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FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
KCS MEDALLION RESOURCES, INC.,
KCS ENERGY, INC.,
KCS ENERGY SERVICES, INC.,
MEDALLION GAS SERVICES, INC., and
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY, AS AGENT,
CIBC INC., AS COLLATERAL AGENT,
AND
THE LENDERS SIGNATORY HERETO
DECEMBER 22, 1998
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REVOLVING LINE OF CREDIT WITH
TRANCHE A OF UP TO $150,000,000
AND TRANCHE B OF UP TO $10,000,000
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...........................21
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 FACILITIES
2.1 Tranche A Loans................................................22
2.2 Letter of Credit Facility......................................23
2.3 Tranche B Loans................................................24
2.4 Limitations on Interest Periods................................26
2.5 Limitation on Types of Loans...................................26
2.6 Use of Loan Proceeds and Letters of Credit.....................27
2.7 Interest.......................................................27
2.8 Repayment of Loans and Interest................................27
2.9 General Terms..................................................28
2.10 Time, Place, and Method of Payments............................28
2.11 Pro Rata Treatment; Adjustments................................29
2.12 Borrowing Base and Tranche B Borrowing Base Determinations.....30
2.13 Mandatory Prepayments..........................................33
2.14 Voluntary Prepayments and Conversions of Loans.................34
2.15 Commitment Fees and Usage Fee..................................34
2.16 Letter of Credit Fee...........................................36
2.17 Other Fees.....................................................36
2.18 Loans to Satisfy Obligations of Borrowers......................36
2.19 Right of Offset................................................36
2.20 General Provisions Relating to Interest........................36
2.21 Obligations Absolute...........................................37
2.22 Yield Protection...............................................38
2.23 Illegality.....................................................40
2.24 Taxes..........................................................40
2.25 Replacement Lenders............................................41
2.26 Regulatory Change..............................................43
2.27 Non-Recourse to KCS............................................43
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ARTICLE III CONDITIONS
3.1 Conditions Precedent to Initial Loan and Letter of Credit......43
3.2 Conditions Precedent to Each Loan..............................45
3.3 Conditions Precedent to Issuance of Letters of Credit..........46
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.1 Due Authorization..............................................47
4.2 Corporate Existence............................................47
4.3 Valid and Binding Obligations..................................47
4.4 Existing Indebtedness; No Defenses.............................47
4.5 Security Instruments...........................................48
4.6 Title to Assets................................................48
4.7 Scope and Accuracy of Financial Statements.....................48
4.8 No Material Misstatements......................................48
4.9 Liabilities and Litigation.....................................48
4.10 Authorizations; Consents.......................................49
4.11 Compliance with Laws...........................................49
4.12 Default........................................................49
4.13 ERISA..........................................................49
4.14 Environmental Laws.............................................50
4.15 Compliance with Federal Reserve Regulations....................50
4.16 Investment Company Act Compliance..............................50
4.17 Public Utility Holding Company Act Compliance..................50
4.18 Proper Filing of Tax Returns; Payment of Taxes Due.............50
4.19 Refunds........................................................51
4.20 Gas Contracts..................................................51
4.21 Intellectual Property..........................................51
4.22 Labor Matters..................................................51
4.23 Casualties or Taking of Property...............................51
4.24 Locations of Borrower..........................................52
4.25 Subsidiaries...................................................52
ARTICLE V AFFIRMATIVE COVENANTS
5.1 Maintenance and Access to Records..............................52
5.2 Quarterly Financial Statements; Compliance Certificates........52
5.3 Annual Financial Statements....................................52
5.4 Oil and Gas Reserve Reports....................................53
5.5 Title Opinions; Title Defects..................................53
5.6 Notices of Certain Events......................................54
5.7 Additional Information.........................................55
5.8 Compliance with Laws...........................................55
5.9 Payment of Assessments and Charges.............................55
5.10 Maintenance of Corporate Existence and Good Standing...........56
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5.11 Payment of Notes; Performance of Obligations...................56
5.12 Further Assurances.............................................56
5.13 Fees and Expenses..............................................56
5.14 Operation of Oil and Gas Properties............................57
5.15 Maintenance and Inspection of Properties.......................57
5.16 Maintenance of Insurance.......................................57
5.17 Indemnification................................................58
5.18 Liens on Material Properties...................................59
ARTICLE VI NEGATIVE COVENANTS
6.1 Indebtedness...................................................59
6.2 Contingent Obligations.........................................60
6.3 Liens..........................................................60
6.4 Negative Pledge Agreements.....................................60
6.5 Sales of Assets................................................60
6.6 Leasebacks.....................................................61
6.7 Loans; Advances; Investments...................................61
6.8 Dividends and Distributions....................................61
6.9 Environmental Matters..........................................62
6.10 Issuance of Stock; Changes in Corporate Structure..............62
6.11 Transactions with Affiliates...................................62
6.12 Lines of Business..............................................62
6.13 ERISA Compliance...............................................62
6.14 Use of Proceeds................................................62
6.15 Subsidiaries...................................................62
6.16 Tangible Net Worth of KCS Medallion............................63
6.17 Interest Coverage Ratio of KCS Medallion.......................63
6.18 Tangible Net Worth of KCS......................................63
6.19 Interest Coverage Ratio of KCS.................................63
ARTICLE VII EVENTS OF DEFAULT
7.1 Enumeration of Events of Default...............................63
7.2 Remedies.......................................................65
ARTICLE VIII THE AGENT
8.1 Appointment....................................................66
8.2 Delegation of Duties...........................................67
8.3 Exculpatory Provisions.........................................67
8.4 Reliance by Agent..............................................67
8.5 Notice of Default..............................................68
8.6 Non-Reliance on Agent and Other Lenders........................68
8.7 Indemnification................................................69
8.8 Restitution....................................................70
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8.9 Agents in Individual Capacity..................................70
8.10 Successor Agent................................................70
8.11 Applicable Parties.............................................71
ARTICLE IX MISCELLANEOUS
9.1 Assignments; Participations....................................71
9.2 Survival of Representations, Warranties, and Covenants.........73
9.3 Notices and Other Communications...............................73
9.4 Parties in Interest............................................73
9.5 Rights of Third Parties........................................74
9.6 No Waiver; Rights Cumulative...................................74
9.7 Severability...................................................74
9.8 Amendments; Waivers............................................74
9.9 Confidentiality................................................75
9.10 Controlling Agreement..........................................76
9.11 Governing Law..................................................76
9.12 Jurisdiction and Venue.........................................76
9.13 Appointment of Agent for Service of Process....................76
9.14 Waiver of Rights to Jury Trial.................................77
9.15 Integration....................................................77
9.16 Counterparts...................................................77
LIST OF EXHIBITS
Exhibit I - Form of Tranche A Note
Exhibit II - Form of Tranche B Note
Exhibit III - Form of Assignment Agreement
Exhibit IV - Form of Tranche A Borrowing Request
Exhibit V - Form of Tranche B Borrowing Request
Exhibit VI - Total Facility Amounts
Exhibit VII - Form of Compliance Certificate
Exhibit VIII - Form of Opinion of Borrowers' Counsel
Exhibit IX - Form of Opinion of Local Counsel
Exhibit X - Disclosures
Exhibit XI - Form of Ratification and Amendment to Stock Pledge Agreement
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FIRST AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDED AND RESTATED CREDIT AGREEMENT is made and entered into
effective as of December 22, 1998, by and among KCS MEDALLION RESOURCES, INC., a
Delaware corporation (formerly known as InterCoast Oil and Gas Company) ("KCS
Medallion"), KCS ENERGY, INC., a Delaware corporation ("KCS"), KCS ENERGY
SERVICES, INC., a Delaware corporation ("KCS Energy Services"), MEDALLION GAS
SERVICES, INC., an Oklahoma corporation (formerly known as InterCoast Gas
Services Company) ("Medallion Gas Services" and 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 (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"), and 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").
W I T N E S S E T H:
WHEREAS, the Borrowers, the Lenders, the Agent and the Collateral Agent
entered into that certain Credit Agreement dated January 2, 1997, as the same
was amended pursuant to the First Amendment to Credit Agreement dated March 24,
1998 (the "First Amendment") and as the same was further amended pursuant to the
Second Amendment to Credit Agreement dated November 12, 1998, effective as of
September 30, 1998 (the "Second Amendment") (collectively, the "Initial
Agreement"); and
WHEREAS, the Borrowers, the Lenders, the Agent and the Collateral Agent
desire to amend and restate the terms and provisions of the Initial Agreement to
create an additional credit facility tranche and commitment and to make certain
other amendments to the Initial Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Agreement, the terms "Agent,"
"Borrower," "CIBC," "CIBC Inc.," "Collateral Agent," "KCS," "KCS Energy
Services," "KCS Medallion," "Lender," "Lenders," and "Medallion Gas Services,"
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) the 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 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.
"Affiliate" shall mean any Person directly or indirectly controlled
by, controlling, or under common control with, any of the Borrowers and
includes any Subsidiary of any of the Borrowers and any "affiliate" of 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
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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.
"Affiliate Credit Agreement" shall mean that certain Credit
Agreement by and among KCS Resources, Inc., KCS Pipeline Systems, Inc.,
KCS Michigan Resources, Inc., KCS Energy Marketing, Inc., Canadian
Imperial Bank of Commerce, New York Agency as Agent, CIBC Inc. as
Collateral Agent, certain Co-agents, and other lenders named therein,
dated September 25, 1996, as amended, and as further amended by the First
Amended and Restated Credit Agreement of even date with this Agreement by
and among such Persons, as such agreement may be amended from time to
time.
"Agreement" shall mean the Initial Credit Agreement, as further
amended by this First Amended and Restated Credit Agreement, as the same
may from time to time be further amended or supplemented.
"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 (a) at all times any Tranche B
Commitment is outstanding, as to each Base Rate Loan and each 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 Applicable Margin
(Tranche A) (Tranche B)
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Base Rate LIBO Rate Base Rate LIBO Rate
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1.0% 2.0% 2.25% 3.25%
(increasing 0.50% on
March 1, 1999 and
every 3 months there
after until the Tranche
B Termination Date)
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and (b) in the event the Tranche B Commitments are irrevocably
terminated, as to each Base Rate Loan and each LIBO Rate Loan, an
amount equal to the percentage set forth in the grid below:
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Applicable Margin
% that Tranche A
Obligations then
Base LIBO outstanding bear to
Rate Rate the Borrowing Base
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0.25% 1.25% Less than 33.3%
0.50% 1.5% 33.3% or more, but less than 66.6%
0.75% 1.75% 66% or more
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"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 III, with appropriate insertions.
"Available Tranche A Commitment" shall mean, at any time, an amount
equal to the remainder, if any, of (a) the lesser of the Tranche A
Commitment Amount or the Borrowing Base in effect at such time minus (b)
Tranche A Obligations at such time.
"Available Tranche B Commitment" shall mean, at any time, an amount
equal to the remainder, if any, of (a) the lesser of (i) the Tranche B
Commitment Amount or (ii) the difference between the Tranche B Borrowing
Base then in effect, minus the Borrowing Base then in effect, minus (b)
the Tranche B Obligations at such time.
"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 which a Borrower has requested
in writing to 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 Tranche A Lender or Benefitted Tranche B Lender" shall
have the meaning assigned to such term in Section 2.11(c) or (d),
respectively.
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"Borrowing Base" shall mean, at any time, the amount determined in
accordance with Section 2.12 (a), (b), (c) and (d).
"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 December 22, 1998.
"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
described in the Security Instruments referenced in Section 3.1 hereof,
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.
"Commitments" shall mean (i) the several obligations of the Tranche
A Lenders to make Tranche A Loans to or for the benefit of the Borrowers
pursuant to Section 2.1, (ii) the several obligations of the Tranche A
Lenders to participate in Letters of Credit pursuant to Section 2.2, and
(iii) the several obligations of the Tranche B Lenders to make Tranche B
Loans to or for the benefit of Borrowers pursuant to Section 2.3.
"Commonly Controlled Entity" shall mean any Person which is under
common control with the Borrowers, within the meaning of Section 4001 of
ERISA.
"Compliance Certificate" shall mean each certificate, substantially
in the form attached hereto as Exhibit VII, executed by a Responsible
Officer of each of the Borrowers, and furnished to the Agent from time to
time in accordance with the terms hereof.
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"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 KCS Medallion Group or KCS and
its Subsidiaries, as the case may be, on a consolidated basis, for
borrowed money.
"Debt Securities" shall mean any and all certificates, notes,
debentures, convertible debentures or any other evidence of indebtedness
of one or more members of the KCS Medallion Group or KCS or any of its
Subsidiaries issued in any public or private offering.
"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 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.
"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 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,
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leased or operated by any of the Borrowers, (c) solid or liquid waste
disposal of Hazardous Substances at any Property at any time owned, leased
or operated by any of the Borrowers or affecting any Property of any of
the Borrowers or any real Property of any of the Borrowers or the
facilities located and the operations conducted thereon, (d) the use,
generation, storage, transportation, or disposal of any Hazardous
Substance by any of the Borrowers or affecting any Property of any of the
Borrowers or any real Property of any of the Borrowers 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 any of the
Borrowers 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 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 generation,
transportation, treatment, storage, recycling, disposal, handling, or
release of Hazardous Substances.
"Equity Sale" has the meaning specified in Section 2.13(b).
"Equity Securities" shall mean any and all certificates, capital
stock, preferred stock, convertible debentures or any other securities
evidencing ownership of equity in KCS or any of its Subsidiaries issued in
any public or private offering.
"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.
"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 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
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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.
"Final Maturity" shall mean, for all Loans, 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.
"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),
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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).
"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, trade names, copyrights, technology, know-how, and processes.
"Interest Coverage Ratio" means, as of the close of any fiscal
quarter, the ratio of (a) KCS EBITDA, or KCS Medallion EBITDA, as the case
may be, for the preceding four fiscal quarters (including the quarter just
ended), to (b) applicable Interest Expense for such preceding four fiscal
quarters.
"Interest Expense" shall mean, for any period, the total interest
expense (including interest expense attributable to capitalized leases) of
the KCS Medallion Group or KCS and its Subsidiaries, as the case may be,
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 2.4, 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 Tranche A Borrowing
Request or the Tranche B Borrowing Request for such Loan.
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"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.
"KCS EBITDA" shall mean, for any period, Net Income of KCS and its
Subsidiaries 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.
"KCS Medallion EBITDA" shall mean, for any period, Net Income of the
KCS Medallion Group 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.
"KCS Medallion Group" shall mean KCS Medallion, KCS Energy Services,
Medallion Gas Services and each of their respective Subsidiaries.
"L/C Exposure" shall mean, at any time, the aggregate maximum amount
available to be drawn under outstanding Letters of Credit at such time.
"Lender" shall mean a Tranche A Lender or a Tranche B Lender.
"Letter of Credit" shall mean any standby or documentary letter of
credit issued for the account of any 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.
"Letter of Credit Payment" shall mean any payment made by the Agent
on behalf of the Tranche A 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
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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 which a Borrower has requested
in writing to 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 Person 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.
"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 a Base Rate Loan or a LIBO Rate Loan made by any
Lender to or for the benefit of the Borrowers pursuant to this Agreement,
each of which is a "type" of Loan hereunder, outstanding as either a
Tranche A Loan or a Tranche B Loan and, without duplication, any payment
made by the Agent as the issuing bank under a Letter of Credit.
"Loan Documents" shall mean this Agreement, the Notes, the Letter of
Credit Applications, the Letters of Credit, the Security Instruments, and
all other documents and instruments now or hereafter delivered by any of
the Borrowers, any Substitute Mortgagor 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
Letter of Credit Applications, the Letters of Credit, or the Security
Instruments, and all renewals, extensions, amendments, supplements, and
restatements thereof.
"Material Adverse Effect" shall mean in the sole reasonable
determination of the Agent, the occurrence or existence of any material
adverse effect on the business, operations,
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Properties, condition (financial or otherwise), or prospects of (i) the
KCS Medallion Group, or (ii) KCS and its Subsidiaries, in each case, taken
as a whole.
"Material Properties" shall mean, at any time, Oil and Gas
Properties of KCS Medallion or any other Borrower or other member of the
KCS Medallion Group or any Substitute Mortgagor which constitute
ninety-five percent (95%) of the net present value (determined in
accordance with the most recent Reserve Reports provided to the Agent in
accordance with Section 5.4) of all Oil and Gas Properties owned by such
Persons, which Oil and Gas Properties, as of the Closing Date, are listed
in the Reserve Report dated July 1, 1998 prepared by the Vice President of
Engineering of KCS, copies of which have been delivered to the Agent.
"Mortgaged Properties" shall mean all Oil and Gas Properties of KCS
Medallion or any Substitute Mortgagor 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 Cash Proceeds" means, for any Transfer the cash proceeds
(including any cash payments actually received as a deferred payment of
principal pursuant to a note, installment receivable, purchase price
adjustment receivable or otherwise) of such Transfer net of (i) all legal
fees, accountant fees, investment banking fees, brokerage fees, finders
fees, survey costs, title insurance premiums, required debt payments
(other than of Obligations) and other customary fees, costs and expenses
actually incurred, paid or made in connection therewith, (ii) taxes or
other governmental fees or charges paid or payable as a result thereof and
(iii) reasonable reserves for purchase price adjustments.
"Net Income" shall mean, for any period, the net income (or loss) of
the KCS Medallion Group or KCS and its Subsidiaries, as the case may be,
for such period, determined on a consolidated basis and in accordance with
GAAP, consistently applied.
"Note" or "Notes" shall mean, individually or collectively, as
applicable, each of the Tranche A Notes and the Tranche B Notes.
"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 Tranche
A 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) all
amounts owing or to be owing by any of the Borrowers under any Hedging
Agreement now or hereafter arising, and (f) all other obligations and
liabilities of the Borrowers to the Agent and the Lenders, now existing or
hereafter incurred, under, arising out of or in connection with any Loan
Document, and to
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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. The term "Oil and Gas
Properties" shall also include a proportionate share of the foregoing of
any partnership or limited partnership equal to the partnership interest
of any of the Borrowers or any Substitute Mortgagor.
"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, (a) in the case of the Tranche A
Commitments or the L/C Exposure, as to each Tranche A Lender, the
percentage such Lender's Tranche A Commitment constitutes of the Tranche A
Commitment Amount, and (b) in the case of the Tranche B Commitments, as to
each Tranche B Lender, the percentage such Lender's Tranche B Commitment
constitutes of the Tranche B Commitment 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 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
business of the Borrowers or any Substitute Mortgagor 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
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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 or any Substitute Mortgagor, the documents listed under the
heading "Permitted Encumbrances" as Exhibit A to the Security Instruments,
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), none of which interfere with the ordinary conduct of the business
of the Borrowers 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 any of the Borrowers or any
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.
"Public Debt" shall mean the obligations of KCS and its Subsidiaries
under or in connection with (i) the Indenture dated as of January 15,
1996, by and among KCS, the Subsidiary Guarantors (as such term is defined
therein) named therein, and Fleet National Bank of Connecticut, as
Trustee, relating to the sale by KCS of its 11% Senior Notes due 2003 in
the aggregate principal amount of $150,000,000.00, and (ii) the Indenture
dated as of January 15, 1998, by and among KCS, the Subsidiary Guarantors
(as such term is defined therein) named therein, and State Street Bank and
Trust Company, as Trustee, relating to the sale by KCS of its eight and
seven-eighths percent (8 7/8%) Senior Subordinated Notes due
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2008 in the aggregate principal amount of $125,000,000.00 and (iii)
Indebtedness hereafter issued under or incurred in connection with the
Indenture described in (i) or (ii) above.
"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 any 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.
"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 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 2.25.
"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 of all Tranche A Commitments
and Tranche B Commitments total at least sixty-six and two-thirds percent
(66-2/3%) of all such Commitments, and at any time
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when any Loans are outstanding, Lenders holding at least sixty-six and
two-thirds percent (66-2/3%) of the aggregate principal amount of all
Loans outstanding (without regard to any sale of a participation in any
Loan).
"Required Payment" shall have the meaning assigned to such term in
Section 2.9.
"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 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, any of the
following officers: Chief Executive Officer, Chairman, Chief Financial
Officer, Treasurer or Secretary; 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 security instruments executed
and delivered in satisfaction of the condition set forth in Section 3.1(c)
and 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.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
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"Stock Pledge Agreement" shall mean the Stock Pledge Agreement dated
as of the closing date of the Initial Agreement executed by KCS in favor
of the Collateral Agent, as amended by the Ratification and Amendment of
Stock Pledge Agreement in substantially the form of Exhibit XI dated as of
the Closing Date and executed by KCS in favor of the Collateral Agent.
"Stock Purchase Agreement" shall mean that certain agreement dated
as of November 14, 1996 by and among KCS, InterCoast Energy Company and
InterCoast Gas Services Company pursuant to which the KCS purchased the
outstanding capital stock of KCS Medallion, Medallion Gas Services and GED
Energy Services.
"Subordinated Indebtedness" shall mean Indebtedness of any Borrower
having terms of payment which are subordinated to payment of the
Obligations pursuant to terms and conditions approved in writing by the
Required Lenders and otherwise permitted pursuant to the provisions of
this Agreement.
"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.
"Substitute Mortgagor" shall have the meaning as provided in Section
3.1.
"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 KCS Medallion Group or KCS and its
Subsidiaries, as the case may be, 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 KCS Medallion Group or KCS and its
Subsidiaries, as the case may be, prepared on a consolidated basis and in
accordance with GAAP plus (c) the after-tax amounts of any ceiling
limitation write downs (such after-tax amounts added by virtue of this
item (c) not to exceed (i) in the case of the KCS Medallion Group,
$25,000,000 and (ii) in the case of KCS and its Subsidiaries, $40,000,000,
in the aggregate on and after September 30, 1998).
"Taxes" shall have the meaning assigned to such term in Section
2.24.
"Terminated Lender" shall have the meaning assigned to such term in
Section 2.25.
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"Termination Date" shall have the meaning assigned to such term in
Section 2.25.
"Total Facility Amount" shall mean, for each Lender, the sum of the
Tranche A Facility Amount and the Tranche B Facility Amount, set forth
opposite the name of such Lender on Exhibit V under the caption "Facility
Amount," as modified to reflect assignments permitted by Sections 9.1 and
2.25 or otherwise pursuant to the terms hereof.
"Tranche A Borrowing Request" shall mean each written request, in
substantially the form attached hereto as Exhibit IV, by the Borrowers to
the Agent for a borrowing or conversion pursuant to Sections 2.1 or 2.14,
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 preceding the
requested borrowing or conversion and designate the Interest Period
requested with respect to such Loan.
"Tranche A Commitment" shall mean, relative to any Tranche A Lender,
such Lender's obligations to make Tranche A Loans and participate in
Letters of Credit pursuant to Sections 2.1 and 2.2.
"Tranche A Commitment Amount" shall mean an amount equal to
$150,000,000, as such amount may be reduced from time to time pursuant to
the terms of this Agreement.
"Tranche A Commitment Period" shall mean the period from and
including the Closing Date to but not including the Tranche A Commitment
Termination Date.
"Tranche A Commitment Termination Date" shall mean September 30,
2000.
"Tranche A Facility Amount" shall mean, for each Tranche A Lender,
the amount set forth opposite the name of such Lender on Exhibit VI under
the caption "Tranche A Facility Amount," as modified to reflect
assignments permitted by Sections 9.1 and 2.25 or otherwise pursuant to
the terms hereof, as such amount.
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Tranche A Lenders" shall mean the Lenders having Tranche A
Commitments as set forth on VI to this Agreement under the heading Tranche
A Facility Amount, as modified from time to time to reflect assignments
permitted by Sections 9.1 and 2.25 or otherwise pursuant to the terms
hereof.
"Tranche A Loan Balance" shall mean, at any time, the aggregate
outstanding principal balance of the Tranche A Notes at such time.
"Tranche A Loans" shall mean the Loans defined in Section 2.1.
"Tranche A Notes" shall mean certain promissory notes of the
Borrowers referred to in Section 2.1(c) payable to a Tranche A Lender in
the amount of the Tranche A 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.
"Tranche A Obligations" shall mean the sum of the Tranche A Loan
Balances of all Tranche A Loans and the L/C Exposure.
"Tranche A Required Lenders" shall mean, at any time when no Tranche
A Loans are outstanding, Tranche A Lenders whose Percentage Shares of all
Tranche A Commitments total at least sixty-six and two-thirds percent (66
2/3%) of all Tranche A Commitments and at any time when Tranche A Loans
are outstanding, Tranche A Lenders holding at least sixty-six and
two-thirds percent (66 2/3%) of the aggregate principal amount of all
Tranche A Loans outstanding (without regard to any sale of a participation
in any Loan).
"Tranche B Borrowing Base" shall mean at any time the amount
determined in accordance with Section 2.12.
"Tranche B Borrowing Request" shall mean each written request, in
substantially the form attached hereto as Exhibit V, by the Borrowers to
the Agent for a borrowing or conversion pursuant to Sections 2.3 or 2.14,
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 preceding the
requested borrowing or
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conversion and designate the Interest Period requested with respect
to such Loan.
"Tranche B Commitment" shall mean relative to any Tranche B Lender,
such Lender's obligations to make Tranche B Loans pursuant to Section 2.3.
"Tranche B Commitment Amount" shall mean $10,000,000 as such amount
may be reduced pursuant to the terms of this Agreement.
"Tranche B Commitment Period" shall mean the period from and
including the Closing Date to but not including the Tranche B Commitment
Termination Date.
"Tranche B Commitment Termination Date" shall mean September 30,
2000.
"Tranche B Facility Amount" shall mean, for each Tranche B Lender,
the amount set forth opposite the name of such Lender on Exhibit VI under
the caption "Tranche B Facility Amounts," as modified to reflect
assignments permitted by Sections 9.1 and 2.25 or otherwise pursuant to
the terms hereof.
"Tranche B Lenders" shall mean the Lenders having Tranche B
Commitments as set forth on Exhibit VI to this Agreement under the heading
Tranche B Facility Amount, as modified, from time to time, to reflect
assignments permitted by Sections 9.1 and 2.25 or otherwise pursuant to
the terms hereof.
"Tranche B Loan Balance" shall mean, at any time, the aggregate
outstanding principal balance of the Tranche B Notes at such time.
"Tranche B Loans" shall mean the Loans defined in Section 2.3.
"Tranche B Notes" shall mean certain promissory notes of the
Borrowers referred to in Section 2.3(c) payable to a Tranche B Lender in
the amount of the Tranche B Facility Amount of such Lender in the form
attached hereto as Exhibit II with appropriate insertions together with
all renewals, extensions for any period, increases and rearrangements
thereof.
"Tranche B Obligations" shall mean the sum of the Tranche B Loan
Balances of all Tranche B Loans.
"Tranche B Required Lenders" shall mean, at any time when no Tranche
B Loans are outstanding, Tranche B Lenders whose Percentage Shares of all
Tranche B Commitments total at least sixty-six and two-thirds percent (66
2/3%) of all Tranche B Commitments and at any time when Tranche B Loans
are outstanding, Tranche B Lenders holding at least sixty-six and
two-thirds percent (66 2/3%) of the aggregate principal amount of all
Tranche B Loans outstanding (without regard to any sale of a participation
in any Loan).
"Transfer" means (i) the issuance or incurrence of Subordinated
Indebtedness or Public Debt, or (ii) an Equity Sale.
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"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.
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 shall mean the knowledge of any officer of such 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 a Borrower, the knowledge of an
operations manager having responsibility for such Property.
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ARTICLE II
TERMS OF FACILITIES
2.1 Tranche A Loans.
(a) Upon the terms and conditions and relying on the representations
and warranties contained in this Agreement and the other Loan Documents,
each Tranche A Lender severally agrees to make Loans (each a "Tranche A
Loan") during the Tranche A Commitment Period on a revolving basis 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 Tranche A Facility Amount of such Lender or the Percentage
Share of such Lender of the Borrowing Base then in effect (for each
Lender, its "Tranche A Commitment"); provided, however, that (i) Tranche A
Obligations shall not exceed at any time the lesser of the Tranche A
Commitment Amount or the Borrowing Base then in effect, and (ii) the sum
of the outstanding principal balance of all Tranche A Loans by any Tranche
A 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 Tranche A Commitment Amount or
the Borrowing Base then in effect. Tranche A 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 Tranche A
Commitment Period, the Borrowers may borrow, repay, and reborrow and
convert Tranche A Loans of one type or with one Interest Period into
Tranche A Loans of another type or with a different Interest Period.
Except for prepayments made pursuant to Section 2.13, 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 Tranche
A Loan of a different type or, in the case of a LIBO Rate Tranche A 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 Tranche A Loan or Interest Period. Anything in this Agreement to
the contrary notwithstanding, the aggregate principal amount of LIBO Rate
Tranche A 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 Tranche A 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 of a Tranche
A Loan, each Tranche A 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 Tranche A Loans by
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each Tranche A Lender shall be maintained at the Applicable Lending Office
of such Lender and shall be evidenced by the Tranche A Note of such
Lender.
(d) The failure of any Tranche A Lender to make any Tranche A Loan
required to be made by it hereunder shall not relieve any other Tranche A
Lender of its obligation to make any Tranche A Loan required to be made by
it, and no Tranche A Lender shall be responsible for the failure of any
other Tranche A Lender to make any Tranche A 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 Tranche A Commitment Termination Date, to issue,
on behalf of the Tranche A 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, 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 Tranche A Commitment Termination Date, (ii) Tranche A
Obligations shall not exceed at any time the lesser of the Tranche A
Commitment Amount or the Borrowing Base, (iii) the L/C Exposure shall not
exceed at any time $15,000,000, 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 Tranche A 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 Tranche A 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 Tranche A Loan by each Tranche A 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 Tranche A Loan under and shall be
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evidenced by the Tranche A 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 2.13, neither the Agent as the issuing bank nor any
such 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 TRANCHE A 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 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 TRANCHE A 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 Tranche B Loans.
(a) Upon the terms and conditions and relying on the representations
and warranties contained in this Agreement and the other Loan Documents,
each Tranche B Lender severally agrees to make Loans (each a "Tranche B
Loan") during the Tranche B Commitment Period on a revolving basis 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
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the lesser of the Tranche B Facility Amount of such Tranche B Lender or
the Percentage Share of such Tranche B Lender of the Tranche B Borrowing
Base then in effect (for each Tranche B Lender, its "Tranche B
Commitment"); provided, however, that Tranche B Obligations shall not
exceed at any time the lesser of (y) the Tranche B Commitment Amount or
(z) the difference between the Tranche B Borrowing Base then in effect
minus the Borrowing Base then in effect. Tranche B Loans shall be made
from time to time on any Business Day designated by the Borrowers in a
Tranche B Borrowing Request but only to the extent such Tranche B Loan
requested exceeds the Available Tranche A Commitment at such time.
(b) Subject to the terms of this Agreement, during the Tranche B
Commitment Period, the Borrowers may borrow, repay, and reborrow and
convert Tranche B Loans of one type or with one Interest Period into
Tranche B Loans of another type or with a different Interest Period.
Except for prepayments made pursuant to Section 2.13, 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 Tranche
B Loan of a different type or, in the case of a LIBO Rate Tranche B 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 Tranche B Loan or Interest Period. Anything in this Agreement to
the contrary notwithstanding, the aggregate principal amount of LIBO Rate
Tranche B 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 Tranche B 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 of a Tranche
B Loan, each Tranche B Lender shall make available to the Agent an amount
equal to the Percentage Share of such Tranche B Lender of the borrowing to
be made on such date, at an account designated by the Agent, for the
account of the Borrower. 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 Tranche B Loans
by each Tranche B Lender shall be maintained at the Applicable Lending
Office of such Lender and shall be evidenced by the Tranche B Note of such
Lender.
(d) The failure of any Tranche B Lender to make any Tranche B Loan
required to be made by it hereunder shall not relieve any other Tranche B
Lender of its obligation to make any Tranche B Loan required to be made by
it, and no Tranche B Lender shall be responsible for the failure of any
other Tranche B Lender to make any Tranche B Loan.
(e) The Borrowers shall have the right at any time and from time to
time, upon three (3) Business Days' prior and irrevocable written notice
to the Agent, to terminate or reduce the Tranche B Commitments without
premium or penalty, in whole or in part, any partial termination to be (i)
in an amount not less than $1,000,000 as determined by the
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Borrowers and in integral multiples of $1,000,000, and (ii) allocated (A)
either ratably among the Tranche B Lenders in proportion to their
respective Tranche B Commitments; or (B) in the case of a termination of
the Tranche B Commitment of a dissenting Tranche B Lender pursuant to
Section 2.12(h), allocated solely to such Tranche B Lender; provided, that
the Tranche B Commitment Amounts may not be reduced to an amount less than
the Tranche B Loan Balance. The Agent shall give prompt notice to each
Tranche B Lender of any termination or reduction of the Tranche B
Commitments. Any termination of the Tranche B Commitments pursuant to this
Section 2.3(e) is permanent and may not be revoked.
2.4 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.
2.5 Limitation on Types of Loans. Borrowings of both Tranche A Loans and
Tranche B Loans may be outstanding respectively as either Base Rate Loans or
LIBO Rate Loans as selected by Borrowers. Anything herein to the contrary
notwithstanding, no more than ten separate Tranche A Loans and five (5) separate
Tranche B Loans shall be outstanding at any one time, with, for purposes of this
Section, all Base Rate Tranche A Loans constituting one Loan, all Base Rate
Tranche B Loans constituting one Loan, all LIBO Rate Tranche A Loans for the
same Interest Period constituting one Loan, and all LIBO Rate Tranche B 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 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 2.14. During
the 30
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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.
2.6 Use of Loan Proceeds and Letters of Credit.
(a) Proceeds of all Loans shall be used solely by the Borrowers for
general corporate purposes, acquisitions and working capital.
(b) Letters of Credit shall be used solely by the Borrowers for
general corporate purposes.
2.7 Interest. Subject to the terms of this Agreement (including Section
2.20), interest on the Loans shall accrue and be payable at a rate per annum
equal to the lesser of (a) the Highest Lawful Rate or (b) the Adjusted Base Rate
for each Base Rate Loan or 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 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.
2.8 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, 1998, 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
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the amount of interest which has accrued and remains unpaid in respect of the
relevant Loan. The outstanding principal balance of all Loans, 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 shall apply such payment in such manner as the Lenders shall determine
in their sole discretion.
2.9 General Terms.
(a) The outstanding principal balance of the Notes of each Lender
reflected in the records of such Lender shall be deemed rebuttably
presumptive evidence of the principal amount owing on such Notes. The
liability for payment of principal and interest evidenced by each such
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 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.
2.10 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
U.S. 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.
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2.11 Pro Rata Treatment; Adjustments.
(a) Except to the extent otherwise expressly provided herein, (i)
each borrowing of Tranche A Loans pursuant to this Agreement shall be made
from the Tranche A Lenders pro rata in accordance with their respective
Percentage Shares, (ii) each payment by the Borrowers of fees payable by
the Borrowers in respect of Tranche A Loans shall be made for the account
of the Tranche A Lenders pro rata in accordance with their respective
Percentage Shares, (iii) each payment of principal of Tranche A Loans
shall be made for the account of the Tranche A Lenders pro rata in
accordance with their respective shares of the Tranche A Loan Balance,
(iv) each payment of interest on Tranche A Loans shall be made for the
account of the Tranche A Lenders pro rata in accordance with their
respective Percentage Shares of the aggregate amount of such interest due
and payable to the Tranche A Lenders, (v) each borrowing of Tranche B
Loans shall be made from the Tranche B Lenders pro rata in accordance with
their respective Percentage Shares, (vi) each payment by the Borrowers of
fees payable by the Borrowers in respect of Tranche B Loans shall be made
for the account of the Tranche B Lenders pro rata in accordance with their
respective Percentage Shares, (vii) each payment of principal of Tranche B
Loans shall be made for the account of the Tranche B Lenders pro rata in
accordance with their respective shares of the Tranche B Loan Balance, and
(viii) each payment of interest on Tranche B Loans shall be made for the
account of the Tranche B Lenders pro rata in accordance with their
respective Percentage Shares of the aggregate amount of such interest due
and payable to the Tranche B 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 of the Loans, and (iv) last, to any other Obligations.
(c) If any Tranche A Lender (for purposes of this Section, a
"Benefitted Tranche A 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 Tranche
A Lender shall purchase for cash from the other Tranche A Lenders such
portion of the Obligations of such other Lenders, or shall provide such
other Tranche A Lenders with the benefits of any such Collateral or the
proceeds thereof, as shall be necessary to cause such Benefitted Tranche A
Lender to share the excess payment or benefits of such Collateral or
proceeds with each of the Tranche A Lenders according to the terms hereof.
If all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Tranche A 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
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of such portion. If any Tranche A Lender ever receives, by voluntary
payment, exercise of rights of set-off or banker's lien, counterclaim,
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.
(d) If any Tranche B Lender (for purposes of this Section, a
"Benefitted Tranche B 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 Tranche
B Lender shall purchase for cash from the other Tranche B Lenders such
portion of the Obligations of such other Lenders, or shall provide such
other Tranche B Lenders with the benefits of any such Collateral or the
proceeds thereof, as shall be necessary to cause such Benefitted Tranche B
Lender to share the excess payment or benefits of such Collateral or
proceeds with each of the Tranche B Lenders according to the terms hereof.
If all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Tranche B 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 Tranche B Lender ever receives, by
voluntary payment, exercise of rights of set-off or banker's lien,
counterclaim, 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.
(e) Notwithstanding any of the provisions of this Section 2.11,
after the occurrence and during the continuance of an Event of Default,
the Lenders may apply payments in respect of the Obligations in such
manner as the Lenders shall determine in their sole discretion.
2.12 Borrowing Base and Tranche B Borrowing Base Determinations.
(a) The Borrowing Base as of the Closing Date is agreed by the
Borrowers and the Tranche A Lenders to be $80,000,000.
(b) The Borrowing Base shall be redetermined by the Agent, with the
consent of the Tranche A 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 Tranche A Lenders, shall, in the normal course of business
following a request of the Borrowers, redetermine the Borrowing Base;
provided, however, the Agent and the Tranche A 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
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for above. Notwithstanding the foregoing, the Agent, with the consent of
the Tranche A 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 Tranche A 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 Tranche A 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
Tranche A Lenders then in effect for loans of this type and borrowers
similarly situated. Except as hereinafter provided, in the event that a
group of Tranche A Lenders constituting at least the Tranche A 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
Tranche A Lenders, then the Borrowing Base shall be the amount as
determined by such Tranche A Required Lenders for a period of 60 days from
the date of notification of such Borrowing Base to the Borrowers pursuant
to Section 2.12(c). Notwithstanding the foregoing provisions of this
Section 2.12(d), if at any time the Borrowing Base redetermination by the
Agent results in an increase in the Borrowing Base and such Borrowing Base
is not approved unanimously by all the Tranche A Lenders, then, in such
event, the Borrowing Base shall, during the sixty (60) day period from the
date of notification of the Borrowing Base to the Borrowers pursuant to
Section 2.12(c), be the amount agreed to by the Agent and all of the
Tranche A Lenders, but in any event not less than the amount which existed
immediately prior to such redetermination by the Agent. During such 60 day
period or at any time thereafter, the Borrowers may, at their election,
terminate the Commitments of such dissenting Tranche A Lenders pursuant to
the procedures set forth in Section 2.25. At the end of such 60 day
period, the Borrowing Base shall be an amount agreed to by the Agent and
all of the Tranche A 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 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 Tranche A Lenders.
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(e) The Tranche B Borrowing Base (the "Tranche B Borrowing Base") is
agreed by the Borrowers and the Tranche B Lenders to be (i) $90,000,000
from the Closing Date through the later of (y) March 31, 1999 and (z) the
date of the next determination of the Tranche B Borrowing Base in
accordance with Sections 2.12(f), (g) and (h), and (ii) thereafter, such
amount as shall be determined by the Tranche B Lenders in the manner
provided in Section 2.12(f), (g) and (h) of this Agreement.
(f) The Tranche B Borrowing Base shall be redetermined by the Agent,
with the consent of the Tranche B Lenders, semi-annually commencing March
31, 1999 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 Tranche B Lenders, with
the assistance of the Agent, shall, in the normal course of business
following a request of the Borrowers, redetermine the Borrowing Base;
provided, however, the Agent and the Tranche B 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 Tranche B Lenders, may (except as provided in Section
2.12(e)(i)) at its discretion redetermine the Tranche B Borrowing Base at
any time and from time to time.
(g) Each determination of the Tranche B 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 Tranche B 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 Tranche B 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 Tranche B Borrowing Base.
(h) In connection with any redetermination of the Tranche B
Borrowing Base, the Agent and each Tranche B 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 Tranche B
Borrowing Base shall represent the determination by the Agent based upon
such evaluation by the Agent, with the consent of the Tranche B Lenders,
of the value for loan purposes of the Mortgaged Properties, subject, in
the case of any increase in the Tranche B Borrowing Base, to the credit
approval processes of the Tranche B Lenders then in effect for loans of
this type and borrowers similarly situated. In the event that a group of
Tranche B Lenders constituting at least the Tranche B Required Lenders are
in agreement as to the amount of any Tranche B Borrowing Base
redetermination but such amount is not approved unanimously by all of the
Tranche B Lenders, then the Tranche B Borrowing Base shall be the amount
as determined by such Tranche B Required Lenders for a period of 60 days
from the date of notification of such Tranche B Borrowing Base to the
Borrowers pursuant to Section 2.12(g). During such 60 day period or at any
time thereafter, the Borrowers may, at their election, (x) terminate the
Tranche B Commitment of such dissenting Tranche B Lender(s) in accordance
with Section 2.3(e), or (y) substitute a new Tranche B Lender or
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Lenders for such dissenting Lender(s) pursuant to the procedures set forth
in Section 2.25. At the end of such 60 day period, the Tranche B Borrowing
Base shall be an amount agreed to by the Agent and all of the Tranche B
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 Tranche B Lenders have no
obligation to increase the Tranche B Borrowing Base and may, subject to
Section 2.12(e)(i), reduce the Tranche B Borrowing Base, in either case,
at any time or as a result of any circumstance, and further acknowledges
that the determination of the Tranche B 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 Tranche B
Lenders.
2.13 Mandatory Prepayments.
(a) If at any time the Tranche A Obligations exceed the lesser of
the Tranche A Commitment Amount or the Borrowing Base then in effect, the
Borrowers shall, within 30 days of notice from the Agent of such
occurrence, (i) prepay, or make arrangements acceptable to the Tranche A
Required Lenders for the prepayment of, the amount of such excess for
application on the Loan Balance of the Tranche A Loans, (ii) provide
additional collateral, of character and value satisfactory to the Tranche
A 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 (iii) effect any combination
of the alternatives described in clauses (i) and (ii) of this Section
2.13(a) and acceptable to the Tranche A Required Lenders in their
discretion. In the event that a mandatory prepayment is required under
this Section 2.13(a) and the Tranche A Loan Balance is less than the
amount required to be prepaid, the Borrowers shall repay the entire
Tranche A Loan Balance together with accrued interest, 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 Tranche A Commitment Amount or the Borrowing Base.
The cash deposited with the Agent in satisfaction of the requirement
provided in this Section 2.13 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) For so long as any Tranche B Commitment is outstanding, in the
event after the Closing Date any Borrower (i) issues or incurs
Subordinated Indebtedness or Public Debt to any Person other than an
Affiliate or (ii) issues, transfers, sells, assigns, or conveys to any
Person other than an Affiliate (an "Equity Sale") (y) all or any portion
of the capital stock of any other Borrower, or (z) any equity interest in
itself or any other Borrower, then, in any such event, an amount equal to
fifty percent (50%) of the Net Cash Proceeds from the issuance or
incurrence of such Subordinated Indebtedness up to the then outstanding
principal amount of the Tranche B Loans, if any, and fifty percent (50%)
of the Net Cash Proceeds from the issuance, sale, assignment or conveyance
of such Equity Sale up to the then outstanding principal amount of the
Tranche B Loans, if any, shall be applied for reduction of the Tranche B
Loans in the manner determined by the Lenders, and the Tranche
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B Commitments then in effect (if any) shall be irrevocably reduced prorata
to the extent of fifty percent (50%) of the Net Cash Proceeds from the
issuance or incurrence of such Subordinated indebtedness or Public Debt
and fifty percent (50%) of the Net Cash Proceeds from the issuance, sale,
assignment or conveyance of such Equity Sale.
(c) If at any time the Tranche B Obligations exceed the lesser of
(i) the Tranche B Commitment Amount or (ii) the difference between the
Tranche B Borrowing Base then in effect minus the Borrowing Base then in
effect, the Borrowers shall, within 30 days of notice from the Agent of
such occurrence, (i) prepay, or make arrangements acceptable to the
Tranche B Required Lenders for the prepayment of, the amount of such
excess for application on the Tranche B Loan Balance, (ii) provide
additional collateral, of character and value satisfactory to the Tranche
B 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 (iii) effect any combination
of the alternatives described in clauses (i) and (ii) of this Section
2.13(c) and acceptable to the Tranche B Required Lenders in their
discretion. If at any time, Tranche B Obligations are outstanding when
Available Tranche A Commitment exists, the Borrowers shall, (i) in the
case of such Tranche B Obligations which are Base Rate Tranche B Loans, to
the extent of the Available Tranche A Commitment, prepay such Loans within
three Business Days of the occurrence of such condition, or (ii) in the
case of such Tranche B Obligations which are LIBO Rate Tranche B Loans, to
the extent of the Available Tranche A Commitment, on the last day of the
Interest Period to which such Loans are subject, prepay such Loans on the
last day of the Interest Period to which such Loans are subject. In the
event that a mandatory prepayment is required under this Section 2.13(c)
and the Tranche B Loan Balance is less than the amount required to be
prepaid, the Borrowers shall repay the entire Loan Balance of the Tranche
B Loans.
2.14 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 2.22(e), the
amount, if any, required to be paid under Section 2.22(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 of such
Loans 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 of such Loans, (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.
2.15 Commitment Fees and Usage Fee.
(a) To compensate the Tranche A Lenders for maintaining funds
available under the Tranche A Commitment, the Borrowers shall pay to the
Agent for the account of such
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Lenders a fee equal to (i) at all times the Tranche B Commitments are
outstanding and existing, one-half of one percent (0.50%) per annum times
the average daily amount of the Available Tranche A Commitment during the
immediately preceding fiscal quarter just ended (or shorter period thereof
in the case of the fee for the period from the date of this Agreement and
ending December 31, 1998 or the period ending on the Tranche A Commitment
Termination Date) or (ii) in the event the Tranche B Commitments are
irrevocably terminated, (y) in the event the average daily amount of the
Available Tranche A Commitment during the immediately preceding fiscal
quarter just ended (or shorter period thereof in the case of the fee for
the period from the date of this Agreement and ending December 31, 1998 or
the period ending on the Tranche A Commitment Termination Date) is equal
to or more than sixty-six and two-thirds percent (66 2/3%) of the average
daily amount of the Tranche A Commitments during such immediately
preceding fiscal quarter (or any such shorter period), thirty-seven and
one-half one hundredths of one percent (0.375%) per annum times the
average daily amount of the Available Tranche A Commitment for such
quarter or shorter period, or (z) in the event the average daily amount of
the Available Tranche A Commitment during the immediately preceding fiscal
quarter just ended (or shorter period thereof in the case of the fee for
the period from the date of this Agreement and ending December 31, 1998 or
the period ending on the Tranche A Commitment Termination Date) is less
than sixty-six and two thirds percent (66 2/3%) of the average daily
amount of the Tranche A Commitments during such immediately preceding
fiscal quarter (or any such shorter period), one half of one percent
(0.50%) per annum times the average daily amount of the Available Tranche
A Commitment for such quarter or shorter period, in each case 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); such
accrued commitment fees shall be payable in arrears on the 31st day of
December, 1998, the last day of each third calendar month thereafter
during the Tranche A Commitment Period, and on the Tranche A Commitment
Termination Date;
(b) To compensate the Tranche B Lenders for maintaining funds
available under the Tranche B Commitment the Borrowers shall pay to the
Agent for the account of such Tranche B Lenders, a fee equal to one-half
of one percent (0.50%) per annum, times the average daily amount of the
Available Tranche B Commitment during the immediately preceding fiscal
quarter just ended (or shorter period thereof in the case of the fee for
the period from the date of this Agreement and ending December 31, 1998 or
the period ending on the Tranche B Commitment Termination Date),
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); such accrued commitment fees shall be payable in arrears on the 31st
day of December, 1998, the last day of each third calendar month
thereafter during the Tranche B Commitment Period, and on the Tranche B
Commitment Termination Date; and
(c) To compensate the Tranche B Lenders for advancing Tranche B
Loans, subject to the provisions of Section 2.20, on the date of any
borrowing of a Tranche B Loan where, after giving effect to such Loan, the
aggregate principal amount of Tranche B Loans then outstanding exceeds the
maximum aggregate principal amount of Tranche B Loans theretofore
outstanding at any one time (the amount of such excess on any such
borrowing date, herein called an "Excess Amount"), the Borrowers shall pay
to the Agent, for the
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account of the Tranche B Lenders, a fee ("Usage Fee") equal to
one-and-one-fourth percent (1.25%) times such Excess Amount on such date
of borrowing.
2.16 Letter of Credit Fee. The Borrowers shall pay to the Agent for the
account of the Tranche A 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, 1998, the last day of each third calendar
month thereafter during the Tranche A Commitment Period, and at Final Maturity
of the Tranche A Loans. 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 Borrowers also agree 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.
2.17 Other Fees. The Borrowers shall pay to the Agent on the Closing Date
(a) for the account of the Tranche A Lenders an amendment fee (the "Tranche A
Amendment Fee") equal to $100,000 representing one-eighth of one percent
(0.125%) of the aggregate of the Tranche A Commitments and (b) for the account
of the Tranche B Lenders, a commitment fee (the "Tranche B Commitment Fee")
equal to $125,000 representing one and one-fourth percent (1.25%) of the
aggregate of the Tranche B Commitments.
2.18 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 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.
2.19 Right of Offset. The Borrowers hereby grant to the Agent and each
Lender (for the 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 the Borrowers 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.
2.20 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.
2.21 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
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corresponding Letter of Credit or 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 2.21 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.
2.22 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 2.22(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 2.22(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 Commitments,
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
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below that which such Lender (or any Applicable Lending Office) could have
achieved but for such Regulatory Change.
(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 2.22(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
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shall be conclusive, absent manifest error, provided that such
determinations are 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.
2.23 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 2.14; 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.
2.24 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
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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
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.
2.25 Replacement Lenders.
(a) If any Lender (i) has notified the Borrowers of its incurring
additional costs under Section 2.22 or the illegality of LIBO Rate Loans
under Section 2.23, (ii) has required the Borrowers to make payments for
Taxes under Section 2.24, or (iii) has informed any Borrower of a
Regulatory Change in accordance with Section 2.26, or if any Tranche A
Lender is not in agreement with the amount of any Borrowing Base
redetermination which a group of Tranche A Lenders constituting at least
the Tranche A Required Lenders has approved, or if any Tranche B Lender is
not in agreement with the amount of any Tranche B Borrowing Base
redetermination which a group of Tranche B Lenders constituting at least
the Tranche B 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
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notice no longer apply, terminate, in whole but not in part, the
Commitments or the Tranche B 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 Commitments or the
Tranche B Commitment of the Terminated Lender, the Borrowers shall (i)
obtain an agreement with one or more Lenders to increase their Commitments
and/or become a Tranche B Lender (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 its Commitments; provided, however,
that such one or more other banking institutions are reasonably acceptable
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 Commitments or the Tranche B Commitment of the Terminated Lender
being referred to herein as the "Replacement Lenders"), such that the
aggregate increased and/or accepted Total Facility Amounts of the
Replacement Lenders under clauses (i) and (ii) above equal the Tranche A
Facility Amount and the Tranche B Facility Amount (if any) of the
Terminated Lender and provided further, no Person may become a Tranche B
Lender hereunder unless such Person also is or becomes a Tranche A 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 Commitments or the Tranche B Commitment,
and, if there will be more than one Replacement Lender, the portion of the
Terminated Lender's Commitments or the Tranche B 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 Commitments
or the Tranche B 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 Commitments or the
Tranche B 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 Loans (if any) so assigned then outstanding pro
rata as aforesaid), (ii) the Terminated Lender shall endorse its
applicable Note(s), 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(s) 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 its 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 2.22, of which the Borrowers shall have
received notice pursuant to Section 2.22(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
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all respects for the Terminated Lender to the extent of such assignment
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.
2.26 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 outstanding LIBO Rate Loans shall be converted
into Base Rate Loans in accordance with Section 2.14.
2.27 Non-Recourse to KCS. Notwithstanding any other provision of this
Agreement, the Notes or any of the other Loan Documents executed and delivered
by KCS in connection with or as security for the Obligations, except as
expressly hereinafter provided in this Section 2.27, KCS shall not be liable for
payment of amounts owing under and pursuant to the Obligations and the sole
recourse of the Agent and the Lenders for satisfaction of the Obligations with
respect to KCS shall be the liens, security interests and agreements created and
granted by KCS pursuant to the Stock Pledge Agreement and any other collateral
security documents to which KCS is now or may be a party to in the future. It is
expressly understood and agreed that (i) the Stock Pledge Agreement and (ii)
Section 4.7 of this Agreement contain various warranties, representations,
covenants and/or agreements made by KCS. To the extent that a breach of any of
such warranties, representations, covenants and/or agreements is or becomes an
Event of Default or otherwise gives rise to rights or actions (other than claims
of personal liability against KCS) by the Agent and the Lenders, the aforesaid
lack of personal liability shall not limit, modify, diminish or negate any such
right or actions, including without limitation (i) those relating to foreclosure
of liens, and/or security interests created pursuant to the Loan Documents and
(ii) those relating to enforcement of such personal liability as may exist for
breach of warranty or representation made in the Stock Pledge Agreement or
Section 4.7 of this Agreement, fraud or defalcation.
ARTICLE III
CONDITIONS
3.1 Conditions Precedent to Initial Loan and Letter of Credit. The Lenders
shall have no obligation to make the initial Loans or issue the initial Letters
of Credit on or after the Closing Date unless and until all matters incident to
the consummation of the transactions contemplated herein, including the review
by the Agent or its counsel of matters relating to the Security Instruments as
set forth in clause (g) of KCS Medallion or any other Borrower or other member
of the KCS
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Medallion Group, (any such Person other than KCS Medallion being referred to as
a "Substitute Mortgagor"), shall be satisfactory to the Agent, and the Agent
shall have substantially simultaneously received the Tranche A Amendment Fee and
the Tranche B Amendment Fee and (to the extent not previously received to the
satisfaction of the Agent in its sole determination) 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, 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 as requested by the
Agent;
(b) the Notes;
(c) The duly executed Stock Pledge Agreement and the duly executed
Ratification and Amendment of Stock Pledge Agreement in the form of
Exhibit XI (together with any and all other ratifications, supplements or
amendments thereto required by the Collateral Agent pursuant to the
amendment and restatement of the Initial Agreement and the Loan Documents)
from KCS creating, evidencing, perfecting and otherwise establishing Liens
in favor of the Collateral Agent in and to all issued and outstanding
shares of Borrowers other than KCS and KCS Energy Services, together with
the delivery to the Collateral Agent of all of the pledged securities
described therein necessary to effectuate and perfect such stock pledge,
accompanied by an executed and undated stock power in blank, or such other
instrument, as may be required under applicable law to perfect the pledge;
(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, accompanied by a certificate issued by the
secretary or an assistant secretary of each Borrower, as the case may be,
to the effect that each such copy is correct and complete or, in lieu of
the foregoing, a certificate of such secretary or assistant secretary to
the effect that such Articles or Certificate of Incorporation have not
been amended since the date of the Initial Agreement;
(e) certificates of incumbency and signatures of all officers of
each Borrower 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;
(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 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;
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(g) multiple counterparts, as requested by the Agent, of
ratifications and amendments in form satisfactory to the Collateral Agent
relating to each of the Security Instruments executed and delivered by a
Borrower or Substitute Mortgagor prior to the Closing Date; and
(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 in their respective
jurisdiction of incorporation and in any other jurisdictions where any of
them is qualified to do business;
(i) results of searches of the UCC Records of the Secretary of State
of the States of California, Colorado, Louisiana, Mississippi, Montana,
New Mexico, Oklahoma, 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 or the Collateral Agent
and other Permitted Liens;
(j) results satisfactory to the Agent in its discretion of a review
of the environmental reports furnished to the Agent by Borrowers in
connection with the Initial Agreement;
(k) engineering reports as of June 30, 1998 covering the Mortgaged
Properties;
(l) the opinion of Orloff, Lowenbach, Xxxxxxxxx & Xxxxxx, P.A.,
counsel to the Borrowers, in the form attached hereto as Exhibit VIII,
with such changes thereto as may be approved by the Agent;
(m) if required by the Agent, supplemental opinions in form
satisfactory to the Agent, in connection with any ratifications or
amendments to any of the Security Instruments, with such changes thereto
as may be approved by the Agent;
(n) certificates evidencing the insurance coverage required pursuant
to Section 5.16; and
(o) 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 Tranche A Loan and each Tranche B Loan are subject to the satisfaction
of the following additional conditions precedent except that items (b), (c) and
(d) below shall not be applicable to continuations or conversions into Base Rate
Loans where no new funds are advanced:
(a) the Borrowers shall have delivered to the Agent a Tranche A
Borrowing Request or a Tranche B 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
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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 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 have received payment from the Borrowers, for (i) all reasonable
fees and expenses of counsel to the Agent for which the Borrowers are
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
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(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 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 the 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 in the aggregate principal amounts set forth in Exhibit X
under the heading "Existing Indebtedness", and (b) the Borrowers have no
defenses to, rights of setoff against, claims or
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counterclaims with respect to, and no default exists under or with respect to
any Indebtedness or obligation of the Borrowers evidenced thereby.
4.5 Security Instruments. The provisions of each Security Instrument
executed by any Borrower or any Substitute Mortgagor are effective to create in
favor of the Agent or the Collateral Agent, a legal, valid, and enforceable Lien
in all right, title, and interest of such Person 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 such Person in the 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 clear 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.
4.7 Scope and Accuracy of Financial Statements. The Financial Statements
of KCS and its Subsidiaries as of December 31, 1997 and September 30, 1998
(subject, in the case of the Financial Statements as of September 30, 1998, to
normal year-end audit adjustments), 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, as
applicable. No event or circumstance has occurred since September 30, 1998
except for the material decline of oil and gas prices generally, which could
reasonably be expected to have a Material Adverse Effect on KCS or KCS
Medallion.
4.8 No Material Misstatements. All written estimates, projections and
forecasts furnished by or on behalf of the Borrowers 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 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 and Litigation. Other than as listed under the heading
"Liabilities" on Exhibit X, the Borrowers have no liabilities, direct, or
contingent, which could reasonably be expected to have a Material Adverse Effect
on KCS or KCS Medallion. 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 Borrowers, threatened,
against or affecting (a) any Collateral, or, in the case of Environmental Laws,
any Property of any Borrower,
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or the facilities located and the operations conducted thereon, which, if
determined adversely to such Borrower, could reasonably be expected to have a
Material Adverse Effect on KCS or KCS Medallion, (b) any Borrower's ability to
enter into, execute, deliver or perform in any material respect its obligations
under the Loan Documents, (c) any Borrower which, if determined adversely to
such Borrower, 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 on KCS or KCS Medallion 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, which if determined adversely to such Borrower, could reasonably be
expected to result in any other Material Adverse Effect on KCS or KCS Medallion.
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 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. 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 or obligation other than an agreement or obligation
evidencing or relating to 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 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
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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:"
(a) no Property of any Borrower 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 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 from, affecting, or related to any Property of any
Borrower or the facilities located and the operations conducted thereon;
and
(d) no Environmental Complaint has been received by any Borrower.
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
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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.
4.20 Gas Contracts. Except as described on Exhibit X under the heading
"Gas Contracts," as of the Closing Date, (a) no Borrower 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) no Borrower 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 September 30, 1998, 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.
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4.24 Locations of Borrower. 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 other than those described in Exhibit X.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any Commitments
exist, the Borrowers 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, on or before the 45th day after the close of each of the first three
quarterly periods of each fiscal year of KCS, Sufficient Copies of the unaudited
consolidated and consolidating Financial Statements of KCS 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 KCS as having been prepared in accordance with GAAP
consistently applied and as a fair presentation of the condition of KCS and its
Subsidiaries, subject to changes resulting from normal year-end audit
adjustments, and a Compliance Certificate from KCS.
5.3 Annual Financial Statements. Deliver to the Agent, on or before the
90th day after the close of each fiscal year of KCS, Sufficient Copies of the
annual audited consolidated and consolidating Financial Statements of KCS and
its Subsidiaries, and a Compliance Certificate from KCS.
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5.4 Oil and Gas Reserve Reports.
(a) Deliver to the Agent no later than sixty (60) 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 Oil and Gas Properties
of the KCS Medallion Group or any Substitute Mortgagor 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 Oil
and Gas 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, 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 Oil and Gas Properties of the KCS Medallion Group or any
Substitute Mortgagor 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 Oil and Gas Properties of the
KCS Medallion Group or any Substitute Mortgagor, 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 1999,
furnish to the Agent confirmation of title reasonably acceptable to the Agent,
covering Oil and Gas Properties constituting not less than eighty percent (80%)
of the then net present value of the Material 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 or any Substitute
Mortgagor 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
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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, 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 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 any litigation, investigation, or proceeding between
any Borrower 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;
(c) any litigation or proceeding involving any Borrower as a
defendant or in which any Property of any Borrower is subject to a claim
and in which the amount of the claim against any Borrower 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 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 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 from, affecting, or related to any Property of any Borrower,
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
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PBGC, any Borrower, 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, (a) to the extent not
previously furnished by KCS, within five Business Days after any material report
(other than financial statements) or other communication is sent by KCS to its
stockholders or filed by KCS with the Securities and Exchange Commission or any
successor or analogous Governmental Authority, Sufficient Copies of such report
or communication and, promptly upon the request of the Agent, (b) 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 including without limitation, all such information that KCS
may have or receive with respect to the Collateral and (c) notice 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.
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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.
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, 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
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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; 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 Collateral Agent and, within 30 days of the Closing
Date for property damage insurance covering Collateral maintained by the
Borrowers, naming the Collateral 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 Collateral Agent, furnish to the Collateral Agent
evidence, reasonably satisfactory to the Collateral Agent, of the maintenance of
such insurance. The Collateral Agent shall have the right to collect, and the
Borrower hereby assigns to the Collateral 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 Collateral 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 2.22. In the event of any
such damage, loss, or destruction for which insurance proceeds are $500,000 or
less, provided that no
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Default or Event of Default has occurred and is continuing, the Collateral Agent
shall deliver any such proceeds received by it to the Borrower. In the event the
Collateral Agent receives insurance proceeds not attributable to Collateral or
business interruption, the Collateral 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 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
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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.
5.18 Liens on Material Properties. As of the Closing Date, Properties
constituting not less than ninety percent (90%) of the net present value
(determined in accordance with the most recent Reserve Reports provided to the
Agent in accordance with Section 5.4) of all Oil and Gas Properties owned by any
Borrower or any other member of the KCS Medallion Group or any Substitute
Mortgagor shall be subject to a Lien in favor of the Agent and, subject to the
limitations of the instruments governing any of the Public Debt, the Borrowers
shall cooperate in good faith with the Agent to execute from time to time such
documents and instruments as the Agent may reasonably request to assure that
Properties constituting Material Properties are subject to a Lien in favor of
the Agent to secure the Obligations.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any Commitments
exist, the Borrowers will not:
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)
indebtedness owed by KCS to any of its Subsidiaries or any Subsidiary of KCS to
KCS or to any other Subsidiary of KCS, provided, in each case, that any such
indebtedness is payable on demand, is duly entered on the books and records of
each such Person and is not subordinated in right of payment to any other
indebtedness of such Person except pursuant to the Subordination Agreement dated
September 15, 1996 made by KCS, CIBC, KCS Resources, Inc., KCS Pipeline Systems,
Inc., KCS Michigan Resources, Inc., and KCS Energy Marketing, Inc., (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 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, (h) the Public Debt, and (i) Subordinated Indebtedness.
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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 Public Debt, 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(g),
(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 Public Debt, 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 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.
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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, (f) loans or advances by any Borrower
to any other Borrower and by KCS to any Subsidiary of KCS, which loans and
advances are payable on demand, duly entered on the books and records of such
Borrower and KCS, and which are not subordinated in right of payment to any
other Indebtedness of KCS except pursuant to the Subordination Agreement dated
September 25, 1996 made by KCS, CIBC, KCS Resources, Inc., KCS Pipeline Systems,
Inc., KCS Michigan Resources, Inc., and KCS Energy Marketing, Inc., or (g) loans
to Persons who are purchasers of Property of any Borrower granted pursuant to
the sale of such Property provided such loans shall not exceed the aggregate sum
of $500,000.00.
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 or other payments made in
capital stock of the Borrowers or options, warrants or other rights to purchase
any such capital stock; or to the payment of any dividend within sixty (60) days
after the date of declaration thereof if at such date of declaration such
payment would have complied with the provisions of this Section 6.8; provided
further, so long as any Tranche B Commitment is outstanding, no Borrower shall
purchase, redeem, or otherwise acquire for value from any Person other than
another Borrower or other Restricted
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Subsidiary (as defined in the Public Debt instruments) (i) any share of any
class of its capital stock at any time, or (ii) any of the Public Debt.
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) Other than
KCS, issue or agree to issue additional shares of capital stock, in one or any
series of transactions other than to KCS; enter into any transaction of
consolidation, merger, or amalgamation except with another Borrower; liquidate,
wind up, or dissolve (or suffer any liquidation or dissolution); or (b) amend or
otherwise modify their corporate charter or their corporate structure,
activities or nature, as applicable, in any manner that could reasonably be
expected to have a Material Adverse Effect, nor permit any of their respective
Subsidiaries to do any of the foregoing.
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 their
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 their 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 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.
6.15 Subsidiaries. Other than KCS, 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 except in the ordinary course of the oil and gas
industry.
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6.16 Tangible Net Worth of KCS Medallion. Permit Tangible Net Worth of KCS
Medallion Group as of September 30, 1998, to be less than $12,000,000 and
thereafter at the close of any fiscal quarter to be less than $12,000,000 plus
50% of positive Net Income of KCS Medallion Group and 75% of the net proceeds
from any offering to any Person other than an Affiliate by KCS Medallion Group
or any of their respective Subsidiaries of capital stock or rights to acquire
capital stock in each such quarter.
6.17 Interest Coverage Ratio of KCS Medallion. Permit Interest Coverage
Ratio of the KCS Medallion Group to be less than 2.0 to 1.
6.18 Tangible Net Worth of KCS. Permit Tangible Net Worth of KCS and its
Subsidiaries on a consolidated basis as of September 30, 1998 to be less than
$80,000,000 and thereafter at the close of any fiscal quarter to be less than
$80,000,000 plus 50% of positive Net Income of KCS and its Subsidiaries on a
consolidated basis and 75% of the net proceeds from any offering to any Person
other than an Affiliate by KCS or any of its Subsidiaries of capital stock or
rights (other than rights in connection with debt convertible into Equity
Securities) to acquire capital stock in each such quarter.
6.19 Interest Coverage Ratio of KCS. Permit Interest Coverage Ratio of KCS
and its Subsidiaries on a consolidated basis to be less than 2.0 to 1.
ARTICLE VII
EVENTS OF DEFAULT
7.1 Enumeration of Events of Default. Any of the following events shall
constitute an Event of Default:
(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
2.13, or (ii) in the event of a default in the payment when due of any
other sums, including, without limitation, interest, 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 by any Borrower 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) 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 having or obtaining knowledge thereof;
(c) any representation or warranty made by any Borrower in any of
the Loan Documents proves to have been untrue in any material respect as
of the date the facts therein
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set forth were stated or certified or deemed stated or certified provided,
however, Borrowers' representations and warranties as to title and
environmental matters shall not be deemed to be untrue in any respect
during any period in which Borrowers are pursuing rights or remedies
pursuant to Sections 9.1, 9.2, 10.3 or 10.6 of the Stock Purchase
Agreement;
(d) default(s) shall be made by any Borrower (as principal or
guarantor or other surety) in the payment or performance of any bond,
debenture, note, guaranty or other Debt or under any credit agreement,
loan agreement, indenture, promissory note, including without limitation,
the Affiliate Credit Agreement, 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;
(e) any Borrower 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;
(f) an order, judgment, or decree shall be entered against any
Borrower 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;
(g) the levy against any significant portion of the Property of any
Borrower, 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;
(h) a final and non-appealable order, judgment, or decree shall be
entered against any Borrower 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 fifteen (15) days before the date on which execution on any
Property of such Borrower may be issued;
(i) any charges are filed or any other action or proceeding is
instituted by any Governmental Authority against any Borrower under the
Racketeering Influence and Corrupt
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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 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;
(j) any Borrower 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;
(k) 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; any Borrower, 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(k) could reasonably be expected to subject such Borrower 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;
(l) 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
(m) KCS shall without the prior written consent of the Agent cease
to own all of the outstanding capital stock of any class issued by the
Borrowers other than KCS.
7.2 Remedies.
(a) Upon the occurrence of an Event of Default specified in Sections
7.1(e) or 7.1(f), immediately and without notice, (i) all Obligations
shall automatically become immediately due and payable, without
presentment, demand, protest, notice of protest, default, or
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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 in such manner as the
Lenders determine in their sole discretion.
(b) Upon the occurrence of any Event of Default other than those
specified in Sections 7.1(e) or 7.1(f), (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 or the Tranche
A 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 in such manner as the
Lenders determine in their sole discretion.
(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 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 in such manner
as the Lenders determine in their sole discretion.
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
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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 the 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 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
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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.
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
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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, 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
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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 of Tranche A
Commitments aggregate at least sixty-six and two-thirds percent (66-2/3%) shall
appoint 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
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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 per forming
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.
ARTICLE IX
MISCELLANEOUS
9.1 Assignments; Participations.
(a) The Borrowers may not assign any of their rights or obligations
under any Loan Documents 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; provided, however, that if
the assigning Lender holds both Tranche A Loans and Tranche B Loans
(and/or has a Tranche A Commitment and a Tranche B Commitment), then any
assignment of any portion of the rights and obligations in respect of such
Lender's Tranche B Loans and/or Tranche B Commitment or Tranche A Loans
and/or Tranche A Commitment may only be made in conjunction with an
assignment of a proportionate portion of its rights and obligations in
respect of such Lender's Tranche A Loans and/or Tranche A Commitment or
Tranche B Loans and/or Tranche B Commitment, respectively. Except with the
consent of the Agent and the Borrowers (which consents shall not be
unreasonably withheld) in the case of any assignment of any Tranche B
Loans and/or Tranche B Commitment, any such assignment shall be in the
amount of at least $10,000,000 in the case of a Tranche A assignment (or
any whole multiple of $1,000,000 in excess thereof) and $1,000,000 in the
case of a Tranche B assignment (or any whole multiple of $500,000 in
excess thereof), and the assignee shall pay to the Agent a transfer fee in
the amount of $3,500 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
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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 canceled 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 2.21 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 III 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 any such amendment or waiver
pertains to the type of Commitment(s) or Loan(s) of such participant so
that such participant would be affected thereby, of (i) increasing the
Commitments of such Lender, (ii) extending the Tranche A Commitment
Termination Date, (iii) extending the Tranche B Commitment Termination
Date, (iv) reducing the principal on the Loans, (v) reducing the rate of
interest on the Loans or the Notes, (vi) reducing the amount of such
Lender's participation in any fees payable pursuant to Sections 2.15 or
2.16, or (vii) extending the time of scheduled payment of any Obligation.
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.
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(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 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 Commitments exist.
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.
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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, 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 Tranche A Commitment Termination Date, extend the
Tranche B Commitment Termination Date or extend a Final Maturity, reduce any fee
payable for the account of the Lenders hereunder, release any, all or
substantially all of the Collateral, reduce the amount of any Obligation,
increase the Tranche A Commitment Amount or increase the Tranche B Commitment
Amount, except in accordance with Section 2.12 change the Borrowing Base or the
Tranche B Borrowing Base or any other provision applicable to the determination
of the Borrowing Base or the Tranche B Borrowing Base, or amend, modify, or
waive any provision of this Section or Sections 2.12, 5.13, 5.17 or 8.10, change
the percentage specified in the definition of the Tranche A Required Lenders or
the Tranche B Required Lenders, or consent to the assignment or transfer by the
Borrowers of any of their rights or obligations under this
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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
(taking into account the differences between the Tranche A Commitment and the
Tranche B Commitment) and shall be binding upon the 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 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 Borrowers' 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
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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)
the later to occur of the Final Maturity of the Tranche A Notes or the Final
Maturity of the Tranche B Notes 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, this
Agreement shall control. Without limiting the generality of the foregoing, no
provision of any Letter of Credit 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 AND THE NOTES 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. The 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 the
Borrower to receive, for and on behalf of such Borrower, service of process out
of any of the aforementioned 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.
76
82
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.
9.15 Integration. THIS AGREEMENT 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. 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.
[SIGNATURES ON FOLLOWING PAGES]
77
83
IN WITNESS WHEREOF, this Agreement is executed effective as of the date
first above written.
BORROWER:
KCS MEDALLION RESOURCES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President
Address for Notices:
000 Xxxxxxxx Xx.
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Principal Place of Business
and Chief Executive Office:
0000 Xxxxx Xxxxx Xxx.
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: President
78
84
KCS ENERGY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President
Address for Notices:
000 Xxxxxxxx Xx.
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Principal Place of Business
and Chief Executive Office:
000 Xxxxxxxx Xx.
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
KCS ENERGY SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President
Address for Notices:
000 Xxxxxxxx Xx.
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Principal Place of Business
and Chief Executive Office:
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
79
85
MEDALLION GAS SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President
Address for Notices:
000 Xxxxxxxx Xx.
Xxxxxx, Xxx Xxxxxx 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: President
80
86
AGENT:
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY
By: /s/ Xxxxxxxx Xxxx
------------------------------------
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
0000 Xxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telecopy: (000) 000-0000
87
COLLATERAL AGENT AND A LENDER:
CIBC INC.
By: /s/ Xxxxxxxx Xxxx
------------------------------------
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 Xxxx
Telecopy: (000) 000-0000
88
LENDERS:
BANK ONE, TEXAS
NATIONAL ASSOCIATION
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
----------------------------------
Title: Vice President
---------------------------------
Address for Notices:
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
89
COMERICA BANK-TEXAS
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------
Title: Senior Vice President
---------------------------------
Address for Notices:
000 Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
90
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ Xxxx X. Xxx
------------------------------------
Name: Xxxx X. Xxx
----------------------------------
Title: Director
Head of Houston Office
---------------------------------
Address for Notices:
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxx
91
DEN NORSKE BANK ASA
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: XXXXXXX X. XXXXX
----------------------------------
Title: SENIOR VICE PRESIDENT
---------------------------------
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: XXXXX X. XXXXXX
----------------------------------
Title: SENIOR VICE PRESIDENT
---------------------------------
Address for Notices:
Three Xxxxx Center
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx
92
PARIBAS
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------
Title: Director
---------------------------------
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------
Title: Vice President
---------------------------------
Address for Notices:
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
93
EXHIBIT I
[FORM OF TRANCHE A NOTE]
PROMISSORY NOTE
$_____________ December ___, 1998
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("Maker,"
whether one or more) promises to pay to the order of __________________________
("Payee"), at the banking quarters of Canadian Imperial Bank of Commerce, New
York Agency (in its capacity as Agent for Payee and others under the Credit
Agreement referred to hereinafter, the "Agent"), the sum of
___________________________________________________________ AND __/100 DOLLARS
($_____________), or so much thereof as may be advanced and outstanding against
this Note pursuant to the First Amended and Restated Credit Agreement of even
date herewith by and among Maker, Payee, the Agent, CIBC Inc., 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), together with interest at the rates and
calculated as provided in the Credit Agreement. The principal and interest
hereunder shall be due and payable on the dates and in the amounts as are
specified 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.
Without being limited thereto or thereby, this Note is secured by
the Security Instruments.
The obligations of this Note are without recourse to KCS Energy,
Inc. except as provided in Section 2.27 of the Credit Agreement.
This Note constitutes a renewal and extension of a portion of the
Obligations of the Borrowers arising under and pursuant to that certain
promissory note dated January 2, 1997 in the original principal amount of
$150,000,000 executed by the Maker in favor of Agent in connection with the
Credit Agreement dated January 2, 1997 as amended by a First Amendment to Credit
Agreement dated March 24, 1998 and a Second Amendment to Credit Agreement dated
November
94
12, 1998 by and among Maker and other Borrowers, the Agent, CIBC Inc., as
collateral agent, and the lenders signatory thereto (the "Original Credit
Agreement"). Maker acknowledges and agrees that this Note is secured by the
Security Instruments and all the other Loan Documents and all liens and security
interests created, evidenced by or recorded in any applicable jurisdiction in
connection with the Original Credit Agreement as amended and restated by the
Credit Agreement, and that such liens and security interests secure the
Obligations as set forth in the Security Instruments with the same force, effect
and priority with respect to the Credit Agreement as they had in connection with
the Original Credit Agreement.
[SIGNATURES ON NEXT PAGE]
95
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 MEDALLION RESOURCES, INC.
By:
------------------------------------
Xxxxxxx Xxxxxxxx
Vice President
KCS ENERGY, INC.
By:
------------------------------------
Xxxxxxx Xxxxxxxx
Vice President
KCS ENERGY SERVICES, INC.
By:
------------------------------------
Xxxxxxx Xxxxxxxx
Vice President
MEDALLION GAS SERVICES, INC.
By:
------------------------------------
Xxxxxxx Xxxxxxxx
Vice President
96
EXHIBIT II
[FORM OF TRANCHE B NOTE]
$_____________ December ___, 1998
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("Maker,"
whether one or more) promises to pay to the order of __________________________
("Payee"), at the banking quarters of Canadian Imperial Bank of Commerce, New
York Agency (in its capacity as Agent for Payee and others under the Credit
Agreement referred to hereinafter, the "Agent"), the sum of
_________________________________________________________ AND __/100 DOLLARS
($_____________), or so much thereof as may be advanced and outstanding against
this Note pursuant to the First Amended and Restated Credit Agreement of even
date herewith by and among Maker, Payee, the Agent, CIBC Inc., 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), together with interest at the rates and
calculated as provided in the Credit Agreement. The principal and interest
hereunder shall be due and payable on the dates and in the amounts as are
specified 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 "Tranche B 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.
Without being limited thereto or thereby, this Note is secured by
the Security Instruments.
The obligations of this Note are without recourse to KCS Energy,
Inc. except as provided in Section 2.27 of the Credit Agreement.
This Note constitutes a renewal and extension of a portion of the
Obligations of the Borrowers arising under and pursuant to that certain
promissory note dated January 2, 1997 in the original principal amount of
$150,000,000 executed by the Maker in favor of Agent in connection with the
Credit Agreement dated January 2, 1997 as amended by a First Amendment to Credit
Agreement dated March 24, 1998 and a Second Amendment to Credit Agreement dated
November 12, 1998 by and among Maker and other Borrowers, the Agent, CIBC Inc.,
as collateral agent, and the lenders signatory thereto (the "Original Credit
Agreement"). Maker acknowledges and agrees
97
that this Note is secured by the Security Instruments and all the other Loan
Documents and all liens and security interests created, evidenced by or recorded
in any applicable jurisdiction in connection with the Original Credit Agreement
as amended and restated by the Credit Agreement, and that such liens and
security interests secure the Obligations as set forth in the Security
Instruments with the same force, effect and priority with respect to the Credit
Agreement as they had in connection with the Original Credit Agreement.
[SIGNATURES ON NEXT PAGE]
98
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 MEDALLION RESOURCES, INC.
By:
------------------------------------
Xxxxxxx Xxxxxxxx
Vice President
KCS ENERGY, INC.
By:
------------------------------------
Xxxxxxx Xxxxxxxx
Vice President
KCS ENERGY SERVICES, INC.
By:
------------------------------------
Xxxxxxx Xxxxxxxx
Vice President
MEDALLION GAS SERVICES, INC.
By:
------------------------------------
Xxxxxxx Xxxxxxxx
Vice President
99
EXHIBIT III
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 First Amended and Restated Credit
Agreement dated as of December _____, 1998 (as amended, restated or supplemented
from time to time, the "Credit Agreement") by and among KCS MEDALLION RESOURCES,
INC., a Delaware corporation, KCS Energy, Inc., a Delaware corporation, KCS
Energy Services, Inc., a Delaware corporation, and Medallion Gas Services, Inc.,
a Delaware corporation (collectively, the "Borrowers"), each of the lenders that
is or becomes a party thereto as provided in Section 9.1(b) or Section 2.25 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 Total 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:
"Assigned Interest" shall mean all of Assignor's (in its capacity as
a "Lender") rights and obligations under the Credit Agreement and the
other Loan Documents in respect of (a) [all of] the [portion of the]
Tranche A Facility Amount of the Assignor in the principal
III-i
100
amount equal to $______, including, without limitation, (i) any obligation
to participate pro rata in any L/C Exposure, (ii) any obligation to make
Tranche A Loans under its Tranche A Commitment, subject to the limitations
of the Borrowing Base in effect from time to time, as set forth in the
Credit Agreement, and (iii) any right to receive payments for the Tranche
A Loans currently outstanding under its Tranche A Commitment in the
principal amount of $______ (the "Loan Balance of Tranche A Loans"),
and/or (b) [all of] the [portion of the] Tranche B Facility Amount of the
Assignor in the principal amount equal to $______, including, without
limitation, (i) any obligation to make Tranche B Loans under its Tranche B
Commitment, subject to the limitations of the Tranche B Borrowing Base in
effect from time to time, as set forth in the Credit Agreement, and (ii)
any right to receive payments for the Tranche B Loans currently
outstanding under its Tranche B Commitment in the principal amount of
$______ (the "Loan Balance of Tranche B Loans"), and (c) 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.
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101
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 sum of the Tranche A Loan Balance if any is
being assigned hereunder and the Tranche B Loan Balance, if any is being
assigned hereunder. 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 Notes 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 Total 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:
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(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
(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 the
Borrower, or any other Person (other than
III-iv
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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 or any other Person, or any other matter
relating to the Credit Agreement or any other Loan Document or any extension of
credit thereunder.
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 2.24(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
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to either party, at such other address as shall be designated by such party in a
notice to the other party.
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.
III-vi
105
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNOR
________________________________________
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
Address for Notices:
________________________________________
________________________________________
________________________________________
Telecopier No.:_________________________
Telephone No.:__________________________
Attention:______________________________
ASSIGNEE
________________________________________
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
Address for Notices:
________________________________________
________________________________________
________________________________________
Telecopier No.:_________________________
Telephone No.:__________________________
Attention:______________________________
III-vii
106
ACKNOWLEDGED AND CONSENTED TO:
Canadian Imperial Bank of Commerce,
acting through its New York Agency,
as Agent
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
KCS MEDALLION RESOURCES, INC.
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
KCS ENERGY, INC.
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
KCS ENERGY SERVICES, INC.
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
MEDALLION GAS SERVICES, INC.
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
III-viii
107
EXHIBIT IV
[FORM OF TRANCHE A 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: Amended and Restated Credit Agreement dated as of December ____,
1998, by and among KCS Medallion Resources, Inc. (the "Borrower"),
KCS Energy, Inc., KCS Energy Services, Inc., and Medallion Gas
Services, Inc., Canadian Imperial Bank of Commerce, acting through
its New York agency, as Agent, CIBC Inc. as Collateral 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. |_| Tranche A Loans
(a) Amount of new Tranche A Loan: $___________
(b) Requested funding date: ______, 19__
(c) $______ of such Tranche A Loan is to be a Base Rate Loan; and
$________________ of such Tranche A Loan is to be a LIBO Rate Loan.
(d) Requested Interest Period for LIBO Rate Loan: ____ months.
|_| 3. 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 $_______________.
IV-i
108
|_| 4. 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, if this is a request for a borrowing other than a
conversion into Base Rate Loans where no new funds are advanced, 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 MEDALLION RESOURCES, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
KCS ENERGY, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
KCS ENERGY SERVICES, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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109
MEDALLION GAS SERVICES, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
IV-iii
110
EXHIBIT V
[FORM OF TRANCHE B 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: Amended and Restated Credit Agreement dated as of December ____,
1998, by and among KCS Medallion Resources, Inc. (the "Borrower"),
KCS Energy, Inc., KCS Energy Services, Inc., and Medallion Gas
Services, Inc., Canadian Imperial Bank of Commerce, acting through
its New York agency, as Agent, CIBC Inc. as Collateral 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. |_| Tranche B Loans
(a) Amount of new Tranche B Loan: $______
(b) Requested funding date: ____________, 19
(c) $________________ of such Tranche B Loan is to be a Base Rate Loan;
and
$________________ of such Tranche B Loan is to be a LIBO Rate Loan.
(d) Requested Interest Period for LIBO Rate Loan: ____ months.
|_| 3. 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
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111
(b) Amount to be converted to a Base Rate Loan is $__________________.
|_| 4. 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, if this is a request for a borrowing other than a
conversion into Base Rate Loans where no new funds are advanced, 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 MEDALLION RESOURCES, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
KCS ENERGY, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
KCS ENERGY SERVICES, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
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112
MEDALLION GAS SERVICES, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
V-iii
113
EXHIBIT VI
TOTAL FACILITY AMOUNTS
------------------------------------------------------------------------------------------------------------------------------------
Total Facility
Tranche A Tranche A Tranche B Tranche B Total Amount
Facility Percentage Facility Percentage Facility Percentage
Name of Lender Amount Share Amount Share Amount Share
------------------------------------------------------------------------------------------------------------------------------------
Canadian Imperial
Bank of Commerce,
New York Agency $31,111,111 20.74074076 % $10,000,000 100% $41,111,111 29.54732512 %
------------------------------------------------------------------------------------------------------------------------------------
Bank One Texas,
National
Association $27,777,778 18.51851851 % N/A N/A $27,777,778 16.46090534 %
------------------------------------------------------------------------------------------------------------------------------------
Comerica Bank-
Texas $22,222,222 14.81481482 % N/A N/A $22,222,222 13.16872428 %
------------------------------------------------------------------------------------------------------------------------------------
Den Norske Bank
ASA $27,777,778 18.51851851 % N/A N/A $27,777,778 16.46090534 %
------------------------------------------------------------------------------------------------------------------------------------
Societe Generale,
Southwest Agency $20,555,556 13.70370370 % N/A N/A $20,055,556 12.18106996 %
------------------------------------------------------------------------------------------------------------------------------------
Paribas $20,555,556 13.70370370 % N/A N/A $20,055,556 12.18106996 %
------------------------------------------------------------------------------------------------------------------------------------
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EXHIBIT VII
[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: Amended and Restated Credit Agreement dated as of December ____,
1998, by and among KCS Medallion Resources, Inc., KCS Energy, Inc.
("KCS"), KCS Energy Services, Inc., and Medallion Gas Services,
Inc., (collectively, "Borrowers"), Canadian Imperial Bank of
Commerce, acting through its New York agency, as Agent, CIBC Inc.,
as Collateral 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, each
of the undersigned, a Responsible Officer of KCS, hereby certifies to you on
behalf of the Borrowers 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 the
undersigned, a Responsible Officer of KCS, hereby certifies to you on behalf of
the Borrowers that:
As of the close of business on _________, no default exists under
Sections 6.16, 6.17, 6.18 or 6.19 of the Credit Agreement, as evidenced by
the following:
(i) Section 6.16: Tangible Net Worth of the KCS Medallion Group
VII-i
115
Required Actual
-------- ------
Not less than $12,000,000 plus
50% of positive Net Income and
75% of net proceeds of equity offerings $_________
(ii) Section 6.17: Interest Coverage Ratio of the KCS Medallion
Group
Required Actual
-------- ------
Not less than 2.0 to 1.0 ____ to 1.0
(iii) Section 6.18: Tangible Net Worth of KCS
Required Actual
-------- ------
Not less than $80,000,000 plus
50% of positive Net Income and
75% of net proceeds of equity offerings
$______
(iv) Section 6.19: Interest Coverage Ratio of KCS
Required Actual
-------- ------
Not less than 2.0 to 1.0 ____ 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 ENERGY, INC.
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
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116
EXHIBIT VIII
OPINION OF BORROWERS' COUNSEL
December ______, 1998
To each Lender party
to the Credit Agreement
referenced below
Canadian Imperial Bank
of Commerce, as Agent,
and CIBC Inc., as Collateral
Agent
Re: First Amended and Restated Credit Agreement dated as of December
_____, 1998, by and among KCS Medallion Resources, Inc., KCS Energy, Inc., KCS
Energy Services, Inc., and Medallion Gas Services, 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 counsel to the Borrowers and Medallion California
Properties Co. ("Cal") in connection with the transactions contemplated in the
Credit Agreement. This Opinion is delivered pursuant to Section 3.1(l) of the
Credit Agreement, and the Agent, the Collateral 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, we have examined an executed
counterpart of each of the following (the "Loan Documents"):
(1) the Credit Agreement;
(2) the Notes; and
(3) the Stock Pledge.
We have also examined the originals, or copies certified to our
satisfaction, of such other records of the Borrowers, certificates of public
officials and officers of the Borrowers, agreements, instruments, and documents
as we have deemed necessary as a basis for the opinions hereinafter expressed.
VIII-i
117
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;
b) the authenticity and completeness 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, the Collateral 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
e) the representations as to factual matters made by the Borrowers
in the Loan Documents are true and complete.
Based upon the foregoing and subject to the qualifications set forth
herein, we are of the opinion that:
A. Each of the Borrowers and Cal 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 in the
jurisdictions listed under its name on Schedule A, attached to and made a part
of this Opinion. The execution and delivery by the Borrowers and Cal of the
respective Security Instruments to which each Borrower or Cal is a party are
within the power of each Borrower and Cal and have been duly authorized by all
necessary corporate action.
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, 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) to our knowledge, 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.
C. The execution and delivery of the Stock Pledge and the other Loan
Documents executed by KCS and the performance of all obligations of KCS
thereunder are within the power of KCS, have been duly authorized by all
necessary corporation action, and do not, (a) require the consent of any
Governmental authority, (b) contravene or conflict with any Requirement of Law
or other articles or certificate of incorporation, bylaws, or other
organizational or governing documents of KCS, (c) to our knowledge, contravene
or conflict with any indenture, instrument, or other agreement to
VIII-ii
118
which KCS is a party or by which any Property of KCS may be presently bound or
encumbered, or (d) to our knowledge, result in or require the creation or
imposition of any Lien upon any Property of KCS other than as contemplated by
the Loan Documents.
D. The Credit Agreement, the Notes and the other Loan Documents
which are governed by New York law 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. To our knowledge, except as disclosed in Exhibit X to the Credit
Agreement, no litigation or other action of any nature affecting the Borrowers
is pending before any Governmental Authority or threatened against the
Borrowers, which, if determined adversely to such Borrower, could reasonably be
expected to have a Material Adverse Effect or affect any Borrower's ability to
execute, deliver or perform in any material respect its obligations under the
Loan Documents.
F. 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 of those Loan Documents which are
governed by New York Law, or the payment or performance by the Borrowers of the
Obligations arising pursuant to those Loan Documents entered into at Closing
which are governed by New York law.
G. 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.
H. No Borrower 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.
I. 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 States of New Jersey and
New York 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, the State of New York, applicable United States
federal law, and the corporation laws of the State of Delaware.
The validity, binding effect, and enforceability of the Loan
Documents or certain provisions thereof may be limited or affected by
bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization, or
other similar laws affecting rights of creditors generally, including, without
limitation, judicial decisions, statutes or rules of law which limit the effect
of waivers of rights
VIII-iii
119
by a debtor or guarantor and limit the permissible scope of indemnification
agreements, provided, however, that the limitations and other effects of such
statutes or rules of law, as currently in effect, 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, stock pledge agreements and
guaranties generally. No opinion is expressed with respect to the enforceability
of any provisions that may purport to bind the Borrowers to the waiver of any
right or defense which by virtue of applicable law or equitable principle cannot
be waived.
The enforceability of the respective obligations of the Borrowers
under the Loan Documents is subject to general principles of equity (whether
such enforceability is considered in a suit in equity or at law).
Whenever our opinion is modified by the phrase "to our knowledge",
to the extent that it relates to KCS and KCS Energy Services, our opinion is
based solely upon information which we have obtained in the course of our
representation of the Borrowers in matters to which we have devoted substantive
attention, without any further investigation or inquiry.
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.
This Opinion speaks as of the date hereof, and we disclaim any
obligation to update this opinion to you.
Very truly yours,
ORLOFF, LOWENBACH, XXXXXXXXX & XXXXXX,P.A.
By:
--------------------------------------
Xxxxx X.. Lowenbach, Vice President
VIII-iv
120
SCHEDULE A
JURISDICTIONS WHERE QUALIFIED TO DO BUSINESS
KCS MEDALLION RESOURCES, INC.
Arkansas, Colorado, Louisiana,
Mississippi, Montana, Nebraska,
New Mexico, North Dakota, Ohio,
Oklahoma, Pennsylvania, Texas,
Utah, Wyoming
KCS ENERGY, INC.
New Jersey
KCS ENERGY SERVICES, INC.
Louisiana, Texas
MEDALLION GAS SERVICES, INC.
Arkansas, Texas
VIII-v
121
EXHIBIT IX
[FORM OF OPINION OF LOCAL COUNSEL]
___________________,1998
To each of the Lenders party
to the Credit Agreement referenced
below, Canadian Imperial Bank
of Commerce, as Agent, and
CIBS Inc., as Collateral Agent
Re: Amended and Restated Credit Agreement, dated effective as of
December _____, 1998, by and among KCS Medallion Resources, Inc.,
KCS Energy, Inc., KCS Energy Services, Inc., Medallion Gas Services,
Inc. and GED Energy Services, Inc., 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 the Borrowers (the "Mortgagor") in connection with the transaction described
below executed pursuant to the Credit Agreement. In such capacity, we furnish
this opinion with the intention and understanding that it is relied upon by each
of the lenders 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 the closing of the
transactions provided for in the Credit Agreement.
MATERIAL EXAMINED
As such counsel and in connection with this opinion, we have examined an
executed counterpart of the Ratification of and Amendment to Open-End Line of
Credit Mortgage, Deed of Trust, Indenture, Security Agreement, Financing
Statement, and Assignment of Production of the Collateral Agent (the
"Ratification"). Capitalized words and phrases not otherwise defined herein have
the meaning specified in the Ratification.
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122
ASSUMPTIONS
In connection with this opinion we have, with your permission, assumed the
following:
(a) Each of the Ratification, the Credit Agreement, the Notes and other
Loan Documents has been duly authorized, executed and delivered by the parties
thereto and each such instrument constitutes the legal, valid and binding
obligations of such parties, [other than Mortgagor], enforceable against such
parties, [other than Mortgagor], in accordance with its respective terms;
(b) The Ratification as executed by the parties thereto conforms to the
execution counterparts of such documents received in connection with the
issuance of this opinion.
(c) The Mortgagor and each of the Lenders are, to the extent necessary,
duly formed entities and are duly qualified to transact business in the State of
_________; and the Mortgagor, Mortgagee and each of the Lenders are, to the
extent necessary, duly qualified to own interests in the types of property
comprising the Mortgaged Property, including interests in leases, easements,
rights-of-way and other interests issued by federal, state, tribal or local
governmental bodies, authorities and agencies;
(d) The parties to the Ratification are not subject to any special laws,
regulations or other restrictions that are not generally applicable to parties
participating in transactions of the type provided for by the Ratification;
(e) Neither the execution, the delivery nor the performance of the
Ratification by any party thereto will result in any violation of or be in
conflict with or constitute a default under the charter, bylaws or other
governing documents of such party, or any other document or instrument to which
such party is a party and that each party's execution and delivery of the
Ratification and the instruments referenced therein have been duly authorized;
(f) No party to the Ratification is in violation of any order, judgment or
decree of any court, arbitration or governmental authority, the consequences of
which violation would affect the validity or enforceability of any of the
Ratification;
(g) A loan is outstanding and funds have been advanced under the Credit
Agreement and the promissory notes described in the Ratification; that value has
been given by the Lenders to the Borrowers within the meaning of the UCC in the
State; and there is otherwise adequate consideration for the transactions
referenced in the Ratification;
(h) All signatures are genuine, all documents and instruments submitted to
us are authentic and all documents and instruments submitted to us as
photocopies, telecopies or facsimiles conform to the original documents and
instruments;
(i) The Mortgages have been recorded in each county of the State of
______________ necessary for them to be recorded to create or perfect the liens
and interests described therein.
IX-ii
123
OPINION
Based solely upon the foregoing and subject to the comments,
qualifications and other matters set forth herein, it is our opinion that:
1. The Ratification constitutes legal, valid and binding obligations of
the Mortgagor, enforceable against the Mortgagor in accordance with its terms.
2. The Ratification is in form sufficient to amend the Mortgages (as such
term is defined in the Ratification by reference to Schedule I of the
Ratification ("Schedule I")), and to renew, extend and carry forward the liens
and security interests arising under such Mortgages (the "Liens") in the
Mortgaged Property described therein in favor of the Collateral Agent.
3. The Ratification is in proper form for recording in the real property
records maintained by the Clerk or Recorder of the applicable counties
identified on Schedule I.
4. Upon recordation and filing of the Ratification in the applicable
counties where Mortgages have been recorded and filed as set forth in Schedule I
to the Ratification, the Ratification will (i) amend the Mortgages; and (ii)
renew, extend and carry forward the Liens in favor of the Collateral Agent
created under the Mortgages to secure the Notes and all other indebtedness
described in the Ratification.
5. The recording of the Ratification in each office of each county in the
State of ___________ in which the Mortgages were recorded are the only
recordings in the State of ___________ necessary in connection with the
renewing, extending and carrying forward of the Liens and other rights created
under the Mortgages. No other documents or instruments need be recorded or filed
in any public office in the State of ___________ for the validity and
enforceability of the Mortgages (as amended by the Ratification) or to permit
the Collateral Agent to enforce in the State of _____________ its rights under
the Mortgages as amended by the Ratification.
6. No consent of or filing with any governmental authority or agency of
the State of ___________ or any county therein is required in connection with
the execution and delivery of the Ratification by the Mortgagor.
7. The execution, delivery and filing of the Loan Documents will not
conflict with any regulation, existing law, or any rule of any state regulatory
body, administration, agency or other governmental body in the State of
____________________.
8. No state or local transfer tax, stamp tax or other fee, tax or
governmental charge (other than filing and recording fees imposed by law) is
required to be paid in the State of ___________ in connection with the
execution, delivery, filing or recording of the Loan Documents.
IX-iii
124
EXHIBIT X
DISCLOSURES
X-i
125
EXHIBIT XI
FORM OF RATIFICATION OF AND AMENDMENT TO STOCK PLEDGE
This instrument, dated as of the _______ day of December, 1998 by
KCS ENERGY, INC., a Delaware corporation, whose Taxpayer Identification Number
is 00-0000000, with principal offices in Edison, New Jersey, and whose mailing
address is 000 Xxxxxxxx Xx., Xxxxxx, Xxx Xxxxxx 00000 (sometimes referred to
individually as "Debtor"), in favor of CIBC INC., a Delaware corporation, whose
Taxpayer Identification Number is 00-0000000, and with principal offices in New
York, New York County, New York, and whose mailing address is 000 Xxxxxxxxx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, as collateral agent for the benefit
of the Lenders (defined below) pursuant to the Credit Agreement described below
(in such capacity, together with its successors in such capacity pursuant to the
terms of the Credit Agreement, "Secured Party").
W I T N E S S E T H:
WHEREAS, pursuant to the terms and conditions of the Credit
Agreement dated January 2, 1997, as amended by a First Amendment to Credit
Agreement dated March 24, 1998, a Second Amendment to Credit Agreement dated
November 12, 1998 and further amended by the First Amended and Restated Credit
Agreement of even date herewith (collectively, the "Credit Agreement"), by and
among Debtor, KCS MEDALLION RESOURCES, INC., a Delaware corporation, ("KCS
Medallion"), KCS ENERGY SERVICES, INC., a Delaware corporation ("KCS Energy
Services"), MEDALLION GAS SERVICES, INC., an Oklahoma corporation ("Medallion
Gas Services" and together with KCS Medallion, KCS Energy Services, and Debtor,
each individually a "Borrower" and collectively, the "Borrowers"), CANADIAN
IMPERIAL BANK OF COMMERCE, a Canadian chartered bank, acting through its New
York Agency (in its individual capacity, "CIBC"), as agent (the "Agent"), and
CIBC INC., as Collateral Agent (the "Collateral Agent"), and the other parties
thereto from time to time (the "Lenders"), the Lenders have agreed to renew,
extend and rearrange credit to or for the benefit of Borrowers; and
WHEREAS, pursuant to and in connection with the Credit Agreement,
Debtor executed that certain Stock Pledge Agreement dated January 2, 1997 (as
amended herein, the "Stock Pledge");
WHEREAS, the Stock Pledge was executed and delivered to secure the
payment or performance of certain indebtedness and other obligations of Debtor,
as more fully described in said Stock Pledge (the "Indebtedness"), which
Indebtedness is, in part, evidenced by certain promissory notes described in the
Stock Pledge executed by Debtor and delivered to Secured Party;
WHEREAS, pursuant to such Stock Pledge, the Debtor granted Secured
Party a security interest in certain property described therein (the
"Collateral");
WHEREAS, pursuant to the Credit Agreement, the parties hereto desire
to ratify and amend the Stock Pledge as described below;
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NOW, THEREFORE, in consideration of the foregoing, the benefits to
be derived by Debtor and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Debtor, the parties hereto agree
as follows, with capitalized terms used but not defined herein having meanings
assigned to such terms in the Credit Agreement:
1. AMENDMENTS.
(a) Effective December ___, 1998, the existing Section 2.2 of the
Stock Pledge is deleted and the amended Paragraph 2.2 set forth below is
substituted in its place:
"2.2 Obligations Secured. The assignment, transfer and
delivery of the Collateral and the security interest in,
and general lien upon, the Collateral is granted to
secure the following (herein called the "Obligations"
(a) the indebtedness evidenced by the Notes, including,
without limitation, the following described promissory notes dated
December __, 1998 and executed by the Borrowers, each bearing interest and
being payable as provided in the Credit Agreement:
(i) Promissory Note to the order of the CANADIAN IMPERIAL BANK OF
COMMERCE in the original principal amount of _______________________
AND NO/100 DOLLARS ($______________) with a final maturity of
September 30, 2000;
(ii) Promissory Note to the order of BANC ONE TEXAS in the original
principal amount of _____________________ AND NO/100 DOLLARS
($_____________) with a final maturity of September 30, 2000.
(iii) Promissory Note to the order of COMERICA BANK-TEXAS in the
original principal amount of ________________ AND NO/100 DOLLARS
($___________) with a final maturity of September 30, 2000.
(iv) Promissory Note to the order of BANQUE PARIBAS in the original
principal amount of _____________________ AND NO/100 DOLLARS
($_____________) with a final maturity of September 30, 2000.
(v) Promissory Note to the order of DEN NORSKE BANK ASA in the
original principal amount of ______________ AND NO/100 DOLLARS
($_____________) with a final maturity of September 30, 2000.
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127
(vi) Promissory Note to the order of SOCIETE GENERAL, SOUTHWEST
AGENCY in the original principal amount of __________________ AND
NO/100 DOLLARS ($_____________) with a final maturity of September
30, 2000.
(vii) Promissory Note to the order of CANADIAN IMPERIAL BANK OF
COMMERCE in the original principal amount of __________________ AND
NO/100 DOLLARS ($_____________) with a final maturity of September
30, 2000.
2. REAFFIRMATION OF STOCK PLEDGE. The Stock Pledge, as amended
hereby, is declared and acknowledged by Debtor to be in full force and effect,
in accordance with its terms. Giving effect to the foregoing amendment of the
Stock Pledge, Debtor has assigned, transferred, delivered and granted, and by
these presents does assign, transfer and deliver, unto the Secured Party, and
grant to Secured Party a security interest in, and a general lien upon, the
Collateral upon the terms and provisions of the Stock Pledge, to secure the
payment of the Obligations and the performance of the agreements and covenants
of Debtor herein and in the Stock Pledge. Without limiting the foregoing, Debtor
hereby ratifies and reaffirms the warranties, representations and covenants of
Debtor contained in the Stock Pledge.
3. MISCELLANEOUS. This instrument shall be considered as an
amendment to and ratification and reaffirmation of the Stock Pledge, and the
Stock Pledge, as herein expressly amended, is hereby ratified, reaffirmed,
approved and confirmed in every respect. All liens created, extended or renewed
by the Stock Pledge are hereby extended, renewed and carried forward by this
instrument. All references to the Stock Pledge in any document hereafter
executed shall be deemed to refer to the Stock Pledge as amended by this
instrument.
For the convenience of the parties, this instrument may be executed
in multiple counterparts. Each of the counterparts hereof so executed shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
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In witness hereof, Debtor and Secured Party have caused this instrument to
be duly executed as of the date first above written.
DEBTOR:
KCS ENERGY, INC.
By:
------------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President
SECURED PARTY:
CIBC INC., a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
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