EXHIBIT 10.8
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "AMENDMENT"), dated as of March 15, 2004, to be effective as of
the Amendment Effective Date as set forth in Section 4 below, is by and among
KCS Energy, Inc., a Delaware corporation (the "BORROWER"), and each of the
Lenders party to that certain Second Amended and Restated Credit Agreement dated
as of November 18, 2003, among the Borrower, the Lenders party thereto, Bank of
Montreal, a Canadian chartered bank acting through certain of its U.S. branches
or agencies ("BANK OF MONTREAL"), as Agent and Collateral Agent, BNP Paribas, as
Documentation Agent and Bank One, NA, as Syndication Agent (as amended,
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT");
WHEREAS, the Borrower has requested that the Lenders amend the
Credit Agreement to permit the Borrower to redeem its 8 7/8% Senior Subordinated
Notes due 2006 (the "SUB NOTES") with the proceeds of an issuance of unsecured
senior notes (the "NEW NOTES") that will not be contractually subordinated to
the Obligations and will not otherwise comply with all of the requirements of
Section 8.1(d) of the Credit Agreement; and
WHEREAS, the Required Lenders have agreed to such amendment subject
to the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual
covenants, representations and warranties contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows. Capitalized terms used but not otherwise defined herein shall have the
meanings assigned such terms in the Credit Agreement.
Section 1. Amendments. The Credit Agreement is hereby amended as follows:
(a) Clause (i) of the definition of "Adjusted Base Rate" is amended
and restated to read in its entirety as follows:
"(i) the Federal Funds Rate for such day plus 0.5%,"
(b) The definition of "Permitted Public Debt Refinancing" is amended
by deleting the words "all of the" from the second line thereof.
(c) Section 2.7(d) is amended by deleting the words "one time" in
the penultimate line of the second sentence thereof and replacing the same with
"two times".
(d) Section 5.2(f)(ii) is amended and restated to read in its
entirety as follows:
"(ii) either (whichever of the following subclauses (A) or (B) is
applicable) (A) until such time as it is satisfied and discharged, the
Senior Subordinated
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Indenture, as amended or modified from time to time, and such Loan shall
constitute "Senior Indebtedness" and "Permitted Indebtedness" thereunder
and all Liens created by any of the Security Instruments shall constitute
"Permitted Liens" thereunder (as such terms are defined therein) or (B)
from and after the consummation of any Permitted Public Debt Refinancing,
the indenture governing such Permitted Public Debt Refinancing, and such
Loan and all Liens created by any of the Security Instruments shall be
permitted thereunder;"
(e) The proviso to Section 8.1(d) is amended and restated to read in
its entirety as follows:
"provided, however, that with respect to any portion thereof that would
constitute Indebtedness, such Permitted Public Debt Refinancing (i) does
not exceed $175.0 million in aggregate principal amount outstanding; (ii)
bears interest at a per annum rate not to exceed 8 7/8 %; (iii) has a
stated maturity date no earlier than March 1, 2010; (iv) shall be
unsecured, except to the extent permitted by the "equal and ratable"
provision described under the caption "Certain Covenants--Liens" in the
March 8, 2004 draft "Description of the Notes" provided to the Agent (the
"DESCRIPTION OF THE NOTES"), or any comparable provision not materially
less favorable to the Lenders (it being understood in all events that no
Lien which would cause the Borrower to be required to xxxxx x Xxxx under
such provision may be granted if prohibited by any term of this
Agreement); (v) shall permit (A) the incurrence and maintenance of the
Obligations now existing or, provided such Obligations constitute
"Permitted Indebtedness" under any applicable provisions of the
Description of Notes or otherwise are permitted to be incurred under the
first paragraph appearing under the caption "Certain Covenants--
Incurrence of Indebtedness" in the Description of Notes (or, in each case
in this clause (A), under comparable provisions not materially less
favorable to the Lenders), hereafter incurred by the Borrower or any of
the Subsidiary Guarantors and (B) the Liens securing such Obligations; and
(vi) is issued under an indenture with other terms (A) not materially less
favorable to the Lenders than the terms set forth in the Description of
the Notes or (B) otherwise reasonably acceptable to the Required Lenders."
(f) Section 8.2(c) is amended and restated to read in its entirety
as follows:
"(c) obligations under guarantees and contribution obligations by
and among any Subsidiaries that are guarantors under the Senior
Subordinated Indenture or any Permitted Public Debt Refinancing that
constitutes Indebtedness;"
(g) Section 8.4 is amended by deleting the word "or" after subclause
(b) of the proviso thereto and adding in its place a comma, and by adding the
following new subclause (d) at the end of such proviso:
",or (d) the holders of any Indebtedness issued in a Permitted Public Debt
Refinancing, as evidenced by the "equal and ratable negative pledge"
provision
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described under the caption "Certain Covenants--Liens" in the
Description of the Notes, or any comparable provision not materially less
favorable to the Lenders."
(h) Section 8.7(f) is amended and restated to read in its entirety
as follows:
"(f) (i) any such loans, advances, Investments, purchases or acquisitions
by the Borrower or any Subsidiary Guarantor into or from the Borrower or
any Subsidiary Guarantor, as the case may be, or (ii) Investments by the
Borrower or any Material Subsidiary in any Subsidiary of the Borrower
which is not a Subsidiary Guarantor, not to exceed $1.0 million in the
aggregate for all such Investments in all such Subsidiaries which are not
Subsidiary Guarantors."
(i) Section 8.8(e) is amended and restated to read in its entirety
as follows:
"(e) any such dividend, distribution, purchase, redemption or other
acquisition by any Subsidiary Guarantor to or from the Borrower or another
Subsidiary Guarantor;"
(j) Section 8.12 is amended and restated to read in its entirety as
follows:
"8.12. SUBORDINATED INDEBTEDNESS; PRODUCTION PAYMENTS. With respect
to the Senior Subordinated Indenture or the Borrower's 8 7/8% Senior
Subordinated Notes due 2006, (a) materially amend or modify any of the
terms or provisions thereof, or (b) otherwise amend or modify any such
terms if such amendment or modifications would have the effect of (i)
accelerating the maturity date of the principal amount thereof, or any
scheduled interest payment thereon, (ii) increasing the principal amount
thereof, (iii) causing, or purporting to cause, the Obligations not to
constitute "Senior Indebtedness" (as defined in the Senior Subordinated
Indenture) or causing the Liens securing the Obligations to no longer be
"Permitted Liens" (as defined in the Senior Subordinated Indenture), (iv)
providing any Lien for the benefit of the holders thereof, except to the
extent permitted by Section 10.15 or 12.4 of the Senior Subordinated
Indenture as in effect at the date hereof (it being understood in all
events that no Lien which would cause the Borrower to be required to xxxxx
x Xxxx under such Section 10.15 may be granted if prohibited by any term
of this Agreement), or (v) making the subordination provisions applicable
thereto any less favorable to the Lender Parties than the terms of Article
XIV of the Senior Subordinated Indenture as in effect at the date hereof
as such terms benefit and pertain to holders of "Senior Indebtedness" (as
such term is defined therein). With respect to any Permitted Public Debt
Refinancing, the Borrower shall not amend or modify any of the terms or
provisions thereof in a manner that would no longer comply with the
definition herein of "Permitted Public Debt Refinancing". The Borrower
shall not make, and shall not permit any Subsidiary to make, any payments,
whether in cash, evidences of Indebtedness or other Property, on or with
respect to the Borrower's 8 7/8% Senior Subordinated Notes due 2006,
unless, but only to the extent, such payment would be permitted to be made
pursuant to and not result in any violation of the subordination
provisions applicable thereto. The Borrower
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shall not, and shall not permit any Subsidiary to, (a) prepay, redeem,
purchase or defease (1) any Subordinated Indebtedness (except with
proceeds of a Permitted Public Debt Refinancing in the case of the
Borrower's 8 7/8% Senior Subordinated Notes due 2006), or (2) any
Indebtedness issued in a Permitted Public Debt Refinancing other than (x)
with the Net Cash Proceeds from the issuance of equity securities, which,
if Preferred Stock, is issued in compliance with Section 2.7(f) or (y)
pursuant to a purchase offer required under the terms of the indenture
governing such Indebtedness, or (b) renew, rearrange or amend or modify
the Production Payment 2001 Facility other than (i) as required or
contemplated under the express terms of the contracts and agreements
constituting such facility, and (ii) as required to effect a purchase (in
whole or in part) by either the Borrower or one or more of its Subsidiary
Guarantors of one or both of the Star Production Payments and the
termination or amendment of contracts and agreements relating to the Star
Properties and required by any such purchase."
Section 2. Covenants of the Borrower.
(a) The Borrower may, at its option, consummate an offering and
issuance of New Notes (the "ISSUANCE") under a Permitted Public Debt Refinancing
(as defined giving effect to this Amendment) and redeem all of the Sub Notes
with a portion of the Net Cash Proceeds. Upon the consummation of an Issuance
(if any), the Borrower shall (i) within one Business Day of the closing date of
such Issuance, cause to be delivered to the trustee (the "TRUSTEE") under the
Senior Subordinated Indenture an amount sufficient to pay and discharge the
entire indebtedness outstanding on the Sub Notes, including interest to accrue
thereon to the Redemption Date (as defined in the Senior Subordinated
Indenture), which deposit shall be accompanied by instructions from the Borrower
irrevocably directing the Trustee to apply such funds to the payment of the Sub
Notes at redemption, all in accordance with Section 4.1(a) of the Senior
Subordinated Indenture; (ii) as soon as practicable, (A) deliver to the Agent a
certificate of the Chief Executive Officer, Chief Operating Officer or Chief
Financial Officer of the Borrower to the effect that all steps have been taken
that are required under Article IV of the Senior Subordinated Indenture to
satisfy and discharge such indenture, with the effect that such indenture shall
have ceased to be of any further effect, except as expressly provided for
therein; and (B) cause to be delivered the written permission of Xxxxxxx Xxxxx
LLP, counsel to the Borrower, for the Lenders and Bank of Montreal, as Agent and
Collateral Agent, to rely upon the Opinion of Counsel (as defined in the Senior
Subordinated Indenture) described in, and delivered to the Trustee under the
Senior Subordinated Indenture pursuant to, Section 4.1(c) of the Senior
Subordinated Indenture as though such opinion were separately addressed to the
Lenders and Bank of Montreal, as Agent and Collateral Agent.
(b) Default in the performance of any obligations under Section 2(a)
above shall constitute an Event of Default.
Section 3. Amendment and Ratification. Upon the effectiveness hereof as
provided in Section 4, this Amendment shall be deemed to be an amendment to the
Credit Agreement, and the Credit Agreement, as modified hereby, is hereby
ratified, approved and confirmed to be in full force and effect in each and
every respect. Except as expressly provided by the amendments set forth in
Section 1, the execution, delivery and effectiveness of this Amendment shall not
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operate as a waiver of any right, power or remedy of any Lender, the Agent, the
Collateral Agent, the Documentation Agent or the Syndication Agent, nor
constitute a waiver of any provision of any of the Loan Documents. All
references to the Credit Agreement in any other document, instrument, agreement
or writing shall hereafter be deemed to refer to the Credit Agreement as
modified hereby.
Section 4. Conditions to Effectiveness. This Amendment shall become
effective as of the date (the "AMENDMENT EFFECTIVE DATE") when the Agent has
confirmed (and has so notified the Borrower) that (i) counterparts hereof have
been duly executed by the Borrower and the Required Lenders and delivered to the
Agent; and (ii) it has received for and on behalf of the Lenders the aggregate
amendment consent fee referred to in Section 5 below. The Agent agrees to give
the Borrower prompt written confirmation of the occurrence of the Amendment
Effective Date.
Section 5. Amendment Consent Fee. Upon receipt of notification from the
Agent of the execution of this Amendment by the Required Lenders, the Borrower
shall pay to the Agent for the account of each Lender party hereto an amendment
consent fee equal to 0.125% of such Lender's Revolving Loan Commitment. Such fee
is non-refundable and fully earned regardless of whether or not any Permitted
Public Debt Refinancing occurs.
Section 6. Representation and Warranties. The Borrower hereby represents
and warrants that, as of the Amendment Effective Date, after giving effect
hereto:
(i) the representations and warranties of each Loan Party contained
in the Loan Documents are correct in all material respects on and as of
such date (other than those representations and warranties that expressly
relate solely to a specific earlier date, which shall remain correct as of
such earlier date), as though made on and as of such date; and
(ii) no event has occurred and is continuing which constitutes a
Default, an Event of Default or both.
Section 7. Governing Law. This Amendment and the rights and obligations of
the parties hereunder shall be construed and enforced in accordance with and be
governed by the laws of the State of Illinois.
Section 8. Counterparts. This Amendment may be executed in any number of
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 taken
together shall constitute one and the same agreement.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective duly authorized officers as
of the date first set forth above, to be effective as of the Amendment Effective
Date.
BORROWER:
KCS ENERGY, INC.
By: /s/ X.X. XXXXX
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Name: X.X. Xxxxx
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Title: VP & CFO
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BANKS:
BANK OF MONTREAL, acting through
its U.S. branches and agencies, including
its Chicago, Illinois branch, as a Lender,
the Agent and Collateral Agent
By: /s/ XXXXX X. XXXXXXXX
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Name: Xxxxx X. Xxxxxxxx
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Title: Managing Director
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BNP PARIBAS, as a Lender and
Documentation Agent
By: /s/ XXXXX XXXXXX /s/ XXXX XXXXXXX
-----------------------------------------
Name: Xxxxx Xxxxxx Xxxx Xxxxxxx
---------------------------------
Title: Vice President Vice President
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BANK ONE, NA, as a Lender and
Syndication Agent
By: /s/ XXXXXXX XXXXXXXXX XXXXX
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Name: Xxxxxxx Xxxxxxxxx Xxxxx
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Title: Managing Director
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STERLING BANK
By: /s/ C. XXXXX XXXXXX
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Name: C. Xxxxx Xxxxxx
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Title: Vice President
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