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EXHIBIT 10(xii)
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CREDIT AGREEMENT
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,
NEW YORK AGENCY, AS AGENT,
CIBC INC., AS COLLATERAL AGENT,
AND
THE LENDERS SIGNATORY HERETO
JANUARY 2, 1997
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REVOLVING LINE OF CREDIT OF UP TO $150,000,000
WITH LETTER OF CREDIT SUBFACILITY
$30,000,000 TERM LOAN
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above............................................. 1
1.2 Additional Defined Terms........................................ 1
1.3 Undefined Financial Accounting Terms............................ 21
1.4 References...................................................... 21
1.5 Articles and Sections........................................... 22
1.6 Number and Gender............................................... 22
1.7 Incorporation of Exhibits....................................... 22
1.8. Knowledge....................................................... 22
ARTICLE II TERMS OF FACILITIES
2.1 Revolving Loans................................................. 22
2.2 Letter of Credit Facility....................................... 23
2.3 Term Loans...................................................... 25
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................................. 28
2.12 Borrowing Base Determinations................................... 29
2.13 Mandatory Prepayments........................................... 30
2.14 Voluntary Prepayments and Conversions of Loans.................. 31
2.15 Commitment Fee.................................................. 32
2.16 Letter of Credit Fee............................................ 32
2.17 Other Fees...................................................... 32
2.18 Loans to Satisfy Obligations of Borrowers....................... 32
2.19 Right of Offset................................................. 32
2.20 General Provisions Relating to Interest......................... 33
2.21 Obligations Absolute............................................ 33
2.22 Yield Protection................................................ 34
2.23 Illegality...................................................... 36
2.24 Taxes........................................................... 36
2.25 Replacement Lenders............................................. 37
2.26 Regulatory Change............................................... 38
2.27 Non-Recourse to KCS............................................. 39
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ARTICLE III CONDITIONS
3.1 Conditions Precedent to Initial Loan and Letter of Credit....... 39
3.2 Conditions Precedent to Each Revolving Loan..................... 42
3.3 Conditions Precedent to Issuance of Letters of Credit........... 43
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.1 Due Authorization............................................... 43
4.2 Corporate Existence............................................. 44
4.3 Valid and Binding Obligations................................... 44
4.4 Existing Indebtedness; No Defenses.............................. 44
4.5 Security Instruments............................................ 44
4.6 Title to Assets................................................. 44
4.7 Scope and Accuracy of Financial Statements...................... 44
4.8 No Material Misstatements....................................... 44
4.9 Liabilities and Litigation...................................... 45
4.10 Authorizations; Consents........................................ 45
4.11 Compliance with Laws............................................ 45
4.12 Default......................................................... 45
4.13 ERISA........................................................... 46
4.14 Environmental Laws.............................................. 46
4.15 Compliance with Federal Reserve Regulations..................... 47
4.16 Investment Company Act Compliance............................... 47
4.17 Public Utility Holding Company Act Compliance................... 47
4.18 Proper Filing of Tax Returns; Payment of Taxes Due.............. 47
4.19 Refunds......................................................... 47
4.20 Gas Contracts................................................... 47
4.21 Intellectual Property........................................... 47
4.22 Labor Matters................................................... 48
4.23 Casualties or Taking of Property................................ 48
4.24 Locations of Borrower........................................... 48
4.25 Subsidiaries.................................................... 48
ARTICLE V AFFIRMATIVE COVENANTS
5.1 Maintenance and Access to Records............................... 48
5.2 Quarterly Financial Statements; Compliance Certificates......... 48
5.3 Annual Financial Statements..................................... 49
5.4 Oil and Gas Reserve Reports......................... 49
5.5 Title Opinions; Title Defects................................... 49
5.6 Notices of Certain Events....................................... 50
5.7 Additional Information.......................................... 51
5.8 Compliance with Laws............................................ 51
5.9 Payment of Assessments and Charges.............................. 52
5.10 Maintenance of Corporate Existence and Good Standing............ 52
5.11 Payment of Notes; Performance of Obligations.................... 52
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5.12 Further Assurances.............................................. 52
5.13 Fees and Expenses............................................... 52
5.14 Operation of Oil and Gas Properties............................. 53
5.15 Maintenance and Inspection of Properties........................ 53
5.16 Maintenance of Insurance........................................ 53
5.17 Indemnification................................................. 54
ARTICLE VI NEGATIVE COVENANTS
6.1 Indebtedness.................................................... 55
6.2 Contingent Obligations.......................................... 55
6.3 Liens........................................................... 55
6.4 Negative Pledge Agreements...................................... 56
6.5 Sales of Assets................................................. 56
6.6 Leasebacks...................................................... 56
6.7 Loans; Advances; Investments.................................... 56
6.8 Dividends and Distributions..................................... 57
6.9 Environmental Matters........................................... 57
6.10 Issuance of Stock; Changes in Corporate Structure............... 57
6.11 Transactions with Affiliates.................................... 57
6.12 Lines of Business............................................... 57
6.13 ERISA Compliance................................................ 57
6.14 Use of Proceeds................................................. 58
6.15 Subsidiaries.................................................... 58
6.16 Tangible Net Worth of KCS Medallion............................. 58
6.17 Interest Coverage Ratio of KCS Medallion........................ 58
6.18 Tangible Net Worth of KCS....................................... 58
6.19 Interest Coverage Ratio of KCS.................................. 58
ARTICLE VII EVENTS OF DEFAULT
7.1 Enumeration of Events of Default................................ 58
7.2 Remedies........................................................ 61
ARTICLE VIII THE AGENT
8.1 Appointment..................................................... 62
8.2 Delegation of Duties............................................ 62
8.3 Exculpatory Provisions.......................................... 62
8.4 Reliance by Agent............................................... 62
8.5 Notice of Default............................................... 63
8.6 Non-Reliance on Agent and Other Lenders......................... 63
8.7 Indemnification................................................. 64
8.8 Restitution..................................................... 65
8.9 Agents in Individual Capacity................................... 65
8.10 Successor Agent................................................. 65
8.11 Applicable Parties.............................................. 66
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ARTICLE IX MISCELLANEOUS
9.1 Assignments; Participations..................................... 66
9.2 Survival of Representations, Warranties, and Covenants.......... 67
9.3 Notices and Other Communications................................ 68
9.4 Parties in Interest............................................. 68
9.5 Rights of Third Parties......................................... 68
9.6 No Waiver; Rights Cumulative.................................... 68
9.7 Severability.................................................... 68
9.8 Amendments; Waivers............................................. 69
9.9 Confidentiality................................................. 69
9.10 Controlling Agreement........................................... 70
9.11 Governing Law................................................... 70
9.12 Jurisdiction and Venue.......................................... 70
9.13 Appointment of Agent for Service of Process..................... 71
9.14 Waiver of Rights to Jury Trial.................................. 71
9.15 Integration..................................................... 71
9.16 Counterparts.................................................... 71
LIST OF EXHIBITS
Exhibit I - Form of Revolving Note
Exhibit II - Form of Term Note
Exhibit III - Form of Assignment Agreement
Exhibit IV - Form of Borrowing Request
Exhibit V - Facility Amounts
Exhibit VI - Form of Compliance Certificate
Exhibit VII - Material Properties
Exhibit VIII - Form of Opinion of Counsel
Exhibit IX - Form of Opinion of Local Counsel
Exhibit X - Disclosures
Exhibit XI - Form of Stock Pledge Agreement
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into effective as of the
2nd day of January, 1997, 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 GED ENERGY SERVICES, INC., a
Delaware corporation ("GED Energy" and together with KCS Medallion, KCS, KCS
Energy Services, KCS Gas 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:
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," "GED Energy,"
"KCS," "KCS Energy Services," "KCS Medallion," "Lender," "Lenders," and
"Medallion Gas Services," shall have the meaning assigned to them hereinabove.
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
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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.
"Adjustment Date" shall mean the second Business Day following
receipt by the Agent of both (a) the Financial Statements required to be
delivered pursuant to Sections 5.2 or 5.3, as the case may be, for the
most recently completed fiscal period and (b) the Compliance Certificate
required to be delivered pursuant to such Sections with respect to such
fiscal period.
"Affiliate" shall mean any Person directly or indirectly controlled
by, controlling, or under common control with, 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
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of 1934, as amended, with "control," as used in this definition, meaning
possession, directly or indirectly, of the power to direct or cause the
direction of management, policies or action through ownership of voting
securities, contract, voting trust, or membership in management or in the
group appointing or electing management or otherwise through formal or
informal arrangements or business relationships.
"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 such agreement may be amended from time to
time.
"Agreement" shall mean this Credit Agreement, as amended, restated,
or supplemented from time to time.
"Applicable Lending Office" shall mean, for each Lender and type of
Loan, the lending office of such Lender (or an affiliate of such Lender)
designated for such type of Loan on the signature pages hereof or such
other office of such Lender (or an affiliate of such Lender) as such
Lender may from time to time specify to the Agent and the Borrowers as the
office by which its Loans of such type are to be made and maintained.
"Applicable Margin" shall mean, (a) as to each Base Rate Loan and
each LIBO Rate Loan, an amount equal to the percentage set forth in the
grid below (the "Grid") for such type of Loan and determined to be the
applicable percentage pursuant to the Debt to KCS EBITDA ratio as
reflected in the most recent Financial Statements of KCS and its
Subsidiaries furnished to the Agent pursuant to Section 5.2 or 5.3 and
reported in the Compliance Certificate delivered therewith, which
Applicable Margin shall change as necessary effective on each Adjustment
Date:
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Debt/EBITDA Ratio LIBO Rate Loan Base Rate Loan
Applicable Margin Applicable Margin
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Less than or equal to 1.50 0.75% 0%
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Greater than or equal to 1.51 0.875 0%
but less than 2.01
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Greater than or equal to 2.01 1.0% 0%
but less than 2.51
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Greater than or equal to 2.51 1.25% 0.25%
but less than 3.01
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Greater than 3.00 1.625% 0.625%
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provided, however, from the period from the Closing Date through the date
KCS is to provide the Agent with financial statements for the fiscal year
ending December 31, 1997, as required by Section 5.2, the Applicable
Margin shall be calculated from time to time on a pro-forma basis by
substituting for each period for which the KCS Medallion EBITDA is not
included in the consolidated Financial Statements of KCS, the KCS
Medallion EBITDA for such period in the immediately preceding fiscal year;
provided further, however, at all times during which any principal or
accrued interest remains outstanding under the Term Notes, or the Term
Credit Commitment is outstanding the Applicable Margin shall be 2.25% in
the case of LIBO Rate Loans and 1.25% in the case of Base Rate Loans;
provided, further, (i) if such Financial Statements and related Compliance
Certificate are not delivered when due, without giving effect to any
applicable cure period, and the Applicable Margin increases from that
previously in effect as a result of the delivery of such Financial
Statements and Compliance Certificate, then the Applicable Margin during
the period from the date upon which such Financial Statements and
Compliance Certificate were required to be delivered, without giving
effect to any applicable cure period, until the date upon which they
actually are delivered shall, except as otherwise provided in clause
(iii), be the Applicable Margin as so increased; (ii) if such Financial
Statements and Compliance Certificate are delivered after the date such
Financial Statements and Compliance Certificate were required to be
delivered and the Applicable Margin decreases from that previously in
effect as a result of the delivery of such Financial Statements and
Compliance Certificate, then such decrease in the Applicable Margin shall
not become applicable until the date upon which such Financial Statements
and Compliance Certificate actually are delivered; and (iii) if such
Financial Statements and Compliance Certificate are not delivered prior to
the date upon which the resultant Default shall become an Event of
Default, then, effective upon such Default becoming an Event of Default,
for the period from the date upon which such Financial Statements and
Compliance Certificate were required to be delivered, after the expiration
of the applicable cure period, until two Business Days following the date
upon which they actually are delivered, the Applicable Margin shall be (A)
at all times during which any principal or accrued interest remains
outstanding under the Term Notes or the Term Credit Commitment is
outstanding, 2.25% in the case of LIBO Rate Loans and 1.25% in the case of
Base Rate Loans or (B) if no principal or accrued interest is outstanding
on the Term Notes and the Term Credit Commitment is not outstanding,
1.625% in the case of LIBO Rate Loans and 0.625%, in the case of Base Rate
Loans; and
"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.
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"Assignment Agreement" shall mean an Assignment Agreement,
substantially in the form of Exhibit III, with appropriate insertions.
"Available Revolving Credit Commitment" shall mean, at any time, an
amount equal to the remainder, if any, of (a) the lesser of the Revolving
Credit Commitment Amount or the Borrowing Base in effect at such time
minus (b) Revolving Obligations at such time.
"Available Term Credit Commitment" shall mean, at any time, an
amount equal to the remainder, if any, of (a) the Term Credit Commitment
Amount minus (b) the Term 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 or any portion of the Loan
Balance which the Borrowers have requested, in the initial Borrowing
Request for such Loan or a subsequent Borrowing Request for such portion
of the Loan Balance, bear interest at the Adjusted Base Rate or which,
pursuant to the terms hereof, is otherwise required to bear interest at
the Adjusted Base Rate.
"Benefitted Lender" shall have the meaning assigned to such term in
Section 2.11(c).
"Borrowing Base" shall mean, at any time, the amount determined in
accordance with Section 2.12.
"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
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(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.
"Business Day" shall mean a day other than a day when commercial
banks are authorized or required to close in the State of New York and,
with respect to all requests, notices, and determinations in connection
with, and payments of principal and interest on, LIBO Rate Loans, which is
also a day for trading by and between banks in Dollar deposits in the
London interbank market.
"CBRS" shall mean C.B.R.S. Inc., carrying on business as "Canadian
Bond Rating Service," and its successors.
"CD Rate" shall mean, for any day relative to any determination of
the Adjusted Base Rate for any Base Rate Loan, the rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Agent to be the average of the bid rates quoted to the
Agent in the New York City secondary market at approximately 10:00 a.m.
New York time (or as soon thereafter as practicable) initially, on the day
such Base Rate Loan is made, and thereafter, from time to time as the
Agent may select, by two (2) certificate of deposit dealers of recognized
standing selected by the Agent, for the purchase at face value of 30-day
certificates of deposit in an amount approximately equal or comparable to
the amount of such Base Rate Loan. Each determination by the Agent of the
CD Rate shall, in the absence of manifest error, be conclusive and
binding.
"Closing Date" shall mean the effective date of this Agreement.
"Code" shall mean the United States Internal Revenue Code of 1986,
as amended from time to time.
"Collateral" shall mean the Mortgaged Properties, the Properties
described in the Security Instruments referenced in Sections 3.1(c) and
3.1(g) 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 Lenders
to make Revolving Loans to or for the benefit of the Borrowers pursuant to
Section 2.1, (ii) the several obligations of such Lenders to participate
in Letters of Credit pursuant to Section 2.2, and (iii) the several
obligations of such Lenders to make Term 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.
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"Compliance Certificate" shall mean each certificate, substantially
in the form attached hereto as Exhibit VI, executed by a Responsible
Officer of each of the Borrowers, and furnished to the Agent from time to
time in accordance with the terms hereof.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends, or other obligations of any other Person (for purposes
of this definition, a "primary obligation") in any manner, whether
directly or indirectly, including any obligation of such Person,
regardless of whether such obligation is contingent, (a) to purchase any
primary obligation or any Property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the purchase or
payment of any primary obligation, or (ii) to maintain working or equity
capital of any other Person in respect of any primary obligation, or
otherwise to maintain the net worth or solvency of any other Person, (c)
to purchase Property, securities or services primarily for the purpose of
assuring the owner of any primary obligation of the ability of the Person
primarily liable for such primary obligation to make payment thereof, or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof, with the amount of any
Contingent Obligation being deemed to be equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined
by such Person in good faith.
"DBRS" shall mean Dominion Bond Rating Service Limited and its
successors.
"Debt" shall mean Indebtedness of the 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.
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"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,
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 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.
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"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 any day, the
Federal Funds Rate for such day shall be the average rate charged to the
Agent on such day on such transactions as determined by the Agent.
"Fee Letter" shall mean the letter agreement dated as of January 2,
1997, from CIBC to the Borrowers concerning certain fees in connection
with the transactions contemplated hereby, and any agreements or
instruments executed in connection therewith, as amended, restated, or
supplemented from time to time.
"Final Maturity" shall mean in the case of Revolving Loans,
September 30, 2000 and in the case of Term Loans, March 31, 1997.
"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
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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), 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 which 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
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the United States Code, seeking liquidation, reorganization, or
rearrangement or taking advantage of any bankruptcy, insolvency, debtor's
relief, or other similar law of the United States or any other
jurisdiction.
"Insolvent" or "Insolvency" shall mean, with respect to any
Multiemployer Plan, that such Plan is insolvent within the meaning of such
term as used in Section 4245 of ERISA.
"Intellectual Property" shall mean patents, patent applications,
trademarks, tradenames, copyrights, technology, know-how, and processes.
"Interest 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 Borrowing Request for such
Loan.
"Investment" shall mean, as to any Person, any stock, bond, note or
other evidence of Debt or any other security (other than current trade and
customer accounts) of, investment or partnership interest in or loan to,
such Person.
"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, GED Energy and each of their respective
Subsidiaries.
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"L/C Exposure" shall mean, at any time, the aggregate maximum amount
available to be drawn under outstanding Letters of Credit at such time.
"Letter of Credit" shall mean any standby or documentary letter of
credit issued for the account of 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 Lenders under a Letter of Credit, to the extent that such
payment has not been repaid by the Borrowers.
"LIBO Rate" shall mean, with respect to any Interest Period for any
LIBO Rate Loan, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) equal to the average of the offered quotations
appearing on Telerate Page 3750 (or if such Telerate Page shall not be
available, any successor or similar service selected by the Agent and the
Borrowers) as of approximately 11:00 a.m., London time, on the day two
Business Days prior to the first day of such Interest Period for Dollar
deposits in an amount comparable to the principal amount of such LIBO Rate
Loan and having a term comparable to the Interest Period for such LIBO
Rate Loan. If neither such Telerate Page 3750 nor any successor or similar
service is available, the term "LIBO Rate" shall mean, with respect to any
Interest Period for any LIBO Rate Loan, the rate per annum (rounded
upwards if necessary, to the nearest 1/16 of 1%) quoted by the Agent at
approximately 11:00 a.m., London time (or as soon thereafter as
practicable) two Business Days prior to the first day of the Interest
Period for such LIBO Rate Loan for the offering by the Agent to leading
banks in the London interbank market of Dollar deposits in an amount
comparable to the principal amount of such LIBO Rate Loan and having a
term comparable to the Interest Period for such LIBO Rate Loan.
"LIBO Rate Loan" shall mean any Loan or any portion of the Loan
Balance which a Borrower has requested, in the initial Borrowing Request
for such Loan or a subsequent Borrowing Request for such portion of the
Loan Balance, bear interest at the Adjusted LIBO Rate and which is
permitted by the terms hereof to bear interest at the Adjusted LIBO Rate.
"Lien" shall mean any interest in Property securing an obligation
owed to, or constituting a claim by, a Person other than the owner of such
Property, whether such interest is based on common law, statute, or
contract, and including the lien or security interest arising from a
mortgage, ship mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt, or a lease, consignment, or bailment
for security purposes (other than true leases or true consignments), liens
of mechanics, materialmen, and artisans, maritime liens and reservations,
exceptions, encroachments, easements, rights of way,
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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, Borrower shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional sale
agreement, financing lease, or other arrangement pursuant to which title
to the Property has been retained by or vested in some other Person for
security purposes), and the filing or recording of any financing statement
or other security instrument in any public office.
"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
Revolving Loan or a Term Loan and, without duplication, any payment made
by the Agent as the issuing bank under a Letter of Credit.
"Loan Balance" shall mean, in the case of Revolving Loans, at any
time, the aggregate outstanding principal balance of the Revolving Notes
at such time and in the case of Term Loans, at any time, the aggregate
outstanding principal balance of the Term Notes at such time.
"Loan Documents" shall mean this Agreement, the Notes, the Letter of
Credit Applications, the Letters of Credit, the Fee Letter, the Security
Instruments, and all other documents and instruments now or hereafter
delivered by any of the Borrowers 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, the Fee Letter, or the Security
Instruments, and all renewals, extensions, amendments, supplements, and
restatements thereof.
"Material Properties" shall mean the Oil and Gas Properties listed
on Exhibit VII.
"Material Adverse Effect" shall mean in the sole reasonable
determination of the Agent, the occurrence or existence of any material
adverse effect on the business, operations, 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.
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"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 Revolving Notes and the Term 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
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 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,
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leasehold estate interests, net profits interests, production payment
interests, and mineral fee interests, together with contracts executed in
connection therewith and all tenements, hereditaments, appurtenances, and
Properties appertaining, belonging, affixed, or incidental thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any entity
succeeding to any or all of its functions under ERISA.
"Percentage Share" shall mean, as to each Lender, the percentage
such Lender's Facility Amount constitutes of the Maximum Facility Amount.
"Permitted Liens" shall mean (a) Liens for taxes, assessments, or
other governmental charges or levies not yet due or which (if foreclosure,
distraint, sale, or other similar proceedings shall not have been
initiated) are being contested in good faith by appropriate proceedings,
and such reserve as may be required by GAAP shall have been made therefor,
(b) Liens in connection with workers' compensation, unemployment insurance
or other social security (other than Liens created by Section 4068 of
ERISA), old-age pension, or public liability obligations which are not yet
due or which are being contested in good faith by appropriate proceedings,
if such reserve as may be required by GAAP shall have been made therefor,
(c) Liens in favor of Governmental Authorities, vendors, carriers,
warehousemen, repairmen, mechanics, workmen, and materialmen, and
construction or similar Liens arising by operation of law (including Liens
securing statutory or regulatory obligations) in the ordinary course of
business in respect of obligations that are not past-due or which are
being contested in good faith by appropriate proceedings, if such reserve
as may be required by GAAP shall have been made therefor, (d) Liens in
favor of operators and non-operators under joint operating agreements or
similar contractual arrangements arising in the ordinary course of the
business of the Borrowers to secure amounts owing, which amounts are not
yet due or are being contested in good faith by appropriate proceedings,
if such reserve as may be required by GAAP shall have been made therefor,
(e) Liens under production sales agreements, division orders, operating
agreements, unitization and pooling orders, and other agreements customary
in the oil and gas business for processing, producing, transporting,
marketing, and exchanging produced hydrocarbons securing obligations not
constituting Indebtedness and provided that such Liens do not secure
obligations to deliver hydrocarbons at some future date without receiving
full payment therefor within 90 days of delivery, (f) the terms of the
instruments evidencing the Oil and Gas Properties of the Borrowers, 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 prior to the Closing Date), 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
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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.
"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 Moody's, 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.
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"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 2.24.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20
of PBGC Reg.
ss.2615.
"Required Lenders" shall mean, at any time when no Loans are
outstanding, Lenders whose Percentage Shares total at least sixty-six and
two-thirds percent (66-2/3%), and at any time when any Loans are
outstanding, Lenders holding at least sixty-six and two-thirds percent (66
2/3%) of the Loan Balance (without regard to any sale of a participation
in any Loan).
"Required Payment" shall have the meaning assigned to such term in
Section 2.9.
"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
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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 KCS Medallion
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 Persons: Xxxxx X. Christmas, Chief Executive Officer; Xxxxx X.
Xxxxxx, Vice President and Chief Financial Officer; or Xxxxxxx X.
Xxxxxxxx, Treasurer; and in any event, shall mean no other Person or
Persons except as modified pursuant to a certificate sent to the Agent
signed by a Responsible Officer of the Person with respect to which the
modification is to be effected, and in each such event, only after the
Agent has had a reasonable opportunity to act upon such certification.
"Revolving Credit Commitment" shall mean, relative to any Lender,
such Lender's obligations to make Revolving Loans and participate in
Letters of Credit pursuant to Sections 2.1 and 2.2.
"Revolving Credit 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.
"Revolving Credit Commitment Period" shall mean the period from and
including the Closing Date to but not including the Revolving Credit
Commitment Termination Date.
"Revolving Credit Commitment Termination Date" shall mean
September 30, 2000.
"Revolving Credit Facility Amount" shall mean, for each Lender, the
amount set forth opposite the name of such Lender on Exhibit V under the
caption "Revolving Credit Facility Amount," as modified to reflect
assignments permitted by Sections 9.1 and 2.25 or otherwise pursuant to
the terms hereof.
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"Revolving Loan" shall mean the revolving loans defined in Section
2.1.
"Revolving Notes" shall mean certain promissory notes of the
Borrower as defined in Section 2.1 payable to a Lender in the amount of
the Revolving Credit 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.
"Revolving Obligations" shall mean the sum of the Loan Balance of
all Revolving Loans and L/C Exposure.
"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.
"Senior Note Indenture" shall mean 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 the Guarantor of its 11% Senior Notes due
2003 in the aggregate principal amount of $150,000,000.00.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"Stock Pledge Agreement" shall mean the Stock Pledge Agreement dated
as of the Closing date executed by KCS in favor of the Collateral Agent in
substantially the Form of Exhibit XI.
"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 agrees to
purchase the outstanding capital stock of KCS Medallion, Medallion Gas
Services and GED Energy Services.
"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.
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"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.
"Taxes" shall have the meaning assigned to such term in Section
2.24.
"Term Commitment Period" shall mean the period from and including
the Closing Date to but not including the Term Credit Commitment
Termination Date.
"Term Credit Commitment" shall mean relative to any Lender, such
Lender's obligations to make Term Loans pursuant to Section 2.3.
"Term Credit Commitment Amount" shall mean $30,000,000, as such
amount may be reduced pursuant to the terms of this Agreement.
"Term Credit Commitment Termination Date" shall mean the Final
Maturity of the Term Notes or (ii) March 31, 1997.
"Term Credit Facility Amount" shall mean, for each Lender, the
amount set forth opposite the name of such Lender on Exhibit V under the
caption "Term Credit Facility Amounts," as modified to reflect assignments
permitted by Sections 9.1 and 2.25 or otherwise pursuant to the terms
hereof.
"Term Loan" shall mean the term loans defined in Section 2.3.
"Term Notes" shall mean certain promissory notes of the Borrowers as
defined in Section 2.3 payable to a Lender in the amount of the Term
Credit 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.
"Term Obligations" shall mean the sum of the Loan Balances of all
Term Loans.
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"Terminated Lender" shall have the meaning assigned to such term in
Section 2.25.
"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
Revolving Credit Facility Amount and the Term Credit Facility Amount, set
forth opposite the name of such Lender on Exhibit V under the caption
"Facility Amounts", as modified to reflect assignments permitted by
Sections 9.1 and 2.25 or otherwise pursuant to the terms hereof.
"Transfer" means a sale, transfer, conveyance, assignment or other
disposition of Property (or a series of related dispositions), including,
without limitation, any transfer pursuant to an option to purchase, any
sale or assignment (with or without recourse) of any accounts receivable
and any sale and leaseback of assets and transfers made pursuant to the
rights under any title guaranty agreement, but excluding (i) any
involuntary transfer of Property by operation of law and any transfers of
Property pursuant to any casualty or theft with respect to such Property,
(ii) the sale of hydrocarbons or inventory in the ordinary course of
business other than the sale of a production payment, and (iii) 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.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Xxxxxx County Litigation" shall mean the cases styled Tennessee Gas
Pipeline v. KCS Resources, Inc., Case No. 3448, In the District Court 49th
Judicial District, Xxxxxx County, Texas and (ii) Tennessee Gas Pipeline
Company v. KCS Resources, Inc., Tesoro E&P Company, and Coastal Oil & Gas
Corporation, Case No. 3510, in the Xxxxxxxx Xxxxx, 00xx Xxxxxxxx Xxxxxxxx,
Xxxxxx Xxxxxx, Xxxxx.
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.
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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 KCS Medallion, such "knowledge" or
"knowledge and belief" shall mean (a) in the case of an Oil and Gas Property
operated by KCS Medallion, the knowledge of the highest ranking field personnel
of KCS Medallion assigned to such Property and (b) in the case of an Oil and Gas
Property of KCS Medallion that is not operated by KCS Medallion, the knowledge
of an operations manager having responsibility for such Property.
ARTICLE II
TERMS OF FACILITIES
2.1 Revolving Loans. (a) Upon the terms and conditions and relying on
the representations and warranties contained in this Agreement and the other
Loan Documents, each Lender severally agrees to make Loans (each a "Revolving
Loan") during the 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 Revolving Credit
Facility Amount of such Lender or the Percentage Share of such Lender of the
Borrowing Base then in effect (for each Lender, its "Revolving Credit
Commitment"); provided, however, that (i) Revolving Obligations shall not exceed
at any time the lesser of the Revolving Credit Commitment Amount or the
Borrowing Base then in effect, and (ii) the sum of the outstanding principal
balance of all Revolving Loans by any Lender plus the Percentage Share of such
Lender of the L/C Exposure shall not exceed at any time an amount equal to the
Percentage Share of such Lender multiplied by the lesser of the Revolving Credit
Commitment Amount or the Borrowing Base then in effect. Revolving 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 Revolving
Credit Commitment Period, the Borrowers may borrow, repay, and reborrow and
convert Revolving
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Loans of one type or with one Interest Period into Revolving 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 Revolving
Loan of a different type or, in the case of a LIBO Rate Revolving 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 Revolving Loan or
Interest Period. Anything in this Agreement to the contrary notwithstanding, the
aggregate principal amount of LIBO Rate Revolving Loans having the same Interest
Period shall be at least equal to $1,000,000; and if any LIBO Rate Revolving
Loan would otherwise be in a lesser principal amount for any period, such
Revolving Loan shall be a Base Rate Revolving Loan during such period.
(c) Not later than noon, Eastern Standard or Daylight Savings Time,
as the case may be, on the date specified for each borrowing, each Lender shall
make available to the Agent an amount equal to the Percentage Share of such
Lender of the borrowing to be made on such date, at an account designated by the
Agent, for the account of the 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 Revolving Loans by each Lender shall be
maintained at the Applicable Lending Office of such Lender and shall be
evidenced by the Revolving Note of such Lender.
(d) The failure of any Lender to make any Revolving Loan required to
be made by it hereunder shall not relieve any other Lender of its obligation to
make any Revolving Loan required to be made by it, and no Lender shall be
responsible for the failure of any other Lender to make any Loan.
2.2 Letter of Credit Facility. (a) Upon the terms and conditions and
relying on the representations and warranties contained in this Agreement, the
Agent, as issuing bank for the Lenders, agrees, from the date of this Agreement
until the date which is 30 days prior to the Revolving Commitment Termination
Date, to issue, on behalf of the Lenders in their respective Percentage Shares,
Letters of Credit for the account of the Borrowers, or any combination of them,
and to renew and extend such Letters of Credit. Letters of Credit shall be
issued, renewed, or extended from time to time on any Business Day designated by
the Borrowers following the receipt in accordance with the terms hereof by the
Agent of the written (or oral, 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 Revolving Commitment Termination
Date, (ii) Revolving Obligations shall not exceed at any time the lesser of the
Revolving Credit 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.
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(b) Prior to any Letter of Credit Payment in respect of any Letter
of Credit, each Lender shall be deemed to be a participant through the Agent
with respect to the relevant Letter of Credit in the obligation of the Agent, as
the issuer of such Letter of Credit, in an amount equal to the Percentage Share
of such Lender of the maximum amount which is or at any time may become
available to be drawn thereunder. Upon delivery by such Lender of funds
requested pursuant to Section 2.2(c), such Lender shall be treated as having
purchased a participating interest in an amount equal to such funds delivered by
such Lender to the Agent in the obligation of the Borrowers to reimburse the
Agent, as the issuer of such Letter of Credit, for any amounts payable, paid, or
incurred by the Agent, as the issuer of such Letter of Credit, with respect to
such Letter of Credit.
(c) Each Lender shall be unconditionally and irrevocably liable,
without regard to the occurrence of any Default or Event of Default, to the
extent of the Percentage Share of such Lender at the time of issuance of each
Letter of Credit, to reimburse, on demand, the Agent, as the issuer of such
Letter of Credit, for the amount of each Letter of Credit Payment under such
Letter of Credit. Each Letter of Credit Payment shall be deemed to be a Base
Rate Revolving Loan by each Lender to the extent of funds delivered by such
Lender to the Agent with respect to such Letter of Credit Payment and shall to
such extent be deemed a Base Rate Revolving Loan under and shall be evidenced by
the Revolving 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 Lender shall have any right to require any Borrower to prepay any
amounts for which the Agent as the issuing bank or any Lender might become
liable under any Letter of Credit.
(d) EACH LENDER AGREES TO INDEMNIFY THE AGENT, AS THE ISSUER OF EACH
LETTER OF CREDIT, AND THE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT AND AFFILIATES OF THE AGENT (TO THE EXTENT NOT REIMBURSED BY
THE BORROWERS AND WITHOUT LIMITING THE OBLIGATION OF THE BORROWERS TO DO SO),
RATABLY ACCORDING TO THE PERCENTAGE SHARE OF SUCH LENDER AT THE TIME OF ISSUANCE
OF SUCH LETTER OF CREDIT, FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER WHICH MAY AT ANY TIME
(INCLUDING ANY TIME FOLLOWING THE PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS AND
THE TERMINATION OF THIS AGREEMENT) BE IMPOSED ON, INCURRED BY OR ASSERTED
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,
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ATTORNEYS-IN-FACT OR AFFILIATES; PROVIDED THAT NO LENDER (OTHER THAN THE AGENT
AS THE ISSUER OF A LETTER OF CREDIT) SHALL BE LIABLE FOR THE PAYMENT OF ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING SOLELY FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT AS THE ISSUER OF A LETTER OF
CREDIT. THE AGREEMENTS IN THIS SECTION 2.2(d) SHALL SURVIVE THE PAYMENT AND
PERFORMANCE OF ALL OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
2.3 Term Loans. (a) Upon the terms and conditions and relying on the
representations and warranties contained in this Agreement and the other Loan
Documents, each Lender severally agrees to make Term Loans (each a "Term Loan")
to the Borrowers during the Term Commitment Period in an aggregate amount not to
exceed its Percentage Share of the Term Credit Commitment Amount (for each
Lender, its "Term Loan Commitment"). The Term Loans shall be made ratably by the
Lenders in proportion to their respective Percentage Shares. No Lender shall be
permitted or required to make any Term Loan if, after giving effect thereto, the
aggregate principal amount of such Term Loan would exceed the Percentage Share
of such Lender of the Term Credit Commitment Amount. Term Loans may be advanced
in one or more tranches, each of which shall be in an amount not less than
$10,000,000. No more than three such tranches shall be available to the
Borrowers. Except as provided in subsection (b) of this Section 2.3, the Term
Loan Commitment shall be permanently reduced in the amount of any prepayment on
the Term Loans and such amount shall not be available for reborrowing. Term
Loans shall be made from time to time as herein provided on any Business Day
designated by the Borrowers in a Borrowing Request.
(b) Subject to the terms of this Agreement, during the Term
Commitment Period, the Borrowers may borrow, repay and convert Term Loans of one
type or with one Interest Period into Term Loans of another type or with a
different Interest Period. Each such borrowing, conversion, and prepayment of
principal shall be in an amount not less than the Loan Balance.
(c) Not later than noon, Eastern Standard or Daylight Savings Time,
as the case may be, on the date specified for each such borrowing, each Lender
shall make available to the Agent an amount equal to the Percentage Share of
such Lender of the borrowing to be made on such date, at an account designated
by the Agent, for the account of the 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 Borrower. All Term Loans by each Lender shall be
maintained at the Applicable Lending Office of such Lender and shall be
evidenced by the Term Note of such Lender.
(d) The failure of any Lender to make any Term Loan required to be
made by it hereunder shall not relieve any other Lender of its obligation to
make any Term Loan required to be made by it, and no Lender shall be responsible
for the failure of any other Lender to make any Term 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
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reduce the Term Credit Commitments without premium or penalty, in whole or in
part, any partial termination to be (i) in an amount not less than $5,000,000 as
determined by the Borrower and in integral multiples of $1,000,000, and (ii)
allocated ratably among the Lenders in proportion to their respective Term
Credit Commitments; provided, that the Term Credit Commitment Amount may not be
reduced to an amount less than the Loan Balance of the Term Loans. The Agent
shall give prompt notice to each Lender of any termination or reduction of the
Term Credit Commitment. Any termination of the Term Credit Commitment 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 Revolving Loans
and Term Loans may be outstanding as either Base Rate Loans or LIBO Rate Loans
as selected by Borrowers. Anything herein to the contrary notwithstanding, no
more than ten separate Loans shall be outstanding at any one time, with, for
purposes of this Section, all Base Rate Loans constituting one Loan, and all
LIBO Rate Loans for the same Interest Period constituting one Loan. Anything
herein to the contrary notwithstanding, if, on or prior to the determination of
any interest rate for any LIBO Rate Loan for any Interest Period therefor:
(a) the Agent determines (which determination shall be conclusive,
absent manifest error) that quotations of interest rates for the deposits
referred to in the definition of "LIBO Rate" in Section 1.2 are not being
provided in the relevant amounts or for the relevant maturities for
purposes of determining the rate of interest for such Loan as provided in
this Agreement; or
(b) the Agent or the Required Lenders determine (which determination
shall be conclusive, absent manifest error) that the rates of interest
referred to in the definition of "LIBO Rate" in Section 1.2 upon the basis
of which the rate of interest for such Loan for such Interest Period is to
be determined do not 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 days next succeeding the giving of such notice by the Agent to the
Borrowers,
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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 to enable KCS to pay the purchase
price for the acquisition of KCS Medallion, Medallion Gas Services, Inc. and GED
Energy Services, 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 Adjusted Base Rate for each Base Rate Loan and the Adjusted
LIBO Rate for each LIBO Rate Loan. Notwithstanding the foregoing, interest on
past-due principal and, to the extent permitted by applicable law, past-due
interest, shall accrue at the Default Rate and shall be payable upon demand by
the Agent at any time as to all or any portion of such interest. In the event
that the Borrower fails to select the duration of any Interest Period for any
LIBO Rate Loan within the 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 March, 1997, and continuing on the last day of each third
calendar month thereafter while any Base Rate Loan remains outstanding, the
payment in each instance to be the amount of interest which has accrued and
remains unpaid in respect of the relevant Loan. Accrued and unpaid interest on
each outstanding LIBO Rate Loan shall be due and payable on the last day of the
Interest Period for such LIBO Rate Loan and, in the case of any Interest Period
in excess of three months, on the day of the third calendar month following the
commencement of such Interest Period corresponding to the day of the calendar
month on which such Interest Period commenced, the payment in each instance to
be the amount of interest which has accrued and remains unpaid in respect of the
relevant Loan. The Loan Balance of all Revolving Loans,
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together with all accrued and unpaid interest thereon, shall be due and payable
at Final Maturity of the Revolving Loans. The Loan Balance of all Term Loans,
together with all accrued and unpaid interest thereon, shall be due and payable
at Final Maturity of the Term Loans. At the time of making each payment
hereunder or under the Notes, the Borrowers shall specify to the Agent the Loans
or other amounts payable by the Borrowers hereunder to which such payment is to
be applied. In the event the Borrowers fail to so specify, or if an Event of
Default has occurred and is continuing, the Agent may apply such payment as it
may elect in its discretion and in accordance with the terms hereof.
2.9 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 Dollars and in immediately available funds. All payments by the
Borrowers shall be deemed received on the next Business Day following receipt if
such receipt is after 3:00 p.m., Eastern Standard or Daylight Savings Time, as
the case may be, on any Business Day, and shall be made to the Agent at the
Principal Office. Except as provided to the contrary herein, if the due date of
any payment hereunder or under any Note would otherwise fall on a day which is
not a Business Day, such date shall be extended to the next succeeding Business
Day, and interest shall be payable for any principal so extended for the period
of such extension.
2.11 Pro Rata Treatment; Adjustments. (a) Except to the extent
otherwise expressly provided herein, (i) each borrowing pursuant to this
Agreement shall be made from the Lenders pro rata in accordance with their
respective Percentage Shares, (ii) each payment by the Borrowers of fees shall
be made for the account of the Lenders pro rata in accordance with their
respective Percentage Shares, (iii) each payment of principal of Loans shall be
made
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for the account of the Lenders pro rata in accordance with their respective
shares of the Loan Balance, and (iv) each payment of interest on Loans shall be
made for the account of the Lenders pro rata in accordance with their respective
shares of the aggregate amount of interest due and payable to the Lenders.
(b) The Agent shall distribute all payments with respect to the
Obligations to the Lenders promptly upon receipt in like funds as received. In
the event that any payments made hereunder by the Borrowers at any particular
time are insufficient to satisfy in full the Obligations due and payable at such
time, such payments shall be applied (i) first, to fees and expenses due
pursuant to the terms of this Agreement or any other Loan Document, (ii) second,
to accrued interest, (iii) third, to the Loan Balance of the Term Loans, and
(iv) last, to any other Obligations.
(c) If any Lender (for purposes of this Section, a "Benefitted
Lender") shall at any time receive any payment of all or part of its portion of
the Obligations, or receive any Collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Sections 7.1(f) or 7.1(g), or otherwise) in an amount
greater than such Lender was entitled to receive pursuant to the terms hereof,
such Benefitted Lender shall purchase for cash from the other Lenders such
portion of the Obligations of such other Lenders, or shall provide such other
Lenders with the benefits of any such Collateral or the proceeds thereof, as
shall be necessary to cause such Benefitted Lender to share the excess payment
or benefits of such Collateral or proceeds with each of the Lenders according to
the terms hereof. If all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded and the purchase price and benefits returned by such Lender, to the
extent of such recovery, but without interest. The Borrower agrees that each
such Lender so purchasing a portion of the Obligations of another Lender may
exercise all rights of payment (including rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such portion.
If any Lender ever receives, by voluntary payment, exercise of rights of set-off
or banker's lien, counterclaim, cross-action or otherwise, any funds of the
Borrower to be applied to the Obligations, or receives any proceeds by
realization on or with respect to any Collateral, all such funds and proceeds
shall be forwarded immediately to the Agent for distribution in accordance with
the terms of this Agreement.
2.12 Borrowing Base Determinations. (a) The Borrowing Base as of the
Closing Date is agreed by the Borrowers and the Lenders to be $105,000,000.
(b) The Borrowing Base shall be redetermined by the Agent, with the
consent of the Lenders, semi-annually commencing June 30, 1997 on the basis of
information supplied by the Borrowers in compliance with the provisions of this
Agreement, including Reserve Reports, and all other information available to the
Agent and the Lenders. In addition, the Agent, with the consent of the Lenders,
shall, in the normal course of business following a request of the Borrowers,
redetermine the Borrowing Base; provided, however, the Agent and the Lenders
shall not be obligated to respond to more than two (2) such requests during any
calendar year in addition to each scheduled semi-annual redetermination provided
for above. Notwithstanding the foregoing, the Agent, with the consent of the
Lenders, may at its discretion redetermine the Borrowing Base at any time and
from time to time.
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(c) Each determination of the Borrowing Base shall be made within
forty-five (45) days of the Agent's receiving all of the information required
under this Agreement in connection therewith. Upon each determination of the
Borrowing Base, the Agent shall promptly, and in all events within such 45 days,
notify the Borrowers orally (confirming such notice promptly in writing) of such
determination and the Borrowing Base so communicated to the Borrowers shall
become effective upon such oral notification and shall remain in effect until
the next subsequent determination of the Borrowing Base.
(d) In connection with any redetermination of the Borrowing Base,
the Agent and each Lender shall evaluate the Mortgaged Properties in accordance
with their then existing customary lending procedures for evaluating oil and gas
reserves and related assets for loans of this type and borrowers similarly
situated. The Borrowing Base shall represent the determination by the Agent
based upon such evaluation by the Agent, with the consent of the Lenders, of the
value for loan purposes of the Mortgaged Properties, subject, in the case of any
increase in the Borrowing Base, to the credit approval processes of the Lenders
then in effect for loans of this type and borrowers similarly situated. In the
event that a group of Lenders constituting at least the Required Lenders are in
agreement as to the amount of any Borrowing Base redetermination but such amount
is not approved unanimously by all of the Lenders, then the Borrowing Base shall
be the amount as determined by such Required Lenders for a period of 60 days
from the date of notification of such Borrowing Base to the Borrowers pursuant
to Section 2.12(c). During such 60 day period or at any time thereafter, the
Borrowers may, at their election, terminate the Commitments of such dissenting
Lenders pursuant to the procedures set forth in Section 2.25. At the end of such
60 day period, the Borrowing Base shall be an amount agreed to by the Agent and
all of the 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 Lenders.
2.13 Mandatory Prepayments. (a) If at any time the Revolving
Obligations exceed the lesser of the Revolving Credit Commitment Amount or the
Borrowing Base then in effect, the Borrowers shall, within 30 days of notice
from the Agent of such occurrence, (a) prepay, or make arrangements acceptable
to the Required Lenders for the prepayment of, the amount of such excess for
application on the Loan Balance, (b) provide additional collateral, of character
and value satisfactory to the Required Lenders in their sole discretion, to
secure the Obligations by the execution and delivery to the Agent of security
instruments in form and substance satisfactory to the Agent, or (c) effect any
combination of the alternatives described in clauses (a) and (b) of this Section
and acceptable to the Required Lenders in their discretion. In the event that a
mandatory prepayment is required under this Section and the Loan Balance is less
than the amount required to be prepaid, the Borrowers shall repay the entire
Loan Balance and, in accordance with the provisions of the relevant Letter of
Credit Applications executed by the Borrowers or otherwise to the satisfaction
of the Agent, deposit with the Agent, as additional collateral securing the
Obligations, an amount of cash, in immediately available funds, equal to the L/C
Exposure minus the lesser of the Revolving Credit Commitment Amount or the
Borrowing Base. The cash deposited with the Agent in satisfaction of the
requirement provided
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in this Section may be invested at the express direction of the Borrowers as to
investment vehicle and maturity (which shall be no later than the latest expiry
date of any then outstanding Letter of Credit), for the account of the Borrowers
in cash or cash equivalent investments offered by or through the Agent.
(b) Within thirty (30) days after receipt by any Borrower or any of
its Subsidiaries of Net Cash Proceeds from any Transfer of any Property in
excess in the aggregate in any fiscal year of $1,000,000, such Borrower shall
make a mandatory prepayment of the Term Loans in an amount equal to such Net
Cash Proceeds. Within ten (10) days after receipt by any Borrower of the
proceeds of any offering of Equity Securities or Debt Securities, the Borrower
shall make a mandatory prepayment of the Term Loan in an amount equal to the
lesser of the Net Cash Proceeds thereof or the unpaid principal balance of the
Term Loans. Amounts prepaid on Term Loans may not be reborrowed. Each prepayment
pursuant to this Section 2.13(b) shall be accompanied by a payment of all
accrued and unpaid interest on the Term Loans prepaid and any applicable fees
and funding losses pursuant to Section 2.22.
(c) Whenever the Shareholders (as defined in the Stock Purchase
Agreement) shall elect pursuant to Section 9.1 or Section 9.2 of the Stock
Purchase Agreement to cause a Property or Affected Property (as defined therein)
to be conveyed to the Shareholders, the Borrower receiving payment in
consideration for such conveyance shall make a mandatory prepayment in the
amount of such payment, less any related expenses incurred by such Borrower, for
application to the Term Obligations, if any, and if no Term Obligations are
outstanding, to the Revolving Obligations. Contemporaneously with the Borrower's
execution and delivery of the assignment pursuant to either Section 9.1 or
Section 9.2, the Agent or the Collateral Agent, as appropriate, shall execute an
instrument (the "Discharge") in recordable form effective in the reasonable
opinion of Borrower's counsel to release and discharge all of the Liens
affecting the property conveyed which then exist in favor of the Collateral
Agent. The Discharge shall be delivered in escrow to the attorney for such
Borrower, who shall be authorized to deliver the Discharge to the Shareholders
when such attorney has evidence that the required mandatory prepayment has been
sent to the Agent.
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.
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2.15 Commitment Fee. To compensate the Lenders for maintaining funds
available, the Borrowers shall pay to the Agent for the account of the Lenders a
fee in the amount of three-eighths of one percent (.375%) per annum, calculated
on the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed (including the first day but excluding the last day), on the average
daily amount of the sum of (a) the Available Revolving Commitment and (b) the
Available Term Commitment. Such accrued commitment fees shall be payable on the
31st day of March, 1997, the last day of each third calendar month thereafter
during the Revolving Credit Commitment Period, and on the Revolving Credit
Commitment Termination Date.
2.16 Letter of Credit Fee. The Borrowers shall pay to the Agent for
the account of the Lenders a letter of credit fee in the amount of the
Applicable Margin for LIBO Rate Loans in effect at such time per annum,
calculated on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day), on the average daily amount of the
L/C Exposure. Accrued letter of credit fees shall be payable quarterly in
arrears on the 31st day of March, 1997, the last day of each third calendar
month thereafter during the Revolving Credit Commitment Period, and at Final
Maturity of the Revolving 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 for its own
account all fees owing or which may become owing under the Fee Letter as
provided therein.
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 pro rata benefit of all Lenders) the right, exercisable at
such time as any Event of Default shall occur, of offset or banker's lien
against all funds of 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 corresponding Letter of Credit or any
draft thereunder, or (b) any dispute between or among the Borrowers and any
beneficiary
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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 below that which such
Lender (or any Applicable Lending Office) could have achieved but for such
Regulatory Change.
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(c) Without limiting the effect of the other provisions of this
Section (but without duplication), in the event that any Regulatory Change or
the compliance by the Agent or any Lender therewith shall (i) impose, modify, or
hold applicable any reserve, special deposit, or similar requirement against any
Letter of Credit or obligation to issue Letters of Credit, or (ii) impose upon
the Agent or such Lender any other condition regarding any Letter of Credit or
obligation to issue Letters of Credit, and the result of any such event shall be
to increase the cost to the Agent or such Lender of issuing or maintaining any
Letter of Credit or obligation to issue Letters of Credit or any liability with
respect to Letter of Credit Payments, or to reduce any amount receivable in
connection therewith, then, within five Business Days of receipt of the
certificate provided for in Section 2.22(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
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
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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 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
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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, (iii) has informed any Borrower of a
Regulatory Change in accordance with Section 2.26, or (iv) is not in agreement
with the amount of any Borrowing Base redetermination which a group of Lenders
constituting at least the Required Lenders has approved, then in any such event
the Borrowers may, unless such Lender has notified the Borrowers that the
circumstances giving rise to such notice no longer apply, terminate, in whole
but not in part, the Commitments 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 of the
Terminated Lender, the Borrowers shall (i) obtain an agreement with one or more
Lenders to increase their Commitments and/or (ii) request any one or more other
banking institutions to become a "Lender" in place and instead of such
Terminated Lender and agree to accept 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 of the Terminated Lender being referred to herein as the
"Replacement Lenders"), such that the aggregate
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increased and/or accepted Total Facility Amounts of the Replacement Lenders
under clauses (i) and (ii) above equal the Total Facility Amount of the
Terminated Lender.
(c) The Notice of Termination shall include the name of the
Terminated Lender, the date the termination will occur (the "Termination Date"),
the Replacement Lender or Replacement Lenders to which the Terminated Lender
will assign its Commitments, and, if there will be more than one Replacement
Lender, the portion of the Terminated Lender's Commitments 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 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 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) then outstanding pro rata as aforesaid), (ii) the Terminated
Lender shall endorse its Notes, 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 Notes 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 all respects for the Terminated Lender from and
after such date with like effect as if becoming a Lender pursuant to the terms
of Section 9.1(b), and the Terminated Lender will have the rights and benefits
of an assignor under Section 9.1(b). To the extent not in conflict, the terms of
Section 9.1(b) shall supplement the provisions of this Section.
2.26 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
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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 the Credit 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 the Credit 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
Letter of Credit unless and until all matters incident to the consummation of
the transactions contemplated herein, including the review by the Agent or its
counsel of the title of KCS Medallion (or if consented to in writing by the
Agent, any other Borrower, any such Borrower being referred to as a "Substitute
Mortgagor") to the Material Properties, shall be satisfactory to the Agent and
each Lender, and the Agent shall have received, reviewed, and approved the
following documents and other items, appropriately executed when necessary and,
where applicable, acknowledged by one or more authorized officers of the
Borrowers, 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 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;
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(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;
(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;
(g) multiple counterparts, as requested by the Agent, of the
following documents, creating, evidencing, perfecting, and otherwise
establishing Liens in favor of the Collateral Agent in and to the
Collateral:
(i) Open-End Line of Credit Mortgage, Deed of Trust, Indenture,
Security Agreement, Financing Statement and Assignment of
Production from KCS Medallion or any Substitute Mortgagor (or
other similar security instrument, agreement or assignment
required to perfect a Lien in and to the Material Properties
in a given state) covering all Material Properties of KCS
Medallion or any Substitute Mortgagor in the States of
California, Colorado, Louisiana, Mississippi, Montana, New
Mexico, Oklahoma, Texas and Wyoming and all improvements,
personal property, and fixtures related thereto; and
(ii) Financing Statements from KCS Medallion or any Substitute
Mortgagor as debtor, constituent to the instrument described
in clause (i) above.
(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
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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 and other Permitted
Liens;
(j) confirmation, acceptable to the Agent, of the title of Borrower
or any Substitute Mortgagor to the Material Properties, free and clear of
Liens other than Permitted Liens;
(k) results satisfactory to the Agent in its discretion of a review
of the environmental reports furnished to the Agent by Borrowers;
(l) all operating, lease, sublease, royalty, sales, exchange,
processing, farmout, bidding, pooling, unitization, communitization, and
other agreements relating to the Mortgaged Properties requested by the
Agent or any Lender;
(m) engineering reports covering the Mortgaged Properties;
(n) 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;
(o) the opinion of special counsel in each of the States of
California, Colorado, Louisiana, Mississippi, Montana, New Mexico, Ohio,
North Dakota, Oklahoma, Texas, Utah and Wyoming, in the form attached
hereto as Exhibit IX, with such changes thereto as may be approved by the
Agent;
(p) certificates evidencing the insurance coverage required pursuant
to Section 5.16; and
(q) such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Agent or any Lender
may reasonably request.
(r) copies of the executed Settlement Agreement and Release (the
"Settlement Agreement" dated effective January 1, 1997 by and between KCS
Resources, Inc. and Tennessee Gas Pipeline Company, certified by the
Secretary or Assistant Secretary of KCS to be correct and complete,
together with evidence satisfactory to Agent in its sole discretion, that
the Joint Motions to Dismiss the Xxxxxx County Litigation as provided in
paragraph 2 of the Settlement Agreement and in the form provided pursuant
to Exhibit "C" thereof has either been irrevocably and irretrievably
transmitted to the Xxxxxx County, Texas District
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Clerk for delivery to the Court in which such cases are pending or the
Court has signed orders dismissing the Xxxxxx County Litigation as
requested in such Joint Motions to Dismiss.
3.2 Conditions Precedent to Each Revolving Loan. The obligations of
the Lenders to make each Revolving Loan are subject to the satisfaction of the
following additional conditions precedent:
(a) the Borrowers shall have delivered to the Agent a Borrowing
Request at least the requisite time prior to the requested date or time
for the relevant Loan; and each statement or certification made in such
Borrowing Request shall be true and correct in all material respects on
the requested date for such Revolving Loan;
(b) no Default or Event of Default shall exist or will occur as a
result of the making of the requested Revolving 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 Revolving 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 Revolving 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.
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3.3 Conditions Precedent to Issuance of Letters of Credit. The
obligation of the Agent, as the issuer of the Letters of Credit, to issue,
renew, or extend any Letter of Credit is subject to the satisfaction of the
following additional conditions precedent:
(a) the Borrowers shall have delivered to the Agent a written (or
oral, confirmed promptly in writing) request for the issuance, renewal, or
extension of a Letter of Credit at least three Business Days prior to the
requested issuance, renewal, or extension date and a Letter of Credit
Application at least one Business Day prior to the requested issuance
date; and each statement or certification made in such Letter of Credit
Application shall be true and correct in all material respects on the
requested date for the issuance of such Letter of Credit;
(b) no Default or Event of Default shall exist or will occur as a
result of the issuance, renewal, or extension of such Letter of Credit;
and
(c) the terms and provisions of the Letter of Credit or such renewal
or extension shall be reasonably satisfactory to the Agent, as the issuer
of the Letters of Credit.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and
to extend credit to the Borrowers, each Borrower represents and warrants to the
Agent and each Lender (which representations and warranties shall survive the
delivery of the Notes) that:
4.1 Due Authorization. The execution and delivery by the Borrowers of
this Agreement and the borrowings hereunder, the execution and delivery by the
Borrowers of the Notes and the other Loan Documents, the repayment of the Notes
and interest and fees provided for in the Notes and this Agreement, and the
performance of all obligations of the Borrowers under the Loan Documents are
within the power of the Borrowers, have been duly authorized by all necessary
corporate action by the Borrowers, and do not and will not (a) require the
consent of any Governmental Authority to be obtained by any Borrower, (b)
contravene or conflict with any Requirement of Law applicable to any Borrower or
the articles or certificate of incorporation, bylaws, or other organizational or
governing documents of the Borrowers, (c) contravene or conflict with any
material indenture, instrument, or other agreement, or any 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.
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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 Loan Balances", and (b) the Borrowers have
no defenses to, rights of setoff against, claims or counterclaims with respect
to, and no default exists under or with respect to any Indebtedness or
obligation of the Borrowers evidenced thereby.
4.5 Security Instruments. The provisions of each Security Instrument
executed by any Borrower is effective to create in favor of the Agent, a legal,
valid, and enforceable Lien in all right, title, and interest of such Borrower
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 Borrower 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, 1995 and September 30,
1996 (subject, in the case of the Financial Statements as of September 30, 1996,
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 December 31, 1995 or
September 30, 1996, which could reasonably be expected to have a Material
Adverse Effect on KCS or KCS Medallion except the verdict in and the settlement
of the Xxxxxx County Litigation.
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
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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 Borrower's 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, 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
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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 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
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(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 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 the 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 Borrower 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, no Borrower (a) is obligated in
any material respect by virtue of any prepayment made under any contract
containing a "take-or-pay" or "prepayment" provision or under any similar
agreement to deliver hydrocarbons produced from or allocated to any of the
Mortgaged Property at some future date without receiving full payment therefor
within 90 days of delivery, and (b) has not 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
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each Borrower knows of no valid basis for any such claim. The use of such
Intellectual Property by each Borrower does not infringe on the rights of any
Person, except for such claims and infringements as are not, in the aggregate,
likely to have a Material Adverse Effect.
4.22 Labor Matters. Except as disclosed on Exhibit X under the
heading "Labor Matters," as of the Closing Date there are no collective
bargaining agreements covering the employees of any of the Borrowers or any
Affiliates of any of the Borrowers. None of such Persons has suffered any
strikes, walkouts, work stoppages or other material labor difficulty within the
last five years, other than those which could not reasonably be expected to have
a Material Adverse Effect.
4.23 Casualties or Taking of Property. Except as disclosed on Exhibit
X under the heading "Casualties," since June 30, 1996, no Material Adverse
Effect has occurred with respect to the business nor any Property of any
Borrower as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of Property, or cancellation of contracts, permits, or concessions by any
Governmental Authority, riot, activities of armed forces, or acts of God.
4.24 Locations of 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
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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.
5.4 Oil and Gas Reserve Reports. (a) Deliver to the Agent no later
than forty-five (45) days after the end of each fiscal year during the term of
this Agreement, Sufficient Copies of engineering reports in form and substance
reasonably satisfactory to the Agent, certified by any of the Persons listed
under the heading "Approved Petroleum Engineers" on Exhibit X or any other
nationally- or regionally-recognized independent consulting petroleum engineers
reasonably acceptable to the Agent as fairly and accurately setting forth, in
accordance with the principles set forth in the Standards Pertaining to the
Estimating and Auditing of Oil and Gas Reserves Information as at the time are
promulgated by the Society of Petroleum Engineers, (i) the proven and producing,
shut-in, behind-pipe, and undeveloped oil and gas reserves (separately
classified as such) attributable to the Mortgaged Properties as of December 31
of the year for which such reserve reports are furnished, (ii) the aggregate
present value of the future net income with respect to such Mortgaged
Properties, discounted at a stated per annum discount rate of proven and
producing reserves, (iii) projections of the annual rate of production, gross
income, and net income with respect to such proven and producing reserves, and
(iv) information with respect to the "take-or-pay," "prepayment," and material
gas-balancing liabilities of the Borrowers.
(b) Deliver to the Agent no later than forty-five (45) days after
the end of each second quarterly period of each fiscal year during the term of
this Agreement, Sufficient Copies of engineering reports in form and substance
reasonably satisfactory to the Agent prepared by or under the supervision of the
chief petroleum engineer of the Borrowers evaluating the Mortgaged Properties as
of June 30 of the year for which such reserve reports are furnished and updating
the information provided in the reports pursuant to Section 5.4(a).
(c) Each of the reports provided pursuant to this Section shall be
submitted to the Agent together with such additional data concerning pricing,
quantities of production from the Mortgaged Properties, volumes of production
sold, purchasers of production, gross revenues, expenses, and such other
information and engineering and geological data with respect thereto as the
Agent may reasonably request.
5.5 Title Opinions; Title Defects. Promptly upon the written request
of the Agent made no more than once in any calendar year commencing with 1997,
furnish to the Agent at the election of the Borrowers either (a) clean xxxxxxx
runsheets with respect to the Material Properties, (b) title opinions with
respect to any or all other Mortgaged Properties, in
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form and substance and by counsel reasonably satisfactory to the Agent, or (c)
other confirmation of title reasonably acceptable to the Agent, covering Oil and
Gas Properties constituting not less than 75% of the then present value of the
Mortgaged Properties, determined in accordance with the most recent Reserve
Reports provided to the Agent in accordance with Section 5.4; and promptly, but
in any event within 60 days after notice by the Agent of any defect which is
material (in the reasonable opinion of the Agent) in value, in the title of the
Borrowers to any of such Oil and Gas Properties, clear such title defects, and,
in the event any such title defects are not cured in a timely manner, the value
of the affected Oil and Gas Properties shall be excluded from the Borrowing
Base, or at the Borrowers' election, the Borrowers shall pay all related costs
and fees incurred by the Agent to cure such title defects.
5.6 Notices of Certain Events. Deliver to the Agent, 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,
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certificate, or approval of the relevant Governmental Authority, or the
violation of any Environmental Law, or the revocation, suspension, or
forfeiture of or failure to renew, any permit, license, registration,
approval, or authorization;
(g) any Reportable Event or imminently expected Reportable Event
with respect to any Plan; any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan; the institution
of proceedings or the taking of any other action by the PBGC, any
Borrower, 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) 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.
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5.9 Payment of Assessments and Charges. Pay all taxes, assessments,
governmental charges, rent, and other Indebtedness which, if unpaid, might
become a Lien against the Property of any Borrower, except any of the foregoing
being contested in good faith and as to which adequate reserve in accordance
with GAAP has been established or unless failure to pay would not have a
Material Adverse Effect.
5.10 Maintenance of Corporate Existence and Good Standing. (a)
Maintain its corporate existence and good standing in its jurisdiction of
incorporation and (b) maintain its corporate qualification and good standing in
all jurisdictions wherein the Property now owned or hereafter acquired or
business now or hereafter conducted by such Borrower necessitates same, unless
the failure to do so would not have a Material Adverse Effect.
5.11 Payment of Notes; Performance of Obligations. Pay the Notes
according to the reading, tenor, and effect thereof, as modified hereby, and do
and perform every act and discharge all of its other Obligations.
5.12 Further Assurances. Promptly after discovery thereof cure any
defects, errors, or omissions in the execution and delivery of any of the Loan
Documents and execute, acknowledge, and deliver to the Agent such other
assurances and instruments as shall, in the reasonable opinion of the Agent, be
necessary to fulfill the terms of the Loan Documents.
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 connection with any action
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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 the Borrower and/or a trustee,
receiver, custodian, or liquidator of the 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 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.
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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 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.
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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 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, and (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.
6.2 Contingent Obligations. Create, incur, assume, or suffer to exist
any Contingent Obligation; provided, however, the foregoing restriction shall
not apply to (a) performance guarantees and performance, surety or other bonds
provided in the ordinary course of business, including guaranties and letters of
credit supporting such performance obligations, (b) trade credit incurred or
operating leases entered into in the ordinary course of business, (c) guaranties
and contribution obligations under the Senior Note Indenture, and (d)
endorsements of instruments for deposit or collection in the ordinary course of
business.
6.3 Liens. Create, incur, assume, or suffer to exist any Lien on any
of its Oil and Gas Properties or any other Property, whether now owned or
hereafter acquired; provided, however, the foregoing restrictions shall not
apply to (a) Permitted Liens, (b) landlord's Liens in any Property which is not
Collateral, (c) Liens existing on cash deposits in connection with Indebtedness
permitted in Section 6.1(d), (d) Liens securing the Indebtedness permitted in
Section 6.1(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,
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government contracts and leases, performance and return of money bonds and
similar obligations (other than for payment of Debt) and covering Property which
is not Collateral.
6.4 Negative Pledge Agreements. Create, enter into, execute, incur,
assume or permit to exist, or will permit any of its Subsidiaries to create,
enter into, execute, incur, assume or permit to exist, any contract, agreement
or understanding (other than the Loan Documents) which in any manner grants,
conveys, creates or imposes, or which in any way prohibits or restricts the
granting, conveying, creation or imposition of, any Lien on any Property of the
Borrowers, or which requires the consent of, or notice to, other Persons in
connection therewith; provided, however, the foregoing restrictions shall not
apply to (a) any of the foregoing as may be required under the Senior Note
Indenture, and (b) any of the foregoing with respect to any Liens permitted
pursuant to Section 6.3.
6.5 Sales of Assets. During each Sales Period, sell, transfer, or
otherwise dispose of, in one or any series of transactions, assets, whether now
owned or hereafter acquired, the aggregate value of all of which exceeds
$5,000,000 or enter into any agreement to do so; provided, however, the
foregoing restriction shall not apply to (a) the sale of hydrocarbons or
inventory in the ordinary course of business other than the sale of a production
payment and provided that no contract for the sale of hydrocarbons shall
obligate the Borrowers to deliver hydrocarbons produced from any of the
Mortgaged Property at some future date without receiving full payment therefor
within 90 days of delivery, or (b) the sale or other disposition of Property
destroyed, lost, worn out, damaged, or having only salvage value or no longer
used or useful in the business of such Borrower. For purposes of this Section
6.5, the value of any Oil and Gas Property shall be the discounted present value
of such Property as shown on the most recent Reserve Report delivered to the
Agent pursuant to this Agreement.
6.6 Leasebacks. Enter into any agreement to sell or transfer any
Property and thereafter rent or lease as lessee such Property or other Property
intended for the same use or purpose as the Property sold or transferred.
6.7 Loans; Advances; Investments. Except as permitted by Section 6.1,
make or agree to make or allow to remain outstanding any loans or advances to or
acquire Investments in, or purchase or otherwise acquire all or substantially
all of the assets of any Person; provided, however, the foregoing restrictions
shall not apply to (a) advances or extensions of credit in the form of accounts
receivable incurred in the ordinary course of business and upon terms common in
the industry for such accounts receivable, (b) advances to employees of the
Borrower for the payment of expenses in the ordinary course of business, (c) the
purchase or acquisition of Oil and Gas Properties, (d) Investments in the form
of (i) debt securities issued or directly and fully guaranteed or insured by the
United States Government or any agency or instrumentality thereof, with
maturities of no more than one year from the date of acquisition, (ii)
commercial paper of a domestic issuer rated at the date of acquisition at least
P-2 by Xxxxx'x Investor Service, Inc. or A-2 by Standard & Poor's Corporation
and with maturities of no more than one year from the date of acquisition, (iii)
repurchase agreements covering debt securities or commercial paper of the type
permitted in this Section, certificates of deposit, demand deposits, eurodollar
time deposits, overnight bank deposits and bankers' acceptances, with maturities
of no more than one year from the date of acquisition, issued by or acquired
from or through the Agent, any Lender, or any bank or trust company organized
under the laws of the United States or any state thereof
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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 capital stock of the Borrowers.
6.9 Environmental Matters. Cause or permit any of its Property to be
in violation of any Environmental Law or do anything or permit anything to be
done that would subject any of its Property to be subject to any remedial
obligations under any Environmental Law, assuming disclosure to applicable
Governmental Authorities of all relevant facts, conditions, and circumstances,
except where the foregoing would not have a Material Adverse Effect.
6.10 Issuance of Stock; Changes in Corporate Structure. (a) Other
than KCS, issue or agree to issue additional shares of capital stock, in one or
any series of transactions; 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
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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.
6.16 Tangible Net Worth of KCS Medallion. Permit Tangible Net Worth
of the KCS Medallion Group as of the close of any fiscal quarter to be less than
$48,000,000 plus 50% of positive Net Income of the KCS Medallion Group and 75%
of the net proceeds from any offering by any member of the KCS Medallion Group
or any of their respective Subsidiaries of capital stock or rights to acquire
capital stock in each quarter, beginning with the quarter commencing on January
1, 1997.
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 the close of any fiscal quarter
to be less than $75,000,000 plus 50% of positive Net Income of KCS and its
Subsidiaries on a consolidated basis and 75% of the net proceeds from any
offering 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 commencing April 1, 1996.
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;
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(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 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;
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(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 or any
Affiliate under the Racketeering Influence and Corrupt Organizations
Statute (18 U.S.C. ss.1961 et seq.), the result of which could reasonably
be expected to be the forfeiture or transfer of any material Property of
such Borrower or any Affiliate 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, or any Affiliate 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) subject to Section 2.13(c) 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
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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 dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity, or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by each Borrower; (ii) the Commitments
shall immediately cease and terminate unless and until reinstated by the Agent
and the Lenders in writing; and (iii) with the oral consent of the Required
Lenders (confirmed promptly in writing), the Agent and each Lender are hereby
authorized at any time and from time to time, without notice to the Borrowers
(any such notice being expressly waived by each Borrower), to set-off and apply
any and all deposits (general or special, time or demand, provisional or final)
held by the Agent or such Lender and any and all other indebtedness at any time
owing by the Agent or such Lender to or for the credit or account of the
Borrowers against any and all of the Obligations.
(b) Upon the occurrence of any Event of Default other than those
specified in Sections 7.1(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, shall, declare the Commitments terminated,
whereupon the Commitments shall immediately cease and terminate unless and until
reinstated by the Agent and the Lenders in writing; and (iii) with the oral
consent of the Required Lenders (confirmed promptly in writing), the Agent and
each Lender are hereby authorized at any time and from time to time, without
notice to the Borrowers (any such notice being expressly waived by each
Borrower), to set-off and apply any and all deposits (general or special, time
or demand, provisional or final) held by the Agent or such Lender and any and
all other indebtedness at any time owing by the Agent or such Lender to or for
the credit or account of the Borrowers against any and all of the Obligations.
(c) Upon the occurrence of any Event of Default, the Lenders, with
the oral consent of the Required Lenders (confirmed promptly in writing), and
the Agent, in accordance 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.
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ARTICLE VIII
THE AGENT
8.1 Appointment. Each Lender hereby designates and appoints CIBC as
the Agent and CIBC Inc. as the Collateral Agent under this Agreement and the
other Loan Documents. Each Lender authorizes the Agent and the Collateral Agent
to take such action on behalf of such Lender under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent and the Collateral Agent by
the terms of this Agreement and the other Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in this Agreement or in any other Loan Document,
neither the Agent nor the Collateral Agent shall have any duties or
responsibilities except those expressly set forth herein or in any other Loan
Document or any fiduciary relationship with any Lender; and no implied
covenants, functions, responsibilities, duties, obligations, or liabilities on
the part of the Agent or the Collateral Agent shall be read into this Agreement
or any other Loan Document or otherwise exist against the Agent or the
Collateral Agent.
8.2 Delegation of Duties. Each of the Agent and the Collateral Agent
may execute any of its duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. Neither the Agent nor
the Collateral Agent shall be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
8.3 Exculpatory Provisions. Neither the Agent, the Collateral Agent,
nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (a) required to initiate or conduct any
litigation or collection proceedings hereunder, except with the concurrence of
the Required Lenders and contribution by each Lender of its Percentage Share of
costs reasonably expected by the Agent or the Collateral Agent to be incurred in
connection therewith, (b) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for gross negligence or willful misconduct of the
Agent, the Collateral Agent, or such Person), or (c) responsible in any manner
to any Lender for any recitals, statements, representations or warranties made
by the Borrowers or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent or the Collateral Agent
under or in connection with, this Agreement or any other Loan Document, or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Document or for any failure of 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,
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notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including counsel to the Borrowers), independent accountants and other experts
selected by the Agent or the Collateral Agent. Each of the Agent and the
Collateral Agent may deem and treat the payee of any Note as the owner thereof
for all purposes unless and until a written notice of assignment, negotiation,
or transfer thereof shall have been received by the Agent. Each of the Agent and
the Collateral Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate or of all of the Lenders if required by any provision of this
Agreement and contribution by each Lender of its Percentage Share of costs
reasonably expected by the Agent or the Collateral Agent, as the case may be, to
be incurred in connection therewith. Each of the Agent and the Collateral Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the other Loan Documents in accordance with a request
of the Required Lenders. Such request and any action taken or failure to act
pursuant thereto shall be binding upon the Lenders and all future holders of the
Notes. In no event shall either the Agent or the Collateral Agent be required to
take any action that exposes such agent to personal liability or that is
contrary to any Loan Document or applicable Requirement of Law.
8.5 Notice of Default. Neither the Agent nor the Collateral Agent
shall be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default unless such agent has received notice from a Lender or the
Borrowers referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
such agent receives such a notice, such agent shall promptly give notice thereof
to the Lenders. The Agent and the Collateral Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided that unless and until the Agent and the
Collateral Agent shall have received such directions, subject to the provisions
of Section 7.2, each of the Agent and the Collateral Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders. In the event that the officer of the Agent or the
Collateral Agent primarily responsible for the lending relationship with the
Borrowers or the officer of any Lender primarily responsible for the lending
relationship with the Borrowers becomes aware that a Default or Event of Default
has occurred and is continuing, such agent or such Lender, as the case may be,
shall use its good faith efforts to inform the other Lenders and/or the other
agents, as the case may be, promptly of such occurrence. Notwithstanding the
preceding sentence, failure to comply with the preceding sentence shall not
result in any liability to the Agent, the Collateral Agent, or any Lender.
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
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that it has, independently and without reliance upon the Agent, the Collateral
Agent, or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, condition (financial and otherwise) and
creditworthiness of the Borrowers and the value of the Collateral and other
Properties of the Borrowers and has made its own decision to enter into this
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Agent or the Collateral Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, condition (financial and otherwise) and creditworthiness
of the Borrowers and the value of the Collateral and other Properties of the
Borrowers. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Agent or the Collateral Agent hereunder,
neither the Agent nor the Collateral Agent shall have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, operations, property, condition (financial and otherwise), or
creditworthiness of the Borrowers or the value of the Collateral or other
Properties of the Borrowers which may come into the possession of the Agent, the
Collateral Agent or any of their respective officers, directors, employees,
agents, attorneys-in-fact or affiliates.
8.7 Indemnification. EACH LENDER AGREES TO INDEMNIFY THE AGENT AND
THE COLLATERAL AGENT AND EACH OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT AND AFFILIATES (TO THE EXTENT NOT REIMBURSED BY THE BORROWERS
AND WITHOUT LIMITING THE OBLIGATION OF THE BORROWERS TO DO SO), RATABLY
ACCORDING TO THE PERCENTAGE SHARE OF SUCH LENDER, FROM AND AGAINST ANY AND ALL
LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER WHICH
MAY AT ANY TIME (INCLUDING ANY TIME FOLLOWING THE PAYMENT AND PERFORMANCE OF ALL
OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT) BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST THE AGENT, THE COLLATERAL AGENT OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES IN ANY
WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY OTHER DOCUMENT CONTEMPLATED OR REFERRED TO HEREIN OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR ANY ACTION TAKEN OR OMITTED BY THE AGENT, THE COLLATERAL
AGENT OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT OR AFFILIATES UNDER OR IN CONNECTION WITH ANY OF THE
FOREGOING, INCLUDING ANY LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS IMPOSED,
INCURRED OR ASSERTED AS A RESULT OF THE NEGLIGENCE, 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
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OR AFFILIATES. THE AGREEMENTS IN THIS SECTION SHALL SURVIVE THE PAYMENT AND
PERFORMANCE OF ALL OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
8.8 Restitution. Should the right of the Agent, the Collateral Agent
or any Lender to realize funds with respect to the Obligations be challenged and
any application of such funds to the Obligations be reversed, whether by
Governmental Authority or otherwise, or should the Borrowers otherwise be
entitled to a refund or return of funds distributed to the Lenders in connection
with the Obligations, the Agent, the Collateral Agent or such Lender, as the
case may be, shall promptly notify the Lenders of such fact. Not later than
Noon, Eastern Standard or Daylight Savings Time, as the case may be, of the
Business Day following such notice, each Lender shall pay to the Agent an amount
equal to the ratable share of such Lender of the funds required to be returned
to the Borrowers. The ratable share of each Lender shall be determined on the
basis of the percentage of the payment all or a portion of which is required to
be refunded originally distributed to such Lender, if such percentage can be
determined, or, if such percentage cannot be determined, on the basis of the
Percentage Share of such Lender. The Agent shall forward such funds to the
Borrowers or to the Lender required to return such funds. If any such amount due
to the Agent is made available by any Lender after Noon, Eastern Standard or
Daylight Savings Time, as the case may be, of the Business Day following such
notice, such Lender shall pay to the Agent (or the Lender required to return
funds to the Borrowers, as the case may be) for its own account interest on such
amount at a rate equal to the Federal Funds Rate for the period from and
including the date on which restitution to the Borrowers is made by the Agent
(or the Lender required to return funds to the Borrowers, as the case may be) to
but not including the date on which such Lender failing to timely forward its
share of funds required to be returned to the Borrowers shall have made its
ratable share of such funds available.
8.9 Agents in Individual Capacity. Each of the Agent and the
Collateral Agent and their affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrowers as though the
Agent and the Collateral Agent were not agents hereunder. With respect to any
Note issued to the Lender serving as the Collateral Agent, the Collateral Agent
shall have the same rights and powers under this Agreement as a Lender and may
exercise such rights and powers as though it were not the Collateral Agent. The
terms "Lender" and "Lenders" shall include the Collateral Agent in its
individual capacity.
8.10 Successor Agent. Provided that a successor agent has been
appointed and has accepted such appointment as provided below, the Agent or the
Collateral Agent may resign upon 30 days' notice to the Lenders and the
Borrowers. If the Agent or the Collateral Agent shall resign as an agent under
this Agreement and the other Loan Documents, Lenders for which the Percentage
Shares aggregate at least sixty-six and two-thirds percent (66-2/3%) shall
appoint from among the Lenders a successor agent or collateral agent, as the
case may be, for the Lenders, whereupon such successor agent shall succeed to
the rights, powers and duties of such agent. The term "Agent" or "Collateral
Agent" shall mean such successor agent effective upon its appointment. Upon
written acceptance by such successor agent (a copy of which shall be furnished
to the Borrowers), the rights, powers, and duties of the former agent as Agent
or Collateral Agent shall be terminated, without any other or further act or
deed on the part of such former agent or any of the parties to this Agreement or
any holders of the Notes. After the resignation of the Agent or the Collateral
Agent hereunder as an agent, the provisions of this
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Article VIII and Sections 2.2(d), 5.13, and 5.17 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was an agent under
this Agreement and the other Loan Documents.
8.11 Applicable Parties. The provisions of this Article are solely
for the benefit of the Agent, the Collateral Agent and the Lenders, and the
Borrowers shall not have any rights as a third party beneficiary or otherwise or
any obligations under any of the provisions of this Article. In performing
functions and duties hereunder and under the other Loan Documents, the Agent and
the Collateral Agent shall act solely as the agent of the Lenders and do not
assume, nor shall either be deemed to have assumed, any obligation or
relationship of trust or agency with or for the Borrowers or any legal
representative, successor, and assign of the Borrowers.
ARTICLE IX
MISCELLANEOUS
9.1 Assignments; Participations. (a) The Borrowers may not assign any
of its rights or obligations under any Loan Document without the prior consent
of the Agent and the Lenders.
(b) With the consent of the Agent and the Borrowers (which consents
shall not be unreasonably withheld), any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
pursuant to an Assignment Agreement. Any such assignment shall be in the amount
of at least $10,000,000 (or any whole multiple of $1,000,000 in excess thereof),
and the assignee shall pay to the Agent a transfer fee in the amount of $3,500
for each such assignment. Any such assignment shall become effective upon the
execution and delivery to the Agent of the Assignment Agreement and the consent
of the Agent and the Borrowers. Promptly following receipt of an executed
Assignment Agreement, the Agent shall send to the Borrowers a copy of such
executed Assignment Agreement. Promptly following receipt of such executed
Assignment Agreement, the Borrowers shall execute and deliver, at its own
expense, new Notes to the assignee and, if applicable, the assignor, in
accordance with their respective interests, whereupon the prior Notes of the
assignor and, if applicable, the assignee, shall be cancelled and returned to
the Borrowers. Upon the effectiveness of any assignment pursuant to this Section
9.1(b), the assignee shall become a "Lender," if not already a "Lender," for all
purposes of the Loan Documents, and the assignor shall be relieved of its
obligations hereunder from and after the date of such assignment to the extent
of such assignment. If the assignor no longer holds any rights or obligations
under this Agreement, such assignor shall cease to be a "Lender" hereunder,
except that its rights under Sections 2.21 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
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such participation shall not constitute a "Lender" hereunder. In the case of any
such participation, the participant shall not have any rights under any Loan
Document, the rights of the participant in respect of such participation to be
against the granting Lender as set forth in the agreement with such Lender
creating such participation, and all amounts payable by the Borrower hereunder
shall be determined as if such Lender had not sold such participation. Each
participation agreement shall provide that the Lender that has sold or granted
the participation shall retain the sole right to take or refrain from taking any
action under the Loan Documents, except that such participation agreement may
provide that such Lender shall not, without the consent of the participant,
agree to any amendment or waiver that would have the effect, to the extent such
participant would be affected thereby, of (i) increasing the Commitments of such
Lender, (ii) extending the Revolving Credit Commitment Termination Date, (iii)
extending the Term Credit 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 and 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.
(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
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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.
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.
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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 Revolving Credit Commitment Termination Date, the
Term Credit Commitment Termination Date or Final Maturity, reduce any fee
payable for the account of the Lenders hereunder, release any, all or
substantially of the Collateral, reduce the amount of any Obligation, increase
the Revolving Credit Commitment Amount or the Term Credit Commitment Amount,
change the Borrowing Base except in accordance with Section 2.12 or change any
other provision applicable to the determination of the Borrowing Base, amend,
modify, or waive any provision of this Section or Sections 2.12, 5.13, 5.17 or
8.10, change the percentage specified in the definition of Required Lenders, or
consent to the assignment or transfer by the Borrowers of any of their rights or
obligations under this Agreement or the other Loan Documents, in any such case
without the written consent of all Lenders, (b) amend, modify, or waive any
provision of Article VIII or the rights or obligations of the Agent (including
its rights and obligations as issuer of the Letters of Credit) or the Collateral
Agent without the written consent of such agent, or (c) amend, modify, or waive
any provision relating to any Hedging Agreement without the written consent of
the Lender party thereto or whose affiliate is a party thereto. Any such
amendment, supplement, modification, or waiver shall apply equally to each of
the Lenders and shall be binding upon the 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
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confidence to the Borrowers or any Affiliate of the Borrowers with respect to
such information or through any other means other than through disclosure by the
Borrowers or any Affiliate of the Borrowers to the Agent, the Collateral Agent
or the Lenders, (vi) are disclosed with the Borrower's consent, (vii) must be
disclosed pursuant to any Requirement of Law, (viii) as may be required by law
or regulation or order of any Governmental Authority in any judicial,
arbitration or governmental proceeding or (ix) as may be requested by any
Governmental Authority pursuant to any bank examination or audit; provided,
however, that to the extent practicable and unless otherwise prohibited by any
Requirement of Law, any Person disclosing any non-public information pursuant to
clauses (vii) or (viii) shall endeavor in good faith to give the Borrowers at
least 5 days' prior written notice of such disclosure. Further, the Agent, the
Collateral Agent or a Lender may disclose any such information to any other
Lender or successor agent, any independent petroleum engineers or consultants,
any independent certified public accountants, any legal counsel employed by such
Person in connection with this Agreement or any other Loan Document, including
the enforcement or exercise of all rights and remedies hereunder or thereunder,
or any assignee or participant (including prospective assignees and
participants) in the Loans; provided, however, that the Agent, the Collateral
Agent or the Lenders impose on the Person to whom such information is disclosed
the same obligation to maintain the confidentiality of such information as is
imposed upon it hereunder and such Person agrees to be bound by the terms
hereof. Notwithstanding anything to the contrary provided herein, this
obligation of confidence shall cease three (3) years from the later of (a) Final
Maturity of the Revolving 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, the
provisions of 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.
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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.
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.
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IN WITNESS WHEREOF, this Agreement is executed effective as of the
date first above written.
BORROWER:
KCS MEDALLION RESOURCES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
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:
Telecopy:
KCS ENERGY, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
Address for Notices:
000 Xxxxxxxx Xx.
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
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00
Xxxxxxxxx Xxxxx 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: ___________________________________
Xxxxx X. Xxxxxx
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:
Telecopy:
MEDALLION GAS SERVICES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
Address for Notices:
000 Xxxxxxxx Xx.
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
73
00
Xxxxxxxxx Xxxxx of Business
and Chief Executive Office:
0000 Xxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention:
Telecopy:
GED ENERGY SERVICES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
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:
Telecopy:
AGENT:
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY
By: ___________________________________
Xxxxxxxx Xxxx
Authorized Signatory
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Address for Notices:
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Syndications Group
Telecopy: (000) 000-0000
with copies to:
CANADIAN IMPERIAL BANK OF COMMERCE
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
COLLATERAL AGENT AND A LENDER:
CIBC INC.
By: ___________________________________
Xxxxxxxx Xxxx
Authorized Signatory
Applicable Lending Office
for Base Rate Loans and
LIBO Rate Loans:
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Address for Notices:
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Telecopy: (000) 000-0000
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with copies to:
CIBC INC.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
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EXHIBIT I
[FORM OF REVOLVING NOTE]
PROMISSORY NOTE
$[______________] [____________], 1996
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("Maker,"
whether one or more) promises to pay to the order of [___________________]
("Payee"), at the banking quarters of Canadian Imperial Bank of Commerce, New
York Agency (in its capacity as Agent for Payee and others under the Credit
Agreement referred to hereinafter, the "Agent"), the sum of [__________________]
DOLLARS ($[_________]), or so much thereof as may be advanced against this Note
pursuant to the Credit Agreement dated of even date herewith by and among Maker,
Payee, the Agent, the Collateral Agent, and the lenders signatory thereto from
time to time (as amended, restated, or supplemented from time to time, the
"Credit Agreement," defined terms from which are used herein with the meaning
assigned thereto in the Credit Agreement, unless expressly provided to the
contrary herein) and remains unpaid, together with interest at the rates and
calculated as provided in the Credit Agreement. If there is more than one party
constituting Maker hereunder, the liability of all such parties for full
performance under this Note shall be joint and several.
Reference is hereby made to the Credit Agreement for matters
governed thereby, including, without limitation, certain events which will
entitle the holder hereof to accelerate the maturity of all amounts due
hereunder.
This Note is issued pursuant to, is a "Note" under, and is payable
as provided in the Credit Agreement. Subject to compliance with applicable
provisions of the Credit Agreement, Maker may at any time pay the full amount or
any part of this Note without the payment of any premium or fee, but such
payment shall not, until this Note is fully paid and satisfied, excuse the
payment as it becomes due of any payment on this Note provided for in the Credit
Agreement.
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.
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THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICT OF LAWS.
KCS MEDALLION RESOURCES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
KCS ENERGY, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
KCS ENERGY SERVICES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
MEDALLION GAS SERVICES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
GED ENERGY SERVICES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
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EXHIBIT II
[FORM OF TERM NOTE]
TERM NOTE
$_____________ [Date]
FOR VALUE RECEIVED, the undersigned unconditionally promises to pay to the
order of ________________________________ (the "Lender"), at the banking
quarters of Canadian Imperial Bank of Commerce, New York Agency (in its capacity
as Agent for Lender and others under the Credit Agreement referred to
hereinafter (the "Agent") (as hereinafter defined) located in New York City, New
York, on or before the Final Maturity hereof (as defined in the Credit Agreement
hereafter defined), the principal sum of _____________________________________
DOLLARS ($____________________), or, if less, the aggregate unpaid principal
amount of the Term Loans (as defined in the Credit Agreement hereinafter
defined) made by the Lender to the undersigned pursuant to the Credit Agreement
dated of even date herewith by and among the undersigned Lender, the Agent, the
Collateral Agent and the Lenders signatory thereto (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. At the Lender's option, the Term
Loans made to the undersigned may either be set forth on the grid schedule
attached hereto (and any continuation thereof), or in the records of the Lender;
provided that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligations of the undersigned hereunder. Prior
to any transfer hereof, all Term Loans made by the Lender, the respective
maturities thereof and all repayments of the principal thereof shall be endorsed
by the Lender on the grid schedule attached hereto, or on a continuation of such
schedule attached to and made a part hereof; provided that the failure of the
Bank to make any such recordation or endorsement shall not affect the
obligations of the undersigned.
The undersigned also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement; provided,
however, that in no event shall such interest exceed the Highest Lawful Rate (as
hereinafter defined).
All payments of principal and interest hereunder shall be made in lawful
money of the United States of America in freely transferable United States
dollars.
"Highest Lawful Rate" shall mean the maximum nonusurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on this Note under laws applicable to the payee
which are presently in effect or, to the extent allowed by applicable law, under
such laws which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow. Determination of the
rate of interest for the purpose of determining whether the Loans represented
hereby are
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85
usurious under all applicable laws shall be made by amortizing, prorating,
allocating, and spreading, in equal parts during the period of the full stated
term of the Loans represented hereby, all interest at any time contracted for,
charged, or received from the undersigned in connection with such Loans.
This Note is one of the Term Notes referred to in and is entitled to the
benefits of the Credit Agreement and secured by the Security Instruments (as
such term is defined in the Credit Agreement). Reference is hereby made to the
Credit Agreement for a statement of additional provisions relating to interest,
the prepayment rights and obligations of the Maker, a description of the
properties and assets mortgaged, encumbered and assigned, the nature and extent
of the security and the rights of the parties to the Security Instruments in
respect of such security, and for a statement of the terms and conditions under
which the due date of this Note may be accelerated. Upon the occurrence and
during the continuance of any Event of Default as specified in the Credit
Agreement, the principal balance hereof and the interest accrued hereon may be
declared to be forthwith due and payable in accordance with the Credit
Agreement.
All parties hereto, whether as makers, endorsees, or otherwise, severally
waive presentment for payment, demand, protest, notice of intent to accelerate,
notice of acceleration, notice of dishonor and all other notices whatsoever in
respect of this Note.
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 SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
KCS MEDALLION RESOURCES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
KCS ENERGY, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
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KCS ENERGY SERVICES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
MEDALLION GAS SERVICES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
GED ENERGY SERVICES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
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LOANS AND PRINCIPAL PAYMENTS
====================================================================================================================================
Date Type of Loan Made Amount of Principal Repaid Unpaid Principal Balance
------------------------------------------------------------------------------------------------------------------------------------
Base Rate Eurodollar Rate Base Rate Eurodollar Rate Base Rate Eurodollar Rate Total Notation
Made By
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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 Credit Agreement dated as of
____________, 1996 (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, Medallion Gas Services, Inc., a Delaware
corporation and GED Energy 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:
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"Assigned Interest" shall mean all of Assignor's (in its capacity as
a "Lender") rights and obligations (i) under the Credit Agreement and the
other Loan Documents in respect of [all of] the [portion of the] Total
Facility Amount of the Assignor in the principal amount equal to
$___________, including, without limitation, any obligation to participate
pro rata in any L/C Exposure, (ii) to make Revolving Loans under its
Revolving Credit Commitment up to the lesser of the Revolving Facility
Amount referenced above or the Borrowing Base in effect from time to time
and any right to receive payments for the Revolving Loans currently
outstanding under its Revolving Credit Commitment in the principal amount
of $ (the "Loan Balance of Revolving Loans"), and (iii) to make Term Loans
under its Term Credit Commitment up to the Term Credit Facility Amount and
any right to receive payments for the Term Loans currently outstanding
under its Term Credit Commitment in the principal amount of $___________
(the "Loan Balance of Term Loans") plus the interest and fees which will
accrue from and after the Assignment Date.
"Assignment Date" shall mean ________________, 199__.
ARTICLE II
SALE AND ASSIGNMENT
2.1 Sale and Assignment. On the terms and conditions set forth herein,
effective on and as of the Assignment Date, the Assignor hereby sells, assigns
and transfers to the Assignee, and the Assignee hereby purchases and assumes
from the Assignor, all of the right, title and interest of the Assignor in and
to, and all of the obligations of the Assignor in respect of, the Assigned
Interest. Such sale, assignment and transfer is without recourse and, except as
expressly provided in this Agreement, without representation or warranty.
2.2 Assumption of Obligations. The Assignee agrees with the Assignor (for
the express benefit of the Assignor and the Borrowers) that the Assignee will,
from and after the Assignment Date, assume and perform all of the obligations of
the Assignor in respect of the Assigned Interest. From and after the Assignment
Date for matters accruing or arising from and after the Assignment Date: (a) the
Assignor shall be released from the Assignor's obligations in respect of the
Assigned Interest, and (b) the Assignee shall be entitled to all of the
Assignor's rights, powers and privileges under the Credit Agreement and the
other Loan Documents in respect of the Assigned Interest.
2.3 Consent to Assignment. By executing this Agreement as provided below,
in accordance with Section 9.1(b) of the Credit Agreement, the Agent and each of
the Borrowers hereby acknowledges notice of the transactions contemplated by
this Agreement and consents to such transactions.
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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 Loan Balance of Revolving Loans and
the Loan Balance of Term Loans, if any. An amount equal to all accrued and
unpaid interest and fees shall be paid to the Assignor as provided in Section
3.2 (iii) below. Except as otherwise provided in this Agreement, all payments
hereunder shall be made in Dollars and in immediately available funds, without
setoff, deduction or counterclaim.
3.2 Allocation of Payments. The Assignor and the Assignee agree that (i)
the Assignor shall be entitled to any payments of principal with respect to the
Assigned Interest made prior to the Assignment Date, together with any interest
and fees with respect to the Assigned Interest accrued prior to the Assignment
Date, (ii) the Assignee shall be entitled to any payments of principal with
respect to the Assigned Interest made from and after the Assignment Date,
together with any and all interest and fees with respect to the Assigned
Interest accruing from and after the Assignment Date, and (iii) the Agent is
authorized and instructed to allocate payments received by it for account of the
Assignor and the Assignee as provided in the foregoing clauses. Each party
hereto agrees that it will hold any interest, fees or other amounts that it may
receive to which the other party hereto shall be entitled pursuant to the
preceding sentence for account of such other party and pay, in like money and
funds, any such amounts that it may receive to such other party promptly upon
receipt.
3.3 Delivery of Notes. Promptly following the receipt by the Assignor of
the consideration required to be paid under Section 3.1 hereof, the Assignor
shall, in the manner contemplated by Section 9.1(b) of the Credit Agreement, (i)
deliver to the Agent (or its counsel) the 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:
III-iii
91
(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
III-iv
92
other Person (other than Assignor) to perform any of its obligations thereunder
or for the existence, value, perfection or priority of any collateral security
or the financial or other condition of any Borrower 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
III-v
93
intended recipient at its "Address for Notices" specified below its name on the
signature pages hereof or, as to either party, at such other address as shall be
designated by such party in a notice to the other party.
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
94
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
95
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
96
GED ENERGY SERVICES, INC.
By: _______________________________
Printed Name: _____________________
Title: ____________________________
III-ix
97
EXHIBIT IV
[FORM OF BORROWING REQUEST]
Canadian Imperial Bank of Commerce,
acting through its New York agency,
as Agent
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Syndications Group
Telecopy: (000) 000-0000
Re: Credit Agreement dated as of _________, 1996, by and among KCS
Medallion Resources, Inc. (the "Borrower"), KCS Energy, Inc., KCS
Energy Services, Inc., Medallion Gas Services, Inc. and GED Energy
Services, Inc., Canadian Imperial Bank of Commerce, acting through
its New York agency, as Agent, and the lenders signatory thereto
from time to time (as amended, restated, or supplemented from time
to time, the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to the Credit Agreement, the Borrowers hereby make the
requests indicated below:
|_| 1. |_| Term Loans |_| Revolving Loans
(a) Amount of new Loan: $____________
(b) Requested funding date: ___________, 19__
(c) $________________ of such Loan is to be a Base Rate Loan; and
$________________ of such Loan is to be a LIBO Rate Loan.
(d) Requested Interest Period for LIBO Rate Loan: ____ months.
|_| 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
98
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 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: ___________________________________
Xxxxx X. Xxxxxx
Vice President
KCS ENERGY, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
KCS ENERGY SERVICES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
IV-ii
99
MEDALLION GAS SERVICES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
GED ENERGY SERVICES, INC.
By: ___________________________________
Xxxxx X. Xxxxxx
Vice President
IV-iii
100
EXHIBIT V
FACILITY AMOUNTS
================================================================================
Revolving Team Credit
Percentage Credit Facility Facility Total Facility
Name of Lender Share Amount Amount Amount
--------------------------------------------------------------------------------
CIBC Inc. 100% $150,000,000 $30,000,000 $180,000,000
--------------------------------------------------------------------------------
================================================================================
V-i
101
EXHIBIT VI
[FORM OF COMPLIANCE CERTIFICATE]
___________, 19__
Canadian Imperial Bank of Commerce,
acting through its New York agency,
as Agent
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Syndications Group
Telecopy: (000) 000-0000
Re: Credit Agreement dated as of _________, 1996, by and among KCS
Medallion Resources, Inc., KCS Energy, Inc. ("KCS"), KCS Energy
Services, Inc., Medallion Gas Services, Inc. and GED Energy
Services, Inc., (collectively, "Borrowers"), Canadian Imperial Bank
of Commerce, acting through its New York agency, as Agent, and the
lenders signatory thereto from time to time (as amended, restated,
or supplemented from time to time, the "Credit Agreement")
Ladies and Gentlemen:
1. Pursuant to applicable requirements of the Credit Agreement, the
undersigned, 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:
(a) 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
VI-i
102
Required Actual
-------- ------
Not less than $48,000,000 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 $75,000,000 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
(b) The Debt of KCS/KCS EBITDA ratio, as of the close of business on
_______________, is _________ to 1.0.
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
KCS ENERGY, INC.
By: _________________________________
Printed Name:
Title:
VI-ii
103
EXHIBIT VII
MATERIAL PROPERTIES
NO. PROPERTY NAME FIELD COUNTY/PARISH ST
4 RANCHO SAN FRN 2 NEWHALL-POTRERO LOS ANGELES CA
5 RANCHO SAN FRN 7 NEWHALL-POTRERO LOS ANGELES CA
6 RANCHO SAN FRN 16 NEWHALL-POTRERO LOS ANGELES CA
7 RANCHO SAN FRN 19 NEWHALL-POTRERO LOS ANGELES CA
8 RANCHO SAN FRN 21 NEWHALL-POTRERO LOS ANGELES CA
9 RANCHO SAN FRN 29 NEWHALL-POTRERO LOS ANGELES CA
10 RANCHO SAN FRN 45 NEWHALL-POTRERO LOS ANGELES CA
11 RANCHO SAN FRN 58 NEWHALL-POTRERO LOS ANGELES CA
12 RANCHO SAN FRN 69 NEWHALL-POTRERO LOS ANGELES CA
13 RANCHO SAN FRN 73 NEWHALL-POTRERO LOS ANGELES CA
14 RANCHO SAN FRN 74 NEWHALL-POTRERO LOS ANGELES CA
15 RANCHO SAN FRN 76 NEWHALL-POTRERO LOS ANGELES CA
16 RANCHO SAN FRN 77 NEWHALL-POTRERO LOS ANGELES CA
17 RANCHO SAN FRN 80 NEWHALL-POTRERO LOS ANGELES CA
18 RANCHO SAN FRN 90 NEWHALL-POTRERO LOS ANGELES CA
19 RANCHO SAN FRN 91 NEWHALL-POTRERO LOS ANGELES CA
20 RANCHO SAN FRN 96 NEWHALL-POTRERO LOS ANGELES CA
21 RANCHO SAN FRN 99 NEWHALL-POTRERO LOS ANGELES CA
22 RANCHO SAN FRN 101 NEWHALL-POTRERO LOS ANGELES CA
23 RANCHO SAN FRN 102 NEWHALL-POTRERO LOS ANGELES CA
24 RANCHO SAN FRN 107 NEWHALL-POTRERO LOS ANGELES CA
25 RANCHO SAN FRN 114 NEWHALL-POTRERO LOS ANGELES CA
26 RANCHO SAN FRN 122 NEWHALL-POTRERO LOS ANGELES CA
27 RANCHO SAN FRN 123 NEWHALL-POTRERO LOS ANGELES CA
28 RANCHO SAN FRN 127 NEWHALL-POTRERO LOS ANGELES CA
29 RANCHO SAN FRN 128 NEWHALL-POTRERO LOS ANGELES CA
30 RANCHO SAN FRN 137 NEWHALL-POTRERO LOS ANGELES CA
31 RANCHO SAN FRN 141 NEWHALL-POTRERO LOS ANGELES CA
32 RANCHO SAN FRN 143 NEWHALL-POTRERO LOS ANGELES CA
33 RANCHO SAN FRN 150 NEWHALL-POTRERO LOS ANGELES CA
00 XXXXXX XX UNIT DRAGON TRAIL RIO XXXXXX CO
45 SECOND WIND UNIT SECOND WIND CHEYENNE CO
73 XXXXXXXX 0 XXX XXXXX XXXXXXX XX
74 XXXXXXXX 0 XXX XXXXX XXXXXXX XX
75 XXXXXXXX 1 BP-HOS XXX XXXXX XXXXXXX XX
00 EGP 0 XXX XXXXX XXXXXXX XX
81 EGP 0-0 XXX XXXXX XXXXXXX XX
82 EGP 0-0 XXX XXXXX XXXXXXX XX
83 EGP 0-0 XXX XXXXX XXXXXXX XX
84 EGP 9-6 BP (HOS) ELM GROVE BOSSIER LA
VII-i
104
EXHIBIT VII
(continued)
NO. PROPERTY NAME FIELD COUNTY/PARISH ST
85 EGP 00-0 XXX XXXXX XXXXXXX XX
87 XXXXXXX ETAL 0 XXX XXXXX XXXXXXX XX
91 MCDADE 0 XXX XXXXX XXXXXXX XX
93 XXXXXXX 0-0 XXX XXXXX XXXXXXX XX
94 XXXXXXX 8-1 BP-CVC XXX XXXXX XXXXXXX XX
00 XXXXXXX 8-1 BP-HOS XXX XXXXX XXXXXXX XX
00 XXXXXX 0-0 XXX XXXXX XXXXXXX XX
98 XXXXXXXXX 0 XXX XXXXX XXXXXXX XX
99 XXXX 0 XXX XXXXX XXXXXXX XX
100 XXXX 4 NP-CVC ELM GROVE BOSSIER LA
101 XXXX 0 XXX XXXXX XXXXXXX XX
102 XXXX 0 XXX XXXXX XXXXXXX XX
103 XXXX 0 XXX XXXXX XXXXXXX XX
105 XXXX 0 XXX XXXXX XXXXXXX XX
106 XXXX 7 NP (CVC) XXX XXXXX XXXXXXX XX
000 XXXXXXX 8-1 (XXXX) XXX XXXXX XXXXXXX XX
000 XXXXXXX 8-1 BP-CVC XXX XXXXX XXXXXXX XX
000 XXXXXXX 8-1 XX XXX ELM GROVE BOSSIER LA
112 XXXXXXX 0 XXX XXXXX XXXXXXX XX
113 EI 000 X-00 XXXXXX XXX 000/000 XXXXXXXX XX
114 EI 251 X-0 XXXXXX XXX 000/000 XXXXXXXX XX
000 XX 000 X-0 XXXXXX ISL 251/262 OFFSHORE LA
116 EI 000 X-0 XX XXXXXX XXX 000/000 XXXXXXXX XX
117 EI 000/000 XXX X XXXXXX XXX 000/000 XXXXXXXX XX
118 EI 000 X-00 XXXXXX XXX 000/000 XXXXXXXX XX
119 EI 000 X-00 XX XXXXXX XXX 000/000 XXXXXXXX XX
120 EI 262 B-1 XXXXXX ISL 251/262 OFFSHORE LA
121 EI 262 X-0 XXXXXX XXX 000/000 XXXXXXXX XX
000 XX 000 X-0 XXXXXX ISL 251/262 OFFSHORE LA
123 XXXXXXXXX 0 XXXX XXXXXX, X XXXXXXXXX XX
149 BANE 00-0 XXXXXX XXXXXXXXX XX
000 XXXX 0-00 XXXXXX CLAIBORNE LA
153 XXXXX 1 BP2 LONGVILLE, E XXXXXXXXXX LA
000 XXXXX, XXXXXXX X XXXXXXXXX, X XXXXXXXXXX XX
223 ST 193 4 SOUTH TIMB 000/000 XXXXXXXX XX
000 XX 000 0 XXXXX XXXX 193/194 OFFSHORE LA
225 ST 000 X-0 XXXXX XXXX 000/000 XXXXXXXX XX
226 ST 000 X-0 XXXXX XXXX 000/000 XXXXXXXX XX
227 ST 000 X-0 XXXXX XXXX 000/000 XXXXXXXX XX
228 ST 194 B-1 SOUTH TIMB 193/194 OFFSHORE LA
229 SL 4909 NO 0 XXXXXXX XXXXX XX XXXXXXX XX
VII-ii
105
EXHIBIT VII
(continued)
NO. PROPERTY NAME FIELD COUNTY/PARISH ST
248 VR 000 X-0 XXXXXXXXX 000 XXXXXXXX XX
000 XXXXXX 0-00 0 XXXXXX XXXXX XXXX. XXXXX MS
000 XX XX XXX 00-0 0X XXXXXX XXXXX XXXX. XXXXX XX
000 XX XX XX 00-0 XXXXXXX, X XXX XX
324 VACUUM 00-0 XXXXXX, X XXX XX
000 XXXXX XXXX XXXX XXXXX XXXXXXXX XX
379 C L O 23-3 MOCANE-XXXXXXX XXXXXX OK
385 XXXXXX 2-16 MOCANE-XXXXXXX XXXXX OK
395 XXXX 8-1 MOCANE-XXXXXXX XXXXX OK
000 XXXXXX X X XXXXX XXXX XXXXX XXXXX TX
000 XXXX, XXXXXX X 0 XXXXXXX XXXX XXXXXX XX
000 XXXXXXX XXXX XXXXX XXXXXXX XXXXXXXXX XX
555 XXXXXX 0-00 XXXXX XXXXX XXXXXXX XX
556 XXXXXX X X 1 XXXXX RANCH WHEELER TX
557 XXXXXXXX V 1 XXXXX RANCH WHEELER TX
558 XXXXXXX X X 1 XXXXX RANCH WHEELER TX
000 XXXXX X X 0 XXXXX XXXXX XXXXXXX XX
000 XXXXXX X 0 XXXXX XXXXX XXXXXXX XX
000 XXXXX X X 0 XXXXX XXXXX XXXXXXX XX
565 LISTER 1 XXXXX RANCH XXXXXXX TX
000 XXXXX X X 0 XXXXX XXXXX XXXXXXX XX
568 XXXXX X X 1 XXXXX RANCH XXXXXXX TX
000 XXXXXXX 0 XXXXX XXXX XXXXXXX XX
000 XXXXXXXXX X R F 3 XXXXXX XXXXXX TX
000 XXXXXXXXX X R G 3 XXXXXX XXXXXX TX
625 CUSENBARY W R F 1 XXXXXX XXXXXX TX
626 CUSENBARY W R F 2 XXXXXX XXXXXX TX
627 CUSENBARY W R G 1 XXXXXX XXXXXX TX
628 CUSENBARY W R G 2 XXXXXX XXXXXX TX
633 XXXX, X X 1-L XXXXXX XXXXXX TX
634 XXXX, X X 1-U XXXXXX XXXXXX TX
635 XXXX, X X 2 XXXXXX XXXXXX TX
636 XXXX, X X 3-U XXXXXX XXXXXX TX
637 XXXX, X X 4 XXXXXX XXXXXX TX
638 XXXX, X X 5-T XXXXXX XXXXXX TX
639 XXXX, X X 6 XXXXXX XXXXXX TX
640 XXXX, X X 7 XXXXXX XXXXXX TX
641 XXXX, X X 8 XXXXXX XXXXXX TX
642 ESPY, H T A 1 XXXXXX XXXXXX TX
643 ESPY, H T A 2 XXXXXX XXXXXX TX
644 ESPY, H T B 1 XXXXXX XXXXXX TX
VII-iii
106
EXHIBIT VII
(continued)
NO. PROPERTY NAME FIELD COUNTY/PARISH ST
645 ESPY, H T B 2 XXXXXX XXXXXX TX
646 ESPY, H T B 3 XXXXXX XXXXXX TX
647 GENINI 0000 XXXXXX XXXXXX XX
648 GENINI 3701X XXXXXX XXXXXX TX
649 GENINI 0000 XXXXXX XXXXXX XX
650 GENINI 0000 XXXXXX XXXXXX XX
651 XXXXX 97 1 XXXXXX XXXXXX TX
652 XXXXX 97 2 XXXXXX XXXXXX TX
653 XXXXX 97 3 XXXXXX XXXXXX TX
654 XXXXX 97 4 XXXXXX XXXXXX TX
655 XXXXX 97 5 XXXXXX XXXXXX TX
656 XXXXX 97 6 XXXXXX XXXXXX TX
657 XXXXX 97 7 XXXXXX XXXXXX TX
658 XXXXX 97 10 XXXXXX XXXXXX TX
659 XXXXX 97 11 XXXXXX XXXXXX TX
660 XXXXX 119 1 XXXXXX XXXXXX TX
661 XXXXX 119 2 XXXXXX XXXXXX TX
662 XXXXX 119 3 XXXXXX XXXXXX TX
663 XXXXX 119 4 XXXXXX XXXXXX TX
664 XXXXX 119 5 XXXXXX XXXXXX TX
665 XXXXX 119 7 XXXXXX XXXXXX TX
666 XXXXX 119 8 XXXXXX XXXXXX TX
667 XXXXX 119 9 XXXXXX XXXXXX TX
668 XXXXX 119 10 XXXXXX XXXXXX TX
669 XXXXX 119 11 XXXXXX XXXXXX TX
670 XXXXX 119 12 XXXXXX XXXXXX TX
671 XXXXX 119 13 XXXXXX XXXXXX TX
672 XXXXX 119 14 XXXXXX XXXXXX TX
673 XXXXX 119 15 XXXXXX XXXXXX TX
674 XXXXX 121 1 XXXXXX XXXXXX TX
675 XXXXX 121 2 XXXXXX XXXXXX TX
676 XXXXX 121 3 XXXXXX XXXXXX TX
677 XXXXX 121 4 XXXXXX XXXXXX TX
678 XXXXX 121 5 XXXXXX XXXXXX TX
679 XXXXX 121 6 XXXXXX XXXXXX TX
680 XXXXX 121 7 XXXXXX XXXXXX TX
681 XXXXX 121 8 XXXXXX XXXXXX TX
682 XXXXX 121 9 XXXXXX XXXXXX TX
683 XXXXX 121 10 XXXXXX XXXXXX TX
684 XXXXX 121 11 XXXXXX XXXXXX TX
685 XXXXX 121 12 XXXXXX XXXXXX TX
VII-iv
107
EXHIBIT VII
(continued)
NO. PROPERTY NAME FIELD COUNTY/PARISH ST
686 XXXXX 121 00 XXXXXX XXXXXX XX
687 XXXXX 121 14 XXXXXX XXXXXX TX
688 XXXXX 121 15 XXXXXX XXXXXX TX
690 XXXXX 121 19 XXXXXX XXXXXX TX
691 XXXXX 122 1 XXXXXX XXXXXX TX
692 XXXXX 122 2 XXXXXX XXXXXX TX
693 XXXXX 122 3 XXXXXX XXXXXX TX
694 XXXXX 122 4 XXXXXX XXXXXX TX
695 XXXXX 122 5 XXXXXX XXXXXX TX
696 XXXXX 122 6 XXXXXX XXXXXX TX
697 XXXXX 122 7 XXXXXX XXXXXX TX
698 XXXXX 122 8 XXXXXX XXXXXX TX
699 XXXXX 122 9 XXXXXX XXXXXX TX
700 XXXXX 122 10 XXXXXX XXXXXX TX
701 XXXXX 122 11 XXXXXX XXXXXX TX
702 XXXXX 122 12 XXXXXX XXXXXX TX
703 XXXXX 122 14 XXXXXX XXXXXX TX
704 XXXXX 122 15 XXXXXX XXXXXX TX
705 XXXXX 122 16 XXXXXX XXXXXX TX
706 XXXXX 122 17 XXXXXX XXXXXX TX
000 XXXXXXXX, X X 0 XXXXXX XXXXXX XX
000 XXXXXXXX, X X 0 XXXXXX XXXXXX XX
000 XXXXXXXX, X X 0 XXXXXX XXXXXX XX
000 XXXXXXXX, X X 0 XXXXXX XXXXXX XX
000 XXXXXXXX, X X 0 XXXXXX XXXXXX XX
000 XXXXXXXX, X X 0 XXXXXX XXXXXX XX
000 XXXXXXXX, X X 0 XXXXXX XXXXXX XX
714 XXXX, XXXXX 117 2 XXXXXX XXXXXX TX
715 XXXX, XXXXX 117 3 XXXXXX XXXXXX TX
716 XXXX, XXXXX 117 5 XXXXXX XXXXXX TX
717 XXXX, XXXXX 117 6 XXXXXX XXXXXX TX
718 XXXX, XXXXX 117 7 XXXXXX XXXXXX TX
719 XXXX, XXXXX 117 8 XXXXXX XXXXXX TX
720 XXXX, XXXXX 117 9 XXXXXX XXXXXX TX
721 XXXX, XXXXX 117 10 XXXXXX XXXXXX TX
722 XXXX, XXXXX 117 11 XXXXXX XXXXXX TX
723 XXXX, XXXXX 117 12 XXXXXX XXXXXX TX
724 XXXX, XXXXX 117 13 XXXXXX XXXXXX TX
725 XXXX, XXXXX 117 14 XXXXXX XXXXXX TX
726 XXXX, XXXXX 117 15 XXXXXX XXXXXX TX
727 XXXX, XXXXX 117 16 XXXXXX XXXXXX TX
VII-v
108
EXHIBIT VII
(continued)
NO. PROPERTY NAME FIELD COUNTY/PARISH ST
728 XXXX, XXXXX 117 19 XXXXXX XXXXXX TX
729 XXXXXX 113 1 XXXXXX XXXXXX TX
730 XXXXXX 113 2 XXXXXX XXXXXX TX
731 XXXXXX 113 3 XXXXXX XXXXXX TX
732 XXXXXX 113 4 XXXXXX XXXXXX TX
733 XXXXXX 113 5 XXXXXX XXXXXX TX
734 XXXXXX 113 6 XXXXXX XXXXXX TX
735 XXXXXX 113 7 XXXXXX XXXXXX TX
736 XXXXXX 113 8 XXXXXX XXXXXX TX
737 XXXXXX 113 9 XXXXXX XXXXXX TX
738 XXXXXX 113 11 XXXXXX XXXXXX TX
739 XXXXXX 113 12 XXXXXX XXXXXX TX
740 XXXXXX 113 13 XXXXXX XXXXXX TX
743 XXXXXX 129 3 XXXXXX XXXXXX TX
744 XXXXXX 129 4 XXXXXX XXXXXX TX
745 XXXXXX 129 5 XXXXXX XXXXXX TX
746 XXXXXX 129 6 XXXXXX XXXXXX TX
747 XXXXXX 129 7 XXXXXX XXXXXX TX
748 XXXXXX 129 8 XXXXXX XXXXXX TX
749 XXXXXX 129 9 XXXXXX XXXXXX TX
750 XXXXXX 129 10 XXXXXX XXXXXX TX
751 XXXXXX 129 11 XXXXXX XXXXXX TX
753 XXXXXX 143 1 XXXXXX XXXXXX TX
754 XXXXXX 143 2 XXXXXX XXXXXX TX
755 XXXXXX 143 3 XXXXXX XXXXXX TX
756 XXXXXX 143 4 XXXXXX XXXXXX TX
757 XXXXXX 143 5 XXXXXX XXXXXX TX
758 XXXXXX 143 6 XXXXXX XXXXXX TX
759 XXXXXX 143 7 XXXXXX XXXXXX TX
760 XXXXXX 143 8 XXXXXX XXXXXX TX
761 XXXXXX 143 9 XXXXXX XXXXXX TX
762 XXXXXX 143 10 XXXXXX XXXXXX TX
763 XXXXXX 143 11 XXXXXX XXXXXX TX
764 XXXXXX 143 12 XXXXXX XXXXXX TX
765 XXXXXX 143 13 XXXXXX XXXXXX TX
766 XXXXXX 143 14 XXXXXX XXXXXX TX
767 XXXXXX 143 15 XXXXXX XXXXXX TX
768 XXXXXX 143 16 XXXXXX XXXXXX TX
769 XXXXXX 000 X 0 XXXXXX XXXXXX XX
770 XXXXXX 000 X 0 XXXXXX XXXXXX XX
771 XXXXXX 000 X 0 XXXXXX XXXXXX XX
VII-vi
109
EXHIBIT VII
(continued)
NO. PROPERTY NAME FIELD COUNTY/PARISH ST
772 XXXXXX 000 X 0 XXXXXX XXXXXX XX
773 XXXXXX 000 X 0 XXXXXX XXXXXX XX
774 XXXXXX 000 X 0 XXXXXX XXXXXX XX
775 XXXXXX 000 X 0 XXXXXX XXXXXX XX
776 XXXXXX 000 X 0 XXXXXX XXXXXX XX
777 XXXXXX 000 X 0 XXXXXX XXXXXX XX
778 XXXXXX 000 X 00 XXXXXX XXXXXX XX
779 XXXXXX 000 X 00 XXXXXX XXXXXX XX
780 XXXXXX 000 X 00 XXXXXX XXXXXX XX
781 XXXXXX 000 X 00 XXXXXX XXXXXX XX
782 XXXXXX 000 X 00 XXXXXX XXXXXX XX
783 XXXXXX 000 X 00 XXXXXX XXXXXX XX
784 XXXXXX 144.5 1 XXXXXX XXXXXX TX
785 XXXXXX 145 1 XXXXXX XXXXXX TX
786 XXXXXX 145 4 XXXXXX XXXXXX TX
787 XXXXXX 145 5 XXXXXX XXXXXX TX
788 XXXXXX 145 6 XXXXXX XXXXXX TX
789 XXXXXX 145 7 XXXXXX XXXXXX TX
790 XXXXXX 145 8 XXXXXX XXXXXX TX
791 XXXXXX 145 9 XXXXXX XXXXXX TX
792 XXXXXX 145 10 XXXXXX XXXXXX TX
793 XXXXXX 145 11 XXXXXX XXXXXX TX
794 XXXXXX 145 13 XXXXXX XXXXXX TX
795 XXXXXX 145 14 XXXXXX XXXXXX TX
796 XXXXXX 146 1 XXXXXX XXXXXX TX
797 XXXXXX 146 2 XXXXXX XXXXXX TX
798 XXXXXX 146 3 XXXXXX XXXXXX TX
799 XXXXXX 146 4 XXXXXX XXXXXX TX
800 XXXXXX 146 5 XXXXXX XXXXXX TX
801 XXXXXX 146 6 XXXXXX XXXXXX TX
802 XXXXXX 146 7 XXXXXX XXXXXX TX
803 XXXXXX 146 8 XXXXXX XXXXXX TX
804 XXXXXX 146 9 XXXXXX XXXXXX TX
805 XXXXXX 146 10 XXXXXX XXXXXX TX
806 XXXXXX 146 11 XXXXXX XXXXXX TX
807 XXXXXX 146 13 XXXXXX XXXXXX TX
808 XXXXXX 146 14 XXXXXX XXXXXX TX
809 XXXXXX 146 15 XXXXXX XXXXXX TX
810 XXXXXX 146 16 XXXXXX XXXXXX TX
811 XXXXXX 146 17 XXXXXX XXXXXX TX
812 XXXXXX 167 2 XXXXXX XXXXXX TX
VII-vii
110
EXHIBIT VII
(continued)
NO. PROPERTY NAME FIELD COUNTY/PARISH ST
813 XXXXXX 167 3 XXXXXX XXXXXX TX
814 XXXXXX 167 4 XXXXXX XXXXXX TX
815 XXXXXX 167 5 XXXXXX XXXXXX TX
816 XXXXXX 167 6 XXXXXX XXXXXX TX
817 XXXXXX 167 8 XXXXXX XXXXXX TX
818 XXXXXX 167 9 XXXXXX XXXXXX TX
819 XXXXXX 169 3 XXXXXX XXXXXX TX
820 XXXXXX 169 4 XXXXXX XXXXXX TX
821 XXXXXX 169 5 XXXXXX XXXXXX TX
822 XXXXXX 169 6 XXXXXX XXXXXX TX
823 XXXXXX 169 7 XXXXXX XXXXXX TX
824 XXXXXX 169 8 XXXXXX XXXXXX TX
825 XXXXXX 169 11 XXXXXX XXXXXX TX
826 XXXXXX 169 12 XXXXXX XXXXXX TX
827 XXXXXX 169 13 XXXXXX XXXXXX TX
828 XXXXXX 170 1 XXXXXX XXXXXX TX
829 XXXXXX 170 2 XXXXXX XXXXXX TX
830 XXXXXX 170 3 XXXXXX XXXXXX TX
831 XXXXXX 170 4 XXXXXX XXXXXX TX
832 XXXXXX 170 5 XXXXXX XXXXXX TX
833 XXXXXX 170 6 XXXXXX XXXXXX TX
834 XXXXXX 170 7 XXXXXX XXXXXX TX
835 XXXXXX 170 8 XXXXXX XXXXXX TX
836 XXXXXX 170 9 XXXXXX XXXXXX TX
837 XXXXXX 170 10 XXXXXX XXXXXX TX
838 XXXXXX 170 11 XXXXXX XXXXXX TX
840 XXXXXXX 98 1 XXXXXX XXXXXX TX
841 XXXXXXX 98 2 XXXXXX XXXXXX TX
842 XXXXXXX 98 3 XXXXXX XXXXXX TX
843 XXXXXXX 98 5 XXXXXX XXXXXX TX
844 XXXXXXX 98 6 XXXXXX XXXXXX TX
845 XXXXXXX 98 7 XXXXXX XXXXXX TX
846 XXXXXXX 98 8 XXXXXX XXXXXX TX
847 XXXXXXX 98 9 XXXXXX XXXXXX TX
848 XXXXXXX 98 00 XXXXXX XXXXXX XX
849 XXXXXXX 98 00 XXXXXX XXXXXX XX
850 XXXXXXX 98 00 XXXXXX XXXXXX XX
851 XXXXXXX 98 00 XXXXXX XXXXXX XX
852 XXXXXXX 98 00 XXXXXX XXXXXX XX
853 XXXXXXX 98 16 XXXXXX XXXXXX TX
854 XXXXXXX A 99 1 XXXXXX XXXXXX TX
VII-viii
111
EXHIBIT VII
(continued)
NO. PROPERTY NAME FIELD COUNTY/PARISH ST
855 XXXXXXX A 99 2 XXXXXX XXXXXX TX
856 XXXXXXX A 99 3 XXXXXX XXXXXX TX
857 XXXXXXX A 99 4 XXXXXX XXXXXX TX
858 XXXXXXX A 99 5 XXXXXX XXXXXX TX
859 XXXXXXX A 99 6 XXXXXX XXXXXX TX
860 XXXXXXX A 99 7 XXXXXX XXXXXX TX
861 XXXXXXX A 99 8 XXXXXX XXXXXX TX
862 XXXXXXX A 99 9 XXXXXX XXXXXX TX
863 XXXXXXX A 99 10 XXXXXX XXXXXX TX
864 XXXXXXX A 99 11 XXXXXX XXXXXX TX
865 XXXXXXX A 99 12 XXXXXX XXXXXX TX
866 XXXXXXX A 99 14 XXXXXX XXXXXX TX
867 XXXXXXX A 99 16 XXXXXX XXXXXX TX
000 XXXXXXX X 00 0 XXXXXX XXXXXX XX
000 XXXXXXX X 00 0 XXXXXX XXXXXX XX
000 XXXXXXX X 00 0 XXXXXX XXXXXX XX
000 XXXXXXX X 00 0 XXXXXX XXXXXX XX
000 XXXXXXX X 00 0 XXXXXX XXXXXX XX
000 XXXXXXX X 00 0 XXXXXX XXXXXX XX
000 XXXXXXX X 00 0 XXXXXX XXXXXX XX
000 XXXXXXX X 00 0 XXXXXX XXXXXX XX
876 XXXXXXX B 97 10 XXXXXX XXXXXX TX
000 XXXXXXX X 00 00 XXXXXX XXXXXX XX
000 XXXXXXX X 00 00 XXXXXX XXXXXX XX
000 XXXXXXX X 00 00 XXXXXX XXXXXX XX
000 XXXXXXX X 00 00 XXXXXX XXXXXX XX
881 XXXXXXX B 97 15 XXXXXX XXXXXX TX
000 XXXXXXX X 00 0 XXXXXX XXXXXX XX
000 XXXXXXX X 00 0 XXXXXX XXXXXX XX
885 XXXXXXX D 99 1 XXXXXX XXXXXX TX
893 XXXXXXXXX A XXXXXXXXX HOCKLEY TX
897 XXXXX 00 X 0 XXXXXX XXXXXX XX
898 XXXXX 15 A 00 XXXXXX XXXXXX XX
899 XXXXX 15 A 00 XXXXXX XXXXXX XX
900 XXXXX 15 A 00 XXXXXX XXXXXX XX
901 XXXXX 15 A 00 XXXXXX XXXXXX XX
903 XXXXX 00 X 0 XXXXXX XXXXXX XX
904 XXXXX 00 X 0 XXXXXX XXXXXX XX
905 XXXXX 00 X 0 XXXXXX XXXXXX XX
906 XXXXX 00 X 0 XXXXXX XXXXXX XX
907 XXXXX 82 A 13 SONORA XXXXXX TX
VII-ix
112
EXHIBIT VII
(continued)
NO. PROPERTY NAME FIELD COUNTY/PARISH ST
908 MIERS 82 A 15 SONORA SUTTON TX
909 MIERS 82 A 16 SONORA SUTTON TX
911 WARD C 109 1 SONORA SUTTON TX
912 WARD C 109 7 SONORA SUTTON TX
913 WARD C 109 11 SONORA SUTTON TX
914 WARD C 109 16 SONORA SUTTON TX
915 WARD C 109 21 SONORA SUTTON TX
916 WARD C 109 22 SONORA SUTTON TX
917 WARD C 109 23 SONORA SUTTON TX
918 WARD C 109 27 SONORA SUTTON TX
919 WARD C 115 2 SONORA SUTTON TX
920 WARD C 115 6 SONORA SUTTON TX
921 WARD C 115 12 SONORA SUTTON TX
922 WARD C 115 13 SONORA SUTTON TX
923 WARD C 115 25 SONORA SUTTON TX
924 WARD C 115 32 SONORA SUTTON TX
925 WARD C 115 33 SONORA SUTTON TX
926 WARD C 116 3 SONORA SUTTON TX
927 WARD C 116 8 SONORA SUTTON TX
928 WARD C 116 14 SONORA SUTTON TX
929 WARD C 116 15 SONORA SUTTON TX
930 WARD C 116 24 SONORA SUTTON TX
931 WARD C 116 28 SONORA SUTTON TX
932 WARD C 116 29 SONORA SUTTON TX
933 WARD C 116 34 SONORA SUTTON TX
934 WARD C 125 4 SONORA SUTTON TX
935 WARD C 125 10 SONORA SUTTON TX
936 WARD C 125 19 SONORA SUTTON TX
937 WARD C 125 20 SONORA SUTTON TX
938 WARD C 125 30 SONORA SUTTON TX
939 WARD C 126 9 SONORA SUTTON TX
940 WARD C 126 17 SONORA SUTTON TX
941 WARD C 126 18 SONORA SUTTON TX
942 WARD C 126 26 SONORA SUTTON TX
943 WARD C 126 31 SONORA SUTTON TX
966 ELK BASIN MAD ELK BASIN PARK WY
967 ELK BASIN TS ELK BASIN PARK WY
VII-x
113
EXHIBIT VIII
OPINION OF ORLOFF, LOWENBACH, STIFELMAN & SIEGEL
September 25, 1996
To each Lender party
to the Credit Agreement
referenced below,
Canadian Imperial Bank
of Commerce, as Agent,
and CIBC Inc.,
as Collateral Agent
Re: Credit Agreement dated as of January 2, 1997, by and among KCS
Medallion Resources, Inc., KCS Energy, Inc,. KCS Energy Services,
Inc., Medallion Gas Services, Inc. and GED Energy 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 in connection with the
transactions contemplated in the Credit Agreement. This Opinion is delivered
pursuant to Section 3.1(p) of the Credit Agreement, and the Agent and the
Lenders are hereby authorized to rely upon this Opinion in connection with the
transactions contemplated in the Credit Agreement. Each capitalized term used
but not defined herein shall have the meaning assigned to such term in the
Credit Agreement.
In our representation of the Borrowers, 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 Agreement.
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.
In making such examinations, we have, with your permission, assumed:
114
ORLOFF, LOWENBACH, STIFELMAN & SIEGEL
A PROFESSIONAL CORPORATION
September 25, 1996
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 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 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.
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 Agreement 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 the 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 which KCS is a party or by which any
115
ORLOFF, LOWENBACH, STIFELMAN & SIEGEL
A PROFESSIONAL CORPORATION
September 25, 1996
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.
C. 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.
D. To our knowledge, except as disclosed in Exhibit ___ 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.
E. 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 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.
F. 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.
G. 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.
H. 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.
116
ORLOFF, LOWENBACH, STIFELMAN & SIEGEL
A PROFESSIONAL CORPORATION
September 25, 1996
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 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, and stock pledge agreements
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" it
is based solely upon information which we have obtained in the course of our
representation of the Borrowers and the Guarantor 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
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, STIFELMAN
& SIEGEL, P.A.
By: _____________________________
RALPH M. LOWENBACH
RML:cao
117
SCHEDULE A
JURISDICTIONS WHERE QUALIFIED TO DO BUSINESS
118
EXHIBIT IX
[FORM OF OPINION OF LOCAL COUNSEL]
[Closing Date]
To each Lender party
to the Credit Agreement
referenced below and
Canadian Imperial Bank
of Commerce, as Agent
Re: Credit Agreement dated as of ___________________, 1996, by and among
KCS Medallion Resources, Inc. ("KCS Medallion"), 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 each of the lenders from time to time party to the Credit
Agreement (the "Lenders"), Canadian Imperial Bank of Commerce, as Agent for the
Lenders (the "Agent"), and CIBC Inc., as Collateral Agent for the Lenders (the
"Collateral Agent") in connection with the transactions contemplated in the Loan
Documents described below which were executed pursuant to the Credit Agreement.
In such capacity, we furnish this Opinion with the intention and understanding
that it is to be relied upon by the Agent, the Collateral Agent and the Lenders
in the closing of the transactions contemplated in the Credit Agreement.
In our representation of the KCS Medallion, we have examined an
executed counterpart of each of the following (the "Loan Documents"):
(1) Mortgage, Deed of Trust, Indenture, Security Agreement,
Financing Statement, and Assignment of Production dated of even date
herewith from KCS Medallion Resources, Inc. in favor of the Collateral
Agent (the "Mortgage"); and
(2) Non-Standard Financing Statements constituent to the Mortgage
(the "Financing Statements").
In making such examination, we have, with your permission, assumed:
a) the genuineness of all signatures to the Loan Documents;
IX-i
119
b) the authenticity of all documents submitted to us as originals
and the conformity with the originals of all documents submitted to us as
copies;
c) each party to any Loan Document is authorized and has the power
to enter into and perform its obligations under such Loan Document;
d) the due authorization, execution, and delivery of all Loan
Documents by each party thereto;
e) each of the mortgagors under the Mortgage is a duly organized and
validly existing corporation under the laws of its state of incorporation;
f) the mortgagors under the Mortgage have title to all Mortgaged
Property (as such term is defined in the Mortgage and so used herein)
situated in the State.
Based upon the foregoing and subject to the qualifications set forth
herein, we are of the opinion that:
1. No consent, approval, or other authorization of, or filing or
registration (other than as described in paragraphs 11 and 12 hereof)
with, any court, governmental agency, commission, or other authority of
the State or any subdivision thereof is required for the due execution and
delivery of the Loan Documents or for the enforceability, performance, or
observance of the terms thereof.
2. The execution and delivery by the KCS Medallion of each Loan
Document to which it is a party, compliance with the provisions thereof,
and the consummation of the transactions contemplated thereby will not
conflict with or result in a violation of any law or governmental rule or
regulation of the State or any subdivision thereof.
3. The Loan Documents to which KCS Medallion is a party constitute
legal, valid, and binding obligations of the Borrower, enforceable against
KCS Medallion in accordance with their respective terms.
4. The forms of the Mortgage and the Financing Statements and the
description of the Mortgaged Property situated in the State satisfy all
applicable laws of the State and are legally sufficient under the laws of
the State to enable the Collateral Agent to realize the practical benefits
purported to be afforded by such Loan Documents.
5. The Mortgage (a) creates a lien upon and a security interest in
all Mortgaged Property situated in the State to secure the Indebtedness
(as such term is defined in the Mortgage and so used herein), and (b)
provides for nonjudicial foreclosure remedies customarily used in the
State.
6. The Loan Documents are in satisfactory form for filing and
recording in the offices described below.
IX-ii
120
7. The filing and/or recording, as the case may be, of (a) the
Mortgage in the office of the county clerk of each county in the State in
which any portion of the Mortgaged Property is located and as a financing
statement in the office of the Secretary of State of the State, and (b)
the Financing Statements in the Uniform Commercial Code records in each
county in the State in which any portion of the Mortgaged Property is
located are the only recordings or filings in the State necessary to
perfect the liens and security interests in the Mortgaged Property created
by the Mortgage or to permit the Collateral Agent to enforce in the State
its rights under the Mortgage. No subsequent filing, re-filing, recording,
or re-recording will be required in the State in order to continue the
perfection of the liens and security interests created by the Mortgage
except that (a) a continuation statement must be filed with respect to the
Mortgage filed as a financing statement in the office of the Secretary of
State of the State and with respect to the Financing Statements in the
Uniform Commercial Code records in each county in the State in which any
portion of the Mortgaged Property is located, each within six months prior
to the expiration of five years from the date of the relevant initial
financing statement filing, (b) a subsequent continuation statement must
be filed within six months prior to the expiration of each subsequent
five-year period from the date of each initial financing statement filing,
and (c) amendments or supplements to the Mortgage filed as a financing
statement and the Financing Statements and/or additional financing
statements may be required to be filed in the event of a change in the
name, identity, or structure of any Borrower or in the event the financing
statement filing otherwise becomes inaccurate or incomplete.
8. No state or local mortgage recording tax, stamp tax, or other
similar fee, tax, or governmental charge (other than statutory filing and
recording fees to be paid upon filing) is required to be paid to the State
or any subdivision thereof in connection with the execution, delivery,
filing, or recording of any of the Loan Documents or the consummation of
the transactions contemplated therein.
9. It is not necessary for the Agent, the Collateral Agent, or any
Lender to qualify to do business in the State or file in the State any
designation for service of process or reports solely by reason of the
interests conveyed or assigned to it or for its benefit under the
Mortgage, nor will such conveyances or assignments alone result in the
imposition upon the Agent, the Collateral Agent, or any Lender of any
taxes by the State or by any subdivision thereof, including, without
limitation, franchise, license, tax on interest received or income taxes,
other than recording and filing fees in connection with the filings
referred to in paragraphs 11 and 12 above and taxes which the Agent, the
Collateral Agent, or a Lender may owe in the event it becomes the actual
and record owner of any Mortgaged Property situated in the State.
10. The foreclosure of, or exercise of the power of sale under, the
Mortgage will not in any manner restrict, affect or impair the liability
of KCS Medallion with respect to the Indebtedness or the rights and
remedies of the Collateral Agent with respect to the foreclosure or
enforcement of any other security interests or liens securing the
Indebtedness to the extent any deficiency remains unpaid after application
to the Indebtedness of the proceeds of such foreclosure or the exercise of
such power of sale.
11. The priority of the liens and security interests created by the
Mortgage with respect to Indebtedness incurred by KCS Medallion on or
before the date on which the Mortgage is filed in the appropriate
recording offices referred to hereinabove will be determined by the
IX-iii
121
date of such filings. The priority of the lien created by the Mortgage
with respect to Indebtedness incurred by KCS Medallion after the date the
Mortgage is recorded will be determined by the dates the Mortgage is
filed.
12. The priority of the lien created by the Mortgage will not be
affected by any prepayment of a portion, but less than all, of the
Indebtedness, or any reduction or increase of the outstanding amount of
the Indebtedness from time to time.
13. The limitations period for enforcement of the Mortgage in the
State is ________.
The opinions expressed herein are subject to the following qualifications
and limitations:
We are licensed to practice law only in the State and other
jurisdictions whose laws are not applicable to the opinions expressed
herein; accordingly, the foregoing opinions are limited solely to the laws
of the State and applicable United States federal law.
The validity, binding effect, and enforceability of the Loan
Documents may be limited or affected by bankruptcy, insolvency,
moratorium, reorganization, or other similar laws affecting rights of
creditors generally, including, without limitation, statutes or rules of
law which limit the effect of waivers of rights by a debtor or grantor;
provided, however, that the limitations and other effects of such statutes
or rules of law upon the validity and binding effect of the Loan Documents
should not differ materially from the limitations and other effects of
such statutes or rules of law upon the validity and binding effect of
assignments and security instruments generally.
The enforceability of the respective obligations of KCS Medallion
under the Loan Documents to which they are a party is subject to general
principles of equity (whether such enforceability is considered in a suit
in equity or at law).
This Opinion is furnished by us solely for the benefit of the Agent,
the Collateral Agent, and the Lenders in connection with the transactions
contemplated by the Loan Documents and is not to be quoted in whole or in part
or otherwise referred to or disclosed in any other transaction.
Very truly yours,
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EXHIBIT X
DISCLOSURES
Section 4.4 Existing Indebtedness
1. for KCS Medallion Resources, Inc. - see Schedule
3.9, Stock Purchase Agreement
2. for KCS Energy, Inc.
a. $150 million 11% Senior Notes due 2003
b. Guarantor of $150 million Revolving Line of
Credit with CIBC, Bank One, NationsBank,
Comerica, Dennorske Bank
Section 4.9 Liabilities:
1. Liabilities - none
2. Litigation - for KCS Energy, Inc. and KCS Energy
Services, Inc.:
a. Royalty suits - see attached Cause
No. 94-12219-L Amended Order of Severance
3. Litigation - for KCS Medallion Resources, Inc.,
Medallion Gas Services, Inc. and GED Energy
Services, Inc. - see Schedule 3.8, Stock Purchase
Agreement
Section 4.14 Environmental Laws
1. For KCS Energy, Inc. and KCS Energy Services, Inc.
- none
2. For KCS Medallion Resources, Inc., Medallion Gas
Services, Inc. and GED Energy Services, Inc. - see
items #15 and #17, Schedule 3.8 and Schedule
3.13(a), Stock Purchase Agreement; and letter
(previously delivered to Agent) dated December 9,
1996 to InterCoast Energy Company and InterCoast
Gas Services Company from KCS Energy, Inc. re:
Notification for Environmental Liabilities
Section 4.19 Refunds
None
Section 4.20 Gas Contracts
(a) None
(b) Balancing
1. For KCS Energy, Inc. - none
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2. For KCS Medallion Resources, Inc. - see Schedule
3.27, Stock Purchase Agreement
Section 4.22 Labor Matters
None
Section 4.23 Casualties
None
Section 4.25 Subsidiaries
1. For KCS Energy, Inc. and KCS Energy Services, Inc.
- see attached sheet
2. For KCS Medallion Resources, Inc., Medallion Gas
Services, Inc. and GED Energy Services, Inc. - see
Schedules 3.5(a) and 3.5(b), Stock Purchase
Agreement
Section 5.4 Approved Petroleum Engineers
H.J. Gruy & Associates, Inc.
R.A. Lenser and Associates, inc.
Netherland, Sewell & Associates, Inc.
Ryder Scott Company
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KCS ENERGY, INC. LIST OF SUBSIDIARIES
NAME TYPE OF PERCENTAGE DATE ACQUIRED DOMESTIC
OPERATIONS OWNED OR CREATED OR FOREIGN
KCS Energy Risk Management, Futures hedging for energy price risk 100% 05/18/89 Created Delaware
Inc. management
KCS Power Marketing, Inc. Electric Sales and Marketing 100% 11/04/94 Created Delaware
Proliq, Inc. Holding Company 100% 04/27/88 Acquired New Jersey
KCS Resources, Inc. Oil and gas exploration and production 100% 10/01/93 Created Delaware
KCS Michigan Resources, Inc. Oil and gas exploration and production 100% 09/28/95 Created Delaware
KCS Pipeline Systems, Inc. Gas Transportation 100% 10/01/93 Created Delaware
KCS Energy Services, Inc. Purchase and Sales of oil and gas properties 100% 9/24/96 Created Delaware
National Enerdrill Limited partner in drilling rig partnership 100% 04/27/88 Acquired New Jersey
PIM Corporation Tranchless Pipe Replacement 33.00% 04/20/89 Invested New Jersey
PROLIQ, INC. SUBSIDIARY
KCS Energy Marketing, Inc. Natural gas marketing 100% 08/02/79 Created New Jersey
KCS PIPELINE SYSTEMS, INC. SUBSIDIARY
Enercorp Gas Marketing Natural gas marketing 100% 12/21/93 Created Delaware
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EXHIBIT XI
FORM OF STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT made and entered into as of this 2nd day
of January, 1997, by KCS ENERGY, INC., a Delaware corporation, with its chief
place of business and its chief executive office located at 379 Thornall St.,
Edison, New Jersey 08837 (hereinafter called "Debtor"), in favor of CIBC INC., a
Delaware corporation, with offices at 909 Fannin, Suite 1200, Houston, Texas
77010, as collateral agent for the Lenders, defined below, pursuant to the
Credit Agreement, defined below, (in such capacity, together with its successors
in such capacity pursuant to the terms of the Credit Agreement, hereinafter
"Secured Party");
W I T N E S S E T H:
WHEREAS, on even date herewith that certain Credit Agreement (as may
from time to time be amended or supplemented, hereinafter called the "Credit
Agreement") is being executed by Debtor, KCS MEDALLION RESOURCES, INC. (formerly
known as InterCoast Oil & Gas Company), a Delaware corporation ("KCS
Medallion"), KCS Energy Services, Inc., a Delaware corporation ("KCS Energy
Services"), Medallion Gas Services, Inc. (formerly known as InterCoast Gas
Services, Inc.), a Delaware corporation, ("IGS"), GED Energy Services, Inc., a
Delaware corporation ("GED Energy") (hereinafter together with Debtor,
collectively called "Borrowers"), Secured Party, Canadian Imperial Bank of
Commerce, and the Lenders signatory thereto from time to time pursuant to which
Credit Agreement, upon the terms and conditions stated therein, the Lenders
agree to make loans to Borrower from time to time; and
WHEREAS, the Lenders have conditioned their obligations under the
Credit Agreement upon the execution and delivery by Debtor of this Stock Pledge
Agreement, and Debtor has agreed to enter into this Stock Pledge Agreement;
NOW, THEREFORE, (i) in order to comply with the terms and conditions
of the Credit Agreement, (ii) for and in consideration of the premises and the
agreements herein contained, and (iii) for other good and valuable
consideration, the receipt and sufficiency of all of which is hereby
acknowledged, Debtor hereby agrees with Secured Party as follows:
ARTICLE I
GENERAL TERMS
Section 1.1 Terms Defined Above. As used in this Stock Pledge
Agreement, the terms "Borrower", "Debtor", "Secured Party", "Lenders", and
"Credit Agreement" shall have the meanings indicated above.
Section 1.2 Definitions Contained in the Credit Agreement. All terms
beginning with a capital letter herein which are defined in the Credit Agreement
shall have the same meanings herein unless the context otherwise requires.
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Section 1.3 Certain Definitions. As used in this Stock Pledge
Agreement, the following terms shall have the following meanings, unless the
context otherwise requires:
"Code" shall mean the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Collateral" shall mean all Property, including without
limitation cash or other proceeds, in which Secured Party shall have
a security interest pursuant to Section of this Stock Pledge
Agreement.
"Default" shall mean the occurrence of any of the events
specified in Section hereof, whether or not any requirement for
notice or lapse of time or other condition precedent has been
satisfied.
"Event of Default" shall mean the occurrence of any of the
events specified in Section hereof, provided that any requirement
for notice or lapse of time or other condition precedent has been
satisfied.
"Obligations" shall have the meaning indicated in Section
hereof.
"Other Liable Party" shall mean any Person, other than Debtor,
primarily or secondarily liable for any of the Obligations or who
grants Secured Party a Lien on any Property as security for the
Obligations.
"Securities" shall mean the Shares, regardless of whether they
constitute a "security" within the meaning of Section 8-102(1)(a) of
the Code.
"Stock Pledge Agreement" shall mean this Stock Pledge
Agreement, as the same may from time to time be amended or
supplemented.
"Shares" shall mean the shares of stock referred to in
Subsections (a)(d) hereof, together with any other shares of stock
which at any time become part of the Collateral pursuant to the
terms of this Stock Pledge Agreement or in which Debtor may
hereafter grant a security interest to Secured Party pursuant to
this Stock Pledge Agreement.
Section 1.4 Terms Defined in Code. All terms used herein which are
defined in the Code shall have the same meaning herein unless the context
otherwise requires.
ARTICLE II
SECURITY INTEREST
Section 2.1 Grant of Security Interest. Debtor hereby assigns,
transfers, and delivers to Secured Party and grants to Secured Party a security
interest in, and a general lien upon, the following described Property:
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(a) an aggregate of 1,000 shares of the common stock of KCS
Medallion Resources, Inc. (formerly known as InterCoast Oil & Gas
Company), a Delaware corporation;
(b) an aggregate of 1,000 shares of the common stock of
Medallion Gas Services, Inc., a Delaware corporation;
(c) an aggregate of 1,000 shares of the common stock of GED
Energy Services, Inc., a Delaware corporation;
(d) powers of attorney ("Stock Powers") executed in blank
which are related to the Securities; and
(e) any and all stock rights, rights to subscribe, stock
dividends and dividends paid in stock, new securities which Debtor
is or may hereafter become entitled to receive on account of the
Shares; in the event that Debtor receives any such Property, Debtor
will immediately deliver same to Secured Party to be held by Secured
Party in the same manner as the Property originally deposited as
Collateral; and
(f) the proceeds of any and all Property described in
subparagraphs (a), (b), (c), (d), (e) and (f) above.
Section 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
of even date herewith executed by the Borrowers, each bearing
interest and being payable as provided in the Credit Agreement, and
any and all renewals, extensions for any period, or rearrangements
thereof:
(i) Promissory Note to the order of CIBC INC. in the
original principal amount of ONE HUNDRED FIFTY MILLION AND
NO/100 DOLLARS ($150,000,000.00) with a Final Maturity of
September 30, 2000;
(ii) Promissory Note to the order of CIBC INC. in the
original principal amount of THIRTY MILLION AND NO/100 DOLLARS
($30,000,000.00) with a Final Maturity as provided in the
Credit Agreement;
(b) all other obligations and liabilities of the Borrowers, or
any one or more of them, to the Lenders, now existing or hereafter
incurred, under, arising out of, or in connection with any Loan
Document.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce Secured Party to accept this Stock Pledge
Agreement, Debtor represents and warrants to Secured Party (which
representations and warranties will survive the creation of the Obligations and
any extension of credit thereunder) that:
Section 3.1 Ownership and Liens. Except for the security interest of
Secured Party granted in this Stock Pledge Agreement, Debtor owns (and at the
time of transfer or delivery of the Collateral to Secured Party owned or will
own) good and indefeasible title to the Collateral free and clear of any other
Liens, adverse claims or options. Debtor has (and at the time of transfer or
delivery of the Collateral to Secured Party had or will have) full right, power
and authority to convey, assign, transfer and deliver the Collateral and to
grant a security interest in the Collateral to Secured Party in the manner
provided herein and free and clear of any other Liens, adverse claims and
options. No other Lien, adverse claim or option has been created by Debtor or is
known by Debtor to exist with respect to any Collateral; and to the best of
Debtor's information and belief, no financing statement or other security
instrument is on file in any jurisdiction covering such Collateral.
Section 3.2 Status of Securities Generally. Effective immediately as
to all Securities now in existence and (when indicated below in parentheses)
effective at the time of all other Securities' coming into existence: The
Securities have (or shall have) been properly issued and are (or will be)
genuine; the issuer thereof has (or will have) no defenses (including, without
limitation, defenses of any party which would be available in an action on a
simple contract and the defenses of want or failure of consideration,
nonperformance of any condition precedent, non-delivery, or delivery for a
special purpose), right of set-off or claims to the Securities; Debtor has (or
will have) good title to the Securities; Debtor has (or will have) no knowledge
that the signature of the issuer is unauthorized; the Securities have not (or
will not have) been materially altered; all signatures are (or will be) genuine
and authorized; Debtor has (or will have) no knowledge of any insolvency
proceeding instituted with respect to the issuer; Debtor's transfer of the
Securities to Secured Party is (or will be) effective and rightful; and Debtor
does not (or will not) know of any fact which might impair the validity of the
Securities or of Secured Party's Lien thereon.
Section 3.3 Valid Issuance, Etc. The Shares were duly authorized,
were validly issued and are validly outstanding, were fully paid and are
nonassessable, and were not issued in violation of the pre-emptive rights of any
Person or of any agreement by which Debtor or any issuer of such Shares is
bound.
Section 3.4 Percentage Interests Pledged. The Shares described in
Subsections (a), (b), and (c) hereof constitute all of the authorized, issued,
and outstanding capital stock of KCS Medallion, IGS and GED Energy respectively.
Section 3.5 Stock Rights. To the best of Debtor's information and
belief, none of the issuers of the Shares has any outstanding stock rights,
rights to subscribe, options, warrants or convertible securities outstanding or
any other rights outstanding whereby any Person would be entitled to have issued
to him capital stock of such issuers.
Section 3.6 Secured Party's Security Interest. This Stock Pledge
Agreement creates a valid and binding security interest in the Securities
securing the Obligations. Debtor's transfer and delivery of the
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Securities to Secured Party in accordance with this Stock Pledge Agreement
perfects such security interest. Such perfected security interest in the
Securities is a first-priority security interest under the Code free and clear
of all Liens and is enforceable under the Code.
Section 3.7 Corporate Existence. The Debtor is a corporation duly
organized, legally existing, and in good standing under the laws of its state of
its 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.
Section 3.8 Due Authorization. The execution and delivery by Debtor
of this Stock Pledge Agreement and the security interests and liens granted
herein have been duly authorized by all necessary corporate action by the
Debtor, and do not and will not (a) require the consent of any Governmental
Authority to be obtained by the Debtor, (b) contravene or conflict with any
Requirement of Law applicable to the Debtor or the articles or certificate of
incorporation, bylaws, or other organizational or governing documents of the
Debtor, (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 the Debtor is a
party or by which any Property of the Debtor 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 Debtor under any such
indenture, instrument, or other agreement, other than this Stock Pledge
Agreement.
Section 3.9 Valid and Binding Obligations. This Stock Pledge
Agreement, when duly executed and delivered by Debtor, will be the legal, valid,
and binding obligation of Debtor, enforceable against Debtor in accordance with
its 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.
Section 3.10 Benefit to Debtor. Debtor's granting of a security
interest to Secured Party pursuant to this Stock Pledge Agreement reasonably may
be expected to benefit, directly or indirectly, Debtor.
ARTICLE IV
COVENANTS AND AGREEMENTS
Without the prior written consent of Secured Party, Debtor will at
all times comply with the covenants contained in this Article IV, from the date
hereof and for so long as any part of any Loans or the Commitments is
outstanding.
Section 4.1 Prohibited Liens and Filings. Debtor will not pledge,
mortgage, otherwise encumber, create or suffer a Lien to exist in any of the
Collateral (other than in favor of Secured Party) or sell, assign, or otherwise
transfer any of the Collateral to or in favor of any Person other than Secured
Party. Debtor will not file or permit to be filed or recorded any financing
statement or other security instrument with respect to the Collateral other than
in favor of Secured Party.
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Section 4.2 Taxes, Etc. Debtor agrees to pay prior to delinquency
all taxes, charges, Liens and assessments against the Collateral and, upon the
failure of Debtor to do so Secured Party at its option may pay any of them and
shall be the sole judge of the legality or validity thereof and of the amount
necessary to discharge the same.
Section 4.3 Possession of Collateral. Secured Party shall be deemed
to have possession of any of the Collateral in transit to it or set apart for
it.
Section 4.4 Further Assurances. Debtor will sign, execute, deliver
and file, alone or with Secured Party, any financing statements, security
agreements or other documents or procure any instruments or documents as may be
requested by Secured Party from time to time to confirm, perfect and preserve
the security interests intended to be granted hereby, and in addition, Debtor
hereby authorizes Secured Party to execute and deliver on behalf of Debtor and
to file such financing statements, security agreements and other documents
without the signature of Debtor either in Secured Party's name or in the name of
Debtor and as agent and attorney-in-fact for Debtor. Debtor shall do all such
additional and further acts or things, give such assurances and execute such
documents or instruments as Secured Party requires to vest more completely in
and assure to Secured Party its rights under this Stock Pledge Agreement.
Section 4.5 Filing Reproductions. At the option of Secured Party, a
carbon, photographic or other reproduction of this Stock Pledge Agreement or of
a financing statement covering the Collateral shall be sufficient as a financing
statement and may be filed as a financing statement.
Section 4.6 Expenses. To the extent not paid by Borrower, Debtor
agrees to pay to Secured Party at Secured Party's offices all advances, charges,
costs and expenses (including reasonable attorneys' fees and legal expenses)
incurred by Secured Party in connection with confirming, perfecting and
preserving the security interest created under this Stock Pledge Agreement, in
connection with protecting Secured Party against the claims or interests of any
Person against the Collateral, and in exercising any right, power or remedy
conferred by this Stock Pledge Agreement or by law or in equity (including, but
not limited to, attorneys' fees and legal expenses incurred by Secured Party and
amounts incurred in connection with the operation, maintenance or foreclosure of
any or all of the Collateral).
Section 4.7 Prohibited Issues. Debtor will not permit, authorize the
issuance of, or permit any agent to authorize or permit the issuance of
additional capital stock of any of the issuers of the Collateral or the issuance
or grant by Borrower of any stock rights, rights to subscribe, options,
warrants, convertible securities or any other rights whereby any Person would be
entitled to have issued to him capital stock of such issuer.
Section 4.8 Delivery of Collateral. In the event that Debtor
receives any stock rights, rights to subscribe, stock dividends and dividends
paid in stock, new securities which Debtor is or may hereafter become entitled
to receive on account of the Shares, Debtor will immediately deliver same to
Secured Party to be held by Secured Party in the same manner as the Property
originally deposited as Collateral.
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ARTICLE V
RIGHTS, REMEDIES AND DEFAULT
Section 5.1 With Respect to Collateral. Secured Party is hereby
fully authorized and empowered (without the necessity of any further consent or
authorization from Debtor) and the right is expressly granted to Secured Party,
and Debtor hereby constitutes, appoints and makes Secured Party as Debtor's true
and lawful attorney-in-fact and agent for Debtor and in Debtor's name, place and
stead with full power of substitution, in Secured Party's name or Debtor's name
or otherwise, for Secured Party's sole use and benefit, but at Debtor's cost and
expense, to exercise, without notice, all or any of the following powers at any
time with respect to all or any of the Collateral (regardless of whether any
Default has occurred or not):
(a) transfer to or register in the name of Secured Party or
any nominee of Secured Party any of the Shares and whether or not so
transferred or registered, (i) to receive stock dividends, stock
splits and rights to subscribe thereon, and to hold the same as part
of the Collateral (ii) after the occurrence and during the
continuance of an Event of Default to exercise voting rights as to
the Shares; and (iii) to exchange any of the Shares for other
Property upon reorganization, recapitalization or other readjustment
and in connection therewith to deposit any of the Shares with any
committee or depository upon such terms as Secured Party may
determine; all without notice and without liability except to
account for Property actually received by Secured Party;
provided, however, Secured Party shall be under no obligation or duty to
exercise any of the powers hereby conferred upon it and shall be without
liability for any act or failure to act in connection with the collection of, or
the preservation of any rights under, any Collateral.
Section 5.2 Application of Cash Sums. After the occurrence and
during the continuance of an Event of Default, all cash sums paid to and
received by Secured Party on account of the Collateral (i) shall be applied by
Secured Party on the Obligations whether or not such Obligations shall have by
their terms matured, such application to be made to principal or to interest as
Secured Party may elect; as if such sum was a voluntary prepayment on the
Obligations under the Credit Agreement; provided, however, Secured Party need
not apply or give credit for any item included in such sums until Secured Party
has received final payment thereof at its banking quarters or solvent credits
accepted as such by Secured Party; provided, further, however, Secured Party's
failure to so apply any such sums shall not be a waiver of Secured Party's right
to so apply such sums or any other sums at any time, or, (ii) at the option of
Secured Party shall be released to Debtor for use in Debtor's business.
Section 5.3 Default, Events. Any of the following events shall be
considered an "Event of Default":
(a) Payment of Obligations - default is made in the payment
when due of any of the Obligations which default continues beyond
any applicable grace period; or
(b) Representations and Warranties - Any representation or
warranty made by Debtor in this Stock Pledge Agreement or made by
Debtor in any
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certificate or statement furnished under this Stock Pledge Agreement
proves to have been incorrect in any material respect as of the date
thereof; or
(c) Covenants - default is made by Debtor in the due
observance or performance of any of the covenants or agreements
contained in this Stock Pledge Agreement and such default continues
for thirty days after the earlier of (i) receipt of written notice
thereof by the Debtor from the Secured Party or (ii) the Debtor
having or obtaining knowledge thereof; or
(d) Judgments - the entry of a judgment, issuance of an
injunction or order of attachment, or any other process against any
Collateral; or
(e) Margin Violations - The failure of Debtor, Other Liable
Party or the Collateral to comply with Regulations G, U or X of the
Board of Governors of the Federal Reserve System, as amended; or
(f) Collateral Transfer - selling, assigning or otherwise
transferring any of the Collateral to or in favor of any Person
other than Secured Party; or
(g) Liens on Collateral - granting a Lien on any of the
Collateral to or in favor of any Person other than Secured Party; or
(h) Loan Documents Default - an event of default occurs and
continues beyond any applicable grace period under any of the Loan
Documents.
Section 5.4 Default Remedies. Upon the happening and during the
continuance of any Event of Default specified in Section , Secured Party may
then, or at any time thereafter and from time to time sell in one or more sales,
or otherwise dispose of, any or all of the Collateral, in such order as Secured
Party may elect, and any such sale may be made either at public or private sale
at its place of business or elsewhere, or at any brokers' board or securities
exchange, either for cash or upon credit or for future delivery, at such price
as Secured Party may deem fair, and Secured Party may be the purchaser of any or
all Collateral so sold and may hold the same thereafter in its own right free
from any claim of Debtor or right of redemption. No such purchase or holding by
Secured Party shall be deemed a retention by Secured Party in satisfaction of
the Obligations. All demands, notices and advertisements, and the presentment of
property at sale are hereby waived. If, notwithstanding the foregoing
provisions, any applicable provision of the Code or other law requires Secured
Party to give reasonable notice of any such sale or disposition or other action,
Debtor hereby agrees five days' prior written notice shall constitute reasonable
notice. Any sale hereunder may be conducted by an auctioneer or any officer or
agent of Secured Party.
Section 5.5 Proceeds. After the happening of any Event of Default
specified in Section , the proceeds of any sale or other disposition of the
Collateral and all sums received or collected by Secured Party from or on
account of the Collateral shall be applied by Secured Party in the manner set
forth in ss. 9-504 of the Code.
Section 5.6 Secured Party's Duties. The powers conferred upon
Secured Party by this Stock Pledge Agreement are solely to protect its interest
in the Collateral and shall not impose any duty upon Secured Party to exercise
any such powers. Secured Party shall be under no duty whatsoever to make or give
any
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presentment, demand for performance, notice of nonperformance, protest, notice
of protest, notice of dishonor, or other notice or demand in connection with any
Collateral or the Obligations, or to take any steps necessary to preserve any
rights against prior parties. Secured Party shall not be liable for failure to
collect or realize upon any or all of the Obligations or Collateral, or for any
delay in so doing, nor shall Secured Party be under any duty to take any action
whatsoever with regard thereto. Secured Party shall use reasonable care in the
custody and preservation of any Collateral in its possession but need not take
any steps to keep the Collateral identifiable. Secured Party shall have no duty
to comply with any recording, filing, or other legal requirements necessary to
establish or maintain the validity, priority or enforceability of, or Secured
Party's rights in or to, any of the Collateral.
Section 5.7 Secured Party's Actions. Debtor waives any right to
require Secured Party to proceed against any Person, exhaust any Collateral, or
have any Other Liable Party joined with Debtor in any suit arising out of the
Obligations or this Stock Pledge Agreement, or pursue any other remedy in
Secured Party's power; waives any and all notice of acceptance of this Stock
Pledge Agreement or of creation, modification, renewal or extension for any
period of any of the Obligations from time to time; and waives any defense
arising by reason of any disability or other defense of any Other Liable Party,
or by reason of the cessation from any cause whatsoever of the liability of any
Other Liable Party. All dealings between Debtor and Secured Party, whether or
not resulting in the creation of Obligations, shall conclusively be presumed to
have been had or consummated in reliance upon this Stock Pledge Agreement. Until
all the Obligations shall have been paid and performed in full, Debtor shall
have no right to subrogation, and Debtor waives any right to enforce any remedy
which Secured Party now has or may hereafter have against any Other Liable Party
and waives any benefit of and any right to participate in any Collateral or
security whatsoever now or hereafter held by Secured Party. Debtor authorizes
Secured Party, without notice or demand and without any reservation of rights
against Debtor and without affecting Debtor's liability hereunder or on the
Obligations, from time to time to (a) take and hold any other Property as
collateral, other than the Collateral, for any or all of the Obligations, and
exchange, enforce, waive and release any or all of the Collateral or such other
Property; (b) apply the Collateral or such other Property and direct the order
or manner of sale thereof as Secured Party in its discretion may determine; (c)
renew, extend for any period, accelerate, modify, compromise, settle or release
the obligation of any Other Liable Party with respect to any or all of the
Obligations or Collateral; (d) waive, enforce, modify, amend or supplement any
of the provisions of any of the Loan Documents, including the Credit Agreement
or of any Note evidencing any of the Obligations; and (e) release or substitute
any Other Liable Party.
Section 5.8 Transfer of Obligations and Collateral. Secured Party
may transfer any or all of the Obligations, and upon any such transfer Secured
Party may transfer any or all of the Collateral and shall be fully discharged
thereafter from all liability with respect to the Collateral so transferred, and
the transferee shall be vested with all rights, powers and remedies of Secured
Party hereunder with respect to Collateral so transferred; but with respect to
any Collateral not so transferred Secured Party shall retain all rights, powers
and remedies hereby given. Secured Party may at any time deliver any or all of
the Collateral to Debtor whose receipt shall be a complete and full acquittance
for the Collateral so delivered, and Secured Party shall thereafter be
discharged from any liability therefor.
Section 5.9 Cumulative Security. The execution and delivery of this
Stock Pledge Agreement in no manner shall impair or affect any other security
(by endorsement or otherwise) for the Obligations. No security taken hereafter
as security for payment or performance of the Obligations shall impair in any
manner or affect this Stock Pledge Agreement. All such present and future
additional security is to be considered as cumulative security.
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Section 5.10 Continuing Agreement. This is a continuing Stock Pledge
Agreement and the grant of a security interest hereunder shall remain in full
force and effect and all the rights, powers and remedies of Secured Party
hereunder shall continue to exist until the Obligations are paid and performed
in full as the same become due, payable, and performable; until Secured Party
has no further obligation to advance monies to Borrower under the Credit
Agreement or otherwise and until Secured Party, upon request of Debtor, has
executed a written termination statement, reassigned to Debtor, without
recourse, the Collateral and all rights conveyed hereby and returned possession
of the Collateral to Debtor. Furthermore, it is contemplated by the parties
hereto that there may be times when no Obligations are owing; but
notwithstanding such occurrences, this Stock Pledge Agreement shall remain valid
and shall be in full force and effect as to subsequent Obligations provided
Secured Party has not executed a written termination statement and returned
possession of the Collateral to Debtor. Otherwise this Stock Pledge Agreement
shall continue irrespective of the fact that the liability of any Other Liable
Party may have ceased, or irrespective of the validity or enforceability of the
Notes or the Loan Documents, including the Credit Agreement, to which any Other
Liable Party may be a party, and notwithstanding the reorganization or
bankruptcy of any Other Liable Party, and notwithstanding the reorganization or
bankruptcy of Debtor, or any other event or proceeding affecting Debtor or any
Other Liable Party.
Section 5.11 Cumulative Rights. The rights, powers and remedies of
Secured Party hereunder shall be in addition to all rights, powers and remedies
given by statute or rule of law and are cumulative. The exercise of any one or
more of the rights, powers and remedies provided herein shall not be construed
as a waiver of any other rights, powers and remedies of Secured Party.
Furthermore, regardless of whether or not the Uniform Commercial Code is in
effect in the jurisdiction where such rights, powers and remedies are asserted,
Secured Party shall have the rights, powers and remedies of a secured party
under the Code. Secured Party may exercise its bankers' lien or right of set-off
with respect to the Obligations in the same manner as if the Obligations were
unsecured.
Section 5.12 Exercise of Rights, Etc. Time shall be of the essence
for the performance of any act under this Stock Pledge Agreement or the
Obligations by Debtor or Other Liable Party, but neither Secured Party's
acceptance of partial or delinquent payments nor any forbearance, failure or
delay by Secured Party in exercising any right, power or remedy shall be deemed
a waiver of any obligation of Debtor or of Other Liable Party or of any right,
power or remedy of Secured Party or preclude any other or further exercise
thereof; and no single or partial exercise of any right, power or remedy shall
preclude any other or further exercise thereof, or the exercise of any other
right, power or remedy.
Section 5.13 Remedy and Waiver. Secured Party may remedy any Default
and may waive any Default without waiving the Default remedied or waiving any
prior or subsequent Default.
Section 5.14 Non-Judicial Remedies. Secured Party may enforce its
rights hereunder without prior judicial process or judicial hearing, and Debtor
expressly waives, renounces and knowingly relinquishes any and all legal rights
which might otherwise require Secured Party to enforce its rights by judicial
process. In so providing for non-judicial remedies, Debtor recognizes and
concedes that such remedies are consistent with the usage of the trade, are
responsive to commercial necessity, and are the result of bargain at arm's
length. Nothing herein is intended to prevent Secured Party or Debtor from
resorting to judicial process at either party's option.
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135
ARTICLE VI
MISCELLANEOUS
Section 6.1 Preservation of Liability. Neither this Stock Pledge
Agreement nor the exercise by Secured Party of (or the failure to so exercise)
any right, power or remedy conferred herein or by law shall be construed as
relieving any Person liable on the Obligations from liability on the Obligations
and for any deficiency thereon.
Section 6.2 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 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 in the Credit Agreement 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 Debtor.
Section 6.3 Construction. This Stock Pledge Agreement has been made
in and the conveyance, assignment, transfer and delivery has been made in and
the security interest granted hereby is granted in and each shall be governed by
the laws of the State of New York, and of the United States of America, as
applicable, in all respects, including matters of construction, validity,
enforcement and performance.
Section 6.4 Amendment and Waiver. This Stock Pledge Agreement may
not be amended (nor may any of its terms be waived) except in the manner
provided in Section 9.8 of the Credit Agreement.
Section 6.5 Invalidity. If any provision of this Stock Pledge
Agreement is rendered or declared invalid, illegal or unenforceable by reason of
any existing or subsequently enacted legislation or by a judicial decision which
shall have become final, Debtor and Secured Party shall promptly meet and
negotiate substitute provisions for those rendered invalid, illegal or
unenforceable, but all of the remaining provisions shall remain in full force
and effect.
Section 6.6 Survival of Agreements. All representations and
warranties of Debtor herein, and all covenants and agreements herein not fully
performed before the effective date of this Stock Pledge Agreement, shall
survive such date.
Section 6.7 Successors and Assigns. The covenants and agreements
herein contained by or on behalf of Debtor shall bind Debtor and Debtor's
successors and assigns and shall inure to the benefit of Secured Party and its
successors and assigns.
Section 6.8 Titles of Articles, Sections and Subsections. All titles
or headings to articles, sections, subsections or other divisions of this Stock
Pledge Agreement are only for the convenience of the parties and shall not be
construed to have any effect or meaning with respect to the other content of
such articles, sections, subsections or other divisions, such other content
being controlling as to the agreement between the parties hereto.
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136
Section 6.9 Counterparts. This Stock Pledge Agreement may be
executed in two or more counterparts, and it shall not be necessary that the
signatures of all parties hereto be contained on any one counterpart hereof;
each counterpart shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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: ___________________________________
Henry A. Jurand
Vice President
SECURED PARTY:
CIBC INC.
By: ___________________________________
Marybeth Ross
Authorized Signatory
XI-xii
