exv10w1



 





Exhibit 10.1




THIRD AMENDMENT TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




          This Third Amendment to Second Amended and Restated Credit Agreement (this
“Amendment”), dated and effective as of December 1, 2004 (the “Amendment
Effective Date”), is by and among KCS Energy, Inc., a Delaware corporation (the
“Borrower”), and each of the Lenders party to that certain Second Amended and
Restated Credit Agreement dated as of November 18, 2003, among the Borrower,
the Lenders party thereto, Bank of Montreal, a Canadian chartered bank acting
through certain of its U.S. branches or agencies, as Agent and Collateral
Agent, BNP Paribas, as Documentation Agent and JPMorgan Chase Bank, N.A.
(successor by merger to Bank One, NA (Main Office Chicago)), as Syndication
Agent (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”);



          Whereas, the Borrower has requested that the Lenders amend the Credit
Agreement to reduce (i) the Applicable Margin and (ii) the commitment fee rate
described in Section 3.3(a) of the Credit Agreement; and



          Whereas, all of the Lenders have agreed to such amendment subject to the
terms and conditions set forth herein.



          Now Therefore, in consideration of the premises and the mutual covenants,
representations and warranties contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows. Capitalized terms used but not otherwise defined herein shall have
the meanings assigned such terms in the Credit Agreement.



     Section 1. Amendments. The Credit Agreement is hereby amended as follows:



          (a)   The definition of “Applicable Margin” is amended and restated to read
in its entirety as follows:




      
    “Applicable Margin’ shall mean as to each Base
Rate Loan and each LIBO Rate Loan on any day, an
amount equal to the percentage for such day set forth
in the grid below under the columnar heading
“Applicable Margin” for such type of Loan, as such
percentage may be modified pursuant to the terms set
forth below:



1









 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Applicable Margin
	 	Commitment Fee

	% that aggregate principal	 	 	 	 	 	 	 	 
	amount of outstanding Loans	 	 	 	 	 	 	 	 
	plus Revolving Loan Letter of	 	 	 	 	 	 	 	 
	Credit Outstandings bears to 
Borrowing Base	 	Base Rate	 	LIBO Rate	 	 	 	 
	 	 	Loans
	 	Loans
	 	 	 	 
	Less than or equal to 50.0%
	 	 	0.00	%	 	 	1.75	%	 	 	0.35	%
	Greater than 50.0% but less
than or equal to 75.0%
	 	 	0.25	%	 	 	2.00	%	 	 	0.40	%
	Greater than 75.0% but less
than or equal to 90.0%
	 	 	0.50	%	 	 	2.25	%	 	 	0.50	%
	Greater than 90.0% but less
than or equal to 100%
	 	 	0.75	%	 	 	2.50	%	 	 	0.50	%
	Greater than 100.0%
(Borrowing Base deficiency)
	 	 	1.00	%	 	 	2.75	%	 	 	N.A.	 







          At all times from and after such time as the Production Payment 2001 Lien
has been completely released and discharged of record by an instrument or
instruments in form reasonably satisfactory to the Agent, the Applicable Margin
set forth above for Base Rate Loans and LIBO Rate Loans shall be reduced (but
not below 0.00%) by, in each case, 0.50%.”



          (b)   Section 3.3(a) is amended and restated to read in its entirety
as follows:




          “(a) Commitment Fee. To compensate the Lenders
for maintaining funds available under the Commitments,
the Borrower shall pay to the Agent for the account of
such Lenders a fee, for each day the Commitments are
outstanding and existing, equal to the product of (i)
the actual Available Commitment on such day times (ii)
a fraction, the numerator of which is the applicable
per annum rate for such day set forth under the
columnar heading “Commitment Fee” in the pricing grid
included in the definition of Applicable Margin, and
the denominator of which is the number of days in the
current fiscal year (i.e., 365 or 366, as the case may
be). Aggregate daily commitment fees shall be
calculated in arrears for each fiscal quarter (or
shorter period in the case of such fees for the period
ending on the Commitment Termination Date, including
the first day of such shorter period but excluding the
last day), and shall be payable in arrears on the 31st
day of December, 2004, the last Business Day of each
third calendar month thereafter during the Commitment
Period (each, a “Quarterly Payment Date”), and on the
Commitment Termination Date.”



2









 





     Section 2. Borrowing Base. The Agent hereby notifies the Borrower that
the Applicable Lenders have approved a Borrowing Base of $100.0 million as of
July 1, 2004.



     Section 3. Amendment and Ratification. Upon the effectiveness hereof as
provided in Section 4, this Amendment shall be deemed to be an amendment to the
Credit Agreement, and the Credit Agreement, as modified hereby, is hereby
ratified, approved and confirmed to be in full force and effect in each and
every respect. Except as expressly provided by the amendments set forth in
Section 1, the execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any Lender, the Agent,
the Collateral Agent, the Documentation Agent or the Syndication Agent, nor
constitute a waiver of any provision of any of the Loan Documents. All
references to the Credit Agreement in any other document, instrument, agreement
or writing shall hereafter be deemed to refer to the Credit Agreement as
amended hereby.



     Section 4. Conditions to Effectiveness. This Amendment shall become
effective as of the Amendment Effective Date when the Agent has confirmed (and
has so notified the Borrower) that counterparts hereof have been duly executed
by the Borrower and all of the Lenders and delivered to the Agent. The Agent
agrees to give the Borrower prompt written confirmation of the effectiveness
hereof.



     Section 5. Representations and Warranties. The Borrower hereby represents
and warrants that, as of the Amendment Effective Date, after giving effect
hereto:




          (i) the representations and warranties of each Loan Party contained
in the Loan Documents are correct in all material respects on and as of
such date (other than those representations and warranties that expressly
relate solely to a specific earlier date, which shall remain correct as
of such earlier date), as though made on and as of such date; and




          (ii) no event has occurred and is continuing which constitutes a
Default, an Event of Default or both.



     Section 6. Governing Law. This Amendment and the rights and obligations
of the parties hereunder shall be construed and enforced in accordance with and
be governed by the laws of the State of Illinois.



     Section 7. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.



[Signature Pages Follow]




3









 








          In Witness Whereof, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective duly authorized officers as of
the date first set forth above, to be effective as of the Amendment Effective
Date.


	 	 	 	 	 
	 	BORROWER:



KCS ENERGY, INC.

 	 
	 	By:  	/s/ J.T. Leary
 	 
	 	 	Name:  	J.T. Leary 	 
	 	 	Title:  	VP & CFO 	 




4









 






	 	 	 	 	 



	 	 	 	 	 
	 	BANKS:



BANK OF MONTREAL, acting through 

   its U.S. branches and agencies, including

    its Chicago, Illinois branch, as a Lender,

     the Agent and Collateral Agent

    

 	 
	 	By:  	/s/ James V. Ducote
 	 
	 	 	Name:  	James V. Ducote 	 
	 	 	Title:  	Director 	 



5









 






	 	 	 	 	 



	 	 	 	 	 
	 	BNP PARIBAS, as a Lender and

Documentation Agent

 	 
	 	By:  	/s/ Betsy Jocher             /s/ Polly Schott
 	 
	 	 	Name:  	Betsy Jocher       Polly Schott 	 
	 	 	Title:  	Vice President     Vice President 	 



6









 






	 	 	 	 	 



	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A. 

(successor by merger to Bank One, NA 

(Main Office Chicago)), as a Lender and

Syndication Agent

 	 
	 	By:  	/s/ Jo Linda Papadakis
 	 
	 	 	Name:  	Jo Linda Papadakis 	 
	 	 	Title:  	Associate Director 	 



7









 






	 	 	 	 	 



	 	 	 	 	 
	 	STERLING BANK

 	 
	 	By:  	/s/ C. Scott Wilson
 	 
	 	 	Name:  	C. Scott Wilson 	 
	 	 	Title:  	Sr. Vice President 	 



8