Document:

<PAGE>   1
                                                               EXHIBIT 10(XVIII)

                    SECOND AMENDMENT TO FORBEARANCE AGREEMENT

         THIS SECOND AMENDMENT TO FORBEARANCE AGREEMENT, dated as of December 3,
1999 (herein called this "Amendment"), is entered into by and among KCS Energy,
Inc., a Delaware corporation ("KCS"), KCS RESOURCES, INC., a Delaware
corporation ("KRI") for itself and as successor by merger to KCS Pipeline
Systems, Inc., a Delaware corporation; KCS MICHIGAN RESOURCES, INC., a Delaware
corporation ("KCS Michigan"); and KCS ENERGY MARKETING, INC., a New Jersey
corporation ("KCS Marketing," and together with KRI and KCS Michigan, 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
2.25 of the Credit Agreement (hereinafter defined) (individually, together with
its successors and assigns, a "Lender" and, collectively, together with their
respective successors and assigns, the "Lenders"), 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"), BANK ONE, TEXAS, NATIONAL
ASSOCIATION, a national banking association, as co-agent for the Lenders, and
BANK OF AMERICA, N.A., formerly known as NationsBank, N.A., as co-agent for the
Lenders, and CIBC Inc., a Delaware corporation as collateral agent for the
Lenders (in such capacity pursuant to the terms hereof, the "Collateral Agent").
Terms used herein which are defined in the Forbearance Agreement (as hereinafter
defined) are used herein with the meanings given them therein.

                              W I T N E S S E T H:

         WHEREAS, KCS, the Borrowers, the Lenders, the Collateral Agent and the
Agent have entered into a Forbearance Agreement dated as of July 26, 1999 but
effective as of July 1, 1999, which Forbearance Agreement was amended by an
Amendment to Forbearance Agreement dated as of September 30, 1999, (such
agreement, as so amended, the "Forbearance Agreement") pursuant to which, on the
terms provided therein, the Lenders have agreed (x) to forbear from exercising
any further rights and remedies as provided in the Loan Documents or otherwise
during the Forbearance Period and (y) to rescind the declaration contained in a
notice of default dated July 12, 1999 that all Obligations of KCS and the
Borrowers pursuant to the Loan Documents are immediately due and payable, such
rescission and forbearance to be in effect until termination of the Forbearance
Period and notice to the Borrowers from the Agent accelerating the date for
payment of the Obligations; and

         WHEREAS, KCS, the Borrowers, the Lenders, the Collateral Agent and the
Agent now wish to amend the Forbearance Agreement in certain respects;

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:

<PAGE>   2

         SECTION 1. Amendment to Section 1.2. Section 1.2 of the Forbearance
Agreement is hereby amended by deleting the reference to the date "December 3,
1999" in the ninth line thereof and inserting in lieu thereof the date "March 2,
2000."

         SECTION 2. Amendment to Section 2.1. Section 2.1 of the Forbearance
Agreement is hereby amended by the addition of the following definition
immediately after the definition of "Interest Period":

                  "Specified Value" means, with respect to any Oil and Gas
         Property, a value specified by the Agent, with the consent of the
         Required Lenders.

         SECTION 3. Amendment to Section 3.3. Section 3.3 of the Forbearance
Agreement is hereby amended as follows:

                  (i) The first sentence of clause (a) of Section 3.3 of the
         Forbearance Agreement is amended and restated in its entirety to read
         as follows: "(a) Accrued and unpaid interest on each outstanding Base
         Rate Loan shall be due and payable on July 31, 1999, August 31, 1999,
         September 30, 1999, October 31, 1999, November 30, 1999, December 31,
         1999, January 31, 2000 and February 29, 2000."

                  (ii) The first sentence of clause (b) of Section 3.3 of the
         Forbearance Agreement is amended and restated in its entirety to read
         as follows: "(b) During the Forbearance Period, payments of principal
         of the Tranche A Loans shall be due and payable in the amount of
         $1,250,000 on each of July 31, 1999, August 31, 1999, September 30,
         1999, October 31, 1999, November 30, 1999, December 31, 1999, January
         31, 2000 and February 29, 2000."

         SECTION 4. Amendment to Section 3.4. Section 3.4(a) of the Forbearance
Agreement is amended by deleting the reference to the date "December 3, 1999" in
the ninth line thereof and inserting in lieu thereof the date "March 2, 2000".

         SECTION 5. Amendment to Section 3.6. Section 3.6 of the Forbearance
Agreement is hereby amended and restated in its entirety to read as follows:

                  Section 3.6 Sales of Oil and Gas Properties. At any time
         during the Forbearance Period that any of the Oil and Gas Properties
         are sold (other than Oil and Gas Properties described in Section
         7.1(iii) of this Agreement), KCS and the Borrowers shall, substantially
         concurrently with the sale thereof, pay principal of the Tranche A
         Obligations in an amount equal to the Specified Value until the
         principal of the Tranche A Obligations is paid in full and next to the
         Tranche B Obligations. In addition, upon the sale of any such Oil and
         Gas Properties, if the Net Cash Proceeds are greater than the Specified
         Value, KCS and the Borrowers shall pay an amount equal to twenty
         percent (20%) of the portion of the Net Cash Proceeds in excess of the
         Specified Value which shall be applied (i) first to the repayment of
         the

                                       2
<PAGE>   3

         principal of the Tranche A Obligations until the principal amount of
         such Tranche A Obligations is repaid in full, and (ii) next to the
         repayment of Tranche B Obligations until the principal amount of such
         Tranche B Obligations is repaid in full. At the time of the making of
         each payment hereunder, the Borrowers shall specify to the Agent the
         Loans to which such payment is to be applied in accordance with the
         terms of this Agreement. In the event the Borrowers fail to so specify,
         the Agent may apply such payment to Loans as it may elect in its
         discretion and in accordance with the terms of the Credit Agreement and
         this Agreement. The Agent shall have the necessary authority to
         release, and each Lender hereby consents to the Agent releasing, Liens
         on the Oil and Gas Properties sold pursuant to this Section 3.6 (and
         Oil and Gas Properties described in Section 7.1(iii) of this Agreement)
         so long as the Net Cash Proceeds equal or exceed the Specified Value.

         SECTION 6. Amendment to Section 7.1. Clause (iii) of Section 7.1 of the
Forbearance Agreement is hereby amended and restated to read as follows: "(iii)
have an aggregate value for all such sales during the period beginning December
3, 1999 and continuing thereafter of less than $250,000 (excluding sales of Oil
and Gas Properties, the proceeds of which are applied to the Loans in accordance
with other provisions of this Agreement)."

         SECTION 7. Deletion of Exhibit A. Exhibit A of the Forbearance
Agreement is hereby deleted in its entirety.

         SECTION 8. Conditions to Effectiveness. The effectiveness of this
Amendment is conditioned upon receipt by the Agent of all the following
documents, each in form and substance satisfactory to the Agent:

                  (i) Multiple counterparts of this Amendment as requested by
         the Agent; and

                  (ii) certificates of the secretary or an assistant secretary
         of KCS and each Borrower, certifying as to resolutions of the board of
         directors of such entity authorizing this amendment and the incumbency
         and signatures of the officers of such company authorized to execute
         this Amendment.

         SECTION 9. Effect. This Amendment shall be deemed to be an amendment to
the Forbearance Agreement, and the Forbearance Agreement, as amended hereby, is
hereby ratified, approved and confirmed in each and every respect. All
references to the Forbearance Agreement in any other document, instrument,
agreement or writing shall hereafter be deemed to refer to the Forbearance
Agreement as amended hereby.

         SECTION 10. Counterparts. This Amendment may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Amendment by signing one or
more counterparts.

                                       3
<PAGE>   4

         SECTION 11. Successors. This Amendment shall be binding upon each of
KCS and the Borrowers, the Lenders, the Collateral Agent and the Agent and their
respective successors and assigns, and shall inure to the benefit of each of KCS
and the Borrowers, the Lenders, the Collateral Agent and the Agent and the
successors and assigns of the Lenders, the Collateral Agent and the Agent.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.

                                       4
<PAGE>   5

                                            KCS ENERGY, INC.

                                            By:
                                                --------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                            BORROWERS:

                                            KCS RESOURCES, INC.

                                            By:
                                                --------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                            KCS MICHIGAN RESOURCES, INC.

                                            By:
                                                --------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                            KCS ENERGY MARKETING, INC.

                                            By:
                                                --------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

<PAGE>   6

                                           CO-AGENT AND A LENDER:

                                           BANK ONE, TEXAS, NATIONAL ASSOCIATION

                                           By:
                                               --------------------------------
                                           Name:
                                                -------------------------------
                                           Title:
                                                 ------------------------------

<PAGE>   7

                                            CO-AGENT AND A LENDER:

                                            BANK OF AMERICA, N.A.,
                                            formerly known as NationsBank, N.A.

                                            By:
                                                --------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

<PAGE>   8

                                            LENDERS:

                                            COMERICA BANK-TEXAS

                                            By:
                                                --------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

<PAGE>   9

                                            DEN NORSKE BANK ASA

                                            By:
                                                --------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                            By:
                                                --------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

<PAGE>   10

                                            GENERAL ELECTRIC CAPITAL CORPORATION

                                            By:
                                                --------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

<PAGE>   11

                                          CIBC INC., Lender and Collateral Agent

                                          By:
                                             -----------------------------------
                                                Authorized Signatory

                                          AGENT:

                                          CANADIAN IMPERIAL BANK OF COMMERCE

                                          By:
                                             -----------------------------------<PAGE>   1
                                                                EXHIBIT (10) xix

                         UNITED STATES BANKRUPTCY COURT
                          FOR THE DISTRICT OF DELAWARE

In re:                                      )    Case Nos. 00-310 through 00-318
                                            )
KCS ENERGY, INC., a Delaware corporation    )    Jointly Administered
                                            )
      et al.                                )    Hon. PJW
                                            )
             Debtors.                       )
____________________________________________)

                       ORDER AUTHORIZING AND RESTRICTING
            USE OF CASH COLLATERAL AND GRANTING ADEQUATE PROTECTION

     KCS Energy, Inc. ("KCS Energy"), KCS Resources, Inc. ("KCS Resources"),
KCS Energy Marketing, Inc. ("KCS Marketing"), KCS Michigan Resources, Inc.
("KCS Michigan" and with KCS Energy, KCS Resources and KCS Marketing, the
"Resources Borrowers"), Medallion Gas Services, Inc. ("Medallion Gas"), KCS
Energy Services, Inc. ("KCS Energy Services"), KCS Medallion Resources, Inc.
("KCS Medallion," and with KCS Energy, Medallion Gas and KCS Energy Services,
the "Medallion Borrowers"), Medallion California Properties, Inc. ("Medallion
California"), National Enerdrill Corporation ("National") and Proliq, Inc.
("Proliq"), debtors and debtors in possession, (collectively, the "Debtors")
having filed a motion ("the Motion") for entry of an order authorizing and
restricting use of cash collateral and granting adequate protection of (a) the
secured claims of CIBC Inc., as lender, Canadian Imperial Bank of Commerce
("CIBC"), as Agent for CIBC Inc., and the other hereinafter defined Medallion
Lenders and Resources Lenders and CIBC Inc., as Collateral Agent for itself and
the other hereinafter referred to collectively as the "Agent") and (b) the
secured claims of the
<PAGE>   2

hereinafter defined Medallion Hedging Lender) (CIBC, CIBC Inc, the Medallion
Lenders, the Resources Lenders and the Medallion Hedging Lender, together with
their successors and permitted assigns, are hereinafter referred to as the
"Lenders"), the Court having reviewed the Motion, the Debtors and the Lenders
having stipulated and agreed to the entry of this Order, and upon completion of
a preliminary hearing as provided for under Fed. R. Bankr. Pro. 4001(b);

         THE PARTIES STIPULATE as follows:

         A. On January 5, 2000, an involuntary petition for relief under Chapter
11 of the Bankruptcy Code was filed against KCS Energy by three holders of 11%
senior notes due in 2003. On January 18, 2000, KCS Energy filed a motion in
response to the involuntary petition, in which it did not object to the entry of
an order for relief by this Court, an order for relief was entered as to KCS
Energy and the other Debtors filed voluntary petitions for relief under Chapter
11 of the Bankruptcy Code (the "Petition Date"). Since the Petition Date, each
of the Debtors has remained in possession of its assets and continued to operate
and manage its business as a debtor in possession.

         B. No statutory committee of creditors holding unsecured claims or any
other statutory committee has been appointed.

         C. As of the Petition Date, the Resources Borrowers (including KCS
Energy, as guarantor) were indebted to the Agent as agent, collateral agent and
lender; Bank One, Texas, National Association, as co-agent and lender; Bank of
America, National Association, successor to NationsBank, N.A., as co agent and
lender; Comerica Bank - Texas; Den Norske Bank ASA and General Electric Capital
Corporation (together with their successors and permitted assigns, the
"Resources Lenders") in the aggregate principal amount of $57,594,200.60, plus
interest

                                       -2-

<PAGE>   3

accrued thereon through the Petition Date, plus other costs and expenses
provided for in the Resources Loan Documents, as hereinafter defined (the
"Resources Indebtedness"), all as evidenced by a First Amended and Restated
Credit Agreement dated as of December 22, 1998 (the "Resources Credit
Agreement") and related notes, security agreements and other instruments (the
"Resources Loan Documents").

         D. As of the Petition Date, the Medallion Borrowers were indebted to
the Agent as agent, collateral agent and lender; Bank One, Texas, National
Association; Comerica Bank - Texas; Societe Generale, Southwest Agency; Den
Norske Bank ASA; Paribas and General Electric Capital Corporation (together with
their successors and permitted assigns, the "Medallion Lenders") in the
aggregate principal amount of $49,500,688.30, plus interest accrued thereon
through the Petition Date, plus other costs and expenses provided for in the
Medallion Loan Documents, as hereinafter defined (the "Medallion Indebtedness"),
all as evidenced by a First Amended and Restated Credit Agreement dated as of
December 22, 1998 (the "Medallion Credit Agreement") and related notes, security
agreements and other instruments (the "Medallion Loan Documents").

         E. As of the Petition Date, the Medallion Borrowers were parties to
certain commodity hedging agreements (the "Medallion Hedging Agreements") with
CIBC or its affiliates (the "Medallion Hedging Lender") which provide for
monthly reconciliations among the parties thereto, and which require payments to
be made to the Medallion Hedging Lender under certain circumstances (the
"Medallion Hedging Agreement Indebtedness").

         F. As security for the payment of the Resources Indebtedness, the
Resources Lenders have, and the Debtors acknowledge and agree that the Resources
Lenders have, valid, perfected,

                                       -3-

<PAGE>   4

and unavoidable liens upon, and security interests in, substantially all of the
real and personal property of the Resources Borrowers as more particularly
described in, and evidenced by, the Resources Loan Documents. The collateral
described in the Resources Loan Documents is hereinafter collectively referred
to as the "Pre-Petition Resources Collateral."

         G. As security for the payment of the Medallion Indebtedness, the
Medallion Lenders have, and the Debtors acknowledge and agree that the Medallion
Lenders have, valid, perfected, and unavoidable liens upon, and security
interests in, substantially all of the real and personal property of the
Medallion Borrowers and Medallion California, as more particularly described in,
and evidenced by, the Medallion Loan Documents. The collateral described in the
Medallion Loan Documents is hereinafter collectively referred to as the
"Pre-Petition Medallion Collateral" and with the Pre-Petition Resources
Collateral, the "Pre-Petition Collateral."

         H. As security for payment of the Medallion Hedging Agreement
Indebtedness, the Medallion Hedging Lender has, and the Debtors acknowledge and
agree that the Medallion Hedging Lender has, valid, perfected, and unavoidable
liens upon, and security interests in, certain of the Medallion Borrowers' real
and personal property (the "Pre-Petition Medallion Hedging Collateral").

         I. The Resources Borrowers and the Medallion Borrowers are in default
under the Resources Loan Documents and the Medallion Loan Documents,
respectively.

         J. The Debtors require the use of the Lenders' Pre-Petition Collateral,
the Pre-Petition Medallion Hedging Collateral and the cash and cash equivalent
proceeds of or generated from the Pre-Petition Collateral and the Pre-Petition
Medallion Hedging Collateral ("the Cash Collateral") for the maintenance and
preservation of the Debtors' property, for the operation of

                                       -4-
<PAGE>   5

their businesses in the ordinary course and for payment of the expenses
attendant thereto. The Lenders are willing to consent to the limited use by
the Debtors of the Cash Collateral, but only upon the terms and conditions of
this Order, including the requirements of the budgetary process set forth
herein. The Lenders have also made a good faith request for adequate protection
of their interests in the Pre-Petition Collateral and the Pre-Petition
Medallion Hedging Collateral.

         K. Prior to the Petition Date, the Debtors and the Lenders were parties
to certain forbearance agreements, pursuant to which the parties agreed that 50%
of certain payments made under those agreements would be paid to the Resources
Lenders and the remaining 50% would be paid to the Medallion Lenders. The
Debtors and Lenders have likewise agreed that the payment of Excess Cash
Collateral (as hereinafter defined) under this Order will be divided 50/50
between the Resources Lenders and the Medallion Lenders.

         L. The terms and conditions of the Debtor's use of funds and Cash
Collateral are fair and reasonable under the circumstances and were negotiated
in good faith at arm's length.

         M. There is good cause, and, in the case of each Debtor, it is in the
best interests of the estate and its creditors, that the Debtors be authorized
to use the Pre-Petition Collateral, the Pre-Petition Medallion Hedging
Collateral and the Cash Collateral pursuant to the terms and conditions of this
Order.

         N. Notice of the Motion and of the hearing thereon has been given to
creditors holding the 20 largest claims against the Debtors, the United States
Trustee and the Lenders by [fax/overnight mail].

                                       -5-

<PAGE>   6

         O. The Court has jurisdiction over the Chapter 11 cases of the Debtors
and the Debtors' Motion pursuant to 28 U.S.C. Sections 1.57 and 1334. This Order
is entered in a core proceeding within the meaning of 28 U.S.C. Section
157(b)(2)(M).

         IT IS HEREBY ORDERED as follows:

         1. The Debtors shall not use any of their funds, including Cash
Collateral, except as authorized and permitted herein or by subsequent order of
the Court.

         2. The Debtors have acknowledged and agreed that as of the Petition
Date (a) the Resources Lenders have valid, perfected and unavoidable liens in
the Pre-Petition Resources Collateral, (b) the Medallion Lenders have valid,
perfected and unavoidable liens in the Pre-Petition Medallion Collateral, (c)
the Medallion Hedging Lender has valid, perfected and unavoidable liens in the
Pre-Petition Medallion Hedging Collateral, (d) the Resources Lenders have an
allowed secured claim within the meaning of Section 506 of the Bankruptcy Code
in an amount that is not less than $57,594,200.60, plus interest, fees and
costs, (e) the Medallion Lenders have an allowed secured claim within the
meaning of Section 506 of the Bankruptcy Code in an amount that is not less than
$49,500,688.30, plus interest, fees and costs, and (f) the Medallion Hedging
Lender has an allowed secured claim within the meaning of Section 506 of the
Bankruptcy Code in an amount that was not less than $5,577,231 as of January 14,
2000, plus interest, fees and costs.

         3. The Debtors will furnish to the Lenders not later than the twentieth
(20th) day of the month preceding each calendar month (or if such day is not a
business day, on the next succeeding business day) a budget ("a Budget") for the
Debtors, signed by an appropriate officer, employee or agent of the Debtors, in
form and substance satisfactory to the Lenders, of all

                                       -6-
<PAGE>   7

projected cash receipts and cash disbursements of the Debtors for the next three
months, together with any request for use of Cash Collateral for the next
calendar month. With respect to the period from January 18, 2000 through
February 29, 2000 ("the Initial Budget Period"), the Debtors have furnished an
initial Budget, a copy of which is attached hereto as Exhibit 1. The initial
Budget has been approved by the Lenders.

         4. Within five (5) business days after receipt of each Budget, the
Lenders shall notify the Debtors as to whether they will, in the exercise of
their sole discretion, authorize expenditure by the Debtors of any or all of the
amounts proposed to be expended by the Debtors pursuant to such Budget for the
next calendar month. The Lenders may approve or may disapprove any items of
proposed expenditures set forth in a Budget, and the aggregate of items approved
by the Lenders in a Budget for a calendar month shall constitute an "Approved
Budget." Any Budget or item of proposed expenditure not approved or disapproved
by the Lenders in such five (5) business day period shall be deemed approved.
The aggregate expenditures by the Debtors for any calendar month and for the
Initial Budget Period shall not in any event exceed the aggregate amount
budgeted therefor in such Approved Budget or the initial Budget Period's
Approved Budget by more than a factor of five percent (5%) of the budgeted
amount. Additionally, the expenditures of the Debtors for any calendar month
shall not, for each line item, exceed the amount budgeted for that line item in
that Approved Budget by more than a factor of ten percent (10%) of the budgeted
amount.

         As to any calendar month and the Initial Budget Period, the Debtors
shall not be authorized to expend any funds for an item or expenditure not
included in the Approved Budget for such calendar month or Initial Budget
Period; provided, however, (a) any item or expenditure

                                       -7-

<PAGE>   8

contained and authorized in any prior Approved Budget may be paid in a
subsequent budget period if (i) a contractual commitment was actually incurred
by the Debtors during the period covered by such prior Approved Budget with
respect to said item or expenditure, and (ii) said item or expenditure has been
rebudgeted and listed in the budget for the period during which the Debtors
proposes to pay said item or expenditure, and (b) the Lenders, in their sole
discretion, may approve in writing any such additional expenditure not included
in the Approved Budget for such budget period.

         5. The Debtors, in their sole discretion, may seek permission from the
Court to use funds and Cash Collateral on terms and conditions other than those
set forth in this Order at any time which is five (5) business days after actual
receipt of a written notice to the Agent and the Lenders of their intent to do
so, provided that the terms and conditions of this Order shall govern the use of
any funds or Cash Collateral by the Debtors until the entry of any new order by
the Court with respect thereto.

         6. The Debtors shall submit to the Court and to the Lenders, on or
before the twentieth (20th) day of each calendar month, a detailed report, in a
form satisfactory to the Lenders, of the source, use and application of funds
expended by the Debtors during the previous calendar month pursuant to that
Approved Budget for the previous budget period, and a reconciliation, including
a line by line item comparison of budgeted to actual expenditures setting forth
in reasonable detail an explanation of any differences between budgeted and
actual amounts, of funds received or used and expended by the Debtors during
said calendar month.

         7. In order (a) adequately to protect the Lenders for the use of Cash
Collateral by the Debtors under this Order, and (b) to provide the Lenders with
adequate protection in respect to

                                       -8-

<PAGE>   9

any decrease in the value of their interest in the Pre-Petition Collateral and
the Pre-Petition Medallion Hedging Collateral resulting from the stay imposed
under Section 362 of the Bankruptcy Code, or the use of such property by the
Debtors, (i) the Resources Lenders shall have, and hereby are granted to the
extent not heretofore granted, a lien against and security interest in all
presently owned and hereafter-acquired property, assets, and rights, of any kind
or nature, of the Resources Borrowers, wherever located (which, in the case of
presently owned property, is already encumbered by the Pre-Petition Liens of the
Resources Lenders) to secure the Resources Indebtedness and any diminution in
value of the Pre-Petition Resources Collateral, (ii) the Medallion Lenders and
the Medallion Hedging Lender shall have, and hereby are granted to the extent
not heretofore granted, a lien against and security interest in all presently
owned and hereafter-acquired property, assets, and rights, of any kind or
nature, of the Medallion Borrowers, wherever located (which, in the case of
presently owned property, is already encumbered by the Pre-Petition Liens of the
Medallion Lenders and the Medallion Hedging Lenders) to secure the Medallion
Indebtedness and the Medallion Hedging Indebtedness and any diminution in value
of the Pre-Petition Medallion Collateral and the Pre-Petition Medallion Hedging
Collateral and (iii) the Resources Lenders, the Medallion Lenders and the
Medallion Hedging Lender shall have and hereby are granted to the extent not
heretofore granted, a lien against and security interest in all presently owned
and hereafter-acquired property, assets and rights, of any kind or nature, of
Medallion California, National and Proliq, wherever located to be shared pro
rata between the Resources Lenders, the Medallion Lenders and the Medallion
Hedging Lender based upon amount of the Resources Indebtedness, the Medallion
Indebtedness, and the Medallion Hedging Indebtedness as of the Petition Date.
Such liens and security interests shall be a first and prior

                                     -9-

<PAGE>   10

lien on and security interest in the aforesaid property, assets, and rights of
each of the Resources Borrowers and the Medallion Borrowers and Medallion
California, National and Proliq, subject only to valid and enforceable liens and
security interests existing on said property, assets, or rights of the Resources
Borrowers and the Medallion Borrowers and Medallion California, National and
Proliq at the time of the commencement of these bankruptcy cases or, in the case
of property, assets or rights acquired Post-Petition, at the time the Debtors'
estates acquire the property, assets or rights; provided, however, that the
proceeds of or generated from the sale, use, lease, or operation of any property
subject to such a preexisting lien or security interest shall first secure the
return to the Resources Lenders, the Medallion Lenders and the Medallion Hedging
Lender, as applicable, of any amounts of Cash Collateral which have been used by
the Debtors in connection with such property and would be recoverable from such
property or the proceeds thereof under section 506(c) of the Bankruptcy Code. As
additional adequate protection for the Medallion Hedging Lender, and
notwithstanding the foregoing, the Debtors are authorized and directed to make
any payment to the Medallion Hedging Lender that is required under the Medallion
Hedging Agreements provided that such payments are contained in an Approved
Budget and are not triggered by any bankruptcy terminations or the like. The
Debtors may continue, without further order of this Court, but subject to the
prior consent of the Medallion Lenders or the Resources Lenders, as applicable,
to enter into additional hedging transactions and to grant counterparties first
liens to secure such transactions.

         8. (a) As further adequate protection for the Resource Lenders'
interests in the Pre-Petition Resources Collateral, and consistent with Section
552 of the Bankruptcy Code, proceeds, products, rents and profits of the
Pre-Petition Resources Collateral, and all property

                                      -10-

<PAGE>   11

and assets of the Debtors which are of the same type or nature as the
Pre-Petition Resources Collateral, coming into existence or acquired by the
Debtors on or after the commencement of this Bankruptcy case (including, without
limitation, all accounts receivable and inventory generated after the
commencement of these Bankruptcy cases) are hereby deemed to be Pre-Petition
Resources Collateral, subject to the pre-petition mortgages, security interests
and collateral documents of the Resources Lenders.

         (b) As further adequate protection for the Medallion Lenders' interests
in the Pre-Petition Medallion Collateral, and consistent with Section 552 of the
Bankruptcy Code, proceeds, products, rents and profits of the Pre-Petition
Medallion Collateral, and all property and assets of the Debtors which are of
the same type or nature as the Pre-Petition Medallion Collateral, coming into
existence or acquired by the Debtors on or after the commencement of this
Bankruptcy case (including, without limitation, all accounts receivable and
inventory generated after the commencement of these Bankruptcy cases) are hereby
deemed to be Pre-Petition Medallion Collateral, subject to the pre-petition
mortgages, security interests and collateral documents of the Medallion Lenders.

         (c) As further adequate protection for the Medallion Hedging Lender's
interest in the Pre-Petition Medallion Hedging Collateral, and consistent with
Section 552 of the Bankruptcy Code, proceeds, products, rents and profits of the
Pre-Petition Medallion Hedging Collateral, and all property and assets of the
Debtors which are of the same type or nature as the Pre-Petition Medallion
Hedging Collateral, coming into existence or acquired by the Debtors on or after
the commencement of this Bankruptcy case (including, without limitation, all
accounts receivable and inventory generated after the commencement of these
Bankruptcy cases) are hereby deemed

                                      -11-

<PAGE>   12

to be Pre-Petition Medallion Hedging Collateral, subject to the pre-petition
mortgages, security interests and collateral documents of the Medallion Hedging
Lender.

         9. The full amount of any adequate protection claim of any Lender as
determined by the Bankruptcy Court shall be granted and given a secured and
priority status under Section 364(c)(l), (2) and (3) of the Bankruptcy Code. No
costs or expenses of administration which have been or may be incurred in these
proceedings, or in any other proceeding related hereto, and no priority claims
are or will be prior to or on a parity with the adequate protection claims of
the Lenders subject only to (x) all accrued and unpaid professional fees and
expenses of the Debtors and an unsecured creditors' committee from time to time
allowed as an administrative expense by the Court in these Chapter 11 cases and
(y) expenses pursuant to 28 U.S.C. Section 1930, which expenses, when included
in an Approved Budget, or, if disputed, when allowed by the Court, shall be
deemed to be included in the then extant Approved Budget, and may be paid as set
forth in the order allowing such expenses. Except as approved in the Budget no
cost or expense of administration of any kind whatsoever shall be imposed upon
the Lenders, the Pre-Petition Collateral, the Pre-Petition Medallion Hedging
Collateral, or the Cash Collateral.

         10. The liens and security interests granted to the Lenders pursuant to
paragraphs 7, 8 and 9 hereof shall be valid and perfected, as of the date of
this Order, without the need for the execution or filing of any further document
or instrument otherwise required to be executed or filed under applicable
nonbankruptcy law. Notwithstanding that no documents need be executed or filed
to create or perfect the liens and security interests granted hereunder, the
Debtors, and their officers and agents on their behalf, are hereby directed to
execute and deliver such further documents as the Lenders may request to
evidence and give notice of the liens granted hereunder.

                                      -12-

<PAGE>   13

         11. To enable the Debtors to reduce interest accrual and expense, and
as further adequate protection, on or before the tenth (10th) day of each
calendar month, and more frequently if and as the Debtors and the Lenders may
agree, the Debtors shall make payments to the Lenders in an amount equal to the
excess of the beginning cash balances plus the receipts for the immediately
preceding month over the sum of (i) the actual disbursements (excluding any
disbursements to be made to the Lenders pursuant to this Order) during such
month pursuant to an Approved Budget plus (ii) appropriate reserves agreed to
monthly by the Debtors and the Lenders, including any reserve authorized by the
Medallion and Resources Lenders for the payment of items in subsequent budget
periods pursuant to paragraph 3 hereof ("Excess Cash Collateral"). Such Excess
Cash Collateral payments shall be distributed to the Resources Lenders and the
Medallion Lenders as follows: First to unpaid interest and professional fees and
other costs of the Resources Lenders and the Medallion Lenders, and as to the
remaining Excess Cash Collateral, fifty percent (50%) of the Excess Cash
Collateral shall be paid to and applied by the Resources Lenders against the
Resources Indebtedness in accordance with the provisions of the Resources Loan
Documents and applicable law and fifty percent (50%) of the Excess Cash
Collateral shall be paid to and applied by the Medallion Lenders against the
Medallion Indebtedness in accordance with the provisions of the Medallion Loan
Documents and applicable law; provided, however, that no more than $2.5 million
of Excess Cash Collateral per month shall be paid to the Resources Lenders and
the Medallion Lenders to amortize the principal amounts of the Resources
Indebtedness and the Medallion Indebtedness absent the Debtors' consent. All
amounts of Excess Cash Collateral to be distributed to the Resources Lenders
and to the Medallion Lenders shall be included in the Budgets and Approved
Budgets. As long as

                                      -13-

<PAGE>   14

(a) an Event of Default (as defined in paragraph 20 hereof) has not occurred,
(b) the Debtors make timely payments of interest, professional fees and other
costs of the Resources Lenders and the Medallion Lenders hereunder and (c) the
Debtors make timely principal payments of at least $2.5 million per month from
Excess Cash Collateral to the Resources Lenders and the Medallion Lenders to
amortize the principal amounts of the Resources Indebtedness and the Medallion
Indebtedness, interest on the Resources Indebtedness and the Medallion
Indebtedness shall accrue according to the terms and conditions of the
Forbearance Agreements between the Debtors and the Resources Lenders and the
Medallion Lenders, respectively, dated as of July 26, 1999 and effective as of
July 1, 1999, as amended.

         12. All applications as provided for in paragraph 11 hereof are
provisional only and are subject to further order of this Court. Except with
respect to the Debtors as set forth in paragraph 2 above, nothing contained in
this Order shall be deemed to constitute a determination of (i) the validity or
priority of the pre-petition liens and security interests claimed by the Lenders
in the Pre-Petition Collateral, the Pre-Petition Medallion Hedging Collateral
or the Cash Collateral, or (ii) the propriety of the application of any monies
received by the Resources Lenders and the Medallion Lenders pursuant to
paragraph 11 above.

         13. The Debtors shall sell or dispose of their oil and gas inventory
and products only in the ordinary course of business consistent with an Approved
Budget upon terms and conditions usual and customary in the industry.

         14. The Debtors are hereby prohibited from making any borrowings or
incurring any debt under Sections 363 or 364 of the Bankruptcy Code (other
than trade credit and other

                                      -14-

<PAGE>   15

obligations included in an Approved Budget), except with the consent of the
Lenders or further order of the Court.

         15. The terms and provisions of this Order shall be binding upon the
Debtors and their successors and assigns, including, but not limited to, any
trustee appointed in this case, in any superseding case or in any case related
hereto, and shall survive to the benefit of the Lenders and the Debtors.

         16. The Agent and any successor agents of the Resources Lenders, the
Medallion Lenders or the Medallion Hedging Lender and their respective agents
shall be given access to the books, records and documents of the Debtors and
their affiliates during normal business hours and without interferring with the
Debtors' operations, including, without limitation, the following: check
registers (general disbursements, other disbursements), general ledgers, journal
entries, payroll journals, cash activity reports, aged accounts receivable, aged
accounts payable, bank reconciliations, canceled checks, bank debit and credit
advices, bank statements, leases, and contracts.

         17. The Debtors shall provide to the Lenders the following reports and
information: (i) monthly operating statements, (ii) all documentation and
reports required under the Resources Loan Documents and the Medallion Loan
Documents, and (iii) such other information that the Lenders may from time to
time request.

         18. The automatic stay imposed by Section 362 of the Bankruptcy Code
shall be, and hereby is, lifted and vacated to the extent necessary, if any, to
authorize the payments hereunder and to implement and effectuate the terms and
conditions of this Order. The automatic stay, in

                                      -15-

<PAGE>   16

all other respects, shall remain in effect during the pendency of this case
including the stay against enforcement by the Lenders of their claims, pending
further Order of this Court.

         19. The authority of the Debtors to use Cash Collateral shall terminate
on the earlier of (i) the date of entry by the Court of an order with respect to
the Final Hearing on the Debtors' request to use cash collateral (pursuant to
paragraph 5 hereof), or (ii) an Event of Default.

         20. Each of the following events shall constitute an Event of Default:

         (a) Entry of an order converting the Debtors' Chapter 11 cases to
         cases under Chapter 7 of the Bankruptcy Code which order is not stayed
         within ten (10) days of the entry thereof;

         (b) Entry of an order dismissing the Chapter 11 cases of the Debtors
         which order is not stayed within ten (10) days of the entry thereof;
         and

         (c) Failure of any Debtor to comply with any material terms,
         conditions, or covenants contained in this Order or the Resources Loan
         Documents or Medallion Loan Documents (other than various events and
         conditions and Defaults set forth in (i) the Annual Report of KCS
         Energy, Inc. on Form 10-K filed with the SEC on March 31, 1999, and in
         Forms 10-Q, filed as of the periods ending March 30, 1999, June 30,
         1999 and September 30, 1999, (ii) certain notices of default from the
         Agent to the Debtors dated April 7, 1999 and July 12, 1999) within five
         (5) business days of actual delivery of a written notice of default,
         and (iii) the filing of an involuntary bankruptcy petition against KCS
         Energy on January 5, 2000).

                                      -16-
<PAGE>   17

         21. Upon the occurrence of an Event of Default, the Debtors shall
immediately cease using Cash Collateral, and shall segregate and hold such Cash
Collateral, subject to further order of the Court.

         22. The Debtors are authorized and directed to perform all acts and
execute and comply with the terms of such other documents, instruments and
agreements necessary to effectuate the terms and conditions of this Order.

         23. Nothing contained herein or in the Budgets shall prejudice the
Lenders, or the Debtors with respect to any contested matter involving relief
from the automatic stay, appointment of a trustee or examiner, the assumption or
rejection or executory contracts, dismissal of the Chapter 11 cases, or with
respect to any other matter whatsoever. This Order shall in no way limit the
rights of (a) the Lenders to seek other or additional adequate protection, to
seek relief from the automatic stay, or to take any action in these bankruptcy
cases, or (b) the Debtors to request the use of funds or Cash Collateral on
other terms. This Order is without prejudice to the Debtors' rights to show that
the Lenders are adequately protected by an equity cushion, without the need for
any monthly payments, replacement liens, or the priority administrative claims
set forth herein, provided that the terms and conditions of any other Order(s)
granting adequate protection to the Lenders different than set forth herein
shall only apply prospectively from the date of said additional Order(s).

         24. Nothing in this Order shall terminate, diminish, or otherwise
affect in any way the rights or interests of any person with respect to any
property of the Debtors to the extent such rights or interests in such property
are (a) created pursuant to any applicable law, (b) accorded by such law a
priority equal or senior to that of any right or interest in such Property
asserted by the

                                      -17-

<PAGE>   18

Lenders or their affiliates, and (c) not subject to avoidance pursuant to
Section 545 or any other provision of the Bankruptcy Code.

         25. The Debtors shall serve a copy of the Motion and this Order by the
conclusion of the next business day after its entry upon any committee of
creditors appointed in these cases, the twenty largest creditors included on the
lists filed pursuant to Fed. R. Bankr. Pro. 1007(d), any party that has
requested notice in the cases and the United States Trustee by first class mail,
postage pre-paid. Any objection to the continued effectiveness of this Order
shall be in writing and shall be filed with the Court and served by overnight
mail service on the Debtors, care of Fredrick Dwyer, KCS Energy, Inc., Suite
1200, 5555 San Felipe, Houston, Texas, 77056 and their counsel, Martin J.
Bienenstock, Weil, Gotshal & Manges, 767 Fifth Avenue, New York, New York 10153
and on the Agent, care of Robert N. Greer, Canadian Imperial Bank of Commerce,
425 Lexington Ave., New York, New York 10017 and on its counsel, J. Robert
Stoll, Mayer, Brown & Platt, 190 S. LaSalle Street, Chicago, IL 60603 and the
United States Trustee within 15 days of the mailing of a copy of this Order. If
an objection is timely filed and served, a final hearing will be held on
February 7, 2000 at 3:30 p.m., as the same may be continued or adjourned by the
Court, in Room 2, [address] (the "Final Hearing"). If no objection is timely
filed and served, the Court may enter an order continuing this Order as a final
order without conducting the Final Hearing.

Dated:    January 19, 2000                 PETER J. WALSH
         ------------------        ------------------------------
                                   UNITED STATES BANKRUPTCY JUDGE

AGREED AND STIPULATED:

                                      -18-

<PAGE>   19

DEBTORS IN POSSESSION:

KCS ENERGY, INC.

By: /s/ FREDERICK DWYER
   --------------------

KCS RESOURCES, INC.

By: /s/ FREDERICK DWYER
   --------------------

KCS ENERGY MARKETING, INC.

By: /s/ FREDERICK DWYER
   --------------------

KCS MICHIGAN RESOURCES, INC.

By: /s/ FREDERICK DWYER
   --------------------

MEDALLION GAS SERVICES, INC.

By: /s/ FREDERICK DWYER
   --------------------

KCS ENERGY SERVICES, INC.

By: /s/ FREDERICK DWYER
   --------------------

KCS MEDALLION RESOURCES, INC.

By: /s/ FREDERICK DWYER
   --------------------

MEDALLION CALIFORNIA PROPERTIES, INC.

By: /s/ FREDERICK DWYER
   --------------------

                                      -19-

<PAGE>   20

NATIONAL ENERDRILL CORPORATION

By: /s/ FREDERICK DWYER
   --------------------

PROLIQ, INC.

By: /s/ FREDERICK DWYER
   --------------------

LENDER AND COLLATERAL AGENT:

CIBC, INC.

By: /s/ ROBERT N. GREER
   --------------------

AGENT:  Robert N. Greer

CANADIAN IMPERIAL BANK OF COMMERCE

/s/ ROBERT N. GREER

ASSISTANT GENERAL MANAGER

By:  Robert N. Greer

                                      -20-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}]]