Document:

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 	 

8exv10w1

 

Exhibit 10.1

LEASE AGREEMENT

This lease agreement is
entered into on this the 1st day of December, 2004, by
and between: Alexa Springs Water Company, (hereinafter called “LESSOR”),
whether one or more, and Alexa Springs, Inc., (hereinafter called “LESSEE”),
whether one or more. For valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, LESSOR and LESSEE do hereby covenant, contract
and agree as follows:

1. PREMISES AND TERM: LESSOR, hereby leases to LESSEE for the term commencing
on December 1, 2004 and ending on November 30, 2014, (the “TERM”) two buildings
totaling 34,200 square feet on the following described premises in its present
condition, located in Montgomery County, Arkansas:

Commonly known as :

1055 Owley Road, Mt Ida, AR 71957

SEE EXHIBIT A for legal description

(hereinafter called the “PREMISES or LEASED PREMISES”). LESSEE also has a right
for the benefit of LESSEE, its employees, agents and invitees for access to and
from the Leased Premises through the building and over property of LESSOR
adjoining the Leased Premises, and to use those parts of the building
designated by LESSOR for use by LESSEE, including but not limited to toilet
rooms, elevators and unrestricted parking areas, if any.

2. RENEWAL: LESSEE and LESSOR may agree to extend or renew the lease, with any
agreed modifications, in a separate, signed document.

3. RENT: The LESSEE covenants to pay to LESSOR as Rent the sum of FOUR
THOUSAND NINE HUNDRED TEN Dollars ($4,910.00) per month, (hereinafter “the
Rent”), in advance without demand on or before the first day of each month at
the office of the LESSOR.

The LESSEE shall pay the Rent when due and payable, without any setoff,
deduction or prior demand whatsoever. Any payment by LESSEE or acceptance by
LESSOR of a lesser amount than shall be due from LESSEE to LESSOR shall be
treated as payment on account. The acceptance by LESSOR of a check for a lesser
amount with an endorsement or statement thereon, or upon any letter
accompanying such check, that such lesser amount is payment in full, shall be
given no effect, and LESSOR may accept such check without prejudice to any
other rights or remedies which LESSOR may have against LESSEE.

4. LATE CHARGES: LESSEE shall pay a late charge in the amount of one percent
(1%) of the outstanding delinquent balance for any payment of the rent not made
within 15 days after the due date to cover the extra expense involved in
handling late payments, but not more than $100 dollars for any one month. This
charge is in addition to any other rights or remedies of the LESSOR.

5. UTILITIES: LESSEE shall pay all charges for utilities for the PREMISES..
On failure of LESSEE to pay the
utilities when due, LESSOR shall enforce payment in the same manner as rent in
arrears.

6. CONDITION OF PREMISES; USE OF PREMISES: LESSOR agrees that LESSEE, upon
paying the rent and on performing all terms of this lease, shall peaceably
enjoy the Leased Premises during the term of this lease. By occupying the
Leased Premises as a tenant, or installing fixtures, facilities, or equipment
or performing finished work, LESSEE shall be deemed to have accepted the same
and to have acknowledged that the Premises are in the condition required by
this lease.

LESSEE acknowledges that LESSEE has examined and knows the condition of the
Leased Premises, and has received the same in good order and repair, and
agrees:

	(a)	 	To use these Leased Premises only for water bottling operations.
	 
	(b)	 	To surrender the Leased Premises to LESSOR at the end of the Term or
any renewal without the necessity of any notice from either LESSOR or
LESSEE to terminate the same, and LESSEE hereby expressly waives all
right to any notice which may be required under any laws now or
hereafter enacted and in force.

- 1 -

 

	(c)	 	To surrender possession of these Leased Premises at the expiration of
this lease without further notice to quit, in as good condition as
reasonable use will permit.
	 
	(d)	 	To keep the Premises in good condition and repair at LESSEE’s own
expense, except repairs which are the duty of LESSOR.
	 
	(e)	 	To perform, fully obey and comply with all ordinances, rules,
regulations and laws of all public authorities, boards and officers
relating to the use of the Premises.
	 
	(f)	 	Not to make any occupancy of the Leased Premises contrary to law or
contrary to any directions, rules, regulations, regulatory bodies, or
officials having jurisdiction or which shall be injurious to any person
or property.
	 
	(g)	 	Not to permit any waste or nuisance.
	 
	(h)	 	Not to use the Leased Premises for living quarters or residence.

LESSEE shall pay (a) for any expense, damage or repair occasioned by the
stopping of waste pipes or overflow from bathtubs, closets, washbasins, basins
or sinks, and (b) for any damage to window panes, window shades, curtain rods,
wallpaper, furnishings, or any other damage to the interior of the Leased
Premises.

Any signs placed upon or about such Leased Premises shall, upon the end of the
Term of the lease or upon the earlier termination, be removed by LESSEE, and
LESSEE shall repair any damage to the Leased Premises which shall be occasioned
by reason of such removal.

At all times, LESSEE shall keep the sidewalks, if any, in front of or adjoining
the Leased Premises clean and in a sightly and sanitary condition.

All repairs, except those specific repairs set forth below which are the
responsibility of the LESSOR, shall be made by the LESSEE at its own expense.
If the LESSOR pays for the same or any part thereof, LESSOR shall be reimbursed
by LESSEE for such amount.

The LESSOR shall be responsible for making only the following repairs [check
those that apply]:

	 	 	 	 	 
	[ ]	 	sprinkler system
	[ ]	 	heating, ventilating or air-conditioning system serving the Premises if, and to the extent, installed by LESSOR, and
	[ ]	 	structural repairs to exterior walls, structural columns and structural floors which collectively enclose the
Premises (excluding, however, storefronts), and
	[ ]	 	the roof over the Premises.
	[ ]

	 	Other:	 	 
	

	 	 	 	

	[ ]

	 	Other:	 	 
	

	 	 	 	

	[ ]

	 	Other:	 	 
	

	 	 	 	

LESSEE shall give LESSOR notice of the necessity for such repairs and that such
repairs did not arise from nor were they
caused by the negligence or willful acts of LESSEE, its agents,
concessionaires, officers, employees, licensees, invitees, or contractors.

7. FIXTURES AND TRADE FIXTURES. LESSEE shall make no changes, improvements,
alterations, or additions to the Leased Premises unless such changes,
improvements, alterations, or additions: (a) are first approved in writing by
LESSOR; (b) are not in violation of restrictions placed thereon by the investor
financing the construction of the building; and (c) will not materially alter
the character of such premises and will not substantially lessen the value of
the Leased Premises. LESSOR may not unreasonably withhold approval, and if
there is a dispute as to reasonableness, it shall be determined by arbitration.

All improvements made by LESSEE to the Premises which are so attached to the
Premises that they cannot be removed without material injury to the Premises,
shall become the property of LESSOR upon installation. Not later than the last
day of the Term, LESSEE shall, at LESSEE’s expense, remove all of LESSEE’s
personal property and those improvements made by LESSEE which have not become
the property of LESSOR, including trade fixtures, cabinetwork, movable
paneling, partitions, and the like; repair all injury done by or in connection
with the installation or removal of such property and improvements; and
surrender the Premises in as good condition as they were at the beginning of
the Term, reasonable wear, and damage by fire, the elements, casualty, or other
cause not due to the misuse or neglect by LESSEE or LESSEE’s agents, employees,
visitors, or licensees, excepted. All property of LESSEE remaining on the
Premises after the last day of the

- 2 -

 

Term of this lease shall be conclusively
deemed abandoned and may be removed by LESSOR, and LESSEE shall reimburse
LESSOR for the cost of such removal.

8. SECURITY DEPOSIT: The LESSEE, contemporaneously with the first Rent
installment, and for each increase in the monthly rental amount, agrees to
deposit with the LESSOR, the then current monthly rental amount, which sum
shall be held by the LESSOR as security for the full faith and performance by
LESSEE of all of the terms, covenants and conditions of this lease by LESSEE.

The security deposit shall be held, applied to damages or rent and returned to
LESSEE all in accordance with the laws of the state where the Leased Premises
are located and in force at the time of execution of this lease.

In compliance with Arkansas Code § 18-16-305: LESSOR shall return to LESSEE
the amount of the security deposit remaining after deductions for damages and
unpaid rent, with an itemization of amounts withheld, all to be due within
thirty (30) days of the termination or expiration of the lease and delivery of
possession by LESSEE. LESSOR may comply by mailing, first class mail, to
LESSEE’S last known address. If the mail is returned, and LESSOR is unable to
discover LESSEE’S address after reasonable effort, the deposit becomes the
LESSOR’S property 180 days after the first attempted mailing thereof.

9. LESSOR’S LIEN: In compliance with Arkansas Code § 18-16-404: As additional
security, LESSEE acknowledges, to the extent allowed by applicable law, the
LESSOR’S right to hold and sell with due legal notice all property on or to be
brought on the Premises in order to satisfy unpaid Rent, expenses, and
utilities. No property of LESSEE brought onto the Leased Premises shall be
removed by LESSEE, other than in the ordinary course of business, as long as
LESSEE is in default in the terms of this lease.

10. DEFAULT: Each of the following shall be deemed an Event of Default:

	a.	 	Default in the payment of Rent or other payments hereunder.
	 
	b.	 	Default in the performance or observance of any covenant or condition
of this lease by the LESSEE to be performed or observed.
	 
	c.	 	Abandonment of the premises by LESSEE.
	 
	d.	 	The filing or execution or occurrence of:

	i.	 	Filing a Petition in bankruptcy by or against LESSEE.
	 
	ii.	 	Filing a petition or answer seeking a reorganization,
arrangement, composition,
readjustment, liquidation, dissolution or other relief of the same
or different kind under any provision of the Bankruptcy Act.
	 
	iii.	 	Adjudication of LESSEE as a bankrupt or insolvent: or
insolvency in the bankruptcy equity sense.
	 
	iv.	 	An assignment for the benefit of creditors whether by
trust, mortgage, or otherwise.
	 
	v.	 	A petition or other proceeding by or against LESSEE for, or
the appointment of, a trustee, receiver, guardian, conservator or
liquidator of LESSEE with respect to all or substantially all its
property.
	 
	vi.	 	A petition or other proceeding by or against LESSEE for its
dissolution or liquidation, or the taking of possession of the
property of the LESSEE by any governmental authority in connection
with dissolution or liquidation.

11. NOTICE OF DEFAULT. The parties are desirous of giving one another fair
notice of any default before termination or other action under this lease
requiring such notice. In the event of an act of default with respect to any
provision of this lease, neither party can institute legal action with respect
to such default without first complying with the following conditions:

	a.	 	Notice of such event of default must be in accordance with paragraph
32.
	 
	b.	 	Such written notice shall set forth the nature of the alleged default
in the performance of the terms of this lease and shall designate the
specific paragraph(s) therein which relate to the alleged act of
default;
	 
	c.	 	Such notice shall also contain a reasonably understandable
description of the action to be taken or performed by the other party in
order to cure the alleged default, and the date, greater than ten (10)
days after delivery of such notice, by which the default must be
remedied.

12. TERMINATION. Upon occurrence of any Event of Default, and after compliance
with paragraph #11, LESSOR may, at its option, in addition to any other remedy
or right given hereunder or by law; Give written notice to LESSEE that this

- 3 -

 

lease shall terminate upon the date specified in the notice, which date shall
not be earlier than ten (10) days after delivery of such notice.

The foregoing provisions for the termination of this lease shall not operate to
exclude or suspend any other remedy of the LESSOR for breach, or for the
recovery of said Rent for the full term.

13. ACCELERATION. LESSEE expressly agrees and understands that upon LESSOR’S
termination of this Lease, the entire remaining balance of unpaid Rent for the
remaining term of this Lease shall ACCELERATE, whereby the entire sum shall
become immediately due, payable, and collectable. To the extent allowed by
law, LESSOR may hold the portion of LESSEE’S security deposit remaining after
reasonable cleaning and repairs as a partial offset to satisfaction of the
accelerated Rent.

14. REPOSSESSION. Upon termination of this lease as provided herein, or
pursuant to statute, or by summary proceedings or otherwise, the LESSOR may
enter forthwith, without further demand or notice to LESSEE, and resume
possession of the Leased Premises. In no event shall such re-entry or
resumption of possession or reletting as hereafter provided be deemed to be
acceptance or surrender of this lease or a waiver of the rights or remedies of
LESSOR hereunder.

15. DEFAULT BY LESSOR. In the event of any default by LESSOR, LESSEE, before
exercising any rights that it may have at law to cancel this lease, must first
send notice in accordance with paragraph 32 to LESSOR, and shall have offered
LESSOR ten (10) days in which to correct and cure the default or commence a
good faith effort to cure such default.

16. RELETTING AFTER TERMINATION. Upon termination of this lease in any manner
above provided, LESSOR shall use reasonable efforts to relet the Premises.

17. DAMAGES. Upon termination of this lease in any manner above provided, or
by summary proceedings or otherwise, LESSEE shall pay to LESSOR without demand
or notice the following:

	(a)	 	All Rent and other payments accrued to the date of such termination
and a proportionate part of the rent otherwise payable for the month in
which such termination occurs.
	 
	(b)	 	All future Rent and other payments to be due under the terms of this
lease to the extent Landlord has not been able to offset same by
reletting the Premises within 30 days of termination.
	 
	(c)	 	The costs of making all repairs, alterations and improvements
required to be made by LESSOR hereunder, and of performing all covenants
of LESSEE relating to the condition of the Premises during the Term and
upon expiration or sooner termination of this lease, such costs to be
deemed prima facie to be the costs estimated by a reputable architect or
contractor selected by LESSOR or the amounts actually expended or
incurred thereafter by LESSOR.
	 
	(d)	 	The attorneys’ fees and other costs.

18. EXCLUSIVITY OF LESSOR’S REMEDIES: The receipt of Rent after default, or
after judgment or after execution, shall not deprive the LESSOR of other
actions against the LESSEE for possession or for Rent or for damages, and all
such remedies are non-exclusive and can be exercised concurrently or separately
as LESSOR desires.

19. LESSOR NOT LIABLE FOR INJURY OR DAMAGE TO PERSONS OR PROPERTY: The LESSOR
shall not be liable for any injury or damage to any person or to any property
at any time on said Premises or building from any cause whatever that may at
any time exist from the use or condition of the Premises or building from any
cause, during the Term or any renewal of this lease.

20. TAXES: Property taxes on the Leased Premises shall be responsibility of
LESSOR. Taxes on the personal property of Lessee shall be the responsibility
of LESSEE. All other taxes shall be the responsibility of the party incurring
same.

21. RIGHT OF RE-ENTRY. LESSOR shall have the right, by itself or agent or with
others, to enter the Premises at reasonable hours to examine or exhibit the
premises, or to make such repairs and alterations as shall be deemed necessary
for the safety and preservation of the building, to inspect and examine, to
post such notices as LESSOR may deem necessary to protect LESSOR against loss
from liens of laborers, materialmen or others, and for the purpose of
permitting or facilitating LESSOR’s performance of its obligations hereunder,
or for any other reasonable purpose which does not materially diminish LESSEE’s
enjoyment or use of the Leased Premises.

- 4 -

 

22. HOLDOVER. If LESSEE shall holdover after the expiration of the Term
hereof, with the consent of LESSOR, express or implied, such tenancy shall be
from month to month only, and not a renewal hereof; and LESSEE agrees to pay
Rent and all other charges as provided herein, and also to comply with all
covenants of this lease for the time LESSEE holds over.

Following the expiration of the lease term, and thirty (30) days previous
notice in writing given, If LESSEE shall hold over without the consent of
LESSOR, express or implied, then LESSEE shall be construed to be a tenant at
sufferance at double the Rent herein provided, prorated by the day until
possession is returned to LESSOR.

LESSEE’S holding over beyond the expiration of the notice period of a lawful
Notice of Termination constitutes holding over without the consent of the
LESSOR, and LESSEE shall be construed to be a tenant at sufferance, at double
the Rent herein provided, prorated by the day until possession is returned to
LESSOR, without limitation to LESSOR’S remedies and rights of recovery under
applicable law.

23. NATURE OF RELATIONSHIP BETWEEN PARTIES. The sole relationship between the
parties created by this agreement is that of LESSOR and LESSEE. Nothing
contained in this lease shall be deemed, held, or construed as creating a joint
venture or partnership between the parties.

24. RIGHT OF LESSOR TO PAY OBLIGATIONS OF LESSEE TO OTHERS. If LESSEE shall
fail or refuse to pay any sums due to be paid by it under the provisions of
this lease, or fail or refuse to maintain the Leased Premises or any part
thereof as herein provided, then, and in such event, LESSOR, after 10 days
notice in writing by LESSOR to LESSEE, shall have the right to pay any such sum
or sums due to be paid by LESSEE and to do and perform any work necessary to
the proper maintenance of the Leased Premises; and the amount of such sum or
sums paid by LESSOR for the account of LESSEE and the cost of any such work,
together with interest on such amount at the maximum legal rate from the date
of payment by LESSOR until the repayment to LESSOR by LESSEE, shall be paid by
LESSEE upon demand in writing. The payment by LESSOR of any such sum or sums
or the performance by LESSOR of any such work shall be prima facie evidence of
the necessity for such work.

25. MECHANICS AND OTHER LIENS IMPOSED BY LESSEE. LESSEE shall keep the Leased
Premises and the improvements at all times during the term free of mechanics
and materialmen’s liens and other liens of like nature, other than liens
created and claimed by reason of any work done by or at the instance of LESSOR,
and at all times shall fully protect and indemnify LESSOR against all such
liens or claims and against all attorneys’ fees and other costs and expenses
growing out of or incurred by reason or on account of any such liens or claims.
Should LESSEE fail to fully discharge any such lien or claim, LESSOR, at its
option, may pay the same or any part thereof, and LESSOR shall be the sole
judge of the validity of such lien or claim.

All amounts so paid by LESSOR, together with interest the maximum legal rate
from the time of payment by LESSOR until repayment by LESSEE, shall be paid by
LESSEE upon demand, and if not so paid, shall continue to bear interest at the
aforesaid rate, interest payable monthly, as additional rent.

26. CONDEMNATION CLAUSE: In the event that all or a part of the Premises is
taken by eminent domain or conveyed in lieu of eminent domain, if the Leased
Premises cannot reasonably be used by LESSEE for their intended purpose, then
this lease will terminate effective as of the date that the condemning
authority shall take possession of the same.

27. FIRE CLAUSE: The LESSEE agrees to notify LESSOR of any damages to the
Leased Premises by fire or other hazard and also of any dangerous or hazardous
condition within the Leased Premises immediately upon the occurrence of such
fire or other hazard or discovery of such condition.

Upon occurrence of a fire, repairs shall be made by LESSOR as soon as
reasonably may be done unless the costs of repairing the Premises exceed 25% of
the replacement cost of the building in which case the LESSOR may, at its
option, terminate this lease by giving LESSEE written notice of termination
within 30 days of the date of the occurrence.

If the LESSOR does not terminate this Lease pursuant to the paragraph above,
then LESSOR has 30 days after the date of occurrence to give written notice to
LESSEE setting forth its unqualified commitment to make all necessary repairs
or replacements, the projected date of commencement of such repairs, and the
LESSOR’S best good faith estimate of the date of completion of the same.

- 5 -

 

If the LESSOR fails to give such notice, or if the date of completion is more
than 90 days after the date of the occurrence, then the LESSEE may, at its
option, terminate this lease and the LESSOR will be obliged to refund to the
LESSEE any rent allocable to the period subsequent to the date of the fire.

28. WAIVER OF NONPERFORMANCE: Failure of either party to exercise any of its
rights under this lease upon nonperformance of any condition, covenant or
provision herein contained shall not be considered a waiver, nor shall any
waiver of nonperformance of any such condition, covenant or provision by the
LESSOR be construed as a waiver of the rights of the LESSOR as to any
subsequent defective performance or nonperformance hereunder.

29. PAROL EVIDENCE CLAUSE: This instrument constitutes the final, fully
integrated expression of the agreement between the LESSOR and the LESSEE, and
it cannot be modified or amended in any way except in writing signed by the
LESSOR and LESSEE.

30. SUBORDINATION: This lease is subordinate to the lien of all present or
future mortgages that affect the Leased Premises and to all renewals,
modifications, replacements and extensions of this lease. This clause shall be
self-operative but in any event LESSEE agrees to execute promptly and deliver
any estoppel certificate or other assurances that LESSOR may request in
furtherance of this provision.

31. INSURANCE: LESSEE shall, during the entire term of the lease keep in full
force and effect a policy of public liability insurance with respect to the
property and the business operated by LESSEE in the property and which the
limits of general liability shall be in the amount of Three Million Dollars
($3,000,000) combined single limit, naming LESSOR as additional insured. Such
coverage shall include a broad form general liability endorsement. LESSEE
agrees to include a waiver of subrogation in favor of LESSOR. The policy shall
contain a clause that the LESSEE will not cancel or change the insurance
without first giving the LESSOR ten (10) days prior written notice.

LESSEE shall during the term hereof, at it’s sole expense, provide and keep in
force insurance on the building against loss or damage by fire and extended
coverage, in an amount equal to one hundred percent (100%) of the full
insurable value, which insurance shall be placed with an insurance company or
companies approved by LESSOR and licensed to do business in the state wherein
lay the Leased Premises. The term “full insurable value” shall mean actual
replacement value of the building (exclusive of costs of excavation,
foundations and footing below ground level). The insurance required under this
paragraph shall be carried in the name of the LESSOR and LESSEE and shall
provide that any proceeds thereunder shall be paid to LESSOR and LESSEE and any
applicable mortgage holder, according to their respective interests.

Duplicate originals or certificates of insurance of the policies provided shall
be furnished by LESSEE to LESSOR and shall contain an agreement by the insurer
that such policy or policies shall not be canceled without at least ten (10)
days prior notice to the LESSOR.

32. NOTICES. All notices and communications concerning this lease shall be
sent by faxed and certified mailed return receipt requested to the parties at
the following addresses:

	 	 	 
	LESSOR	 	LESSEE
	Alexa Springs Water Company

	 	Alexa Springs, Inc
	118 Cottonwood

	 	652 Southwestern Blvd
	Coppell, Texas 75019

	 	Coppell, Texas 75019
	972-462-5896

	 	972-462-7764

33. SALE BY LESSOR. In the event of a sale or conveyance by LESSOR of all or
part of the Leased Premises, the same shall operate to release LESSOR from any
future liability upon any of the covenants or conditions, express or implied,
herein contained in favor of LESSEE, and in such event LESSEE agrees to look
solely to the responsibility of the successor in interest of LESSOR in and to
this lease. This lease shall not be affected by any such sale, and LESSEE
agrees to attorn to the purchaser or assignee. LESSEE agrees to permit
LESSOR, at any time within 60 days prior to the expiration of this lease, to
place upon or in the window of the leased premises any usual or ordinary For
Rent or similar sign and to allow prospective tenants, applicants or agents of
LESSOR to enter and examine the Leased Premises during the last 60 days of the
term hereof, and to permit LESSOR or LESSOR’s agents, at any time during the
term hereof, to conduct prospective purchasers through the Leased Premises
during reasonable business hours.

- 6 -

 

34. COURT ACTION, ATTORNEY’S FEES AND COSTS. If, upon failure of either party
to comply with any of the covenants, conditions, rules or regulations of and in
this lease, and suit should be
brought for damages on account, or to enforce the payment of Rent herein
stipulated, or to recover possession of the Premises or to enforce any
provision hereof, the losing party agrees to pay to the prevailing party
reasonable costs and expenses incurred in prosecuting these suits.

35. ASSIGNMENTS AND SUB-LEASE: The LESSEE hereby agrees not to assign this
lease voluntarily or involuntarily, nor to sub-lease the Premises or any part
of the Leased Premises, without the written consent of the LESSOR, under
penalty of instant forfeiture of this lease. All rights and liabilities herein
given to or imposed upon either of the parties shall extend to the heirs,
executors, administrators, successors and assigns of such party.

36. HEADINGS. The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement

37. MODIFICATION. Any modification or amendment off this agreement shall be in
writing and shall be executed by all parties.

38. SEVERABILITY CLAUSE: If any term, covenant, condition, or provision of this
lease is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.

39. LAW TO APPLY: This lease shall be construed under and in accordance with
the laws of the State of Arkansas. The parties agree to jurisdiction and
venue in Dallas County, Texas and Montgomery County, Arkansas.

40. ADDENDUMS. The following addendums are attached to this lease and shall be
initialed by the parties. (Check all that apply or check none)

	 	 	 	 	 
	(  )	 	Option to Purchase
	(  )	 	Arbitration Agreement
	(
 )

	 	Other:	 	_______________________________
	(
 )

	 	None	 	 

41. OTHER PROVISIONS:

a) LESSEE has automatically renewing option for second ten (10) year term.

b) If LESSEE elects not to automatically renew second ten (10) year term,
LESSEE must provide notice in accordance with paragraph 32, to LESSOR between
90 and 120 days prior to expiration of initial ten (10) year lease term.

c) This lease is subject to the execution of the Water Supply Contract dated
December 1, 2004, by and between LESSOR and LESSEE.

d) If the Water Supply Contract dated December 1, 2004 by and between LESSEE
and LESSOR is terminated, LESSOR at his option and with ten (10) days notice in
accordance with paragraph 32, may terminate this Lease.

e) For each ten year term, the monthly rental rate is subject to 3 periodic
increases, not to exceed 10% each.

f) This is a triple net lease. LESSEE is responsible for all taxes, insurance
and maintenance.

All documents such as schedules, exhibits and like documents are incorporated
herein. If LESSEE is a corporation, each person executing this
lease represents and warrants that he is duly authorized to execute and deliver
this lease on behalf of the corporation. Those persons further represent that
the terms of this lease are binding upon the corporation.

In Witness Whereof, the undersigned LESSOR and LESSEE execute this lease to be
effective as of the day and date first above written.

- 7 -

 

	 	 	 
	LESSEE(s) Alexa Springs, Inc.

	 	LESSOR(s) Alexa Springs Water Company
	 
	 	 
	/s/
Marshall Sorokwasz

	 	/s/ Kay Bloom

	Signature

	 	Signature
	 
	 	 
	President

	 	Secretary

	Title

	 	Title

- 8 -

 

EXHIBIT A

Tract #1:

Part of the SE 1/4 SE 1/4 of Section 2, Township 3 South, Range 25 West,
Montgomery County, Arkansas, being more particularly described as follows:
Commencing at the Southeast corner of said SE 1/4 SE 1/4 Section 2, Twp. 3
South, Range 25 West, run thence along the Section line S. 87 degrees 58
minutes 29 seconds W. 493.18 feet to the Point of Beginning; thence N. 0
degrees 15 minutes 09 seconds W. 511.57 feet to a point in a county road;
thence along said county road S. 76 degrees 31 minutes 51 seconds W. 184.17
feet; thence continuing along said county road N. 86 degrees 28 minutes 09
seconds W. 573.28 feet to the center of Williams Creek; thence along the
centerline meanders of Williams Creek to the following courses — S. 29 degrees
14 minutes 21 seconds E. 235.71 feet; S. 62 degrees 15 minutes 32 seconds E.
284.37 feet; S. 11 degrees 22 minutes 03 seconds E. 181.88 feet to a point on
the section line; thence along the section line N. 87 degrees 58 minutes 29
seconds E. 351.11 feet returning to the Point of beginning. Subject to an
easement of 20 feet along the North line for road purposes.

Tract #2:

Part of the SW 1/4 SW 1/4 of Section 1 and Part of the SE 1/4 SE 1/4 of Section
2, Township 3 South, Range 25 West, Montgomery County, Arkansas more
particularly described as follows: Beginning at the Southeast corner of the SW
1/4 SW 1/4, Section 1, Twp. 3 South, Range 25 West; thence along the Section
line S 87 degrees 46 minutes 40 seconds West 1332.73 feet to the Southeast
corner of the SE 1/4 SE 1/4, Section 2, Twp. 3 South, Range 25 West; thence
along the Section line S. 87 degrees 58 minutes 29 seconds W. 493.18 feet;
thence N. 0 degrees 15 minutes 09 seconds W. 511.57 feet to a point in a county
road; thence along said county road the following courses —  N. 76 degrees 31
minutes 51 seconds E. 528.67 feet, S 74 degrees 36 minutes 53 seconds E.
1178.05 feet, S. 78 degrees 39 minutes 51 seconds E. 176.52 feet to a point on
the forty line; thence leaving the road and along the forty line S. 1 degree 00
minutes 09 seconds E. 218.38 feet returning to the Point of beginning. Subject
to an easement of 20 feet along the North line for road purposes.

LESS AND EXCEPT:

A part of the SW 1/4 SW 1/4 of Section 1, Township 3 South, Range 25 West,
described as follows: Begin at SE corner of said forty; thence North 192.0
feet to South right of way line of County Road; thence North 74 degrees 55
minutes West 360.0 feet with said south right of way line; thence south 02
degrees 32 minutes West 290.0 feet; thence East 360.0 feet to Point of
Beginning.

ALSO CONVEYING:

Part of the SE 1/4 SE 1/4 Section 2, Twp. 3 South, Range 25 West described as
follows: Beginning at the Southwest corner of said SE 1/4 SE 1/4 run thence
along the forty line N 1 degree 07 minutes 20 seconds W. 541.72 feet to a point
in a county road; thence along said county road S. 86 degrees 28 minutes 09
seconds E. 117.61 feet to the center of Williams Creek; thence along the
centerline meanders of Williams Creek the following courses —  S. 29 degrees
14 minutes 21 seconds E. 235.71 feet; S. 62 degrees 15 minutes 32 seconds E.
284.37 feet; S. 11 degree 22 minutes 03 seconds E. 181.88 feet to a point on
the Section line; thence along Section line S 87 degrees 58 minutes 29 seconds
W. 509.77 feet returning to the Point of Beginning. Subject to an Easement of
20 feet along North line for road purposes.

 

 

	 	 	WARRANTY DEED

KNOW ALL MEN BY THESE PRESENTS:

     THAT we, CALVIN HORN, a single
person and ANGELA HORN DUKE a single
person, for and in consideration of
the sum of TEN DOLLARS ($10.00) plus
other good and valuable
consideration, in hand paid by ALEXA
SPRINGS WATER COMPANY, GRANTEE, the
receipt of which is hereby
acknowledged,
do hereby grant, bargain, sell and convey unto the said GRANTEE, and unto its
heirs and assigns forever, subject to the reservation as noted below, the
following described lands lying in Montgomery County, Arkansas, to-wit:

	 	 	SE 1/4 of SW 1/4 and SW 1/4 of SE 1/4 Section 2,
Township 3 South Range 25 West.
	 
	 	 	LEGAL DESCRIPTION PROVIDED BY GRANTORS
	 
	 	 	Subject to ail road and utility easements as previously
recorded and which are on file at the Montgomery County
Courthouse.
	 
	 	 	MINERAL RIGHTS RESERVATION: Grantors hereby reserve
unto themselves and their heirs, successors and
assigns all of the oil, gas, coal and minerals of
every kind and character now on or under the above
described lands.

     TO HAVE AND TO HOLD the same unto the said GRANTEE, and unto its heirs and
assigns forever, with all appurtenances thereunto belonging.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]