EIGHTH RESTATED LOAN AGREEMENT
AMONG
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY, INC.,
WARRIOR GAS CO.,
AS BORROWERS
CWEI ACQUISITIONS, INC.,
AS GUARANTOR
BANK ONE, NA
UNION BANK OF CALIFORNIA, N.A.
AND BANK OF SCOTLAND
AS BANKS
AND
BANK ONE, NA, AS ADMINISTRATIVE AGENT
AND
BANC ONE CAPITAL MARKETS, INC.
AS LEAD ARRANGER AND BOOKRUNNER
JUNE 25, 2001
TABLE OF CONTENTS
Page
1. Definitions.............................................................................1
2. Commitments of the Banks...............................................................10
(a) Terms of Revolving Commitment.................................................10
(b) Letters of Credit.............................................................11
(c) Procedure for Advances on the Revolving Loan..................................12
(d) Procedure for Obtaining Letters of Credit.....................................12
(e) Several Obligations...........................................................13
3. Notes Evidencing Loans.................................................................13
(a) Form of Revolving Notes.......................................................13
(b) Interest Rates................................................................13
(c) Payment of Interest...........................................................13
(d) Payment of Principal..........................................................14
(e) Issuance of Additional Notes..................................................14
(f) Payment to Banks..............................................................14
(g) Sharing of Payments...........................................................14
(h) Non-Receipt of Funds by Agent.................................................15
4. Interest Rates.........................................................................15
(a) Options.......................................................................15
(b) Interest Rate Determination...................................................16
(c) Conversion Option.............................................................16
(d) Recoupment....................................................................16
5. Special Provisions Relating to Eurodollar Loans........................................16
(a) Unavailability of Funds or Inadequacy of Pricing..............................16
(b) Change in Laws................................................................17
(c) Increased Cost or Reduced Return..............................................17
(d) Discretion of Bank as to Manner of Funding....................................19
(e) Breakage Fees.................................................................19
6. Collateral Security....................................................................20
7. Borrowing Base.........................................................................20
(a) Initial Borrowing Base........................................................20
(b) Subsequent Determinations of Borrowing Base...................................20
(c) Voluntary Decreases in Borrowing Base.........................................21
(d) Monthly Commitment Reduction..................................................22
8. Fees...................................................................................22
(a) Unused Portion Fee............................................................22
(b) Borrowing Base Increase Fee...................................................22
(c) Letter of Credit Fee..........................................................22
(d) Agency Fee....................................................................22
9. Prepayments............................................................................22
(a) Voluntary Prepayments.........................................................22
(b) Mandatory Prepayment..........................................................23
i
10. Representations and Warranties.........................................................23
(a) Creation and Existence........................................................23
(b) Power and Authorization.......................................................23
(c) Binding Obligations...........................................................24
(d) No Legal Bar or Resultant Lien................................................24
(e) No Consent....................................................................24
(f) Financial Condition...........................................................24
(g) Liabilities...................................................................24
(h) Litigation....................................................................24
(i) Taxes; Governmental Charges...................................................25
(j) Titles, Etc...................................................................25
(k) Defaults......................................................................25
(l) Casualties; Taking of Properties..............................................25
(m) Use of Proceeds; Margin Stock.................................................25
(n) Location of Business and Offices..............................................26
(o) Compliance with the Law.......................................................26
(p) No Material Misstatements.....................................................26
(q) ERISA.........................................................................26
(r) Public Utility Holding Company Act............................................26
(s) Environmental Matters.........................................................26
(t) Guarantor.....................................................................27
11. Conditions of Lending..................................................................27
12. Affirmative Covenants..................................................................28
(a) Financial Statements and Reports..............................................29
(b) Certificates of Compliance....................................................30
(c) Taxes and Other Liens.........................................................30
(d) Compliance with Laws..........................................................31
(e) Further Assurances............................................................31
(f) Performance of Obligations....................................................31
(g) Insurance.....................................................................31
(h) Accounts and Records..........................................................32
(i) Right of Inspection...........................................................32
(j) Notice of Certain Events......................................................32
(k) ERISA Information and Compliance..............................................32
(l) Environmental Reports and Notices.............................................32
(m) Maintenance...................................................................33
(n) Title Matters.................................................................33
(o) Curative Matters..............................................................33
(p) Additional Collateral.........................................................33
13. Negative Covenants.....................................................................34
(a) Liens.........................................................................34
(b) Debts, Guaranties and Other Obligations.......................................34
(c) Current Ratio.................................................................35
(d) Ratio of Debt to EBITDAX......................................................35
ii
(e) Limitation on Sale of Collateral..............................................35
(f) Mergers and Consolidations....................................................36
(g) Use of Proceeds...............................................................36
(h) Loans or Advances.............................................................36
(i) Rate Management Transactions..................................................36
(j) Dividends.....................................................................36
(k) Investments...................................................................37
(l) Change of Control.............................................................37
14. Events of Default......................................................................37
15. Exercise of Rights.....................................................................39
16. Notices................................................................................40
17. The Agent and the Banks................................................................40
(a) Appointment and Authorization.................................................40
(b) Note Holders..................................................................40
(c) Consultation with Counsel.....................................................41
(d) Documents.....................................................................41
(e) Resignation or Removal of Agent...............................................41
(f) Responsibility of Agent.......................................................41
(g) Independent Investigation.....................................................43
(h) Indemnification...............................................................43
(i) Benefit of Section 17.........................................................43
(j) Pro Rata Treatment............................................................44
(k) Assumption as to Payments.....................................................44
(l) Other Financings..............................................................44
(m) Interests of Banks............................................................44
(n) Investments...................................................................45
18. Expenses...............................................................................45
19. Indemnity..............................................................................45
20. Governing Law..........................................................................46
21. Invalid Provisions.....................................................................46
22. Maximum Interest Rate..................................................................46
23. Amendments.............................................................................47
24. Multiple Counterparts..................................................................47
25. Conflict...............................................................................47
26. Survival...............................................................................47
27. Parties Bound..........................................................................48
28. Assignments and Participations.........................................................48
29. Waiver of Jury Trial...................................................................49
30. Choice of Forum: Consent to Service of Process and Jurisdiction........................50
31. Other Agreements.......................................................................50
32. Written Consent........................................................................50
33. Financial Terms........................................................................50
iii
Exhibits:
Exhibit A - Notice of Borrowing
Exhibit B - Renewal Revolving Note
Exhibit C - Financial Condition
Exhibit D - Liabilities
Exhibit E - Litigation
Exhibit F - Environmental Matters
iv
EIGHTH RESTATED
LOAN AGREEMENT
THIS EIGHTH RESTATED
LOAN AGREEMENT (hereinafter referred to as the
"Agreement") executed as of the 25th day of June, 2001, by and among ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ENERGY, INC, a Delaware corporation ("CWE"), WARRIOR GAS CO., a
Texas
corporation ("Warrior") (CWE and Warrior being hereinafter sometimes
collectively referred to as "Borrower"), CWEI ACQUISITIONS, INC., a Delaware
corporation (hereinafter referred to as "Guarantor"), BANK ONE, NA (successor by
merger to Bank One,
Texas, N.A.) ("Bank One"), UNION BANK OF CALIFORNIA, N.A., a
national banking association ("Union") and BANK OF SCOTLAND ("BOS") (Bank One,
Union and BOS each in their capacity as a lender hereunder together with each
and every future holder of any note issued pursuant to this Agreement are
hereinafter collectively referred to as "Banks" and individually as "Bank") and
Bank One as "Agent".
W I T N E S S E T H:
WHEREAS, as of December 1, 1999, Borrower, Bank One and Union entered
into a Seventh Restated
Loan Agreement (the "
Loan Agreement"), pursuant to the
terms of which the Banks agreed to provide a $100,000,000 reducing revolving
loan facility to Borrower;
WHEREAS, the Borrower, the Banks and the Agent entered into a First
Amendment to Seventh Restated
Loan Agreement on July 1, 2000;
WHEREAS, BOS is acquiring an interest in the
Loan Agreement and the
rights and obligations arising thereunder from Bank One and Union; and
WHEREAS, Borrower, Bank One, Union and BOS have agreed to renew,
extend, amend and restate the Seventh Restated
Loan Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. DEFINITIONS. When used herein the terms "Agent", "Agreement", "Bank
One", "Bank of Scotland", "Banks", "Borrower", "Guarantor" and "Union" shall
have the meanings indicated above. When used herein the following terms shall
have the following meanings:
ADVANCE OR ADVANCES means a loan or loans hereunder.
ASSIGNMENT AND ACCEPTANCE means a document substantially in the
form of Exhibit "D" hereto.
BASE RATE means, as of any date, the sum of the Prime Rate plus
the Base Rate Margin.
BASE RATE LOANS means any loan during any period which bears
interest at the Base Rate or which would bear interest at the Base Rate
if the Maximum Rate ceiling was not in effect at that particular time.
BASE RATE MARGIN means the fluctuating Base Rate Margin in effect
from day to day shall be:
(i) three-eighths of one percent (3/8%) per annum whenever
the Total Outstandings are greater than 75% of the Elected
Borrowing Limit in effect at the time in question;
(ii) one-fourth of one percent (1/4%) per annum whenever the
Total Outstandings are greater than 50%, but less than or equal
to 75%, of the Elected Borrowing Limit in effect at the time in
question;
(iii) one-eighth of one percent (1/8%) per annum whenever
the Total Outstandings are greater than 25%, but less than or
equal to 50%, of the Elected Borrowing Limit in effect at the
time in question;
(iv) zero, whenever the Total Outstandings are 25% or less
of the Elected Borrowing Limit in effect at the time in question.
BORROWING BASE means the value, determined by the Banks in
accordance with their customary standards, assigned by the Banks from
time to time to the Collateral less the aggregate amount of any
outstanding CWE guarantees of Vendor Financings.
BORROWING BASE DEFICIENCY means the term "Borrowing Base
Deficiency" is used herein as defined in Section 9(b) hereof.
BORROWING DATE means the date elected by the Borrower pursuant to
(i) Section 2(c) hereof for an Advance on the Revolving Loan or (ii)
Section 4(c) hereof for a change in interest rate placement on the
Revolving Loan.
BUSINESS DAY shall mean (i) with respect to any borrowing,
payment or note selection of Eurodollar Loans, a day (other than
Saturdays or Sundays) on which banks are legally open for business in
Dallas,
Texas and on which dealings in United States dollars are
carried on in the London interbank market, and (ii) for all other
purposes a day (other than Saturdays and Sundays) on which banks are
legally open for business in Dallas,
Texas.
COLLATERAL is used herein as defined in Section 6 hereof.
COMMITMENT PERCENTAGE means the percentage of the Revolving
Commitment that each Bank is severally obligated to fund hereunder,
which, as of the date of this Agreement is:
-2-
BANK ONE, NA 40%
UNION BANK OF CALIFORNIA, N.A. 40%
BANK OF SCOTLAND 20%
CURRENT ASSETS means the sum of the ▇▇▇▇▇▇▇▇ Consolidated
Entities' current assets, determined in accordance with GAAP, plus any
unused portion of the Elected Borrowing Limit, less (i) any current
assets attributable to Vendor Financing transactions and (ii) any
amount required to be included in Current Assets as a result of the
application of FASB Statement 133.
CURRENT LIABILITIES means the total of the ▇▇▇▇▇▇▇▇ Consolidated
Entities' current liabilities, determined in accordance with GAAP,
excluding therefrom (i) trade and revenue payables arising from Vendor
Financings, (ii) current maturities outstanding under the Notes, and
(iii) any amount required to be included in Current Liabilities as the
result of the application of FASB Statement 133.
DEBT means all amounts outstanding on the Revolving Commitment.
DEFAULTING BANK is used herein as defined in Section 3(f) hereof.
EBITDAX means the ▇▇▇▇▇▇▇▇ Consolidated Entities' Net Income
(excluding from such Net Income any non-cash gains or losses as a
result of the application of FASB Statement 133, non-cash stock base
compensation and income attributable to Vendor Financing) plus the sum
of (i) income tax expense (excluding income tax expense related to the
sale or disposition of assets, the gains or losses from which are
excluded in the determination of the ▇▇▇▇▇▇▇▇ Consolidated Entities'
Net Income), (ii) interest expense, (iii) depreciation, depletion and
amortization expense, and (iv) exploration expenses for the most recent
fiscal quarter annualized.
EFFECTIVE DATE means the date of this Agreement.
ELECTED BORROWING LIMIT is used herein as defined in Section 7(c)
hereof.
ELIGIBLE ASSIGNEE means any of (i) a Bank or any Affiliate of a
Bank; (ii) a commercial bank organized under the laws of the United
States, or any state thereof, and having a combined capital and surplus
of at least $100,000,000; (iii) a commercial bank organized under the
laws of any other country which is a member of the Organization for
Economic Cooperation and Development, or a political subdivision of any
such country, and having a combined capital and surplus of at least
$100,000,000.00, provided that such bank is acting through a branch or
agency located in the United States; (iv) a Person that is primarily
engaged in the business of commercial lending and that (A) is a
subsidiary of a Bank, (B) a subsidiary of a Person of which a Bank is a
subsidiary, or (C) a Person of which a Bank is a subsidiary; (v) any
other entity (other than a natural person) which is an "accredited
investor" (as defined in Regulation D under the Securities Act) which
extends credit or buys loans as one of its businesses, including, but
-3-
not limited to, insurance companies, mutual funds, investments funds
and lease financing companies; and (vi) with respect to any Bank that
is a fund that invests in loans, any other fund that invests in loans
and is managed by the same investment advisor of such Bank or by an
Affiliate of such investment advisor (and treating all such funds so
managed as a single Eligible Assignee); provided, however, that no
Affiliate of Borrowers shall be an Eligible Assignee.
ENGINEERED VALUE is used herein as defined in Section 12(p)
hereof.
ENVIRONMENTAL LAWS means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C.A.ss.9601, ET SEQ., the Resource Conservation and Recovery Act,
as amended by the Hazardous Solid Waste Amendment of 1984, 42
U.S.C.A.ss.6901, ET SEQ., the Clean Water Act, 33 U.S.C.A.ss.1251, et
seq., the Clean Air Act, 42 U.S.C.A.ss.1251, ET SEQ., the Toxic
Substances Control Act, 15 U.S.C.A.ss.2601, ET SEQ., The Oil Pollution
Act of 1990, 33 U.S.G.ss.2701, ET SEQ., and all other laws, statutes,
codes, acts, ordinances, orders, judgments, decrees, injunctions,
rules, regulations, orders, permits and restrictions of any federal,
state, county, municipal and other governments, departments,
commissions, boards, agencies, courts, authorities, officials and
officers, domestic or foreign, relating to oil pollution, air
pollution, water pollution, noise control and/or the handling,
discharge, disposal or recovery of on-site or off-site asbestos,
radioactive materials, spilled or leaked petroleum products,
distillates or fractions and industrial solid waste or "hazardous
substances" as defined by 42 U.S.C.ss.9601, ET -- seq., as amended, as
each of the foregoing may be amended from time to time.
ENVIRONMENTAL LIABILITY means any claim, demand, obligation,
cause of action, accusation, allegation, order, violation, damage,
injury, judgment, penalty or fine, cost of enforcement, cost of
remedial action or any other costs or expense whatsoever, including
reasonable attorneys' fees and disbursements, resulting from the
violation or alleged violation of any Environmental Law or the
imposition of any Environmental Lien (as hereinafter defined) which
would individually or in the aggregate have a Material Adverse Effect.
ENVIRONMENTAL LIEN means a Lien in favor of any court,
governmental agency or instrumentality or any other person (i) for any
Environmental Law or (ii) for damages arising from or cost incurred by
such court or governmental agency or instrumentality or other person in
response to a release or threatened release of hazardous or toxic
waste, substance or constituent into the environment.
ERISA means the Employee Retirement Income Security Act of 1974,
as amended.
EURODOLLAR BASE RATE means with respect to each Interest Period,
the rate of interest per annum at which deposits in immediately
available and freely transferable funds in U.S. Dollars are offered to
the Agent (at approximately 10:00 a.m., Dallas,
Texas time three
Business Days prior to the first day of each Interest Period) in the
-▇-
▇▇▇▇▇▇ interbank market for delivery on the first day of such Interest
Period in an amount equal to or comparable to the principal amount of
the Eurodollar Loan to which such Interest Period relates. Each
determination of the Eurodollar Base Rate by the Agent shall, in the
absence of error, be conclusive and binding.
EURODOLLAR LOAN means any loan during any period which bears
interest at the Eurodollar Rate, or which would bear interest at such
rate if the Maximum Rate ceiling was not in effect at a particular
time.
EURODOLLAR MARGIN means the fluctuating Eurodollar Margin in
effect from day to day shall be:
(i) two percent (2.0%) per annum whenever the Total
Outstandings are greater than 75% of the Elected Borrowing Limit
in effect at the time in question;
(ii) one and three-quarters percent (1.75%) per annum
whenever the Total Outstandings are greater than 50%, but less
than or equal to 75%, of the Elected Borrowing Limit in effect at
the time in question;
(iii) one and one-half percent (1.50%)per annum whenever the
Total Outstandings are greater than 25%, but less than or equal
to 50%, of the Elected Borrowing Limit in effect at the time in
question;
(iv) one and one-quarter percent (1.25%), whenever the Total
Outstandings are 25% or less of the Elected Borrowing Limit in
effect at the time in question.
EURODOLLAR RATE means, with respect to a Eurodollar Loan for the
relevant Interest Period, the sum of (i) the quotient of (A) the
Eurodollar Base Rate applicable to such Interest Period, divided by (B)
one minus the Reserve Requirement (expressed as a decimal) applicable
to such Interest Period, plus the (ii) Eurodollar Margin. The
Eurodollar Rate shall be rounded to the next higher multiple of 1/100th
of one percent if the rate is not such a multiple.
EVENT OF DEFAULT is used herein as defined in Section 14 hereof.
FINANCIAL STATEMENTS means the ▇▇▇▇▇▇▇▇ Consolidated Entities'
consolidated balance sheets, income statements and statements of cash
flow prepared in accordance with GAAP.
GAAP means generally accepted accounting principles, consistently
applied.
GOOD AND DEFENSIBLE TITLE means title held by the Borrower and
Guarantor that is free from defects as would cause a reasonable doubt
in the mind of a reasonable and
-5-
prudent purchaser in the area where theCollateral is situated and
cause him if he were purchasing such Collateral to refuse to accept
such Collateral at its full agreed value. The title of Borrower and
Guarantor may be subject to drilling obligations in leases, farmout
agreements, operating agreements, covenants, restrictions, rights,
easements, liens, encumbrances and minor irregularities in title
which collectively do not interfere with the occupation, use and
enjoyment of such Collateral in the normal course of business as
presently conducted or contemplated to be conducted by Borrower and
Guarantor or materially impair the value thereof for such business.
INTEREST PAYMENT DATE means the earlier of (i) the last day of
each Interest Period or (ii) the last day of each calendar quarter.
INTEREST PERIOD means with respect to any Eurodollar Loan (i)
initially, the period commencing on the date such Eurodollar Loan is
made and ending one (1), two (2), three (3), four (4) or six (6) months
thereafter as selected by the Borrower pursuant to Section 4(a)(ii) and
(ii) thereafter, each period commencing on the day following the last
day of the next preceding Interest Period applicable to such Eurodollar
Loan and ending one (1), two (2), three (3), four (4) or six (6) months
thereafter, as selected by the Borrower pursuant to Section 4(a)(ii);
provided, however, that (i) if any Interest Period would otherwise
expire on a day which is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day unless the result of such
extension would be to extend such Interest Period into the next
calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day, (ii) if any Interest Period begins
on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the
end of such Interest Period) such Interest Period shall end on the last
Business Day of a calendar month, and (iii) any Interest Period which
would otherwise expire after the Maturity Date shall end on such
Maturity Date.
LETTERS OF CREDIT is used herein as defined in Section 2(c)
hereof.
LIEN means any mortgage, deed of trust, pledge, security
interest, assignment, encumbrance or lien (statutory or otherwise) of
every kind and character.
LOAN DOCUMENTS means this Agreement, the Note, the Security
Instruments and all other documents executed in connection with the
transaction described in this Agreement.
MAJORITY BANKS means banks holding at least 66-2/3% ownership of
the Revolving Commitment.
MATERIAL ADVERSE EFFECT means any Material Adverse Effect on the
assets or properties, liabilities, financial condition, business,
operations, affairs or circumstances of Borrower and Guarantor, taken
as a whole, from those reflected in the Financial Statements of
Borrower and Guarantor or from the facts represented or warranted in
this Agreement or any other Security Instrument.
-6-
MATURITY DATE means July 31, 2004.
MAXIMUM RATE means at the particular time in question, the
maximum rate of interest which, under applicable law, may then be
charged. If such maximum rate of interest changes after the date
hereof, the Maximum Rate shall be increased or decreased, as the case
may be, without notice to Borrower from time to time as of the
effective date of each such change in the Maximum Rate. If applicable
law ceases to provide for such a maximum rate of interest, the Maximum
Rate shall be equal to eighteen percent (18%) per annum.
MONTHLY COMMITMENT REDUCTION is used herein as defined in Section
7(d) hereof.
NEGATIVE PLEDGE PROPERTY means all producing oil and gas
properties and interests, from time to time, of Borrower or Guarantor
which are not mortgaged or pledged to the Banks.
NET INCOME means the ▇▇▇▇▇▇▇▇ Consolidated Entities' Net Income
determined in accordance with GAAP.
NOTES means the Revolving Notes.
NOTICE OF BORROWING is used herein as defined in Section 2(d)
hereof.
OIL AND GAS PROPERTIES means all oil, gas and mineral properties
and interests, and related personal properties, in which Borrower or
Guarantor has granted and hereinafter grants (to the satisfaction of
Agent) to Banks a first and prior lien and security interest.
PAYOR is used herein as defined in Section 3(h) hereof.
PERMITTED LIENS means (i) royalties, overriding royalties,
reversionary interests, production payments and similar burdens granted
by Borrower or Guarantor with respect to the Oil and Gas Properties if
the net cumulative effect of such burdens does not operate to deprive
Borrower or Guarantor of any material right in respect of its assets or
properties (except for rights customarily granted with respect to such
interests); (ii) statutory liens, including liens for taxes or other
assessments that are not yet delinquent (or that, if delinquent, are
being contested in good faith by appropriate proceedings and for which
Borrower or Guarantor has set aside on its books adequate reserves in
accordance with GAAP); (iii) easements, rights of way, servitudes,
permits, surface leases and other rights in respect to surface
operations, pipelines, grazing, logging, canals, ditches, reservoirs or
the like, conditions, covenants and other restrictions, and easements
of streets, alleys, highways, pipelines, telephone lines, power lines,
railways and other easements and rights of way on, over or in respect
of Borrower's or Guarantor's assets or properties; (iv) materialmen's,
mechanic's, repairman's, employee's, contractor's, sub-contractor's,
operator's and other Liens incidental to the construction, maintenance,
development or operation of Borrower's or Guarantor's assets
-7-
or properties to the extent not delinquent (or which, if delinquent,
are being contested in good faith by appropriate proceedings and for
which Borrower or Guarantor has set aside on its books adequate
reserves in accordance with GAAP); (v) all contracts, agreements and
instruments, and all defects and irregularities and other matters
affecting Borrower's or Guarantor's assets and properties which were in
existence at the time Borrower's or Guarantor's assets and properties
were originally acquired by Borrower or Guarantor and all routine
operational agreements entered into in the ordinary course of business,
which contracts, agreements, instruments, defects, irregularities and
other matters and routine operational agreements are not such as to,
individually or in the aggregate, interfere materially with the
operation, value or use of Borrower's or Guarantor's assets and
properties, considered in the aggregate; (vi) liens in connection with
workmen's compensation, unemployment insurance or other social
security, old age pension or public liability obligations; (vii) legal
or equitable encumbrances deemed to exist by reason of the existence of
any litigation or other legal proceeding or arising out of a judgment
or award with respect to which an appeal is being prosecuted in good
faith; (viii) rights reserved to or vested in any municipality,
governmental, statutory or other public authority to control or
regulate Borrower's or Guarantor's assets and properties in any manner,
and all applicable laws, rules and orders from any governmental
authority; (ix) landlords liens; (x) liens created by or pursuant to
this Agreement or the Security Instruments; (xi) liens existing at the
date of this Agreement which have been disclosed to Banks in Borrower's
or Guarantor's Financial Statements or identified on Schedule "1"
hereto; and (xii) liens arising from indebtedness incurred by Borrower
or Guarantor, which indebtedness is described in Section 13(b).
Provided, however, that the definition of the term "Permitted Liens"
does not include liens of any kind or character which are prior by
perfection to the liens on the Collateral held by the Banks, or which
may, by operation of law, become prior to such liens held by the Banks.
PERSON means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
PLAN means any plan subject to Title IV of ERISA and maintained
by Borrower, or any such plan to which Borrower is required to
contribute on behalf of its respective employees.
PRE-APPROVED CONTRACT as used herein shall mean any contracts or
agreements entered into in connection with any Rate Management
Transaction designed to hedge, provide a price floor for, or swap crude
oil or natural gas in volumes not exceeding (i) 100% of the Borrower's
anticipated production from proved, developed producing reserves of
crude oil, and/or (ii) 100% of the Borrower's anticipated production
from proved, developed producing reserves of natural gas, during the
period from the immediately preceding settlement date (or the
commencement of the term of such hedge transactions if there is no
prior settlement date) to such settlement date, (ii) with a maturity of
twenty-four (24) months or less, (iii) with "strike prices" per barrel
or Mmbtu greater than Agent's forecasted price in the most recent
engineering evaluation of Borrower's Oil and Gas Properties, adjusted
for the difference between the forecasted
-8-
price and the Borrower's actual product price as reasonably
determined by the Agent, and (iv) with counterparties to the hedging
agreement which are otherwise reasonably approved by Agent.
PRIME RATE means the corporate base rate of interest announced
from time to time by Agent or its parent (which is not necessarily the
lowest rate charged to any customer), changing when and as said Prime
Rate changes.
RATE MANAGEMENT TRANSACTION means any transaction (including an
agreement with respect thereto) now existing or hereafter entered into
by Borrower or any of its Subsidiaries which is a rate swap, basis
swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap, equity or equity index option, bond
option, interest rate option, forward exchange transaction, cap
transaction, floor transaction, collar transaction, forward
transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction
(including any option with respect to any of these transactions) or any
combination thereof, whether linked to one or more interest rates,
foreign currencies, commodity prices, equity prices or other financial
measures.
REGULATION D shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any
successor thereto and other regulation or official interpretation of
said Board of Governors relating to reserve requirements applicable to
member banks of the Federal Reserve System.
REIMBURSEMENT OBLIGATIONS means, at any time, the obligations of
the Borrower in respect of all Letters of Credit then outstanding to
reimburse amounts paid by any Bank in respect of any drawing or
drawings under a Letter of Credit.
RELEASE PRICE is used herein as defined in Section 13(e) hereof.
REQUIRED PAYMENT is used herein as defined in Section 3(h)
hereof.
RESERVE REQUIREMENT means, with respect to any Interest Period,
the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed under
Regulation D on Eurocurrency liabilities.
REVOLVING COMMITMENT means, subject to the provisions of Section
2(a) hereof, as to all Banks, the lesser of (i) $100,000,000.00 or (ii)
the Elected Borrowing Limit, and as to each Bank its obligation to make
a Revolving Loan in the amount of the lesser of (i) its Commitment
Percentage times $100,000,000, or (ii) its Commitment Percentage times
the Elected Borrowing Limit.
REVOLVING LOAN means a loan or loans made under the Revolving
Commitment pursuant to Section 2(a) hereof.
-9-
REVOLVING NOTES means the Revolving Notes, in substantially in
the form of Exhibit "B" issued or to be issued hereunder to each Bank,
respectively, to evidence the indebtedness to such Bank arising by
reason of the Advances on the Revolving Loan, together with all
modifications, renewals and extensions thereof or any part thereof.
SECURITY INSTRUMENTS means the term Security Instruments is used
collectively herein to mean this Agreement, all Deeds of Trust,
Mortgages, Security Agreements and Assignments of Production and
Financing Statements, and other collateral documents covering certain
of Borrower's and Guarantor's oil, gas and mineral properties and
interest, and related personal property, and all amendments and
supplements thereof, all pledge agreements covering stock and notes,
and other collateral documents covering other collateral, all such
documents to be in form and substance satisfactory to Agent.
SUBSIDIARIES means Warrior, Clajon Industrial Gas, Inc.,
Guarantor, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Venezuela, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Trading
Company, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Pipeline Corporation and any other
corporation or entity of which voting securities or other ownership
interests having ordinary voting power to elect a majority of the board
of directors or other persons performing similar functions are at any
time owned directly or indirectly by Borrower.
TOTAL OUTSTANDINGS means as of any date, the total principal
balance outstanding on the Notes plus the total face value of all
outstanding Letters of Credit.
UNSCHEDULED REDETERMINATIONS means a redetermination of Borrowing
Base made at any time other than the date set for the regular
semi-annual redetermination of the Borrowing Base which are made at the
request of either Borrowers or Majority Banks.
UNUSED PORTION FEE is used herein as defined in Section 8(a)
hereof.
VENDOR FINANCINGS means non-recourse vendor financings by CWE or
its Subsidiaries for services, equipment or materials on other than
customary trade payable terms.
▇▇▇▇▇▇▇▇ CONSOLIDATED ENTITIES means CWE and its Subsidiaries
which are consolidated with it under GAAP.
2. COMMITMENTS OF THE BANKS.
(a) TERMS OF REVOLVING COMMITMENT. On the terms and conditions
hereinafter set forth, each Bank agrees severally to make Advances to Borrower
from time to time during the period beginning on the Effective Date and ending
on the Maturity Date in such amounts as Borrower may request up to an amount not
to exceed, in the aggregate principal amount outstanding at any time, the
Revolving Commitment. Provided, however, that notwithstanding anything to the
contrary contained herein, but subject to the right of Borrower under Section
9(b) hereof, the Total Outstandings, as of any date, shall never exceed the
lesser of (i) $100,000,000.00, or (ii) the Borrowing Base.
-10-
The obligation of each Bank to make Advances under the Revolving Commitment
shall be limited to such Bank's Commitment Percentage of such Advance.
Notwithstanding any other provision of this Agreement, no Advance shall be
required to be made hereunder if any Event of Default (as hereinafter defined)
has occurred and is continuing or if any event or condition has occurred that
may, with notice, be an Event of Default. Borrower shall have the option
pursuant to Section 4 hereof to determine whether Advances hereunder shall be
made as Base Rate Loans or Eurodollar Loans. Each Advance made as a Prime Rate
Loan shall be an aggregate amount of at least $100,000 or a whole number
multiple thereof. Each Advance made as a Eurodollar Loan shall be in an
aggregate amount of at least $250,000, or in integral multiples thereof. No more
than two (2) Eurodollar tranches may be outstanding at any time.
(b) LETTERS OF CREDIT. On the terms and conditions hereinafter
set forth, Agent shall from time to time during the period beginning on the
Effective Date and ending on the Maturity Date upon request of Borrower issue
Letters of Credit for the account of Borrower (the "Letters of Credit") in such
face amounts as Borrower may request, but not to exceed in the aggregate face
amount at any time outstanding the sum of Ten Million Dollars ($10,000,000.00).
The face amount of all Letters of Credit issued and outstanding hereunder shall
be considered as Advances on the Revolving Commitment for Borrowing Base
purposes and all payments made by Agent (or by another issuing Bank) on such
Letters of Credit shall be considered as Advances under the Revolving Notes. The
obligations of the Agent or any other issuing Bank on such Letters of Credit
shall be secured by all of the Collateral. Each Letter of Credit issued for the
account of Borrower hereunder shall (i) be in favor of such beneficiaries as
specifically requested by Borrower, (ii) have an expiration date not exceeding
the earlier of (A) two (2) years from the date of their issuance, or (B) the
Maturity Date, and (iii) contain such other terms and provisions as may be
required by Agent or the issuing Bank. In the event that at the Maturity Date
there are outstanding Letters of Credit with expiration dates beyond the
Maturity Date, Borrower and Banks agree that all Collateral pledged to secure
the Notes and the other obligations of Borrower hereunder and under the other
documents executed in connection herewith shall continue to secure the
obligations of Borrower to Agent or other issuing Bank on such outstanding
Letters of Credit until such time as either (a) all such Letters of Credit have
expired by their terms or (b) the Agent or other issuing Bank has received
indemnification from a party satisfactory to the Agent or the other issuing
Bank, as the case may be, as to Borrower's obligations under any such
outstanding Letters of Credit. Each Bank (other than the Agent) agrees that,
upon issuance of any Letter of Credit hereunder, it shall automatically acquire
a participation in the Agent's liability under such Letter of Credit in an
amount equal to such Bank's Commitment Percentage of such liability, and each
Bank (other than the Agent) thereby shall absolutely, unconditionally and
irrevocably assume, as primary obligor and not as surety, and shall be
unconditionally obligated to the Agent to pay and discharge when due, its
Commitment Percentage of the Agent's liability under such Letter of Credit. Upon
delivery by such Bank of funds to pay and discharge such liability, such Bank
shall be treated as having purchased a participating interest in an amount equal
to the amount of such funds delivered to the Agent by such Bank in the
obligation of Borrower to reimburse Agent, as the issuer of such Letter of
Credit, for any amounts payable, paid, or
-11-
incurred by Agent, as the issuer of such Letter of Credit, with respect to such
Letter of Credit. Each such payment by such Bank shall be considered an Advance
under its Note and shall bear interest at the rates specified in Section 4
hereof. The Borrower hereby conditionally agrees to pay and reimburse the Agent
for its own account and for the account of each Bank providing funds for the
purchase of a participation in such Letter of Credit for the amount of each
demand for payment under any Letter of Credit that is in substantial compliance
with the provisions of any such Letter of Credit at or prior to the date on
which payment is made by the Agent to the beneficiary thereunder, without
presentment, demand, protest or other formalities of any kind. Upon receipt from
any beneficiary of any Letter of Credit of any demand for payment under such
Letter of Credit, the Agent shall promptly notify the Borrower of the demand and
the date upon which such payment is to be made by the Agent to such beneficiary
in respect of such demand. Forthwith upon receipt of such notice from the Agent,
Borrower shall advise Agent whether or not it intends to borrow hereunder to
finance its obligations to reimburse the Agent, and if so, submit a Notice of
Borrowing as provided in Section 2(c) hereof.
(c) PROCEDURE FOR ADVANCES ON THE REVOLVING LOAN. Whenever
Borrower desires an Advance on the Revolving Loan, they shall give Agent
telegraphic, telex, facsimile or telephonic notice ("Notice of Borrowing") of
such requested Advance, which in the case of telephonic notice, shall be
promptly confirmed in writing. Each Notice of Borrowing shall be in the form of
Exhibit "A" attached hereto and shall be received by Agent not later than 11:00
a.m. Dallas,
Texas time, (i) one Business Day prior to the Borrowing Date in the
case of Base Rate Loans; and (ii) three (3) Business Days prior to any proposed
Borrowing Date in the case of Eurodollar Loans. Each Notice of Borrowing shall
specify (i) the Borrowing Date (which shall be a Business Day), (ii) the
principal amount to be borrowed, (iii) the portion of the borrowing constituting
Base Rate Loans and/or Eurodollar Loans, (iv) if any portion of the proposed
borrowing is to constitute Eurodollar Loans, the initial Interest Period
selected by Borrower pursuant to Section 4 hereof to be applicable thereto, and
(v) the date upon which disbursement is required. Upon receipt of such notice,
Agent shall advise each Bank thereof. Not later than 1:00 p.m., Dallas,
Texas
time, on the date upon which the Advance is to be made, each Bank shall provide
Agent at its office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, in immediately
available funds, its pro rata share of the requested Advance. Not later than
2:00 p.m., Dallas,
Texas time, on the date for which the Advance was requested,
Agent shall make available to Borrower at the same office, in like funds, the
aggregate amount of such requested Advance. Neither Agent nor any Bank shall
incur any liability to Borrower in acting upon any notice referred to above
which Agent or such Bank believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Borrower or
for otherwise acting in good faith under this Section 2(c). Upon funding of
Advances by Banks in accordance with this Agreement pursuant to any such notice,
Borrower shall have effected Advances hereunder.
(d) PROCEDURE FOR OBTAINING LETTERS OF CREDIT. The amount and
date of issuance, renewal, extension or reissuance of a Letter of Credit
pursuant to the Banks' commitment above in Section 2(b) shall be designated by
Borrower's written request
-12-
delivered to Agent at least three (3) Business Days prior to the date of such
issuance, renewal, extension or reissuance. Concurrently with or promptly
following the delivery of the request for a Letter of Credit, Borrower shall
execute and deliver to the Agent an application and agreement with respect to
the Letters of Credit on the customary forms of the Agent pertaining to such
Letters of Credit. The Agent shall not be obligated to issue, renew, extend or
reissue such Letters of Credit if (A) the amount thereon when added to the
amount of the outstanding Letters of Credit exceed Ten Million Dollars
($10,000,000.00) or (B) the amount thereof when added to the amount of all
outstanding Letters of Credit and all amounts outstanding under the Notes would
exceed the Revolving Commitment. Borrower agrees to pay the Agent for the
benefit of the Banks commissions for issuing the Letters of Credit (calculated
separately for each Letter of Credit) at the rate of the greater of (i) 1-1/2%
per annum on the maximum face amount of the Letter of Credit or (ii) $400.00.
Such commission shall be payable prior to the issuance of the Letter of Credit
and thereafter on each anniversary date of such issuance while such Letter of
Credit is outstanding.
(e) SEVERAL OBLIGATIONS. The obligations of the Banks under the
Revolving Commitment are several and not joint. The failure of any Bank to make
an Advance required to be made by it shall not relieve any other Bank of its
obligation to make its Advance, and no Bank shall be responsible for the failure
of any other Bank to make the Advance to be made by such other Bank. No Bank
shall ever be required to lend hereunder any amount in excess of its legal
lending limit.
3. NOTES EVIDENCING LOANS. The loans described above in Section 2 shall
be evidenced by promissory notes of Borrower as follows:
(a) FORM OF REVOLVING NOTES. The Revolving Loan shall be
evidenced by three Revolving Notes in the aggregate face amount of $100,000,000
and shall be in the form of the Note attached hereto as Exhibit "B" with
appropriate insertions. Notwithstanding the principal amount of the Revolving
Notes, as stated on the face thereof, the actual principal amount due from
Borrower to Banks on account of the Revolving Notes, as of any date of
computation, shall be the sum of Advances then and theretofore made on account
thereof, less all principal payments actually received by Banks in collected
funds with respect thereto. Interest in respect thereof shall be payable only
for the period during which the Revolving Loan evidenced thereby is outstanding
and, although the stated amount of the Revolving Notes may be higher, the
Revolving Notes shall be enforceable, with respect to Borrower's obligation to
pay the principal amount thereof, only to the extent of the unpaid principal
amount of the Revolving Loan.
(b) INTEREST RATES. The unpaid principal balance of the Revolving
Notes shall bear interest from time to time at a rate of interest determined
from time to time depending on the option or options selected by Borrower
pursuant to Section 4(a) hereof.
(c) PAYMENT OF INTEREST. Interest on the Notes shall be payable
as specified in Section 4 hereof.
-13-
(d) PAYMENT OF PRINCIPAL. The entire unpaid principal balance of
the Revolving Notes shall be due and payable on the Maturity Date.
(e) ISSUANCE OF ADDITIONAL NOTES. At the Effective Date there
shall be outstanding three Revolving Notes, one in the face amount of
$40,000,000 payable to order of Bank One, one in the face amount of $40,000,000
payable to the order of Union and one in the face amount of $20,000,000 payable
to the order of BOS. From time to time during the period from the Effective Date
to the Maturity Date, additional Notes may be issued to the Banks and other
Banks as such other Banks become parties to this Agreement. The face amount of
each such new Revolving Note shall be in an amount equal to the Commitment
Percentage of such Bank times $100,000,000. The aggregate face amount of all
such Revolving Notes issued and outstanding as of any date shall never exceed
$100,000,000. Upon request from Agent, the Borrowers shall execute and deliver
to Agent any such new or additional Notes. From time to time as new Notes are
issued the Agent shall require that each Bank exchange their Notes for newly
issued Notes to better reflect the extent of each Bank's commitment hereunder.
(f) PAYMENT TO BANKS. Each Bank's Pro Rata Part of payment or
prepayment of the Loans shall be directed by wire transfer to such Bank by the
Agent at the address provided to the Agent for such Bank for payments no later
than 2:00 p.m., Dallas,
Texas, time on the Business Day such payments or
prepayments are deemed hereunder to have been received by Agent; provided,
however, in the event that any Bank shall have failed to make an Advance as
contemplated under Section 2 hereof (a "Defaulting Bank") and the Agent or
another Bank or Banks shall have made such Advance, payment received by Agent
for the account of such Defaulting Bank or Banks shall not be distributed to
such Defaulting Bank or Banks until such Advance or Advances shall have been
repaid in full to the Bank or Banks who funded such Advance or Advances. Any
payment or prepayment received by Agent at any time after 12:00 noon, Dallas,
Texas, time on a Business Day shall be deemed to have been received on the next
Business Day. Interest shall cease to accrue on any principal as of the end of
the day preceding the Business Day on which any such payment or prepayment is
deemed hereunder to have been received by Agent. If Agent fails to transfer any
principal amount to any Bank as provided above, then Agent shall promptly direct
such principal amount by wire transfer to such Bank.
(g) SHARING OF PAYMENTS. If any Bank shall obtain any payment
(whether voluntary, involuntary, or otherwise) on account of the Loans,
(including, without limitation, any set-off) which is in excess of its Pro Rata
Part of payments on either of the Loans, as the case may be, obtained by all
Banks, such Bank shall purchase from the other Banks such participation as shall
be necessary to cause such purchasing Bank to share the excess payment pro rata
with each of them; provided that, if all or any portion of such excess payment
is thereafter recovered from such purchasing Bank, the purchase shall be
rescinded and the purchase price restored to the extent of the recovery. The
Borrower agrees that any Bank so purchasing a participation from another Bank
pursuant to this Section may, to the fullest extent permitted by law, exercise
all of its rights of payment (including the right of offset) with respect to
such participation as fully as if such Bank were the direct creditor of the
Borrower in the amount of such participation.
-14-
(h) NON-RECEIPT OF FUNDS BY AGENT. Unless the Agent shall have
been notified by a Bank or the Borrower (the "Payor") prior to the date on which
such Bank is to make payment to the Agent of the proceeds of a Loan to be made
by it hereunder or the Borrower is to make a payment to the Agent for the
account of one or more of the Banks, as the case may be (such payment being
herein called the "Required Payment"), which notice shall be effective upon
receipt, that the Payor does not intend to make the Required Payment to the
Agent, the Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Agent, the recipient of such
payment shall, on demand, pay to the Agent the amount made available to it
together with interest thereon in respect of the period commencing on the date
such amount was made available by the Agent until the date the Agent recovers
such amount at the rate applicable to such portion of the applicable Loan.
4. INTEREST RATES.
(a) OPTIONS.
(i) BASE RATE LOANS. On all Base Rate Loans, the Borrower
agrees to pay interest on the Notes calculated on the basis of the
actual days elapsed in a year consisting of 365 or, if appropriate, 366
days with respect to the unpaid principal amount of each Base Rate Loan
from the date the proceeds thereof are made available to Borrower until
maturity (whether by acceleration or otherwise), at a varying rate per
annum equal to the lesser of (i) the Maximum Rate (defined herein), or
(ii) the Base Rate. Subject to the provisions of this Agreement as to
prepayment, the principal of the Notes representing Base Rate Loans
shall be payable as specified in Section 3(d) hereof, the interest in
respect of each Base Rate Loan shall be payable on each Interest
Payment Date. Past due principal and, to the extent permitted by law,
past due interest in respect to each Base Rate Loan, shall bear
interest, payable on demand, at a rate per annum equal to the Maximum
Rate.
(ii) EURODOLLAR LOANS. On all Eurodollar Loans, the
Borrower agrees to pay interest calculated on the basis of a year
consisting of 360 days with respect to the unpaid principal amount of
each Eurodollar Loan from the date the proceeds thereof are made
available to Borrower until maturity (whether by acceleration or
otherwise), at a varying rate per annum equal to the lesser of (i) the
Maximum Rate, or (ii) the Eurodollar Rate. Interest with respect to
each Eurodollar Loan shall be payable on each Interest Payment Date.
Upon three (3) Business Days' written notice prior to the making by the
Banks of any Eurodollar Loan (in the case of the initial Interest
Period therefor) or the expiration date of each succeeding Interest
Period (in the case of subsequent Interest Periods
-15-
therefor), Borrower shall have the option, subject to compliance by
Borrower with all of the provisions of this Agreement, as
long as no Event of Default exists, to specify whether the Interest
Period commencing on any such date shall be a one (1), two (2), three
(3), four (4) or six (6) month period. If Agent shall not have received
timely notice of a designation of such Interest Period as herein
provided, Borrower shall be deemed to have elected to convert all
maturing Eurodollar Loans to Base Rate Loans.
(b) INTEREST RATE DETERMINATION. The Agent shall determine each
interest rate applicable to the Revolving Loan hereunder. The Agent shall give
prompt notice to the Borrower of each rate of interest so determined and its
determination thereof shall be conclusive absent error.
(c) CONVERSION OPTION. Borrower may elect from time to time (i)
to convert all of any part of its Eurodollar Loans to Base Rate Loans by giving
Agent irrevocable notice of such election in writing prior to 10:00 a.m.
(Dallas, Texas time) on the conversion date and such conversion shall be made on
the requested conversion date, provided that any such conversion of Eurodollar
Loan shall only be made on the last day of the Eurodollar Interest Period with
respect thereof, (ii) to convert all or any part of its Base Rate Loans to
Eurodollar Loans by giving the Agent irrevocable written notice of such election
three (3) Business Days prior to the proposed conversion and such conversion
shall be made on the requested conversion date or, if such requested conversion
date is not a Business Day on the next succeeding Business Day. Any such
conversion shall not be deemed to be a prepayment of any of the loans for
purposes of this Agreement on either of the Notes.
(d) RECOUPMENT. If at any time the applicable rate of interest
selected pursuant to Sections 4(a)(i) or 4(a)(ii) above shall exceed the Maximum
Rate, thereby causing the interest on the Notes to be limited to the Maximum
Rate, then any subsequent reduction in the interest rate so selected or
subsequently selected shall not reduce the rate of interest on the Notes below
the Maximum Rate until the total amount of interest accrued on the Notes equals
the amount of interest which would have accrued on the Notes if the rate or
rates selected pursuant to Sections 4(a)(i) or 4(a)(ii), as the case may be, had
at all times been in effect.
5. SPECIAL PROVISIONS RELATING TO EURODOLLAR LOANS.
(a) UNAVAILABILITY OF FUNDS OR INADEQUACY OF PRICING. In the
event that, in connection with any proposed Eurodollar Loan, the Agent
reasonably determines, which determination shall, absent manifest error, be
final, conclusive and binding upon all parties, due to changes in circumstances
since the date hereof, adequate and fair means do not exist for determining the
Eurodollar Rate or such rate will not accurately reflect the costs to the Banks
of funding Eurodollar Loan for such Interest Period, the Agent shall give notice
of such determination to the Borrower and the Banks, whereupon, until the Agent
notifies the Borrower and the Banks that the circumstances giving rise to such
-16-
suspension no longer exist, the obligations of the Banks to make, continue or
convert Loan into Eurodollar Loan shall be suspended, and all loans to Borrower
shall be Base Rate Loan during the period of suspension.
(b) CHANGE IN LAWS. If at any time any new law or any change in
existing laws or in the interpretation of any new or existing laws shall make it
unlawful for any Bank to make or continue to maintain or fund Eurodollar Loans
hereunder, then such Bank shall promptly notify Borrower in writing and such
Bank's obligation to make, continue or convert Loans into Eurodollar Loans under
this Agreement shall be suspended until it is no longer unlawful for such Bank
to make or maintain Eurodollar Loans. Upon receipt of such notice, Borrower
shall either repay the outstanding Eurodollar Loans owed to such Bank, without
penalty, on the last day of the current Interest Periods (or, if any Bank may
not lawfully continue to maintain and fund such Eurodollar Loans, immediately),
or Borrower may convert such Eurodollar Loans at such appropriate time to Base
Rate Loan.
(c) INCREASED COST OR REDUCED RETURN.
(i) If, after the date hereof, the adoption of any
applicable law, rule, or regulation, or any change in any
applicable law, rule, or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank with any request or directive (whether or not having the
force of law) of any such governmental authority, central bank,
or comparable agency:
(A) shall subject such Bank to any tax, duty, or other
charge with respect to any Eurodollar Loan, its Notes, or
its obligation to make Eurodollar Loan, or change the basis
of taxation of any amounts payable to such Bank under this
Agreement or its Notes in respect of any Eurodollar Loan
(other than franchise taxes and taxes imposed on the overall
net income of such Bank);
(B) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement
(other than reserve requirements, if any, taken into account
in the determination of the Eurodollar Rate) relating to any
extensions of credit or other assets of, or any deposits
with or other liabilities or commitments of, such Bank,
including the Commitment of such Bank hereunder; or
(C) shall impose on such Bank or on the London
interbank market any other condition affecting this
-17-
Agreement or its Notes or any of such extensions of credit
or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to
such Bank of making, converting into, continuing, or maintaining
any Eurodollar Loan or to reduce any sum received or receivable
by such Bank under this Agreement or its Notes with respect to
any Eurodollar Loan, then Borrower shall pay to such Bank on
demand such amount or amounts as will reasonably compensate such
Bank for such increased cost or reduction. If any Bank requests
compensation by Borrower under this Section 5(c), Borrower may,
by notice to such Bank (with a copy to Agent), suspend the
obligation of such Bank to make or continue Eurodollar Loans, or
to convert all or part of the Eurodollar Loans owing to such Bank
to Base Rate Loans, until the event or condition giving rise to
such request ceases to be in effect (in which case the provisions
of Section 5(c) shall be applicable); PROVIDED that such
suspension shall not affect the right of such Bank to receive the
compensation so requested.
(ii) If, after the date hereof, any Bank shall have
determined that the adoption of any applicable law, rule, or
regulation regarding capital adequacy or any change therein or in
the interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such governmental authority, central bank,
or comparable agency, has or would have the effect of reducing
the rate of return on the capital of such Bank or any corporation
controlling such Bank as a consequence of such Bank's obligations
hereunder to a level below that which such Bank or such
corporation could have achieved but for such adoption, change,
request, or directive (taking into consideration its policies
with respect to capital adequacy), then from time to time upon
demand Borrower shall pay to such Bank such additional amount or
amounts as will reasonably compensate such Bank for such
reduction.
(iii) Each Bank shall promptly notify Borrower and Agent of
any event of which it has knowledge, occurring after the date
hereof, which will entitle such Bank to compensation pursuant to
this Section 5(c) and will designate a separate lending office,
if applicable, if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to it. Any
Bank claiming compensation under this Section 5(c) shall furnish
to Borrower and Agent a statement setting forth the additional
amount or amounts to be paid to it hereunder which shall be
conclusive in the absence of manifest error. In determining such
amount, such Bank may use any reasonable averaging and
attribution methods.
-18-
(iv) Any Bank giving notice to the Borrower through the
Agent pursuant to Section 5(c) shall give to the Borrower a
statement signed by an officer of such Bank setting forth in
reasonable detail the basis for, and the calculation of such
additional cost, reduced payments or capital requirements, as the
case may be, and the additional amounts required to compensate
such Bank therefor.
(v) Within five (5) Business Days after receipt by the
Borrower of any notice referred to in Section 5(c), the Borrower
shall pay to the Agent for the account of the Bank issuing such
notice such additional amounts as are required to compensate such
Bank for the increased cost, reduced payments or increased
capital requirements identified therein, as the case may be.
(d) DISCRETION OF BANK AS TO MANNER OF FUNDING. Notwithstanding
any provisions of this Agreement to the contrary, each Bank shall be
entitled to fund and maintain its funding of all or any part of its
Loan in any manner it sees fit, it being understood, however, that for
the purposes of this Agreement all determinations hereunder shall be
made as if each Bank had actually funded and maintained each Eurodollar
Loan through the purchase of deposits having a maturity corresponding
to the last day of the Interest Period applicable to such Eurodollar
Loan and bearing an interest rate to the applicable interest rate for
such Eurodollar Period.
(e) BREAKAGE FEES. Without duplication under any other provision
hereof, if any Bank incurs any loss, cost or expense including, without
limitation, any loss of profit or loss, cost, expense or premium
reasonably incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Bank to fund or maintain any
Eurodollar Loan or the relending or reinvesting of such deposits or
amounts paid or prepaid to the Banks as a result of any of the
following events other than any such occurrence as a result in the
change of circumstances described in Sections 5(a) and (b):
(i) any payment, prepayment or conversion of a Eurodollar
Loan on a date other than the last day of its Interest Period
(whether by acceleration, prepayment or otherwise);
(ii) any failure to make a principal payment of a Eurodollar
Loan on the due date thereof; or
(iii) any failure by the Borrower to borrow, continue,
prepay or convert to a Eurodollar Loan on the dates specified in
a notice given pursuant to Section 2(c) or 4(c) hereof;
then the Borrower shall pay to such Bank such amount as will reimburse
such Bank for such loss, cost or expense. If any Bank makes such a
claim for compensation, it shall furnish to Borrower and Agent a
statement setting forth the amount of such loss, cost or
-19-
expense inreasonable detail (including an explanation of the basis for
and the computation of such loss, cost or expense) and the amounts
shown on such statement shall be conclusive and binding absent manifest
error.
6. COLLATERAL SECURITY. To secure the performance by Borrower of its
obligations hereunder, and under the Notes and Security Instruments, whether now
or hereafter incurred, matured or unmatured, direct or contingent, joint or
several, or joint and several, including extensions, modification and renewals
thereof, and substitutions therefore, Borrower has heretofore granted and
assigned to the Agent, for the ratable benefit of the Banks, and shall herewith
and hereafter grant and assign to Agent, for the ratable benefit of the Banks, a
first and prior security interest and lien on the Oil and Gas Properties, the
stock of certain of the Subsidiaries, and the other collateral. Guarantor has
heretofore executed and delivered its guaranty agreement guaranteeing the prompt
payment and performance of Borrower's obligations hereunder and under the Notes.
As security for the performance of its guaranty agreement, Guarantor has
heretofore granted to Agent, for the ratable benefit of the Banks, and shall
herewith and hereafter grant and assign to Agent, for the ratable benefit of
Banks, a first and prior lien on its Oil and Gas Properties. Guarantor shall
execute this Agreement to confirm its consent to (i) the execution of the
Agreement by Borrower, and (ii) the amendments contained therein. Obligations
arising from Rate Management Transactions between Borrower, any Guarantor or one
or more of the Banks or any Affiliate of any of the Banks providing for the
hedging, forward swap or sale of crude oil or natural gas or interest rate
protection shall be secured by the Collateral (as hereinafter defined) on a pari
passu basis with the indebtedness and obligations of the Borrower and the
Guarantor under the Loan Documents. All Oil and Gas Properties, oil and gas
related equipment, inventory and receivables, stock, notes and other collateral
in which Borrower or Guarantor has heretofore or hereafter grants to the Agent,
for the ratable benefit of the Banks, a first and prior lien (to the
satisfaction of the Banks) in accordance with this Section 6, as such properties
and interests are from time to time constituted, are hereinafter collectively
called the "Collateral."
The granting and assigning of such security interests and liens by
Borrower shall be pursuant to Security Instruments in form and substance
satisfactory to the Agent. Borrower and Guarantor shall furnish to the Agent the
mortgage and title opinions and other documents satisfactory to Agent with
respect to the title and lien status of its interests in such of the Oil and Gas
Properties covered by the Security Instruments as required in Section 12(n) and
(o) hereof. Borrower and Guarantor will cause to be executed and delivered to
the Agent, for the ratable benefit of the Banks, in the future, additional
Security Instruments if the Agent deems such are necessary to insure perfection
or maintenance of their security interests and liens in the Collateral or any
part thereof.
7. BORROWING BASE.
(a) INITIAL BORROWING BASE. During the period from the date hereof
to the next determination date, the Borrowing Base shall be
$75,000,000.00.
(b) SUBSEQUENT DETERMINATIONS OF BORROWING BASE. Subsequent
determinations of the Borrowing Base shall be made by Banks at least
semi-annually and
-20-
the Banks may make a redetermination at any time and
shall make a redetermination if and when requested by Borrower. In
connection with each such determination of the Borrowing Base, the
Banks shall also determine the Monthly Commitment Reduction. Such
Borrowing Base and Monthly Commitment Reduction determinations shall be
made on or before each November 20 and May 20, commencing November 20,
2001, the same to be effective as of each November 1 and May 1,
commencing November 1, 2001, and at such other dates as determined at
the discretion of Majority Banks. Borrower may likewise request more
frequent Borrowing Base redeterminations and Banks shall make the same
if and when requested. In making such determinations, Banks may utilize
such reports and appraisals as Borrower may furnish to Banks through
Agent under other provisions hereof with respect to the Collateral,
including the information required pursuant to Section 12(a)(iii),
(iv), (v) and (vi), together with such other data as Banks may deem
appropriate under the then circumstance, including, without limitation,
cash flow and projections of cash flow, provided that nothing herein
shall be construed to require that Banks or Agent shall or should
obtain and pay for any reports, appraisals or other data from third
parties in connection therewith. The procedure for determining the
Borrowing Base and the Monthly Commitment Reduction at each
redetermination shall be that the Agent shall determine the Borrowing
Base and Monthly Commitment Reduction and submit the same to the Banks.
Increases in the Borrowing Base shall require the approval of all
Banks, but all other changes in the Borrowing Base and Monthly
Commitment Reduction shall require approval of Majority Banks.
Provided, however, that at any time the ▇▇▇▇▇▇▇▇ Consolidated Entities'
ratio of Current Assets to Current Liabilities is less than 1.0 to 1.0
as of the most recent quarter end, the Borrowing Base and the Monthly
Commitment Reduction shall require approval of all Banks. Such
determinations shall be made by Banks in accordance with their
respective customary practices and standards for loans in similar
amounts to borrowers similarly situated, at the times and under the
circumstances then prevailing which are considered by each Bank in its
discretion, subject only to the requirement that such determination
shall be reasonable and made in good faith. If at any time any of the
Collateral is sold, the Borrowing Base then in effect shall
automatically be reduced by a sum equal to the amount of prepayment
required to be made pursuant to Section 13(e) hereof. If a
non-scheduled Borrowing Base redetermination is made, such
non-scheduled redetermined Borrowing Base shall become effective
immediately upon Agent giving notice thereof to the Borrower. Provided,
however, that no Bank shall ever have an obligation to designate a
Borrowing Base in an amount such that such Bank's Commitment Percentage
thereof is in excess of its legal or internal lending limits.
(c) VOLUNTARY DECREASES IN BORROWING BASE. Within ten (10)
Business Days after notification to Borrower of a Borrowing Base
redetermination pursuant to the provisions of this Section 7, Borrower
may notify Agent as to what portion of the Borrowing Base they desire
access (the "Elected Borrowing Limit"). Thereafter, Borrower may obtain
Revolving Loans which do not exceed the lesser of (i) $100,000,000, or
(ii) the Elected Borrowing Limit until the next Borrowing Base
redetermination, subject to the provisions of Section 9(b) hereof. If
no such notification is received by Agent, the Elected Borrowing Limit
shall be the lesser of $100,000,000 or the Borrowing Base as so
determined.
-21-
(d) MONTHLY COMMITMENT REDUCTION. The Borrowing Base shall be
reduced as of the last day of each month after the Effective Date by an
amount determined by the Banks pursuant to Section 7(b) hereof (the
"Monthly Commitment Reduction"). Beginning June 1, 2001, the Monthly
Commitment Reduction shall be $0 per month until redetermined pursuant
to Section 7(b) hereof.
8. FEES.
(a) UNUSED PORTION FEE. In consideration of the Revolving
Commitment, Borrower shall pay to Agent, for the ratable benefit of
Banks, an Unused Portion Fee (hereinafter referred to as the "Unused
Portion Fee") equivalent to one-quarter of one percent (1/4%) per annum
of the differential between the average Elected Borrowing Limit and the
Total Outstandings for the preceding three months. The Unused Portion
Fee shall be payable in arrears on the last Business Day of each
January, April, July and October, commencing on July 31, 2001. All
amounts due under Section 8(a) of the Seventh Restated
Loan Agreement
as of the Effective Date as Unused Portion Fees shall be paid to Agent
on the Effective Date. The final fee payment shall be due on the
Maturity Date for any period then ending for which the Unused Portion
Fee shall not have been theretofore paid. In the event the Revolving
Commitment terminates on any date prior to the end of any such
quarterly period, Borrower shall pay to Banks, on the date of such
termination, the prorated portion of the total Unused Portion Fee due
for such of the period in which such termination occurs.
(b) BORROWING BASE INCREASE FEE. Borrower agrees to pay to Agent,
for the ratable benefit of Banks, a Borrowing Base Increase Fee
(hereinafter referred to as the "Borrowing Base Increase Fee") equal to
one-half of one percent (.50%) of the amount of any increase in the
Elected Borrowing Limit from the amount of the Elected Borrowing Limit
as of the preceding determination date but only to the extent that any
such newly determined Elected Borrowing Limit is in excess of
$75,000,000. Said fee to payable upon notice to Borrower of such
increase.
(c) LETTER OF CREDIT FEE. Borrower agrees to pay to Agent, for
the benefit of the issuing Banks, commissions for issuing Letters of
Credit in the amounts and at the rates set forth hereinabove in Section
2(d).
(d) AGENCY FEE. Borrower agrees to pay to Agent an Agency Fee for
its services as Agent hereunder in an amount negotiated between
Borrower and Agent.
9. PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. Borrower may at any time and from time
to time, without penalty or premium, make voluntary prepayments in
whole or in part on the Notes. Each such prepayment shall be made on at
least one (1) Business Day's notice to Agent and shall be in an amount
of $100,000 or any larger multiple thereof plus accrued interest
thereon to the date of prepayment.
-22-
(b) MANDATORY PREPAYMENT. In the event the Total Outstandings
ever exceed the Borrowing Base as determined by the Banks pursuant to
Section 7 hereof (a "Borrowing Base Deficiency"), Borrower shall,
within thirty (30) days after notification from Agent either (A) by
instruments satisfactory in form and substance to Banks, provide the
Banks with additional collateral with value and quality satisfactory to
Banks in their sole discretion in order to increase the Borrowing Base
by an amount at least equal to such excess, or (B) prepay, without
premium or penalty, the principal amount of the Notes in an amount at
least equal to such excess, or (C) prepay, without premium or penalty,
the amount of such excess in five (5) equal monthly installments due
and payable on the last Business Day of each of the next five (5)
consecutive months, or (D) elect to convert the entire principal amount
of the Notes to a term obligation with monthly installments of
principal and interest due and payable on the last Business Day of each
month from the date of such conversion to the Maturity Date, each such
installment payment to be in the amount of accrued interest plus an
amount of principal equal to the greater of (i) 1/36th of the
outstanding balance on the date of conversion or (ii) an amount
determined by dividing the principal amount outstanding on the date of
the conversion by the estimated economic half-life of the Oil and Gas
Properties expressed in terms of months, as determined by the Agent in
its sole and absolute discretion reasonably exercised. Notwithstanding
any of the foregoing, all unpaid principal and interest shall be due
and payable on the Maturity Date. Provided, however, that in the event
the Borrower elects option (C) above, the Borrowing Base Deficiency
must be cured at the end of the installment period specified above or
the entire outstanding principal balance due on the Notes shall
immediately convert to a term loan payable in accordance with the
payment provisions set forth in subsection (D) above. Provided,
further, however, that during the five (5) month prepayment period
specified in subsection (C) above, Borrower may elect at any time to
convert to a term loan pursuant to subsection (D) above. The
determination of whether Borrower has cured any such Borrowing Base
Deficiency at the end of the installment period specified in (C) above,
shall be made by the Banks in their sole and absolute discretion based
upon an unscheduled Borrowing Base redetermination made pursuant to
Section 7(b) of this Agreement.
10. REPRESENTATIONS AND WARRANTIES. In order to induce the Banks
to enter into this Agreement, Borrower hereby represents and warrants to the
Banks (which representations and warranties will survive the delivery of the
Notes) that:
(a) CREATION AND EXISTENCE. Borrower and Guarantor are
corporations duly organized and validly existing in good standing under
the laws of their state of incorporation and are duly qualified as a
foreign corporation in all jurisdictions wherein failure to qualify may
result in a Material Adverse Effect. Borrower and Guarantor have all
the power and authority to own their properties and assets and to
transact the business in which they are engaged.
(b) POWER AND AUTHORIZATION. Borrower and Guarantor have the
power and requisite authority, and has taken all action necessary, to
execute, deliver and perform the Loan Documents.
-23-
(c) BINDING OBLIGATIONS. This Agreement does, and the Notes and
other Security Instruments upon their creation, issuance, execution and
delivery will, constitute valid and binding obligations of Borrower and
Guarantor, enforceable in accordance with their respective terms
(except that enforcement may be subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws generally
affecting the enforcement of creditors' rights and subject to
availability of equitable remedies).
(d) NO LEGAL BAR OR RESULTANT LIEN. The Notes and the Security
Instruments, including this Agreement, do not and will not conflict
with or violate any provisions of the articles of incorporation or
bylaws of Borrower or Guarantor or, except as disclosed to Banks prior
to the Effective Date hereof, any contract, agreement, law, regulation,
order, injunction, judgment, decree or writ to which Borrower or
Guarantor is subject, or result in the creation or imposition of any
lien or other encumbrance upon any assets or properties of Borrower or
Guarantor, other than those contemplated by this Agreement which
conflict, violation, creation or imposition is reasonably expected to
have a Material Adverse Effect.
(e) NO CONSENT. The execution, delivery and performance by
Borrower or Guarantor of the Notes and the Security Instruments,
including this Agreement, does not require the consent or approval of
any other person or entity, including without limitation any regulatory
authority or governmental body of the United States or any state
thereof or any political subdivision of the United States or any state
thereof.
(f) FINANCIAL CONDITION. The Financial Statements of the ▇▇▇▇▇▇▇▇
Consolidated Entities which have been delivered to Banks are complete
and correct in all material respects and fairly present in all material
respects the financial condition and results of the operations of the
▇▇▇▇▇▇▇▇ Consolidated Entities as of the date or dates and for the
period or periods stated. No change has since occurred in the
condition, financial or otherwise, of the ▇▇▇▇▇▇▇▇ Consolidated
Entities which is reasonably expected to have a Material Adverse
Effect, except as disclosed to the Banks in Schedule "1" attached
hereto. The Financial Statements which have been delivered to Banks
have been prepared substantially in accordance with GAAP.
(g) LIABILITIES. Neither Borrower nor Guarantor has any material
(individually or in the aggregate) liability, direct or contingent,
except as disclosed to the Banks in the Financial Statements or in
Schedule "2" attached hereto. No unusual or unduly burdensome
restrictions, restraint, or hazard exists by contract, law or
governmental regulation or otherwise relative to the business, assets
or properties of Borrower or Guarantor which is reasonably expected to
have a Material Adverse Effect.
(h) LITIGATION. Except as described in the Financial Statements
or as otherwise disclosed to the Banks in Schedule "3" attached hereto,
there is no litigation, legal or administrative proceeding,
investigation or other action of any nature pending or, to the
knowledge of the officers of Borrower, threatened against or affecting
Borrower or
-24-
Guarantor which involves the possibility of any judgment or
liability not fully covered by insurance, and which is reasonably
expected to have a Material Adverse Effect.
(i) TAXES; GOVERNMENTAL CHARGES. Borrower and Guarantor have
filed all tax returns and reports required to be filed and have paid
all taxes, assessments, fees and other governmental charges levied upon
them or their respective assets, properties or income which are due and
payable, including interest and penalties, or have provided adequate
reserves, if required, in accordance with GAAP for the payment thereof,
except such as are being contested in good faith by appropriate
proceedings and for which adequate reserves for the payment thereof as
required by GAAP have been provided.
(j) TITLES, ETC. Borrower and Guarantor have Good and Defensible
title to all of the Collateral pledged or mortgaged by them except for
defects which are not reasonably expected to have a Material Adverse
Effect, free and clear of all liens or other encumbrances, except
Permitted Liens; and Borrower and Guarantor, to the best of their
knowledge after the exercise of such due diligence as a reasonable
person would have done under the same or similar circumstances, have
Good and Defensible Title to their other assets and properties (except
for (i) undeveloped oil and gas properties, and (ii) defects which are
not reasonably expected to have a Material Adverse Effect), free and
clear of all liens or other encumbrances, except Permitted Liens.
(k) DEFAULTS. Neither Borrower nor Guarantor is in default and no
event or circumstance has occurred which, but for the passage of time
or the giving of notice, or both, would constitute a default under any
loan or credit agreement, indenture, mortgage, deed of trust, security
agreement or other agreement or instrument to which Borrower or
Guarantor is a party in any respect that would be reasonably expected
to have a Material Adverse Effect. No Event of Default hereunder has
occurred and is continuing.
(l) CASUALTIES; TAKING OF PROPERTIES. Since the dates of the
latest Financial Statements delivered to Banks, neither the business
nor the assets or properties of Borrower or Guarantor have been
affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance,
embargo, requisition or taking of property or cancellation of
contracts, permits or concessions by any domestic or foreign government
or any agency thereof, riot, activities of armed forces or acts of God
or of any public enemy that would reasonably be expected to have a
Material Adverse Effect.
(m) USE OF PROCEEDS; MARGIN STOCK. The proceeds of the loans
hereunder will be used by Borrower for working capital, acquisition,
letters of credit and general corporate purposes. Borrower is not
engaged in the business of extending credit for the purpose of
purchasing or carrying any "margin stock" as defined in Regulation U of
the Board of Governors of the Federal Reserve System (12 C.F.R. Part
221), or for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry a margin stock or for any
other purpose which might constitute this transaction a "purpose
credit" within the meaning of said Regulation U. Borrower is not
-25-
engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying
margin stock.
Neither Borrower nor any person or entity acting on behalf of
Borrower has taken or will take any action which might cause the loans
hereunder or any of the Security Instruments, including this Agreement,
to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Securities
Exchange Act of 1934 or any rule or regulation thereunder, in each case
as now in effect or as the same may hereafter be in effect.
(n) LOCATION OF BUSINESS AND OFFICES. The principal place of
business and chief executive offices of Borrower is located at the
address stated in Section 16 hereof.
(o) COMPLIANCE WITH THE LAW. To the best of Borrower's and
Guarantor's knowledge, they:
(i) are not in violation of any law, judgment, decree, order,
ordinance, or governmental rule or regulation to which Borrower
or Guarantor, or any of their assets or properties are subject;
or
(ii) have not failed to obtain any license, permit, franchise
or other governmental authorization necessary to the ownership of
any of its assets or properties or the conduct of their business;
which violation or failure is reasonably expected to have a Material
Adverse Effect.
(p) NO MATERIAL MISSTATEMENTS. No information, exhibit or report
furnished by Borrower or Guarantor to the Banks in connection with the
negotiation of this Agreement contained any material misstatement of
fact or omitted to state a material fact necessary to make the
statement contained therein not misleading.
(q) ERISA. Borrower is in compliance in all material respects
with the applicable provisions of ERISA, and no "reportable event", as
such term is defined in Section 4043 of ERISA, has occurred with
respect to any Plan of Borrower.
(r) PUBLIC UTILITY HOLDING COMPANY ACT. Borrower is not a
"holding company", or "subsidiary company" of a "holding company", or
an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", or a "public utility" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(s) ENVIRONMENTAL MATTERS. Except as disclosed on Schedule "4",
neither Borrower nor Guarantor (i) has received notice or otherwise
learned of any Environmental Liability which would individually or in
the aggregate have a Material Adverse Effect arising in connection with
(A) any non-compliance with or violation of the requirements of any
Environmental Law or (B) the release or threatened release of
-26-
any toxic or hazardous waste into the environment, (ii) to the
knowledge of Borrower and Guarantor, have threatened or actual
liability in connection with the release or threatened release of any
toxic or hazardous waste into the environment which would individually
or in the aggregate have a Material Adverse Effect or (iii) have
received notice or otherwise learned of any federal or state
investigation evaluating whether any remedial action is needed to
respond to a release or threatened release of any toxic or hazardous
waste into the environment for which Borrower or Guarantor is or may be
liable.
(t) GUARANTOR. CWE owns one hundred percent (100%) of the issued
and outstanding equity securities of Guarantor.
11. CONDITIONS OF LENDING.
(a) The effectiveness of this Agreement and the obligation of the
Banks to make the initial Advance under the Revolving Commitment shall
be subject to the following conditions precedent:
(ii) EXECUTION AND DELIVERY. Borrower shall have executed and
delivered to the Agent this Agreement, the Notes, the Security
Instruments and other required documents, and Guarantor shall
have executed and delivered to the Agent its guaranty agreement,
all in form and substance satisfactory to the Banks;
(iii) CORPORATE RESOLUTIONS AND INCUMBENCY. The Agent shall
have received appropriate (i) corporate resolutions for each
Borrower and Guarantor, and (ii) incumbency certificates for each
Borrower and Guarantor;
(iv) SEC FILINGS. The Banks shall have received copies of all
documents filed by Borrower with the Securities and Exchange
Commission prior to the Effective Date;
(v) NO EVENT OF DEFAULT. No Event of Default shall have
occurred and be continuing;
(vi) NO MATERIAL ADVERSE CHANGE. No material adverse change
in the consolidated financial condition of the Borrower shall
have occurred;
(vii) OTHER DOCUMENTS. The Banks shall have received such
other instruments and documents incidental and appropriate to the
transaction provided for herein as the Banks or its counsel may
reasonably request, and all such documents shall be in form and
substance satisfactory to the Banks; and
-27-
(viii) LEGAL MATTERS SATISFACTORY. All legal matters incident
to the consummation of the transactions contemplated hereby shall
be satisfactory to special counsel for the Banks retained at the
expense of Borrower.
(a) The obligation of the Banks to make any Advance (including
the initial Advance) or issue any Letter of Credit on the Revolving
Commitment shall be subject to the following additional conditions
precedent that, at the date of making each such Advance and after
giving effect thereto:
(ix) REPRESENTATION AND WARRANTIES. With respect to any
Advance, the representations and warranties of Borrower and
Guarantor under this Agreement (excluding, however, the
representations and warranties set forth in Sections 10(h) and
10(s) as to any matter which has theretofore been disclosed in
writing by Borrower to the Banks, but as to which Borrower and
Guarantor represent and warrant as of the date of the requested
Advance or issuance of Letter of Credit that the matters so
disclosed are not reasonably expected to have a Material Adverse
Effect) are true and correct in all material respects as of such
date, as if then made (except to the extent that such
representations and warranties related solely to an earlier
date);
(x) NO EVENT OF DEFAULT. No Event of Default shall have
occurred and be continuing nor shall any event have occurred or
failed to occur which, with the passage of time or service of
notice, or both, would constitute an Event of Default;
(xi) OTHER DOCUMENTS. The Banks shall have received such
other instruments and documents incidental and appropriate to the
transaction provided for herein as the Banks or its counsel may
reasonably request, and all such documents shall be in form and
substance satisfactory to the Banks; and
(xii) LEGAL MATTERS SATISFACTORY. All legal matters incident
to the consummation of the transactions contemplated hereby shall
be satisfactory to special counsel for the Banks retained at the
expense of Borrower.
12. AFFIRMATIVE COVENANTS. A deviation from the provisions of this
Section 12 shall not constitute an Event of Default under this Agreement if such
deviation is consented to in writing by Majority Banks. Without the prior
written consent of Majority Banks, Borrower and Guarantor (to the extent
applicable thereto) will at all times comply with the covenants contained in
this Section 12 from the date hereof and for so long as any indebtedness or
obligation of Borrower under the Loan Documents is outstanding or any part of
the Revolving Commitment is in existence.
-28-
(a) FINANCIAL STATEMENTS AND REPORTS. Borrower shall promptly
furnish to the Banks from time to time upon request such information
regarding the business and affairs and financial condition of Borrower,
as the Banks may reasonably request, and will furnish to the Banks:
(i) ANNUAL FINANCIAL STATEMENTS - as soon as available, and
in any event within one hundred and twenty (120) days after the
close of each fiscal year of the ▇▇▇▇▇▇▇▇ Consolidated Entities,
the annual audited Financial Statements of the ▇▇▇▇▇▇▇▇
Consolidated Entities prepared ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, L.L.P. or by
another independent accounting firm satisfactory to Majority
Banks;
(ii) QUARTERLY FINANCIAL STATEMENTS - as soon as available,
and in any event sixty (60) days after the end of each calendar
quarter (except the last calendar quarter) of each year, the
quarterly unaudited Financial Statements of the ▇▇▇▇▇▇▇▇
Consolidated Entities;
(iii) RESERVE REPORTS ON OIL AND GAS PROPERTIES - no later
than November 1 of each year beginning November 1, 2001 and at
such other times as Banks shall request, an internally generated
engineering report covering reserve and income projections for
all Oil and Gas Properties (including those owned by Guarantor),
which reports shall have an effective date of September 30 of
each year. Borrower shall also furnish Banks on or before May 1
of each year beginning May 1, 2002 reserve reports and income
projections for all Oil and Gas Properties, which reserve reports
shall have an effective date of January 1 of each year and shall
be prepared by ▇▇▇▇▇▇▇▇▇▇ Petroleum Consultants, Inc. (or other
reservoir engineering firm satisfactory to Majority Banks), which
January 1 effective date report shall be accompanied by
internally generated information sufficient to allow such January
1 report and the information contained therein to be rolled
forward to an effective date of March 31. All such engineering
reports, shall be in a form acceptable to Agent and shall utilize
oil and gas prices, escalation factors and discount rates
currently then being used by Agent in its general petroleum
lending business;
(iv) MONTHLY OPERATING AND PRODUCTION REPORTS. Borrower
shall furnish Banks, within forty-five (45) days following the
close of each month, oil and gas production reports (inclusive of
prices received thereon), drilling and completion reports for the
▇▇▇▇▇▇▇▇ Consolidated Entities;
(v) BUDGETS AND PROJECTIONS. On each June 1 and December 1
Borrower shall furnish to Banks a budget and cash flow forecast
for the ▇▇▇▇▇▇▇▇ Consolidated Entities prepared on a twelve (12)
month rolling
-29-
forward basis with respect to their operations in a
form satisfactory to Agent;
(vi) MONTHLY HEDGING REPORT. Borrower shall furnish Banks,
within forty-five (45) days following the close of each month, a
report of Rate Management Transactions, said information to be
provided for both the subject month and on an aggregate basis for
all such forward sales;
(vii) MONTHLY PAYABLES AGING REPORTS. Borrower shall furnish
to Banks, within thirty (30) days following the close of each
month, with a monthly payables aging report in a form
satisfactory to Agent; and
(viii) ADDITIONAL INFORMATION. Promptly upon request of the
Banks from time to time any additional financial information or
other information that the Banks may reasonably request.
All such reports referred to in Subsection 12(a) above shall be in such
detail as the Banks may reasonably request.
(b) CERTIFICATES OF COMPLIANCE. Concurrently with the furnishing
of the annual Financial Statements pursuant to Subsection 12(a)(i)
hereof and each of the quarterly Financial Statements pursuant to
Subsection 12(a)(ii) hereof, Borrower will furnish or cause to be
furnished to the Banks a certificate in the form of Exhibit "C" hereto,
signed by a person duly authorized to execute such a certificate on
behalf of Borrower (i) to the extent requested from time to time by the
Banks, specifically affirming compliance of Borrower in all material
respects with any of its representations or obligations under the
Security Instruments; (ii) setting forth the computation, in reasonable
detail as of the end of each period covered by such certificate, of
compliance with Section 13(c), 13(d) and 13(m) containing or
accompanied by such financial or other details, information and
material as the Banks may reasonably request to evidence such
compliance; and (iii) certifying to the beneficial ownership of at
least 20% of Borrower's stock by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., and his
affiliates (specifying such affiliates by name and providing the number
of shares owned by each).
(c) TAXES AND OTHER LIENS. Borrower and Guarantor will pay and
discharge promptly all taxes, assessments and governmental charges or
levies imposed upon Borrower or Guarantor or upon the income or any
assets or property of Borrower or Guarantor or any Subsidiary as well
as all claims of any kind (including claims for labor, materials,
supplies and rent) which, if unpaid, might become a lien or other
encumbrance upon any or all of the assets or property of Borrower or
Guarantor; provided, however, that neither Borrower nor Guarantor shall
be required to pay any such tax, assessment, charge, levy or claim if
the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings diligently conducted
and if Borrower or Guarantor shall have set up adequate reserves
therefor, if required, under GAAP.
-30-
(d) COMPLIANCE WITH LAWS. Borrower and Guarantor will observe and
comply with all applicable laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, orders and
restrictions relating to environmental standards or controls or to
energy regulations of all federal, state, county, municipal and other
governments, departments, commissions, boards, agencies, courts,
authorities, officials and officers, domestic or foreign, where the
violation or failure to observe would be reasonably expected to have a
Material Adverse Effect.
(e) FURTHER ASSURANCES. Borrower will cure promptly any defects
in the creation and issuance of the Notes and the execution and
delivery of the Notes and the Security Instruments, including this
Agreement. Borrower and Guarantor at their sole expense will promptly
execute and deliver to Banks upon request all such other and further
documents, agreements and instruments in compliance with or
accomplishment of the covenants and agreements in this Agreement, or to
correct any omissions in the Notes or more fully to state the
obligations set out herein.
(f) PERFORMANCE OF OBLIGATIONS. Borrower agrees to pay the Notes
and other obligations incurred by it hereunder according to the
reading, tenor and effect thereof and hereof; and Borrower and
Guarantor will do and perform every act and discharge all of the
obligations provided to be performed and discharged by Borrower or
Guarantor under the Security Instruments, including this Agreement, at
the time or times and in the manner specified.
(g) INSURANCE. Borrower and Guarantor now maintain and will
continue to maintain insurance with financially sound and reputable
insurers with respect to its assets against such liabilities, fires,
casualties, risks and contingencies and in such types and amounts as is
customary in the case of persons engaged in the same or similar
businesses and similarly situated. Upon request of the Agent, Borrower
will furnish or cause to be furnished to the Agent from time to time a
summary of the respective insurance coverage of Borrower and Guarantor
in form and substance satisfactory to the Agent, and, if requested,
will furnish the Agent copies of the applicable policies. Upon demand
by Agent any insurance policies covering any such property shall be
endorsed (i) to provide that such policies may not be cancelled,
reduced or affected in any manner for any reason without fifteen (15)
days prior notice to Agent, (ii) to provide for insurance against fire,
casualty and other hazards normally insured against, in amounts
customary in the industry for similarly situated business and
properties, and (iii) to provide for such other matters as the Banks
may reasonably require. Borrower and Guarantor shall at all times
maintain insurance in amounts customary in the industry for similarly
situated business and properties with respect to the Collateral against
their liability for injury to persons or property, which insurance
shall be by financially sound and reputable insurers and shall without
limitation provide the following coverages: comprehensive general
liability (including coverage for damage to underground resources and
equipment, damage caused by blowouts or cratering, damage caused by
explosion, damage to underground minerals or resources caused by saline
substances, broad form property damage coverage, broad form coverage
for contractually assumed liabilities and broad form coverage for acts
of independent contractors), worker's compensation and automobile
liability. Borrower and
-31-
Guarantor shall at all times maintain insurance
with respect to the Collateral which shall insure Borrower and
Guarantor against seepage and pollution expense if deemed economical in
the reasonable discretion of Borrower and Guarantor. Additionally,
Borrower shall at all times maintain adequate insurance with respect to
all of their other assets and ▇▇▇▇▇ in accordance with prudent business
practices.
(h) ACCOUNTS AND RECORDS. Borrower and Guarantor will keep books,
records and accounts in which full, true and correct entries will be
made of all dealings or transactions in relation to their business and
activities.
(i) RIGHT OF INSPECTION. Borrower and Guarantor will permit any
officer, employee or agent of the Banks to examine Borrower's or
Guarantor's books, records and accounts, and take copies and extracts
therefrom, all at such reasonable times and as often as the Banks may
reasonably request. Banks will use their best efforts to keep all such
information confidential and will not without prior written consent
disclose or reveal the information or any part thereof to any person
other than the Banks' officers, employees, legal counsel, regulatory
authorities or advisors to whom it is necessary to reveal such
information for the purpose of effectuating the agreements and
undertakings specified herein.
(j) NOTICE OF CERTAIN EVENTS. Borrower and Guarantor shall
promptly notify the Banks if Borrower or Guarantor learns of the
occurrence of (i) any event which constitutes, or with the passage of
time would constitute, an Event of Default, together with a detailed
statement by Borrower of the steps being taken to cure the Event of
Default; or (ii) any legal, judicial or regulatory proceedings
affecting Borrower, or any of the assets or properties of Borrower
which, if adversely determined, could reasonably be expected to have a
Material Adverse Effect; or (iii) any dispute between Borrower or
Guarantor and any governmental or regulatory body or any other person
or entity which, if adversely determined, might reasonably be expected
to cause a Material Adverse Effect; or (iv) any other matter which in
its reasonable opinion could be expected to have a Material Adverse
Effect.
(k) ERISA INFORMATION AND COMPLIANCE. Borrower will promptly
furnish to the Banks immediately upon becoming aware of the occurrence
of any "reportable event", as such term is defined in Section 4043 of
ERISA, or of any "prohibited transaction", as such term is defined in
Section 4975 of the Internal Revenue Code of 1954, as amended, in
connection with any Plan or any trust created thereunder, a written
notice specifying the nature thereof, what action Borrower is taking or
proposes to take with respect thereto, and, when known, any action
taken by the Internal Revenue Service with respect thereto.
(l) ENVIRONMENTAL REPORTS AND NOTICES. Borrower and Guarantor
will deliver to the Banks (i) promptly upon its becoming available, one
copy of each report sent by Borrower or Guarantor to any court,
governmental agency or instrumentality pursuant to any Environmental
Law (excluding, however, reports filed with the Texas Railroad
Commission or any similar state or federal agency in the ordinary
course of conducting
-32-
Borrower's business where the report does not disclose, or is not in
response to allegations of, violation by Borrower of an Environmental
Law), (ii) notice, in writing, promptly upon Borrower's or Guarantor's
learning that either of them have received notice or otherwise learned
of any claim, demand, action, event, condition, report or investigation
indicating any potential or actual liability arising in connection with
(x) the non-compliance with or violation of the requirements of any
Environmental Law which reasonably could be expected to have a Material
Adverse Effect; (y) the release or threatened release of any toxic or
hazardous waste into the environment which reasonably could be expected
to have a Material Adverse Effect or which release Borrower or
Guarantor would have a duty to report to any court or government agency
or instrumentality, or (z) the existence of any Environmental Lien on
any properties or assets of Borrower or Guarantor, and Borrower or
Guarantor shall immediately deliver a copy of any such notice to Banks.
(m) MAINTENANCE. Borrower and Guarantor will, to the best of
their ability, act prudently and in accordance with customary
applicable industry standards in managing and operating their assets,
properties, businesses and investments, and Borrower will use their
best efforts to keep in good working order and condition, ordinary wear
and tear excepted, all of Borrower's and Guarantor's assets and
properties, including, but not limited to, the Collateral, except where
the failure to do so would not reasonably be expected to cause a
Material Adverse Effect.
(n) TITLE MATTERS. Within one hundred twenty (120) days after the
date of this Agreement, Borrower or Guarantor will provide such title
opinions on the Oil and Gas Properties, if any, being pledged to Agent
for the ratable benefit of the Banks pursuant to Security Instruments
executed as of the date of this Agreement as are requested by Agent. As
to any Oil and Gas Properties hereafter pledged to Agent for the
ratable benefit of Banks, Borrower or Guarantor will promptly (but in
no event more than one hundred twenty (120) days following such
pledges), furnish Agent with title opinions reasonably satisfactory to
Agent, showing Good and Defensible Title of Borrower or Guarantor to
such Oil and Gas Properties subject only to Permitted Liens.
(o) CURATIVE MATTERS. Within ninety (90) days after receipt by
Borrower or Guarantor from Agent or its counsel of written notice of
title defects the Agent reasonably requires to be cured, Borrower or
Guarantor will either (i) provide such curative information, in form
and substance satisfactory to Banks, or (ii) substitute oil and gas
properties of value and quality satisfactory to the Banks for all Oil
and Gas Properties for which such title curative was requested but upon
which Borrower or Guarantor elected not to provide such title curative
information, and, within sixty (60) days of such substitution, provide
title opinions satisfactory to the Banks covering the Oil and Gas
Properties so substituted.
(p) ADDITIONAL COLLATERAL. Borrower agrees to regularly monitor
engineering data covering all producing oil and gas properties and
interests acquired by Borrower or Guarantor on or after the date hereof
and to pledge or cause to be pledged such of the same to Agent for the
ratable benefit of the Banks in substantially the form of the
-33-
Security Instruments, as applicable, to the extent that the Banks shall
at all times during the existence of the Revolving Commitment be
secured by perfected liens and security interests covering (i) not less
than ninety percent (90%) of the engineered value of all producing oil
and gas properties of Borrower and Guarantor in the aggregate; and (ii)
each and all such properties which have an engineered value of $100,000
or more. For the purposes of this Section 12(p), "Engineered Value"
shall mean future net revenue discounted at eight percent (8%) per
annum utilizing the set of pricing parameters used in the most current
engineering report required pursuant to Section 12(a)(iii) hereof.
13. NEGATIVE COVENANTS. A deviation from the provisions of this
Section 13 shall not constitute an Event of Default under this Agreement if such
deviation is consented to in writing by Majority Banks. Without the prior
written consent of Majority Banks, Borrower and Guarantor (to the extent
applicable thereto) will at all times comply with the covenants contained in
this Section 13 from the date hereof and for so long as any indebtedness or
obligation of Borrower under the Loan Documents is outstanding or any part of
the Revolving Commitment is in existence.
(a) LIENS. Neither Borrower nor Guarantor will create, incur,
assume or permit to exist any lien, security interest or other
encumbrance on any of its assets or properties except Permitted Liens.
(b) DEBTS, GUARANTIES AND OTHER OBLIGATIONS. Neither Borrower nor
any of its Subsidiaries (including Guarantor) will incur, create,
assume or in any manner become or be liable in respect of any
indebtedness, issue any preferred or other quasi-equity stock which
requires the payment of a dividend thereon or the mandatory redemption
thereof, or guarantee or otherwise in any manner become or be liable in
respect of any indebtedness, liabilities or other obligations of any
other person or entity, whether by agreement to purchase the
indebtedness of any other person or entity or agreement for the
furnishing of funds to any other person or entity through the purchase
or lease of goods, supplies or services (or by way of stock purchase,
capital contribution, advance or loan) for the purpose of paying or
discharging the indebtedness of any other person or entity, or
otherwise, except that the foregoing restrictions shall not apply to:
(i) the Notes, or other indebtedness or guarantees of
Borrower disclosed in Exhibit "D" hereto;
(ii) taxes, assessments or other government charges which are
not yet due or are being contested in good faith by appropriate
action promptly initiated and diligently conducted, if such
reserve as shall be required by GAAP shall have been made
therefor;
(iii) indebtedness incurred in the ordinary course of
business, including, but not limited to, drilling, completing,
leasing and reworking oil and gas ▇▇▇▇▇;
(iv) Rate Management Transactions;
-34-
(v) indebtedness owed by Non-Borrower Subsidiaries to
Borrower which is permitted hereunder;
(vi) Vendor Financing and guaranties of CWE of Vendor
Financings of its Subsidiaries which do not to exceed $10,000,000
in the aggregate at any one time outstanding;
(vii) intercompany indebtedness among Borrower and Guarantor;
(viii) guaranty by CWE of up to $1,000,000 of obligations of
ClayDesta Building, L.P. owed to First American Bank; or
(ix) guarantees by CWE of loans made by third parties to CWE
employees, which loans may be extended for the sole purpose of
allowing CWE employees to exercise options to purchase CWE common
stock and/or to pay federal income tax liabilities relating from
such exercise; provided, however, that such guarantees may not
exceed $1,000,000 in the aggregate outstanding at any one time.
(c) CURRENT RATIO. The Borrower will not allow the ▇▇▇▇▇▇▇▇
Consolidated Entities' ratio of Current Assets to Current Liabilities
to be less than (i) .8 to 1.0 for the quarter ending June 30, 2001,
(ii) .9 to 1.0 for the quarter ending September 30, 2001, and (iii) 1.0
to 1.0 thereafter, measured as of the end of each calendar quarter.
(d) RATIO OF DEBT TO EBITDAX. The Borrower will not allow the
▇▇▇▇▇▇▇▇ Consolidated Entities' ratio of Debt to EBITDAX to ever be
more than 2.75 to 1.0 as of the end of any calendar quarter.
(e) LIMITATION ON SALE OF COLLATERAL. Neither Borrower nor
Guarantor will sell, assign or discount any of the Collateral or
Negative Pledge Property other than (i) sales of oil and gas production
in the ordinary course of business, (ii) sales or other disposition of
obsolete equipment which are no longer needed for the ordinary business
of Borrower or Guarantor or which are being replaced by equipment of at
least comparable value and utility, and (iii) sales or other
dispositions not exceeding $1,000,000 in the aggregate between
Borrowing Base redeterminations. If and as any of such Collateral or
Negative Pledge Properties and interests are sold, conveyed or assigned
during the term of the Revolving Commitment, Borrower or Guarantor will
prepay against the Notes or Guarantor's obligation under its guaranty
agreement, as the case may be, 100% of the Release Price, provided,
however, that no such payments shall be required from Borrower or
Guarantor until the aggregate proceeds received between any Borrowing
Base redetermination exceeds $1,000,000. Provided, however,
notwithstanding the foregoing, if an Event of Default has occurred and
is continuing all such amounts received by Borrower and/or Guarantor
from such sale during the continuance of an Event of Default shall be
paid to the Agent for the ratable benefit of the
-35-
Banks. The term "Release Price" as used herein shall mean the loan
value of the Collateral or the Negative Pledge Property being sold as
determined by the Agent. Any such prepayment of principal on the Notes
required by this Section 13(e) shall not be in lieu of, but shall be in
addition to, any Monthly Commitment Reduction or any mandatory
prepayment of principal required to be made pursuant to Section 9(b)
hereof. Any such prepayment shall be applied pro rata to the principal
due on the Revolving Notes until such Revolving Notes are paid in full,
principal, interest and other amounts.
(f) MERGERS AND CONSOLIDATIONS. Neither Borrower nor Guarantor
will merge or consolidate with any other Person (except that Borrower
or Guarantor may merge with any other Person if Borrower or Guarantor
is the surviving entity in a non-hostile merger or consolidation and
if, after giving effect thereto, no default or Event of Default shall
have occurred and be continuing).
(g) USE OF PROCEEDS. Borrower shall not use any of the proceeds
of the loans to be made hereunder for the purpose of purchasing or
carrying margin stock as defined in Regulation U of the Board of
Governors of the Federal Reserve System.
(h) LOANS OR ADVANCES. Neither Borrower nor any Subsidiary shall
make or permit to remain outstanding any loans or advances other than:
(i) normal and customary advances to employees, which shall
not exceed $250,000 in the aggregate at any point in time;
(ii) intercompany loans and advances among Borrower and
Guarantor; or
(iii) loans and advances by CWE to Subsidiaries provided that
such loans and advances shall be treated as investments for the
purposes of Section 13(k)(iv) or (v) hereof.
(i) RATE MANAGEMENT TRANSACTIONS. The ▇▇▇▇▇▇▇▇ Consolidated
Entities shall not enter into any Rate Management Transactions except
for (i) Pre-Approved Contracts, or (ii) other Rate Management
Transactions consented to in writing by Agent.
(j) DIVIDENDS. Borrower will not declare or pay any cash
dividend, purchase, redeem or otherwise acquire for value any of its
stock now or hereafter outstanding, return any capital to stock owners,
or make any distribution of its assets to its stockholders as such,
except (i) repurchase or redemption of its stock in an amount not to
exceed $3,000,000 in the aggregate (excluding commissions) and (ii)
cash dividends paid on the stock of Borrower which shall not exceed, in
any fiscal year, an amount equal to 50% of Borrower's net income for
such fiscal year determined in accordance with GAAP, provided that
immediately before and after giving effect thereto no (x) default or
Event of Default or (y) Borrowing Base Deficiency, shall exist.
-36-
(k) INVESTMENTS. Neither Borrower nor Guarantor shall make any
investments in any person or entity, except that the foregoing
restriction shall not apply to:
(i) investments and direct obligations of the United States
of America or any agency thereof;
(ii) investments in certificates of deposit issued by the
Agent or certificates of deposit with maturities of less than one
year issued by other commercial banks in the United States having
capital and surplus in excess of $500,000,000 and have a rating
of (A) 50 or above by Sheshunoff and (B) "B" or above by
▇▇▇▇-▇▇▇▇▇▇;
(iii) investments such as insured money market funds,
Eurodollar investment accounts and other similar accounts with
the Agent or such investments with maturities of less than ninety
(90) days at other commercial banks in the United States having
capital and surplus in excess of $500,000,000 and having a rating
of (A) 50 or above by Sheshunoff and (B) "B" or above by
▇▇▇▇-▇▇▇▇▇▇;
(iv) investments in the Subsidiaries (other than Guarantor)
existing on the Effective Date;
(v) Borrower's investments in Guarantor;
(vi) the repurchase of Borrower's stock as permitted by
Section 13(j) hereof; and
(vii) other investments not exceeding $1,000,000 in the
aggregate after the Effective Date.
(l) CHANGE OF CONTROL. Borrower will not permit ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇. and his affiliates, in the aggregate, to ever own, of
record or beneficially, less than 20% of the outstanding voting
securities of CWE. Failure to comply with this covenant shall (i)
immediately relieve the Banks of any further commitment to advance
funds under the Revolving Commitment, and (ii) result in the entire
amount of principal and interest due on the Notes to be accelerated so
that the entire balance thereof shall be due and payable on or before
one hundred twenty (120) days after the date the Agent first receives
notice that such a change of control has occurred.
14. EVENTS OF DEFAULT. Any one or more of the following events shall
be considered an "Event of Default" as that term is used herein:
(a) Borrower shall fail to pay when due or declared due the
principal of or interest on the Notes or any fee or any other
indebtedness of Borrower incurred pursuant to this Agreement or any
other Security Instrument (but Borrower shall have a grace
-37-
period of three (3) days following an applicable due date during which
to correct a delinquency in payment); or
(b) Any representation or warranty made by Borrower or Guarantor
under this Agreement, or in any certificate or statement furnished or
made to any Bank pursuant hereto, or in connection herewith, or in
connection with any document furnished hereunder, shall prove to be
untrue in any material respect as of the date on which such
representation or warranty is made (or deemed made), or any
representation, statement (including financial statements),
certificate, report or other data furnished or to be furnished or made
by Borrower or Guarantor under any Security Instrument, including this
Agreement, proves to have been untrue in any material respect, as of
the date as of which the facts therein set forth were stated or
certified, and such default shall continue for more than ten (10) days
after notice from Agent;
(c) Default shall be made in the due observance or performance of
any of the covenants or agreements of Borrower or Guarantor contained
in the Security Instruments, including this Agreement, and such default
shall continue for more than ten (10) days after notice from Agent;
PROVIDED, HOWEVER, that a default under Section 13(l) of this Agreement
shall not become an Event of Default under this Section 14 unless
Borrower fails to pay the outstanding balance on the Notes within the
120 day period specified therein; or
(d) Default shall be made in respect of any obligation for
borrowed money owed by Borrower or Guarantor in excess of $1,000,000,
other than the Notes, (directly, by assumption, as guarantor or
otherwise), or any obligations in excess of $1,000,000 secured by any
mortgage, pledge or other security interest, lien, charge or
encumbrance with respect thereto, on any asset or property of Borrower
or Guarantor or in respect of any agreement relating to any such
obligations, and such default shall continue beyond the applicable
grace period, if any; or
(e) Borrower or Guarantor shall commence a voluntary case or
other proceedings seeking liquidation, reorganization or other relief
with respect to either of them or their debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
an appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of their property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against either of them, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay
their debts as they become due, or shall take any corporate action
authorizing the foregoing; or
(f) An involuntary case or other proceeding, shall be commenced
against Borrower or Guarantor seeking liquidation, reorganization or
other relief with respect to either of them or their debts under any
bankruptcy, insolvency or similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of either of them or any substantial part of
their property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a
-38-
period of thirty (30) days; or an order for relief shall be entered
against Borrower or Guarantor under the federal bankruptcy laws as now
or hereinafter in effect; or
(g) A final judgment or order for the payment of money in excess
of $1,000,000.00 (or judgments or orders aggregating in excess of
$1,000,000.00) shall be rendered against Borrower or Guarantor and such
judgments or orders shall continue unsatisfied and unstayed for a
period of thirty (30) days; or
(h) In the event the aggregate principal amount outstanding under
the Notes shall at any time exceed the Borrowing Base established for
the Notes, Borrower shall fail to provide such additional Collateral or
prepay the principal of such Notes in compliance with the provisions of
Section 9(b) hereof.
Upon occurrence of any Event of Default specified in Subsections 14(e)
and (f) hereof, the Revolving Commitment shall terminate and the entire
principal amount due under the Notes and all interest then accrued thereon, and
any other liabilities of Borrower hereunder, shall become immediately due and
payable all without notice and without presentment, demand, protest, notice of
protest or dishonor or any other notice of default of any kind, all of which are
hereby expressly waived by Borrower. In any other Event of Default, the Majority
Banks may by notice from Agent to Borrower, terminate the Revolving Commitment
and declare the principal of, and all interest then accrued on, the Notes and
any other liabilities hereunder to be forthwith due and payable, whereupon the
same shall forthwith become due and payable without presentment, demand, protest
or other notice of any kind, all of which Borrower hereby expressly waives,
anything contained herein or in the Notes to the contrary notwithstanding.
Nothing contained in this Section 14 shall be construed to limit or amend in any
way the Events of Default enumerated in the Notes, or any other document
executed in connection with the transaction contemplated herein.
Upon the occurrence and during the continuance of any Event of Default,
the Banks are hereby authorized at any time and from time to time, without
notice to Borrower (any such notice being expressly waived by Borrower), to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Banks to or for the credit or the account of Borrower against any and all
of the indebtedness of Borrower under the Notes and the Security Instruments,
including this Agreement, irrespective of whether or not the Banks shall have
made any demand under the Security Instrument, including this Agreement or the
Notes. Any amount set-off by either of the Banks shall be applied against the
indebtedness owed the Banks by Borrower pursuant to the provisions of Section 16
of this Agreement. The Banks agree promptly to notify Borrower after any such
set-off and application, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Banks
under this Section 14 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Banks may have.
15. EXERCISE OF RIGHTS. No failure to exercise, and no delay in
exercising, on the part of the Banks, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right.
-39-
The rights of the Banks hereunder shall be in addition to all other rights
provided by law. No modification or waiver of any provision of the Security
Instruments, including this Agreement, or the Notes nor consent to departure
therefrom, shall be effective unless in writing, and no such consent or waiver
shall extend beyond the particular case and purpose involved. No notice or
demand given in any case shall constitute a waiver of the right to take other
action in the same, similar or other circumstances without such notice or
demand.
16. NOTICES. Any notices or other communications required or
permitted to be given by this Agreement or any of the other Loan Documents and
instruments referred to herein must be given in writing and must be delivered or
mailed by prepaid certified or registered mail or by facsimile to the party to
whom such notice or communication is directed at the address of such party as
follows: (a) BORROWER AND GUARANTOR: c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy, Inc., ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇, Executive
Vice President, Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇; (b) AGENT: BANK ONE, NA, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Wm. ▇▇▇▇ ▇▇▇▇▇▇▇, Vice President,
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇; and (c) UNION: Union Bank of California, N.A., ▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Vice
President, Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇; (d) BOS: Bank of Scotland, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice
President, Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇. Any such notice or other communication
shall be deemed to have been given (whether actually received or not) on the day
it is delivered as aforesaid or, if mailed, on the fifth day after it is mailed
as aforesaid. Any party may change its address for purposes of this Agreement by
giving notice of such change to the other parties pursuant to this Section 16.
Upon receipt by Agent of any such notice, Agent shall promptly provide copies of
such notice or notices to the Banks.
17. THE AGENT AND THE BANKS.
(a) APPOINTMENT AND AUTHORIZATION. Each Bank hereby irrevocably
appoints and authorizes Agent to take such action on its behalf and to
exercise such powers under the Loan Documents as are delegated to Agent
by the terms thereof, together with such powers as are reasonably
incidental thereto. With respect to its commitments hereunder and the
Notes issued to it, Bank One and any successor Agent shall have the
same rights under the Loan Documents as any other Bank and may exercise
the same as though it were not the Agent; and the term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include Bank One
and any successor Agent in its capacity as a Bank. Bank One and any
successor Agent and its affiliates may accept deposits from, lend money
to, act as trustee under indentures of and generally engage in any kind
of business with Borrower, and any person which may do business with
Borrower, all as if Bank One and any successor Agent were not Agent
hereunder and without any duty to account therefor to the Banks. Each
Bank shall disclose to all other Banks all indebtedness and
liabilities, direct and contingent, of Borrower to Banks from time to
time.
(b) NOTE HOLDERS. Agent may treat the payee of any Note as the
holder thereof until written notice of transfer has been filed with it,
signed by such payee and in form satisfactory to Agent.
-40-
(c) CONSULTATION WITH COUNSEL. Banks agree that Agent may consult
with legal counsel selected by it and shall not be liable for any
action taken or suffered in good faith by it in accordance with the
advice of such counsel.
(d) DOCUMENTS. Agent shall not be under a duty to examine or pass
upon the validity, effectiveness, enforceability, genuineness or value
of any of the Collateral or any of the Loan Documents or any other
instrument or document furnished pursuant thereto or in connection
therewith, and Agent shall be entitled to assume that the same are
valid, effective, enforceable and genuine and what they purport to be.
(e) RESIGNATION OR REMOVAL OF AGENT. Subject to the appointment
and acceptance of a successor Agent as provided below, Agent may resign
at any time by giving written notice thereof to Banks and Borrower, and
Agent may be removed at any time with or without cause by Majority
Banks. If no successor Agent has been so appointed by all Banks (and
approved by Borrower) and has accepted such appointment within 30 days
after the retiring Agent's giving of notice of resignation or removal
of the retiring Agent, then the retiring Agent may, on behalf of Banks,
appoint a successor Agent, which appointment shall require the approval
of Borrower only if a party other than one of the other Banks is so
appointed. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal hereunder
as Agent, (i) the provisions of this Section 17 shall continue in
effect for its benefit in respect to any actions take or omitted to be
taken by it while it was acting as Agent, and (ii) any Collateral held
in possession of the retiring Agent shall be delivered to the successor
Agent.
(f) RESPONSIBILITY OF AGENT. It is expressly understood and
agreed that the obligations of Agent under the Loan Documents are only
those expressly set forth in the Loan Documents and that Agent shall be
entitled to assume that no default or Event of Default has occurred and
is continuing, unless Agent has actual knowledge of such fact or has
received notice from a Bank that such Bank considers that a default or
an Event of Default has occurred and is continuing and specifying the
nature thereof. Neither Agent nor any of its directors, officers or
employees shall be liable for any action taken or omitted to be taken
by it under or in connection with the Loan Documents, except for its or
their own gross negligence or willful misconduct. Agent shall incur no
liability under or in respect of any of the Loan Documents by acting
upon any notice, consent, certificate, warranty or other paper or
instrument believed by it to be genuine or authentic or to be signed by
the proper party or parties, or with respect to anything which it may
do or refrain from doing in the reasonable exercise of its judgment, or
which may seem to it to be necessary or desirable.
Agent shall not be responsible to Banks for any recitals,
statements, representations or warranties contained in any of the Loan
Documents, or in any certificate or other document referred to or
provided for in, or received by any Bank under, the Loan Documents, or
for the value, validity, effectiveness, genuineness,
-41-
enforceability or sufficiency of any of the Collateral or any of the
Loan Documents or for any failure by Borrower to perform any of their
obligations hereunder or thereunder. Agent may employ agents and
attorneys-in-fact and shall not be answerable, except as to money or
securities received by it or its authorized agents, for the negligence
or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care.
The relationship between Agent and each Bank is only that of
agent and principal and has no fiduciary aspects. Nothing in the Loan
Documents or elsewhere shall be construed to impose on Agent any duties
or responsibilities other than those for which express provision is
therein made. In performing its duties and functions hereunder, Agent
does not assume and shall not be deemed to have assumed, and hereby
expressly disclaims, any obligation or responsibility toward or any
relationship of agency or trust with or for Borrower or any of their
shareholders or other creditors. As to any matters not expressly
provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), Agent shall not be required to
exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of all Banks
and such instructions shall be binding upon all Banks and all holders
of Notes; provided, however, that Agent shall not be required to take
any action which is contrary to the Loan Documents or applicable law.
Agent shall have the right to exercise or refrain from
exercising, without notice or liability to the Banks, any and all
rights afforded to Agent by the Loan Documents or which Agent may have
as a matter of law; PROVIDED, HOWEVER, that Agent shall not (i) except
as provided herein and in Section 7(b) hereof, without the consent of
Majority Banks designate the amount of the Borrowing Base or the
Monthly Commitment Reduction or (ii) take any other action with regard
to amending the Loan Documents, waiving any default under the Loan
Documents or taking any other action with respect to the Loan
Documents. Provided further, however, that no amendment, waiver, or
other action shall be effected pursuant to the preceding clause (ii)
without the consent of all Banks which: (i) would increase the
Borrowing Base or decrease the Monthly Commitment Reduction, (ii) would
reduce any fees hereunder, or the principal of, or the interest on, any
Bank's Note or Notes, (iii) would postpone any date fixed for any
payment of any fees hereunder, or any principal or interest of any
Bank's Note or Notes, (iv) would increase the aggregate Commitment or
any Bank's individual Commitment hereunder or would materially alter
Agent's obligations to any Bank hereunder, (v) would release Borrower
from its obligation to pay any Bank's Note or Notes, (vi) would change
the definition of Majority Banks, (vii) would amend, modify or change
any provision of this Agreement requiring the consent of all the Banks,
(viii) would waive any of the conditions precedent to the Effective
Date or the making of any Loan or issuance of any Letter of Credit or
(ix) would extend the Maturity Date or (x) would amend this sentence or
the previous sentence. Agent shall have the right and authority without
necessity of notice or liability to the Banks to release (i) Collateral
in amounts of up to $1,000,000 in the aggregate between Borrowing Base
redeterminations and (ii) in addition to amounts released pursuant to
(i) above, additional Collateral if 100% of the net proceeds from the
sale of such Collateral, after payment of superior lien indebtedness
-42-
and taxes relating thereto, is paid to Agent for the ratable benefit of
the Banks as a prepayment of the Notes; provided, however, that Agent's
right to release Collateral hereunder shall be limited to releases of
Collateral the net sale proceeds of which shall not exceed, in the
aggregate, on an annual basis, $5,000,000.00. For purposes of this
paragraph, a Bank shall be deemed to have consented to any such action
by the Agent upon the passage of ten (10) Business Days after written
notice thereof is given to such Bank in accordance with Section 16
hereof, unless such Bank shall have previously given Agent notice,
complying with the provision of Section 16 hereof, to the contrary.
Agent shall have no liability to Banks for failure or delay in
exercising any right or power possessed by Agent pursuant to the Loan
Documents or otherwise unless such failure or delay is caused by the
gross negligence of the Agent.
(g) INDEPENDENT INVESTIGATION. Each Bank severally represents and
warrants to Agent that it has made its own independent investigation
and assessment of the financial condition and affairs of Borrower in
connection with the making and continuation of its participation
hereunder and has not relied exclusively on any information provided to
such Bank by Agent in connection herewith, and each Bank represents,
warrants and undertakes to Agent that it shall continue to make its own
independent appraisal of the credit worthiness of Borrower while the
Notes is outstanding or its commitments hereunder are in force. Agent
shall not be required to keep itself informed as to the performance or
observance by Borrower of this Agreement or any other document referred
to or provided for herein or to inspect the properties or books of
Borrower. Other than as provided in this Agreement, Agent shall have no
duty, responsibility or liability to provide any Bank with any credit
or other information concerning the affairs, financial condition or
business of Borrower which may come into the possession of Agent.
(h) INDEMNIFICATION. Banks agree to indemnify Agent (to the
extent not reimbursed by Borrower), ratably according to their
Commitment Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in any way
relating to or arising out of the Loan Documents or any action taken or
omitted by Agent under the Loan Documents, provided that no Bank shall
be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence or willful
misconduct. THE PARTIES INTEND THE PROVISIONS OF THIS PARAGRAPH TO
APPLY TO AND PROTECT THE BANK FROM THE CONSEQUENCES OF ITS OWN
NEGLIGENCE, WHETHER OR NOT SUCH NEGLIGENCE IS THE SOLE, CONTRIBUTING OR
CONCURRING CAUSE OF ANY SUCH LOSS, COST, LIABILITY, DAMAGE OR EXPENSE
INDEMNIFIED AGAINST IN THIS PARAGRAPH.
(i) BENEFIT OF SECTION 17. The agreements contained in this
Section 17 are solely for the benefit of Agent and the Banks and are
not for the benefit of, or to be relied upon by, Borrower, any
affiliate of Borrower or any other person.
-43-
(j) PRO RATA TREATMENT. Subject to the provisions of this
Agreement, each payment (including each prepayment) by Borrower and
collections by Banks (including offsets) on account of the principal of
and interest on the Notes and fees payable by Borrower shall be made
pro rata to Banks according to the then ownership interest of each Bank
in loans to Borrower under this Agreement. Upon receipt of a request
for disbursement by Borrower under the Revolving Commitment, Agent
shall notify Banks of such request or draft and the requested
disbursement date or payment date, whereupon each Bank shall fund to
Agent its pro rata share of the loan requested by Borrower at such time
and in such manner as to reasonably permit the disbursement by Agent to
Borrower on the disbursement date requested.
(k) ASSUMPTION AS TO PAYMENTS. Except as specifically provided
herein, unless Agent shall have received notice from the Borrower prior
to the date on which any payment is due to Banks hereunder that the
Borrower will not make such payment in full, Agent may, but shall not
be required to, assume that the Borrower has made such payment in full
to Agent on such date and Agent may, in reliance upon such assumption,
cause to be distributed to each Bank on such due date an amount equal
to the amount then due such Bank. If and to the extent the Borrower
shall not have so made such payment in full to Agent, each Bank shall
repay to Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount
is distributed to such Bank until the date such Bank repays such amount
to Agent, at the interest rate applicable to such portion of the Loan.
(l) OTHER FINANCINGS. Without limiting the rights to which any
Bank otherwise is or may become entitled, such Bank shall have no
interest, by virtue of this Agreement or the Loan Documents, in (a) any
present or future loans from, letters of credit issued by, or leasing
or other financial transactions by, any other Bank to, on behalf of, or
with the Borrower (collectively referred to herein as "Other
Financings") other than the obligations hereunder; (b) any present or
future guarantees by or for the account of the Borrower which are not
contemplated by the Loan Documents; (c) any present or future property
taken as security for any such Other Financings; or (d) any property
now or hereafter in the possession or control of any other Bank which
may be or become security for the obligations of the Borrower arising
under any loan document by reason of the general description of
indebtedness secured or property contained in any other agreements,
documents or instruments relating to any such Other Financings.
(m) INTERESTS OF BANKS. Nothing in this Agreement shall be
construed to create a partnership or joint venture between Banks for
any purpose. Agent, Banks and the Borrower recognize that the
respective obligations of Banks under the Commitments shall be several
and not joint and that neither Agent nor any of Banks shall be
responsible or liable to perform any of the obligations of the other
under this Agreement. Each Bank is deemed to be the owner of an
undivided interest in and to all rights, titles, benefits and interests
belonging and accruing to Agent under the Security Instruments,
including, without limitation, liens and security interests in any
collateral, fees and payments of principal and interest by the Borrower
under the Commitments on a Pro Rata basis. Each Bank shall perform all
duties and obligations of Banks under this Agreement in the same
-44-
proportion as its ownership interest in the Loans outstanding at the
date of determination thereof.
(n) INVESTMENTS. Whenever Agent in good faith determines that it
is uncertain about how to distribute to Banks any funds which it has
received, or whenever Agent in good faith determines that there is any
dispute among the Banks about how such funds should be distributed,
Agent may choose to defer distribution of the funds which are the
subject of such uncertainty or dispute. If Agent in good faith believes
that the uncertainty or dispute will not be promptly resolved, or if
Agent is otherwise required to invest funds pending distribution to the
Banks, Agent may invest such funds pending distribution. All interest
on any such investment shall be distributed upon the distribution of
such investment and in the same proportions and to the same Persons as
such investment. All monies received by Agent for distribution to the
Banks (other than to the Person who is Agent in its separate capacity
as a Bank) shall be held by the Agent pending such distribution solely
as Agent for such Banks, and Agent shall have no equitable title to any
portion thereof.
18. EXPENSES. The Borrower shall pay (i) all reasonable and necessary
out-of-pocket expenses of the Agent, including reasonable fees and disbursements
of special counsel for the Agent, in connection with the preparation of this
Agreement, any waiver or consent hereunder or any amendment hereof or any
default or Event of Default or alleged default or Event of Default hereunder,
(ii) all reasonable and necessary out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of special counsel for the Agent in connection
with the preparation of any participation agreement for a participant or
participants requested by the Borrower or any amendment thereof and (iii) if a
default or an Event of Default occurs, all reasonable and necessary
out-of-pocket expenses incurred by the Banks, including fees and disbursements
of counsel, in connection with such default and Event of Default and collection
and other enforcement proceedings resulting therefrom. THE BORROWER HEREBY
ACKNOWLEDGES THAT GARDERE ▇▇▇▇▇ ▇▇▇▇▇▇ LLP IS SPECIAL COUNSEL TO BANK ONE, AS
AGENT AND AS A BANK, UNDER THIS AGREEMENT AND THAT IT IS NOT COUNSEL TO, NOR
DOES IT REPRESENT THE BORROWER IN CONNECTION WITH THE TRANSACTIONS DESCRIBED IN
THIS AGREEMENT. The Borrower is relying on separate counsel in the transaction
described herein. The Borrower shall indemnify the Banks against any transfer
taxes, document taxes, assessments or charges made by any governmental authority
by reason of the execution, delivery and filing of the Loan Documents. The
obligations of this Section 18 shall survive any termination of this Agreement,
the expiration of the Loans and the payment of all indebtedness of the Borrower
to the Banks hereunder and under the Notes.
19. INDEMNITY. The Borrowers agree to indemnify and hold harmless
the Banks and their respective officers, employees, agents, attorneys and
representatives (singularly, an "Indemnified Party", and collectively, the
"Indemnified Parties") from and against any loss, cost, liability, damage or
expense (including the reasonable fees and out-of-pocket expenses of counsel to
the Banks, including all local counsel hired by such counsel) ("Claim") incurred
by the Banks in investigating or preparing for, defending against, or providing
evidence, producing documents or taking any other action in respect of any
commenced or threatened litigation,
-45-
administrative proceeding or investigation under any federal securities law,
federal or state environmental law, or any other statute of any jurisdiction, or
any regulation, or at common law or otherwise, which is alleged to arise out of
or is based upon any acts, practices or omissions or alleged acts, practices or
omissions of the Borrower or their agents or arises in connection with the
duties, obligations or performance of the Indemnified Parties in negotiating,
preparing, executing, accepting, keeping, completing, countersigning, issuing,
selling, delivering, releasing, assigning, handling, certifying, processing or
receiving or taking any other action with respect to the Loan Documents and all
documents, items and materials contemplated thereby even if any of the foregoing
arises out of an Indemnified Party's ordinary negligence. The indemnity set
forth herein shall be in addition to any other obligations or liabilities of the
Borrowers to the Banks hereunder or at common law or otherwise, and shall
survive any termination of this Agreement, the expiration of the Loan and the
payment of all indebtedness of the Borrowers to the Banks hereunder and under
the Notes, provided that the Borrowers shall have no obligation under this
Section 19 to the Bank with respect to any of the foregoing arising out of the
gross negligence or willful misconduct of the Banks. If any Claim is asserted
against any Indemnified Party, the Indemnified Party shall endeavor to notify
the Borrowers of such Claim (but failure to do so shall not affect the
indemnification herein made except to the extent of the actual harm caused by
such failure). The Indemnified Party shall have the right to employ, at the
Borrowers' expense, counsel of the Indemnified Parties' choosing and to control
the defense of the Claim. The Borrowers may at their own expense also
participate in the defense of any Claim. Each Indemnified Party may employ
separate counsel in connection with any Claim to the extent such Indemnified
Party believes it reasonably prudent to protect such Indemnified Party. THE
PARTIES INTEND FOR THE PROVISIONS OF THIS SECTION 19 TO APPLY TO AND PROTECT
EACH INDEMNIFIED PARTY FROM THE CONSEQUENCES OF ITS OWN NEGLIGENCE, WHETHER OR
NOT THAT NEGLIGENCE IS THE SOLE, CONTRIBUTING, OR CONCURRING CAUSE OF ANY CLAIM.
20. GOVERNING LAW. THIS AGREEMENT IS BEING EXECUTED AND
DELIVERED, AND IS INTENDED TO BE PERFORMED, IN DALLAS, TEXAS, AND THE
SUBSTANTIVE LAWS OF TEXAS SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT
AND INTERPRETATION OF THIS AGREEMENT AND ALL OTHER DOCUMENTS AND INSTRUMENTS
REFERRED TO HEREIN, UNLESS OTHERWISE SPECIFIED THEREIN OR UNLESS THE LAWS OF
ANOTHER STATE REQUIRE THE APPLICATION OF THE LAWS OF SUCH STATE.
21. INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, such provisions shall be fully
severable and this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this Agreement,
and the remaining provisions of the Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement.
22. MAXIMUM INTEREST RATE. Regardless of any provisions contained
in this Agreement or in any other documents and instruments referred to herein,
the Banks shall never be deemed to have contracted for or be entitled to
receive, collect or apply as interest on the
-46-
Notes any amount in excess of the Maximum Rate and in the event the Banks ever
receive, collect or apply as interest any such excess, or if an acceleration of
the maturity of the Notes or if any prepayment by Borrower results in Borrower
having paid any interest in excess of the Maximum Rate, such amount which would
be excessive interest shall be applied to the reduction of the unpaid principal
balance of the Notes for which such excess was received, collected or applied,
and, if the principal balance of such Notes is paid in full, any remaining
excess shall forthwith be paid to Borrower. All sums paid or agreed to be paid
to the Banks for the use, forbearance or detention of the indebtedness evidenced
by the Notes and/or this Agreement shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such indebtedness until payment in full so that the rate or amount of interest
on account of such indebtedness does not exceed the Maximum Rate. In determining
whether or not the interest paid or payable under any specific contingency
exceeds the Maximum Rate, Borrower and the Banks shall, to the maximum extent
permitted under applicable law, (i) characterize any non-principal payment as an
expense, fee or premium, rather than as interest; and (ii) exclude voluntary
prepayments and the effect thereof; and (iii) compare the total amount of
interest contracted for, charged or received with the total amount of interest
which could be contracted for, charged or received throughout the entire
contemplated term of the Notes at the Maximum Rate.
For purposes of Section 303 of the Texas Finance Code, to the extent
applicable to any Bank or Agent, Borrowers agree that the Maximum Rate (as
defined herein) shall be the "weekly ceiling" as defined in said Chapter,
provided that such Lender or Agent, as applicable, may also rely, to the extent
permitted by applicable laws of the State of Texas and the United States of
America, on alternative maximum rates of interest under the Texas Finance Code
or other laws applicable to such Bank or Agent from time to time if greater.
23. AMENDMENTS. This Agreement may be amended only by an
instrument in writing executed by an authorized officer of the party against
whom such amendment is sought to be enforced. No modification or waiver of any
provision of the Loan Documents, including this Agreement, or the Notes, nor
consent to departure therefrom, shall be effective unless in writing signed by
Borrower and Majority Banks (or by Agent on behalf of Majority Banks). No such
consent or waiver shall extend beyond the particular case and purpose involved.
No notice or demand given at any case shall constitute a waiver of the right to
take other action in the same, similar or other circumstances without such
notice or demand.
24. MULTIPLE COUNTERPARTS. This Agreement may be executed in a
number of identical separate counterparts, each of which for all purposes is to
be deemed an original, but all of which shall constitute, collectively, one
agreement. No party to this Agreement shall be bound hereby until a counterpart
of this Agreement has been executed by all parties hereto.
25. CONFLICT. In the event any term or provision hereof is
inconsistent with or conflicts with any provision of the Security Instruments,
the terms or provisions contained in this Agreement shall be controlling.
26. SURVIVAL. All covenants, agreements, undertakings,
representations and warranties made in the Security Instrument, including this
Agreement, the Notes or other
-47-
documents and instruments referred to herein shall survive all closings
hereunder and shall not be affected by any investigation made by any party.
27. PARTIES BOUND. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors, assigns,
heirs, legal representatives and estates, provided, however, that Borrower may
not, without the prior written consent of the Banks, assign any rights, powers,
duties or obligations hereunder.
28. ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Bank shall have the right to sell, assign or transfer
all or any part of its Note or Notes, its Revolving Commitment and its
rights and obligations hereunder to one or more Affiliates, Banks,
financial institutions, pension plans, insurance companies, investment
funds, or similar Persons who are Eligible Assignees or to a Federal
Reserve Bank; PROVIDED, that in connection with each sale, assignment
or transfer (other than to an Affiliate, a Bank or a Federal Reserve
Bank), but each such sale, assignment, or transfer (other than to an
Affiliate, a Bank or a Federal Reserve Bank), shall require the consent
of both the Borrower and Agent, which consent, in either case, will not
be unreasonably withheld; provided, however, that if an Event of
Default has occurred and is continuing, the consent of the Borrower
shall not be required. Any such assignee, transferee or recipient shall
have, to the extent of such sale, assignment, or transfer, the same
rights, benefits and obligations as it would if it were such Bank and a
holder of such Note, Revolving Commitment and rights and obligations,
including, without limitation, the right to vote on decisions requiring
consent or approval of all Banks or Majority Banks and the obligation
to fund its Revolving Commitment; provided, further, that (1) each such
sale, assignment, or transfer (other than to an Affiliate, a Bank or a
Federal Reserve Bank) shall be in an aggregate principal amount not
less than $5,000,000, (2) each remaining Bank shall at all times
maintain Revolving Commitment then outstanding in an aggregate
principal amount at least equal to $5,000,000; (3) each such sale,
assignment or transfer shall be of a Pro Rata portion of such Bank's
Revolving Commitment, (4) no Bank may offer to sell its Note or Notes,
Revolving Commitment, rights and obligations or interests therein in
violation of any securities laws; and (5) no such assignments (other
than to a Federal Reserve Bank) shall become effective until the
assigning Bank and its assignee delivers to Agent and Borrowers an
Assignment and Acceptance and the Note or Notes subject to such
assignment and other documents evidencing any such assignment. An
assignment fee in the amount of $5,000 for each such assignment (other
than to an Affiliate, a Bank or the Federal Reserve Bank) will be
payable to Agent by assignor or assignee. Within five (5) Business Days
after its receipt of copies of the Assignment and Acceptance and the
other documents relating thereto and the Note or Notes, the Borrowers
shall execute and deliver to Agent (for delivery to the relevant
assignee) a new Note or Notes evidencing such assignee's assigned
Revolving Commitment and if the assignor Bank has retained a portion of
its Revolving Commitment, a replacement Note in the principal amount of
the Revolving Commitment retained by the assignor (except as provided
in the last sentence of this paragraph (a) such Note or Notes to be in
exchange for, but not in payment of, the Note or Notes held by such
Bank). On and after the effective date of an assignment hereunder, the
assignee shall for all purposes be a Bank,
-48-
party to this Agreement and any other Loan Document executed by the
Banks and shall have all the rights and obligations of a Bank under the
Loan Documents, to the same extent as if it were an original party
thereto, and no further consent or action by Borrowers, Banks or the
Agent shall be required to release the transferor Bank with respect to
its Revolving Commitment assigned to such assignee and the transferor
Bank shall henceforth be so released.
(b) Each Bank shall have the right to grant participations in all
or any part of such Bank's Notes and Revolving Commitment hereunder to
one or more pension plans, investment funds, insurance companies,
financial institutions or other Persons, provided, that:
(i) each Bank granting a participation shall retain the right
to vote hereunder, and no participant shall be entitled to vote
hereunder on decisions requiring consent or approval of Bank or
Majority Banks (except as set forth in (iii) below);
(ii) in the event any Bank grants a participation hereunder,
such Bank's obligations under the Loan Documents shall remain
unchanged, such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Bank
shall remain the holder of any such Note or Notes for all purposes
under the Loan Documents, and Agent, each Bank and Borrowers shall
be entitled to deal with the Bank granting a participation in the
same manner as if no participation had been granted; and
(iii) no participant shall ever have any right by reason of
its participation to exercise any of the rights of Banks
hereunder, except that any Bank may agree with any participant
that such Bank will not, without the consent of such participant
(which consent may not be unreasonably withheld) consent to any
amendment or waiver requiring approval of all Banks.
(c) It is understood and agreed that any Bank may provide to
assignees and participants and prospective assignees and participants
financial information and reports and data concerning Borrowers'
properties and operations which was provided to such Bank pursuant to
this Agreement.
(d) Upon the reasonable request of either Agent or Borrowers, each
Bank will identify those to whom it has assigned or participated any
part of its Notes and Commitment, and provide the amounts so assigned
or participated.
29. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND THE BANKS
(BY THEIR ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE (WHETHER BASED UPON CONTRACT,
-49-
TORT OR OTHERWISE) BETWEEN OR AMONG THE BORROWER, THE AGENT AND THE BANKS,
ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT, ANY OTHER RELATED
DOCUMENT, OR ANY RELATIONSHIP BETWEEN THE AGENT, THE BANKS AND THE BORROWER.
THIS PROVISION IS A MATERIAL INDUCEMENT TO THE AGENT AND THE BANKS TO PROVIDE
THE FINANCING DESCRIBED HEREIN.
30. CHOICE OF FORUM: CONSENT TO SERVICE OF PROCESS AND
JURISDICTION. THE OBLIGATIONS OF BORROWER UNDER THE LOAN DOCUMENTS ARE
PERFORMABLE IN DALLAS COUNTY, TEXAS. ANY SUIT, ACTION OR PROCEEDING AGAINST THE
BORROWER WITH RESPECT TO THE LOAN DOCUMENTS OR ANY JUDGMENT ENTERED BY ANY COURT
IN RESPECT THEREOF, MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS, COUNTY
OF DALLAS, OR IN THE UNITED STATES COURTS LOCATED IN DALLAS COUNTY, TEXAS AND
THE BORROWER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR
THE PURPOSE OF ANY SUCH SUIT, ACTION OR PROCEEDING. THE BORROWER HEREBY
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN
SAID COURT BY THE MAILING THEREOF BY AGENT BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER, AT THE ADDRESS FOR NOTICES AS PROVIDED IN
SECTION 17. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT BROUGHT IN THE COURTS LOCATED IN
THE STATE OF TEXAS, COUNTY OF DALLAS, AND HEREBY FURTHER IRREVOCABLY WAIVES ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
31. OTHER AGREEMENTS. THIS WRITTEN
LOAN AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
32. WRITTEN CONSENT. The Guarantor is executing this Eighth
Restated Loan Agreement in its capacity as Guarantor for the purpose of
acknowledging the existence of the Eighth Restated Loan Agreement, consenting to
the execution thereof by the Borrower and reaffirming its guaranty of the
obligations of Borrower to Banks.
33. FINANCIAL TERMS. All accounting terms used in this Agreement
which are not specifically defined herein shall be construed in accordance with
GAAP.
-50-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
BORROWER:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President-Finance
WARRIOR GAS CO.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President-Finance
GUARANTOR:
CWEI ACQUISITIONS, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President-Finance
BANKS:
BANK ONE, NA
a national banking association,
as a Bank and as Agent
By: /s/ Wm. ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Wm. ▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
-▇▇-
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, N.A.
a national banking association
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: Vice President
-----------------------------------------
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------------
Title: Senior Vice President
-----------------------------------------
BANK OF SCOTLAND
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Title: Senior Vice President
-----------------------------------------
-52-
EXHIBIT "A"
NOTICE OF BORROWING
The undersigned hereby certifies that he is the ____________________ of
_________________, a ________________ corporation ("Borrower"), and that as such
he is authorized to executed this Notice of Borrowing on behalf of Borrower.
With reference to that certain Eighth Restated Loan Agreement, dated June 25,
2001, (as same may be amended, modified, increased, supplemented and/or restated
from time to time, the "Agreement") entered into among Borrower, Bank One, NA
(successor by merger to Bank One, Texas, N.A.), Union Bank of California, N.A.
and Bank of Scotland ("BOS") ("Banks"), and Bank One, NA as Agent ("Agent"), the
undersigned further certifies, represents and warrants on behalf of Borrower
that to his best knowledge and belief after reasonable and due investigation and
review, all of the following statements are true and correct (each capitalized
term used herein having the same meaning given to it in the Agreement unless
otherwise specified):
(a) Borrower requests that the Banks advance Borrower the
aggregate sum of $_____________________ by no later than
_______________________, 20___. Immediately following such Advance, the
aggregate outstanding balance of Advances shall equal
$_________________________________.
(b) Type of Advance: [Base Rate or Eurodollar Loan].
(c) Eurodollar Loan - Interest Period of _________ months.
(d) As of the date hereof, and as a result of the making of the
requested Advance, there does not and will not exist any Event of
Default.
(e) Borrower has performed and complied with all agreements and
conditions contained in the Loan Documents which are required to be
performed or complied with by Borrower before or on the date hereof.
(f) The representations and warranties contained in the Agreement
and in the other Loan Documents (excluding, however, the
representations and warranties set forth in Sections 10(h) and 10(s) as
to any matter which has theretofore been disclosed in writing by
Borrowers to Banks, but as to which Borrower and Guarantor hereby
represent and warrant that as of the date hereof the matters so
disclosed are not reasonably expected to have a Material Adverse
Effect) are true and correct in all material respects as of the date
hereof and shall be true and correct upon the making of the Advance,
with the same force and effect as though made on and as of the date
hereof and thereof.
EXECUTED AND DELIVERED this _______ day of ___________________, 20___.
[BORROWER]
--------------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-2-
EXHIBIT "B"
RENEWAL REVOLVING NOTE
$_____________ Dallas, Texas June ____, 2001
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy, Inc., a
Delaware corporation and Warrior Gas Co., a Texas corporation (the "Borrowers")
hereby jointly and severally promise to pay to the order of ________________
(the "Payee"), at the offices of the Agent at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, or at such other place as the holder hereof may direct, in lawful money
of the United States of America, the principal amount of ____________________
AND 00/100 DOLLARS ($_____________), or, if less than such amount, the aggregate
unpaid principal amount of all Advances made by Payee to Borrowers hereunder in
accordance with the terms of that certain Eighth Restated Loan Agreement, dated
as of even date herewith, entered into among Borrowers, Bank One, NA (successor
by merger to Bank One, Texas, N.A.) ("Bank One"), Union Bank of California, N.A.
("Union") and Bank of Scotland ("BOS") and Bank One, as Agent (as same may be
amended, modified, increased, supplemented and/or restated from time to time,
the "Agreement"), and Borrowers further promise to pay interest to Payee at such
office or other place, in like money, from the date hereof on the unpaid
principal amount hereof from time to time outstanding at the rates stated in the
Agreement. All terms defined in the Agreement shall have the same meaning when
used herein.
1. PAYMENT TERMS. The principal of, and all accrued interest
upon, this Note shall be due and payable in the amounts and at the times stated
in the Agreement as follows:
(a) Interest shall be due and payable as provided in the
Agreement;
(b) The entire unpaid principal amount of this Note shall be due
and payable on the Maturity Date.
2. DISBURSEMENT AND PREPAYMENT. Payee may disburse the principal
of this Note to Borrowers in one or more Advances from time to time in
accordance with the Agreement. Borrowers shall be entitled and in certain
instances may be required to prepay the principal of this Note from time to time
in accordance with the Agreement. Borrowers may borrow, repay and reborrow under
this Note in accordance with the terms of the Agreement. It is contemplated that
by reason of prepayments hereon there may be times when no indebtedness is owing
hereunder; but notwithstanding such occurrences, this Note shall remain valid
and shall be in full force and effect as to Advances made pursuant to the
Agreement subsequent to each such occurrence.
3. BENEFITS. This Note is the Note referred to in the Agreement,
and Agent and the holder(s) hereof are entitled to the benefits thereof and may
enforce the agreements contained therein and exercise the rights provided for
thereby or otherwise in respect thereof. Reference to the Agreement shall not
affect or impair the absolute unconditional obligation of Borrowers to
pay the principal of, interest on and any additional payment in connection with
this Note when due.
4. SECURITY. The payment of this Note is secured by Collateral
more particularly described in the Agreement.
5. ACCELERATION OF MATURITY. Upon the occurrence of an Event of
Default under the Agreement, Banks may (i) declare the principal of, and all
interest then accrued on, this Note, to be forthwith due and payable, whereupon
the same shall forthwith become due and payable without presentment, demand,
protest, or notice of any kind, all of which Borrowers hereby expressly waive,
and/or (ii) exercise of any other right provided in the Loan Documents, or at
law or in equity. Reference is hereby made to the Agreement for a statement of
the events upon which the maturity of this Note may be accelerated
automatically. Borrowers grant to each Bank the right to set off against this
Note, and the right of recoupment from, any and all deposit and other
liabilities of each Bank to Borrowers and all money or property in the
possession of any Bank held for or owed to Borrowers.
6. WAIVER. Except as otherwise expressly provided herein or in
the other Loan Documents, Borrowers and all sureties, endorsers and guarantors
of this Note (i) waive demand, presentment for payment, notice of intention to
accelerate, notice of acceleration, protest, notice of protest, notice of
default and all other notices, filing of suit and diligence in collecting this
Note or enforcing any of the security herefor, (ii) agree to any substitution,
exchange or release of any such security or the release of any person or entity
primarily or secondarily liable herefor, (iii) agree that it will not be
necessary for Agent or any holder hereof, in order to enforce payment of this
Note by Agent or such holder, to first institute suit or exhaust its rights
against Borrowers or others liable herefor, or to enforce its rights against any
security herefor, and (iv) consent to any and all extensions for any period,
renewals or postponements of time of payment of this Note or any other
indulgences with respect hereto, without notice thereof to any of them.
7. ATTORNEYS' FEES. If this Note is collected by legal
proceedings or in or through a bankruptcy court, or is placed in the hands of an
attorney for collection after maturity, no matter how maturity is brought about,
Borrowers agree to pay reasonable attorneys fees and all other collection costs
incurred by Agent and the holder(s) of this Note.
8. GOVERNING LAW AND VENUE. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND APPLICABLE
FEDERAL LAW AND SHALL BE PERFORMABLE IN DALLAS COUNTY, TEXAS, OR AT SUCH OTHER
PLACE AS MAY BE DESIGNATED IN WRITING BY THE HOLDER HEREOF.
9. HEADINGS. The headings of the sections of this Note are
inserted for convenience only and shall not be deemed to constitute a part
hereof.
-2-
IN WITNESS WHEREOF, Borrowers have executed this Note as of the date
and year first herein written.
BORROWERS:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY, INC.
By:
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President-Finance
WARRIOR GAS CO.
By:
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President-Finance
-3-
EXHIBIT "C"
CERTIFICATE OF COMPLIANCE
The undersigned hereby certifies that he is the ___________________ of
_________________, a _________________ (the "Borrower") and that as such he is
authorized to execute this Certificate of Compliance on behalf of the Borrower.
With reference to that certain Eighth Restated Loan Agreement, dated as of June
25, 2001, (as same may be amended, modified, increased, supplemented and/or
restated from time to time, the "Agreement") entered into between the Borrower
and BANK ONE, NA as "Agent," for itself and the Banks signatory thereto (the
"Banks"), the undersigned further certifies, represents and warrants on behalf
of the Borrower that all of the following statements are true and correct (each
capitalized term used herein having the same meaning given to it in the
Agreement unless otherwise specified):
(a) The Borrower has fulfilled in all material respects its
obligations under the Notes and Security Instruments, including the
Agreement, and all representations and warranties made herein and
therein continue (except to the extent they relate solely to an earlier
date) to be true and correct in all material respects [if the
representations and warranties are not true and correct, the party
signing this certificate shall except from the foregoing statement the
matters for which such representations and warranties are no longer
true specifying the nature of any such change.]
(b) No Event of Default has occurred under the Security
Instruments, including the Agreement [if an Event of Default has
occurred, the party certifying hereto shall specify the facts
constituting the Event of Default and the nature and status thereof].
(c) To the extent requested from time to time by the Agent,
the certifying party shall specifically affirm compliance of the
Borrower in all material respects with any of its representations and
warranties (except to the extent they relate solely to an earlier date)
or obligations under said instruments.
(d) Financial Computations for the period ending
________________ (provide calculations on a consolidated basis):
(i) Current Ratio; and
(ii) Ratio of Debt to EBITDAX.
EXECUTED, DELIVERED AND CERTIFIED TO this ____day of ______________, 2001.
BORROWERS:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
WARRIOR GAS CO.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-2-
EXHIBIT "D"
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
________________ _________________- (the "Assignor") and _____________________
__________________ (the "Assignee") is dated as of ______________, 20___ The
parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement
(which, as it may be amended, modified, renewed or extended from time to time is
herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached
hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents, such that after giving effect to such
assignment the Assignee shall have purchased pursuant to this Assignment
Agreement the percentage interest specified in Item 3 of Schedule 1 of all
outstanding rights and obligations under the Credit Agreement and the other Loan
Documents relating to the facilities listed in Item 3 of Schedule 1. The
aggregate Commitment (or Loans, if the applicable Commitment has been
terminated) purchased by the Assignee hereunder is set forth in Item 4 of
Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1 or two Business Days (or such shorter period agreed to by the Agent) after
this Assignment Agreement, together with any consents required under the Credit
Agreement, are delivered to the Agent. In no event will the Effective Date occur
if the payments required to be made by the Assignee to the Assignor on the
Effective Date are not made on the proposed Effective Date.
4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of
Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date, the
amount agreed to by the Assignor and the Assignee. On and after the Effective
Date, the Assignee shall be entitled to receive from the Agent all payments of
principal, interest and fees with respect to the interest assigned hereby. The
Assignee will promptly remit to the Assignor any interest on Loans and fees
received from the Agent which relate to the portion of the Commitment or Loans
assigned to the Assignee hereunder for periods prior to the Effective Date and
not previously paid by the Assignee to the Assignor. In the event that either
party hereto receives any payment to which the other party hereto is entitled
under this Assignment Agreement, then the party receiving such amount shall
promptly remit it to the other party hereto.
5. RECORDATION FEE. The Assignor and Assignee each agree to pay
one-half of the recordation fee required to be paid to the Agent in connection
with this Assignment Agreement unless otherwise specified in Item 6 of Schedule
1.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder, (ii) such
interest is free and clear of any adverse claim created by the Assignor and
(iii) the execution and delivery of this Assignment Agreement by the Assignor is
duly authorized. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the Assignor makes
no other representation or warranty of any kind to the Assignee. Neither the
Assignor nor any of its officers, directors, employees, agents or attorneys
shall be responsible for (i) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectability of any Loan Document,
including without limitation, documents granting the Assignor and the other
Lenders a security interest in assets of the Borrower or any guarantor, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrower or any guarantor, (iv) the performance of or compliance with any of the
terms or provisions of any of the Loan Documents, (v) inspecting any of the
property, books or records of the Borrower, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (i)
confirms that it has received a copy of the Credit Agreement, together with
copies of the financial statements requested by the Assignee and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment Agreement, (ii) agrees that
it will, independently and without reliance upon the Agent, the Assignor or any
other Lender and based on such documents and information at it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, (iii) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, (iv) confirms
that the execution and delivery of this Assignment Agreement by the Assignee is
duly authorized, (v) agrees that it will perform in accordance with their terms
all of the obligations which by the terms of the Loan Documents are required to
be performed by it as a Lender, (vi) agrees that its payment instructions and
notice instructions are as set forth in the attachment to Schedule 1, (vii)
confirms that none of the funds, monies, assets or other consideration being
used to make the purchase and assumption hereunder are "plan assets" as defined
under ERISA and that its rights, benefits and interests in and under the Loan
Documents will not be "plan assets" under ERISA, (viii) agrees to indemnify and
hold the Assignor harmless against all losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the
-2-
Assignee's non-performance of the obligations assumed under this Assignment
Agreement, and (ix) if applicable, attaches the forms prescribed by the Internal
Revenue Service of the United States certifying that the Assignee is entitled to
receive payments under the Loan Documents without deduction or withholding of
any United States federal income taxes.
8. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Texas.
9. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth in the attachment to Schedule 1.
10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may
be executed in counterparts. Transmission by facsimile of an executed
counterpart of this Assignment Agreement shall be deemed to constitute due and
sufficient delivery of such counterpart and such facsimile shall be deemed to be
an original counterpart of this Assignment Agreement.
IN WITNESS WHEREOF, the duly authorized officers of the parties hereto
have executed this Assignment Agreement by executing Schedule 1 hereto as of the
date first above written
-3-
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
2. Date of Assignment Agreement:______________ , 20 ____
3. Amounts (As of Date of Item 2 above):
Facility Facility Facility Facility
1* 2* 3* 4*
-------- --------- --------- ----------
a. Assignee's percentage
of each Facility purchased
under the Assignment
Agreement** _____% _____% _____% _____%
b. Amount of
each Facility
purchased
under the Assignment
Agreement*** $_____ $_____ $_____ $
4. Assignee's Commitment (or Loans
with respect to terminated
Commitments) purchased
hereunder: $_________________
5. Proposed Effective Date: _________________
6. Non-standard Recordation Fee
Arrangement N/A***
[Assignor/Assignee
to pay 100% of fee]
[Fee waived by Agent]
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
--------------------------------- ----------------------
Title: Title:
------------------------------ -----------------------------
ACCEPTED AND CONSENTED TO BY ACCEPTED AND CONSENTED TO BY
[NAME OF BORROWER] [NAME OF AGENT]
By: By:
--------------------------------- --------------------------------
Title: Title:
------------------------------ -----------------------------
-4-
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
ADMINISTRATIVE INFORMATION SHEET
Attach Assignor's Administrative Information Sheet, which must
include notice addresses for the Assignor and the Assignee
(Sample form shown below)
ASSIGNOR INFORMATION
CONTACT:
Name: Telephone No.:
-------------------------------- -----------------------
Fax No.: Telex No.:
---------------------------- ---------------------------
Answerback:
-------------------------
PAYMENT INFORMATION:
Name & ABA # of Destination Bank: ---------------------------------------
Account Name & Number for Wire Transfer:
---------------------------------------
Other Instructions:
-------------------------------------------------------------
ADDRESS FOR NOTICES FOR ASSIGNOR:
--------------------------------------------
-5-
ASSIGNEE INFORMATION
CREDIT CONTACT:
Name: Telephone No.:
--------------------------------- -----------------------
Fax No.: Telex No.:
----------------------------- ---------------------------
Answerback:
---------------------------
KEY OPERATIONS CONTACTS:
Booking Installation: Booking Installation:
----------------- ----------------
Name: Name:
--------------------------------- --------------------------------
Telephone No.: Telephone No.:
------------------------ ------------------------
Fax No.: Fax No.:
----------------------------- -----------------------------
Telex No.: Telex No.:
--------------------------- ---------------------------
Answerback: Answerback:
--------------------------- --------------------------
PAYMENT INFORMATION:
Name & ABA # of Destination Bank:
---------------------------------------------
Account Name & Number for Wire Transfer:
------------------------------------
Other Instructions:
-------------------------------------------------------------
ADDRESS FOR NOTICES FOR ASSIGNEE:
--------------------------------------------
-6-
SCHEDULE "1"
FINANCIAL CONDITION
SCHEDULE "2"
LIABILITIES
SCHEDULE "3"
LITIGATION
RENEWAL REVOLVING NOTE
$40,000,000.00 Dallas, Texas June 25, 2001
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy, Inc., a
Delaware corporation and Warrior Gas Co., a Texas corporation (the "Borrowers")
hereby jointly and severally promise to pay to the order of BANK ONE, NA (the
"Payee"), at the offices of the Agent at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
or at such other place as the holder hereof may direct, in lawful money of the
United States of America, the principal amount of FORTY MILLION AND 00/100
DOLLARS ($40,000,000.00), or, if less than such amount, the aggregate unpaid
principal amount of all Advances made by Payee to Borrowers hereunder in
accordance with the terms of that certain Eighth Restated Loan Agreement, dated
as of even date herewith, entered into among Borrowers, Bank One, NA (successor
by merger to Bank One, Texas, N.A.) ("Bank One"), Union Bank of California, N.A.
("Union") and Bank of Scotland ("BOS") and Bank One, as Agent (as same may be
amended, modified, increased, supplemented and/or restated from time to time,
the "Agreement"), and Borrowers further promise to pay interest to Payee at such
office or other place, in like money, from the date hereof on the unpaid
principal amount hereof from time to time outstanding at the rates stated in the
Agreement. All terms defined in the Agreement shall have the same meaning when
used herein.
1. PAYMENT TERMS. The principal of, and all accrued interest
upon, this Note shall be due and payable in the amounts and at the times stated
in the Agreement as follows:
(a) Interest shall be due and payable as provided in the
Agreement;
(b) The entire unpaid principal amount of this Note shall be due
and payable on the Maturity Date.
2. DISBURSEMENT AND PREPAYMENT. Payee may disburse the principal
of this Note to Borrowers in one or more Advances from time to time in
accordance with the Agreement. Borrowers shall be entitled and in certain
instances may be required to prepay the principal of this Note from time to time
in accordance with the Agreement. Borrowers may borrow, repay and reborrow under
this Note in accordance with the terms of the Agreement. It is contemplated that
by reason of prepayments hereon there may be times when no indebtedness is owing
hereunder; but notwithstanding such occurrences, this Note shall remain valid
and shall be in full force and effect as to Advances made pursuant to the
Agreement subsequent to each such occurrence.
3. BENEFITS. This Note is the Note referred to in the Agreement,
and Agent and the holder(s) hereof are entitled to the benefits thereof and may
enforce the agreements contained therein and exercise the rights provided for
thereby or otherwise in respect thereof. Reference to the Agreement shall not
affect or impair the absolute unconditional obligation of Borrowers to pay the
principal of, interest on and any additional payment in connection with this
Note when due.
4. SECURITY. The payment of this Note is secured by Collateral
more particularly described in the Agreement.
5. ACCELERATION OF MATURITY. Upon the occurrence of an Event of
Default under the Agreement, Banks may (i) declare the principal of, and all
interest then accrued on, this Note, to be forthwith due and payable, whereupon
the same shall forthwith become due and payable without presentment, demand,
protest, or notice of any kind, all of which Borrowers hereby expressly waive,
and/or (ii) exercise of any other right provided in the Loan Documents, or at
law or in equity. Reference is hereby made to the Agreement for a statement of
the events upon which the maturity of this Note may be accelerated
automatically. Borrowers grant to each Bank the right to set off against this
Note, and the right of recoupment from, any and all deposit and other
liabilities of each Bank to Borrowers and all money or property in the
possession of any Bank held for or owed to Borrowers.
6. WAIVER. Except as otherwise expressly provided herein or in
the other Loan Documents, Borrowers and all sureties, endorsers and guarantors
of this Note (i) waive demand, presentment for payment, notice of intention to
accelerate, notice of acceleration, protest, notice of protest, notice of
default and all other notices, filing of suit and diligence in collecting this
Note or enforcing any of the security herefor, (ii) agree to any substitution,
exchange or release of any such security or the release of any person or entity
primarily or secondarily liable herefor, (iii) agree that it will not be
necessary for Agent or any holder hereof, in order to enforce payment of this
Note by Agent or such holder, to first institute suit or exhaust its rights
against Borrowers or others liable herefor, or to enforce its rights against any
security herefor, and (iv) consent to any and all extensions for any period,
renewals or postponements of time of payment of this Note or any other
indulgences with respect hereto, without notice thereof to any of them.
7. ATTORNEYS' FEES. If this Note is collected by legal
proceedings or in or through a bankruptcy court, or is placed in the hands of an
attorney for collection after maturity, no matter how maturity is brought about,
Borrowers agree to pay reasonable attorneys fees and all other collection costs
incurred by Agent and the holder(s) of this Note.
8. GOVERNING LAW AND VENUE. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND APPLICABLE
FEDERAL LAW AND SHALL BE PERFORMABLE IN DALLAS COUNTY, TEXAS, OR AT SUCH OTHER
PLACE AS MAY BE DESIGNATED IN WRITING BY THE HOLDER HEREOF.
9. HEADINGS. The headings of the sections of this Note are
inserted for convenience only and shall not be deemed to constitute a part
hereof.
IN WITNESS WHEREOF, Borrowers have executed this Note as of the date and year
first herein written.
-2-
BORROWERS:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY, INC.
By:
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President-Finance
WARRIOR GAS CO.
By:
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President-Finance
-3-
RENEWAL REVOLVING NOTE
$40,000,000.00 Dallas, Texas June 25, 2001
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy, Inc., a
Delaware corporation and Warrior Gas Co., a Texas corporation (the "Borrowers")
hereby jointly and severally promise to pay to the order of UNION BANK OF
CALIFORNIA, N.A. (the "Payee"), at the offices of the Agent at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or at such other place as the holder hereof may direct, in
lawful money of the United States of America, the principal amount of FORTY
MILLION AND 00/100 DOLLARS ($40,000,000.00), or, if less than such amount, the
aggregate unpaid principal amount of all Advances made by Payee to Borrowers
hereunder in accordance with the terms of that certain Eighth Restated Loan
Agreement, dated as of even date herewith, entered into among Borrowers, Bank
One, NA (successor by merger to Bank One, Texas, N.A.) ("Bank One"), Union Bank
of California, N.A. ("Union") and Bank of Scotland ("BOS") and Bank One, as
Agent (as same may be amended, modified, increased, supplemented and/or restated
from time to time, the "Agreement"), and Borrowers further promise to pay
interest to Payee at such office or other place, in like money, from the date
hereof on the unpaid principal amount hereof from time to time outstanding at
the rates stated in the Agreement. All terms defined in the Agreement shall have
the same meaning when used herein.
1. PAYMENT TERMS. The principal of, and all accrued interest
upon, this Note shall be due and payable in the amounts and at the times stated
in the Agreement as follows:
(a) Interest shall be due and payable as provided in the
Agreement;
(b) The entire unpaid principal amount of this Note shall be due
and payable on the Maturity Date.
2. DISBURSEMENT AND PREPAYMENT. Payee may disburse the principal
of this Note to Borrowers in one or more Advances from time to time in
accordance with the Agreement. Borrowers shall be entitled and in certain
instances may be required to prepay the principal of this Note from time to time
in accordance with the Agreement. Borrowers may borrow, repay and reborrow under
this Note in accordance with the terms of the Agreement. It is contemplated that
by reason of prepayments hereon there may be times when no indebtedness is owing
hereunder; but notwithstanding such occurrences, this Note shall remain valid
and shall be in full force and effect as to Advances made pursuant to the
Agreement subsequent to each such occurrence.
3. BENEFITS. This Note is the Note referred to in the Agreement,
and Agent and the holder(s) hereof are entitled to the benefits thereof and may
enforce the agreements contained therein and exercise the rights provided for
thereby or otherwise in respect thereof. Reference to the Agreement shall not
affect or impair the absolute unconditional obligation of Borrowers to pay the
principal of, interest on and any additional payment in connection with this
Note when due.
4. SECURITY. The payment of this Note is secured by Collateral
more particularly described in the Agreement.
5. ACCELERATION OF MATURITY. Upon the occurrence of an Event of
Default under the Agreement, Banks may (i) declare the principal of, and all
interest then accrued on, this Note, to be forthwith due and payable, whereupon
the same shall forthwith become due and payable without presentment, demand,
protest, or notice of any kind, all of which Borrowers hereby expressly waive,
and/or (ii) exercise of any other right provided in the Loan Documents, or at
law or in equity. Reference is hereby made to the Agreement for a statement of
the events upon which the maturity of this Note may be accelerated
automatically. Borrowers grant to each Bank the right to set off against this
Note, and the right of recoupment from, any and all deposit and other
liabilities of each Bank to Borrowers and all money or property in the
possession of any Bank held for or owed to Borrowers.
6. WAIVER. Except as otherwise expressly provided herein or in
the other Loan Documents, Borrowers and all sureties, endorsers and guarantors
of this Note (i) waive demand, presentment for payment, notice of intention to
accelerate, notice of acceleration, protest, notice of protest, notice of
default and all other notices, filing of suit and diligence in collecting this
Note or enforcing any of the security herefor, (ii) agree to any substitution,
exchange or release of any such security or the release of any person or entity
primarily or secondarily liable herefor, (iii) agree that it will not be
necessary for Agent or any holder hereof, in order to enforce payment of this
Note by Agent or such holder, to first institute suit or exhaust its rights
against Borrowers or others liable herefor, or to enforce its rights against any
security herefor, and (iv) consent to any and all extensions for any period,
renewals or postponements of time of payment of this Note or any other
indulgences with respect hereto, without notice thereof to any of them.
7. ATTORNEYS' FEES. If this Note is collected by legal
proceedings or in or through a bankruptcy court, or is placed in the hands of an
attorney for collection after maturity, no matter how maturity is brought about,
Borrowers agree to pay reasonable attorneys fees and all other collection costs
incurred by Agent and the holder(s) of this Note.
8. GOVERNING LAW AND VENUE. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND APPLICABLE
FEDERAL LAW AND SHALL BE PERFORMABLE IN DALLAS COUNTY, TEXAS, OR AT SUCH OTHER
PLACE AS MAY BE DESIGNATED IN WRITING BY THE HOLDER HEREOF.
9. HEADINGS. The headings of the sections of this Note are
inserted for convenience only and shall not be deemed to constitute a part
hereof.
-2-
IN WITNESS WHEREOF, Borrowers have executed this Note as of the date
and year first herein written.
BORROWERS:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY, INC.
By:
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President-Finance
WARRIOR GAS CO.
By:
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President-Finance
-3-
RENEWAL REVOLVING NOTE
$20,000,000.00 Dallas, Texas June 25, 2001
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy, Inc., a
Delaware corporation and Warrior Gas Co., a Texas corporation (the "Borrowers")
hereby jointly and severally promise to pay to the order of BANK OF SCOTLAND
(the "Payee"), at the offices of the Agent at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, or at such other place as the holder hereof may direct, in lawful money
of the United States of America, the principal amount of TWENTY MILLION AND
00/100 DOLLARS ($20,000,000.00), or, if less than such amount, the aggregate
unpaid principal amount of all Advances made by Payee to Borrowers hereunder in
accordance with the terms of that certain Eighth Restated Loan Agreement, dated
as of even date herewith, entered into among Borrowers, Bank One, NA (successor
by merger to Bank One, Texas, N.A.) ("Bank One"), Union Bank of California, N.A.
("Union") and Bank of Scotland ("BOS") and Bank One, as Agent (as same may be
amended, modified, increased, supplemented and/or restated from time to time,
the "Agreement"), and Borrowers further promise to pay interest to Payee at such
office or other place, in like money, from the date hereof on the unpaid
principal amount hereof from time to time outstanding at the rates stated in the
Agreement. All terms defined in the Agreement shall have the same meaning when
used herein.
1. PAYMENT TERMS. The principal of, and all accrued interest
upon, this Note shall be due and payable in the amounts and at the times stated
in the Agreement as follows:
(a) Interest shall be due and payable as provided in the
Agreement;
(b) The entire unpaid principal amount of this Note shall be due
and payable on the Maturity Date.
2. DISBURSEMENT AND PREPAYMENT. Payee may disburse the principal of
this Note to Borrowers in one or more Advances from time to time in accordance
with the Agreement. Borrowers shall be entitled and in certain instances may be
required to prepay the principal of this Note from time to time in accordance
with the Agreement. Borrowers may borrow, repay and reborrow under this Note in
accordance with the terms of the Agreement. It is contemplated that by reason of
prepayments hereon there may be times when no indebtedness is owing hereunder;
but notwithstanding such occurrences, this Note shall remain valid and shall be
in full force and effect as to Advances made pursuant to the Agreement
subsequent to each such occurrence.
3. BENEFITS. This Note is the Note referred to in the Agreement, and
Agent and the holder(s) hereof are entitled to the benefits thereof and may
enforce the agreements contained therein and exercise the rights provided for
thereby or otherwise in respect thereof. Reference to the Agreement shall not
affect or impair the absolute unconditional obligation of Borrowers to pay the
principal of, interest on and any additional payment in connection with this
Note when due.
4. SECURITY. The payment of this Note is secured by Collateral more
particularly described in the Agreement.
5. ACCELERATION OF MATURITY. Upon the occurrence of an Event of Default
under the Agreement, Banks may (i) declare the principal of, and all interest
then accrued on, this Note, to be forthwith due and payable, whereupon the same
shall forthwith become due and payable without presentment, demand, protest, or
notice of any kind, all of which Borrowers hereby expressly waive, and/or (ii)
exercise of any other right provided in the Loan Documents, or at law or in
equity. Reference is hereby made to the Agreement for a statement of the events
upon which the maturity of this Note may be accelerated automatically. Borrowers
grant to each Bank the right to set off against this Note, and the right of
recoupment from, any and all deposit and other liabilities of each Bank to
Borrowers and all money or property in the possession of any Bank held for or
owed to Borrowers.
6. WAIVER. Except as otherwise expressly provided herein or in the
other Loan Documents, Borrowers and all sureties, endorsers and guarantors of
this Note (i) waive demand, presentment for payment, notice of intention to
accelerate, notice of acceleration, protest, notice of protest, notice of
default and all other notices, filing of suit and diligence in collecting this
Note or enforcing any of the security herefor, (ii) agree to any substitution,
exchange or release of any such security or the release of any person or entity
primarily or secondarily liable herefor, (iii) agree that it will not be
necessary for Agent or any holder hereof, in order to enforce payment of this
Note by Agent or such holder, to first institute suit or exhaust its rights
against Borrowers or others liable herefor, or to enforce its rights against any
security herefor, and (iv) consent to any and all extensions for any period,
renewals or postponements of time of payment of this Note or any other
indulgences with respect hereto, without notice thereof to any of them.
7. ATTORNEYS' FEES. If this Note is collected by legal proceedings or
in or through a bankruptcy court, or is placed in the hands of an attorney for
collection after maturity, no matter how maturity is brought about, Borrowers
agree to pay reasonable attorneys fees and all other collection costs incurred
by Agent and the holder(s) of this Note.
8. GOVERNING LAW AND VENUE. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW
AND SHALL BE PERFORMABLE IN DALLAS COUNTY, TEXAS, OR AT SUCH OTHER PLACE AS MAY
BE DESIGNATED IN WRITING BY THE HOLDER HEREOF.
9. HEADINGS. The headings of the sections of this Note are inserted for
convenience only and shall not be deemed to constitute a part hereof.
-2-
IN WITNESS WHEREOF, Borrowers have executed this Note as of the date
and year first herein written.
BORROWERS:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY, INC.
By:
---------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President-Finance
WARRIOR GAS CO.
By:
---------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President-Finance
-3-