LOAN AGREEMENT
THIS LOAN AGREEMENT (hereinafter referred to as the "Agreement") executed
as of the 19th day of November, 1996, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
PARTNERSHIP, LTD., a Texas limited partnership (hereinafter referred to as the
"Borrower") and BANK ONE, TEXAS, N.A., a national banking association
(hereinafter sometimes referred to as "Bank").
W I T N E S S E T H:
WHEREAS, Borrower has requested that the Bank provide Borrower with a
revolving facility and the Bank is willing to make such facility available to
Borrower m an amount of up to $2,750,000.00.
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 "Agreement," "Borrower" and
"Bank" shall have the meanings indicated above. when used herein the following
terms shall have the following meanings:
(a) ADVANCE OR ADVANCES - A loan or loans hereunder.
(b) AFFILIATE - Any Person, estate, trust, firm or other entity
directly or indirectly controlled by, controlling or under common control
with the relevant Person.
(c) BASE RATE - The fluctuating rate of interest per annum
established from time to time by Bank as its Base Rate (which rate of
interest may not be the lowest, best or most favorable rate of interest
which Bank may charge on loans to its customers). Each change in the Base
Rate shall become effective without prior notice to Borrower automatically
as of the opening of business on the date of such change in the Base Rate.
(d) BORROWING BASE - As of any date, an amount equal to fifty percent
(50%) of the aggregate Collateral Value; provided, however, that in no
event shall the Borrowing Base ever exceed the Revolving Loan Commitment.
(e) BORROWING DATE - The date elected by the Borrower pursuant to
Section 2(a) hereof for an Advance on the Revolving Loan.
(f) BUSINESS DAY - The normal banking hours during any day (other
than Saturdays or Sundays) that banks are legally open for business in
Dallas, Texas.
(g) CWEI - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy, Inc.
(h) CWEI COMMON STOCK - The common stock, $.10 par value, of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Energy, Inc.
(i) CHANGE OF CONTROL - A change of control shall occur if any of
Borrower's partnership interests are ever owned by any Person or entity
other than the General Partner, the ▇▇▇▇▇▇▇▇ Childrens Partnership, Ltd.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. or any Affiliate of one or more of the foregoing.
(j) COLLATERAL - All property of any kind which is subject to a Lien
in favor of the Bank under the terms of any Security Instrument as
described in Section 5 hereof.
(k) COLLATERAL VALUE - As of any date, the sum of (i) the aggregate
market value of the Collateral, as determined by Bank on the basis of the
most recent closing price for CWEI Common Stock and/or other stock pledged
as Collateral as quoted on the principal securities exchange or other
recognized public market on which such shares are then traded, as appearing
in any regularly published reporting or quotation service, and (ii) to the
extent oil and gas properties are ever mortgaged to secure the Borrower's
obligation hereunder, the value assigned by the Bank, in its sole
discretion, to such oil and gas properties for collateral purposes.
(l) EFFECTIVE DATE - The date of this Agreement.
(m) ENVIRONMENTAL LAWS - The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Super Fund
Amendments and Reauthorization Act of 1986, 42 U.S.C.A. Section 9601, ET
SEQ., the Resource Conservation and Recovery Act, as amended by the
Hazardous Solid Waste Amendment of 1984, 42 U.S.C.A. Section 6901, ET SEQ.,
the Clean Air Act, 42 U.S.C.A. Section 1251, ET SEQ., the Toxic Substances
Control Act, 15 U.S.C.A. Section 2601, ET SEQ., The Oil Pollution Act of
1990, 33 U.S.G. Section 2701, ET SEQ., and all other laws, statutes, codes,
acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, order 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 air pollution, water pollution, noise control and/or the
handling, discharge, disposal or recovery of on-site or off-site asbestos
or "hazardous substances" as defined by 42 U.S.C. Section 9601, ET SEQ., as
amended, as each of the foregoing may be amended from time to time.
(n) ENVIRONMENTAL LIABILITY - 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).
(o) ENVIRONMENTAL LIEN - A Lien in favor of any court, governmental
agency or instrumentality or any other Person (i) for any Environmental
Liability 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.
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(p) FINANCIAL STATEMENTS - Balance sheets, income statements,
statements of cash flow, and, on an annual basis, appropriate footnotes and
schedules, prepared in accordance with the income tax basis of accounting.
(q) GENERAL PARTNER - CWPLCO, Inc., a Delaware corporation.
(r) GUARANTEED PAYMENTS - The term Guaranteed Payments is used herein
as defined in the Partnership Agreement.
(s) GUARANTIES - The unconditional guaranties of the Guarantors.
(t) GUARANTORS - ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., CWPLCO, Inc. and Clajon
Holding Corporation.
(u) LIEN - Any mortgage, deed of trust, pledge, security interest,
assignment, encumbrance or lien (statutory or otherwise) of every kind and
character.
(v) LOAN DOCUMENTS - This Agreement, the Note, the Security
Instruments, the Guaranties and all other documents executed in connection
with the transaction described in this Agreement.
(w) MATERIAL ADVERSE EFFECT - Material Adverse Effect shall mean any
material adverse effect or the occurrence of any circumstance or event
which (i) could have a material adverse effect on the assets, properties,
liabilities, financial condition, business, operations, affairs or
circumstances of Borrower or any Guarantor from the facts represented or
warranted in this Agreement or in any Security Instrument or (ii) could
materially impair the ability of the Borrower or any Guarantor to carry out
their respective businesses as conducted as of the date of this Agreement
or as proposed at the date of this Agreement to be conducted or to meet
their respective obligations under the Note, this Agreement or the other
Loan Documents on a timely basis, or (iii) is material and adverse to the
financial condition or business operations of Borrower or any Guarantor, or
(iv) could have a material adverse effect on the validity, enforceability,
perfection or priority of any of the Loan Documents, or (v) may result in
or cause a default or Event of Default..
(x) MATURITY DATE - November 19, 1997.
(y) MAXIMUM RATE - At any particular time in question, the maximum
rate of interest which under applicable law may then be charged on the
Note. If such maximum rate changes after the date hereof, the Maximum Rate
shall be automatically increased or decreased, as the case may be, without
notice to Borrower from time to time as the effective date of each change
in such maximum rate.
(z) NOTE - The $2,750,000 note described in Section 3 hereof,
together with all renewals and extensions thereof or any part thereof.
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(aa) PARTNERSHIP AGREEMENT - The Amended and Restated Agreement of
Limited Partnership of Borrower dated March 1, 1995.
(bb) PERMITTED LIENS - The term Permitted Lien shall mean (i)
royalties, overriding royalties, reversionary interests, production
payments and similar burdens granted by Borrower or Guarantors with respect
to their respective oil and gas properties if the net cumulative effect of
such burdens does not operate to deprive Borrower or Guarantors 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) (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
Guarantors' 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 Guarantors' assets or properties to the extent
not delinquent (or which, if delinquent, are being contested in good faith
by appropriate proceedings) (v) all contracts, agreements and instruments,
and all defects and irregularities and other matters affecting Borrower's
or Guarantors' assets and properties which were in existence at the time
Borrower's or Guarantors' assets and properties were originally acquired by
Borrower or Guarantors 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 Guarantors' 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 Guarantors' 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 Bank in
Borrower's Financial Statements or identified on Schedule "1" hereto; and
(xii) and any and all renewals and extensions (but not increases) of all or
any of the foregoing. 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 Bank, or
which may, by operation of law, become prior to such liens held by the
Bank.
(cc) PERSON - 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.
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(dd) REVOLVING LOAN - Loan or loans made under the Revolving Loan
Commitment pursuant to Section 2 hereof.
(ee) REVOLVING LOAN COMMITMENT - The commitment contained in Section 2
of this Agreement.
(ff) SECURITY INSTRUMENTS - The term Security Instruments is used
collectively herein to mean this Agreement, the Guaranties, a Pledge
Agreement and other collateral documents covering certain of Borrower's
stock in CWEI, all such documents to be in form and substance reasonably
satisfactory to Bank.
(gg) TOTAL OUTSTANDING - The total principal amount outstanding on the
Note as of any date of computation.
2. COMMITMENT OF THE BANK.
(a) TERMS OF REVOLVING LOAN COMMITMENT. On the terms and conditions
hereinafter set forth, the Bank agrees to make Advances to the 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 lesser of (i) the Borrowing Base or (ii) $2,750,000. Within
the limit of this Section 2, the Borrower may borrow, repay without premium
or penalty, and reborrow. 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. Each Advance under the revolving line of credit shall be an
aggregate amount of at least $100,000. Provided, however, that in no event
shall the Bank ever be obligated to advance any amount in excess of the
Borrowing Base.
(b) PROCEDURE FOR BORROWING. Whenever Borrower desires an Advance
hereunder, it shall give Bank telegraphic, facsimile, telex 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 Bank not later than 11:00 a.m. Dallas, Texas time, on the
Borrowing Date. Each Notice of Borrowing shall specify the Borrowing Date
and the principal amount to be borrowed. Notice received by Bank after 1:00
p.m. Dallas, Texas time shall be considered to have been received on the
next Business Day.
(c) VOLUNTARY REDUCTION OF REVOLVING LOAN COMMITMENT. Borrower may
at any time, or from time to time, upon not less than three (3)Business
Days prior written notice to Bank, reduce or terminate the Revolving Loan
Commitment; provided, however, that (i) each reduction in the Revolving
Loan Commitment must be in a minimum amount of at least $100,000, or the
unpaid balance of the Note, whichever is less, and (ii) each reduction must
be accompanied by a prepayment of the Note in the amount by which the
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principal balance of the Note exceeds the Revolving Loan Commitment as
reduced pursuant to this Section 2.
3. NOTE EVIDENCING LOANS. The loans described above in Section 2 shall
be evidenced by a promissory note of Borrower as follows:
(a) FORM OF NOTE - The Revolving Loan shall be evidenced by a Note in
the face amount of $2,750,000, and shall be in the form of Exhibit "B"
hereto with appropriate insertion. Notwithstanding the principal amount of
the Note, as stated on the face thereof, the actual principal amount due
from Borrower to Bank on account of the Note, 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 Bank in
collected funds with respect thereto. Although the Note shall be dated as
of the Effective Date, interest in respect thereof shall be payable only
for the period during which the loans evidenced thereby are outstanding
and, although the stated amount of the Note may be higher, the Note 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
loans.
(b) INTEREST RATE - The unpaid principal balance of the Note shall
bear interest from time to time as set forth in Section 4 hereof.
(c) PAYMENT OF INTEREST - Interest on the Note shall be payable
quarterly on the first day of each calendar quarter, beginning January 1,
1997 and the Maturity Date.
(d) PAYMENT OF PRINCIPAL - Principal of the Note shall be due on the
Maturity Date, unless earlier due in whole or in part pursuant to the
mandatory prepayment requirements of Section 8(b) hereof.
4. INTEREST RATES.
(a) BASIC RATE. The unpaid principal balance of the Note shall bear
interest (calculated on the basis of actual days in a year consisting of
365 or, if appropriate, 366 days) at a fluctuating rate per annum from day
to day equal to the lesser of (i) the Maximum Rate, or (ii) the Base Rate
plus one-half of one percent (1/2%).
(b) DEFAULT RATE. After maturity (whether by acceleration or
otherwise), the principal balance of the Note shall bear interest to the
extent permitted by law at a rate per annum equal to the Maximum Rate.
(c) RECAPTURE RATE. Notwithstanding the foregoing, if at any time
the rate specified in Section 4(a) (ii) exceeds the Maximum Rate, and,
therefore, the rate of interest on the Note is limited to the Maximum Rate,
then any subsequent reductions in the Base Rate shall not reduce the rate
of interest on the Note below the Maximum Rate until the total amount of
interest accrued on the Note equals the amount of interest which would have
accrued thereon if the rate specified in Section 4(a) (ii) had at all times
been in effect.
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5. COLLATERAL SECURITY. To secure the performance by Borrower of its
obligations hereunder, and under the Note and Security Instruments, whether now
or hereafter incurred, matured or unmatured, direct or contingent, joint or
several, or joint and several, including extensions, modifications, renewals and
increases thereof, and substitutions therefore, Borrower shall contemporaneously
with or prior to the execution of this Agreement and the Note, grant and assign
to the Bank a first and prior security interest and Lien on 600,000 shares of
the CWEI Common Stock and proceeds of the foregoing. All collateral in which
Borrower has herewith granted or hereafter grants to the Bank a first and prior
Lien (to the satisfaction of the Bank) in accordance with this Section 5, 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 reasonably
satisfactory to the Bank. Concurrently with the delivery of each of the Security
Instruments, Borrower shall deliver certificates representing 600,000 shares of
CWEI Common Stock to Bank. Borrower will cause to be executed and delivered to
the Bank, in the future, additional Security Instruments if the Bank reasonably
deems such are necessary to insure perfection or maintenance of Bank's security
interests and Liens in the Collateral or any part thereof.
6. FEES.
(a) ORIGINATION FEE. In consideration of the Revolving Loan
Commitment, Borrower shall pay to Bank a Origination Fee (hereinafter
referred to as the "Origination Fee") equal to $20,625 which is payable on
the date of the execution of this Agreement.
(b) UNUSED PORTION FEE. In addition to the Origination Fee, Borrower
shall pay to Bank an Unused Portion Fee (hereinafter referred to as the
"Unused Portion Fee") equivalent to one-half of one percent ( 1/2%) per
annum on the daily average of the unadvanced amount of the Revolving Loan
Commitment. The Unused Portion Fee shall be payable in arrears on the
first day of each calendar quarter beginning January 1, 1997, with the
final fee payment 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 Loan Commitment terminates on any date prior to the end
of any such quarterly period, Borrower shall pay to Bank, on the date of
such termination, the pro rata portion of the Unused Portion Fee due for
the period in which such termination occurs.
7. VOLUNTARY PREPAYMENTS. The Borrower may at any time and from time to
time, without penalty or premium, prepay the Note, in whole or in part. Each
such prepayment shall be made on at least one (1) Business Day's notice to Bank
and shall be in a minimum amount of $100,000 or the unpaid balance on the Note,
whichever is less.
8. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank to enter
into this Agreement, Borrower hereby represents and warrants to the Bank (which
representations and warranties will survive the delivery of the Note) that:
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(a) PARTNERSHIP EXISTENCE. Borrower is a limited partnership duly
formed under the laws of the State of Texas and is duly qualified in all
jurisdictions where the failure to qualify could result in a Material
Adverse Effect.
(b) EXISTENCE AND AUTHORITY OF GENERAL PARTNER. CWPLCO, Inc., a
Delaware corporation, is the general partner of Borrower, and on behalf of
Borrower is duly authorized and empowered to execute and issue the Note; is
duly authorized and empowered to execute, deliver and perform the Security
Instruments, including this Agreement, to which it is a party and all
action on the General Partner's part requisite for the due creation and
issuance of the Note and for the due execution, delivery and performance of
the Security Instruments, including this Agreement, to which it is a party,
has been duly and effectively taken.
(c) EXISTENCE AND AUTHORITY OF GUARANTORS. CWPLCO, Inc. and Clajon
Holding Corporation are each a corporation duly organized, validly existing
and in good standing under the laws of the jurisdictions in which they were
incorporated and each is duly qualified as a foreign corporation in all
jurisdictions wherein the failure to qualify could result in a Material
Adverse Affect. Each Guarantor (including ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.) has
all requisite power and authority to execute and deliver their respective
Guaranties, and to perform their obligations under their respective
Guaranties.
(d) BINDING OBLIGATIONS. This Agreement does, and the Note and other
Security Instruments upon their creation, issuance, execution and delivery
will, constitute valid and binding obligations of Borrower, and the
Guarantors, respectively, enforceable in accordance with its terms (except
that enforcement may be subject to any applicable bankruptcy, insolvency,
or similar debtor relief laws now or hereafter in effect and relating to or
affecting the enforcement of creditors rights generally and subject to
availability of equitable remedies).
(e) NO LEGAL BAR OR RESULTANT LIEN. The Note and the Security
Instruments, including this Agreement, do not and will not, to the best of
Borrower's and Guarantors' knowledge, violate any provisions of any
contract, agreement, law, regulation, order, injunction, judgment, decree
or writ to which Borrower or any Guarantor is subject, or result in the
creation or imposition of any lien or other encumbrance upon any assets or
properties of Borrower or any Guarantor, other than those contemplated by
this Agreement, which conflict, violation, creation or imposition is
reasonably expected to have a Material Adverse Effect.
(f) NO CONSENT. The execution, delivery and performance by Borrower
of the Note and the Security Instruments, including this Agreement, and the
execution and delivery of their respective Guaranties by the Guarantors,
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.
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(g) FINANCIAL CONDITION. The Financial Statement of Borrower dated
September 30, 1996, which has been delivered to Bank is complete and
correct in all material respects, and fully and accurately reflect in all
material respects the financial condition of the Borrower 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 Borrower which is reasonably
expected to have a Material Adverse Effect, except as disclosed to the Bank
in Schedule "2" attached hereto.
(h) LIABILITIES. Borrower does not have any material (individually
or in the aggregate) liability, direct or contingent, except as disclosed
to the Bank in the Financial Statements or in Schedule "3" 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 which is reasonably expected to
have a Material Adverse Effect.
(i) LITIGATION. Except as disclosed to the Bank in Schedule "4"
attached hereto, there is no litigation, legal or administrative
proceeding, investigation or other action of any nature pending or, to the
knowledge of Borrower or any Guarantor, threatened against or affecting
Borrower or any 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.
(j) TAXES; GOVERNMENTAL CHARGES. Borrower has filed all tax returns
and reports required to be filed and has paid all taxes, assessments fees
and other governmental charges levied upon it or its assets, properties or
income which are due and payable, including interest and penalties, the
failure of which to pay could have a Material Adverse Effect, except such
as are being contested in good faith by appropriate proceedings and levy
and execution thereon have been stayed and continue to be stayed.
(k) TITLES; ETC. Borrower has good and defensible title to all of
the Collateral pledged or mortgaged by it except for defects which are not
reasonably expected to have a Material Adverse Effect, free and clear of
all liens and 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 and encumbrances, except Permitted
Liens.
(l) DEFAULTS. Borrower is not 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 is a party in any respect that is
reasonably expected to have a Material Adverse Effect. No Event of Default
hereunder has occurred and is continuing.
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(m) CASUALTIES; TAKING OF PROPERTIES. Since the dates of the latest
Financial Statements of Borrower delivered to Bank, neither the business
nor the assets or properties of Borrower has 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 be reasonably
expected to have a Material Adverse Effect.
(n) USE OF PROCEEDS; MARGIN STOCK. The proceeds of the loans
hereunder will be used by Borrower primarily for the purpose of
investments. A portion of such proceeds will be used by the Borrower for
the purpose of providing funds for purchasing or carrying "margin stock" as
that term is 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 will constitute this
transaction a "purpose credit" within the meaning of Regulation U.
(o) LOCATION OF BUSINESS AND OFFICES. The principal place of
business of Borrower is located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇.
(p) COMPLIANCE WITH THE LAW. To the best of Borrower's knowledge,
neither Borrower nor any Guarantor:
(i) is in violation of any law, judgment, decree, order,
ordinance, or governmental rule or regulation to which Borrower, or
any of its assets or properties are subject; and
(ii) has 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 its business;
which violation or failure is reasonably expected to have a Material
Adverse Effect.
(q) NO MATERIAL MISSTATEMENTS. No information, exhibit or report
furnished by Borrower or any Guarantor to the Bank in connection with the
negotiation of this Agreement contained any material misstatement of fact
or omitted to state a material fact or any fact necessary to make the
statement contained therein not materially misleading.
(r) LIENS. Except for Permitted Liens, the assets and properties of
Borrower are free and clear of all liens and encumbrances;
(s) ENVIRONMENTAL MATTERS. Except as disclosed on Schedule "5",
Borrower has not received notice or otherwise learned of (i) any
Environmental Liability which could individually or in the aggregate
reasonably be expected to have a Material Adverse Effect arising in
connection with (A) any non-compliance with or violation of the
requirements
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of any Environmental Law or (B) the release or threatened release of any
toxic or hazardous waste into the environment, (ii) any threatened or
actual liability in connection with the release or threatened release of
any toxic or hazardous waste into the environment which could individually
or in the aggregate reasonably be expected to have a Material Adverse
Effect or (iii) 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 is or
may be liable which reasonably could be expected to result in a Material
Adverse Effect.
9. CONDITIONS OF LENDING.
(a) The obligation of the Bank to make the initial Advance under the
Revolving Loan Commitment shall be subject to the following conditions
precedent:
(i) EXECUTION AND DELIVERY. (A) Borrower shall have executed
and delivered to the Bank the Note, the Security Instruments and other
required documents and (B) the Guarantors shall each have delivered
their respective Guaranties in the form of Exhibit "C" hereto, all in
form and substance satisfactory to the Bank;
(ii) LEGAL OPINION. The Bank shall have received from Borrower's
legal counsel a favorable legal opinion in form and substance
satisfactory to Bank (i) as to the matters set forth in Subsections
8(a), (b), (c), (d), (e), (f) and (i) hereof, and (ii) as to such
other matters as Bank or its counsel may reasonably request;
(iii) DELIVERY OF COLLATERAL. Borrower shall have delivered
certificates representing 600,000 shares of CWEI Common Stock to Bank
as Collateral, accompanied by appropriate stock powers.
(iv) PARTNERSHIP RESOLUTIONS AND INCUMBENCY. The Bank shall have
received appropriate partnership resolutions and incumbency
certificates for the Borrower;
(v) CORPORATE RESOLUTIONS AND INCUMBENCY. The Bank shall have
received appropriate corporate resolutions and incumbency certificates
for each corporate Guarantor;
(vi) PARTNERSHIP AGREEMENT. The Bank shall have received a copy
of the Partnership Agreement, certified to by an appropriate officer
of the General Partner as a true and correct copy thereof;
(vii) PAYMENT OF ORIGINATION FEE. The Bank shall have
received payment of the Origination Fee;
-11-
(viii) OTHER DOCUMENTS. The Bank shall have received such
other instruments and documents incidental and appropriate to the
transaction provided for herein as the Bank or its counsel may
reasonably request, and all such documents shall be in form and
substance reasonably satisfactory to the Bank; and
(ix) LEGAL MATTERS SATISFACTORY. All legal matters incident to
the consummation of the transactions contemplated hereby shall be
reasonably satisfactory to special counsel for the Bank retained at
the expense of Borrower.
(b) The obligation of the Bank to make any Advance (including the
initial Advance) on the Revolving Loan Commitment shall be subject to the
following additional conditions precedent that, at the date of making each
such Advance and after giving effect thereto:
(i) REPRESENTATION AND WARRANTIES. With respect to any Advance,
the representations and warranties of Borrower under this Agreement
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);
(ii) 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;
(iii) OTHER DOCUMENTS. The Bank shall have received such
other instruments and documents incidental and appropriate to the
transaction provided for herein as the Bank or its counsel may
reasonably request, and all such documents shall be in form and
substance reasonably satisfactory to the Bank; and
(iv) LEGAL MATTERS SATISFACTORY. All legal matters incident to
the consummation of the transactions contemplated hereby shall be
reasonably satisfactory to special counsel for the Bank retained at
the expense of Borrower.
10. AFFIRMATIVE COVENANTS. A deviation from the provisions of this
Section 10 shall not constitute an Event of Default under this Agreement if such
deviation is consented to in writing by the Bank. Without the prior written
consent of the Bank, Borrower will at all times comply with the covenants
contained in this Section 10 from the date hereof and for so long as any part of
the Revolving Loan Commitment is in existence.
(a) FINANCIAL STATEMENTS AND REPORTS. Borrower shall promptly
furnish to the Bank from time to time upon request such information
regarding the business and affairs and financial condition of the Borrower,
as the Bank may reasonably request, and will furnish to the Bank:
(i) ANNUAL FINANCIAL STATEMENTS - as soon as available, and in
any event within one hundred twenty (120) days after the close of each
fiscal year, the annual Financial Statements of Borrower and each
Guarantor;
-12-
(ii) QUARTERLY FINANCIAL STATEMENTS - as soon as available, and
in any event within sixty (60) days after the end of each calendar
quarter of each year (except the last calendar quarter in any fiscal
year), the quarterly unaudited Financial Statements of Borrower,
General Partner and Clajon Holding Corporation;
(iii) ADDITIONAL INFORMATION - promptly upon request of the
Bank from time to time any additional financial information or other
information that the Bank may reasonably request.
All such information, reports, balance sheets and Financial Statements
referred to in Subsection 10(a) above shall be in such detail as the Bank
may reasonably request and shall be prepared in a manner consistent with
prior periods.
(b) CERTIFICATES OF COMPLIANCE. Concurrently with the furnishing of
the annual Financial Statements pursuant to Section 10(a)(i) hereof and
each of the quarterly Financial Statements pursuant to Section 10(a)(ii)
hereof, Borrower and each Guarantor will furnish or cause to be furnished
to the Bank separate certificates in the form of Exhibit "D" attached
hereto, signed by an authorized officer of the General Partner of Borrower
or by an authorized officer of the corporate Guarantors or by the
individual Guarantor, as the case may be, (i) stating that the Borrower or
such Guarantor, as the case may be, has fulfilled in all material respects
its obligations under the Note and the Security Instruments, including this
Agreement, and that all representations and warranties made herein and
therein by such party continue (except to the extent they relate solely to
an earlier date) to be true and correct in all material respects (or
specifying the nature of any change), or if an Event of Default has
occurred, specifying the Event of Default and the nature and status
thereof; (ii) to the extent requested from time to time by the Bank,
specifically affirming compliance of the Borrower or a Guarantor, as the
case may be, in all material respects with any of its representations
(except to the extent they relate solely to an earlier date) or obligations
under said instruments; (iii) setting forth the computation, in reasonable
detail as of the end of each period covered by such certificate, of
Borrower's ratio of Collateral Value to Total Outstandings; and (iv)
containing or accompanied by such financial or other details, information
and material as the Bank may reasonably request to evidence such
compliance.
(c) TAXES AND OTHER LIENS. The Borrower and each Guarantor will pay
and discharge promptly all taxes, assessments and governmental charges or
levies imposed upon Borrower or upon the income or any assets or property
of the Borrower and each Guarantor 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 and which could reasonably be expected to
result in a Material Adverse Effect; provided, however, that Borrower and
the Guarantors shall not 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, levy and execution thereon have been stayed and
continue to be stayed.
-13-
(d) COMPLIANCE WITH LAWS. Borrower and each Guarantor will observe
and comply, in all material respects, 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.
(e) FURTHER ASSURANCES. Borrower will cure promptly any defects in
the creation and issuance of the Note and Borrower and the Guarantors will
cure any defect in the execution and delivery of the Note and the Security
Instrument, including this Agreement. Borrower at its sole expense will
promptly execute and deliver to Bank upon its reasonable 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 Note or more fully to state the obligations
set out herein.
(f) PERFORMANCE OF OBLIGATIONS. Borrower will pay the Note and other
obligations incurred by it hereunder according to the reading, tenor and
effect thereof and hereof; and Borrower and each Guarantor will do and
perform every act and discharge all of the obligations provided to be
performed and discharged by Borrower under the Security Instrument,
including this Agreement, at the time or times and in the manner specified.
(g) INSURANCE. Borrower and each Guarantor now maintains and will
continue to maintain insurance with financially sound and reputable
insurers with respect to its material assets against such liabilities,
fires, casualties, risks and contingencies and in such types and amounts as
is customary in the case of persons similarly situated. Upon request of
the Bank, Borrower will furnish or cause to be furnished to the Bank from
time to time a summary of the respective insurance coverage of Borrower and
each Guarantor in form and substance satisfactory to the Bank, and, if
requested, will furnish the Bank copies of the applicable policies.
(h) ACCOUNTS AND RECORDS. Borrower and each 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 its business and
activities, prepared in a manner consistent with prior years.
(i) RIGHT OF INSPECTION. Borrower and each Guarantor will permit any
officer, employee or agent of the Bank to examine Borrower's and each
Guarantor's books, records and accounts, and take copies and extracts
therefrom, all at such reasonable times during normal business hours and as
often as the Bank may reasonably request. The Bank will 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 Bank's 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 or
as otherwise required by law or in connection with the
-14-
enforcement of the Bank's rights and remedies and this Agreement, the Note
and the Security Instruments.
(j) NOTICE OF CERTAIN EVENTS. Borrower shall promptly notify the
Bank if Borrower learns of the occurrence of (i) any event which
constitutes 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 the Borrower, or any of
the assets or properties of the Borrower which, if adversely determined,
could have a Material Adverse Effect; or (iii) any dispute between the
Borrower and any governmental or regulatory body or any other person or
entity which, if adversely determined, could cause a Material Adverse
Effect; or (iv) any other matter which in Borrower's reasonable opinion
could have a Material Adverse Effect.
(k) CHANGE OF PRINCIPAL PLACE OF BUSINESS. Borrower shall give Bank
at least thirty (30) days prior written notice of its intention to move its
principal residence from the address set forth in Section 8(o) hereof;
(l) ENVIRONMENTAL REPORTS AND NOTICES. Borrower will deliver to the
Bank (i) promptly upon its becoming available, one copy of each report sent
by the Borrower to any court, governmental agency or instrumentality
pursuant to any Environmental Law, (ii) notice, in writing, promptly upon
Borrower's learning that it has 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 is reasonably expected to have a Material Adverse
Effect or which release Borrower would have a duty to report to any court
or government agency or instrumentality, or (iii) the existence of any
Environmental Lien on any properties or assets of the Borrower, and
Borrower shall immediately deliver a copy of any such notice to Bank;
(m) TITLE MATTERS. As to any oil and gas properties hereinafter
mortgaged to Bank by Borrower pursuant to the provisions of Section 12(h)
hereof Borrower will promptly (but in no event more than 120 days following
such pledges, furnish Bank with title opinions reasonably satisfactory to
Bank, showing good and defensible title of the Borrower to such oil and gas
properties subject only to Permitted Liens.
11. NEGATIVE COVENANTS. A deviation from the provisions of this
Section 11 shall not constitute an Event of Default under this Agreement if such
deviation is consented to in writing by the Bank. Without the prior written
consent of the Bank, Borrower will at all times comply with the covenants
contained in this Section 11 from the date hereof and for so long as any part of
the Revolving Loan Commitment is in existence.
(a) LIENS. Borrower will not create, incur, assume or permit to
exist any lien, security interest or other encumbrance on any of its assets
or properties except for Permitted Liens.
-15-
(b) MERGERS AND CONSOLIDATIONS. Neither Borrower nor any Guarantor
will consolidate or merge with or into any other Person, except that the
Borrower and the Guarantors may merge with another Person if the Borrower
or such Guarantor is the entity surviving such merger, and if, after giving
effect thereto, no Event of Default shall have occurred as a result
thereof.
(c) DISTRIBUTIONS. Borrower will not declare or pay any distribution
to its partners as such if an Event of Default shall have occurred and be
continuing or would occur as a result thereof.
(d) LOANS AND ADVANCES. Borrower shall not make or allow to remain
outstanding any loans or advances to any Person or entity, except the
foregoing restrictions shall not apply to loans or advances to Affiliates
of Borrower; provided, however, that no such loans or advances to
Affiliates shall be made if an Event of Default shall have occurred and be
continuing or would occur as a result thereof.
(e) DEBTS, GUARANTIES AND OTHER OBLIGATIONS. Borrower will not
incur, create, assume or in any manner become or be liable in respect of
any indebtedness, nor will the Borrower 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 Note, or other indebtedness of Borrower heretofore
disclosed to Bank on Schedule "3" 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 levy and execution
thereon have been stayed and continue to be stayed;
(iii) unsecured intercompany indebtedness owed by Borrower to
any of its Affiliates; or
(iv) renewals and extensions of any or all of the foregoing.
(f) SALE OF ASSETS. Borrower will not sell, transfer or otherwise
dispose of any of its unpledged CWEI Common Stock or any of its oil, gas
and mineral properties and interests without the prior written consent of
the Bank other than (i) sales of oil and gas production in the ordinary
course of business, and (ii) sales or other dispositions of obsolete
equipment which are no longer need for the ordinary business of Borrower or
which are being replaced by equipment of at least comparable value and
utility. If and as any of such Collateral or other properties and
interests are sold, conveyed or assigned
-16-
during the term of the Revolving Loan Commitment, Borrower will pay over
100% of the proceeds received net of any superior lien indebtedness or
taxes related thereto.
(g) TRANSACTIONS WITH AFFILIATES. The Borrower will not enter into
any transaction with any of its Affiliates, except transactions upon terms
no less favorable to it than would be obtained in a transaction negotiated
at arm's length with a unrelated third party.
(h) COMPLIANCE WITH REGULATION. Neither Borrower nor any person
acting on Borrower's behalf has taken nor will they take any action which
might cause this Agreement or any other Loan Document to violate, and
Borrower will take all actions necessary to cause compliance with,
Regulations G, T, U and X of the Board of the Governors of the Federal
Reserve System and the Securities and Exchange Act of 1934, in each case as
now in effect or as the same may hereafter be in effect.
(i) AMENDMENT OF PARTNERSHIP AGREEMENT. Borrower shall not permit
any amendment to, or other alteration of, the Partnership Agreement.
12. 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, and the interest on, the Note or any fee or any other indebtedness of
Borrower incurred pursuant to this Agreement or any other Security
Instrument; or
(b) Any representation or warranty made by Borrower or any Guarantor
under this Agreement, or in any certificate or statement furnished or made
to 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 any 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; or
(c) Default shall be made in the due observance or performance of any
of the covenants or agreements of the Borrower contained in the Security
Instruments, including this Agreement (excluding covenants contained in
Section 11 of the Agreement for which there is a ten (10) day cure period),
and such default shall continue for more than thirty (30) days after
written notice thereof from Bank to Borrower; or
(d) Default shall be made in respect of any obligation for borrowed
money, other than the Note, for which the Borrower or any Guarantor is
liable (directly, by assumption, as guarantor or otherwise), or any
obligations secured by any mortgage, pledge or other security interest,
lien, charge or encumbrance with respect thereto, on any
-17-
asset or property of the Borrower 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) Either Borrower or any Guarantor or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy, Inc.
shall commence a voluntary case or other proceedings seeking liquidation,
reorganization or other relief with respect to itself or its 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 its 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 it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or
shall take any corporate action or authorizing the foregoing; or
(f) An involuntary case or other proceeding, shall be commenced
against the Borrower, any Guarantor or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy, Inc.
seeking liquidation, reorganization or other relief with respect to any
such party or them, 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 it or any substantial
part of its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of sixty (60) days, or an
order for relief shall be entered against the Borrower, any Guarantor or
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy, Inc. 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
$100,000.00 (or judgments or orders aggregating in excess of $100,000.00)
shall be rendered against the Borrower and such judgments or orders shall
continue unsatisfied and unstayed for a period of thirty (30) days; or
(h) The Collateral Value of the Collateral is at any time less than
200% of the Total Outstandings and such deficiency shall continue for more
than ten (10) days after notice thereof from Bank to Borrower, unless the
Borrower shall within such ten (10) day notice period either (i) prepay,
without premium or penalty, the principal amount of the Note in an amount
at least equal to such excess plus interest thereon to the date of such
prepayment, or (ii) pledge additional CWEI Common Stock with a value
satisfactory to Bank in its sole discretion in order to increase the
Borrowing Base by an amount at least equal to such excess (provided,
however, that the total number of shares of CWEI Common Stock pledged to
the Bank shall never exceed the lesser of (A) 700,000 shares or (B) 9.99%
of the issued and outstanding shares of such stock), or (iii) notify the
Bank of Borrower's intention to mortgage oil and gas properties or other
assets to cure such liens and receive from Bank, within such ten (10) day
notice period, the Bank's acceptance of the mortgaging of any oil and gas
properties proposed to be mortgaged, said consent to be to the mortgaging
thereof as well as to the value and quality of the oil and gas properties
proposed to be mortgaged and shall be in the sole discretion of the Bank,
and thereafter within thirty (30) days of such approval, by instruments
satisfactory in form and substance to Bank, provide the Bank with a first
and prior Lien (to the satisfaction
-18-
of the Bank) on such oil, gas and mineral properties and interests
(provided, however, that notwithstanding any of the foregoing, in the event
the Collateral Value of the Collateral is ever less than 125% of the
principal amount outstanding on the Note, the Bank shall not be required to
give such ten (10) days' notice, but may immediately sell the Collateral
and apply the proceeds thereof in accordance with the provisions of the
Security Instruments); or
(i) A Change of Control shall occur.
Upon occurrence of any Event of Default specified in Subsections 12(e) or
(f) hereof, the Revolving Loan Commitment shall terminate and the entire
principal amount due under the Note 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 Bank
may by notice to Borrower terminate the Revolving Loan Commitment and declare
the principal of, and all interest then accrued on, the Note 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 Note to the contrary notwithstanding. Nothing
contained in this Section 12 shall be construed to limit or amend in any way the
Events of Default enumerated in the Note, 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
Bank is 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 either of
the Bank to or for the credit or the account of the Borrower against any and all
of the indebtedness of the Borrower under the Note and the Security Instrument,
including this Agreement, irrespective of whether or not the Bank shall have
made any demand under the Security Instrument, including this Agreement or the
Note and although such indebtedness may be unmatured. Any amount set-off by the
Bank shall be applied against the indebtedness owed the Bank by Borrower
pursuant to this Agreement and the Note. The Bank agrees promptly to notify
Borrower after any such setoff 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 Bank under this Section 12 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the Bank
may have. Within five (5) Business Days after any such set-off or appropriation
by the Bank, the Bank shall give Borrower written notice thereof. However, a
failure to give such notice will not affect the validity of the set-off or
appropriation.
13. EXERCISE OF RIGHTS. No failure to exercise, and no delay in
exercising, on the part of the Bank, 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. The
rights of the Bank hereunder shall be in addition to all other rights provided
by law. No modification or waiver of any provision of the Security Agreement,
including this Agreement,
-19-
or the Note 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.
14. NOTICES. Any notices or other communications required or permitted to
be given by this Agreement or any other documents and instruments referred to
herein must be given in writing (which may be by facsimile transmission) and
must be personally delivered or mailed by prepaid certified or registered mail
to the party to whom such notice or communication is directed at the address of
such party as follows: (a) BORROWER: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ PARTNERSHIP,LTD., c/o
CWPLCO, Inc., its general partner, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇; Attention: L. ▇▇▇▇ ▇▇▇▇▇▇, Vice President; Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇;
(b) BANK: BANK ONE, TEXAS, N.A., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President. Any
such notice or other communication shall be deemed to have been given (whether
actually received or not) on the day it is personally 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 party pursuant to this Section 14.
15. EXPENSES. The Borrower shall pay (i) all reasonable and necessary
out-of- pocket expenses of the Bank, including reasonable fees and disbursements
of special counsel for the Bank, 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 Bank, including
reasonable fees and disbursements of special counsel for the Bank in connection
with the preparation of any participation agreement for a participant or
participants requested by 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 Bank, 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 shall indemnify
the Bank against any transfer taxes, document taxes, assessments or charges made
by any governmental authority by reason of the execution and delivery of this
Agreement or the Note.
16. INDEMNITY. The Borrower agree to indemnify and hold harmless the Bank
and its 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
Bank, including all local counsel hired by such counsel) ("Claim") incurred by
the Bank 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, 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,
-20-
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; provided, however, such indemnity shall not apply
to a violation by Bank of any state or federal securities law. The indemnity set
forth herein shall be in addition to any other obligations or liabilities of the
Borrower to the Bank 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 Borrower to the Bank hereunder and under the Note,
provided that the Borrower shall have no obligation under this Section 16 to the
Bank with respect to any of the foregoing arising out of the gross negligence or
willful misconduct of the Bank. If any Claim is asserted against any
Indemnified Party, the Indemnified Party shall endeavor to notify the Borrower
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 Borrower's expense,
counsel of the Indemnified Parties' choosing and to control the defense of the
Claim. The Borrower 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 16 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.
17. 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.
18. INVALID PROVISIONS. If any provision of this Agreement is held to be
legal, 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 legal, 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 legal, invalid or unenforceable provision or by its
severance from this Agreement.
19. MAXIMUM INTEREST RATE. Regardless of any provisions contained in this
Agreement or in any other documents and instruments referred to herein, the Bank
shall never be deemed to have contracted for or be entitled to receive, collect
or apply as interest on the Note any amount in excess of the maximum rate of
interest permitted to be charged by applicable law, and in the event the Bank
ever receives, collects or applies as interest any such excess, or if
acceleration of the maturities of the Note 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 Note for which such excess was received,
collected or applied, and, if the principal balance of such Note is paid in
full, any remaining excess shall forthwith be paid to Borrower. All sums paid
or agreed to
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be paid to the Bank for the use, forbearance or detention of the indebtedness
evidenced by the Note 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 lawful rate
permitted under applicable law. In determining whether or not the interest paid
or payable under any specific contingency exceeds the maximum rate of interest
permitted by law, Borrower and the Bank 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 Note at the maximum lawful rate under applicable law.
20. 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.
21. 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.
22. 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.
23. SURVIVAL. All covenants, agreements, undertakings, representations
and warranties made in the Security Instrument, including this Agreement, the
Note or other documents and instruments referred to herein shall survive all
closings hereunder and shall not be affected by any investigation made by any
party.
24. 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 Bank, assign any rights, powers, duties
or obligations hereunder.
25. PARTICIPATIONS. The Bank shall have the right at any time and from
time to time, with the consent of the Borrower, to sell one or more
participations in the Note or any Advance thereunder. Provided, however, that
no such consent shall be required to sell or assign a participation to a bank or
other entity wholly or substantially by Bank or its parent company. To the
extent of any such participation the provisions of this Agreement shall inure to
the benefit of, and be binding on, each participant, including, but not limited
to, any indemnity from Borrower to the Bank. The Borrower shall have no
obligation or liability to and no obligation to negotiate or confer with any
participant, and Borrower shall be entitled to treat the Bank as the sole owners
of the Note without regard to notice or actual knowledge of any such
participation Upon the occurrence of a default or an Event of Default, each
participant will have
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and is hereby granted the right to setoff against and to appropriate and apply
from time to time, without prior notice to the Borrower or any other party, any
such notice being hereby expressly Waived) any and all deposits (general or
special or other indebtedness or claims, direct or indirect contingent or
otherwise), at any time held or owing by the participant to or for the credit or
account of Borrower against the payment of the note and any other obligations of
the Borrower hereunder, provided, however, none of the rights granted in this
Section 25 shall apply to any deposits held by any participant constituting
trust funds and so identified to such participant at the time the applicable
deposit account is created Within five (5) Business Days after such setoff or
appropriation by a participant, that participant shall give Borrower and Bank
written notice thereof. However, a failure to give such notice will not affect
the validity of this setoff or appropriation.
26. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BORROWER:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ PARTNERSHIP, LTD.
a Texas limited partnership
By: CWPLCO, Inc., its general partner
By: /s/ L. ▇▇▇▇ ▇▇▇▇▇▇
_____________________________________
L. ▇▇▇▇ ▇▇▇▇▇▇, Vice President
BANK:
BANK ONE, TEXAS, N.A.
a national banking association
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
__________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
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