EXHIBIT 10.1
Seventh Restated Loan Agreement dated as of December 1, 1999, among Xxxxxxx
Xxxxxxxx Energy, Inc., Warrior Gas Co., CWEI Acquisitions, Inc., Bank One,
Texas, N.A. and Union Bank of California, N.A.
SEVENTH RESTATED LOAN AGREEMENT
AMONG
XXXXXXX XXXXXXXX ENERGY, INC.,
WARRIOR GAS CO.,
CWEI ACQUISITIONS, INC.,
BANK ONE, TEXAS, N.A.
AND UNION BANK OF CALIFORNIA, N.A.
DECEMBER 1, 1999
TABLE OF CONTENTS
Page
1. Definitions. ............................................................1
2. Commitments of the Banks..................................................9
(a) Terms of Revolving Commitment...................................9
(b) Letters of Credit..............................................10
(c) Procedure for Advances on the Revolving Loan...................11
(d) Procedure for Obtaining Letters of Credit......................12
(e) Several Obligations............................................12
3. Notes Evidencing Loans...................................................12
(a) Form of Revolving Notes .......................................12
(b) Interest Rates ................................................13
(c) Payment of Interest ...........................................13
(d) Payment of Principal ..........................................13
(e) Issuance of Additional Notes ..................................13
4. Interest Rates...........................................................13
(a) Options........................................................13
(b) Interest Rate Determination....................................14
(c) Conversion Option..............................................14
(d) Recoupment.....................................................14
5. Special Provisions Relating to Eurodollar Loans..........................15
(a) Unavailability of Funds or Inadequacy of Pricing...............15
(b) Reserve Requirements...........................................15
(c) Taxes..........................................................16
(d) Change in Laws.................................................16
(e) Option to Fund.................................................16
(f) Indemnity......................................................17
6. Collateral Security......................................................17
7. Borrowing Base...........................................................18
(a) Initial Borrowing Base.........................................18
(b) Subsequent Determinations of Borrowing Base....................18
(c) Voluntary Decreases in Borrowing Base..........................18
(d) Monthly Commitment Reduction...................................19
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8. Fees.....................................................................19
(a) Unused Portion Fee.............................................19
(b) Borrowing Base Increase Fee....................................19
(c) Letter of Credit Fee...........................................19
(d) Agency Fee.....................................................19
9. Prepayments..............................................................19
(a) Voluntary Prepayments..........................................19
(b) Mandatory Prepayment...........................................20
10. Representations and Warranties. .........................................20
(a) Creation and Existence.........................................20
(b) Power and Authorization........................................21
(c) Binding Obligations............................................21
(d) No Legal Bar or Resultant Lien.................................21
(e) No Consent.....................................................21
(f) Financial Condition............................................21
(g) Liabilities....................................................21
(h) Litigation.....................................................22
(i) Taxes; Governmental Charges....................................22
(j) Titles, Etc....................................................22
(k) Defaults.......................................................22
(l) Casualties; Taking of Properties...............................22
(m) Use of Proceeds; Margin Stock..................................23
(n) Location of Business and Offices...............................23
(o) Compliance with the Law........................................23
(p) No Material Misstatements......................................23
(q) ERISA..........................................................23
(r) Public Utility Holding Company Act.............................24
(s) Environmental Matters..........................................24
(t) Guarantor......................................................24
(u) Year 2000 Compliance...........................................24
11. Conditions of Lending....................................................25
12. Affirmative Covenants....................................................26
(a) Financial Statements and Reports...............................27
(b) Certificates of Compliance.....................................28
(c) Taxes and Other Liens..........................................28
(d) Compliance with Laws...........................................29
(e) Further Assurances.............................................29
(f) Performance of Obligations.....................................29
(g) Insurance......................................................29
ii
(h) Accounts and Records...........................................30
(i) Right of Inspection............................................30
(j) Notice of Certain Events.......................................30
(k) ERISA Information and Compliance...............................30
(l) Environmental Reports and Notices..............................31
(m) Maintenance....................................................31
(n) Title Matters..................................................31
(o) Curative Matters...............................................31
(p) Additional Collateral..........................................32
(q) Year 2000 Compatibility........................................32
13. Negative Covenants.......................................................32
(a) Liens..........................................................33
(b) Debts, Guaranties and Other Obligations........................33
(c) Current Ratio..................................................34
(d) Ratio of Cash Flow to Debt Service.............................34
(e) Limitation on Sale of Collateral...............................34
(f) Mergers and Consolidations.....................................34
(g) Use of Proceeds................................................35
(h) Loans or Advances..............................................35
(i) Hedging Transactions...........................................35
(j) Dividends......................................................35
(k) Investments....................................................35
(l) Change of Control..............................................36
(m) Minimum Tangible Net Worth.....................................36
14. Events of Default........................................................36
15. Exercise of Rights. .....................................................39
16. Notices..................................................................39
17. The Agent and the Banks..................................................39
(a) Appointment and Authorization..................................39
(b) Note Holders...................................................40
(c) Consultation with Counsel......................................40
(d) Documents......................................................40
(e) Resignation or Removal of Agent................................40
(f) Responsibility of Agent........................................40
(g) Independent Investigation......................................42
(h) Indemnification................................................42
(i) Benefit of Section 17..........................................43
(j) Pro Rata Treatment.............................................43
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(k) Interests of Banks.............................................43
(l) Failure By Any Bank to Provide Funds to Agent..................43
18. Expenses.................................................................44
19. Indemnity................................................................45
20. Governing Law............................................................45
21. Invalid Provisions.......................................................46
22. Maximum Interest Rate....................................................46
23. Amendments...............................................................46
24. Multiple Counterparts....................................................46
25. Conflict.................................................................46
26. Survival.................................................................46
27. Parties Bound............................................................47
28. Assignments and Participations...........................................47
29. Waiver of Jury Trial.....................................................48
30. Other Agreements.........................................................49
31. Written Consent..........................................................49
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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
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SEVENTH RESTATED LOAN AGREEMENT
THIS SEVENTH RESTATED LOAN AGREEMENT (hereinafter referred to as the
"Agreement") executed as of the 1st day of December, 1999, by and among XXXXXXX
XXXXXXXX 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, TEXAS, N.A., a
national banking association ("Bank One") and UNION BANK OF CALIFORNIA, N.A., a
national banking association ("Union") (Bank One and Union 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 July 16, 1998, Borrower, Bank One, Paribas and Union
entered into a Sixth 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 Sixth Restated Loan Agreement, a Second Amendment to Sixth Restated
Loan Agreement and a Third Amendment to Sixth Restated Loan Agreement;
WHEREAS, Bank One and Union have acquired all of the interests of other
Banks, including Paribas, in the Loan Agreement and the rights and obligations
arising thereunder;
WHEREAS, Borrower, Bank One and Union have agreed to renew, extend, amend
and restate the Sixth 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", "Banks", "Borrower", "Guarantor" and "Union" 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) Borrowing Base - 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.
(c) Borrowing Base Deficiency - The term "Borrowing Base Deficiency"
is used herein as defined in Section 9(b) hereof.
(d) Borrowing Date - 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.
(e) Business Day - The normal banking hours during any day (other
than Saturdays or Sundays) that banks are legally open for business in
Dallas, Texas.
(f) Cash Flow - The Xxxxxxxx Consolidated Entities' cash flow from
operations before working capital changes, excluding cash flow
attributable to Vendor Financing, calculated in accordance with GAAP for
the fiscal quarter being measured.
(g) Collateral - The term "Collateral" is used herein as defined in
Section 6 hereof.
(h) Commitment Percentage - The percentage of the Revolving
Commitment that each Bank is severally obligated to fund hereunder, which,
as of the date of this Agreement is:
BANK ONE, TEXAS, N.A. 55%
UNION BANK OF CALIFORNIA, N.A. 45%
(i) Current Assets - The sum of the Xxxxxxxx Consolidated Entities'
current assets, determined in accordance with GAAP, plus any unused
portion of the Elected Borrowing Limit and less any current assets
attributable to Vendor Financing transactions.
(j) Current Liabilities - The total of the Xxxxxxxx Consolidated
Entities' current liabilities, determined in accordance with GAAP,
excluding therefrom (i) trade and revenue payables arising from Vendor
Financings, and (ii) current maturities outstanding under the Notes.
(k) Debt Service - At the end of each fiscal quarter, the sum of (i)
the current portion of all notes payable as defined by GAAP (excluding
amounts outstanding on the Revolving Commitment), plus (ii) the average
Revolving Commitment during such quarter divided by twenty (20), plus
(iii) the sum of all amounts paid or payable by Borrower during such
fiscal quarter as a result of its election made pursuant to Section
9(b)(C) hereof.
(l) Effective Date - The date of this Agreement.
(m) Elected Borrowing Limit - The term "Elected Borrowing Limit" is
used herein as defined in Section 7(c) hereof.
(n) Engineered Value - The term "Engineered Value" is used herein as
defined in Section 12(p) hereof.
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(o) 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., and all other
laws relating to air pollution, water pollution, noise control and/or the
handling, discharge, disposal or recovery of on-site or off-site
hazardous substances or materials, as each of the foregoing may be
amended from time to time.
(p) 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) which would individually or in the aggregate have a
Material Adverse Effect.
(q) Environmental Lien - A Lien in favor of any court, governmental
agency or instrumentality or any other person (i) for any liability under
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.
(r) ERISA - The Employee Retirement Income Security Act of 1974, as
amended.
(s) Eurodollar Business Day - A Business Day on which dealings in
U.S. Dollar deposits are carried on in the London interbank market.
(t) Eurodollar Interest Period - With respect to any Eurodollar Loan
(i) initially, the period commencing on the date such Eurodollar Loan is
made and ending thirty (30), sixty (60), ninety (90), one hundred twenty
(120) or one hundred eighty (180) days 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 thirty (30),
sixty (60), ninety (90), one hundred twenty (120) or one hundred eighty
(180) days thereafter, as selected by the Borrower pursuant to Section
4(a)(ii); provided, however, that (i) if any Eurodollar Interest Period
would otherwise expire on a day which is not a Eurodollar Business Day,
such Interest Period shall expire on the next succeeding Eurodollar
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 Eurodollar Business Day,
(ii) if any Eurodollar Interest Period begins on the last Eurodollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the
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calendar month at the end of such Interest Period) such Interest Period
shall end on the last Eurodollar Business Day of a calendar month, and
(iii) any Eurodollar Interest Period which would otherwise expire after
the Maturity Date shall end on such Maturity Date.
(u) Eurodollar Loan - 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.
(v) Eurodollar Margin - The fluctuating Eurodollar Margin in effect
from day to day shall be:
(i) two and one-half percent (2.50%) per annum whenever the
Total Outstandings are greater than 75% of the Elected Borrowing
Limit in effect at the time in question;
(ii) two and one-quarter percent (2.25%) 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) two percent (2%) 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 three-quarters percent (1.75%), whenever the
Total Outstandings are 25% or less of the Elected Borrowing Limit in
effect at the time in question.
(w) Eurodollar Rate - With respect to each Eurodollar 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 Eurodollar
Business Days prior to the first day of each Eurodollar Interest Period)
in the London interbank market for delivery on the first day of such
Eurodollar Interest Period in an amount equal to or comparable to the
principal amount of the Eurodollar Loan to which such Eurodollar Interest
Period relates. Each determination of the Eurodollar Rate by the Agent
shall, in the absence of error, be conclusive and binding.
(x) Event of Default - The term "Event of Default" is used herein as
defined in Section 14 hereof.
(y) Financial Statements - The Xxxxxxxx Consolidated Entities'
consolidated balance sheets, income statements and statements of cash flow
prepared in accordance with GAAP.
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(z) GAAP - Generally accepted accounting principles, consistently
applied.
(aa) Good and Defensible Title - 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 prudent purchaser in the area where the
Collateral 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.
(bb) Hedging Transactions - Any contract, agreement or transaction
for the hedging or forward sale of crude oil and/or natural gas including
but not limited to transactions involving swaps, caps, collars, floors and
futures transactions.
(cc) Interest Payment Date - The earlier of (i) the last day of each
Interest Period or (ii) the last day of each calendar quarter.
(dd) Interest Period - Any Prime Rate Interest Period, or Eurodollar
Interest Period.
(ee) Letters of Credit - The term "Letters of Credit" is used herein
as defined in Section 2(c) hereof.
(ff) Lien - Any mortgage, deed of trust, pledge, security interest,
assignment, encumbrance or lien (statutory or otherwise) of every kind and
character.
(gg) Loan Documents - This Agreement, the Note, the Security
Instruments and all other documents executed in connection with the
transaction described in this Agreement.
(hh) Majority Xxxxx - Xxxxx holding at least 100% ownership of the
Revolving Commitment which shall include the Agent.
(ii) Material Adverse Effect - 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.
(jj) Maturity Date - July 31, 2001.
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(kk) Maximum Rate - 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.
(ll) Monthly Commitment Reduction - The term "Monthly Commitment
Reduction" is used herein as defined in Section 7(d) hereof.
(mm) Negative Pledge Property - 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.
(nn) Net Income - The Xxxxxxxx Consolidated Entities' Net Income
determined in accordance with GAAP.
(oo) Notes - The Revolving Notes.
(pp) Notice of Borrowing - The term "Notice of Borrowing" is used
herein as defined in Section 2(d) hereof.
(qq) Oil and Gas Properties - 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.
(rr) Permitted Liens - The term Permitted Lien shall mean (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 or properties
to the extent not delinquent (or which, if delinquent, are being contested
in good faith by appropriate
6
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
Exhibit "C" hereto; (xii) liens arising from indebtedness incurred by
Borrower or Guarantor, which indebtedness is described in Section 13(b);
and (xiii) Liens securing the Subordinated Debt. 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.
(ss) 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.
(tt) Plan - 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.
(uu) Prime Rate - The fluctuating rate of interest per annum
established from time to time by Bank One as its Prime Rate (which rate of
interest may not be the lowest, best or most favorable rate of interest
which Bank One may charge on loans to its customers). Each change in the
Prime Rate shall become effective without prior notice to Borrower
automatically as of the opening of business on the date of such change in
the Prime Rate.
(vv) Prime Rate Interest Period - With respect to any Advance on the
Revolving Loan which is a Prime Rate Loan, the period ending on the last
Business Day of each month; provided, however, that (A) if any Prime Rate
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business
7
Day, and (B) if any Prime Rate Interest Period would otherwise end after
the Maturity Date such Interest Period shall end on the Maturity Date.
(ww) Prime Rate Loans - Any loan during any period which bears
interest at the Prime Rate or which would bear interest at the Prime Rate
if the Maximum Rate ceiling was not in effect at that particular time.
(xx) Prime Rate Margin - The fluctuating Prime 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.
(yy) Release Price - The term "Release Price" is used herein as
defined in Section 13(e) hereof.
(zz) Revolving Commitment - 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.
(aaa) Revolving Loan - Loan or loans made under the Revolving
Commitment pursuant to Section 2(a) hereof.
(bbb) Revolving Notes - The $55,000,000 Renewal Revolving Note,
dated the Effective Date, payable to Bank One and the $45,000,000 Renewal
Revolving Note, dated the Effective Date, payable to Union.
(ccc) Security Instruments - The term Security Instruments is used
collectively herein to mean this Agreement, all Deeds of Trust, Mortgages,
Security Agreements and
8
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.
(ddd) Subsidiaries - Warrior, Clajon Industrial Gas, Inc.,
Guarantor, Xxxxxxx Xxxxxxxx Venezuela, Inc., Xxxxxxx Xxxxxxxx Trading
Company, Xxxxxxx Xxxxxxxx Midland, Inc. 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.
(eee) Tangible Net Worth - An amount equal to the total
shareholder's equity shown on the consolidated balance sheet of the
Xxxxxxxx Consolidated Entities, less all intangible assets including, but
not limited to, good will, all as determined in accordance with GAAP.
(fff) Total Outstandings - As of any date, the total principal
balance outstanding on the Notes plus the total face value of all
outstanding Letters of Credit.
(ggg) Unused Portion Fee - The term "Unused Portion Fee" is used
herein as defined in Section 8(a) hereof.
(hhh) Vendor Financings - Non-recourse vendor financings by CWE or
its Subsidiaries for services, equipment or materials on other than
customary trade payable terms.
(iii) Xxxxxxxx Consolidated Entities - 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. 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
9
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 Prime Rate Loans or Eurodollar
Loans; provided, however, that Borrower shall not have the option to elect
a Eurodollar Loan at any time when less than $5,000,000 in Prime Rate
Loans are outstanding. 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 incurred by
Agent, as
10
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 Prime Rate Loans; and (ii) three (3)
Eurodollar 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, if a Prime Rate Loan shall be a Business Day, and
if a Eurodollar Loan, a Eurodollar Business Day), (ii) the principal
amount to be borrowed, (iii) the portion of the borrowing constituting
Prime 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 0000 Xxxx
Xxxxxx, Xxxxxx, Xxxxx 00000, 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.
11
(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 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 two Revolving Notes in the total amount of $100,000,000, one in the
amount of $55,000,000 payable to Bank One and one in the amount of
$45,000,000 payable to Union, each 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.
12
(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.
(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 two Revolving Notes, one in the face amount of $55,000,000,
payable to the order of Bank One and one in the face amount of
$45,000,000, payable to the order of Union. 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.
4. Interest Rates.
(a) Options.
(i) Prime Rate Loans. On Prime 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 Prime 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 sum of the Prime Rate plus the Prime Rate Margin.
Subject to the provisions of this Agreement as to prepayment,
the principal of the Notes representing Prime Rate Loans shall
be payable as specified in Section 3(d) hereof, the interest
in respect of each Prime 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 Prime
Rate Loan, shall bear interest, payable on demand, at a rate
per annum equal to the Maximum Rate.
13
(ii) Eurodollar Loans. On 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) sum of
the Eurodollar Rate plus the Eurodollar Margin. Interest with
respect to each Eurodollar Loan shall be payable on each
Interest Payment Date. Upon three (3) Eurodollar 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 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 30, 60, 90, 120
or 180 day 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 Prime 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 Prime 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 Prime Rate Loans to Eurodollar Loans by giving the Agent
irrevocable written notice of such election three (3) Eurodollar 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 Eurodollar Business Day or a Business Day, as the case may be, on the
next succeeding Eurodollar Business Day or Business Day, as the case may
be. 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
14
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, Agent (i) shall
have determined that U.S. Dollar deposits of the relevant amount and for
the relevant Eurodollar Interest Period for Eurodollar Loans are not
available to Agent in the London interbank market; or (ii) in good faith
determines that the Eurodollar Interest Rate will not adequately reflect
the cost to the Banks of maintaining or funding the Eurodollar Loans for
such Interest Period, the obligations of the Banks to make the Eurodollar
Loans, as the case may be, shall be suspended until such time as Agent in
its sole discretion reasonably exercised determines that the event
resulting in such suspension has ceased to exist. If Agent shall make such
determination it shall promptly notify Borrower in writing and Borrower
shall either repay the outstanding Eurodollar Loans, as the case may be,
owed to Banks, without penalty, on the last day of the current Interest
Period or convert the same to Prime Rate Loans in the case of Eurodollar
Loans on the last day of the then current Interest Period for such
Eurodollar Loan.
(b) Reserve Requirements. In the event of any change in any
applicable law, treaty or regulation or in the interpretation or
administration thereof, or in the event any central bank or other fiscal
monetary or other authority having jurisdiction over the Banks or the
loans contemplated by this Agreement shall impose, modify or deem
applicable any reserve requirement of the Board of Governors of the
Federal Reserve System on any Eurodollar Loan or loans, or any other
reserve, special deposit, or some requirements against assets to, deposits
with or for the account of, or credit extended by, the Banks or shall
impose on the Banks or the London interbank market, as the case may be,
any other condition affecting this Agreement or the Eurodollar Loans and
the result of any of the foregoing is to increase the cost to the Banks in
making or maintaining its Eurodollar Loans or to reduce any amount (or the
effective return on any amount) received by the Banks hereunder, then
Borrower shall pay to the Banks upon demand of the Banks as additional
interest on the Revolving Notes evidencing the Eurodollar Loans such
additional amount or amounts as will reimburse the Banks for such
additional cost or such reduction. The Banks shall give notice to Borrower
upon becoming aware of any such change or imposition which may result in
any such increase or reduction. A certificate of any Bank setting forth
the basis for the determination of such amount necessary to compensate
Banks as aforesaid shall be delivered to Borrower and shall be conclusive
as to such determination and such amount, absent error.
15
(c) Taxes. Both principal and interest on the Revolving Notes
evidencing the Eurodollar Loans are payable without withholding or
deduction for or on account of any taxes. If any taxes are levied or
imposed on or with respect to the Revolving Notes evidencing the
Eurodollar Loans or on any payment on the Revolving Notes evidencing the
Eurodollar Loans made to the Banks, then, and in any such event, Borrower
shall pay to the Banks upon demand of the Banks such additional amounts as
may be necessary so that every net payment of principal and interest on
the Revolving Notes evidencing the Eurodollar Loans, after withholding or
deduction for or on account of any such taxes, will not be less than any
amount provided for herein. In addition, if at any time when the
Eurodollar Loans are outstanding any laws enacted or promulgated, or any
court of law or governmental agency interprets or administers any law,
which, in any such case, materially changes the basis of taxation of
payments to the Banks of principal of or interest on the Revolving Notes
evidencing the Eurodollar Loans by reason of subjecting such payments to
double taxation or otherwise (except through an increase in the rate of
tax on the overall net income of Banks) then Borrower will pay the amount
of loss to the extent that such loss is caused by such a change. The Banks
shall give notice to Borrower upon becoming aware of the amount of any
loss incurred by the Banks through enactment or promulgation of any such
lawwhich materially changes the basis of taxation of payments to the
Banks. The Banks shall also give notice on becoming aware of any such
enactment or promulgation which may result in such payments becoming
subject to double taxation or otherwise. A certificate of any Bank setting
forth the basis for the determination of such loss and the computation of
such amounts shall be delivered to Borrower and shall be conclusive of
such determination and such amount, absent error.
(d) 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 the Banks to maintain or fund its Eurodollar Loans
hereunder, then the Banks shall promptly notify Borrower in writing and
Borrower shall either repay the outstanding Eurodollar Loans owed to the
Banks, without penalty, on the last day of the current Interest Periods
(or, if the Banks may not lawfully continue to maintain and fund such
Eurodollar Loans, immediately), or Borrower may convert such Eurodollar
Loans at such appropriate time to Prime Rate Loans.
(e) Option to Fund. The Banks shall have the option if the Borrower
elects a Eurodollar Loan, to purchase one or more deposits in order to
fund or maintain its funding of the principal balance of the Revolving
Notes to which such Eurodollar Loan is applicable during the Interest
Period in question; it being understood that the provisions of this
Agreement relating to such funding are included only for the purpose of
determining the rate of interest to be paid under such Eurodollar Loan and
any amounts owing hereunder and under the Revolving Notes. The Banks shall
be entitled to fund and maintain its funding of all or any part of that
portion of the principal balance of the Revolving Notes in any manner it
sees fit, but all such determinations hereunder shall be made as if the
Banks have actually funded and maintained that portion of the principal
balance of the Revolving Notes to which a Eurodollar Loan is applicable
during the applicable Interest Period through the purchase
16
of deposits in an amount equal to the principal balance of the Revolving
Notes to which such Eurodollar Loan is applicable and having a maturity
corresponding to such Interest Period. The Banks may fund the outstanding
principal balance of the Revolving Notes which is to be subject to any
Eurodollar Loan from any branch or office of the Banks as the Banks may
designate from time to time.
(f) Indemnity. Borrower shall indemnify and hold harmless the Banks
against all reasonable and necessary out-of-pocket costs and expenses
(which costs and expenses are not intended to include, without limitation,
any loss sustained by the Banks in connection with the borrowing or
reemployment of funds with respect to any Eurodollar Loan) which the Banks
may sustain (i) as a result of the making of any loan or loans as a
Eurodollar Loan, or (ii) as a consequence of any default by Borrower under
this Agreement.
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. 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.
17
7. Borrowing Base.
(a) Initial Borrowing Base. During the period from the date hereof
to the next determination date, the Borrowing Base shall be
$48,000,000.00.
(b) Subsequent Determinations of Borrowing Base.Subsequent
determinations of the Borrowing Base shall be made by Banks at least
semi-annually and 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 May 20, 2000, the same to be
effective as of each November 1 and May 1, commencing May 1, 2000, 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. 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 the Banks cannot otherwise agree on the Borrowing Base or
Monthly Commitment Reduction, each Bank will submit in writing to the
Agent its proposed Borrowing Base and Monthly Commitment Reduction and the
Borrowing Base and Monthly Commitment Reduction shall be set on the basis
of the lowest Borrowing Base and highest Monthly Commitment Reduction
proposed by any Bank. 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
18
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.
(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 November 30, 1999, 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 January 31, 2000. All amounts due under
Section 8(a) of the Sixth 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, 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.
19
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.
(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
20
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.
(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 Xxxxxxxx
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
Xxxxxxxx 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 Xxxxxxxx Consolidated Entities which is
reasonably expected to have a Material Adverse Effect, except as disclosed
to the Banks in Exhibit "C" 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 Exhibit "D"
attached hereto. No unusual or unduly burdensome restrictions, restraint,
or hazard exists by contract, law or governmental regulation or
21
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 Exhibit "E" 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 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 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, or has 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.
22
(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 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.
23
(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 Exhibit "F",
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 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.
(u) Year 2000 Compliance. Borrower represents and warrants to Banks
that:
(i) All devices, systems, machinery, information technology,
computer software and hardware, and other date sensitive technology
(jointly and severally the "Systems") necessary for Borrower to
carry on its business as presently conducted and as contemplated to
be conducted in the future are Year 2000 Compliant or will be Year
2000 Compliant within a period of time calculated to result in no
material disruption of any of Borrower's business operations. For
purposes of these provisions, "Year 2000 Compliant" means that such
Systems are designed to be used prior to, during and after the
Gregorian calendar year 2000 A.D. and will operate during each such
time period without error relating to date data, specifically
including any error relating to, or the product of, date data which
represents or references different centuries or more than one
century.
(ii) Borrower has: (A) undertaken an inventory, review, and
assessment of all areas within its business and operations that
could be adversely affected by the failure of Borrower to be Year
2000 Compliant on a timely basis; (B) developed a plan and time line
for becoming Year 2000 Compliant on a timely basis; (C) to date,
implemented that plan in accordance with that timetable in all
material respects.
(iii) Borrower has either made, or will make, written inquiry
of each of its material purchasers of its oil and gas, and has
obtained, or will obtain, in writing
24
confirmations from all such persons, as to whether such persons have
initiated programs to become Year 2000 Compliant and on the basis of
such confirmations. Borrower reasonably believes that all such
persons will be or become so compliant. For purposes hereof,
"material purchasers of oil and gas" refers to those purchasers of
oil and gas from Borrower whose business failure would, with
reasonable probability, result in a material adverse change in the
business, properties, condition (financial or otherwise), or
prospects of Borrower. For purposes of this paragraph, Bank, as a
lender of funds under the terms of this Agreement, confirms to
Borrower that Bank has initiated its own corporate-wide Year 2000
program with respect to its lending activities.
(iv) The fair market value of all Collateral pledged to Bank
to secure the Revolving Loan and the Notes and all of Borrower's
obligation hereunder is not and shall not be less than currently
anticipated or subject to deterioration in value because of the
failure of such Collateral to be Year 2000 Compliant.
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:
(i) 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;
(ii) 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;
(iii) 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;
(iv) No Event of Default. No Event of Default shall have
occurred and be continuing;
(v) No Material Adverse Change. No material adverse change in
the consolidated financial condition of the Borrower shall have
occurred;
25
(vi) 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
(vii) 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.
(b) 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:
(i) 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);
(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 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
(iv) 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
26
the Banks. Without the prior written consent of the 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.
(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 Xxxxxxxx Consolidated Entities, the
annual audited Financial Statements of the Xxxxxxxx Consolidated
Entities prepared Xxxxxx Xxxxxxxx, L.L.P. or by another independent
accounting firm satisfactory to 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 Xxxxxxxx
Consolidated Entities;
(iii) Reserve Reports on Oil and Gas Properties - no later
than November 1 of each year beginning November 1, 2000 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, 2000 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
Xxxxxxxxxx Petroleum Consultants, Inc. (or other reservoir
engineering firm satisfactory to 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
Banks 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 Xxxxxxxx
Consolidated Entities;
27
(v) Budgets and Projections. On each June 1 and December 1
Borrower shall furnish to Banks a budget and Cash Flow forecast for
the Xxxxxxxx Consolidated Entities prepared on a twelve (12) month
rolling forward basis with respect to their operations;
(vi) Monthly Hedging Report. Borrower shall furnish Banks,
within forty-five (45) days following the close of each month, a
report of Hedging Transactions, said information to be provided for
both the subject month and on an aggregate basis for all such
forward sales;
(vii) SEC Reports. As soon as available furnish Banks with
copies of all filings by the Xxxxxxxx Consolidated Entities with the
Securities and Exchange Commission; 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 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 Xxxxxxx
X. Xxxxxxxx Xx., 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
28
appropriate proceedings diligently conducted and if Borrower or Guarantor
shall have set up adequate reserves therefor, if required, under GAAP.
(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:
29
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 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 xxxxx 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.
30
(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 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
31
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 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.
(q) Year 2000 Compatibility. Borrower covenants and agrees with
Banks that it will:
(i) Furnish such additional information, statements and other
reports with respect to Borrower's activities, course of action and
progress towards becoming Year 2000 Compliant as Banks may
reasonably request from time to time;
(ii) In the event of any change in circumstances that causes
or will likely cause any of Borrower's representations and
warranties with respect to its being or becoming Year 2000 Compliant
to no longer be true (hereinafter, referred to as a "Change in
Circumstances") then Borrower shall promptly, and in any event
within ten (10) days of receipt of information regarding a Change in
Circumstances, provide Bank with written notice (the "Notice") that
describes in reasonable detail the Change in Circumstances and how
such Change in Circumstances caused or will likely cause Borrower's
representations and warranties with respect to being or becoming
Year 2000 Compliant no longer to be true. Borrower shall, within ten
(10) days of a request, also provide Banks with any additional
information Banks reasonably request of Borrower in connection with
the Notice and/or a Change in Circumstances;
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 the Banks. Without the prior written consent of
the 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.
32
(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 xxxxx;
(iv) Hedging Transactions;
(v) indebtedness owed by Non-Borrower Subsidiaries to Borrower
which is permitted hereunder;
(vi) Vendor Financing not to exceed $10,000,000 in the
aggregate at any one time outstanding;
(vii) guarantees by CWE of Vendor Financings of its
Subsidiaries, which guarantees shall never exceed $10,000,000 in the
aggregate at any one time outstanding;
(viii) intercompany indebtedness among Borrower and Guarantor;
or
33
(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 Xxxxxxxx
Consolidated Entities' ratio of Current Assets to Current Liabilities to
ever be less than 1.0 to 1.0 as of the end of any calendar quarter.
(d) Ratio of Cash Flow to Debt Service. The Borrower will not allow
the Xxxxxxxx Consolidated Entities' ratio of Net Cash Flow (less cash
distributions paid pursuant to Section 13(j) hereof) to Debt Service to
ever be less than 1.10 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, and (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. 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. 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. Provided, however, that
the Borrower and Guarantor may, without consent of Banks and Agent and
without prepaying the Notes, sell Negative Pledge Properties where the
sales proceeds from any such sale do not exceed $500,000 on an annual
basis.
(f) Mergers and Consolidations. Neither Borrower nor Guarantor will
merge or consolidate with any other entity or sell, assign, transfer or
otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of their assets or properties to
any person or entity.
(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.
34
(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) Hedging Transactions. The Xxxxxxxx Consolidated Entities shall
not enter into any Hedging Transactions (i) in amounts which exceed, in
the aggregate, 100% of the Xxxxxxxx Consolidated Entities' estimated
production from proved producing reserves existing as of the date of the
execution of such Hedging Transactions, or (ii) the terms and provisions
of which could require margin calls; or (iii) which are secured by any of
the Collateral or the Negative Pledge Property.
(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.
(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 Xxxx-Xxxxxx;
(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 Xxxx-Xxxxxx;
35
(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) Guarantor's initial investment of $425,000 in Xxxxxxx
Xxxxxxxx Acquisition Partnership, Ltd. ("Acquisition") and
additional investments in Acquisition equal to one percent (1%) of
all capital contributions made to Acquisition by its general and
limited partners, but only to the extent such contributions are
required by the partnership agreement of Acquisition, provided that
immediately before and after giving effect to such additional
investments no default or Event of Default shall exist.
(l) Change of Control. Borrower will not permit Xxxxxxx X. Xxxxxxxx,
Xx. 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.
(m) Minimum Tangible Net Worth. For each calendar quarter hereafter
during the remaining term of the Revolving Commitment, the Xxxxxxxx
Consolidated Entities' Tangible Net Worth shall never be less than
$40,000,000 plus an amount equal to 50% of the Xxxxxxxx Consolidated
Entities' Net Income (without reduction for losses) for each calendar
quarter ending after December 31, 1998 on a cumulative basis.
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 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,
36
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 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
37
(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 Instrument,
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. 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
38
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 Xxxxxxx Xxxxxxxx Energy, Inc., Xxx Xxxxx Xxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Attention: Xxxx Xxxxxx, Executive Vice
President, Facsimile No. (000) 000-0000; (b) AGENT: BANK ONE, TEXAS, N.A., 0000
Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, Attention: Wm. Xxxx Xxxxxxx, Vice President,
Facsimile No. (000) 000-0000; and (c) UNION: Union Bank of California, N.A., 000
X. Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention: Xxxx X. Xxxxx, Vice
President, Facsimile No. (000) 000-0000. 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.
39
(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
40
document referred to or provided for in, or received by any Bank under,
the Loan Documents, or for the value, validity, effectiveness,
genuineness, 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 (A) without the consent of all
Banks (i) amend the Loan Documents to (x) change the method of computing
interest so as to decrease the interest payable on the Notes, (y) increase
or decrease the principal amount of the Notes, (z) extend the Maturity
Date; or (ii) waive any default under the Loan Documents; or (iii) make a
redetermination of the Borrowing Base; or (iv) defer the date for payment
of principal interest or any fee; or (v) make any changes in the fees
payable hereunder (except the Agency fee which does not require the
consent of the Banks other than the Agent); or (vi) release any guaranty;
or (vii) make any change in the definition of Majority Banks; or (viii)
make any change in the number of Banks required to take any action under
this Agreement; or (ix) make any change in Sections 7(b), 13(e) or 13(n)
of this Agreement; and (B) without the consent of Majority Banks (i) make
any other amendment to the Loan Documents; or (ii) accelerate the
outstanding balance due on the Notes. Agent shall have the right and
authority without necessity of notice or liability to the Banks to release
Collateral, if 100% of the net proceeds from the sale of such Collateral,
after payment of superior lien indebtedness 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
41
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.
(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
42
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) 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 Borrower each recognize that the respective obligations
of Banks under the Revolving Commitment 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 this Agreement, including, without limitation, the Notes, liens and
security interests in the Collateral, fees and payments of principal and
interest by Borrower under the Revolving Commitment in the proportion that
each Banks' Commitment Percentage bears to the total of all of such loan
commitments of all Banks taken in the aggregate. Each Bank shall perform
all duties and obligations of Banks under this Agreement in the same
proportion as its ownership interest.
(l) Failure By Any Bank to Provide Funds to Agent.
(i) Unless a Bank has determined that in accordance with the
provisions of this Agreement it is not obligated to fund its share
of a borrowing hereunder prior to 1:00 p.m., Dallas, Texas time, on
the requested date of disbursement, Agent may assume that each Bank
has made its pro rata share of the Borrowing available to Agent on
such date and Agent may, in reliance upon such assumption (but shall
not be required to) make available to Borrower a corresponding
amount. If Agent has made such amount available to Borrower and if
such corresponding amount is not in fact made available to Agent by
any such Bank, Agent shall be entitled on demand to receive such
amount from such Bank (or if such Bank fails to pay such amount
forthwith upon demand, to recover such amount from Borrower)
together with interest thereon in respect of each day during the
period commencing on the date such amount was made available to
Borrower and ending on (but excluding) the date Agent recovers such
amount at the Prime Rate.
(ii) If any Bank shall fail or refuse to fund its pro rata
share of a requested disbursement for any reason (hereinafter called
the "Under-Funded Bank(s)") and other Bank or Banks fund their own
pro rata shares of such requested disbursement (hereinafter called
the "Fully-Funded Bank(s)") so
43
that Banks are out-of-balance to the extent of the unfunded share of
a requested advance (hereinafter called the "Out-of-Balance"), if
the refusal to fund by Under Funded Banks was:
(1) in accordance with the provisions of this Agreement,
then in lieu of the pro rata distribution of payments
thereafter received and collections thereafter made as
specified in Section 17(j) hereof, Agent is authorized and
directed by Banks to thereafter make distributions of such
payments and collections on account of the principal of and
interest on the Notes and fees paid by Borrower to Banks pro
rata on the basis of principal sums funded by each Bank under
the Revolving Commitment.
(2) not in accordance with the provisions of this
Agreement, then notwithstanding the provisions of Section
17(j) hereof and in addition to any other rights and remedies
which the Fully-Funded Bank(s) may have as against the
Under-Funded Bank(s), Agent shall as to subsequent payments or
recoveries (whether voluntary, involuntary, by application of
offset or otherwise) on account of principal of or interest on
the Notes, distribute first to the Fully-Funded Bank(s) (pro
rata if more than one Fully-Funded Bank) until any such
Out-of-Balance is discharged, then pro rata among all Banks in
accordance with Section 17(j).
18. Expenses. Borrower shall pay (i) all reasonable and necessary
out-of-pocket expenses of the Agent, including 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, and (ii) 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. Borrower shall indemnify the Banks
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 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, administrative proceeding or investigation
under any federal securities law, federal or state environmental law, or any
other statute
44
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.
45
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 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.
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.
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 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.
46
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,
and the 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, 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.
47
(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, 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.
48
30. 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.
31. Written Consent. The Guarantor is executing this Seventh Restated Loan
Agreement in its capacity as Guarantor for the purpose of acknowledging the
existence of the Seventh Restated Loan Agreement, consenting to the execution
thereof by the Borrower and reaffirming its guaranty of the obligations of
Borrower to Banks.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BORROWER:
XXXXXXX XXXXXXXX ENERGY, INC.
By: /s/ L. Xxxx Xxxxxx
----------------------------------------
L. Xxxx Xxxxxx, Executive Vice President
WARRIOR GAS CO.
By: /s/ L. Xxxx Xxxxxx
----------------------------------------
L. Xxxx Xxxxxx, Executive Vice President
GUARANTOR:
CWEI ACQUISITIONS, INC.
By: /s/ L. Xxxx Xxxxxx
----------------------------------------
L. Xxxx Xxxxxx, Executive Vice President
49
BANKS:
BANK ONE, TEXAS, N.A.,
a national banking association
By: /s/ Wm. Xxxx Xxxxxxx
----------------------------------------
Wm. Xxxx Xxxxxxx, Vice President
UNION BANK OF CALIFORNIA, N.A.
a national banking association
By:
----------------------------------------
Xxxx X. Xxxxx, Vice President
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
AGENT:
BANK ONE, TEXAS, N.A.,
a national banking association
By: /s/ Wm. Xxxx Xxxxxxx
----------------------------------------
Wm. Xxxx Xxxxxxx, Vice President
50
BANKS:
BANK ONE, TEXAS, N.A.,
a national banking association
By:
----------------------------------------
Wm. Xxxx Xxxxxxx, Vice President
UNION BANK OF CALIFORNIA, N.A.
a national banking association
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Xxxx X. Xxxxx, Vice President
By: /s/ Xxxx Shakerjian
----------------------------------------
Name: Xxxx Shakerjian
Title: Assistant Vice President
AGENT:
BANK ONE, TEXAS, N.A.,
a national banking association
By:
----------------------------------------
Wm. Xxxx Xxxxxxx, Vice President
50
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 Seventh Restated Loan Agreement, dated December
1, 1999, (as same may be amended, modified, increased, supplemented and/or
restated from time to time, the "Agreement") entered into among Borrower, Bank
One, Texas, N.A. and Union Bank of California, N.A. ("Banks"), and Bank One,
Texas, N.A. 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 _______________________,
19___. Immediately following such Advance, the aggregate outstanding
balance of Advances shall equal $____________________________.
(b) Type of Advance: [Prime Rate or Eurodollar Loan].
(c) Eurodollar Loan - Interest Period of _________ days.
(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 ___________________,
19___.
[Borrower]
-----------------------------------------
By: _____________________________________
Name: ___________________________________
Title: __________________________________
-2-
EXHIBIT "B"
RENEWAL REVOLVING NOTE
$_____________ Dallas, Texas December 1, 1999
FOR VALUE RECEIVED, the undersigned, Xxxxxxx Xxxxxxxx Energy, Inc., a
Delaware corporation and Warrior Gas Co., a Texas corporation (the "Borrowers")
hereby jointly and severally promise to pay to the order of ________________
(the "Payee"), at the offices of the Agent at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx
00000, or at such other place as the holder hereof may direct, in lawful money
of the United States of America, the principal amount of ____________________
AND 00/100 DOLLARS ($_____________), 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 Seventh Restated Loan Agreement, dated
as of even date herewith, entered into among Borrowers, Bank One, Texas, N.A.
("Bank One"), Union Bank of California, N.A. ("Union") 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:
XXXXXXX XXXXXXXX ENERGY, INC.
By:________________________________________
L. Xxxx Xxxxxx, Executive Vice President
WARRIOR GAS CO.
By:________________________________________
L. Xxxx Xxxxxx, Executive Vice President
-3-
EXHIBIT "C"
FINANCIAL CONDITION
NONE
-1-
EXHIBIT "D"
LIABILITIES
NONE
-2-
EXHIBIT "E"
LITIGATION
NONE
-3-
EXHIBIT "F"
ENVIRONMENTAL MATTERS
NONE
-4-
