Re: $3,000,000 Revolving Letter Loan Agreement
Gentlemen:
This revolving letter loan agreement (the "Agreement") is between Texas
Capital Bank, N .A., a national banking association (the "Lender"), and GultW
est Energy, Inc., a Texas corporation (the "Borrower") and amends, restates,
renews and replaces the $2,500,000 Revolving Letter Loan Agreement dated October
26, 2001, between the Borrower and the Lender (the "Prior Agreement"). Reference
is made to Schedule One hereto for certain of the terms used herein, which
Schedule is incorporated herein and made a part hereof. The Borrower and the
Lender hereby agree as follows:
SECTION 1. Commitment to Lend. Subj ect to the terms and conditions hereof
and if no Default exists, the Lender agrees to lend to the Borrower and have
outstanding at any time up to $3,000,000 (the "Commitment"), in one or more
Advances as may be requested by the Borrower from time to time prior to 12:00
noon (Dallas time) on the date of the requested Advance, which amounts the
Borrower may repay and reborrow in accordance with this Agreement. The proceeds
of the Advances will be used by the Borrower solely for Proper Purposes. The
Advances shall be evidenced by the Note, which Note shall be, in part, a renewal
of the balance outstanding under the $2,500,000 promissory note dated October
26, 2001, issued by the Borrower under the Prior Agreement. It is the intention
of the Borrower and the Corporate Guarantor that the Lender shall be and
continue to be secured by the Properties of the Corporate Guarantor now or
hereafter securing the indebtedness of the Corporate Guarantor under the GultW
est Development Credit Agreement and under its guaranties of the Obligations.
SECTION 2. Terms ofPay!!!ent. The principal of the Note and interest
thereon shall be due and payable as set forth in the Note, except to the extent
earlier payment of the Note is required herein.
SECTION 3. Fees. The Borrower shall pay to the Lender a commitment fee of
one-half of one percent (0.5%) per annum, calculated daily on the amount of the
Unused Commitment in effect from time to time, such commitment fee to be payable
quarterly as it accrues on each January 1, April 1, July 1, and October 1, and
on the Final Maturity Date.
SECTION 4. Security. The Note shall be secured by, among other collateral,
the guaranties of the Guarantors and the Corporate Guarantor.
SECTION 5. Conditions Precedent. The obligation of the Lender to make each
Advance hereunder is subject to the satisfaction of such conditions as the
Lender may deem appropriate at such time and the receipt by the Lender of all
resolutions, certificates, legal opinions and other documents as the Lender may
reasonably request. All opinions, certificates, agreements, documents,
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instruments and other papers delivered hereunder must be in fonIl and
substance reasonably satisfactory to the Lender.
SECTION 6. ReDresentation and Warranties. The Borrower represents and
warrants to the Lender that (a) the Borrower is not, and the execution, delivery
and perfonIlance of and the compliance with the tenIls of the Loan Documents
will not cause it to be in violation of any Laws, its articles of incorporation
or other organizational documents, or any material agreement to which it is a
party or by which it or its Properties are bound; (b) this Agreement constitutes
a valid and binding agreement of the Borrower; (c) the execution, delivery and
perfonIlance by the Borrower of the Loan Documents have been duly authorized by
all necessary action; and (d) the Borrower is a corporation, duly authorized,
validly existing and in good standing in the state of Texas.
SECTION 7. AffinIlative Covenants. Until the Obligations are paid in full
and no commitment to lend to the Borrower exists, the Borrower covenants and
agrees (a) to deliver to the Lender, (i) on or before 60 days after the end of
each calendar year, copies of the financial statements of each Guarantor on the
fonIlS of the Lender or in fonIl satisfactory to the Lender, and (ii) within 15
days following each request therefor from the Lender, a copy of the federal
income tax returns of each Guarantor; and (iii) at the time the financial
statements are delivered under clauses (i) and (ii) preceding, a Compliance
Certificate; (b) to notify the Lender promptly after becoming aware thereof, of
any litigation or other event or circumstance which could have a material
adverse effect on the financial condition of the Borrower or either Guarantor;
(c) to promptly pay (i) all fees and expenses of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P. paid or
incurred by the Lender in connection with the negotiation, preparation,
confinIlation, execution and, where appropriate, recordation of the Loan
Documents and (ii) all costs, fees and expenses, including, without limitation,
the fees and expenses of legal counsel, paid or incurred by the Lender in the
negotiation, preparation, and execution of any amendments to the Loan Documents
and the collection or enforcement of the Loan Documents; (d) to maintain its
existence as a corporation in Texas and its qualification to do business in all
jurisdictions where the nature of its business requires the same; (e) to
maintain insurance covering such risks as are customarily carried by businesses
similarly situated; (f) to comply with all Laws; (g) to keep its primary
business the acquisition, ownership and operation of Oil and Gas Properties; (h)
to penIlit the Lender access to the books, records and Properties of the
Borrower at any time during nonIlal business hours; (i) to maintain all
operating accounts with the Lender; and (j) from time to time to furnish such
additional infonIlation regarding the financial position, business or Properties
of the Borrower as the Lender may reasonably request.
SECTION 8. Negative Covenants. Until the Obligations are paid in full and
no commitment to lend to the Borrower exists, the Borrower covenants and agrees
not (a) to penIlit at any time the ratio of Liquid Assets to Debt of ▇▇▇▇▇▇▇▇ to
ever be less than 2.0 to 1.0; or (b) to amend its articles of incorporation or
bylaws in any respect adverse, in the reasonable opinion of the Lender, to the
interests of the Lender; or (c) to merge or consolidate with or into any other
Person or to dissolve or liquidate; or (d) to change its lines of business.
SECTION 9. Remedies. Should an Event of Default occur and be continuing,
the obligation of the Lender to make Advances hereunder shall automatically
cease, and the Lender may declare the unpaid balance of the Note, or any part
thereof, to be immediately due and payable whereupon it shall be due and payable
without presentment, demand, protest, notice of intent to accelerate, or other
notice of any kind, all of which are hereby waived by the Borrower and exercise
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any other rights under the Loan Documents or afforded at law, in equity, or
otherwise; and in the case of an Event of Default specified in clause (e) of the
definition of ' 'Event of Default", the Note shall become immediately due and
payable without presentment, demand, protest, notice of intent to accelerate,
notice or other action by the Lender of any kind, all of which are hereby waived
by the Borrower. The acceptance by the Lender of partial payment on the Note or
any delay by the Lender in exercising any right available to it shall not be
deemed to be a waiver of any Event ofDefault then existing, and no waiver by the
Lender of any Event ofDefault shall be deemed to be a waiver of any other then
existing or subsequent Event ofDefault. All rights available to the Lender under
the Loan Documents or otherwise shall be cumulative of and in addition to all
other rights granted to the Lender at law or in equity, whether or not the Note
be due and payable and whether or not the Lender shall have instituted any suit
for collection or other action in connection with the Note.
SECTION 10. Miscellaneous. The parties hereto further agree that: (a) each
notice, request or other communication to any party hereunder shall be in
writing (including telecopy or similar writing) and shall be given to such party
at its address set forth on the signature pages hereof or such other address as
such party may hereafter specify by notice to the Lender and the Borrower, and
shall be effective (i) if given by mail, 72 hours after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid
or (ii) if given by any other means, when delivered at the address or to the
telecopy number specified in this clause (a); (b) all covenants, agreements,
undertakings, representations and warranties made in any of the Loan Documents
shall survive all closings under the Loan Documents and shall not be affected by
any investigation made by any party; (c) the Loan Documents may be amended only
by an instrument in writing executed jointly by the Borrower and the Lender, and
supplemented only by documents delivered or to be delivered in accordance with
the express tenus hereof; (d) no failure or delay by the Lender in exercising
any right, power or privilege hereunder or under the Note or any other Loan
Document 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, power or privilege; (e) the rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law or in any of the other Loan Documents; (f) if any provision of
the Loan Documents is held to be illegal, invalid or unenforceable under present
or future laws effective during the tenD thereof, such provision shall be fully
severable, the Loan Documents shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part thereof,
and the remaining provisions thereof shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance therefrom. Furthennore, in lieu of such illegal, invalid or
unenforceable provision there shall be added automatically as a part of the Loan
Documents a provision as similar in tenus to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid and enforceable;
(g) THE BORROWER AGREES TO INDEMNIFY THE LENDER AND HOLD THE LENDER HARMLESS ON
A CURRENT BASIS FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, COSTS
AND EXPENSES OF ANY KIND WHICH MAY BE INCURRED BY THE LENDER RELATING TO OR
ARISING OUT OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTUAL OR
PROPOSED USE OF PROCEEDS OF THE LOAN, INCLUDING, WITHOUT LIMITATION, ANY OF THE
FOREGOING ARISING FROM NEGLIGENCE, WHETHER SOLE OR CONCURRENT, ON THE PART OF
THE LENDER; J2.rovided f1!g1 the Lender shall not have the right to be
indemnified hereunder for its own
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gross negligence or willful misconduct as determined by a court of
competent jurisdiction; and (h) multiple counterparts of this Agreement may be
executed by the parties, and each counterpart shall be deemed an original, but
in making proofhereof it shall be necessary to account for only one such
counterpart.
SECTION 11. References. References in this Agreement to Exhibits,
Schedules, Annexes, Appendixes, Attachments, Articles, Sections or clauses shall
be to exhibits, schedules, annexes, appendixes, attachments, articles, sections
or clauses of this Agreement, unless expressly stated to the contrary.
References in this Agreement to "hereby," "herein," "hereinafter,"
"hereinabove," "hereinbelow," "hereof," "hereunder" and words of similar import
shall be to this Agreement in its entirety and not only to the particular
Exhibit, Schedule, Annex, Appendix, Attachment, Article, or Section in which
such reference appears. This Agreement, for convenience only, has been divided
into Articles and Sections; and it is understood that the rights and other legal
relations of the parties hereto shall be determined from this instrument as an
entirety and without regard to the aforesaid division into Articles and Sections
and without regard to headings prefixed to such Articles or Sections. Whenever
the context requires, reference herein made to the single number shall be
understood to include the plural; and likewise, the plural shall be understood
to include the singular. Definitions of terms defined in the singular or plural
shall be equally applicable to the plural or singular, as the case may be,
unless otherwise indicated. Words denoting sex shall be construed to include the
masculine, feminine and neuter, when such construction is appropriate; and
specific enumeration shall not exclude the general but shall be construed as
cumulative. The Exhibits, Schedules, Annexes, Appendixes and Attachments
attached to this Agreement and items referenced as being attached to this
Agreement are incorporated herein and shall be considered a part of this
Agreement for all purposes.
SECTION 12. ADDlicable Law: Venue: Waiver of Jyry Trial. THIS AGREEMENT HAS
BEEN NEGOTIATED, IS BEING EXECUTED AND DELIVERED, AND WILL BE PERFORMED IN WHOLE
OR IN PART, IN THE STATE OF TEXAS, AND THE SUBSTANTIVE LAWS OF SUCH STATE AND
THE APPLICABLE FEDERAL LAWS OF THE UNITED STATES OF AMERICA SHALL GOVERN THE
VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THE LOAN DOCUMENTS,
EXCEPT TO THE EXTENT THE LAWS OF ANY JURISDICTION WHERE COLLATERAL IS LOCATED
REQUIRE APPLICATION OF SUCH LAWS WITH RESPECT TO SUCH COLLATERAL. THE BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE NON- EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR TEXAS STATE COURT SITTING IN DALLAS, DALLAS COUNTY, TEXAS IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND
THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY
WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF
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ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
LENDER OR ANY AFFILIATE OF THE LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE I BROUGHT ONLY IN A COURT IN DALLAS, DALLAS COUNTY, TEXAS. THE
BORROWER AND THE LENDER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
IRREVOCABLY, AND UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR
ARISES OUT OF ANY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR
OMISSIONS OF THE LENDER IN THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHERWISE WITH RESPECT THERETO. THE
PROVISIONS OF THIS SECTION ARE A MATERIAL INDUCEMENT FOR THE LENDER ENTERING
INTO THIS AGREEMENT. SECTION 13. Arbitration.
Upon the demand of an an Dis ute shall be resolved b bindin arbitration exc
t as set forth in Section 11.20 e below in accordance with the terms of this A
eement or the other
Arbitration Droceedine:s shall be administered bv the American Arbitration
Association i
" AAA" or such other administrator as the arties shall mutuall a ee u on in
accordance with the
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No provision hereof shall limit the right of an art to exercise self -hel
remedies such as rovisional or ancill remedies includin without limitation in
..unctive relief se uestration attachment arnishment or the a ointment of a
receiver from a court of com etent .urisdiction remed shall not waive the ri t
of an art to com el arbitration hereunder.
law a licable to the sub 'ect matter of the Dis ute. Arbitrators are em
owered to resolve Dis utes b summ rulin s in res onse to motions filed rior to
the final arbitration hearin .Arbitrators i controvers is 5 000 000 or less
shall be decided b a sin Ie arbitrator who shall not render an award of eater
than 5 000 000 includin damages costs fees and ex enses .B submission to a
participate in all hearings and deliberations. Notwithstandin an n herein
to the contr in an arbitration in which the amount in controvers exceeds 25 000
000 the arbitrators shall be re uired to make sp ecific written findin s evidence
and the conclusions of law are not erroneous under the substantive law of the
State of
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Lender and Borrower hereby agree to keep all Disputes and arbitration
proceedings strictly confidential, provided, however, that Lender and Borrower
may disclose such confidential information as is necessary in any litigation
between Lender and Borrower or as required by applicable law and, on a
confidential basis, to accountants, attorneys and other consultants in the
ordinary course of business.
If the foregoing terms and provisions are
acceptable to you, please indicate your acceptance thereof by signing in the
appropriate space provided below whereupon this letter shall constitute a valid
and binding agreement between the Lender, the Borrower and their respective
successors and assigns, except that the Borrower may not assign or otherwise
transfer any of its rights under this Agreement.
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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THIS AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT,
COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH
PARTIES. Sincerely,
TEXAS CAPITAL BANK, N .A.
By:
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Energy Group
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
AGREED TO AND ACCEPTED:
GULFWEST E RGY, INC.
By:
Nam
Addr480 N. ▇▇▇ Houston Parkway E.
ess: ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE ONE
As used in the letter loan agreement to which this Schedule One is
attached, the following terms shall have the meanings assigned below, unless the
context otherwise requires:
"Advance" or "Loan" means a loan or an advance made or to be made by the
Lender to the Borrower pursuant to this Agreement or the aggregate outstanding
amount of all such loans or advances, as the context may require.
"Commitment" has the meaning given such term in Section I hereof.
"Compliance Certificate" means a certificate, substantially in the form
attached hereto as Exhibit B, executed by the chief financial officer of the
Borrower and furnished to Lender from time to time in accordance with the terms
hereof.
"Corporate Guarantor" means GulfWest Development Company, a Texas
corporation.
"Debt" of ▇▇▇▇▇▇▇▇ means at any date, without duplication:
(i) all obligations of ▇▇▇▇▇▇▇▇ for money borrowed, including, without
limitation, ( a) the obligations of ▇▇▇▇▇▇▇▇ for money borrowed by a
partnership of which ▇▇▇▇▇▇▇▇ is a general partner, (b) obligations,
whether or not assumed, which are secured in whole or in part by the
Property of ▇▇▇▇▇▇▇▇ or payable out of the proceeds or production from
Property of ▇▇▇▇▇▇▇▇, (c) any obligations of ▇▇▇▇▇▇▇▇ in respect of letters
of credit and repurchase agreements, and (d) net liabilities under interest
rate swap, exchange or cap agreements;
(ii) all obligations of ▇▇▇▇▇▇▇▇ evidenced by notes, debentures, bonds
or similar instruments;
(iii) all obligations of ▇▇▇▇▇▇▇▇ to pay the deferred purchase price
of Property or services (except trade accounts arising in the ordinary
course of business if interest is not paid or accrued thereon);
(iv) all capitalized lease obligations of ▇▇▇▇▇▇▇▇;
(v) all liabilities which in accordance with OCBOA would be included
in determining total liabilities as shown on the liability side of a
balance sheet;
(vi) all obligations of ▇▇▇▇▇▇▇▇ under hedging agreements; and
(vii) all Guarantees by ▇▇▇▇▇▇▇▇ of Debt of another Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the I giving of notice or lapse of time or both would,
unless cured or waived, become an Event ofDefault. I
"Default Rate" means a per annum interest rate equal to five percent (5.0%)
plus the TCB Rate from time to time in effect, but in no event exceeding the
Highest Lawful Rate.
"Event of Default" means the occurrence of anyone or more of the following
events: (a) the failure of the Borrower to pay any amount when due under the
Note or the Agreement; (b) the breach by the Borrower of any of the negative
covenants contained in Section 9 of this Agreement; (c) the failure of the
Borrower to properly perfonIl, observe or comply with any covenant, agreement or
condition contained herein or in any other Loan Document and such failure
continues for a period of 15 days after notice thereof has been given to the
Borrower by the Lender (except for covenants and other provisions covered by
other clauses of this definition for which there shall be no cure period); (d)
the discovery by the Lender that any statement, representation or warranty made
by the Borrower or any other Person in connection with any Loan Document was
false, misleading or erroneous in any material respect when made; ( e) a case is
commenced or a petition is filed against the Borrower under any bankruptcy or
other debtor relief law, or the Borrower voluntarily seeks, consents to or
acquiesces in the benefit of any provision of any bankruptcy or other debtor
relief law; (f) the occurrence of an "Event of Default" under and as such tenIl
is defined in the GulfW est Development Credit Agreement; or (g) the
tenIlination or expiration of the GulfW est Development Credit Agreement.
"Final Maturity Date" means April 1, 2003, or such earlier date on which
the obligations of the Lender to make Advances hereunder
tenIlinate or are tenIlinated in accordance with the tenIlS of this Agreement or the payment of the Note is accelerated.
"Floating Rate" means a per annum interest rate equal to the TCB Rate from
time to time in effect less one-fourth of one percent (0.25%); but in no event
exceeding the Highest Lawful Rate.
"Guarantees" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing or in effect guaranteeing any
Debt of any other Person and, without limiting the generality of the foregoing,
any obligation, direct or indirect, contingent or otherwise, of such Person (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay, to make reimbursement in connection with any
letter-of -credit or to maintain financial statement conditions, by "comfort
letter" or other similar undertaking of support or otherwise) or (ii) entered
into for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof(in whole or in part). The tenIl "Guarantee" includes the
pledging or other encumbrance of assets by a Person to secure the obligations of
another Person and restrictions or limitations on a Person or its assets agreed
to in connection with the obligations of another Person, but does not include
endorsements for collection or deposit in the ordinary course of business; and
"Guaranteed" by a Person shall mean the act or condition of providing a
Guarantee by such Person or penIlitting a Guarantee of such Person to exist.
"Guarantors" means ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ill, an individual.
"GulfW est Development Credit Agreement" means the $10,000,000 Credit
Agreement dated November 30, 2000, between the Corporate Guarantor and the
Lender, as amended from time to time.
"Laws" mean all applicable statutes, laws, executive orders, ordinances,
regulations, orders, writs, injunctions, rulings or decrees of the United States
or of any state, commonwealth, nation, territory, possession, county, parish,
municipality, or governmental entity or department.
"Liquid Assets" of ▇▇▇▇▇▇▇▇ shall mean all of his cash, certificates of
deposit, U.S. governmental agency securities, corporate bonds and/or municipal
bonds rated Baa or better by ▇▇▇▇▇'▇ Inc., common and preferred stock listed on
the New York Stock Exchange, American Stock Exchange and/or NASDAQ, mutual funds
and/or unit investment trusts that invest solely in any of the foregoing and are
not considered retirement or defined benefit accounts.
"Loan Documents" mean this letter loan agreement, the Note, and all other
agreements, documents and instruments now or hereafter executed or delivered in
connection with the foregoing, and all renewals, extensions, amendments,
restatements and modifications thereof. "Note" means the promissory note of the
Borrower substantially in the form of Exhibit A attached hereto and made a part
hereof, as the same may be renewed, extended or amended from time to time.
"Obligations" shall mean, without duplication, (i) all Debt evidenced by
the Note, (ii) the undrawn, unexpired amount of all outstanding letters of
credit issued by the Lender on behalf of the Borrower, (iii) the obligation of
the Borrower for the payment of the fees payable hereunder or under the other
Loan Documents, and (iv) all other obligations and liabilities of the Borrower
to the Lender, now existing or hereafter incurred, under, arising out of or in
connection with any Loan Document, and to the extent that any of the foregoing
includes or refers to the payment of amounts deemed or constituting interest,
only so much thereof as shall have accrued, been earned and which remains unpaid
at each relevant time of determination.
"OCBOA" means "other comprehensive basis of accounting" applicable to tax
basis-cash accounting, as established by the American Institute of Certified
Public Accountants under its published Statement on Auditing Standards No. 14.
"Oil and Gas Properties" shall mean fee, leasehold, or other interests in
or under mineral estates or oil, gas, and other liquid or gaseous hydrocarbon
leases with respect to Properties situated in the United States or offshore from
any State of the United States, including, without limitation, overriding
royalty and royalty interests, leasehold estate interests, net profits
interests, production payment interests, and mineral fee interests, together
with contracts executed in connection therewith and all tenements,
hereditaments, appurtenances and Properties appertaining, belonging, affixed, or
incidental thereto.
"Person" means any individual, corporation, partnership, association, trust
or other entity, including any government, or any subdivision or agency thereof.
"Proper Purposes" means general corporate purposes, but not to acquire or
carry margin stock.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.
"Security Documents" or "Security Instruments" means the security
instruments executed and delivered in satisfaction of the conditions of this
Agreement and all other guarantees, documents and instruments at any time
executed as security for all or any portion of the Obligations, as such
instruments may be amended, restated, or supplemented from time to time.
"TCB Rate" means, on any day, the greater of (i) the prime rate as
published in The Wall Skeet Journal's "Money Rates" table for such day or (ii)
five and one-half percent (5.50%). Ifmultiple prime rates are quoted in such
table, then the highest prime rate quoted therein shall be the TCB Rate. In the
event that a prime rate is not published in The Wall Street Journal's "Money
Rates" table for any reason or The Wall Street Journal is not published that
day, the Lender will choose a substitute TCB Rate, for purposes of calculating
the interest rate applicable hereunder, which is based on comparable
information, until such time as a prime rate is published in The Wall Street
Journal' s "Money Rates" table. In this connection, such prime rate for each
Saturday, Sunday or day for which banks are authorized to be closed in the state
of Texas shall be the most recent prime rate so published if published no more
than three days prior to such date. Each change in the TCB Rate shall become
effective without notice to the Borrower on the effective date of each such
change. "UCC" means the Uniform Commercial Code as in effect in Texas from time
to time.
"Unused Commitment" means, at any time, an amount equal to the remainder of
the Commitment minus the outstanding principal balance of the Note at such time.
"▇▇▇▇▇▇▇▇" means J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual.
EXHIBIT A
PROMISSORY NOTE
$3,000,000 Dallas, Texas April 3, 2002
FOR VALUE RECEIVED, the undersigned GulfWest Energy, Inc., a Texas corporation
(the "Borrower"), hereby promises to pay to the order of Texas Capital Bank, N
..A., a national banking association (the "Lender"), at its office in Dallas,
Texas, the principal sum $3,000,000 or such amount as is advanced and
outstanding hereunder, together with interest as provided herein.
This note has been executed and delivered pursuant to the terms of that certain
letter loan agreement of even date herewith between the Borrower and the Lender
(as amended from time to time, the "Credit Agreement"), and is the "Note"
referred to therein, and the holder of this note shall be entitled to the
benefits provided in the Credit Agreement. Reference is made to the Credit
Agreement for a statement of the events upon which maturity of this note may be
accelerated and for a description of the collateral, if any, securing payment of
this note. Terms defined in the Credit Agreement are used herein as therein
defined, unless otherwise defined herein or the context otherwise requires.
This note is, in part, a renewal and extension of the indebtedness outstanding
under the $2,500,000 promissory note of the Borrower dated October 26, 2001.
Principal of this note shall be due and payable on the Final Maturity Date,
unless earlier payment is required under the Credit Agreement.
Principal of this note outstanding from time to time shall bear interest at the
Floating Rate. Interest on this note and commitment fees under the Credit
Agreement shall be calculated on the basis of actual days elapsed and computed
as if each year consisted of360 days, subject to the limitations of the Highest
Lawful Rate.
Accrued interest on this note shall be due and payable on May 1, 2002, and on
the first day of each month thereafter and at maturity hereof (stated or by
acceleration).
If any payment hereunder becomes due on a day on which banking institutions are
authorized by law to close in Dallas, Texas, such payment shall be due on the
next succeeding business day and interest thereon shall be payable for such
extended time.
All payments by the Borrower shall be made to the Lender at its principal office
in Dallas, Texas, by not later than 2:00 p.m. on the date due, and shall be
payable in lawful currency of the United States in funds immediately available
in Dallas.
Unless waived by the Lender, the principal of the Note shall bear interest at
the Default Rate at any time an Event of Default exists and, to the extent
permitted by law, overdue interest on the Loans shall bear interest at the
Default Rate.
The principal of this note and accrued interest thereon may be prepaid by the
Borrower in whole or in part at any time without premium or penalty. Any such
prepayment shall be applied first to accrued interest, then to principal
hereunder. .. As used herein, the tenn "Highest Lawful Rate" means the maximum
non-usurious interest rate, if any (or, if the context so requires, an amount
calculated at such rate), that at any time or from time to time may be
contracted for, taken, reserved, charged, or received under applicable laws of
the State of Texas or the United States of America, whichever authorizes the
greater rate, as such laws are presently in effect or, to the extent allowed by
applicable law, as such laws may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than such laws now allow. To the extent the
laws of the State of Texas are applicable for the purpose of detennining the
"Highest Lawful Rate", such tenn shall mean the "weekly ceiling" from time to
time in effect as referred to and defined in Chapter 303 of the Finance Code of
Texas, as amended. The detennination of the Highest Lawful Rate shall, to the
extent required by applicable law, take into account as interest paid or
contracted for any and all relevant payments or charges under the Loan
Documents, in any case after taking into account, to the extent required by
applicable law, any and all relevant payments, charges and calculations.
Regardless of any provision contained herein or in the other Loan Documents, the
Lender shall never be entitled to receive, collect or apply, as interest on this
note, any amount in excess of the Highest Lawful Rate, and in the event the
Lender ever receives, collects or applies as interest any such excess, such
amount which would be deemed excessive interest shall be deemed a partial
prepayment of principal on this note and treated hereunder as such; and if this
note is paid in full, any remaining excess shall promptly be paid to the
Borrower. In detennining whether or not the interest paid or payable under any
specific contingency exceeds the Highest Lawful Rate, the Borrower and the
Lender shall, to the extent pennitted under applicable law, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate and spread, in equal parts, the total amount of the interest
throughout the entire contemplated tenn of this note, so that the interest rate
is the Highest Lawful Rate throughout the entire tenn of this note;]2rovided
ffiill if the unpaid principal balance hereof is paid and perfonned in full
prior to the end of the full contemplated tenn hereof, and if the interest
received for the actual period of existence thereof exceeds the Highest Lawful
Rate, the Lender shall refund to the Borrower the amount of such excess and, in
such event, the Lender shall not be subject to any penalties provided by any
laws for contracting for, charging, taking, reserving or receiving interest in
excess of the Highest Lawful Rate.
If this note is placed in the hands of attorneys for collection, the Borrower
agrees to pay the reasonable attorneys' fees and collection expenses of the
holder hereof.
The Borrower and each surety, endorser, guarantor and other party liable
for the payment of any sums of money payable on this note severally waive
presentment and demand for payment, protest, notice of intent to accelerate,
notice of protest, acceleration and nonpayment, and any other notice of any kind
and agree that their liability on this note shall not be affected by any renewal
or extension in the time of payment hereof, or by any release of or change in
any security for the payment of this note, regardless of the number of such
renewals, extensions, releases or changes.
GulfW est Energy, Inc.
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
