(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
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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 WELLS;
(IV)
RATE MANAGEMENT TRANSACTIONS;
(V)
INDEBTEDNESS OWED BY NON-BORROWER SUBSIDIARIES TO BORROWER WHICH
IS PERMITTED HEREUNDER;
(VI)
VENDOR FINANCING AND GUARANTIES OF CWE OF VENDOR FINANCINGS OF ITS
SUBSIDIARIES WHICH DO NOT TO EXCEED $10,000,000 IN THE AGGREGATE AT ANY ONE TIME
OUTSTANDING;
(VII)
INTERCOMPANY INDEBTEDNESS AMONG BORROWER AND GUARANTOR;
(VIII)
GUARANTY BY CWE OF UP TO $1,000,000 OF OBLIGATIONS OF CLAYDESTA
BUILDING, L.P. OWED TO FIRST AMERICAN BANK; OR
(IX)
GUARANTEES BY CWE OF LOANS MADE BY THIRD PARTIES TO CWE
EMPLOYEES, WHICH LOANS MAY BE EXTENDED FOR THE SOLE PURPOSE OF ALLOWING CWE
EMPLOYEES TO EXERCISE OPTIONS TO PURCHASE CWE COMMON STOCK AND/OR TO PAY FEDERAL
INCOME TAX LIABILITIES RELATING FROM SUCH EXERCISE; PROVIDED, HOWEVER, THAT SUCH
GUARANTEES MAY NOT EXCEED $1,000,000 IN THE AGGREGATE OUTSTANDING AT ANY ONE
TIME.
(C)
CURRENT RATIO.
THE BORROWER WILL NOT ALLOW THE WILLIAMS
CONSOLIDATED ENTITIES' RATIO OF CURRENT ASSETS TO CURRENT LIABILITIES TO EVER BE
LESS THAN 1.0 TO 1.0, MEASURED AS OF THE END OF EACH CALENDAR QUARTER.
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(D)
RATIO OF DEBT TO EBITDAX.
THE BORROWER WILL NOT ALLOW THE
WILLIAMS CONSOLIDATED ENTITIES' RATIO OF DEBT TO EBITDAX TO EVER BE MORE THAN
2.75 TO 1.0 AS OF THE END OF ANY CALENDAR QUARTER.
(E)
LIMITATION ON SALE OF COLLATERAL.
NEITHER BORROWER NOR GUARANTOR
WILL SELL, ASSIGN OR DISCOUNT ANY OF THE COLLATERAL OR NEGATIVE PLEDGE PROPERTY
OTHER THAN (I) SALES OF OIL AND GAS PRODUCTION IN THE ORDINARY COURSE OF
BUSINESS, (II) SALES OR OTHER DISPOSITION OF OBSOLETE EQUIPMENT WHICH ARE NO
LONGER NEEDED FOR THE ORDINARY BUSINESS OF BORROWER OR GUARANTOR OR WHICH ARE
BEING REPLACED BY EQUIPMENT OF AT LEAST COMPARABLE VALUE AND UTILITY, AND
(III)