AND SUBSTANCE REASONABLY
ACCEPTABLE TO AGENT SO THAT AGENT SHALL HAVE RECEIVED, TOGETHER WITH TITLE
INFORMATION PREVIOUSLY DELIVERED TO AGENT, REASONABLY SATISFACTORY TITLE
INFORMATION ON AT LEAST EIGHTY PERCENT (80%) OF THE TOTAL RESERVE VALUE OF THE
PROVED OIL AND GAS PROPERTIES EVALUATED BY SUCH RESERVE REPORT.
FOR PURPOSES OF
CLARITY, AGENT SHALL BE PERMITTED TO ESTABLISH RESERVES AGAINST THE MAXIMUM
REVOLVER AMOUNT PURSUANT TO SECTION 2.1(C) TO THE EXTENT THAT THE AGENT DOES NOT
RECEIVE SATISFACTORY TITLE AS DETERMINED IN THIS CLAUSE (C).
(D)
IF A LOAN PARTY IS UNABLE TO CURE ANY TITLE DEFECT REQUESTED TO BE
CURED PURSUANT TO SECTION 6.21(C) WITHIN THE SIXTY (60)-DAY PERIOD OR SUCH LOAN
PARTY DOES NOT COMPLY WITH
40
THE REQUIREMENTS OF SECTION 6.21(B) TO PROVIDE ACCEPTABLE TITLE INFORMATION
COVERING EIGHTY PERCENT (80%) OF THE TOTAL RESERVE VALUE OF THE PROVED OIL AND
GAS PROPERTIES EVALUATED IN THE MOST RECENT RESERVE REPORT, SUCH DEFAULT SHALL
NOT BE A DEFAULT, BUT INSTEAD AGENT AND/OR THE REQUIRED LENDERS SHALL HAVE THE
RIGHT TO EXERCISE THE FOLLOWING REMEDY IN THEIR REASONABLE DISCRETION FROM TIME
TO TIME, AND ANY FAILURE TO SO EXERCISE THIS REMEDY AT ANY TIME SHALL NOT BE A
WAIVER AS TO FUTURE EXERCISE OF THE REMEDY BY AGENT OR THE LENDERS.
TO THE
EXTENT THAT AGENT OR THE REQUIRED LENDERS ARE NOT REASONABLY SATISFIED WITH
TITLE TO ANY MORTGAGED PROPERTY AFTER THE 60-DAY PERIOD HAS ELAPSED, SUCH
UNACCEPTABLE MORTGAGED PROPERTY SHALL NOT COUNT TOWARDS "THE EIGHTY PERCENT
(80%) REQUIREMENT," AND AGENT MAY SEND A NOTICE TO BORROWER AND THE LENDERS THAT
A RESERVE AGAINST THE MAXIMUM REVOLVER AMOUNT PURSUANT TO SECTION 2.1(C) WILL BE
APPLIED IN AN AMOUNT AS DETERMINED BY THE REQUIRED LENDERS TO CAUSE THE LOAN
PARTIES TO BE IN COMPLIANCE WITH THE REQUIREMENT TO PROVIDE ACCEPTABLE TITLE
INFORMATION ON EIGHTY PERCENT (80%) OF THE TOTAL RESERVE VALUE OF THE PROVED OIL
AND GAS PROPERTIES PURSUANT TO THIS SECTION 6.21.
6.22
Swap Agreements.
To the extent Borrower or any
other Loan Party enters into Swap Agreements, such Loan Party shall use (and
cause its Subsidiaries to use) such Swap Agreements solely as a part of their
normal business operations as a risk management strategy and/or to hedge against
changes resulting from market conditions related to their oil and gas operations
and not as a means to speculate for investment purposes on trends and shifts in
financial or commodities markets.
The Loan Parties shall maintain at all times
Swap Agreements for Hydrocarbon Interests in form and substance satisfactory to
Agent and the Required Lenders, with an Approved Counterparty and the notional
volumes for which (when aggregated with all other Swap Agreements then in effect
other than basis differential swaps on volumes already hedged pursuant to the
other Swap Agreements) are in amounts satisfactory to Agent and the Required
Lenders.
6.23
Post Closing Obligations.
(A)
NO LATER THAN MARCH 1, 2009, PARENT SHALL (I) EXECUTE AND DELIVER
MORTGAGES IN FAVOR OF AGENT WITH RESPECT TO THE OIL AND GAS PROPERTIES