(WITHIN THE MEANING OF REGULATION U ISSUED BY THE BOARD),
AND NO PART OF THE PROCEEDS OF ANY LOAN WILL BE USED TO PURCHASE OR CARRY ANY
MARGIN STOCK OR TO EXTEND CREDIT TO OTHERS FOR THE PURPOSE OF PURCHASING OR
CARRYING MARGIN STOCK.
52
SECTION 4.15.
OIL AND GAS INTERESTS. EACH CREDIT
PARTY HAS GOOD AND DEFENSIBLE TITLE TO ALL PROVED RESERVES INCLUDED IN THE OIL
AND GAS INTERESTS (FOR PURPOSES OF THIS SECTION 4.15, "PROVED OIL AND GAS
INTERESTS") DESCRIBED IN THE MOST RECENT RESERVE REPORT PROVIDED TO THE
ADMINISTRATIVE AGENT, FREE AND CLEAR OF ALL LIENS EXCEPT LIENS PERMITTED
PURSUANT TO SECTION 7.02. ALL SUCH PROVED OIL AND GAS INTERESTS ARE VALID,
SUBSISTING, AND IN FULL FORCE AND EFFECT, AND ALL RENTALS, ROYALTIES, AND OTHER
AMOUNTS DUE AND PAYABLE IN RESPECT THEREOF HAVE BEEN DULY PAID. WITHOUT REGARD
TO ANY CONSENT OR NON-CONSENT PROVISIONS OF ANY JOINT OPERATING AGREEMENT
COVERING ANY CREDIT PARTY'S PROVED OIL AND GAS INTERESTS, SUCH CREDIT PARTY'S
SHARE OF (A) THE COSTS FOR EACH PROVED OIL AND GAS INTEREST DESCRIBED IN THE
RESERVE REPORT IS NOT MATERIALLY GREATER THAN THE DECIMAL FRACTION SET FORTH IN
THE RESERVE REPORT, BEFORE AND AFTER PAYOUT, AS THE CASE MAY BE, AND DESCRIBED
THEREIN BY THE RESPECTIVE DESIGNATIONS "WORKING INTERESTS," "WI," "GROSS WORKING
INTEREST," "GWI," OR SIMILAR TERMS (EXCEPT IN SUCH CASES WHERE THERE IS A
CORRESPONDING INCREASE IN THE NET REVENUE INTEREST), AND (B) PRODUCTION FROM,
ALLOCATED TO, OR ATTRIBUTED TO EACH SUCH PROVED OIL AND GAS INTEREST IS NOT
MATERIALLY LESS THAN THE DECIMAL FRACTION SET FORTH IN THE RESERVE REPORT,
BEFORE AND AFTER PAYOUT, AS THE CASE MAY BE, AND DESCRIBED THEREIN BY THE
DESIGNATIONS "NET REVENUE INTEREST," "NRI," OR SIMILAR TERMS. EACH WELL DRILLED
IN RESPECT OF PROVED PRODUCING OIL AND GAS INTERESTS DESCRIBED IN THE RESERVE
REPORT (1) IS CAPABLE OF, AND IS PRESENTLY, EITHER PRODUCING HYDROCARBONS IN
COMMERCIALLY PROFITABLE QUANTITIES OR IN THE PROCESS OF BEING WORKED OVER OR
ENHANCED, AND THE CREDIT PARTY THAT OWNS SUCH PROVED PRODUCING OIL AND GAS
INTERESTS IS CURRENTLY RECEIVING PAYMENTS FOR ITS SHARE OF PRODUCTION, WITH NO
FUNDS IN RESPECT OF ANY THEREOF BEING PRESENTLY HELD IN SUSPENSE, OTHER THAN ANY
SUCH FUNDS BEING HELD IN SUSPENSE PENDING DELIVERY OF APPROPRIATE DIVISION
ORDERS, AND (2) HAS BEEN DRILLED, BOTTOMED, COMPLETED, AND OPERATED IN
COMPLIANCE WITH ALL APPLICABLE LAWS, IN THE CASE OF CLAUSES (1) AND (2), EXCEPT
WHERE ANY FAILURE TO SATISFY CLAUSE (1) OR TO COMPLY WITH CLAUSE (2) WOULD NOT
HAVE A MATERIAL ADVERSE EFFECT, AND NO SUCH WELL WHICH IS CURRENTLY PRODUCING
HYDROCARBONS IS SUBJECT TO ANY PENALTY IN PRODUCTION BY REASON OF SUCH WELL
HAVING PRODUCED IN EXCESS OF ITS ALLOWABLE PRODUCTION.
SECTION 4.16.
INSURANCE. THE CERTIFICATE SIGNED BY
THE RESPONSIBLE OFFICER THAT ATTESTS TO THE EXISTENCE AND ADEQUACY OF, AND
SUMMARIZES, THE PROPERTY AND CASUALTY INSURANCE PROGRAM MAINTAINED BY THE CREDIT
PARTIES THAT HAS BEEN FURNISHED BY THE BORROWER TO THE ADMINISTRATIVE AGENT AND
THE LENDERS AS OF