HAVE IN FULL FORCE AND EFFECT
ALL FEDERAL, STATE AND LOCAL LICENSES, PERMITS, ORDERS AND APPROVALS REQUIRED TO
OPERATE THE COLLATERAL IN COMPLIANCE WITH ALL ENVIRONMENTAL LAWS IN ALL MATERIAL
RESPECTS.
(K)
INDEBTEDNESS.
BORROWER SHALL NOT, AND
SHALL NOT PERMIT ANY SUBSIDIARY TO, CREATE, INCUR, ASSUME OR PERMIT TO EXIST ANY
INDEBTEDNESS, EXCEPT:
(i)
the Notes or other Obligations arising
under the Loan Documents or any guaranty of or suretyship arrangement for the
Notes or other Obligations arising under the Loan Documents;
(ii)
Indebtedness under capital leases not to
exceed $600,000;
(iii)
Indebtedness associated with bonds or surety
obligations required by Governmental Agencies or third-parties in connection
with drilling operations in the ordinary course of business;
(iv)
endorsements of negotiable instruments for
collection in the ordinary course of business;
(v)
intercompany Indebtedness between Borrower
and any Subsidiary of Borrower that is a Guarantor; provided that any such
Indebtedness owed by either the Borrower or a Subsidiary of Borrower shall be
subordinated to the Obligations on terms set forth in the relevant Guaranty or
subordination agreement, as applicable;
(vi)
unsecured subordinated Indebtedness (other
than described in clause (v) above) on terms and conditions satisfactory to the
Administrative Agent;
(vii)
Loans and advances made by CWEI to Borrower
prior to the Closing Date; provided that all such loans are repaid at the time
of the first advance on the Loan; and
(viii)
other Indebtedness not to exceed $1,000,000 in the
aggregate at any one time outstanding.
27
For avoidance of doubt, the parties confirm that ordinary course of business
accounts payable and accrued expenses of the type found in clause (i) of the
definition of Indebtedness are not Indebtedness.
(L)
LIENS.
EXCEPT FOR PERMITTED LIENS,
LIENS SECURING THE OBLIGATIONS, AND LIENS ON NON-COLLATERAL ASSETS AND THE
PROCEEDS THEREOF SECURING THE INDEBTEDNESS REFERRED TO IN SECTION 3.3(K) ABOVE,
BORROWER SHALL NOT CREATE OR PERMIT TO EXIST ANY LIENS ON ANY PROPERTY OR ASSETS
OF BORROWER OR ITS SUBSIDIARIES.
(M)
RESTRICTED PAYMENTS.
BORROWER SHALL NOT MAKE
OR PERMIT ANY RESTRICTED PAYMENT.
(N)
INVESTMENTS, LOANS AND ADVANCES.
BORROWER
WILL NOT, AND WILL NOT PERMIT ANY SUBSIDIARY TO, MAKE OR PERMIT TO REMAIN
OUTSTANDING ANY INVESTMENT IN, OR LOAN OR ADVANCE TO, ANY PERSON (AN
"INVESTMENT"), EXCEPT THAT THE FOREGOING RESTRICTION SHALL NOT APPLY TO:.
(I)
INVESTMENTS REFLECTED IN THE FINANCIAL
STATEMENTS OF THE BORROWER ON THE CLOSING DATE OR ARE OTHERWISE DISCLOSED TO THE
LENDERS ON THE CLOSING DATE;
(II)
ACCOUNTS RECEIVABLE ARISING IN THE
ORDINARY COURSE OF BUSINESS;
(III)
DIRECT OBLIGATIONS OF THE UNITED STATES OR
ANY AGENCY THEREOF, OR OBLIGATIONS GUARANTEED BY THE UNITED STATES OR ANY AGENCY
THEREOF, IN EACH CASE MATURING WITHIN ONE YEAR FROM THE DATE OF CREATION
THEREOF;
(IV)
COMMERCIAL PAPER MATURING WITHIN ONE YEAR FROM
THE DATE OF CREATION THEREOF RATED IN THE HIGHEST GRADE BY S&P OR MOODY'S;
(V)
DEPOSITS MATURING WITHIN ONE YEAR FROM THE
DATE OF CREATION THEREOF WITH, INCLUDING CERTIFICATES OF DEPOSIT ISSUED BY, ANY
LENDER OR ANY OFFICE LOCATED IN THE UNITED