OPERATING ACCOUNTS AND RELATED DEPOSIT ACCOUNTS.
5.22
HEDGING TRANSACTION REPORTS.
FOR EACH COMMODITY
HEDGE AGREEMENT TO WHICH EITHER BORROWER IS A PARTY, IF ANY, AS PERMITTED UNDER
THIS AGREEMENT, DELIVER TO LENDER CONTEMPORANEOUSLY WITH THE QUARTERLY FINANCIAL
STATEMENTS A DETAILED REPORT SETTING OUT SUCH BORROWER'S (I) POSITION AS OF THE
END OF SUCH CALENDAR QUARTER INCLUDING, BUT NOT LIMITED TO, SUCH BORROWER'S
SETTLEMENT PAYMENTS AND RECEIPTS DURING SUCH CALENDAR QUARTER AND SETTLEMENT
PAYABLES AND RECEIVABLES AS OF THE END OF SUCH CALENDAR QUARTER, (II ) VOLUMES
HEDGED, (III) PRICES AT WHICH SUCH VOLUMES WERE HEDGED, (III) THE PERIOD COVERED
UNDER EACH COMMODITY HEDGE AGREEMENT AND (IV) ANY OTHER INFORMATION WHICH LENDER
MAY REQUEST.
5.23
[RESERVED].
5.24
PRODUCTION AND EXPENSE REPORTS.
DELIVER TO
LENDER, ON OR BEFORE THE SIXTIETH (60TH) DAY AFTER THE END OF EACH CALENDAR
MONTH, A PRODUCTION AND EXPENSE REPORT COVERING QUANTITIES OF PRODUCTION FROM
THE BORROWING BASE OIL AND GAS PROPERTIES, VOLUMES OF PRODUCTION SOLD,
PURCHASERS OF PRODUCTION, GROSS REVENUES AND EXPENSES (INCLUDING LEASE OPERATING
EXPENSES).
5.25
OPERATING BUDGET FORECASTS.
COMMENCING
SEPTEMBER 30, 2008, AND CONTINUING ON THE LAST DAY OF EACH SUBSEQUENT MONTH,
DELIVER TO LENDER WITH A ROLLING REVENUE, LEASE OPERATING EXPENSE, CAPITAL
EXPENDITURE AND GENERAL AND ADMINISTRATIVE EXPENSE FORECAST, IN FORM
SATISFACTORY TO LENDER (THE "OPERATING BUDGET FORECASTS"), BY MONTH FOR THE
SUCCEEDING
35
12-MONTH PERIOD COVERING BORROWERS' INTERESTS IN THE BORROWING BASE OIL AND GAS
PROPERTIES.
THE OPERATING BUDGET FORECASTS WILL INCLUDE A BRIEF DISCUSSION BY
BORROWERS OF ALL OPERATING AND FINANCIAL VARIANCES FROM THE PRIOR OPERATING
BUDGET FORECAST DELIVERED TO LENDER.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any Commitment
exists, no Borrower will:
6.1
INDEBTEDNESS.
CREATE, INCUR, ASSUME, OR
SUFFER TO EXIST ANY INDEBTEDNESS, WHETHER BY WAY OF LOAN OR OTHERWISE; PROVIDED,
HOWEVER, THE FOREGOING RESTRICTION SHALL NOT APPLY TO (A) THE OBLIGATIONS,
(B) UNSECURED ACCOUNTS PAYABLE INCURRED IN THE ORDINARY COURSE OF BUSINESS,
WHICH ARE NOT UNPAID IN EXCESS OF 90 DAYS BEYOND INVOICE DATE OR ARE BEING
CONTESTED IN GOOD FAITH AND AS TO WHICH SUCH RESERVE AS IS REQUIRED BY GAAP HAS
BEEN MADE, ACCRUED OR DEFERRED TAXES AND OTHER LIABILITIES NOT CONSTITUTING
BORROWED MONEY, (C) PERMITTED COMMODITY HEDGE AGREEMENTS, (D) RATE MANAGEMENT
TRANSACTIONS, IN FORM AND SUBSTANCE AND WITH A PERSON AND ON TERMS ACCEPTABLE TO
THE LENDER IN ITS SOLE DISCRETION, (E) INDEBTEDNESS SECURED BY PERMITTED LIENS,
(F) ANY OTHER INDEBTEDNESS SUBORDINATED TO THE OBLIGATION ON TERMS APPROVED BY
LENDER IN ITS SOLE DISCRETION, AND (G) OTHER UNSECURED INDEBTEDNESS NOT TO
EXCEED, IN THE AGGREGATE ANY TIME OUTSTANDING, AN AMOUNT EQUAL TO $50,000
INCURRED IN THE ORDINARY COURSE OF BUSINESS.
6.2
CONTINGENT OBLIGATIONS.
CREATE, INCUR,
ASSUME, OR SUFFER TO EXIST ANY CONTINGENT OBLIGATION; PROVIDED, HOWEVER, THE
FOREGOING RESTRICTION SHALL NOT APPLY TO (A) PERFORMANCE GUARANTEES AND
PERFORMANCE SURETY OR OTHER BONDS PROVIDED IN THE ORDINARY COURSE OF BUSINESS,
(B) TRADE CREDIT INCURRED OR OPERATING LEASES ENTERED INTO IN THE ORDINARY
COURSE OF BUSINESS, OR (C) GUARANTEES OR OTHER