ADMINISTRATIVE AGENT AS ITS
PRINCIPAL DEPOSITORY BANK, INCLUDING FOR THE MAINTENANCE OF BUSINESS, CASH
MANAGEMENT, OPERATING AND ADMINISTRATIVE DEPOSIT ACCOUNTS
SECTION 8.18.
CHIEF FINANCIAL OFFICER.
THE BORROWER
SHALL KEEP THE POSITION OF CHIEF FINANCIAL OFFICER FILLED THROUGH THE MATURITY
DATE.
ARTICLE IX
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
SECTION 9.01.
FINANCIAL COVENANTS.
(A)
INTEREST COVERAGE RATIO.
THE BORROWER WILL
NOT, AS OF THE LAST DAY OF ANY FISCAL QUARTER BEGINNING WITH THE FISCAL QUARTER
ENDING DECEMBER 31, 2007, PERMIT ITS RATIO OF EBITDA TO INTEREST EXPENSE FOR
EACH FOUR CONSECUTIVE FISCAL QUARTER PERIOD, TO BE LESS THAN 2.5 TO 1.0.
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(B)
CONSOLIDATED LEVERAGE RATIO.
THE BORROWER
WILL NOT, AS OF THE LAST DAY OF ANY FISCAL QUARTER BEGINNING WITH THE FISCAL
QUARTER ENDING DECEMBER 31, 2007, PERMIT ITS CONSOLIDATED LEVERAGE RATIO TO BE
GREATER THAN 4.0 TO 1.0.
(C)
CURRENT RATIO.
THE BORROWER WILL NOT
PERMIT, AS OF THE LAST DAY OF ANY FISCAL QUARTER, ITS RATIO OF (I) CONSOLIDATED
CURRENT ASSETS (INCLUDING THE UNUSED AMOUNT OF THE TOTAL COMMITMENTS, BUT
EXCLUDING NON-CASH ASSETS UNDER FAS 133) TO (II) CONSOLIDATED CURRENT
LIABILITIES (EXCLUDING NON-CASH OBLIGATIONS UNDER FAS 133 AND CURRENT MATURITIES
UNDER THIS AGREEMENT) TO BE LESS THAN 1.0 TO 1.0.
(D)
MINIMUM LIQUIDITY.
THE BORROWER SHALL
MAINTAIN AT ALL TIMES UNENCUMBERED LIQUID ASSETS HAVING AN AGGREGATE VALUE OF AT
LEAST $2,000,000.
THE PHRASE 'UNENCUMBERED LIQUID ASSETS' MEANS THE SUM OF
(A) THE UNUSED AVAILABILITY OF THE BORROWING BASE, PLUS (B) CASH WHICH IS NOT
SUBJECT TO ANY LIEN OR RIGHT OF SET-OFF.
SECTION 9.02.
DEBT.
THE BORROWER WILL NOT, AND WILL
NOT PERMIT ANY SUBSIDIARY TO, INCUR, CREATE, ASSUME OR SUFFER TO EXIST ANY DEBT,
EXCEPT:
(A)
THE NOTES OR OTHER INDEBTEDNESS ARISING
UNDER THE LOAN DOCUMENTS OR ANY GUARANTY OF OR SURETYSHIP ARRANGEMENT FOR THE
NOTES OR OTHER INDEBTEDNESS ARISING UNDER THE LOAN DOCUMENTS.
(B)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES,
LIABILITIES OR OTHER OBLIGATIONS TO PAY THE DEFERRED PURCHASE PRICE OF PROPERTY
OR SERVICES, FROM TIME TO TIME INCURRED IN THE ORDINARY COURSE OF BUSINESS WHICH
ARE NOT GREATER THAN SIXTY (60) DAYS PAST THE DATE OF INVOICE OR DELINQUENT OR
WHICH ARE BEING CONTESTED IN GOOD FAITH BY APPROPRIATE ACTION AND FOR WHICH
ADEQUATE RESERVES HAVE BEEN MAINTAINED IN ACCORDANCE WITH GAAP.
(C)
DEBT UNDER CAPITAL LEASES NOT TO EXCEED
$1,000,000.
(D)
DEBT ASSOCIATED WITH BONDS OR SURETY
OBLIGATIONS REQUIRED BY GOVERNMENTAL REQUIREMENTS IN CONNECTION WITH THE
OPERATION OF THE OIL AND GAS PROPERTIES.
(E)
INTERCOMPANY DEBT BETWEEN THE BORROWER AND
ANY SUBSIDIARY OR BETWEEN SUBSIDIARIES TO THE EXTENT PERMITTED BY
SECTION 9.05(G); PROVIDED THAT SUCH DEBT IS NOT HELD, ASSIGNED, TRANSFERRED,
NEGOTIATED OR PLEDGED TO ANY PERSON