OPERATIONS, AND WITH RESPECT TO SUCH OF THE FOREGOING WHICH ARE OPERATED
BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, IN A MANNER CONSISTENT WITH THE
BORROWER'S OR ITS SUBSIDIARIES' PAST PRACTICES (OTHER THAN THOSE THE FAILURE OF
WHICH TO MAINTAIN IN ACCORDANCE WITH THIS SECTION 7.18 COULD NOT REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT).
SECTION 7.18.
GAS IMBALANCES, PREPAYMENTS.
EXCEPT
AS SET FORTH ON SCHEDULE 7.18 OR ON THE MOST RECENT CERTIFICATE DELIVERED
PURSUANT TO SECTION 8.12(C), ON A NET BASIS THERE ARE NO MATERIAL GAS
IMBALANCES, TAKE OR PAY OR OTHER PREPAYMENTS WHICH WOULD REQUIRE THE BORROWER OR
ANY OF ITS SUBSIDIARIES TO DELIVER HYDROCARBONS PRODUCED FROM THE OIL AND GAS
PROPERTIES AT SOME FUTURE TIME WITHOUT THEN OR THEREAFTER RECEIVING FULL PAYMENT
THEREFOR.
SECTION 7.19.
MARKETING OF PRODUCTION.
EXCEPT FOR
CONTRACTS LISTED AND IN EFFECT ON THE DATE HEREOF ON SCHEDULE 7.19, AND
THEREAFTER EITHER DISCLOSED IN WRITING TO THE ADMINISTRATIVE AGENT OR INCLUDED
IN THE MOST RECENTLY DELIVERED RESERVE REPORT (WITH RESPECT TO ALL OF WHICH
CONTRACTS THE BORROWER REPRESENTS THAT IT OR ITS SUBSIDIARIES ARE RECEIVING A
PRICE FOR ALL PRODUCTION SOLD THEREUNDER WHICH IS COMPUTED SUBSTANTIALLY IN
ACCORDANCE WITH THE TERMS OF THE RELEVANT CONTRACT AND ARE NOT HAVING DELIVERIES
CURTAILED SUBSTANTIALLY BELOW THE SUBJECT PROPERTY'S DELIVERY CAPACITY), NO
MATERIAL AGREEMENTS EXIST WHICH ARE NOT CANCELABLE ON 60 DAYS NOTICE OR LESS
WITHOUT PENALTY OR DETRIMENT FOR THE SALE OF PRODUCTION FROM THE BORROWER'S OR
ITS SUBSIDIARIES' HYDROCARBONS (INCLUDING, WITHOUT LIMITATION, CALLS ON OR OTHER
RIGHTS TO PURCHASE, PRODUCTION, WHETHER OR NOT THE SAME ARE CURRENTLY BEING
EXERCISED) THAT (A) PERTAIN TO THE SALE OF PRODUCTION AT A FIXED PRICE AND
(B) HAVE A MATURITY OR EXPIRY DATE OF LONGER THAN SIX (6) MONTHS FROM THE DATE
HEREOF.
SECTION 7.20.
SWAP AGREEMENTS.
SCHEDULE 7.20, AS OF
THE DATE HEREOF, AND AFTER THE DATE HEREOF, EACH REPORT REQUIRED TO BE DELIVERED
BY THE BORROWER PURSUANT TO SECTION 8.01(F), SETS FORTH, A TRUE AND COMPLETE
LIST OF ALL SWAP AGREEMENTS OF THE BORROWER AND EACH SUBSIDIARY, THE MATERIAL
TERMS THEREOF (INCLUDING THE TYPE, TERM, EFFECTIVE DATE, TERMINATION DATE AND
NOTIONAL AMOUNTS OR VOLUMES), THE NET MARK TO MARKET VALUE THEREOF, ALL CREDIT
SUPPORT AGREEMENTS RELATING THERETO (INCLUDING ANY MARGIN REQUIRED OR SUPPLIED)
AND THE COUNTERPARTY TO EACH SUCH AGREEMENT.
SECTION 7.21.
USE OF LOANS AND LETTERS OF CREDIT.
THE PROCEEDS OF THE LOANS AND THE LETTERS OF CREDIT SHALL BE USED (A) TO PROVIDE
WORKING CAPITAL FOR EXPLORATION AND PRODUCTION OPERATIONS, (B) TO PAY FEES AND
EXPENSES RELATED TO THE TRANSACTION, (C) FOR GENERAL CORPORATE PURPOSES, AND
(D) TO PURCHASE ASSETS FROM APACHE CORPORATION PURSUANT TO THE PROVISIONS OF THE
58
APACHE ACQUISITION AGREEMENT.
IN ADDITION, THE BORROWER MAY USE THE PROCEEDS OF
LOANS TO MAKE RESTRICTED PAYMENTS TO THE HOLDERS OF ITS EQUITY INTERESTS
PROVIDED (I) THE AGGREGATE AMOUNT OF THE RESTRICTED PAYMENT DOES NOT EXCEED THE
BORROWER'S EBITDA FOR THE IMMEDIATELY PRECEDING FISCAL QUARTER; AND (II) THE
RESTRICTED PAYMENT IS