INSURANCE AGAINST LARCENY, EMBEZZLEMENT, AND
CRIMINAL MISAPPROPRIATION.
IN ADDITION, EACH LOAN PARTY SHALL MAINTAIN
PERFORMANCE BONDS IN RESPECT OF ITS OPERATIONS RELATED TO ITS RESPECTIVE OIL AND
GAS PROPERTIES IN SUCH AMOUNTS AND IN SUCH MANNER AS IS CUSTOMARY FOR COMPANIES
ENGAGED IN THE SAME OR SIMILAR BUSINESS OPERATING IN THE SAME OR SIMILAR
LOCATIONS.
ALL SUCH POLICIES OF INSURANCE SHALL BE IN SUCH AMOUNTS AND WITH
SUCH INSURANCE COMPANIES AS ARE REASONABLY SATISFACTORY TO AGENT, IT BEING
AGREED THAT THE INSURANCE POLICIES AND AMOUNTS MAINTAINED BY EACH LOAN PARTY AS
OF THE INTERIM FACILITY EFFECTIVE DATE ARE SATISFACTORY.
EACH LOAN PARTY SHALL
DELIVER COPIES OF ALL SUCH POLICIES TO AGENT WITH AN ENDORSEMENT NAMING AGENT
(ON BEHALF OF THE LENDERS) AS LOSS PAYEE (UNDER A SATISFACTORY LENDER'S LOSS
PAYABLE ENDORSEMENT) OR ADDITIONAL INSURED, AS APPROPRIATE.
EACH POLICY OF
INSURANCE OR ENDORSEMENT SHALL CONTAIN A CLAUSE REQUIRING THE INSURER TO GIVE
NOT LESS THAN THIRTY (30) DAYS PRIOR WRITTEN NOTICE TO AGENT IN THE EVENT OF
CANCELLATION OF THE POLICY FOR ANY REASON WHATSOEVER.
DURING THE PERIOD OF THE
DRILLING OF WELLS AND THE CONSTRUCTION OF ANY OTHER IMPROVEMENTS COMPRISING A
PART OF THE OIL AND GAS PROPERTIES OF ANY LOAN PARTY, SUCH LOAN PARTY SHALL, AND
SHALL CAUSE ITS CONTRACTORS OR SUBCONTRACTORS TO (AND SHALL CAUSE ITS
SUBSIDIARIES AND THEIR CONTRACTORS AND SUBCONTRACTORS TO), OBTAIN AND MAINTAIN
WELL CONTROL INSURANCE (INCLUDING COVERAGE FOR COSTS AND REDRILLING) AND
BUILDER'S RISK INSURANCE, AS APPLICABLE, IN SUCH FORM AND AMOUNTS AS IS
CUSTOMARY IN THE INDUSTRY (IT BEING UNDERSTOOD THAT SUCH INSURANCE IS NOT
REQUIRED WITH RESPECT TO DRILLING AND CONSTRUCTION ASSOCIATED WITH COAL BED
METHANE WELLS IN WYOMING) AND WORKER'S COMPENSATION INSURANCE COVERING ALL
PERSONS EMPLOYED BY SUCH LOAN PARTY OR ITS OR THEIR AGENTS OR SUBCONTRACTORS OF
ANY TIER IN CONNECTION WITH ANY CONSTRUCTION AFFECTING SUCH OIL AND GAS
PROPERTIES, INCLUDING, WITHOUT LIMITATION, ALL AGENTS AND EMPLOYEES OF SUCH LOAN
PARTY AND ITS AND THEIR SUBCONTRACTORS WITH RESPECT TO WHOM DEATH OR BODILY
INJURY CLAIMS COULD BE ASSERTED AGAINST SUCH LOAN PARTY THEREOF.
IF ANY LOAN
PARTY AT ANY TIME OR TIMES HEREAFTER SHALL FAIL TO OBTAIN OR MAINTAIN ANY OF THE
POLICIES OF INSURANCE REQUIRED ABOVE OR TO PAY ALL PREMIUMS RELATING THERETO,
AGENT MAY AT ANY TIME OR TIMES THEREAFTER OBTAIN AND MAINTAIN SUCH POLICIES OF
INSURANCE AND PAY SUCH PREMIUMS AND TAKE ANY OTHER ACTION WITH RESPECT THERETO
WHICH AGENT DEEMS ADVISABLE; PROVIDED THAT PRIOR TO A DEFAULT OR EVENT OF
DEFAULT, AGENT SHALL NOT OBTAIN ANY NEW INSURANCE POLICIES WITHOUT PRIOR
CONSULTATION WITH SUCH LOAN PARTY.
AGENT SHALL HAVE NO OBLIGATION TO OBTAIN
INSURANCE FOR ANY LOAN PARTY OR PAY ANY PREMIUMS THEREFOR.
BY DOING SO, AGENT
SHALL NOT BE DEEMED TO HAVE WAIVED ANY DEFAULT OR EVENT OF DEFAULT ARISING FROM
ANY LOAN PARTY'S FAILURE TO MAINTAIN SUCH INSURANCE OR PAY ANY PREMIUMS
THEREFOR.
ALL SUMS SO DISBURSED, INCLUDING REASONABLE ATTORNEYS' FEES, COURT
COSTS AND OTHER CHARGES RELATED THERETO, SHALL BE PAYABLE ON DEMAND BY