SUBSIDIARIES, AND (III) THE NUMBER
AND THE PERCENTAGE OF THE OUTSTANDING SHARES OF EACH SUCH CLASS OWNED DIRECTLY
OR INDIRECTLY BY BORROWER.
BORROWER HAS NO JOINT VENTURES OR SIMILAR
ARRANGEMENTS WITH ANY PERSON.
ALL OF THE OUTSTANDING CAPITAL STOCK OF EACH SUCH
SUBSIDIARY HAS BEEN VALIDLY ISSUED AND IS FULLY PAID AND NON-ASSESSABLE.
(D)
EXCEPT AS SET FORTH ON SCHEDULE 5.5(D) TO THE INTERIM DIP CREDIT
AGREEMENT, THERE ARE NO SUBSCRIPTIONS, OPTIONS, WARRANTS, OR CALLS RELATING TO
ANY SHARES OF BORROWER'S SUBSIDIARIES' CAPITAL STOCK, INCLUDING ANY RIGHT OF
CONVERSION OR EXCHANGE UNDER ANY OUTSTANDING SECURITY OR OTHER INSTRUMENT.
NEITHER BORROWER NOR ANY OF ITS SUBSIDIARIES IS SUBJECT TO ANY OBLIGATION
(CONTINGENT OR OTHERWISE) TO REPURCHASE OR OTHERWISE ACQUIRE OR RETIRE ANY
SHARES OF BORROWER'S SUBSIDIARIES' CAPITAL STOCK OR ANY SECURITY CONVERTIBLE
INTO OR EXCHANGEABLE FOR ANY SUCH CAPITAL STOCK.
(E)
(I)
NO LOAN PARTY IS IN VIOLATION OF ANY LAW, STATUTE,
REGULATION, ORDINANCE, JUDGMENT, ORDER, OR DECREE APPLICABLE TO IT (OTHER THAN
ENVIRONMENTAL LAW WHICH IS ADDRESSED IN SECTION 5.11 BELOW), WHICH VIOLATION
COULD REASONABLY BE EXPECTED TO CAUSE A MATERIAL ADVERSE CHANGE.
(II)
NO LOAN PARTY HAS VIOLATED ANY LAW IN ANY RESPECT OR FAILED TO
OBTAIN ANY LICENSE, PERMIT, FRANCHISE OR OTHER AUTHORIZATION FROM ANY
GOVERNMENTAL AUTHORITY (OTHER THAN PURSUANT TO ANY ENVIRONMENTAL LAW WHICH IS
ADDRESSED IN SECTION 5.11 BELOW) NECESSARY FOR THE OWNERSHIP OF ANY OF ITS OIL
AND GAS PROPERTIES OR THE CONDUCT OF ITS BUSINESS WHICH FAILURE COULD NOT
REASONABLY BE EXPECTED TO CAUSE A MATERIAL ADVERSE CHANGE.
EXCEPT AS COULD NOT
REASONABLY BE EXPECTED TO CAUSE A MATERIAL ADVERSE CHANGE, THE OIL AND GAS
PROPERTIES OF THE LOAN PARTIES (AND ASSETS AND PROPERTIES UTILIZED THEREWITH)
HAVE BEEN MAINTAINED, OPERATED AND DEVELOPED IN A GOOD AND WORKMANLIKE MANNER
AND IN CONFORMITY WITH ALL APPLICABLE LAWS AND ALL RULES, REGULATIONS AND ORDERS
OF ALL GOVERNMENTAL AUTHORITIES HAVING JURISDICTION (OTHER THAN PURSUANT TO ANY
ENVIRONMENTAL LAW WHICH IS ADDRESSED IN SECTION 5.11 BELOW) AND IN CONFORMITY
WITH THE PROVISIONS OF ALL LEASES, SUBLEASES OR OTHER CONTRACTS COMPRISING A
PART OF THE HYDROCARBON INTERESTS AND OTHER CONTRACTS AND AGREEMENTS FORMING A
PART OF SUCH OIL AND GAS PROPERTIES, EXCEPT SUCH NON-CONFORMITY RESULTING IN
DEFAULTS THE ENFORCEMENT OF WHICH IS STAYED BY VIRTUE OF THE FILING OF THE
CHAPTER 11 CASES; SPECIFICALLY IN THIS CONNECTION, (A) NO OIL AND GAS PROPERTY
OF ANY LOAN PARTY IS SUBJECT TO HAVING ALLOWABLE PRODUCTION REDUCED BELOW THE
FULL AND REGULAR ALLOWABLE PRODUCTION (INCLUDING THE MAXIMUM PERMISSIBLE
TOLERANCE) BECAUSE OF ANY OVERPRODUCTION (WHETHER OR NOT THE SAME WAS
PERMISSIBLE AT THE TIME) PRIOR TO THE INTERIM FACILITY EFFECTIVE DATE AND
(B) NONE OF THE WELLS COMPRISING A PART OF ANY OIL AND GAS PROPERTY (OR ASSETS
AND PROPERTIES UTILIZED THEREWITH) IS DEVIATED FROM THE VERTICAL, EXCEPT TO THE
EXTENT SUCH DEVIATION COULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL
ADVERSE CHANGE, AND SUCH WELLS ARE, IN FACT, BOTTOMED UNDER AND ARE PRODUCING
FROM, AND THE WELL BORES ARE WHOLLY WITHIN,