BORROWER OR THE SUBSIDIARY, AS
APPLICABLE, SHALL BE THE CONTINUING OR SURVIVING ENTITY.
SECTION 9.12
SALE OF PROPERTIES.
THE BORROWER
WILL NOT, AND WILL NOT PERMIT ANY SUBSIDIARY TO, SELL, ASSIGN, FARM-OUT, CONVEY
OR OTHERWISE TRANSFER ANY PROPERTY (OTHER THAN TO THE BORROWER OR ANY GUARANTOR)
EXCEPT FOR (A) THE SALE OF HYDROCARBONS IN THE ORDINARY COURSE OF BUSINESS;
(B) FARMOUTS OF UNDEVELOPED ACREAGE TO WHICH NO PROVED RESERVES ARE ATTRIBUTABLE
AND ASSIGNMENTS IN CONNECTION WITH SUCH FARMOUTS; (C) THE SALE OR TRANSFER OF
EQUIPMENT THAT IS NO LONGER NECESSARY FOR THE BUSINESS OF THE BORROWER OR SUCH
SUBSIDIARY OR IS REPLACED BY EQUIPMENT OF AT LEAST COMPARABLE VALUE AND USE;
(D) THE SALE OR OTHER DISPOSITION OF ANY OIL AND GAS PROPERTY OR ANY INTEREST
THEREIN OR ANY SUBSIDIARY OWNING OIL AND GAS PROPERTIES; PROVIDED THAT
(I) EITHER (A) AT LEAST 75% OF THE CONSIDERATION RECEIVED IN RESPECT OF SUCH
SALE OR OTHER DISPOSITION SHALL BE CASH AND ANY PORTION OF THE NON-CASH
CONSIDERATION RECEIVED (TO THE EXTENT CONSTITUTING AN INVESTMENT) IS PERMITTED
UNDER SECTION 9.05 OR (B) SUCH CONSIDERATION CONSISTS OF OIL AND GAS PROPERTIES
WHICH QUALIFY FOR NONRECOGNITION OF GAIN OR LOSS UNDER THE PROVISIONS OF
SECTION 1031 OF THE CODE (PROVIDED THAT NOTWITHSTANDING THE FOREGOING, IF A
BORROWING BASE DEFICIENCY RESULTS FROM SUCH DISPOSITION, THE CASH PORTION OF THE
CONSIDERATION SHALL BE AN AMOUNT AT LEAST SUFFICIENT TO PAY SUCH BORROWING BASE
DEFICIENCY UNDER SECTION 3.04(C)(IV)), (II) THE CONSIDERATION RECEIVED IN
RESPECT OF SUCH SALE OR OTHER DISPOSITION SHALL BE EQUAL TO OR GREATER THAN THE
FAIR MARKET VALUE OF THE OIL AND GAS PROPERTY, INTEREST THEREIN OR SUBSIDIARY
SUBJECT OF SUCH SALE OR OTHER DISPOSITION (AND IF SUCH SALE IS FOR OIL AND GAS
PROPERTIES HAVING A FAIR MARKET VALUE IN EXCESS OF $50,000,000, AS REASONABLY
DETERMINED BY THE BOARD OF DIRECTORS OF THE BORROWER AND, IF REQUESTED BY THE
ADMINISTRATIVE AGENT, THE BORROWER SHALL DELIVER A CERTIFICATE OF A RESPONSIBLE
OFFICER OF THE BORROWER CERTIFYING TO THAT EFFECT), (III) IF SUCH SALE OR OTHER
DISPOSITION OF OIL AND GAS PROPERTY OR SUBSIDIARY OWNING OIL AND GAS PROPERTIES
INCLUDED IN THE MOST RECENTLY DELIVERED RESERVE REPORT DURING ANY PERIOD BETWEEN
TWO SUCCESSIVE SCHEDULED REDETERMINATION DATES HAS A FAIR MARKET VALUE IN EXCESS
OF FIVE PERCENT (5%) OF THE THEN EFFECTIVE BORROWING BASE, THE BORROWING BASE
SHALL BE REDUCED, EFFECTIVE IMMEDIATELY UPON SUCH SALE OR DISPOSITION, BY AN
AMOUNT EQUAL TO THE VALUE, IF ANY, ASSIGNED SUCH PROPERTY IN THE MOST RECENTLY
DELIVERED RESERVE REPORT AND (IV) IF ANY SUCH SALE OR OTHER DISPOSITION IS OF A
SUBSIDIARY OWNING OIL AND GAS PROPERTIES, SUCH SALE OR OTHER DISPOSITION SHALL
INCLUDE ALL THE EQUITY INTERESTS OF SUCH SUBSIDIARY; (E) SALES AND OTHER
DISPOSITIONS OF PROPERTIES NOT REGULATED BY SECTION 9.12(A) TO (D) HAVING A FAIR
MARKET VALUE NOT TO EXCEED $200,000,000 DURING ANY 12-MONTH PERIOD; AND (F) THE
SALE OF THE RILEY RIDGE GAS PLANT AND RELATED ASSETS TO THE RILEY RIDGE SPV.
SECTION 9.13
ENVIRONMENTAL MATTERS.