LATER THAN ONE BUSINESS DAY AFTER THE RECEIPT BY
BORROWER OR ANY RESTRICTED SUBSIDIARY OF SUCH NET CASH PROCEEDS, BORROWER SHALL
PREPAY THE REVOLVING LOANS TO THE EXTENT REQUIRED TO CAUSE THE REVOLVING
COMMITMENT TO EXCEED THE REVOLVING CREDIT EXPOSURE BY AN AMOUNT EQUAL TO TEN
PERCENT (10%) OF THE REVOLVING COMMITMENT AND USE ALL OF THE REMAINING NET CASH
PROCEEDS TO PREPAY THE LOANS TO THE EXTENT PERMITTED UNDER THE REVOLVING CREDIT
AGREEMENT AS IN EFFECT ON THE EFFECTIVE DATE.
(B)
THE BORROWER WILL NOT, NOR WILL IT PERMIT ANY OF ITS RESTRICTED
SUBSIDIARIES TO, ENGAGE TO ANY MATERIAL EXTENT IN ANY BUSINESS OTHER THAN
BUSINESSES OF THE TYPE
46
CONDUCTED BY THE BORROWER AND ITS RESTRICTED SUBSIDIARIES ON THE DATE OF
EXECUTION OF THIS AGREEMENT AND AFTER GIVING EFFECT TO THE TRANSACTIONS AND
BUSINESSES REASONABLY RELATED THERETO.
SECTION 7.04.
INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS.
THE BORROWER WILL NOT, NOR WILL IT PERMIT ANY OF ITS RESTRICTED
SUBSIDIARIES TO, PURCHASE, HOLD OR ACQUIRE (INCLUDING PURSUANT TO ANY MERGER
WITH ANY PERSON THAT WAS NOT A WHOLLY OWNED RESTRICTED SUBSIDIARY PRIOR TO SUCH
MERGER) ANY CAPITAL STOCK, EVIDENCES OF INDEBTEDNESS OR OTHER SECURITIES
(INCLUDING ANY OPTION, WARRANT OR OTHER RIGHT TO ACQUIRE ANY OF THE FOREGOING)
OF, MAKE OR PERMIT TO EXIST ANY LOANS OR ADVANCES TO, GUARANTEE ANY INDEBTEDNESS
OF, OR MAKE OR PERMIT TO EXIST ANY INVESTMENT OR ANY OTHER INTEREST IN, ANY
OTHER PERSON, OR PURCHASE OR OTHERWISE ACQUIRE (IN ONE TRANSACTION OR A SERIES
OF TRANSACTIONS) ANY ASSETS OF ANY OTHER PERSON CONSTITUTING A BUSINESS UNIT,
EXCEPT:
(A)
PERMITTED INVESTMENTS;
(B)
INVESTMENTS BY THE BORROWER IN THE EQUITY INTERESTS OF ANY
RESTRICTED SUBSIDIARY;
(C)
INVESTMENTS BY THE BORROWER OR GUARANTOR CONSISTING OF
INTERCOMPANY INDEBTEDNESS PERMITTED UNDER SECTION 7.01(C);
(D)
GUARANTEES CONSTITUTING INDEBTEDNESS PERMITTED BY SECTION 7.01;
(E)
INVESTMENTS BY THE BORROWER AND ITS RESTRICTED SUBSIDIARIES THAT
ARE (1) CUSTOMARY IN THE OIL AND GAS BUSINESS, (2) MADE IN THE ORDINARY COURSE
OF THE BORROWER'S OR SUCH RESTRICTED SUBSIDIARY'S BUSINESS, AND (3) MADE IN THE
FORM OF, OR PURSUANT TO, OIL, GAS AND MINERAL LEASES, OPERATING AGREEMENTS,
FARM-IN AGREEMENTS, FARM-OUT AGREEMENTS, DEVELOPMENT AGREEMENTS, UNITIZATION
AGREEMENTS, JOINT BIDDING AGREEMENTS, SERVICES CONTRACTS AND OTHER SIMILAR
AGREEMENTS THAT A REASONABLE AND PRUDENT OIL AND GAS INDUSTRY OWNER OR OPERATOR
WOULD FIND ACCEPTABLE (EXCLUDING, HOWEVER, ANY JOINT VENTURE OR PARTNERSHIP WITH
ANY PERSON THAT IS NOT A RESTRICTED SUBSIDIARY);
(F)
INVESTMENTS CONSISTING OF SWAP AGREEMENTS TO THE EXTENT PERMITTED
UNDER SECTION 7.05; AND
(G)
OTHER INVESTMENTS BY THE BORROWER AND THE RESTRICTED SUBSIDIARIES;
PROVIDED THAT, ON THE DATE ANY SUCH OTHER INVESTMENT IS MADE, THE AMOUNT OF SUCH
INVESTMENT, TOGETHER WITH ALL OTHER INVESTMENTS MADE PURSUANT TO THIS CLAUSE
(G) OF SECTION 7.04 (IN EACH CASE DETERMINED BASED ON THE COST OF SUCH
INVESTMENT) SINCE THE EFFECTIVE DATE, DOES NOT EXCEED IN THE AGGREGATE,
$10,000,000.
SECTION 7.05.
SWAP AGREEMENTS.
THE BORROWER WILL NOT, NOR WILL IT
PERMIT ANY OF ITS RESTRICTED SUBSIDIARIES TO, ENTER INTO OR MAINTAIN ANY SWAP