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 OR SPONSORED PARTNERSHIP;
(C)
INVESTMENTS BY THE BORROWER OR ANY 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;
(F)
INVESTMENTS CONSISTING OF SWAP AGREEMENTS TO THE EXTENT
PERMITTED UNDER SECTION 7.05;
(G)
INVESTMENTS EXISTING AS THE DATE HEREOF AND SET FORTH ON
SCHEDULE 7.04;
(H)
INVESTMENTS CONSISTING OF (I) LOANS AND ADVANCES TO EMPLOYEES
FOR MOVING, ENTERTAINMENT, TRAVEL AND OTHER SIMILAR EXPENSES IN THE ORDINARY
COURSE OF BUSINESS AND (II) OTHER SHORT TERM LOANS TO EMPLOYEES NOT TO EXCEED,
WITH RESPECT TO THE FOREGOING CLAUSES (I) AND (II) TOGETHER, $250,000 IN THE
AGGREGATE AT ANY TIME OUTSTANDING;
(I)
INVESTMENTS REPRESENTING THE NON-CASH PORTION OF THE
CONSIDERATION RECEIVED FOR ANY SALE, TRANSFER, LEASE OR OTHER DISPOSITION OF ANY
ASSETS PERMITTED UNDER SECTION 7.03, NOT TO EXCEED $1,000,000 IN THE AGGREGATE
AT ANY TIME OUTSTANDING; AND
(J)
OTHER INVESTMENTS BY THE BORROWER AND THE RESTRICTED
SUBSIDIARIES; PROVIDED THAT, (1) ON THE DATE ANY SUCH INVESTMENT IS MADE, THE
AMOUNT OF SUCH INVESTMENT, TOGETHER WITH ALL OTHER INVESTMENTS MADE PURSUANT TO
THIS CLAUSE (J) 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, AND (2) BORROWING BASE USAGE IS LESS THAN 90% ON THE DATE OF AND
AFTER GIVING EFFECT TO SUCH INVESTMENT.
SECTION 7.05.
SWAP AGREEMENTS.
THE BORROWER WILL NOT, NOR WILL THE
BORROWER PERMIT ANY OF ITS RESTRICTED SUBSIDIARIES OR ANY SPONSORED PARTNERSHIP
TO, ENTER INTO ANY SWAP AGREEMENT, EXCEPT SWAP AGREEMENTS ENTERED INTO IN THE
ORDINARY COURSE OF BUSINESS AND NOT FOR SPECULATIVE PURPOSES TO (A) HEDGE OR
MITIGATE CRUDE OIL AND NATURAL GAS PRICE RISKS TO WHICH THE BORROWER, ANY
RESTRICTED SUBSIDIARY OR ANY SPONSORED PARTNERSHIP HAS ACTUAL EXPOSURE (WHETHER
OR NOT TREATED AS A HEDGE FOR ACCOUNTING PURPOSES UNDER GAAP; PROVIDED THAT SUCH
SWAP AGREEMENTS (AT THE TIME EACH TRANSACTION UNDER