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; 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 AGREEMENT,
EXCEPT THE EXISTING SWAP AGREEMENTS, AND SWAP AGREEMENTS ENTERED INTO IN THE
ORDINARY COURSE OF BUSINESS WITH APPROVED COUNTERPARTIES AND NOT FOR SPECULATIVE
PURPOSES TO (A) HEDGE OR MITIGATE CRUDE OIL AND NATURAL GAS PRICE RISKS TO WHICH
THE BORROWER OR ANY RESTRICTED SUBSIDIARY HAS ACTUAL EXPOSURE, AND (B)
EFFECTIVELY CAP, COLLAR OR EXCHANGE INTEREST RATES (FROM FIXED TO FLOATING
RATES, FROM ONE FLOATING RATE TO ANOTHER FLOATING RATE OR OTHERWISE) WITH
RESPECT TO ANY INTEREST-BEARING LIABILITY OR INVESTMENT OF ANY CREDIT PARTY;
PROVIDED THAT SUCH SWAP AGREEMENTS (AT THE TIME EACH TRANSACTION UNDER SUCH SWAP
AGREEMENT IS ENTERED INTO) WOULD NOT CAUSE THE AGGREGATE NOTIONAL AMOUNT OF
HYDROCARBONS UNDER ALL SWAP AGREEMENTS THEN IN EFFECT (INCLUDING THE EXISTING
SWAP AGREEMENTS) TO EXCEED AT ANY TIME (I) EIGHTY PERCENT (80%) OF THE
"FORECASTED PRODUCTION FROM TOTAL PROVED RESERVES" (AS DEFINED BELOW) OF THE
BORROWER AND THE RESTRICTED SUBSIDIARIES FOR EACH OF THE FIRST TWO YEARS OF THE
FORTHCOMING FIVE YEAR PERIOD AND (II) SEVENTY PERCENT (70%) OF THE FORECASTED
PRODUCTION FROM TOTAL PROVED RESERVES OF THE BORROWER AND THE RESTRICTED
SUBSIDIARIES FOR EACH OF THE THIRD, FOURTH AND FIFTH YEARS OF THE FORTHCOMING
FIVE YEAR PERIOD.
AS USED IN THIS SECTION, "FORECASTED PRODUCTION FROM TOTAL
PROVED RESERVES" MEANS THE FORECASTED PRODUCTION OF CRUDE OIL AND NATURAL GAS AS
REFLECTED IN THE MOST RECENT RESERVE REPORT DELIVERED TO THE ADMINISTRATIVE
AGENT PURSUANT TO SECTION 6.01, AFTER GIVING EFFECT TO ANY PRO FORMA ADJUSTMENTS
FOR THE CONSUMMATION OF ANY ACQUISITIONS OR DISPOSITIONS SINCE THE EFFECTIVE
DATE OF SUCH RESERVE REPORT.
ONCE THE BORROWER OR ANY RESTRICTED SUBSIDIARIES
ENTERS INTO A SWAP AGREEMENT OR ANY HEDGE TRANSACTION PURSUANT TO ANY SWAP
AGREEMENT, THE TERMS AND CONDITIONS OF SUCH SWAP AGREEMENT AND SUCH HEDGE
TRANSACTION MAY NOT BE AMENDED OR MODIFIED, NOR MAY SUCH SWAP AGREEMENT OR HEDGE
TRANSACTION BE CANCELLED WITHOUT THE PRIOR WRITTEN CONSENT OF MAJORITY LENDERS.
EACH CREDIT PARTY AND EACH LENDER AGREES AND ACKNOWLEDGES THAT (I) THE EXISTING
SWAP AGREEMENTS ARE SWAP AGREEMENTS PERMITTED UNDER THIS SECTION 7.05, (II) AS