OBSOLETE,
DEPRECIATED, NON-WORKING OR NON-ECONOMICAL ITEMS OF EQUIPMENT OR OTHER PERSONAL
PROPERTY WITHOUT REGARD TO THE LIMITATION OF SECTION 8.1(C)(2) BELOW), MAINTAIN
INSURANCE NOW IN FORCE WITH RESPECT TO THE ASSETS, AND PAY OR CAUSE TO BE PAID
ALL COSTS AND EXPENSES IN CONNECTION THEREWITH PROMPTLY WHEN DUE;
(2)
NOT COMMIT TO PARTICIPATE IN THE DRILLING OF ANY NEW WELL OR OTHER
NEW OPERATIONS ON THE E & P ASSETS THE PROJECTED COST OF WHICH (NET TO SELLER'S
INTEREST AND WITHOUT CONSIDERATION OF ANY COST OVERRUNS) IS IN EXCESS OF $25,000
IN ANY SINGLE INSTANCE, WITHOUT THE ADVANCE WRITTEN CONSENT OF BUYER, WHICH
CONSENT OR NON-CONSENT MUST BE GIVEN BY BUYER WITHIN THE LESSER OF (X) TEN (10)
DAYS OF BUYER'S RECEIPT OF THE NOTICE FROM SELLER OR (Y) ONE-HALF (1⁄2) OF THE
APPLICABLE NOTICE PERIOD WITHIN WHICH SELLER IS CONTRACTUALLY OBLIGATED TO
RESPOND TO THIRD PARTIES TO AVOID A DEEMED ELECTION BY SELLER REGARDING SUCH
OPERATION, AS SPECIFIED IN SELLER'S NOTICE TO BUYER REQUESTING SUCH CONSENT;
PROVIDED THAT, FAILURE BY BUYER TO RESPOND WITHIN THE AFORESAID APPLICABLE
PERIOD SHALL CONSTITUTE BUYER'S CONSENT TO SELLER'S PARTICIPATION IN SUCH WELL
OR OTHER OPERATION;
(3)
MAINTAIN AND KEEP THE ASSETS IN FULL FORCE AND EFFECT, EXCEPT
WHERE SUCH FAILURE IS DUE TO (I) THE FAILURE TO PAY A DELAY RENTAL, ROYALTY,
SHUT IN ROYALTY OR OTHER PAYMENT BY MISTAKE OR OVERSIGHT (INCLUDING SELLER'S
NEGLIGENCE) UNLESS CAUSED BY SELLER'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR
(II) THE FAILURE TO PARTICIPATE IN AN OPERATION WHICH BUYER DOES NOT TIMELY
APPROVE; AND
(4)
USE SELLER'S REASONABLE BEST EFFORTS TO MAINTAIN ITS RELATIONSHIPS
WITH SUPPLIERS, CUSTOMERS AND OTHERS HAVING MATERIAL BUSINESS RELATIONS WITH
SELLER WITH RESPECT TO THE ASSETS SO THAT THEY WILL BE PRESERVED FOR THE COMPANY
ON AND AFTER THE CLOSING DATE.
(D)
CONTRACTS AND AGREEMENTS.
SELLER SHALL NOT:
(1)
GRANT OR CREATE ANY PREFERENCE RIGHT OR TRANSFER REQUIREMENT WITH
RESPECT TO THE ASSETS EXCEPT (I) IN CONNECTION WITH THE PERFORMANCE BY SELLER OF
AN OBLIGATION OR AGREEMENT EXISTING ON THE EFFECTIVE TIME OR PURSUANT TO THIS
AGREEMENT OR (II) IN CONNECTION WITH THE RENEWAL OR EXTENSION OF ASSETS AFTER
THE EFFECTIVE TIME IF GRANTING OR CREATING SUCH PREFERENCE RIGHT OR TRANSFER
REQUIREMENT IS A CONDITION OF SUCH RENEWAL OR EXTENSION;
13
(2)
ENTER INTO ANY OIL, GAS OR OTHER HYDROCARBON SALES, EXCHANGE,
GATHERING, PROCESSING OR TRANSPORTATION CONTRACT WITH RESPECT TO THE ASSETS
HAVING A TERM IN EXCESS OF ONE (1) YEAR WHICH IS NOT TERMINABLE WITHOUT PENALTY
ON NOTICE OF NINETY (90) DAYS OR LESS;
(3)
VOLUNTARILY RELINQUISH SELLER'S POSITION AS OPERATOR WITH RESPECT
TO ANY OF THE ASSETS; OR
(4)
ENTER INTO, TERMINATE EARLY, AMEND OR DEFAULT UNDER ANY DERIVATIVE
WITHOUT BUYER'S PRIOR WRITTEN CONSENT.
SECTION 8.2
QUALIFICATIONS ON CONDUCT.
(A)
EMERGENCIES; LEGAL REQUIREMENTS.
SELLER MAY TAKE (OR NOT TAKE, AS
THE CASE MAY BE) ANY OF THE ACTIONS MENTIONED IN SECTION 8.1 IF REASONABLY
NECESSARY UNDER EMERGENCY CIRCUMSTANCES (OR IF REQUIRED OR PROHIBITED, AS THE
CASE MAY BE, PURSUANT TO