Common use of Limitation on Dispositions Clause in Contracts

Limitation on Dispositions. No Restricted Person will Dispose of any of its material assets or properties or any material interest therein, except, to the extent not otherwise forbidden under the Security Documents: (a) equipment that is worthless or obsolete or worn out in the ordinary course of business, which is no longer used or useful in the conduct of its business or which is replaced by equipment of equal suitability and value; (b) inventory (including oil and gas sold as produced and seismic data) that is sold in the ordinary course of business on ordinary trade terms; (c) Equity of any of Parent’s Domestic Subsidiaries that is transferred to Borrower or to another Domestic Subsidiary of Parent (provided that (i) if any such Domestic Subsidiary is wholly-owned by Borrower prior to such transfer, such Domestic Subsidiary shall be transferred to Borrower or to another wholly-owned Domestic Subsidiary of Borrower), and (ii) if any such Domestic Subsidiary is a Guarantor prior to such transfer, such Domestic Subsidiary shall be transferred to Borrower or to another Guarantor and Equity of any of Borrower’s Foreign Subsidiaries that is transferred to Borrower, a Domestic Subsidiary of Borrower or a Foreign Subsidiary of Borrower (provided that (i) if any such Foreign Subsidiary is wholly-owned by a Domestic Subsidiary prior to such transfer, such Foreign Subsidiary shall be transferred to Borrower or a wholly-owned Domestic Subsidiary and (ii) if any such Foreign Subsidiary is wholly-owned by a Foreign Subsidiary prior to such transfer, such Foreign Subsidiary shall be transferred to Borrower or a wholly-owned Foreign Subsidiary); (d) Dispositions of property by any Domestic Subsidiary to Borrower or to a Domestic Subsidiary of Borrower, provided that (i) if the transferor of such property is a Guarantor, the transferee thereof must either be Borrower or a Guarantor and (ii) if the transferor is a wholly-owned Domestic Subsidiary, the transferee thereof must either be Borrower or a wholly-owned Domestic Subsidiary, and Dispositions of property by any Foreign Subsidiary to Borrower, a Domestic Subsidiary of Borrower or a Foreign Subsidiary of Borrower (provided that if the transferor is a wholly-owned Foreign Subsidiary, the transferee thereof must either be Borrower, a wholly-owned Domestic Subsidiary or a wholly-owned Foreign Subsidiary); (e) subject to the provisions of the last paragraph of this Section 7.5, interests in Oil and Gas Properties, or portions thereof, to which no Proved Reserves are attributed; (f) subject to the provisions of the last paragraph of this Section 7.5, interests in Oil and Gas Properties to which Proved Reserves are attributed, Hedging Contracts, and the abandonment of any oil or gas well; provided that, no such Disposition shall be permitted pursuant to this clause (f) if Administrative Agent or Borrower determines that (i) such Disposition would result in the aggregate value of (x) the Dispositions of Restricted Persons’ Oil and Gas Properties since the then most recent Asset Coverage Test Date plus (y) the value of all Hedging Contracts Disposed of since the then most recent Asset Coverage Test Date used in determining the Asset Coverage Ratio as of such most recent Asset Coverage Test Date plus (z) the value of all Oil and Gas Properties abandoned since the then most recent Asset Coverage Test Date to equal an amount greater than 10% of the Total Proved PV-10 on such date or (ii) if as a result of such Disposition the Borrower shall not be in pro forma compliance with Section 7.14(c) hereof after giving effect to such Disposition and any prepayments of the Obligations. (g) a farmout of a drilling spacing unit that has no Proved Developed Producing Reserves by (i) Borrower to a Domestic Subsidiary of Parent that is a Guarantor, or (ii) A Domestic Subsidiary of Parent that is a Guarantor to another Domestic Subsidiary of Parent that is a Guarantor or to Borrower. No Disposition may be made pursuant to Section 7.5(e) or (f) unless (i) made for fair consideration to a Person who is not an Affiliate, and (ii) no Default has occurred and is continuing at the time of such Disposition or would result therefrom. No Restricted Person will elect not to participate in a proposed operation on any Oil and Gas Property constituting Collateral where the effect of such election would be the forfeiture either temporarily (e.g., until a certain sum of money is received out of the forfeited interest) or permanently of any interest in the Collateral.

Limitation on Dispositions. No Restricted Person will Dispose of any of its material assets or properties or any material interest therein, except, to the extent not otherwise forbidden under the Security Documents: (a) equipment that is worthless or obsolete or worn out in the ordinary course of business, which is no longer used or useful in the conduct of its business or which is replaced by equipment of equal suitability and value; (b) inventory (including oil and gas sold as produced and seismic data) that is sold in the ordinary course of business on ordinary trade terms; (c) Equity of any of ParentBorrower’s Domestic Subsidiaries that is transferred to Borrower or to another a Domestic Subsidiary of Parent Borrower (provided that (i) if any such Domestic Subsidiary is wholly-owned by Borrower prior to such transfer, such Domestic Subsidiary shall be transferred to Borrower or to another a wholly-owned Domestic Subsidiary of BorrowerSubsidiary), and (ii) if any such Domestic Subsidiary is a Guarantor prior to such transfer, such Domestic Subsidiary shall be transferred to Borrower or to another Guarantor and Equity of any of Borrower’s Foreign Subsidiaries that is transferred to Borrower, a Domestic Subsidiary of Borrower or a Foreign Subsidiary of Borrower (provided that (i) if any such Foreign Subsidiary is wholly-owned by a Domestic Subsidiary prior to such transfer, such Foreign Subsidiary shall be transferred to Borrower or a wholly-owned Domestic Subsidiary and (ii) if any such Foreign Subsidiary is wholly-owned by a Foreign Subsidiary prior to such transfer, such Foreign Subsidiary shall be transferred to Borrower or a wholly-owned Foreign Subsidiary); (d) Dispositions of property by any Domestic Subsidiary to Borrower or to a Domestic Subsidiary of Borrower, provided that (i) if the transferor of such property is a Guarantor, the transferee thereof must either be Borrower or a Guarantor and (ii) if the transferor is a wholly-owned Domestic Subsidiary, the transferee thereof must either be Borrower or a wholly-owned Domestic Subsidiary, and Dispositions of property by any Foreign Subsidiary to Borrower, a Domestic Subsidiary of Borrower or a Foreign Subsidiary of Borrower (provided that if the transferor is a wholly-owned Foreign Subsidiary, the transferee thereof must either be Borrower, a wholly-owned Domestic Subsidiary or a wholly-owned Foreign Subsidiary); (e) subject to the provisions of the last paragraph of this Section 7.5, interests in Oil and Gas Properties, or portions thereof, to which no Proved Reserves are attributed;; and (f) subject to the provisions of the last paragraph of this Section 7.5, interests in Oil and Gas Properties to which Proved Reserves are attributed, Hedging Contracts, and the abandonment of any oil or gas well; provided that, no such Disposition shall be permitted pursuant to this clause (f) if Administrative Agent or Borrower determines determine that (i) such Disposition would result in the aggregate value of (x) the Dispositions Disposition of Restricted Persons’ Oil and Gas Properties since the then most recent Asset Coverage Test Date redetermination of the Borrowing Base plus (y) the Borrowing Base value of all Hedging Contracts Disposed of since the then most recent Asset Coverage Test Date used in determining redetermination of the Asset Coverage Ratio as of such most recent Asset Coverage Test Date Borrowing Base plus (z) the value Present Value of all Oil and Gas Borrowing Base Properties abandoned since the then most recent Asset Coverage Test Date abandoned, equal to equal an amount greater than 105% of the Total Proved PV-10 on such date or (iiBorrowing Base then in effect, the Borrowing Base shall have been redetermined as provided in Section 2.8(e) and the prepayment, if as a result of such Disposition the Borrower any, required under Section 2.7(c) shall not be in pro forma compliance with Section 7.14(c) hereof after giving effect to such Disposition and any prepayments of the Obligations. (g) a farmout of a drilling spacing unit that has no Proved Developed Producing Reserves by (i) Borrower to a Domestic Subsidiary of Parent that is a Guarantor, or (ii) A Domestic Subsidiary of Parent that is a Guarantor to another Domestic Subsidiary of Parent that is a Guarantor or to Borrowerhave been made. No Disposition may be made pursuant to Section 7.5(e) or (f) unless (i) made for fair consideration to a Person who is not an Affiliate, Affiliate and (ii) no Default has occurred and is continuing at the time of such Disposition or would result therefrom. No Restricted Person will elect not to participate in a proposed operation on any Oil and Gas Property constituting Collateral where the effect of such election would be the forfeiture either temporarily (e.g., until a certain sum of money is received out of the forfeited interest) or permanently of any interest in the Collateral.