GOVERNING THE USE OF THE SAME, WHICH LIMITATIONS ARE CUSTOMARY FOR COMPANIES
ENGAGED IN THE BUSINESS OF THE EXPLORATION AND PRODUCTION OF HYDROCARBONS, WITH
SUCH EXCEPTIONS AS COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT.
(F)
WITH REGARD TO THE VOLUMETRIC PRODUCTION
PAYMENT (THE "PRODUCTION PAYMENT") AND THE NATURAL GAS PURCHASE AGREEMENT (THE
"PURCHASE AGREEMENT") (BOTH AS FURTHER DESCRIBED IN EXHIBIT A TO THE MORTGAGE
AND SECURITY AGREEMENT DATED MARCH 23, 2001 AND RECORDED, INTER ALIA, AT
MORTGAGE BOOK 104, PAGE 228 IN THE OFFICE OF THE MCCREARY COUNTY CLERK):
(I) THE PRODUCTION PAYMENT AND THE PURCHASE AGREEMENT HAVE EXPIRED IN ACCORDANCE
WITH THEIR TERMS, (II) NEITHER O.G. INVESTMENT, L.L.C., NOR JOINT INVESTMENT AND
DEVELOPMENT, L.L.C. ANY LONGER HAVE ANY INTEREST IN THE PRODUCTION PAYMENT
AND/OR THE PURCHASE AGREEMENT; AND (III) ALL OF THE RIGHTS OF ANY PARTY TO
RECEIVE GAS, OR THE PAYMENT THEREFOR, PURSUANT TO THE PRODUCTION PAYMENT OR THE
PURCHASE AGREEMENT HAVE TERMINATED AND HAVE REVERTED TO THE BORROWER OR TO AN
AFFILIATE OF THE BORROWER WHICH IS GIVING SECURITY PURSUANT TO THIS AGREEMENT.
SECTION 7.17.
MAINTENANCE OF PROPERTIES.
EXCEPT FOR
SUCH ACTS OR FAILURES TO ACT AS COULD NOT BE REASONABLY EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT, AND SUBJECT TO THE PRIOR RIGHTS AND LIMITATIONS OF
BORROWER AS AN OWNER OF NON-OPERATED WORKING INTERESTS, THE OIL AND GAS
PROPERTIES (AND PROPERTIES UNITIZED THEREWITH) OF THE BORROWER AND ITS
SUBSIDIARIES HAVE BEEN MAINTAINED, OPERATED AND DEVELOPED IN A GOOD AND
WORKMANLIKE MANNER AND IN CONFORMITY WITH ALL GOVERNMENTAL REQUIREMENTS AND IN
CONFORMITY WITH THE PROVISIONS OF ALL LEASES, SUBLEASES OR OTHER CONTRACTS
COMPRISING A PART OF THE HYDROCARBON INTERESTS AND OTHER CONTRACTS AND
AGREEMENTS FORMING A PART OF THE OIL AND GAS PROPERTIES OF THE BORROWER AND ITS
SUBSIDIARIES.
SPECIFICALLY IN CONNECTION WITH THE FOREGOING, EXCEPT FOR THOSE
AS COULD NOT BE REASONABLY EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT, (I) NO
OIL AND GAS PROPERTY OF THE BORROWER OR ANY
57
SUBSIDIARY IS SUBJECT TO HAVING ALLOWABLE PRODUCTION REDUCED BELOW THE FULL AND
REGULAR ALLOWABLE (INCLUDING THE MAXIMUM PERMISSIBLE TOLERANCE) BECAUSE OF ANY
OVERPRODUCTION (WHETHER OR NOT THE SAME WAS PERMISSIBLE AT THE TIME) AND
(II) NONE OF THE WELLS COMPRISING A PART OF THE OIL AND GAS PROPERTIES (OR
PROPERTIES UNITIZED THEREWITH) OF THE BORROWER OR ANY SUBSIDIARY IS DEVIATED
FROM THE VERTICAL MORE THAN THE MAXIMUM PERMITTED BY GOVERNMENTAL REQUIREMENTS
(EXCEPT WITH RESPECT TO HORIZONTAL WELLS PERMITTED BY GOVERNMENTAL AUTHORITY),
AND SUCH WELLS ARE, IN FACT, BOTTOMED UNDER AND ARE PRODUCING FROM, AND THE WELL
BORES ARE WHOLLY WITHIN, THE OIL AND GAS PROPERTIES (OR IN THE CASE OF WELLS
LOCATED ON PROPERTIES UNITIZED THEREWITH, SUCH UNITIZED PROPERTIES) OF THE
BORROWER OR SUCH SUBSIDIARY.
ALL PIPELINES, WELLS, GAS PROCESSING PLANTS,
PLATFORMS AND OTHER MATERIAL IMPROVEMENTS, FIXTURES AND EQUIPMENT OWNED IN WHOLE
OR IN PART BY THE BORROWER OR ANY OF ITS SUBSIDIARIES THAT ARE NECESSARY TO
CONDUCT NORMAL OPERATIONS ARE BEING MAINTAINED IN A STATE ADEQUATE TO CONDUCT
NORMAL