(OR AS SET FORTH
IN A NOTICE DELIVERED PURSUANT TO SECTION 8.01(N)).
SECTION 7.16.
PROPERTIES; TITLES, ETC.
(A)
EACH OF THE BORROWER AND THE SUBSIDIARIES
HAS GOOD AND DEFENSIBLE TITLE TO THE OIL AND GAS PROPERTIES EVALUATED IN THE
MOST RECENTLY DELIVERED RESERVE REPORT AND GOOD TITLE TO ALL ITS PERSONAL
PROPERTIES, IN EACH CASE, FREE AND CLEAR OF ALL LIENS EXCEPT LIENS PERMITTED BY
SECTION 9.03.
AFTER GIVING FULL EFFECT TO THE EXCEPTED LIENS, THE BORROWER OR
THE SUBSIDIARY SPECIFIED AS THE OWNER OWNS THE NET INTERESTS IN PRODUCTION
ATTRIBUTABLE TO THE HYDROCARBON INTERESTS AS REFLECTED IN THE MOST RECENTLY
DELIVERED RESERVE REPORT, AND THE OWNERSHIP OF SUCH PROPERTIES SHALL NOT IN ANY
MATERIAL RESPECT OBLIGATE THE BORROWER OR SUCH SUBSIDIARY TO BEAR THE COSTS AND
EXPENSES RELATING TO THE MAINTENANCE, DEVELOPMENT AND OPERATIONS OF EACH SUCH
PROPERTY IN AN AMOUNT IN EXCESS OF THE WORKING INTEREST OF EACH PROPERTY SET
FORTH IN THE MOST RECENTLY DELIVERED RESERVE REPORT THAT IS NOT OFFSET BY A
CORRESPONDING PROPORTIONATE INCREASE IN THE BORROWER'S OR SUCH SUBSIDIARY'S NET
REVENUE INTEREST IN SUCH PROPERTY.
THE OWNERSHIP BY THE BORROWER OR ANY
SUBSIDIARY OF THE HYDROCARBONS AND THE UNDIVIDED INTERESTS THEREIN SPECIFIED ON
THE EXHIBITS TO THE MORTGAGES ARE THE SAME INTERESTS REFLECTED IN THE MOST
RECENTLY DELIVERED RESERVE REPORT.
(B)
ALL MATERIAL LEASES AND AGREEMENTS NECESSARY
FOR THE CONDUCT OF THE BUSINESS OF THE BORROWER AND THE SUBSIDIARIES ARE VALID
AND SUBSISTING, IN FULL FORCE AND EFFECT,
56
AND THERE EXISTS NO DEFAULT OR EVENT OR CIRCUMSTANCE WHICH WITH THE GIVING OF
NOTICE OR THE PASSAGE OF TIME OR BOTH WOULD GIVE RISE TO A DEFAULT UNDER ANY
SUCH LEASE OR LEASES, WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT.
(C)
THE RIGHTS AND PROPERTIES PRESENTLY OWNED,
LEASED OR LICENSED BY THE BORROWER AND THE SUBSIDIARIES INCLUDING, WITHOUT
LIMITATION, ALL EASEMENTS AND RIGHTS OF WAY, INCLUDE ALL RIGHTS AND PROPERTIES
NECESSARY TO PERMIT THE BORROWER AND THE SUBSIDIARIES TO CONDUCT THEIR BUSINESS
IN ALL MATERIAL RESPECTS IN THE SAME MANNER AS ITS BUSINESS HAS BEEN CONDUCTED
PRIOR TO THE DATE HEREOF.
(D)
ALL OF THE PROPERTIES OF THE BORROWER AND
THE SUBSIDIARIES WHICH ARE REASONABLY NECESSARY FOR THE OPERATION OF THEIR
BUSINESSES ARE IN GOOD WORKING CONDITION AND ARE MAINTAINED IN ACCORDANCE WITH
PRUDENT BUSINESS STANDARDS.
(E)
THE BORROWER AND EACH SUBSIDIARY OWNS, OR
IS LICENSED TO USE, ALL TRADEMARKS, TRADENAMES, COPYRIGHTS, PATENTS AND OTHER
INTELLECTUAL PROPERTY MATERIAL TO ITS BUSINESS, AND THE USE THEREOF BY THE
BORROWER AND SUCH SUBSIDIARY DOES NOT INFRINGE UPON THE RIGHTS OF ANY OTHER
PERSON, EXCEPT FOR ANY SUCH INFRINGEMENTS THAT, IN THE AGGREGATE, COULD NOT
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.
THE BORROWER AND
ITS SUBSIDIARIES EITHER OWN OR HAVE VALID LICENSES OR OTHER RIGHTS TO USE ALL
DATABASES, GEOLOGICAL DATA, GEOPHYSICAL DATA, ENGINEERING DATA, SEISMIC DATA,
MAPS, INTERPRETATIONS AND OTHER TECHNICAL INFORMATION USED IN THEIR BUSINESSES
AS PRESENTLY CONDUCTED, SUBJECT TO THE LIMITATIONS CONTAINED IN THE AGREEMENTS