ACTING IN AN OFFICIAL CAPACITY, IN ORDER TO
OBTAIN, RETAIN OR DIRECT BUSINESS OR OBTAIN ANY IMPROPER ADVANTAGE, IN VIOLATION
OF THE UNITED STATES FOREIGN CORRUPT PRACTICES ACT OF 1977, AS AMENDED.
27
4.16
PROPER FILING OF TAX RETURNS; PAYMENT OF TAXES
DUE.
EACH BORROWER AND GUARANTOR HAS DULY AND PROPERLY FILED ITS UNITED STATES
INCOME TAX RETURN AND ALL OTHER TAX RETURNS WHICH ARE REQUIRED TO BE FILED AND
HAS PAID ALL TAXES DUE EXCEPT SUCH AS ARE BEING CONTESTED IN GOOD FAITH AND AS
TO WHICH ADEQUATE PROVISIONS AND DISCLOSURES HAVE BEEN MADE.
THE RESPECTIVE
CHARGES AND RESERVES ON THE BOOKS OF THE BORROWERS WITH RESPECT TO TAXES AND
OTHER GOVERNMENTAL CHARGES ARE ADEQUATE.
4.17
REFUNDS.
EXCEPT AS DESCRIBED ON EXHIBIT IV UNDER
THE HEADING "REFUNDS," NO ORDERS OF, PROCEEDINGS PENDING BEFORE, OR OTHER
REQUIREMENTS OF, THE FEDERAL ENERGY REGULATORY COMMISSION, THE TEXAS RAILROAD
COMMISSION, OR ANY GOVERNMENTAL AUTHORITY EXIST WHICH COULD RESULT IN THE
BORROWER BEING REQUIRED TO REFUND ANY MATERIAL PORTION OF THE PROCEEDS RECEIVED
OR TO BE RECEIVED FROM THE SALE OF HYDROCARBONS CONSTITUTING PART OF THE
BORROWING BASE OIL AND GAS PROPERTIES.
4.18
MATERIAL AND GAS CONTRACTS. EXCEPT AS DESCRIBED
ON EXHIBIT IV UNDER THE HEADING "GAS CONTRACTS," NO BORROWER (A) IS OBLIGATED IN
ANY MATERIAL RESPECT BY VIRTUE OF ANY PREPAYMENT MADE UNDER ANY CONTRACT
CONTAINING A "TAKE-OR-PAY" OR "PREPAYMENT" PROVISION OR UNDER ANY SIMILAR
AGREEMENT TO DELIVER HYDROCARBONS PRODUCED FROM OR ALLOCATED TO ANY OF THE
BORROWING BASE OIL AND GAS PROPERTIES AT SOME FUTURE DATE WITHOUT RECEIVING FULL
PAYMENT THEREFOR WITHIN 90 DAYS OF DELIVERY, AND (B) HAS PRODUCED GAS, IN ANY
MATERIAL AMOUNT, SUBJECT TO, AND NEITHER BORROWER NOR ANY OF THE BORROWING BASE
OIL AND GAS PROPERTIES ARE SUBJECT TO, BALANCING RIGHTS OF THIRD PARTIES OR
SUBJECT TO BALANCING DUTIES UNDER GOVERNMENTAL REQUIREMENTS, EXCEPT AS TO SUCH
MATTERS FOR WHICH THE BORROWER HAS ESTABLISHED MONETARY RESERVES ADEQUATE IN
AMOUNT TO SATISFY SUCH OBLIGATIONS AND HAVE SEGREGATED SUCH RESERVES FROM OTHER
ACCOUNTS.
EXCEPT AS DESCRIBED ON EXHIBIT IV UNDER THE HEADING "MATERIAL
CONTRACTS," NO BORROWER NOR ANY OF ITS BORROWING BASE OIL AND GAS PROPERTIES ARE
SUBJECT TO ANY CONTRACT OR AGREEMENT WHICH THE DEFAULT THEREUNDER BY A BORROWER
WOULD CAUSE SUCH BORROWER TO FAIL TO HAVE DEFENSIBLE TITLE, OTHER THAN WHERE
SUCH FAILURE COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.
4.19
INTELLECTUAL PROPERTY. THE BORROWERS OWN OR ARE
LICENSED TO USE ALL INTELLECTUAL PROPERTY NECESSARY TO CONDUCT ALL BUSINESS
MATERIAL TO ITS CONDITION (FINANCIAL OR OTHERWISE), BUSINESS, OR OPERATIONS AS
SUCH BUSINESS IS CURRENTLY CONDUCTED. NO CLAIM HAS BEEN ASSERTED OR IS PENDING
BY ANY PERSON WITH THE RESPECT TO THE USE OF ANY SUCH INTELLECTUAL PROPERTY OR
CHALLENGING OR QUESTIONING THE VALIDITY OR EFFECTIVENESS OF ANY SUCH
INTELLECTUAL PROPERTY; AND THE BORROWERS KNOW OF NO VALID BASIS FOR ANY SUCH
CLAIM. THE USE OF SUCH INTELLECTUAL PROPERTY BY THE BORROWERS DO NOT INFRINGE ON
THE RIGHTS OF ANY PERSON, EXCEPT FOR SUCH CLAIMS