WHEN RECORDED RETURN TO:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
2300 First City Tower
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION,
SECURITY AGREEMENT AND FINANCING STATEMENT
(TEXAS)
FROM
▇▇▇▇▇▇ OIL CORPORATION
(TAXPAYER I.D. ▇▇-▇▇▇▇▇▇▇)
TO
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, AS TRUSTEE
FOR THE BENEFIT OF
BANK OF MONTREAL, AS AGENT
(TAXPAYER I.D. ▇▇▇▇▇▇▇▇▇)
TABLE OF CONTENTS
ARTICLE I GRANT OF LIEN AND INDEBTEDNESS SECURED
Section 1.01 GRANT OF LIENS. . . . . . . . . . . . . . . . . . . . .1
Section 1.02 GRANT OF SECURITY INTEREST. . . . . . . . . . . . . . .4
Section 1.03 INDEBTEDNESS SECURED. . . . . . . . . . . . . . . . . .4
Section 1.04 FIXTURE FILING, ETC.. . . . . . . . . . . . . . . . . .5
Section 1.05 PRO RATA BENEFIT. . . . . . . . . . . . . . . . . . . .5
Section 1.06 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . .6
ARTICLE II ASSIGNMENT OF PRODUCTION
Section 2.01 ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . .6
Section 2.02 RIGHTS UNDER TEXAS ACT. . . . . . . . . . . . . . . . .7
Section 2.03 NO MODIFICATION OF PAYMENT OBLIGATIONS. . . . . . . . .7
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01 TITLE . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 3.02 DEFEND TITLE. . . . . . . . . . . . . . . . . . . . . .7
Section 3.03 NOT A FOREIGN PERSON. . . . . . . . . . . . . . . . . .7
Section 3.04 POWER TO CREATE LIEN AND SECURITY . . . . . . . . . . .8
Section 3.05 REVENUE AND COST BEARING INTEREST . . . . . . . . . . .8
Section 3.06 RENTALS PAID; LEASES IN EFFECT. . . . . . . . . . . . .8
Section 3.07 OPERATION BY THIRD PARTIES. . . . . . . . . . . . . . .8
Section 3.08 ABANDON, SALES. . . . . . . . . . . . . . . . . . . . .8
Section 3.09 FAILURE TO PERFORM. . . . . . . . . . . . . . . . . . .8
Section 3.10 OPERATION OF MORTGAGED PROPERTY, ETC. . . . . . . . . .9
ARTICLE IV RIGHTS AND REMEDIES
Section 4.01 EVENT OF DEFAULT. . . . . . . . . . . . . . . . . . . 10
Section 4.02 FORECLOSURE AND SALE. . . . . . . . . . . . . . . . . 10
Section 4.03 SUBSTITUTE TRUSTEES AND AGENTS. . . . . . . . . . . . 11
Section 4.04 JUDICIAL FORECLOSURE; RECEIVERSHIP. . . . . . . . . . 11
Section 4.05 FORECLOSURE FOR INSTALLMENTS. . . . . . . . . . . . . 11
Section 4.06 SEPARATE SALES. . . . . . . . . . . . . . . . . . . . 12
Section 4.07 POSSESSION OF MORTGAGED PROPERTY. . . . . . . . . . . 12
Section 4.08 OCCUPANCY AFTER FORECLOSURE . . . . . . . . . . . . . 12
Section 4.09 REMEDIES CUMULATIVE, CONCURRENT AND NONEXCLUSIVE. . . 12
Section 4.10 NO RELEASE OF OBLIGATIONS . . . . . . . . . . . . . . 13
Section 4.11 RELEASE OF AND RESORT TO COLLATERAL . . . . . . . . . 13
Section 4.12 WAIVER OF REDEMPTION, NOTICE AND MARSHALLING OF ASSETS,
ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.13 DISCONTINUANCE OF PROCEEDINGS . . . . . . . . . . . . 14
Section 4.14 APPLICATION OF PROCEEDS . . . . . . . . . . . . . . . 14
Section 4.15 RESIGNATION OF OPERATOR . . . . . . . . . . . . . . . 14
Section 4.16 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . 15
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ARTICLE V THE TRUSTEE
Section 5.01 DUTIES, RIGHTS, AND POWERS OF TRUSTEE . . . . . . . . 15
Section 5.02 SUCCESSOR TRUSTEE . . . . . . . . . . . . . . . . . . 16
Section 5.03 RETENTION OF MONEYS . . . . . . . . . . . . . . . . . 16
ARTICLE VI MISCELLANEOUS
Section 6.01 INSTRUMENT CONSTRUED AS MORTGAGE, ETC.. . . . . . . . 16
Section 6.02 RELEASE OF MORTGAGE . . . . . . . . . . . . . . . . . 17
Section 6.03 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . 17
Section 6.04 SUCCESSORS AND ASSIGNS OF PARTIES . . . . . . . . . . 17
Section 6.05 SATISFACTION OF PRIOR ENCUMBRANCE . . . . . . . . . . 17
Section 6.06 SUBROGATION OF TRUSTEE. . . . . . . . . . . . . . . . 17
Section 6.07 NATURE OF COVENANTS . . . . . . . . . . . . . . . . . 17
Section 6.08 NOTICES . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.09 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.10 EXCULPATION PROVISIONS. . . . . . . . . . . . . . . . 18
Exhibit A - Mortgaged Property
Exhibit B - Agreements
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MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION,
SECURITY AGREEMENT AND FINANCING STATEMENT
This MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY
AGREEMENT AND FINANCING STATEMENT (this "MORTGAGE") is entered into as of
the effective time and date hereinafter stated (the "EFFECTIVE DATE") by
▇▇▇▇▇▇ OIL CORPORATION, whose address for notice is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("MORTGAGOR"), to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as
Trustee, whose address for notice is ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ ("TRUSTEE") for the benefit of BANK OF MONTREAL with offices at
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, as Agent (in such
capacity, "MORTGAGEE") for itself and such other financial institutions
(collectively called the "LENDERS") which are or hereafter become a party
to the Credit Agreement (hereinafter defined).
R E C I T A L S:
A. On even date herewith, Mortgagor, Mortgagee, and the lenders
parties thereto (the "LENDERS") are executing a Credit Agreement (such
agreement, as may from time to time be amended or supplemented, called the
"CREDIT AGREEMENT") pursuant to which, upon the terms and conditions stated
therein, the Lenders agree to make loans to Mortgagor.
B. The Lenders have conditioned their obligations under the Credit
Agreement upon the execution and delivery by ▇▇▇▇▇▇▇▇▇ of this Mortgage,
and ▇▇▇▇▇▇▇▇▇ has agreed to enter into this Mortgage.
C. Therefore, in order to comply with the terms and conditions of
the Credit Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, ▇▇▇▇▇▇▇▇▇ hereby
agrees with Mortgagee as follows:
ARTICLE I
GRANT OF LIEN AND INDEBTEDNESS SECURED
Section 1.01 GRANT OF LIENS. To secure payment of the Indebtedness
(as hereinafter defined) and the performance of the covenants and
obligations herein contained, Mortgagor does by these presents ▇▇▇▇▇▇
▇▇▇▇▇, BARGAIN, SELL, ASSIGN, MORTGAGE, TRANSFER and CONVEY unto Trustee
and ▇▇▇▇▇▇▇'s successors and substitutes in trust hereunder, for the use
and benefit of Mortgagee, the real and personal property, rights, titles,
interests and estates described in the following paragraphs (a) through (g)
(collectively called the "MORTGAGED PROPERTY"):
(a) All rights, titles, interests and estates now owned or hereafter
acquired by Mortgagor in and to the oil and gas leases and/or oil, gas and
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other mineral leases and other interests and estates and the lands and
premises covered or affected thereby which are described on EXHIBIT A
hereto (collectively called the "HYDROCARBON PROPERTY") or which
Hydrocarbon Property is otherwise referred to herein, and specifically, but
without limitation, the undivided interests of Mortgagor which are more
particularly described on attached EXHIBIT A.
(b) All rights, titles, interests and estates now owned or hereafter
acquired by Mortgagor in and to (i) the properties now or hereafter pooled
or unitized with the Hydrocarbon Property; (ii) all presently existing or
future unitization, communitization, pooling agreements and declarations of
pooled units and the units created thereby (including, without limitation,
all units created under orders, regulations, rules or other official acts
of any Federal, State or other governmental body or agency having
jurisdiction and any units created solely among working interest owners
pursuant to operating agreements or otherwise) which may affect all or any
portion of the Hydrocarbon Property including, without limitation, those
units which may be described or referred to on attached EXHIBIT A;
(iii) all operating agreements, production sales or other contracts,
farmout agreements, farm-in agreements, participation agreements,
exploration agreements, joint venture agreements, area of mutual interest
agreements, assignments, equipment leases and other agreements described or
referred to in this Mortgage or which relate to any of the Hydrocarbon
Property or interests in the Hydrocarbon Property described or referred to
herein or on attached EXHIBIT A or to the production, sale, purchase,
exchange, processing, handling, storage, transporting or marketing of the
Hydrocarbons (hereinafter defined) from or attributable to such Hydrocarbon
Property or interests, including without limitation, all such agreements
described in EXHIBIT B attached hereto; (iv) all geological, geophysical,
engineering, accounting, title, legal, and other technical or business data
concerning the Mortgaged Property, the Hydrocarbons, or any other item of
Property which are in the possession of Mortgagor or in which Mortgagor can
otherwise grant a security interest, and all books, files, records,
magnetic media, computer records, and other forms of recording or obtaining
access to such data; and (v) the Hydrocarbon Property described on attached
EXHIBIT A and covered by this Mortgage even though ▇▇▇▇▇▇▇▇▇'s interests
therein be incorrectly described or a description of a part or all of such
Hydrocarbon Property or Mortgagor's interests therein be omitted; it being
intended by ▇▇▇▇▇▇▇▇▇ and Mortgagee herein to cover and affect hereby all
interests which ▇▇▇▇▇▇▇▇▇ may now own or may hereafter acquire in and to
the Hydrocarbon Property notwithstanding that the interests as specified on
EXHIBIT A may be limited to particular lands, specified depths or
particular types of property interests.
(c) All rights, titles, interests and estates now owned or hereafter
acquired by Mortgagor in and to all oil, gas, casinghead gas, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products
refined therefrom and all other minerals (collectively called the
"HYDROCARBONS") in and under and which may be produced and saved from or
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attributable to the Hydrocarbon Property, the lands pooled or unitized
therewith and ▇▇▇▇▇▇▇▇▇'s interests therein, including all oil in tanks and
all rents, issues, profits, proceeds, products, revenues and other income
from or attributable to the Hydrocarbon Property, the lands pooled or
unitized therewith and ▇▇▇▇▇▇▇▇▇'s interests therein which are subjected or
required to be subjected to the liens and security interests of this
Mortgage.
(d) All tenements, hereditaments, appurtenances and properties in
anywise appertaining, belonging, affixed or incidental to the Hydrocarbon
Property, rights, titles, interests and estates described or referred to in
paragraphs (a) and (b) above, which are now owned or which may hereafter be
acquired by Mortgagor, including, without limitation, any and all property,
real or personal, now owned or hereafter acquired and situated upon, used,
held for use, or useful in connection with the operating, working or
development of any of such Hydrocarbon Property or the lands pooled or
unitized therewith (excluding drilling rigs, trucks, automotive equipment
or other personal property which may be taken to the premises for the
purpose of drilling a well or for other similar temporary uses) and
including any and all oil ▇▇▇▇▇, gas ▇▇▇▇▇, injection ▇▇▇▇▇ or other ▇▇▇▇▇,
buildings, structures, field separators, liquid extraction plants, plant
compressors, pumps, pumping units, pipelines, sales and flow lines,
gathering systems, field gathering systems, salt water disposal facilities,
tanks and tank batteries, fixtures, valves, fittings, machinery and parts,
engines, boilers, meters, apparatus, equipment, appliances, tools,
implements, cables, wires, towers, casing, tubing and rods, surface leases,
rights-of-way, easements, servitudes, licenses and other surface and
subsurface rights together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing properties.
(e) Any property that may from time to time hereafter, by delivery or
by writing of any kind, be subjected to the lien and security interest
hereof by ▇▇▇▇▇▇▇▇▇ or by anyone on ▇▇▇▇▇▇▇▇▇'s behalf; and the Trustee is
hereby authorized to receive the same at any time as additional security
hereunder.
(f) All of the rights, titles and interests of every nature
whatsoever now owned or hereafter acquired by ▇▇▇▇▇▇▇▇▇ in and to the
Hydrocarbon Property rights, titles, interests and estates and every part
and parcel thereof, including, without limitation, the Hydrocarbon Property
rights, titles, interests and estates as the same may be enlarged by the
discharge of any payments out of production or by the removal of any
charges or Permitted Encumbrances (as hereinafter defined in Section 3.01)
to which any of the Hydrocarbon Property rights, titles, interests or
estates are subject, or otherwise; all rights of Mortgagor to liens and
security interests securing payment of proceeds from the sale of production
from the Mortgaged Property, including, but not limited to, those liens and
security interests provided in Tex. Bus. & Com. Code ▇▇▇. 9.319
(Tex. UCC) (▇▇▇▇▇▇ ▇▇▇▇. 1989) ("9.319 TEX. UCC"), as amended from
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time to time; together with any and all renewals and extensions of any of
the Hydrocarbon Property rights, titles, interests or estates; all
contracts and agreements supplemental to or amendatory of or in
substitution for the contracts and agreements described or mentioned above;
and any and all additional interests of any kind hereafter acquired by
Mortgagor in and to the Hydrocarbon Property rights, titles, interests or
estates.
(g) All accounts, contract rights, inventory, general intangibles,
insurance contracts and insurance proceeds constituting a part of, relating
to or arising out of those portions of the Mortgaged Property which are
described in paragraphs (a) through (f) above and all proceeds and products
of all such portions of the Mortgaged Property and payments in lieu of
production (such as "take or pay" payments), whether such proceeds or
payments are goods, money, documents, instruments, chattel paper,
securities, accounts, general intangibles, fixtures, real property, or
other assets.
Any fractions or percentages specified on attached EXHIBIT A in
referring to Mortgagor's interests are solely for purposes of the
warranties made by Mortgagor pursuant to Sections 3.01 and 3.05 hereof and
shall in no manner limit the quantum of interest affected by this
Section 1.01 with respect to any Hydrocarbon Property or with respect to
any unit or well identified on said EXHIBIT A.
TO HAVE AND TO HOLD the Mortgaged Property unto the Trustee and to his
successors and assigns forever to secure the payment of the Indebtedness
(hereinafter defined) and to secure the performance of the covenants,
agreements, and obligations of the Mortgagor herein contained.
Section 1.02 GRANT OF SECURITY INTEREST. To further secure the
Indebtedness, ▇▇▇▇▇▇▇▇▇ hereby grants to Mortgagee a security interest in
and to the Mortgaged Property (whether now or hereafter acquired by
operation of law or otherwise) insofar as the Mortgaged Property consists
of equipment, accounts, contract rights, general intangibles, insurance
contracts, insurance proceeds, inventory, Hydrocarbons, fixtures and any
and all other personal property of any kind or character defined in and
subject to the provisions of the Texas Business and Commerce Code, Chapters
1 through 9 ("TEXAS UCC"), including the proceeds and products from any and
all of such personal property. Upon the happening of any of the Events of
Default, Mortgagee is and shall be entitled to all of the rights, powers
and remedies afforded a secured party by the Texas UCC with reference to
the personal property and fixtures in which Mortgagee has been granted a
security interest herein, or the Trustee or Mortgagee may proceed as to
both the real and personal property covered hereby in accordance with the
rights and remedies granted under this Mortgage in respect of the real
property covered hereby. Such rights, powers and remedies shall be
cumulative and in addition to those granted to the Trustee or Mortgagee
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under any other provision of this Mortgage or under any other Security
Instrument. Written notice mailed to ▇▇▇▇▇▇▇▇▇ as provided herein at least
five (5) days prior to the date of public sale of any part of the Mortgaged
Property which is personal property subject to the provisions of the Texas
UCC, or prior to the date after which private sale of any such part of the
Mortgaged Property will be made, shall constitute reasonable notice.
Section 1.03 INDEBTEDNESS SECURED. This Mortgage is executed and
delivered by ▇▇▇▇▇▇▇▇▇ to secure and enforce the following (the
"INDEBTEDNESS"):
(a) Payment of and performance of any and all indebtedness,
obligations and liabilities of Mortgagor pursuant to the Credit Agreement,
whether now existing or hereafter arising, including without limitation,
those certain promissory notes which are or may be executed by Mortgagor
payable to the order of each Lender and being in the aggregate principal
amount of $75,000,000 with final maturity on or before February 9, 2004 and
all other notes given in substitution therefor or in modification, renewal
or extension thereof, in whole or in part (such notes, as from time to time
supplemented, amended or modified and all other notes given in substitution
therefor or in modification, renewal or extension thereof, in whole or in
part, being hereafter called the "NOTE").
(b) Any sums which may be advanced or paid by Mortgagee under the
terms hereof or of the Credit Agreement on account of the failure of
Mortgagor to comply with the covenants of Mortgagor contained herein or in
the Credit Agreement; and all other indebtedness of Mortgagor arising
pursuant to the provisions of this Mortgage.
(c) Any additional loans made by Mortgagee to Mortgagor. It is
contemplated that Mortgagee may lend additional sums to Mortgagor from time
to time, but shall not be obligated to do so, and ▇▇▇▇▇▇▇▇▇ agrees that any
such additional loans shall be secured by this Mortgage.
(d) Payment of and performance of any and all present or future
obligations of Mortgagor according to the terms of any present or future
interest rate or currency swap, rate cap, rate floor, rate collar, forward
rate agreement or other exchange or rate protection agreements or any
option with respect to any such transaction now existing or hereafter
entered into between Mortgagor and Mortgagee.
(e) Payment of and performance of any and all present or future
obligations of Mortgagor according to the terms of any present or future
swap agreements, cap, floor, collar, forward agreement or other exchange or
protection agreements relating to crude oil, natural gas or other
hydrocarbons or any option with respect to any such transaction now
existing or hereafter entered into between Mortgagor and Mortgagee.
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(f) Performance of all Letter of Credit Agreements executed from time
to time by ▇▇▇▇▇▇▇▇▇ under or pursuant to the Credit Agreement and all
reimbursement obligations for drawn or undrawn portions under any Letter of
Credit now outstanding or hereafter issued under or pursuant to the Credit
Agreement.
(g) Payment of and performance of any and all other indebtedness,
obligations and liabilities of any kind of Mortgagor to the Mortgagee, now
or hereafter existing, arising directly between Mortgagor and the Mortgagee
or acquired outright, as a participation, conditionally or as collateral
security from another by the Mortgagee, absolute or contingent, joint
and/or several, secured or unsecured, due or not due, arising by operation
of law or otherwise, or direct or indirect, including indebtedness,
obligations and liabilities to the Mortgagee of Mortgagor as a member of
any partnership, syndicate, association or other group, and whether
incurred by ▇▇▇▇▇▇▇▇▇ as principal, surety, endorser, guarantor,
accommodation party or otherwise.
Section 1.04 FIXTURE FILING, ETC. Without in any manner limiting
the generality of any of the other provisions of this Mortgage: (i) some
portions of the goods described or to which reference is made herein are or
are to become fixtures on the land described or to which reference is made
herein or on attached EXHIBIT A; (ii) the security interests created hereby
under applicable provisions of the Texas UCC will attach to Hydrocarbons
(minerals including oil and gas) or the accounts resulting from the sale
thereof at the wellhead or minehead located on the land described or to
which reference is made herein; (iii) this Mortgage is to be filed of
record in the real estate records as a financing statement, and (iv)
Mortgagor is the record owner of the real estate or interests in the real
estate comprised of the Mortgaged Property.
Section 1.05 PRO RATA BENEFIT. This Mortgage is executed and
granted for the pro rata benefit and security of Mortgagee, and the
Lenders, and any and all future holders of an interest in the Indebtedness
and the interest thereon for whatever period; it being understood and
agreed that possession of any Note (or any replacements of said Note) at
any time by ▇▇▇▇▇▇▇▇▇ shall not in any manner extinguish the Indebtedness,
such Note or this Mortgage securing payment thereof, and Mortgagor shall
have the right to issue and reissue any of the Notes from time to time as
its interest or as convenience may require, without in any manner
extinguishing or affecting the Indebtedness, the obligations under any of
the Notes, or the security of this Mortgage.
Section 1.06 DEFINED TERMS. Any capitalized term used in this
Mortgage and not defined in this Mortgage shall have the meaning assigned
to such term in the Credit Agreement.
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ARTICLE II
ASSIGNMENT OF PRODUCTION
Section 2.01 ASSIGNMENT. Mortgagor has absolutely and
unconditionally assigned, transferred, and conveyed, and does hereby
absolutely and unconditionally assign, transfer and convey unto Mortgagee,
its successors and assigns, all of the Hydrocarbons and all products
obtained or processed therefrom, and the revenues and proceeds now and
hereafter attributable to the Hydrocarbons and said products and all
payments in lieu of the Hydrocarbons such as "take or pay" payments or
settlements. The Hydrocarbons and products are to be delivered into pipe
lines connected with the Mortgaged Property, or to the purchaser thereof,
to the credit of Mortgagee, free and clear of all taxes, charges, costs,
and expenses; and all such revenues and proceeds shall be paid directly to
Mortgagee, at its banking quarters in Chicago, Illinois with no duty or
obligation of any party paying the same to inquire into the rights of
Mortgagee to receive the same, what application is made thereof, or as to
any other matter. ▇▇▇▇▇▇▇▇▇ agrees to perform all such acts, and to
execute all such further assignments, transfers and division orders, and
other instruments as may be required or desired by Mortgagee or any party
in order to have said proceeds and revenues so paid to Mortgagee.
Mortgagee is fully authorized to receive and receipt for said revenues and
proceeds; to endorse and cash any and all checks and drafts payable to the
order of Mortgagor or Mortgagee for the account of ▇▇▇▇▇▇▇▇▇ received from
or in connection with said revenues or proceeds and to hold the proceeds
thereof in a bank account as additional collateral securing the
Indebtedness; and to execute transfer and division orders in the name of
▇▇▇▇▇▇▇▇▇, or otherwise, with warranties binding Mortgagor. All proceeds
received by the Mortgagee pursuant to this assignment shall be applied as
provided in the other Loan Documents. Mortgagee shall not be liable for
any delay, neglect, or failure to effect collection of any proceeds or to
take any other action in connection therewith or hereunder; but Mortgagee
shall have the right, at its election, in the name of Mortgagor or
otherwise, to prosecute and defend any and all actions or legal proceedings
deemed advisable by Mortgagee in order to collect such funds and to protect
the interests of Mortgagee, and/or Mortgagor, with all costs, expenses and
attorneys' fees incurred in connection therewith being paid by ▇▇▇▇▇▇▇▇▇.
Mortgagor hereby appoints Mortgagee as its attorney-in-fact to pursue any
and all rights of Mortgagor to liens on and security interests in the
Hydrocarbons securing payment of proceeds of runs attributable to the
Hydrocarbons. In addition to the rights granted to Trustee and/or
Mortgagee in Section 1.01 (f) of this Mortgage, Mortgagor hereby further
transfers and assigns to Mortgagee any and all such liens, security
interests, financing statements or similar interests of Mortgagor
attributable to its interest in the Hydrocarbons and proceeds of runs
therefrom arising under or created by said statutory provision, judicial
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decision or otherwise. The power of attorney granted to Mortgagee in this
Section 2.01, being coupled with an interest, shall be irrevocable so long
as the Indebtedness or any part thereof remains unpaid.
Section 2.02 RIGHTS UNDER TEXAS ACT. Mortgagor hereby grants,
sells, assigns, sets over and mortgages unto Mortgagee during the term
hereof, all of Mortgagor's rights and interests pursuant to the provisions
of 9.319 Tex. UCC, hereby vesting in Mortgagee all of Mortgagor's
rights as an interest owner to the continuing security interest in and lien
upon the Mortgaged Property.
Section 2.03 NO MODIFICATION OF PAYMENT OBLIGATIONS. Nothing herein
contained shall modify or otherwise alter the obligation of Mortgagor to
make prompt payment of all principal and interest owing on the Indebtedness
when and as the same become due regardless of whether the proceeds of the
Hydrocarbons are sufficient to pay the same and the rights provided in
accordance with the foregoing assignment provision shall be cumulative of
all other security of any and every character now or hereafter existing to
secure payment of the Indebtedness.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Mortgagor hereby represents, warrants and covenants as follows:
Section 3.01 TITLE. To the extent of the undivided interests
specified on attached EXHIBIT A, Mortgagor has good and indefeasible title
to and is possessed of the Mortgaged Property. The Mortgaged Property is
free of any and all Liens (as defined in the Credit Agreement) except Liens
allowed by Section 9.02 of the Credit Agreement and Liens described on
EXHIBIT A hereto (collectively, the "PERMITTED ENCUMBRANCES").
Section 3.02 DEFEND TITLE. This Mortgage is, and always will be
kept, a direct first lien and security interest upon the Mortgaged Property
subject only to the Permitted Encumbrances and Mortgagor will not create or
suffer to be created or permit to exist any lien, security interest or
charge prior or junior to or on a parity with the lien and security
interest of this Mortgage upon the Mortgaged Property or any part thereof
or upon the rents, issues, revenues, profits and other income therefrom.
▇▇▇▇▇▇▇▇▇ will warrant and defend the title to the Mortgaged Property
against the claims and demands of all other persons whomsoever and will
maintain and preserve the lien created hereby so long as any of the
Indebtedness secured hereby remains unpaid. Should an adverse claim be
made against or a cloud develop upon the title to any part of the Mortgaged
Property, ▇▇▇▇▇▇▇▇▇ agrees it will immediately defend against such adverse
claim or take appropriate action to remove such cloud at Mortgagor's cost
and expense, and ▇▇▇▇▇▇▇▇▇ further agrees that the Trustee and/or Mortgagee
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may take such other action as they deem advisable to protect and preserve
their interests in the Mortgaged Property, and in such event ▇▇▇▇▇▇▇▇▇ will
indemnify the Trustee and Mortgagee against any and all cost, attorney's
fees and other expenses which they may incur in defending against any such
adverse claim or taking action to remove any such cloud.
Section 3.03 NOT A FOREIGN PERSON. Mortgagor is not a "foreign
person" within the meaning of the Internal Revenue Code of 1986, as amended
(hereinafter called the "CODE"), Sections 1445 and 7701 (i.e. Mortgagor is
not a non-resident alien, foreign corporation, foreign partnership, foreign
trust or foreign estate as those terms are defined in the Code and any
regulations promulgated thereunder).
Section 3.04 POWER TO CREATE LIEN AND SECURITY. The Mortgagor has
full power and lawful authority to grant, bargain, sell, assign, transfer,
mortgage, and convey a security interest in all of the Mortgaged Property
in the manner and form herein provided and without obtaining the
authorization, approval, consent or waiver of any lessor, sublessor,
Governmental Authority or other party or parties whomsoever.
Section 3.05 REVENUE AND COST BEARING INTEREST. Mortgagor's
ownership of the Hydrocarbon Property and the undivided interests therein
as specified on attached EXHIBIT A will, after giving full effect to all
Permitted Encumbrances, afford Mortgagor not less than those net interests
(expressed as a fraction, percentage or decimal) in the production from or
which is allocated to such Hydrocarbon Property specified as working
interests on attached EXHIBIT A and will cause Mortgagor to bear not more
than that portion (expressed as a fraction, percentage or decimal),
specified as net revenue interests on attached EXHIBIT A, of the costs of
drilling, developing and operating the ▇▇▇▇▇ identified on EXHIBIT A.
Section 3.06 RENTALS PAID; LEASES IN EFFECT. All rentals and
royalties due and payable in accordance with the terms of any leases or
subleases comprising a part of the Hydrocarbon Property have been duly paid
or provided for and all leases or subleases comprising a part of the
Hydrocarbon Property are in full force and effect.
Section 3.07 OPERATION BY THIRD PARTIES. All or portions of the
Mortgaged Property may be comprised of interests in the Hydrocarbon
Property which are other than working interests or which may be operated by
a party or parties other than Mortgagor and with respect to all or any such
interests and properties as may be comprised of interests other than
working interests or which may be operated by parties other than Mortgagor,
▇▇▇▇▇▇▇▇▇'s covenants as expressed in this Article III are modified to
require that Mortgagor use its best efforts to obtain compliance with such
covenants by the working interest owners or the operator or operators of
such leases or properties.
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Section 3.08 ABANDON, SALES. The Mortgagor will not sell, lease,
assign, transfer or otherwise dispose or abandon any of the Mortgaged
Property except as permitted by the Credit Agreement.
Section 3.09 FAILURE TO PERFORM. The Mortgagor agrees that if the
Mortgagor fails to perform any act or to take any action which the
Mortgagor is required to perform or take hereunder or pay any money which
the Mortgagor is required to pay hereunder, each of the Mortgagee and the
Trustee in the Mortgagor's name or its or their own name may, but shall not
be obligated to, perform or cause to perform such act or take such action
or pay such money, and any expenses so incurred by either of them and any
money so paid by either of them shall be a demand obligation owing by the
Mortgagor to the Mortgagee or the Trustee, as the case may be, and each of
the Mortgagee and the Trustee, upon making such payment, shall be
subrogated to all of the rights of the Person receiving such payment. Each
amount due and owing by Mortgagor to each of the Mortgagee and the Trustee
pursuant to this Mortgage shall bear interest from the date of such
expenditure or payment or other occurrence which gives rise to such amount
being owed to such Person until paid at the Post-Default Rate, and all such
amounts together with such interest thereon shall be a part of the
Indebtedness described in Section 1.03 hereof.
Section 3.10 OPERATION OF MORTGAGED PROPERTY, ETC. Mortgagor will
promptly pay and discharge all rentals, delay rentals, royalties and
indebtedness accruing under, and perform or cause to be performed each and
every act, matter or thing required by, each and all of the assignments,
deeds, leases, sub-leases, contracts and agreements described or referred
to herein or affecting Mortgagor's interests in the Mortgaged Property, and
will do all other things necessary to keep unimpaired Mortgagor's rights
with respect thereto and prevent any forfeiture thereof or default
thereunder. The Mortgaged Property (and properties unitized therewith) has
been maintained, operated and developed in a good and workmanlike manner
and in conformity with all applicable laws and all rules, regulations and
orders of all duly constituted authorities having jurisdiction and in
conformity with the provisions of all leases, subleases or other contracts
comprising a part of the Hydrocarbon Property and other contracts and
agreements forming a part of the Mortgaged Property; specifically in this
connection, (i) after the Effective Date no Mortgaged Property 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) prior to the
Effective Date and (ii) none of the ▇▇▇▇▇ comprising a part of the
Mortgaged Property (or properties unitized therewith) are deviated from the
vertical more than the maximum permitted by applicable laws, regulations,
rules and orders, and such ▇▇▇▇▇ are, in fact, bottomed under and are
producing from, and the well bores are wholly within, the Mortgaged
Property (or, in the case of ▇▇▇▇▇ located on properties unitized
therewith, such unitized properties). Mortgagor will operate the Mortgaged
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Property in a careful and efficient manner in accordance with the practices
of the industry and in compliance with all applicable contracts and
agreements and in compliance with all applicable proration and conservation
laws of the jurisdiction in which the Mortgaged Property is situated, and
all applicable laws, rules and regulations of every other agency and
authority from time to time constituted to regulate the development and
operation of the Mortgaged Property and the production and sale of
Hydrocarbons and other minerals therefrom. Mortgagor will do or cause to
be done such development work as may be reasonably necessary to the prudent
and economical operation of the Mortgaged Property in accordance with the
most approved practices of operators in the industry, including all to be
done that may be appropriate to protect from diminution the productive
capacity of the Mortgaged Property and each producing well thereon
including, without limitation, cleaning out and reconditioning each well
from time to time, plugging and completing at a different level each such
well, drilling a substitute well to conform to changed spacing regulations
and to protect the Mortgaged Property against drainage whenever and as
often as is necessary.
ARTICLE IV
RIGHTS AND REMEDIES
Section 4.01 EVENT OF DEFAULT. An "EVENT OF DEFAULT" under the
Credit Agreement shall be an Event of Default under this Mortgage.
Section 4.02 FORECLOSURE AND SALE. If an Event of Default shall
occur and be continuing, Mortgagee shall have the right and option to
proceed with foreclosure by directing the Trustee, or his successors or
substitutes in trust, to proceed with foreclosure and to sell, to the
extent permitted by law, all or any portion of the Mortgaged Property at
one or more sales, as an entirety or in parcels, at such place or places in
otherwise such manner and upon such notice as may be required by law, or,
in the absence of any such requirement, as the Mortgagee may deem
appropriate, and to make conveyance to the purchaser or purchasers. Where
the Mortgaged Property is situated in more than one county, notice as above
provided shall be posted and filed in all such counties (if such notices
are required by law), and all such Mortgaged Property may be sold in any
such county and any such notice shall designate the county where such
Mortgaged Property is to be sold. Nothing contained in this Section 4.02
shall be construed so as to limit in any way the Trustee's rights to sell
the Mortgaged Property, or any portion thereof, by private sale if, and to
the extent that, such private sale is permitted under the laws of the
applicable jurisdiction or by public or private sale after entry of a
judgment by any court of competent jurisdiction so ordering. ▇▇▇▇▇▇▇▇▇
hereby irrevocably appoints the Trustee to be the attorney of ▇▇▇▇▇▇▇▇▇ and
in the name and on behalf of ▇▇▇▇▇▇▇▇▇ to execute and deliver any deeds,
transfers, conveyances, assignments, assurances and notices which ▇▇▇▇▇▇▇▇▇
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ought to execute and deliver and do and perform any and all such acts and
things which ▇▇▇▇▇▇▇▇▇ ought to do and perform under the covenants herein
contained and generally, to use the name of ▇▇▇▇▇▇▇▇▇ in the exercise of
all or any of the powers hereby conferred on the Trustee. At any such
sale: (i) whether made under the power herein contained or any other legal
enactment, or by virtue of any judicial proceedings or any other legal
right, remedy or recourse, it shall not be necessary for Trustee to have
physically present, or to have constructive possession of, the Mortgaged
Property (Mortgagor hereby covenanting and agreeing to deliver to Trustee
any portion of the Mortgaged Property not actually or constructively
possessed by Trustee immediately upon demand by Trustee) and the title to
and right of possession of any such property shall pass to the purchaser
thereof as completely as if the same had been actually present and
delivered to purchaser at such sale, (ii) each instrument of conveyance
executed by Trustee shall contain a general warranty of title, binding upon
Mortgagor and its successors and assigns, (iii) each and every recital con-
tained in any instrument of conveyance made by Trustee shall conclusively
establish the truth and accuracy of the matters recited therein, including,
without limitation, nonpayment of the Indebtedness, advertisement and
conduct of such sale in the manner provided herein and otherwise by law and
appointment of any successor Trustee hereunder, (iv) any and all
prerequisites to the validity thereof shall be conclusively presumed to
have been performed, (v) the receipt of Trustee or of such other party or
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers for its purchase money and no such purchaser or purchasers, or
its assigns or personal representatives, shall thereafter be obligated to
see to the application of such purchase money, or be in any way answerable
for any loss, misapplication or nonapplication thereof, (vi) to the fullest
extent permitted by law, Mortgagor shall be completely and irrevocably
divested of all of its right, title, interest, claim and demand whatsoever,
either at law or in equity, in and to the property sold and such sale shall
be a perpetual bar both at law and in equity against Mortgagor, and against
any and all other persons claiming or to claim the property sold or any
part thereof, by, through or under ▇▇▇▇▇▇▇▇▇, and (vii) to the extent and
under such circumstances as are permitted by law, Mortgagee may be a pur-
chaser at any such sale, and shall have the right, after paying or
accounting for all costs of said sale or sales, to credit the amount of the
bid upon the amount of the Indebtedness (in the order of priority set forth
in Section 4.14 hereof) in lieu of cash payment.
Section 4.03 SUBSTITUTE TRUSTEES AND AGENTS. The Trustee or his
successor or substitute may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by
Trustee, including the posting of notices and the conduct of sale, but in
the name and on behalf of Trustee, his successor or substitute. If Trustee
or his successor or substitute shall have given notice of sale hereunder,
any successor or substitute trustee thereafter appointed may complete the
sale and the conveyance of the property pursuant thereto as if such notice
had been given by the successor or substitute trustee conducting the sale.
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Section 4.04 JUDICIAL FORECLOSURE; RECEIVERSHIP. If any of the
Indebtedness shall become due and payable and shall not be promptly paid,
the Trustee or Mortgagee shall have the right and power to proceed by a
suit or suits in equity or at law, whether for the specific performance of
any covenant or agreement herein contained or in aid of the execution of
any power herein granted, or for any foreclosure hereunder or for the sale
of the Mortgaged Property under the judgment or decree of any court or
courts of competent jurisdiction, or for the appointment of a receiver
pending any foreclosure hereunder or the sale of the Mortgaged Property
under the order of a court or courts of competent jurisdiction or under
executory or other legal process, or for the enforcement of any other
appropriate legal or equitable remedy. Any money advanced by the Trustee
and/or Mortgagee in connection with any such receivership shall be a demand
obligation (which obligation Mortgagor hereby expressly promises to pay)
owing by Mortgagor to the Trustee and/or Mortgagee and shall bear interest
from the date of making such advance by the Trustee and/or Mortgagee until
paid at the Post Default Rate.
Section 4.05 FORECLOSURE FOR INSTALLMENTS. Mortgagee shall also
have the option to proceed with foreclosure in satisfaction of any
installments of the Indebtedness which have not been paid when due either
through the courts or by directing the Trustee or his successors in trust
to proceed with foreclosure in satisfaction of the matured but unpaid
portion of the Indebtedness as if under a full foreclosure, conducting the
sale as herein provided and without declaring the entire principal balance
and accrued interest due; such sale may be made subject to the unmatured
portion of the Indebtedness, and any such sale shall not in any manner
affect the unmatured portion of the Indebtedness, but as to such unmatured
portion of the Indebtedness this Mortgage shall remain in full force and
effect just as though no sale had been made hereunder. It is further
agreed that several sales may be made hereunder without exhausting the
right of sale for any unmatured part of the Indebtedness, it being the
purpose hereof to provide for a foreclosure and sale of the security for
any matured portion of the Indebtedness without exhausting the power to
foreclose and sell the Mortgaged Property for any subsequently maturing
portion of the Indebtedness.
Section 4.06 SEPARATE SALES The Mortgaged Property may be sold in
one or more parcels and in such manner and order as Mortgagee, in its sole
discretion, may elect, it being expressly understood and agreed that the
right of sale arising out of any Event of Default shall not be exhausted by
any one or more sales.
Section 4.07 POSSESSION OF MORTGAGED PROPERTY. ▇▇▇▇▇▇▇▇▇ agrees to
the full extent that it lawfully may, that, in case one or more of the
Events of Default shall have occurred and shall not have been remedied,
then, and in every such case, the Trustee or Mortgagee shall have the right
and power to enter into and upon and take possession of all or any part of
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the Mortgaged Property in the possession of Mortgagor, its successors or
assigns, or its or their agents or servants, and may exclude Mortgagor, its
successors or assigns, and all persons claiming under Mortgagor, and its or
their agents or servants wholly or partly therefrom; and, holding the same,
the Trustee may use, administer, manage, operate and control the Mortgaged
Property and conduct the business thereof to the same extent as Mortgagor,
its successors or assigns, might at the time do and may exercise all rights
and powers of ▇▇▇▇▇▇▇▇▇, in the name, place and stead of Mortgagor, or
otherwise as the Trustee shall deem best. All costs, expenses and
liabilities of every character incurred by the Trustee and/or Mortgagee in
administering, managing, operating, and controlling the Mortgaged Property
shall constitute a demand obligation (which obligation Mortgagor hereby
expressly promises to pay) owing by Mortgagor to the Trustee and/or
Mortgagee and shall bear interest from date of expenditure until paid at
the Post Default Rate, all of which shall constitute a portion of the
Indebtedness and shall be secured by this Mortgage and all other Security
Instruments.
Section 4.08 OCCUPANCY AFTER FORECLOSURE. In the event there is a
foreclosure sale hereunder and at the time of such sale Mortgagor or
▇▇▇▇▇▇▇▇▇'s heirs, devisees, representatives, successors or assigns or any
other person claiming any interest in the Mortgaged Property by, through or
under Mortgagor, are occupying or using the Mortgaged Property or any part
thereof, each and all shall immediately become the tenant of the purchaser
at such sale, which tenancy shall be a tenancy from day to day, terminable
at the will of either the landlord or tenant, or at a reasonable rental per
day based upon the value of the property occupied, such rental to be due
daily to the purchaser; to the extent permitted by applicable law, the
purchaser at such sale shall, notwithstanding any language herein
apparently to the contrary, have the sole option to demand immediate
possession following the sale or to permit the occupants to remain as
tenants at will. In the event the tenant fails to surrender possession of
said property upon demand, the purchaser shall be entitled to institute and
maintain a summary action for possession of the Mortgaged Property (such as
an action for forcible entry and detainer) in any court having
jurisdiction.
Section 4.09 REMEDIES CUMULATIVE, CONCURRENT AND NONEXCLUSIVE.
Every right, power and remedy herein given to the Trustee or Mortgagee
shall be cumulative and in addition to every other right, power and remedy
herein specifically given or now or hereafter existing in equity, at law or
by statute (including specifically those granted by the Texas UCC and
applicable to the Mortgaged Property or any portion thereof) each and every
right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time and so often and in such order
as may be deemed expedient by the Trustee or Mortgagee, and the exercise,
or the beginning of the exercise, of any such right, power or remedy shall
not be deemed a waiver of the right to exercise, at the same time or
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thereafter any other right, power or remedy. No delay or omission by the
Trustee or Mortgagee in the exercise of any right, power or remedy shall
impair any such right, power or remedy or operate as a waiver thereof or of
any other right, power or remedy then or thereafter existing.
Section 4.10 NO RELEASE OF OBLIGATIONS. Neither Mortgagor, any
guarantor nor any other person hereafter obligated for payment of all or
any part of the Indebtedness shall be relieved of such obligation by reason
of (a) the failure of Trustee to comply with any request of Mortgagor, or
any guarantor or any other person so obligated to foreclose the lien of
this Mortgage or to enforce any provision hereunder or under the Credit
Agreement; (b) the release, regardless of consideration, of the Mortgaged
Property or any portion thereof or interest therein or the addition of any
other property to the Mortgaged Property; (c) any agreement or stipulation
between any subsequent owner of the Mortgaged Property and Mortgagee
extending, renewing, rearranging or in any other way modifying the terms of
this Mortgage without first having obtained the consent of, given notice to
or paid any consideration to Mortgagor, any guarantor or such other person,
and in such event Mortgagor, guarantor and all such other persons shall
continue to be liable to make payment according to the terms of any such
extension or modification agreement unless expressly released and
discharged in writing by Mortgagee; or (d) by any other act or occurrence
save and except the complete payment of the Indebtedness and the complete
fulfillment of all obligations hereunder or under the Credit Agreement.
Section 4.11 RELEASE OF AND RESORT TO COLLATERAL. Mortgagee may
release, regardless of consideration, any part of the Mortgaged Property
without, as to the remainder, in any way impairing, affecting,
subordinating or releasing the lien or security interest created in or
evidenced by this Mortgage or its stature as a first and prior lien and
security interest in and to the Mortgaged Property, and without in any way
releasing or diminishing the liability of any person or entity liable for
the repayment of the Indebtedness. For payment of the Indebtedness,
Mortgagee may resort to any other security therefor held by Mortgagee or
Trustee in such order and manner as Mortgagee may elect.
Section 4.12 WAIVER OF REDEMPTION, NOTICE AND MARSHALLING OF ASSETS,
ETC. To the fullest extent permitted by law, Mortgagor hereby irrevocably
and unconditionally waives and releases (a) all benefits that might accrue
to Mortgagor by virtue of any present or future moratorium law or other law
exempting the Mortgaged Property from attachment, levy or sale on execution
or providing for any appraisement, valuation, stay of execution, exemption
from civil process, redemption (provided, however, that if the laws of any
state in which the Mortgaged Properties are located do not permit the
redemption period to be waived, the redemption period is specifically
reduced to the minimum amount of time allowable by statute) or extension of
time for payment; (b) all notices of any Event of Default or of Mortgagee's
intention to accelerate maturity of the Indebtedness or of Trustee's
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election to exercise or his actual exercise of any right, remedy or
recourse provided for hereunder or under the Credit Agreement; and (c) any
right to a marshalling of assets or a sale in inverse order of alienation.
If any law referred to in this Mortgage and now in force, of which
Mortgagor or its successor or successors might take advantage despite the
provisions hereof, shall hereafter be repealed or cease to be in force,
such law shall thereafter be deemed not to constitute any part of the
contract herein contained or to preclude the operation or application of
the provisions hereof.
Section 4.13 DISCONTINUANCE OF PROCEEDINGS In case Mortgagee shall
have proceeded to invoke any right, remedy or recourse permitted hereunder
or under the Credit Agreement and shall thereafter elect to discontinue or
abandon same for any reason, Mortgagee shall have the unqualified right so
to do and, in such an event, Mortgagor and Mortgagee shall be restored to
their former positions with respect to the Indebtedness, this Mortgage, the
Credit Agreement, the Mortgaged Property and otherwise, and the rights,
remedies, recourses and powers of Mortgagee shall continue as if same had
never been invoked.
Section 4.14 APPLICATION OF PROCEEDS. The proceeds of any sale of
the Mortgaged Property or any part thereof and all other monies received by
the Trustee or Mortgagee in any proceedings for the enforcement hereof or
otherwise, whose application has not elsewhere herein been specifically
provided for, shall be applied:
(a) first, to the payment of all expenses incurred by the Trustee or
Mortgagee incident to the enforcement of this Mortgage, the Credit
Agreement or any of the Indebtedness (including, without limiting the
generality of the foregoing, expenses of any entry or taking of possession,
of any sale, of advertisement thereof, and of conveyances, and court costs,
compensation of agents and employees, legal fees and a reasonable
commission to the Trustee acting), and to the payment of all other charges,
expenses, liabilities and advances incurred or made by the Trustee or
Mortgagee under this Mortgage or in executing any trust or power hereunder;
(b) second to payment of the Indebtedness in such order and manner as
Mortgagee may elect; and
(c) third, to Mortgagor; or as otherwise required by any Governmental
Requirement.
Section 4.15 RESIGNATION OF OPERATOR. In addition to all rights and
remedies under this Mortgage, at law and in equity, if any Event of Default
shall occur and Trustee or the Mortgagee shall exercise any remedies under
this Mortgage with respect to any portion of the Mortgaged Property (or
Mortgagor shall transfer any Mortgaged Property "in lieu of" foreclosure),
the Mortgagee or the Trustee shall have the right to request that any
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operator of any Mortgaged Property which is either Mortgagor or any
Affiliate of ▇▇▇▇▇▇▇▇▇ to resign as operator under the joint operating
agreement applicable thereto, and no later than 60 days after receipt by
▇▇▇▇▇▇▇▇▇ of any such request, ▇▇▇▇▇▇▇▇▇ shall resign (or cause such other
party to resign) as operator of such Mortgaged Property.
Section 4.16 INDEMNITY. IN CONNECTION WITH ANY ACTION TAKEN BY THE
TRUSTEE AND/OR MORTGAGEE PURSUANT TO THIS MORTGAGE, THE TRUSTEE AND/OR
MORTGAGEE AND THEIR OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, AGENTS,
ATTORNEYS, ACCOUNTANTS AND EXPERTS ("INDEMNIFIED PARTIES") SHALL NOT BE
LIABLE FOR ANY LOSS SUSTAINED BY MORTGAGOR RESULTING FROM AN ASSERTION THAT
MORTGAGEE HAS RECEIVED FUNDS FROM THE PRODUCTION OF HYDROCARBONS CLAIMED BY
THIRD PERSONS OR ANY ACT OR OMISSION OF ANY INDEMNIFIED PARTY IN
ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE MORTGAGED PROPERTY
INCLUDING SUCH LOSS WHICH MAY RESULT FROM THE ORDINARY NEGLIGENCE OF AN
INDEMNIFIED PARTY UNLESS SUCH LOSS IS CAUSED BY THE WILLFUL MISCONDUCT AND
BAD FAITH OF AN INDEMNIFIED PARTY, NOR SHALL THE TRUSTEE AND/OR MORTGAGEE BE
OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY OF
MORTGAGOR. MORTGAGOR SHALL AND DOES HEREBY AGREE TO INDEMNIFY EACH
INDEMNIFIED PARTY FOR, AND TO HOLD EACH INDEMNIFIED PARTY HARMLESS FROM, ANY
AND ALL LIABILITY, LOSS OR DAMAGE WHICH MAY OR MIGHT BE INCURRED BY ANY
INDEMNIFIED PARTY BY REASON OF THIS MORTGAGE OR THE EXERCISE OF RIGHTS OR
REMEDIES HEREUNDER; SHOULD THE TRUSTEE AND/OR MORTGAGEE MAKE ANY EXPENDITURE
ON ACCOUNT OF ANY SUCH LIABILITY, LOSS OR DAMAGE, THE AMOUNT THEREOF,
INCLUDING COSTS, EXPENSES AND REASONABLE ATTORNEYS' FEES, SHALL BE A DEMAND
OBLIGATION (WHICH OBLIGATION MORTGAGOR HEREBY EXPRESSLY PROMISES TO PAY)
OWING BY MORTGAGOR TO THE TRUSTEE AND/OR MORTGAGEE AND SHALL BEAR INTEREST
FROM THE DATE EXPENDED UNTIL PAID AT THE POST-DEFAULT RATE, SHALL BE A PART
OF THE INDEBTEDNESS AND SHALL BE SECURED BY THIS MORTGAGE AND ANY OTHER
SECURITY INSTRUMENT. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ASSENTS TO, ▇▇▇▇▇▇▇▇ AND CONFIRMS ANY
AND ALL ACTIONS OF THE TRUSTEE AND/OR MORTGAGEE WITH RESPECT TO THE MORTGAGED
PROPERTY TAKEN UNDER THIS MORTGAGE. THE LIABILITIES OF THE MORTGAGOR AS SET
FORTH IN THIS SECTION 4.16 SHALL SURVIVE THE TERMINATION OF THIS MORTGAGE.
ARTICLE V
THE TRUSTEE
Section 5.01 DUTIES, RIGHTS, AND POWERS OF TRUSTEE. It shall be no
part of the duty of the Trustee to see to any recording, filing or
registration of this Mortgage or any other instrument in addition or
supplemental thereto, or to give any notice thereof, or to see to the
payment of or be under any duty in respect of any tax or assessment or
other governmental charge which may be levied or assessed on the Mortgaged
Property, or any part thereof, or against Mortgagor, or to see to the
performance or observance by Mortgagor of any of the covenants and
agreements contained herein. The Trustee shall not be responsible for the
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execution, acknowledgment or validity of this Mortgage or of any instrument
in addition or supplemental hereto or for the sufficiency of the security
purported to be created hereby, and makes no representation in respect
thereof or in respect of the rights of Mortgagee. The Trustee shall have
the right to advise with counsel upon any matters arising hereunder and
shall be fully protected in relying as to legal matters on the advice of
counsel. The Trustee shall not incur any personal liability hereunder
except for ▇▇▇▇▇▇▇'s own willful misconduct; and the Trustee shall have the
right to rely on any instrument, document or signature authorizing or
supporting any action taken or proposed to be taken by him hereunder,
believed by him in good faith to be genuine.
Section 5.02 SUCCESSOR TRUSTEE. The Trustee may resign by written
notice addressed to Mortgagee or be removed at any time with or without
cause by an instrument in writing duly executed on behalf of Mortgagee. In
case of the death, resignation or removal of the Trustee, a successor
trustee may be appointed by Mortgagee by instrument of substitution
complying with any applicable requirements of law, or, in the absence of
any such requirement, without other formality than appointment and
designation in writing. Written notice of such appointment and designation
shall be given by Mortgagee to Mortgagor, but the validity of any such
appointment shall not be impaired or affected by failure to give such
notice or by any defect therein. Such appointment and designation shall be
full evidence of the right and authority to make the same and of all the
facts therein recited, and, upon the making of any such appointment and
designation, this Mortgage shall vest in the successor trustee all the
estate and title in and to all of the Mortgaged Property, and the successor
trustee shall thereupon succeed to all of the rights, powers, privileges,
immunities and duties hereby conferred upon the Trustee named herein, and
one such appointment and designation shall not exhaust the right to appoint
and designate a successor trustee hereunder but such right may be exercised
repeatedly as long as any Indebtedness remains unpaid hereunder. To
facilitate the administration of the duties hereunder, Mortgagee may
appoint multiple trustees to serve in such capacity or in such
jurisdictions as Mortgagee may designate.
Section 5.03 RETENTION OF MONEYS. All moneys received by Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated in any
manner from any other moneys (except to the extent required by law), and
Trustee shall be under no liability for interest on any moneys received by
him hereunder.
ARTICLE VI
MISCELLANEOUS
Section 6.01 INSTRUMENT CONSTRUED AS MORTGAGE, ETC. With respect to
any portions of the Mortgaged Property located in any state or other
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jurisdiction the laws of which do not provide for the use or enforcement of
a deed of trust or the office, rights and authority of the Trustee as
herein provided, the general language of conveyance hereof to the Trustee
is intended and the same shall be construed as words of mortgage unto and
in favor of Mortgagee and the rights and authority granted to the Trustee
herein may be enforced and asserted by Mortgagee in accordance with the
laws of the jurisdiction in which such portion of the Mortgaged Property is
located and the same may be foreclosed at the option of Mortgagee as to any
or all such portions of the Mortgaged Property in any manner permitted by
the laws of the jurisdiction in which such portions of the Mortgaged
Property is situated. This Mortgage may be construed as a mortgage, deed
of trust, chattel mortgage, conveyance, assignment, security agreement,
pledge, financing statement, hypothecation or contract, or any one or more
of them, in order fully to effectuate the lien hereof and the purposes and
agreements herein set forth.
Section 6.02 RELEASE OF MORTGAGE. If all Indebtedness secured
hereby shall be paid and the Credit Agreement terminated, Mortgagee shall
forthwith cause satisfaction and discharge of this Mortgage to be entered
upon the record at the expense of ▇▇▇▇▇▇▇▇▇ and shall execute and deliver
or cause to be executed and delivered such instruments of satisfaction and
reassignment as may be appropriate. Otherwise, this Mortgage shall remain
and continue in full force and effect.
Section 6.03 SEVERABILITY. If any provision hereof is invalid or
unenforceable in any jurisdiction, the other provisions hereof shall remain
in full force and effect in such jurisdiction and the remaining provisions
hereof shall be liberally construed in favor of the Trustee and Mortgagee
in order to effectuate the provisions hereof, and the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not
affect the validity or enforceability of any such provision in any other
jurisdiction.
Section 6.04 SUCCESSORS AND ASSIGNS OF PARTIES. The term "Lenders"
as used herein shall mean and include any legal owner, holder, assignee or
pledgee of any of the Indebtedness secured hereby. The terms used to
designate Trustee, Mortgagee and Mortgagor shall be deemed to include the
respective heirs, legal representatives, successors and assigns of such
parties.
Section 6.05 SATISFACTION OF PRIOR ENCUMBRANCE. To the extent that
proceeds of the Credit Agreement are used to pay indebtedness secured by
any outstanding lien, security interest, charge or prior encumbrance
against the Mortgaged Property, such proceeds have been advanced by
Mortgagee at Mortgagor's request, and Mortgagee shall be subrogated to any
and all rights, security interests and liens owned by any owner or holder
of such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or
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encumbrances are released, and it is expressly understood that, in
consideration of the payment of such other indebtedness by Mortgagee,
▇▇▇▇▇▇▇▇▇ hereby waives and releases all demands and causes of action for
offsets and payments to, upon and in connection with the said indebtedness.
Section 6.06 SUBROGATION OF TRUSTEE. This Mortgage is made with
full substitution and subrogation of the Trustee and his successors in this
trust and his and their assigns in and to all covenants and warranties by
others heretofore given or made in respect of the Mortgaged Property or any
part thereof.
Section 6.07 NATURE OF COVENANTS. The covenants and agreements
herein contained shall constitute covenants running with the land and
interests covered or affected hereby and shall be binding upon the heirs,
legal representatives, successors and assigns of the parties hereto.
Section 6.08 NOTICES. All notices, requests, consents, demands and
other communications required or permitted hereunder shall be in writing
and shall be deemed sufficiently given or furnished if delivered by
registered or certified United States mail, postage prepaid, or by personal
service (including express or courier service) at the addresses specified
in the first paragraph of this Mortgage (unless changed by similar notice
in writing given by the particular party whose address is to be changed).
Any such notice or communication shall be deemed to have been given either
at the time of personal delivery or, in the case of delivery at the address
and in the manner provided herein, upon receipt; provided that, service of
notice as required by the laws of any state in which portions of the
Mortgaged Property may be situated shall for all purposes be deemed
appropriate and sufficient with the giving of such notice.
Section 6.09 COUNTERPARTS. This Mortgage is being executed in
several counterparts, all of which are identical, except that to facilitate
recordation, if the Mortgaged Property is situated in more than one
jurisdiction, descriptions of only those portions of the Mortgaged Property
located in the jurisdiction in which a particular counterpart is recorded
shall be attached as EXHIBIT A thereto. An EXHIBIT A containing a
description of all Mortgaged Property wheresoever situated will be attached
to that certain counterpart to be attached to a Financing Statement and
filed with the Secretary of State of Texas in the Uniform Commercial Code
Records. Each of such counterparts shall for all purposes be deemed to be
an original and all such counterparts shall together constitute but one and
the same instrument.
SECTION 6.10 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS MORTGAGE; AND AGREES THAT
IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS MORTGAGE; THAT
IT HAS IN FACT READ THIS MORTGAGE AND IS FULLY INFORMED AND HAS FULL NOTICE
AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS MORTGAGE; THAT IT
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HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT
THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS MORTGAGE; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS MORTGAGE; AND THAT IT
RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS MORTGAGE RESULT IN ONE PARTY
ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND
RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH
PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR
ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS MORTGAGE ON THE BASIS
THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE
PROVISION IS NOT "CONSPICUOUS."
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WITNESS THE EXECUTION HEREOF, this 6th day of February, 1998, to be
effective as of the 9th day of February, 1998 (the "EFFECTIVE DATE").
MORTGAGOR:
▇▇▇▇▇▇ OIL CORPORATION
By:___________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
The name and address of the Debtor/Mortgagor is:
▇▇▇▇▇▇ OIL CORPORATION
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-0348
Federal Tax I.D. ▇▇-▇▇▇▇▇▇▇
The name and address of the Secured Party/Mortgagee is:
Bank of Montreal, as Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Federal Tax I.D. 134941092
-S-1-
THE STATE OF TEXAS
COUNTY OF ▇▇▇▇▇▇
THIS INSTRUMENT was acknowledged before me on February __, 1998 by
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President of ▇▇▇▇▇▇ Oil Corporation, a Michigan
corporation, on behalf of such corporation.
______________________________
Notary Public in and for the
State of Texas