MORTGAGE, ASSIGNMENT, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT FROM TRENDSETTER PRODUCTION COMPANY (Organizational I.D. Number MS 528948) TO YA GLOBAL INVESTMENTS, L.P. Dated as of March 3, 2008
Exhibit
10.7 Mortgage
MORTGAGE,
ASSIGNMENT, SECURITY AGREEMENT,
FIXTURE
FILING AND FINANCING STATEMENT
FROM
TRENDSETTER
PRODUCTION COMPANY
(Organizational
I.D. Number MS 528948)
TO
YA GLOBAL
INVESTMENTS, L.P.
Dated as
of March 3, 2008
THIS
INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS, SECURES PAYMENT OF
FUTURE ADVANCES, AND COVERS PROCEEDS OF COLLATERAL.
THIS
INSTRUMENT COVERS, AMONG OTHER THINGS, (A) GOODS WHICH ARE OR ARE TO BECOME
FIXTURES RELATED TO THE IMMOVABLE PROPERTY DESCRIBED HEREIN, AND (B)
AS-EXTRACTED COLLATERAL RELATED TO THE IMMOVABLE PROPERTY DESCRIBED HEREIN
(INCLUDING WITHOUT LIMITATION OIL, GAS, OTHER MINERALS AND OTHER SUBSTANCES OF
VALUE WHICH MAY BE EXTRACTED FROM THE EARTH AND ACCOUNTS ARISING OUT OF THE SALE
AT THE WELLHEAD OR MINEHEAD THEREOF). THIS INSTRUMENT IS TO SERVE, AMONG OTHER
PURPOSES, AS A FIXTURE FILING AND AS A FINANCING STATEMENT COVERING AS-EXTRACTED
COLLATERAL. THE MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE AND
IMMOVABLE PROPERTY CONCERNED, WHICH INTEREST IS DESCRIBED IN SECTION 1.1 OF THIS
INSTRUMENT.
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UNITED
STATES OF AMERICA
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ASSIGNMENT,
SECURITY
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AGREEMENT,
FIXTURE FILING
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STATE
OF TEXAS
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AND
FINANCING STATEMENT
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COUNTY
OF _______________
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BY
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TRENDSETTER
PRODUCTION
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COMPANY
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BE IT KNOWN, that on this __ day of
March, 2008, but dated for reference purposes as of March 3, 2008, before me, the
undersigned Notary Public duly commissioned and qualified, personally came and
appeared:
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TRENDSETTER PRODUCTION
COMPANY, a Mississippi corporation (the "Mortgagor"), having a
mailing address of One ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and a federal taxpayer identification number with the
last four digits of 9627, appearing herein by and through its undersigned
Chief Executive officer, duly authorized by resolutions of its board of
directors, a certified copy of which is attached hereto as Exhibit
B,
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who
declared that Mortgagor does by these presents declare and acknowledge an
indebtedness unto:
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YA GLOBAL INVESTMENTS,
L.P., a Cayman Islands exempt limited partnership (the "Holder"), having a place
of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, and a federal taxpayer identification number with the last four
digits of 0836.
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ARTICLE
I.
Granting Clauses; Secured
Indebtedness
Section
1.1. Mortgage.
In order to secure the full and punctual payment and performance of all present
and future secured indebtedness as defined below, Mortgagor does by these
presents specially MORTGAGE, AFFECT, HYPOTHECATE, PLEDGE and ASSIGN unto and in
favor of the Holder, to inure to the use and benefit of the Holder, all of
Mortgagor's right, title and interest in and to the following described rights,
interest and properties (the "Mortgaged
Properties"):
A.
The oil, gas and/or other mineral properties or
mineral rights which are described in Exhibit A attached
hereto and made a part hereof;
B.
Without limitation of the foregoing, all other right, title
and interest of Mortgagor of whatever kind or character (whether now owned or
hereafter acquired by operation of law or otherwise) in and to (i) the oil, gas
and/or mineral leases or other agreements described in Exhibit A hereto, and
(ii) the lands described or referred to in Exhibit A (or
described in any of the instruments described or referred to in Exhibit A), without
regard to any limitations as to specific lands or depths that may be set forth
in Exhibit A
hereto or in any of the leases or other agreements described in Exhibit A
hereto;
[Mortgage]
C.
All of Mortgagor's interest (whether now owned or hereafter acquired by
operation of law or otherwise) in and to all presently existing and hereafter
created oil, gas and/or mineral unitization, pooling and/or communitization
agreements, declarations and/or orders, and in and to the properties, rights and
interests covered and the units created thereby (including units formed under
orders, rules, regulations or other official acts of any federal, state or other
authority having jurisdiction), which cover, affect or otherwise relate to the
properties, rights and interests described in clause A or B
above;
D.
All of Mortgagor's interest in and rights under (whether now
owned or hereafter acquired by operation of law or otherwise) all presently
existing and hereafter created operating agreements, equipment
leases, production sales contracts, processing agreements, transportation
agreements, gas balancing agreements, farmout and/or farm-in agreements, salt
water disposal agreements, area of mutual interest agreements, and other
contracts and/or agreements which cover, affect, or otherwise relate to the
properties, rights and interests described in clause A, B or C above or to the
operation of such properties, rights and interests or to the treating, handling,
storing, processing, transporting or marketing of oil, gas, other hydrocarbons,
or other minerals produced from (or allocated to) such properties, rights and
interests (including those contracts listed in Exhibit A hereto), as
same may be amended or supplemented from time to time;
E.
All of Mortgagor's interest (whether
now owned or hereafter acquired by operation of law or otherwise) in and
to all improvements, fixtures, movable or immovable property and other real
and/or personal property (including all ▇▇▇▇▇, pumping units, wellhead
equipment, tanks, pipelines, flow lines, gathering lines, compressors,
dehydration units, separators, meters, buildings, injection facilities, salt
water disposal facilities, and power, telephone and telegraph lines), and all
easements, servitudes, rights-of-way, surface leases, licenses, permits and other surface
rights, which are now or hereafter used, or held for use, in connection with the properties, rights
and interests described in clause A, B or C above, or in connection with the operation of such
properties, rights and interests, or in connection with the treating, handling, storing,
processing, transporting or marketing of oil, gas, other hydrocarbons, or other
minerals produced from (or allocated to) such properties, rights and
interests;
F.
All rights, estates, powers and privileges appurtenant to the
foregoing rights, interests and properties;
G.
All extensions, renewals and corrections of any of the
foregoing rights, interests and properties; and
H.
All of
Mortgagor's right to receive proceeds attributable to the insurance loss
of the foregoing
property;
subject,
however, to the condition that (prior to foreclosure by Holder, and then only to
the extent Holder acquires title to all or a portion of the Mortgaged Properties
and commits an act or omission with respect to the Mortgaged Properties creating
liability), Holder shall not ever be liable to any Person including Mortgagor,
with respect to the performance of any covenant or obligation (including,
without limitation, the payment of royalty interests, production payments, net
profits interests or other similar lease burdens or costs or expenses
attributable to the ownership or operation of the Mortgaged Properties) of Mortgagor (or incurred on
its behalf by any other Person or Persons) of whatsoever kind related to all or
any part of the Mortgaged Properties.
[Mortgage]
2
The
Mortgaged Properties are to remain so specially mortgaged, affected and
hypothecated unto and in favor of Holder until the full and final payment or
discharge of the secured indebtedness, and Mortgagor is herein and hereby bound
and obligated not to sell or alienate the Mortgaged Properties to the prejudice
of this act.
In the
event that the Mortgagor acquires (by operation of law or otherwise) additional
undivided interests in some or all of the Mortgaged Properties, this Mortgage
shall automatically encumber such additions or increases to the Mortgagor's
interest in the Mortgaged Properties without need of further act or document.
Further, in the event the Mortgagor becomes the owner of an interest in any part
of the land described either in Exhibit A or in the documents described in
Exhibit A or otherwise subject to or covered by the Mortgaged Properties, this
Mortgage shall automatically encumber such ownership interest of the Mortgagor
without need of further act or document.
Mortgagor
will warrant and defend title to the Property (as defined below), free and clear
of all liens, security interests, and encumbrances except for Permitted Liens
(as defined in Secured Notes, which is defined below)
against the claims and demands of all persons claiming or to claim the same or
any part thereof.
Section
1.2. Scope of
Mortgage. This Mortgage is a mortgage of both real/immovable and personal/movable property,
a security agreement, a financing statement and an assignment, and also covers
goods which are or are to become fixtures, as-extracted collateral, and all
proceeds thereof.
Section
1.3. Grant of Security
Interest. In order to further secure the payment of the secured
indebtedness hereinafter referred to and the performance of the obligations,
covenants, agreements, warranties, and
undertakings of Mortgagor hereinafter described, Mortgagor hereby grants to
Holder a security interest in the entire interest of Mortgagor (whether now
owned or hereafter acquired by operation of law or otherwise) in and
to:
(a)
all oil, gas, other hydrocarbons, and other minerals produced
from or allocated to the Mortgaged Properties, and any products processed or
obtained therefrom (herein collectively called the "Production"), and all accounts
resulting from the sale of Production at the wellhead attributable to the
Mortgaged Properties and other accounts now or hereafter arising in connection
with the sale or other disposition of any Production, including without
limitation all rights to payment owing to Mortgagor payable out of or measured
by Production, and all revenues and rights to payment relating to Mortgagor's
compensation for services as operator of any Mortgaged Properties or to joint
interests ▇▇▇▇▇▇▇▇ or to amounts recoverabled by Mortgagor from non-operating
parties by virtue of non-consent elections or otherwise, together with all
proceeds of Production (regardless of whether the Production to which such
proceeds relate occurred on or before or after the date hereof), and together
with all liens and security interests securing payment of the proceeds of the
Production, including those liens and security interests provided for under (i)
statutes enacted in the jurisdictions in which the Mortgaged Properties are
located, or (ii) statutes made applicable to the Mortgaged Properties under
federal law (or some combination of federal and state law), and further all
rights accrued, accruing or to accrue to receive payments of any and every kind,
such as a bonus, rent, or royalty, which is payable out of or measured by
Production or is otherwise attributable to the Mortgaged
Properties;
(b)
without limitation of any other provisions
of this Section 1.3, all payments received in lieu of Production (regardless of
whether such payments accrued, and/or the events which gave rise to such
payments occurred, on or before or after the date hereof), including "take or
pay" payments and similar payments, payments received in settlement of or
pursuant to a judgment rendered with respect to take or pay or similar
obligations or other obligations under a production sales contract, payments
received in buyout or buydown or other settlement of a production sales
contract, and payments received under a gas balancing or similar agreement as a
result of (or received otherwise in settlement of or pursuant to judgment
rendered with respect to) rights held by Mortgagor as a result of Mortgagor
(and/or its predecessors in title) taking or having taken less gas from lands
covered by a Mortgaged Property (or lands pooled or unitized therewith) than
their ownership of such Mortgaged Property would entitle them to receive (the
payments described in this subsection (b) being herein called "Payments In Lieu of
Production");
[Mortgage]
3
(c)
all equipment, inventory, improvements, fixtures,
accessions, goods and other personal property or movable property of whatever
nature now or hereafter located on or used or held for use in connection with the
Mortgaged Properties (or in connection with the operation thereof or the
treating, handling, storing, processing, transporting, or marketing of
Production), and all licenses and permits of whatever nature now or hereafter
used or held for use in connection with the Mortgaged Properties (or in
connection with the operation thereof or the treating, handling, storing,
processing, transporting, or marketing of Production), and all renewals or
replacements of the foregoing or substitutions for the foregoing, including
without limitation all ▇▇▇▇▇ and equipment listed on Exhibit A
hereto;
(d)
all contracts,
contract rights, choses in action (i.e., rights to enforce contracts or
to bring claims thereunder) and
other general intangibles (regardless of whether the same arose, and/or the
events which gave rise to the same occurred, on or before or after the date
hereof) related to the Mortgaged Properties, the operation thereof (whether
Mortgagor is operator or non-operator), or the treating, handling, separation,
stabilization, storing, processing, transporting, gathering, or marketing of
Production (including any of the same relating to payment of proceeds of
Production or to payment of amounts which could constitute Payments in Lieu of
Production); provided, however, that to the extent the granting of the security
interest under this Mortgage is prohibited by any of such contracts and would
cause or result in a default under any of such contracts, Mortgagor shall not be
deemed to have granted such security interest in such contracts to the extent
such prohibition is enforceable;
(e)
without limitation of the generality of the
foregoing, any rights and interests of Mortgagor under any present or future
hedge or swap agreements, cap, floor, collar, exchange, forward or other hedge
or protection agreements or transactions relating to interest rates or to crude
oil, natural gas or other hydrocarbons, or any option with respect to any such
agreement or transaction now existing or hereafter entered into by or on behalf
of Mortgagor to the extent they relate to the Mortgaged Properties or operations
thereon;
(f)
all geological, geophysical, engineering, seismic, reserve, production,
accounting, title, legal, and other technical or business data concerning the
Mortgaged Properties, the Production or any other item of Property (as
hereinafter defined) which are now or hereafter in the possession of Mortgagor
or in which Mortgagor can otherwise grant a security interest, and all books,
files, records, magnetic media, computer tapes, other computer records, and
other forms of recording or obtaining access to such data to the extent any of
the above relates to the Mortgaged Properties or operations
thereon;
(g)
without limitation of or by any of the foregoing, to the
extent that any portion of the Mortgaged Properties constitutes corporeal or
incorporeal movable property, all rights, titles and interests in and to the
Mortgaged Properties, and together with all rights, titles and interests now
owned or hereafter
acquired by Mortgagor in any and all goods, inventory, equipment, as-extracted
collateral, documents, money, instruments, intellectual property, certificated
securities, uncertificated securities, investment property, letters of credit,
rights to proceeds of written letters of credit and other letter-of-credit
rights, commercial tort claims, deposit accounts, payment intangibles, general
intangibles, contract rights, chattel paper (including electronic chattel paper
and tangible chattel paper), rights to payment evidenced by chattel paper,
software, supporting obligations and accounts, wherever located, and all rights
and privileges with respect thereto (all of the properties, rights and interests
described in subsections (a), (b), (c), (d), (e), and (f) above, subsection (h)
below, and this subsection (g), being herein sometimes collectively called the
"Collateral"); and
[Mortgage]
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(h)
all
proceeds of the Collateral (the Mortgaged Properties, the Collateral and the
proceeds of the Mortgaged
Properties and of the Collateral being herein sometimes collectively called
the "Property").
Except as
otherwise expressly provided in this Mortgage, all terms in this Mortgage
relating to the Collateral and the grant of the foregoing security interest
which are defined in the applicable Uniform Commercial Code (the "UCC") shall
have the meanings assigned to them in Article 9 (in Louisiana, Chapter 9) (or,
absent definition in Article 9, in any other Article) of the UCC, as those
meanings may be amended, revised or replaced from time to time. Notwithstanding
the foregoing, the parties intend that the terms used herein which are defined
in the UCC have, at all times, the broadest and most inclusive meanings
possible. Accordingly, if the UCC shall in the future be amended or held by a
court to define any term used herein more broadly or inclusively than the UCC in
effect on the date of this Mortgage, then such term, as used herein, shall be
given such broadened meaning. If the UCC shall in the future be amended or held
by a court to define any term used herein more narrowly, or less inclusively,
than the UCC in effect on the date of this Mortgage, such amendment or holding
shall be disregarded in defining terms used in this Mortgage.
Section
1.4. Transaction
Documents. Hedging Obligations, and Other Obligations. This Mortgage is
made to secure and enforce the payment and performance of the following
obligations, indebtedness, loans, and liabilities:
(a)
All indebtedness and other obligations of
Mortgagor of Hyperdynamics
Corporation, a Delaware corporation ("Parent") now or hereafter
incurred or arising pursuant to the provisions of that certain Securities
Purchase Agreement, dated as of February 6, 2008 by and between Parent and
Holder (the "Securities
Purchase Agreement"), and those certain Secured Notes, dated, issued or
to be issued by Parent to the order of the Holder (the "Secured Notes") pursuant to
the Securities Purchase Agreement and all supplements thereto and amendments or
modifications thereof, and all agreements given in substitution therefor or in
reissuance, restatement, renewal, refinancing or extension thereof, in whole or
in part (such Securities Purchase Agreement and such Secured Notes, as each may
from time to time be supplemented, amended or modified, and all other agreements
given in substitution therefor or in replacement, restatement, renewal,
refinancing or extension thereof, in whole or in part, being herein called the
"Agreements");
(b)
The Obligations (as defined in that certain Security Agreement, dated of even
date herewith, by Parent and Mortgagor to Holder (the "Security Agreement")) that
may be owed from time to time by Mortgagor or Parent to Holder pursuant to the
Agreements and the other Transaction Documents (as defined below), pursuant to
the Agreements, bearing interest as provided in the Secured Notes, having an
original principal amount of up to $3,000,000, unless otherwise extended
pursuant to the Secured Notes;
[Mortgage]
5
(c)
Any and all obligations under that certain
Guaranty dated of even date herewith, executed and delivered by Mortgagor to
Holder (the "Guaranty");
(d) All
indebtedness and other obligations now or hereafter incurred or arising pursuant
to the provisions of the Agreements, this Mortgage or any other instrument now
or hereafter evidencing, governing, guaranteeing or securing the "secured
indebtedness" (as hereinafter defined) or any part thereof or otherwise executed
in connection with any indebtedness evidenced or governed by the Secured Notes
(the Secured Notes, the Securities Purchase Agreement, this Mortgage, the
Security Agreement, the Guaranty and such other instruments being herein
sometimes collectively called the "Transaction Documents");
and
(e)
Without limiting the generality of the foregoing, all post-petition interest,
expenses, and other duties and liabilities with respect to indebtedness or other
obligations described above in this Section 1,4, which would be owed but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization, or similar proceeding.
Section
1.5. Secured
Indebtedness. The indebtedness referred to in Section 1.4, and all
renewals, extensions and modifications thereof, and all substitutions therefor,
in whole or in part, are herein sometimes referred to as the "secured indebtedness" or the
"indebtedness secured
hereby."
Section
1.6. Maximum
Amount.
(a)
The maximum amount of the secured indebtedness that may be outstanding at any
time and from time to time that this Mortgage secures, including without
limitation as a mortgage and as a collateral assignment, and including any
advances made by Holder pursuant to Section 2.3 or otherwise under this Mortgage
and included within the secured indebtedness, is twenty million ($20,000,000.00)
dollars.
(b)
Mortgagor acknowledges that this Mortgage secures all secured indebtedness under
or pursuant to the Transaction Documents, whether such loans or advances made or
incurred by the Holder are optional or obligatory by the Holder, This Mortgage
is and shall remain effective, even though the amount of the secured
indebtedness may now be zero or may later be reduced to zero, until all of the
amounts, liabilities and obligations, present and future, comprising the secured
indebtedness have been incurred and are extinguished.
ARTICLE
II.
Representations, Warranties and
Covenants
Section
2.1. Mortgagor represents, warrants, and covenants as
follows:
(a)
Title and Permitted
Encumbrances. Mortgagor has, and Mortgagor covenants to maintain, good
and defensible title to the ownership interests in immovable property and the
oil and gas leasehold interests or other royalty or mineral interests comprising
the Property, in each case free and clear of all liens, security interests, and
encumbrances except for Permitted Liens (as defined in the Security Agreement).
The ownership by Mortgagor of the Mortgaged Properties does and will, with
respect to each well or unit identified on Exhibit A, attached
hereto and made a part hereof acquired by assignment from ▇▇▇▇ Resources
Limited, entitle Mortgagor to receive (subject to the terms and provisions of
this Mortgage) a decimal or percentage share of the oil, gas and other
hydrocarbons produced from, or allocated to, such well or unit equal to not less
than seventy five (75%) percent share, and entitle Mortgagor to a working
interest of one hundred (100%) percent for such well or unit, except that under
the Peabody LBM lease in
Concordia Parish the net revenue interest is 72.54%, The above-described shares
of production which Mortgagor is entitled to receive and shares of expenses
which Mortgagor is obligated to bear are not and will not be subject to change
(other than changes which arise pursuant to non-consent provisions of operating
agreements described in Exhibit A in
connection with operations hereafter proposed), except, and only to the extent
that, such changes are reflected in Exhibit A. There is
not and will not be any unexpired financing statement covering any part of the
Property on file in any public office naming any party other than Holder as
secured party and other than Permitted Liens (as defined in the Security
Agreement) allowed under the Security Agreement.
[Mortgage]
6
(b)
Operations. Upon
closing or shortly thereafter, except as disclosed in writing to Holder,
Mortgagor will be and thereafter remain the operator of the Mortgaged
Properties. Whether or not Mortgagor is the operator of the Mortgaged
Properties, Mortgagor will cause the Mortgaged Properties to be used and managed
as would a reasonably prudent operator and will take actions necessary to allow
Mortgagor to observe, perform and comply with every term, covenant and condition
in any Transaction Document. Mortgagor will not enter into any operating
agreement or other contract which materially adversely affects any of the
Property, or which is not in the ordinary course of business. Mortgagor will
promptly take all action necessary to enforce or secure the observance or
performance of any term, covenant, agreement or condition to be observed or
performed by third parties under any contract pertaining to any part of the
Property.
(c)
Not Abandon ▇▇▇▇▇;
Participate in Operations; Sale or Disposal. Mortgagor will not, without
prior written consent of Holder, abandon, or consent to the abandonment of, any
well producing from the Mortgaged Properties (or properties unitized therewith)
so long as such well is capable (or is subject to being made capable through
drilling, reworking or other operations which it would be commercially
reasonable to conduct) of producing oil, gas, or other
hydrocarbons or other minerals in commercial quantities (as determined by a
prudent operator without considering the effect of this Mortgage). Mortgagor
will not, without prior written consent of Holder, elect not to participate in a
proposed operation on the Mortgaged Properties where the effect of such election
would be the forfeiture either temporarily (i.e. until a certain sum of money is
received out of the forfeited interest) or permanently of any interest in the
Mortgaged Properties. Mortgagor will not, without the prior written consent of
Holder, sell, exchange, lease, transfer, or otherwise dispose of any part of, or
interest in, the Property other than as permitted under the Secured Notes or the
Security Agreement
(d)
Defense of Mortgage.
If the validity or priority of this Mortgage or of any rights, titles, liens or
security interests created or evidenced hereby with respect to the Property or
any part thereof or the title of Mortgagor to the Property shall be endangered
or questioned or shall be attacked directly or indirectly or if any legal
proceedings are instituted against Mortgagor with respect thereto, Mortgagor
will give prompt written notice thereof to Holder and at Mortgagor's own cost
and expense will diligently endeavor to cure any defect that may be developed or
claimed, and will take all reasonably necessary and proper steps for the defense
of such legal proceedings, including the employment of counsel, the prosecution
or defense of litigation and the release or discharge of all adverse claims, and
Holder (whether or not named as party to legal proceedings with respect thereto)
is hereby authorized and empowered to take such additional steps as in its
judgment and discretion may be reasonably necessary or proper for the defense of
any such legal proceedings or the protection of the validity or priority of this
Mortgage and the rights, titles, liens and security interests created or
evidenced hereby, including the employment of independent counsel, the
prosecution or defense of litigation, the compromise or discharge of any adverse
claims made with respect to the Property, the purchase of any tax title and the
removal of prior liens or security interests, and all expenditures so made of
every kind and character shall be a demand obligation (which obligation
Mortgagor hereby expressly promises to pay) owing by Mortgagor to Holder and
shall bear interest from the date expended until paid at the rate described in
Section 2,3 hereof, and the party incurring such expenses shall be subrogated to
all rights of the person receiving such payment.
[Mortgage]
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(e)
Insurance. Mortgagor
will carry insurance as required under the Security Agreement. In the event of
foreclosure of this Mortgage, or other transfer of title to the Property in
extinguishment in whole or in part of the secured indebtedness, all right, title
and interest of Mortgagor in and to such policies then in force concerning the
Property and all proceeds payable thereunder shall thereupon vest in the
purchaser at such foreclosure or other transferee in the event of such other
transfer of title.
(f)
Further Assurances.
Mortgagor will, on request of Holder, (i) promptly correct any defect, error or
omission which may be discovered in the contents of this Mortgage, or in any
other Transaction
Document, or in the execution or acknowledgment of this Mortgage or any other
Transaction Document;
and (ii) execute, acknowledge, deliver and record and/or file such further
instruments (including further mortgages, security agreements, financing
statements, continuation statements, and assignments of production, accounts,
funds, contract rights, general intangibles, and proceeds) and do such further
acts as may be necessary, desirable or proper to carry out more effectively the
purposes of this Mortgage and the other Transaction Documents and to more fully
identify and subject to the liens and security interests hereof any property
intended to be covered hereby, including any renewals, additions, substitutions,
replacements, or appurtenances to the Property. Mortgagor shall pay all
reasonable costs connected with any of the foregoing.
(g)
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).
(h)
No inconsistent
Agreements. There are no preferential purchase rights held by third
parties affecting any part of the Property, or rights of third parties to
prohibit the mortgage and pledge to Holder of any part of the Property without
the consent of such third parties. Mortgagor has not performed any acts or
signed any agreements which might prevent Holder from enforcing any of the terms
of this Mortgage or which would limit Holder in any such
enforcement.
Section
2.2. Compliance by
Operator. As to any part of the Mortgaged Properties which is not a
working interest, Mortgagor agrees to take all reasonable action and to exercise
all rights and remedies as are reasonably available to Mortgagor to cause the
owner or owners of the working interest in such properties to comply with the
covenants and agreements contained herein; and as to any part of the Mortgaged
Properties which is a working interest but which is operated by a party other
than Mortgagor, Mortgagor agrees to take all reasonable action and to exercise
all rights and remedies as are reasonably available to Mortgagor (including all
rights under any operating agreement) to cause the party who is the operator of
such property to comply with the covenants and agreements contained
herein.
Section
2.3. Performance on
Mortgagor's Behalf. Mortgagor agrees that, if Mortgagor fails to perform
any act or to take any action which hereunder Mortgagor is required to perform
or take, or to pay any money which hereunder Mortgagor is required to pay,
Holder, in Mortgagor's name or its own name, may, upon two (2) Business Days
prior notice to Mortgagor, but shall not be obligated to, perform or cause to be
performed such act or take such action or pay such money, and any expenses so
incurred by Holder and any money so paid by Holder shall be a demand obligation
owing by Mortgagor to Holder (which obligation Mortgagor hereby expressly
promises to pay) and Holder, upon making such payment, shall be subrogated to all
of the rights of the person, corporation or body politic receiving such payment.
Each amount due and owing by Mortgagor to Holder pursuant to this Section 2.3 or
other sections of this Mortgage that specifically refer to this Section 2.3
shall bear interest each day, from the date of such expenditure or payment until
paid, at a rate as provided for past due principal on the Secured Notes; all
such amounts, together with such interest thereon, shall be a part of the
secured indebtedness and shall be secured by this Mortgage.
[Mortgage]
8
Section
2.4. Recording.
Holder will cause this Mortgage and all amendments and supplements thereto and
substitutions therefor and all financing statements and continuation statements
relating thereto to be recorded, filed, re-recorded and refiled in such manner
and in such places as Holder shall reasonably determine and Mortgagor will pay
all such recording, filing, re-recording and refiling taxes, fees and other
charges.
Section
2.5. Reporting
Compliance. Mortgagor agrees to comply with any and all
reporting requirements applicable to
the transaction evidenced by the secured indebtedness which are set forth in any
law, statute, ordinance, rule, regulation, order or determination of any
governmental authority, and further agrees upon request of Holder to furnish
Holder with evidence of such compliance.
Section
2.6. Release of
Mortgage. If all of the secured indebtedness be paid and no further
obligation shall exist to provide credit or advance funds to Mortgagor or the
seller of the Secured Notes (or other obligor with respect to other
indebtedness) secured hereby, then, at Mortgagor's request and expense, this
Mortgage shall be released provided, however, that, notwithstanding such
release, the indemnifications, and other rights, which are provided herein or in
the other Transaction Documents to continue following the release hereof shall
continue in effect unaffected by such release; and provided that if any payment
to Holder is held to constitute a preference or a voidable transfer under
applicable state or federal laws or if for any other reason Holder is required
to refund such payment to the payor thereof or to pay the amount thereof to any
third party, this Mortgage shall be reinstated to the extent of such payment or
payments.
ARTICLE
III.
Assignment of Production,
Accounts, and Proceeds
Section
3.1. Assignment of
Production. In order to further secure the payment of the secured
indebtedness and performance of the obligations, covenants, agreements,
warranties, and undertakings of Mortgagor herein described, up to the maximum
amount outstanding at any time and from time to time set forth in Section 1.6,
Mortgagor does hereby absolutely and unconditionally assign, transfer and set
over to Holder all Production which accrues to Mortgagor's interest in the
Mortgaged Properties, all proceeds of such Production and all Payments in Lieu
of Production, and all present and future rents from the Mortgaged Properties
(which rents include without limitation all royalties, delay rentals, shut-in
payments and other payments which are rentals under Title 31 of the Louisiana
Revised Statutes) (herein collectively referred to as the "Production Proceeds"),
together with the immediate and continuing right to collect and receive such
Production Proceeds. Subject to Section 3.7, Mortgagor
directs and instructs any and all purchasers of any Production to pay to Holder
all of the Production Proceeds accruing to Mortgagor's interest until such time
as such purchasers have been furnished with evidence that all secured
indebtedness has been paid and that this Mortgage has been released. Mortgagor
agrees that no purchasers of the Production shall have any responsibility for
the application of any funds paid to Holder.
Section
3.2. Effectuating
Payment of Production Proceeds to Holder. Independent of the foregoing
provisions and authorities herein granted, Mortgagor agrees to execute and
deliver any and all transfer orders, division
orders and other instruments that may be requested by Holder or that may be
required by any purchaser of any Production for the purpose of effectuating
payment of the Production Proceeds to Holder. If under any existing sales
agreements, other than division orders or transfer orders, any Production
Proceeds are required to be paid by the purchaser to Mortgagor so that under
such existing agreements payment cannot be made of such Production Proceeds to
Holder, Mortgagor's interest in all Production Proceeds under such sales
agreements and in all other Production Proceeds which for any reason may be paid
to Mortgagor shall, when received by Mortgagor, constitute trust funds in
Mortgagor's hands and, shall be immediately paid over to Holder. Without
limitation upon any of the foregoing, Mortgagor hereby constitutes and appoints
Holder as Mortgagor's special attorney-in-fact (with full power of substitution,
either generally or for such periods or purposes as Holder may from time to time
prescribe) in the name, place and stead of Mortgagor to do any and every act and
exercise any and every power that Mortgagor might or could do or exercise
personally with respect to ail Production and Production Proceeds (the same
having been assigned by Mortgagor to Holder pursuant to Section 3.1 hereof),
expressly inclusive, but not limited to, the right, power and authority
to:
[Mortgage]
9
(a)
Execute and deliver in the name of Mortgagor any and all transfer orders,
division orders, letters in lieu of transfer orders, indemnifications,
certificates and other instruments of every nature that may be requested or
required by any purchaser of Production from any of the Mortgaged Properties for
the purposes of effectuating payment of the Production Proceeds to Holder or
which Holder may otherwise deem necessary or appropriate to effect the intent
and purposes of the assignment contained in Section 3.1; and
(b)
If under any product sales agreements other than division orders or transfer
orders, any Production Proceeds are required to be paid by the purchaser to
Mortgagor so that under such existing agreements payment cannot be made of such
Production Proceeds to Holder, to make, execute and enter into such sales
agreements or other agreements as are necessary to direct Production Proceeds to
be payable to Holder;
giving
and granting unto said attorney-in-fact full power and authority to do and
perform any and every act and thing whatsoever necessary and requisite to be
done as fully and to all intents and purposes, as Mortgagor might or could do if
personally present; and Mortgagor shall be bound thereby as fully and
effectively as if Mortgagor had personally executed, acknowledged and delivered
any of the foregoing certificates or documents. The powers and authorities
herein conferred upon Holder may be exercised by Holder through any person who,
at the time of the execution of the particular instrument, is an officer of
Holder. The power of attorney herein conferred is granted for valuable
consideration and hence is coupled with an interest and is irrevocable so long
as the secured indebtedness, or any part thereof, shall remain unpaid. All
persons dealing with Holder or any substitute shall be fully protected in
treating the powers and authorities conferred by this paragraph as continuing in
full force and effect until advised by Holder that all the secured indebtedness
is fully and finally paid. Holder may, but shall not be obligated to, take such
action as it deems appropriate in an effort to collect the Production Proceeds
and any reasonable expenses (including reasonable attorney's fees) so incurred
by Holder shall be a demand obligation of Mortgagor and shall be part of the
secured indebtedness, and shall bear interest each day, from the date of such
expenditure or payment until paid, at the rate described in Section 2.3 hereof.
The foregoing is subject to Section 3.7.
Section
3.3. Change of
Purchaser. To the extent a default has occurred hereunder and is
continuing, should any person now or hereafter purchasing or taking Production
fail to make payment promptly to Holder of the Production Proceeds, Holder
shall, subject to then existing contractual prohibitions, have the right to
make, or to require Mortgagor to make, a change of purchaser, and the right to designate or
approve the new purchaser, and Holder shall have no liability or responsibility
in connection therewith so long as ordinary care is used in making such
designation,
[Mortgage]
10
Section
3.4. Application of
Production Proceeds. Any Production Proceeds received by Holder shall be
applied by Holder to the secured indebtedness as determined by the
Holder.
Section
3.5. Release Prom
Liability; Indemnification. Holder and its successors and assigns are
hereby released and absolved from all liability for failure to enforce
collection of the Production Proceeds and from all other responsibility in
connection therewith, except the responsibility of each to account to Mortgagor
for funds actually received by each. Mortgagor agrees to indemnify and hold
harmless Holder (for purposes of this paragraph, the term "Holder" shall include
the directors, officers, partners, employees and Holders of Holder and any
persons or entities owned or controlled by or affiliated with Holder) from and
against ail claims, demands, liabilities, losses, damages (including
consequential damages), causes of action, judgments, penalties, costs and
expenses (including reasonable attorneys' fees and expenses) imposed upon,
asserted against or incurred or paid by Holder by reason of the assertion that
Holder received, either before or after payment in full of the secured
indebtedness, funds from the production of oil, gas, other hydrocarbons or other
minerals claimed by third persons (and/or funds attributable to sales of
production which (i) were made at prices in excess of the maximum price
permitted by applicable law or (ii) were otherwise made in violation of laws,
rules, regulations and/or orders governing such sales), and Holder shall have
the right to defend against any such claims or actions, employing attorneys of
its own selection, and if not furnished with indemnity reasonably satisfactory
to it, Holder shall have the right to compromise and adjust any such claims,
actions and judgments, and in addition to the rights to be indemnified as herein
provided, all amounts paid by Holder in compromise, satisfaction or discharge of
any such claim, action or judgment, and all court costs, attorneys' fees and
other expenses of every character expended by Holder pursuant to the provisions
of this section shall be a demand obligation (which obligation Mortgagor hereby
expressly promises to pay) owing by Mortgagor to Holder and shall bear interest,
from the date expended until paid, at the rate described in Section 2.3 hereof.
The foregoing indemnities shall not terminate upon the release, foreclosure or
other termination of this Mortgage but will survive such release,
foreclosure of this Mortgage or conveyance in lieu of foreclosure, or other
termination, and the repayment of the secured indebtedness and the discharge and
release of this Mortgage and the other documents evidencing and/or securing the
secured indebtedness. WITHOUT
LIMITATION, IT IS THE INTENTION OF MORTGAGOR AND MORTGAGOR AGREES THAT THE
FOREGOING RELEASES AND INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH
RESPECT TO ALL CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES (INCLUDING
CONSEQUENTIAL DAMAGES), CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES) WHICH IN WHOLE OR
IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER)
INDEMNIFIED PARTY. However, such indemnities shall not apply to any
particular indemnified party (but shall apply to the other indemnified parties)
to the extent the subject of the indemnification is caused by or arises out of
the gross negligence or willful misconduct of such particular indemnified party
as determined in a final, non-appealable judgment by a court of competent
jurisdiction. If any person (including Mortgagor or any of its Affiliates) ever
alleges such gross negligence or willful misconduct by Holder, the
indemnification provided for in this Section shall nonetheless be paid upon
demand, subject to later adjustment or reimbursement, until such time as a court
of competent jurisdiction enters a final, non-appealable judgment as to the
extent and effect of the alleged gross negligence or willful
misconduct.
Section
3.6. Mortgagor's
Absolute Obligation to Pay Loans. Nothing herein
contained shall detract from or limit the
obligations of Mortgagor to make prompt payment of the Obligations (as define in
the Secured Notes), and any and all other secured indebtedness, at the time and
in the manner provided herein and in the Transaction Documents, regardless of
whether the Production and Production Proceeds herein assigned are sufficient to
pay same, and the rights under this Article III shall be cumulative of all other
rights under the Transaction Documents.
[Mortgage]
11
Section
3.7. Collection upon
Default. Notwithstanding anything to the contrary contained in this
Article III of this Mortgage, so long as a default has not occurred (or having
occurred is not continuing), Mortgagor shall have the right to collect all
Production Proceeds and to retain, use and enjoy same, and Holder shall not
collect and receive the Production Proceeds from any obligor or purchaser.
Nonetheless, Mortgagor agrees that no purchasers of the Production shall have
any responsibility for determining whether or not a default exists, and all
persons dealing with Holder shall be fully protected in relying upon notice from
Holder or any substitute that a default exist and that payment of Production
Proceeds is to be made to Holder.
ARTICLE
IV.
Remedies Upon
Default
Section
4.1. Default.
The term "default" as used in this Mortgage shall mean the occurrence of an
"Event of Default" (subject to any requirement for notice and opportunity to
cure provisions provided therein) as defined in the Secured
Notes.
Section
4.2. Acceleration of
Secured Indebtedness. The secured indebtedness may be (and in certain
circumstances shall automatically be) accelerated as provided in the Secured
Notes.
Section
4.3. Pre-Foreclosure
Remedies. Upon the occurrence and during the continuance of a default,
Holder is authorized, prior or subsequent to the institution of any foreclosure
proceedings, to enter upon the Property, or any part thereof, and to take
possession of the Property and all books and records relating thereto, and to
exercise without interference from Mortgagor any and all rights which Mortgagor
has with respect to the management, possession, operation, protection or
preservation of the Property. If necessary to obtain the possession provided for
above, Holder may invoke any and all remedies to dispossess Mortgagor. Mortgagor
agrees to peacefully surrender possession of the Property upon default if
requested by Holder. All costs, expenses and liabilities of every character
incurred by Holder in managing, operating, maintaining, protecting or preserving
the Property shall constitute a demand obligation (which obligation Mortgagor
hereby expressly promises to pay) owing by Mortgagor to Holder and shall bear
interest from date of expenditure until paid at the rate described in Section
2.3 hereof, all of which shall constitute a portion of the secured indebtedness
and shall be secured by this Mortgage and by any other instrument securing the
secured indebtedness. In connection with any action taken by Holder pursuant to
this Section 4.3, HOLDER SHALL
NOT BE LIABLE FOR ANY LOSS SUSTAINED BY MORTGAGOR RESULTING FROM ANY ACT OR
OMISSION OF HOLDER (INCLUDING HOLDER'S OWN NEGLIGENCE) IN MANAGING THE PROPERTY
UNLESS SUCH LOSS IS CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR BAD
FAITH OF HOLDER AS DETERMINED BY A FINAL, NON-APPEALABLE, JUDGMENT OF A COURT OF
COMPETENT JURISDICTION, nor shall Holder be obligated to perform or
discharge any obligation, duty or liability of Mortgagor arising under any
agreement forming a part of the Property or arising under any Permitted Lien (as
defined in the Secured Notes) or otherwise arising. Mortgagor hereby assents to,
ratifies and confirms any and all actions of Holder with respect to the Property
taken under this Section 4.3, other than gross negligence, willful misconduct,
or bad faith of Holder.
[Mortgage]
12
Section
4.4. Foreclosure.
(a)
Upon the occurrence and during the continuance of a default, the Holder
may take such action, without notice or demand, as it deems advisable to protect
and enforce its rights against Mortgagor and in and to the Property, including,
but not limited to, the following actions, each of which may be pursued
concurrently or otherwise, at such time and in such order as the Holder may
determine, in its sole discretion, without impairing or otherwise affecting the
other rights and remedies of the Holder: (i) institute proceedings for the
complete foreclosure of this Mortgage in which case the Property or any part
thereof may be sold for cash or upon credit in one or more portions, under
executory process or other legal process; or (ii) to the extent permitted and
pursuant to the procedures provided by applicable law, institute proceedings for
the partial foreclosure of this Mortgage for the portion of the secured
indebtedness then due and payable, subject to the continuing Lien of this
Mortgage for the balance of the secured indebtedness not then due; or (iii)
institute an action, suit or proceeding in equity for the specific performance
of any covenant, condition or agreement contained in this Mortgage or the
Transaction Documents; or (iv) recover judgment on the Secured Notes or the
Guaranty either before, during or after any proceedings for the enforcement of
this Mortgage; or (v) apply for the appointment of a trustee, receiver, keeper,
liquidator or conservator of the Property, without regard for the adequacy of
the security for the secured indebtedness and without regard for the solvency of
Mortgagor or of any person, firm or other entity liable for the payment of the
secured indebtedness; or (vi) pursue such other remedies as the Holder may have
under applicable law.
(b)
Upon the occurrence and during the continuance of a
default, Holder may exercise its rights of enforcement with respect to the
Collateral under the Uniform Commercial Code or any other statute in force in
any state to the extent the same is applicable law. Cumulative of the foregoing
and the other provisions of this Section 4.4;
(i)
Holder may enter upon the Mortgaged Properties or
otherwise upon Mortgagor's premises to
take possession of, assemble and collect the Collateral or to render it
unusable; and
(ii)
Holder may require Mortgagor to assemble the Collateral and
make it available at a place Holder designates which is mutually convenient to
allow Holder to take possession or dispose of the Collateral;
and
(iii) written
notice mailed to Mortgagor as provided herein at least ten (10) days prior to
the date of public sale of the Collateral or prior to the date after which
private sale of the Collateral will be made shall constitute reasonable notice;
and
(iv) in
the event of a foreclosure of the liens and/or security interests evidenced
hereby, the Collateral, or any part thereof, and the Mortgaged Properties, or
any part thereof, may, at the option of Holder, be sold, as a whole or in parts,
together or separately (including where a portion of the Mortgaged Properties is
sold, the Collateral related thereto may be sold in connection therewith);
and
(v)
the expenses of sale provided for in clause FIRST of
Section 4.7 shall include the reasonable expenses of retaking the Collateral, or
any part thereof, holding the same and preparing the same for sale or other
disposition; and
[Mortgage]
13
(vi) should,
under this subsection, the Collateral be disposed of other than by sale, any
proceeds of such disposition shall be treated under Section 4.7 as if the same
were sales proceeds.
(c)
To the extent permitted by applicable law, the sale hereunder
of less than the whole of the Property shall not exhaust the right to judicial
foreclosure, and successive sale or sales may be made until the whole of the
Property shall be sold, and, if the proceeds of such sale of less than the whole
of the Property shall be less than the aggregate of the indebtedness secured
hereby and the expense of conducting such sale, this Mortgage and the liens and
security interests hereof shall remain in full force and effect as to the unsold
portion of the Property just as though no sale had been made; provided, however,
that Mortgagor shall never have any right to require the sale of less than the
whole of the Property. Any sale may be adjourned by announcement at the time and
place appointed for such sale without further notice except as may be required
by law. Any and all statements of fact or other recitals made in any deed or
deeds, or other instruments of transfer, given in connection with a sale as to
nonpayment of the secured indebtedness or as to the occurrence of any default,
or as to all of the secured indebtedness having been declared to be due and
payable, or as to the request to sell, or as to notice of time, place and terms
of sale and the properties to be sold having been duly given, or as to any other
act or thing having been duly done, shall be taken as prima facie evidence of
the truth of the facts so stated and recited. Notwithstanding any reference
herein to the Secured Notes or any other Transaction Document, all persons
dealing with the Mortgaged Properties shall be entitled to rely on any document,
or certificate, of Holder as to the occurrence of an event, such as an Event of
Default, and shall not be charged with or forced to review any provision of any
other document to determine the accuracy thereof. With respect to any sale held
in foreclosure of the liens and/or security interests covered hereby, it shall
not be necessary for the Holder, any public officer acting under execution or
order of the court or any other party to have physically present or
constructively in his/her or its possession, either at the time of or prior to
such sale, the Property or any part thereof.
Section
4.5. Effective as
Mortgage. This instrument shall be effective as a mortgage and upon the
occurrence of a default may be foreclosed as to the Mortgaged Properties, or any
portion thereof, in any manner permitted by applicable law, and any foreclosure
suit may be brought by Holder.
Section
4.6. Receiver.
In addition to all other remedies herein provided for, Mortgagor agrees that,
upon the occurrence of a default, Holder shall as a matter of right be entitled
to the appointment of a receiver or receivers for all or any part of the
Property, whether such receivership be incident to a proposed sale (or sales) of
such property or otherwise, and without regard to the value of the Property or
the solvency of any person or persons liable for the payment of the indebtedness
secured hereby, and Mortgagor does hereby consent to the appointment of such
receiver or receivers, waives any and all defenses to such appointment, and
agrees not to oppose any application therefor by Holder, and agrees that such
appointment shall in no manner impair, prejudice or otherwise affect the rights
of Holder under Article III hereof. Mortgagor expressly waives notice of a
hearing for appointment of a receiver and the necessity for bond or an
accounting by the receiver. Nothing herein is to be construed to deprive Holder
of any other right, remedy or privilege it may now or hereafter have under the
law to have a receiver appointed. Any money advanced by Holder in connection
with any such receivership shall be a demand obligation (which obligation
Mortgagor hereby expressly promises to pay) owing by Mortgagor to Holder and
shall bear interest, from the date of making such advancement by Holder until
paid, at the rate described in Section 2.3 hereof.
[Mortgage]
14
Section
4.7. Proceeds of
Foreclosure. The proceeds of any sale held in foreclosure of the liens
and/or security interests evidenced hereby shall be applied;
FIRST, to the payment
of all necessary costs and expenses incident to such foreclosure sale, including
all court costs and charges of every character in the event foreclosed by suit
or any judicial proceeding;
SECOND, to the
payment of the secured indebtedness (including the principal, interest and
attorneys' fees due and unpaid under the Secured Notes and the amounts due and
unpaid and owed under this Mortgage) in such manner and order as the Holder
shall determine; and
THIRD, the remainder, if any there shall be,
shall be paid to Mortgagor, or to Mortgagor's heirs, devisees, representatives,
successors or assigns, or such other persons as may be entitled thereto by
law.
Section 4.8. Holder as
Purchaser. Holder shall
have the right to become the purchaser at any sale held in foreclosure of the liens and/or
security interests evidenced hereby, and Holder purchasing at any such sale
shall have the right to credit upon the amount of the bid made therefor, to the
extent necessary to
satisfy such bid, the secured indebtedness owing to Holder, or if Holder holds
less than all of such indebtedness, the pro rata part thereof
owing to Holder, accounting to all other holders not joining in such bid in cash
for the portion of such bid or bids apportionable to such non-bidding holder or
holders.
Section
4.9. Foreclosure as to
Matured Debt. Upon the occurrence and during the continuance of a
default, Holder shall have the right to proceed with foreclosure of the liens
and/or security interests evidenced hereby without declaring the entire secured
indebtedness due, and in such event, any such foreclosure sale may be made
subject to the unmatured part of the secured indebtedness and shall not in any
manner affect the unmatured part of the secured indebtedness, but as to such
unmatured part, this Mortgage shall remain in full force and effect just as
though no sale had been made. The proceeds of such sale shall be applied
provided in Section 4.7 except that the amount paid under clause SECOND thereof
shall be only the matured portion of the secured indebtedness and any proceeds
of such sale in excess of those provided for in clauses FIRST and SECOND
(modified as provided above) shall be applied as Holder shall determine. Several
sales may be made hereunder without exhausting the right of sale for any
unmatured part of the secured indebtedness.
Section
4.10. Remedies
Cumulative. All remedies herein provided for are cumulative of each other
and of all other remedies existing at law or in equity and are cumulative of any
and all other remedies provided for in any other Transaction Document, and, in
addition to the remedies herein provided, there shall continue to be available
all such other remedies as may now or hereafter exist at law or in equity for
the collection of the secured indebtedness and the enforcement of the covenants
herein and the foreclosure of the liens and/or security interests evidenced
hereby, and the resort to any remedy provided for hereunder or under any such
other Transaction Document or provided for by law shall not prevent the
concurrent or subsequent employment of any other available remedy or
remedies.
Section
4.11. Discretion as to
Security. Holder may resort to any security given by this Mortgage or to
any other security now existing or hereafter given to secure the payment of the
secured indebtedness, in whole or in part, and in such portions and in such
order as may seem best to Holder in its sole and absolute discretion, and any
such action shall not in any way be considered as a waiver of any of the rights,
benefits, liens or security interests evidenced by this
Mortgage.
[Mortgage]
15
Section
4.12. Mortgagor's
Waiver of Certain Rights. To the full extent Mortgagor may do so
Mortgagor agrees that Mortgagor will not at any time insist upon, plead, claim
or take the benefit or advantage of any law now or hereafter in force providing
for any appraisement, valuation, stay, extension or redemption, and Mortgagor,
for Mortgagor, Mortgagor's heirs, devisees, representatives, successors and
assigns, and for any and all persons ever claiming any interest in the Property,
to the extent permitted by applicable law, hereby waives and releases all rights
of appraisement, valuation, stay of execution, redemption, notice of intention
to mature or declare due the whole of the secured indebtedness, notice of
election to mature or declare due the whole of the secured indebtedness and all
rights to a marshaling of assets of Mortgagor, including the Property, or to a
sale in inverse order of alienation in the event of foreclosure of the liens
and/or security interests hereby created. Mortgagor shall not have or assert any
right under any statute or rule of law pertaining to the marshaling of assets,
sale in inverse order of alienation, the exemption of homestead, the
administration of estates of decedents, or other matters whatever to defeat,
reduce or affect the right under the terms of this Mortgage to a sale of the
Property for the collection of the secured indebtedness without any prior or
different resort for collection, or the right under the terms of this Mortgage
to the payment of the secured indebtedness out of the proceeds of sale of the
Property in preference to every other claimant whatever. If any law referred to
in this section and now in force, of which Mortgagor or Mortgagor's heirs,
devisees, representatives, successors or assigns or any other persons claiming
any interest in the Mortgaged Properties or the Collateral might take advantage
despite this section, shall hereafter be repealed or cease to be in force, such
law shall not thereafter be deemed to preclude the application of this
section.
Section
4.13. Mortgagor as
Tenant Post-Foreclosure. In the event there is a foreclosure sale
hereunder and at the time of such sale Mortgagor or Mortgagor's heirs, devisees,
representatives, successors or assigns or any other persons claiming any
interest in the Property by, through or under Mortgagor are occupying or using
the 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 landlord or tenant, 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 property (such as an action for forcible entry and detainer) in any court
having jurisdiction.
Section
4.14. Confession of
Judgment. For purposes of foreclosure under Louisiana executory process
procedures, Mortgagor hereby acknowledges the secured indebtedness and confesses
judgment in favor of Holder for the full amount of the secured
indebtedness.
Section
4.15. Keeper.
In the event the Property, or any part thereof, is seized as an incident to an
action for the recognition or enforcement of this Mortgage by executory process,
ordinary process, sequestration, writ of fieri facias or otherwise, Mortgagor
and the Holder agree that the court issuing any such order shall, if petitioned
for by Holder, direct the applicable sheriff to appoint as a keeper of the
Property, the Holder or any agent designated by Holder or any person named by
the Holder at the time such seizure is effected. This designation is pursuant to
Louisiana Revised Statutes 9:5131 through 5135 and 9:5136 through 5140.2, as the
same may be amended, and Holder shall be entitled to all the rights and benefits
afforded thereunder. It is hereby agreed that the keeper shall be entitled to
receive as compensation, in excess of its reasonable costs and expenses incurred
in the administration or preservation of the Property, an amount equal to five
percent of the gross revenues of the Property, which shall be included as
secured indebtedness secured by this Mortgage. The designation of keeper made
herein shall not be deemed to require Holder to provoke the appointment of such
a keeper.
[Mortgage]
16
Section
4.16. Waivers.
Mortgagor waives in favor of the Holder any and all homestead exemptions and
other exemptions of seizure or otherwise to which Mortgagor is or may be
entitled under the constitution and statutes of the State of Louisiana insofar
as the Property is concerned. Mortgagor further waives: (a) the benefit of
appraisement as provided in Louisiana Code of Civil Procedure Articles 2332,
2336, 2723 and 2724, and all other laws conferring the same; (b) the notice of
seizure required by Louisiana Code of Civil Procedure Articles 2293 and 2721;
(c) the three days delay provided by Louisiana Code of Civil Procedure Articles
2331 and 2722; and (d) the benefit of the other provisions of Louisiana Code of
Civil Procedure Articles 2331, 2722 and 2723, not specifically mentioned
above.
Section
4.17. Authentic
Evidence. Any and all declarations of facts made by authentic act before
a notary public in the presence of two witnesses by a person declaring that such
facts lie within his knowledge, shall constitute authentic evidence of such
facts for the purpose of executory process. Mortgagor specifically agrees that
such an affidavit by a representative of the Holder as to the existence, amount,
terms and maturity of the secured indebtedness and of a default thereunder shall
constitute authentic evidence of such facts for the purpose of executory
process.
ARTICLE
V.
Miscellaneous
Section
5.1. Effective as a
Financing Statement. This Mortgage covers
goods which are or are to become fixtures on the immovable property described
herein, and this Mortgage shall be effective as a financing statement filed as a
fixture filing with respect to all fixtures included within the Property. This
Mortgage shall also be effective as a financing statement, filed as a fixture
filing, and also covering as-extracted collateral, minerals and other substances
of value which may be extracted from the earth (including oil and gas), and
accounts related thereto, which will be financed at the wellhead or minehead of
the ▇▇▇▇▇ or mines located on the Mortgaged Properties. This Mortgage is to be
filed for record in the real/immovable property records of each parish where any
part of the Mortgaged Properties is situated or which lies shoreward of any
Mortgaged Property (i.e., to the extent a Mortgaged Property lies offshore
within the projected seaward extension of the relevant parish boundaries), and
may also be filed in the offices of the Bureau of Land Management or the
Minerals Management Service or any relevant state agency (or any successor
agencies). This Mortgage shall also be effective as a financing statement
covering any other Property and may be filed in any other appropriate filing or
recording office. The mailing address of Mortgagor is the address of Mortgagor
set forth at the end of this Mortgage, and the address of Holder from which
information concerning the security interests hereunder may be obtained is the
address of Holder set forth at the end of this Mortgage.
Section
5.2. Reproduction of
Mortgage as Financing Statement. A carbon, photographic, facsimile or
other reproduction of this Mortgage or of any financing statement relating to
this Mortgage shall be sufficient as a financing statement for any of the
purposes referred to in Section 5.1. Without limiting any other provision
herein, Mortgagor hereby authorizes Holder to file one or more financing
statements, or renewal or continuation statements thereof, describing the
Collateral.
Section
5.3. Notice to Account
Debtors. In addition to, but without limitation of, the rights granted in
Article III hereof, Holder may, at any time after a default has occurred that is
continuing, notify the account debtors or obligors of any accounts, chattel
paper, negotiable instruments or other evidences of indebtedness included in the
Collateral to pay Holder directly.
Section
5.4. Waivers.
Holder may at any time and from time to time in writing waive compliance by
Mortgagor with any covenant herein made by Mortgagor to the extent and in the
manner specified in
such writing, or consent to Mortgagor's doing any act which hereunder Mortgagor
is prohibited from doing, or to Mortgagor's failing to do any act which
hereunder Mortgagor is required to do, to the extent and in the manner specified
in such writing, or release any part of the Property or any interest therein or
any Production Proceeds from the lien and security interest of this Mortgage.
Any party liable, either directly or indirectly, for the secured indebtedness or
for any covenant herein or in any other Transaction Document may be released
from all or any part of such obligations without impairing or releasing the
liability of any other party. No such act shall in any way impair any rights or
powers hereunder except to the extent specifically agreed to in such
writing.
[Mortgage]
17
Section
5.5. No Impairment of
Security. The lien, security interest and other security rights hereunder
shall not be impaired by any indulgence, moratorium or release which may be
granted, including any renewal, extension or modification which may be granted
with respect to any secured indebtedness, or any surrender, compromise, release,
renewal, extension, exchange or substitution which may be
granted in respect of the Property (including Production Proceeds), or any part
thereof or any interest therein, or any release or indulgence granted to any
endorser, guarantor or surety of any secured indebtedness.
Section
5.6, Acts Not
Constituting Waiver. Any default may be waived without waiving any other
prior or subsequent default. Any default may be remedied without constituting a
waiver by Holder of the default remedied. Neither failure to exercise, nor delay
in exercising, any right, power or remedy upon any default shall be construed as
a waiver of such default or as a waiver of the right to exercise any-such right,
power or remedy at a
later date. No single or partial exercise of any right, power or remedy
hereunder shall exhaust the same or shall preclude any other or further exercise
thereof, and every such right, power or remedy hereunder may be exercised at any
time and from time to time. No modification or waiver of any provision hereof
nor consent to any departure by Mortgagor therefrom shall in any event be
effective unless the same shall be in writing and signed by Holder and then such
waiver or consent shall be effective only in the specific instances, for the
purpose for which given and to the extent therein specified. No notice to nor
demand on Mortgagor in any case shall of itself entitle Mortgagor to any other
or further notice or demand in similar or other circumstances. Acceptance of any
payment in an amount less than the amount then due on any secured indebtedness
shall be deemed an acceptance on account only and shall not in any way excuse
the existence of a default hereunder (except to the extent waived by Holder in
writing in compliance with the Secured Notes).
Section
5.7. Mortgagor's
Successors. In the event the ownership of the Property or any part
thereof becomes vested in a person other than Mortgagor, then, without notice to
Mortgagor, such successor or successors in interest may be dealt with, with
reference to this Mortgage and to the indebtedness secured hereby, in the same
manner as with Mortgagor, without in any way vitiating or discharging
Mortgagor's liability hereunder or for the payment of the indebtedness or
performance of the obligations secured hereby. No transfer of the Property, no
forbearance, and no extension of the time for the payment of the indebtedness
secured hereby shall operate to release, discharge, modify, change or affect, in
whole or in part, the liability of Mortgagor hereunder or for the payment of the
indebtedness or performance of the obligations secured hereby or the liability
of any other person hereunder or for the payment of the indebtedness secured
hereby.
Section
5.8. Application of
Payments to Certain Indebtedness. If any part of the secured indebtedness
cannot be lawfully secured by this Mortgage or if any part of the Property
cannot be lawfully subject to the lien and security interest hereof to the full
extent of such indebtedness, then all payments made shall be applied on said
indebtedness first in discharge of that portion thereof which is not secured by
this Mortgage.
[Mortgage]
18
Section
5.9. Compliance With
Usury Laws. It is the intent of Mortgagor, Holder and all other parties
to the Transaction Documents to contract in strict compliance with applicable
usury law from time to time in effect. In furtherance thereof, it is stipulated
and agreed that, as more fully provided in the Secured Notes, none of the terms
and provisions contained herein shall ever be construed to create a contract to
pay, for the use, forbearance or detention of money, interest in excess of the
maximum amount of interest permitted to be collected, charged, taken, reserved,
or received by applicable law from time to time in effect.
Section
5.10. Certificates. The
production of mortgage, conveyance, tax research or other certificates is waived
by consent, and Mortgagor agrees to hold me, Notary, harmless for failure to
procure and attach same.
Section 5.11. Acceptance. Pursuant to
Louisiana Civil Code Article 3289, this Mortgage need not be signed by the Holder, and
Mortgagor hereby confirms that the Holder's consent to and acceptance of this
Mortgage shall be irrevocably presumed.
Section
5.12. 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 in compliance with and according to
Section 7 of the Secured Notes. Notwithstanding the foregoing, or anything else
in the Transaction Documents which may appear to the contrary, any notice given
in connection with a foreclosure of the liens and/or security interests created
hereunder, or otherwise in connection with the exercise by Holder of its rights
hereunder or under any other Transaction Document, which is given in a manner
permitted by applicable law shall constitute proper notice; without limitation
of the foregoing, notice given in a form required or permitted by statute shall
(as to the portion of the Property to which such statute is applicable)
constitute proper notice,
Section
5.13. Invalidity of
Certain Provisions. A determination that any provision of this Mortgage is unenforceable
or invalid shall not affect the enforceability or validity of any other
provision and the determination that the application of any provision of this
Mortgage to any person or circumstance is illegal or unenforceable shall not
affect the enforceability or validity of such provision as it may apply to other
persons or circumstances.
Section
5.14. Interpretation,
etc. Within this Mortgage, words of any gender shall be held and
construed to include any other gender, and words in the singular number shall be
held and construed to include the plural, unless the context otherwise requires.
Titles appearing at the beginning of any subdivisions hereof are for convenience
only, do not constitute any part of such subdivisions, and shall be disregarded
in construing the language contained in such subdivisions. References herein to
any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a
Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically
provided. The word "or" is not exclusive. The use herein of the word "include"
or "including", when following any general statement, term or matter, shall not
be construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not non-limiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
This Mortgage has been reviewed and negotiated by sophisticated parties with
access to legal counsel and no rule of construction shall apply hereto or
thereto which would require or allow this Mortgage to be construed against any
party because of its role in drafting this Mortgage.
[Mortgage]
19
Section
5.15. Certain
Consents. Except where otherwise expressly provided herein, in any
instance hereunder where the approval, consent or the exercise of judgment of
Holder is required, the granting or denial of such approval or consent and the
exercise of such judgment shall be within the sole discretion of such party, and
such party shall not, for any reason or to any extent, be required to grant such
approval or consent or exercise such judgment in any particular manner,
regardless of the reasonableness of either the request or the judgment of such
party.
Section
5.16. Certain
Obligations of Mortgagor. Without limiting Mortgagor's obligations
hereunder, Mortgagor's liability hereunder shall extend to and include all
post-petition interest, expenses, and other duties and liabilities with respect
to Mortgagor's obligations hereunder which would be owed but for the fact that
the same may be unenforceable due to the existence of a bankruptcy,
reorganization or similar proceeding.
Section
5.17. Counterparts. This
Mortgage may be executed in several counterparts (multiple originals), all of
which are identical, except that, to facilitate recordation, certain
counterparts hereof may include only that portion of Exhibit A which
contains descriptions of the properties located in (or otherwise subject to the
recording or filing requirements and/or protections of the recording or filing
acts or regulations of) the recording jurisdiction in which the particular
counterpart is to be recorded, and other portions of Exhibit A shall be
included in such counterparts by reference only. All of such counterparts
together shall constitute one and the same instrument.
Section
5.18. Successors and
Assigns.
(a) The
terms, provisions, covenants, representations, indemnifications and conditions
hereof shall be binding upon Mortgagor, and the successors and assigns of
Mortgagor, and shall inure to the benefit of Holder and its successors and
assigns, and shall constitute covenants running with the Mortgaged Properties.
All references in this Mortgage to Mortgagor or Holder shall be deemed to
include all such successors and assigns,
(b) This
Mortgage is for the benefit of the Holder and for such other Person or Persons
as may from time to time become or be the holders of any of the secured
indebtedness, and this Mortgage shall be transferable and negotiable, with the
same force and effect and to the same extent as the secured indebtedness may be
transferable, it being understood that, upon the transfer or assignment by the
Holder of any of the secured indebtedness, the legal holder of such secured
indebtedness shall have all of the rights granted to the Holder under this
Mortgage. The Mortgagor specifically agrees that upon any transfer of all or any
portion of the secured indebtedness, this Mortgage shall secure with retroactive
rank the then existing secured indebtedness to the transferee and any and all
secured indebtedness to such transferee thereafter arising.
(c) If
less than all of the secured indebtedness secured by this Mortgage is
transferred, each part of such secured indebtedness shall share pro-rata in the
security of this Mortgage as provided by Louisiana Civil Code Article 3311, and
the Holder or subsequent transferor shall not be deemed to have warranted or
agreed to have subordinated any remaining or future secured indebtedness to that
portion of such secured indebtedness transferred.
Section 5.19. FINAL
AGREEMENT OF THE PARTIES.
THE
WRITTEN TRANSACTION DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES-THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
[Mortgage]
20
Section
5.20. CHOICE OF
LAW. WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW, THIS MORTGAGE SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF LOUISIANA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE AND THE LAWS OF
THE UNITED STATES OF AMERICA, EXCEPT THAT TO THE EXTENT THAT THE LAW OF A STATE
IN WHICH A PORTION OF THE PROPERTY IS LOCATED (OR WHICH IS OTHERWISE APPLICABLE
TO A PORTION OF THE PROPERTY) NECESSARILY OR, IN THE SOLE DISCRETION OF HOLDER,
APPROPRIATELY GOVERNS WITH RESPECT TO PROCEDURAL AND SUBSTANTIVE MATTERS
RELATING TO THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS, SECURITY
INTERESTS AND OTHER RIGHTS AND REMEDIES OF THE HOLDER GRANTED HEREIN, THE LAW OF
SUCH STATE SHALL APPLY AS TO THAT PORTION OF THE PROPERTY LOCATED IN (OR WHICH
IS OTHERWISE SUBJECT TO THE LAWS OF) SUCH STATE.
Section
5.21. Place of
Payment. All secured indebtedness which may be owing hereunder at any
time by Mortgagor shall be payable at the place designated in the Secured Notes
(or if no such designation is made, at the address of Holder indicated at the
end of this Mortgage), or at such other place as Holder may designate in
writing.
[The
remainder of this page is intentionally left blank.]
[Mortgage]
21
THUS DONE
AND PASSED in the place and on the day and in the month and year hereinabove
written, in the presence of the two undersigned witnesses who hereunto sign
their names with the Mortgagor and me, Notary, after due reading of the
whole.
|
WITNESSES:
|
MORTGAGOR: TRENDSETTER
PRODUCTION COMPANY
|
||||
|
By:
|
|||||
|
Printed
Name:
|
Name:
|
▇▇▇▇
▇. ▇▇▇▇▇
|
|||
|
Title:
|
Chief
Executive Officer
|
||||
|
Printed
Name:
|
|||||
|
NOTARY
PUBLIC
|
|||
|
My Commission expires:
|
|||
|
The
address of Holder is:
|
The
address of Mortgagor is:
|
|
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
|
Trendsetter
Production Company
|
|
▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
|
One
Sugar Creek Center Boulevard
|
|
Attention:
▇▇▇▇ ▇▇▇▇▇▇
|
Suite
125
|
|
Telephone:
(▇▇▇)▇▇▇-▇▇▇▇
|
▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
|
|
Facsimile:
(▇▇▇)▇▇▇-▇▇▇▇
|
Attention: ▇▇▇▇
▇. ▇▇▇▇▇
|
|
Telephone:
(▇▇▇)▇▇▇-▇▇▇▇ Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
|
[Mortgage]
22
EXHIBIT
A
DESCRIPTION
OF MORTGAGED PROPERTIES
Introduction
to Description of Mineral Properties
The
Mortgagor and the Holder hereby agree and affirm that this Introduction to
Description of Properties is an amplification and explanation of the
terminology, format and information contained in
Exhibit A and that
this instrument shall be construed as a whole with reference to the entirety of
its provisions (including all Exhibits),
1.
This instrument covers the Mortgagor's entire interest in each
of the mineral servitudes, mineral leases, mineral royalties and other mineral
rights described in Exhibit A, as now owned or as hereafter acquired. The
inclusion of the Mortgagor's revenue interests, working interests and undivided
leasehold interests, by the listing of percentage, decimal or fractional numbers
or otherwise, as well as the inclusion of depth limitations, spacing unit
designations and agreements, well names and well arabic numbers, are in some
instances for purposes of certain representations of the Mortgagor contained in
this instrument and are generally for descriptive purposes. The inclusion (or
the inaccuracy thereof) of this information is not in any way a limitation or
restriction on the interest of the Mortgagor being subjected to the lien and
encumbrance of this instrument. In the event that the Mortgagor acquires
additional undivided interests in some or all of such mineral rights, this
Mortgage shall automatically encumber such additions or increases to the
Mortgagor's interest in such mineral rights without need of further act or
document.
2.
This instrument is intended to cover the entire interest of the Mortgagor in any
lease described in Exhibit A. Reference is made to the land descriptions
contained in the documents of title recorded as described in Exhibit
A.
3.
References in Exhibit A to instruments on file in the public records are made
for all purposes. Unless provided otherwise, all recording references in Exhibit
A are to the official real property records of the parish or parishes in which
(or offshore of which) the mortgaged property is located and in which records
such documents are or in the past have been customarily recorded, whether
Conveyance Records, Deed Records, Oil and Gas Records, Mineral Lease Records,
Oil and Gas Lease Records or other records.
4.
Each reference to a lease or a contract in Exhibit A shall be deemed a
reference to said lease or contract as said lease or contract may have been
amended or ratified by all amendments or ratifications heretofore executed,
whether or not referred to herein.
5.
A statement herein that a certain interest described herein is subject to the
terms of certain described or referred to agreements, instruments or other
matters shall not operate to subject such interest to any such agreement,
instrument or other matter except to the extent that such agreement, instrument
or matter is otherwise valid and presently subsisting nor shall such statement
be deemed to constitute a recognition by the parties hereto that any such
agreement, instrument or other matter is valid and presently subsisting or
binding against the Holder.
[Mortgage]
EXHIBIT A
CONTINUED
Part
1.
A.
Oil, Gas and Mineral Lease dated April 1, 2005, by and between ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, as lessor, to Trendsetter Production Company, as lessee, recorded in COB
297, page 351, File No. 197675 of the records of LaSalle Parish,
Louisiana.
B.
Oil, Gas Lease dated October 13, 2004, by and between ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as lessor, and Trendsetter Production Company, as
lessee, recorded in COB 292, page 597, File No. 195082 of the records of LaSalle Parish,
Louisiana.
C.
Oil, Gas and Mineral Lease dated April 1, 1987, by and between ▇▇▇▇▇
▇. ▇▇▇▇▇, et al, to ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, recorded in COB 260, page 89, Document
No. 178880 of the records of Concordia Parish,
Louisiana.
D.
Oil, Gas and Mineral Lease dated September 24, 2002, by and
between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Irrevocable Trust, et al, to ▇▇▇▇▇ Operating, Inc. and
▇. ▇. Oil, LLC recorded in COB 398, page 501 of the records of Concordia Parish,
Louisiana.
E. Assignment
of Oil, Gas and Mineral Leases dated July 12, 2007, effective as of July 1,
2007, by ▇▇▇▇ Resources, Limited to Trendsetter Production Company, recorded in
COB 1790, page 838, Entry No. 1346725 of the records of Rapides Parish,
Louisiana, as corrected by Notarial Act of Correction recorded on February 25,
2008, in COB 428, page 210, Document No. 266074 of the records of Concordia Parish,
Louisiana and in COB 425, page 91, Document No. 263487 of the records of Concordia Parish,
Louisiana, and COB 238, page 121, Document No. 262333, of the records of Catahoula Parish,
Louisiana, and all oil, gas and mineral leases and all other properties listed
therein.
F. Assignment of
Oil, Gas and Mineral Leases dated December 28, 2004, effective December 29,
2004, by
▇. ▇. Oil, LLC to Trendsetter Production, Inc., recorded in COB 410, page 837,
Entry No. 251484 of
the records of Concordia Parish.
Louisiana, and all oil, gas and mineral leases and all other properties
listed therein.
Part
2.
All of
oil, gas and/or mineral leases and other contracts, ▇▇▇▇▇, equipment and other
properties described on the following nine (9) pages:
[Mortgage]
Exhibit A
1 Oil,
gas and mineral lease dated July 28,1983, executed by ▇▇▇▇▇ ▇. ▇▇▇▇▇, et al, in
favor of Triangle Oil Producers, nc., and recorded at Conveyance Book 203, Page
268, of the records of Concordia ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, and amended by document
dated August 23,1990 and recorded at Conveyance Book 299, Page 9 of the records
of Concordia ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, and which covers and applies to the fol owing
descr'bed lands, to-wit:
TRACT
1
40 acres
of land in the form of a square with that certain well originally known as the
Marin Explorat'on, Inc. -▇▇▇▇▇-▇▇▇▇▇ #1 Well being in the exact center thereof,
and sa'd 40 acres be'ng more part'cularly described as follows,
to-w't:
From the
northwest ▇▇▇▇▇ of Section 43, Townsh'p 6 North, Range 9 East, run South a ong
the West boundary I'ne of Sect'on 43 a distance of 4327.4 feet; thence turn to
the left at an angle of 90 degrees and run East 1224.0 feet to the point where
sa'd Mar in Exp orat'on, Inc. -▇▇▇▇▇-▇▇▇▇▇ #1 Wei was drilled and s
present y producing; thence run North 660 feet to a point of beginn'ng; thence
run East 660 feet; thence run South 1320 feet; thence West 1320 feet; then run
North 1320 feet; thence run East 680 feet to the po'nt of beginning and as
stated, the ands eased be'ng in the form of a square with the sa'd well,
mentioned being in the center thereof and be'ng s'tuated in Section 43, Townsh'p
8 North, Range 9 East
TRACT
2
From the
Northwest corner of Section 17, Township 6 North, Range 9 East, Concordia
Parish, Louisiana, go South a ong the West boundary of sa'd Section 17, for 4075
feet, thence West at r'ght angles for 99 feet to the po'nt of beg'nn'ng, being
the Northwest ▇▇▇▇▇ of the with'n descr'bed tract. Thence from sa'd point of
beginn'ng, go'South 627.64 feet; thence North 88 degrees 45 m'nutes East a ong a
surface property line for 1306.21 feet; thence North for 627 85 feet, more or
ess, to the boundary of ▇▇▇▇▇▇ Lease; thence South 88 degrees 45 m nutes West
along sa d boundary for 1306.21 feet to the po'nt of beginning. Said within
described tract contains 18.82 acres.
TRACT
3
From the
Northeast corner of Sect'on 17, Townsh'p 6 North, Range 9 East, Concord'a
Parish, Lou's'▇▇▇, go South a ong the
West-boundary of said Sect'on 17 for 4075 feet; thence West at r'ght angles for
99 feet to the Northwest ▇▇▇▇▇ of the 40 acre dri 'ng unit ass'gned to the
▇▇▇▇▇-▇▇▇▇▇ No.1; thence South along the West boundary of said dr lling un't for
627.84 feet to the point of beginn'ng, being the Northwest corner to the within
descr'bed tract; thence from said point of beginning, continue South for 692.16
feet; thence East for 1305 9 feet; thence North for 720.66 feet to a surface
property line; thence South 88 degrees 45 m nutes. West along said surface
property line of' 1306.2 feet to the point of beginning. Sa'd with'n described
tract contains 21.18 acres.
t 's
specif cal y understood that there is presently s'tuated on the acreage affected
by the aforesaid ▇▇▇▇▇▇ as'amended, and as's'gned herein, those certa'n we s
known as the J. M Oi, L L.C -▇▇▇▇▇-Smrth B-1 (Ser.# 186954) and B-2 (SerJ
210127) wel s, and a we I origina ly dr lled under the name of ▇. ▇. ▇▇▇▇▇ &
Co., Inc.- ▇▇▇▇▇-▇▇▇▇▇ No.1 Well (Ser# 205117).
There's a
so conveyed by these presents all r ght, t'tle and interest of Ass gnors in and
to any and all surface and downhole equ'pment associated with the Dav's &
Kaiser Operating, Inc; ▇▇▇▇▇-Smth B-1, B-2 and No.1 ▇▇▇▇▇ and any other rights
and equ pment ncidental to the operation of sa'▇ ▇▇▇▇▇, and which would nclude a
I rights pertaining to a certain salt water disposal we I known as the
▇▇▇▇▇-▇▇▇▇▇ Salt Water Disposal Well (SerJ 068093).
Page 1 of
9
11. Oi,
gas and m'nera ease dated April 1,1987, executed by ▇▇▇▇▇ ▇. ▇▇▇▇▇, et a , in
favor of H Markham ▇▇▇▇▇▇, husband of ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and recorded at
Conveyance Book 260, as Document No 178,880, of the records of Concordia ▇▇▇▇▇▇,
▇▇▇'siana, and which lease covers and applies to the fo lowing described
property, to-wit:
The
Northeast Quarter of Section 42, Township 6 North, Range 9 East, LESS AND EXCEPT
any portions of the following described tracts s'tuated with'n the boundar'es of
the sa d Northeast Quarter of Section 42, Township 6 North, Range 9 East,
to-wit:
(A) 8.0
acres, more or less, tract so d by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
to ▇▇▇▇▇ ▇. New as per deed dated Apr'l 28,1976, and recorded at Conveyance Book
88, Page 782
(B) 14
acres, more or ess, tract conveyed by P. L ▇▇▇▇▇▇▇▇, Jr and W ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
to ▇. ▇. Jenn'ngs, Jr. as per exchange deed dated December 30,1976 and recorded
at Conveyance Book 97, Page 389 of the records of Concord a Par'sh,
▇▇▇'siana.
It is
specifically understood that there 's present y s tuated on the acreage affected
by the aforesaid ease those certa'n we s known as the ▇▇▇▇▇ & Ka'ser
Operating, Inc.- ▇▇▇▇▇-▇▇▇▇▇ No.1 we
Page 2 of
9
EXHIBIT
A
(CONCORDIA
PARISH PROPERTY)
OIL, GAS AND MINERAL
LEASES
|
1.
|
Oil
and Gas Lease made November 1, 2001, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.,
as Trustee for the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1989 Revocable Trust, et al, Lessor
and Verona Energy, Inc., Lessee, recorded in COB 417, page 151, Entry No.
257058 of the records of Concordia Parish,
Louisiana.
|
|
2.
|
Oil
and Gas Lease dated November 1, 2001, executed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, et al
in favor of Verona Energy, Inc., filed November 2, 2001, and recorded at
COB 393, page 60, as Document Number 237326, of the records of Concordia
Parish, Louisiana.
|
|
3.
|
Oil
and Gas Lease made November 1, 2001 by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, et
al, Lessor, and Verona Energy, Inc., Lessee, recorded in COB 393, page 56,
Entry No. 237326 of the records of Concordia Parish,
Louisiana.
|
|
4.
|
Oil,
gas and mineral lease dated December 27, 1989, executed by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇., et al, as Lessors, in favor of KFG Petroleum Corporation, as
Lessee, reocrded at COB 297, page 189, as Document Number 190325 of the
records of Concordia Parish, Louisiana, and Extension of Oil, Gas and
Mineral Lease recorded at COB 305, page 254 of the records of Concordia
Parish, Louisiana.
|
|
5.
|
Oil,
gas and mineral leased dated October 17, 1989, executed by ▇▇▇▇▇▇ Learned
Peabody, et al, as Lessors, in favor KFG Petroleum Corporation, as Lessee,
filed August 23, 1990 and recorded in Conveyance Book 297, page 181, as
Document Number 190324 of the records of Concordia Parish, Louisiana, and
Extension of Oil, Gas and Mineral Lease recorded at COB 305, page 261 of
the records of Concordia Parish,
Louisiana.
|
|
6.
|
Oil,
Gas and Mineral Lease dated (effective) August 7, 1991 from Conn Memorial
Foundation, Inc., et al, as lessor, to Oilwell Acquition Company, as
Lessee, filed for record under Register No. 194040 and recorded in COB
309, page 276 of the Records of Concordia Parish,
Louisiana.
|
|
7.
|
That
certain oil, gas and mineral lease executed by Andre ▇▇▇▇▇▇ ▇▇▇▇▇, et al
in favor of ▇▇▇▇▇▇ ▇▇▇▇, husband of ▇▇▇▇▇ ▇▇▇▇, dated July 5, 2000, filed
August 2, 2000, and recorded at COB 386, page 62 as Registry No. 232120 of
the records of Concordia Parish, Louisiana, and which oil, gas and mineral
lease was extended by Extension of Oil, Gas and Mineral Lease dated June
23, 2001, filed June 26, 2001 and recorded at COB 391, page 170 of the
records of Concordia Parish,
Louisiana.
|
Page 3 of
9
EXHIBIT
A
|
8.
|
Oil,
gas and mineral lease executed by the State Mineral Board of the State of
Louisiana, as Lessor, in favor of ▇▇▇▇ Resources, Limited, as Lessee,
dated June 13, 2001, recorded August 14, 2001 in COB 391, page 815 of the
records of Concordia Parish, Louisiana, and SL No. 17129 and affecting
▇▇▇▇▇ ▇▇▇▇▇.
|
PRODUCING
▇▇▇▇▇
|
1.
|
▇▇▇▇
▇▇ ▇▇▇; SL 7763 -KARAM 001 - Serial No.
164144
|
|
2.
|
▇▇▇▇
▇▇ ▇▇▇; SL ▇▇▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇ - ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇
|
|
3.
|
PEABODY
002 - Serial No. 213803
|
|
4.
|
PEABODY
003-Serial No. 214328
|
|
5.
|
PEABODY
005 - Serial No. 194163
|
|
6.
|
PEABODY
006 - Serial No. 198302
|
|
7.
|
PEABODY
007 - Serial No. 199817
|
|
8.
|
PEABODY
010-Serial No. 206783
|
|
9.
|
PEABODY
▇▇▇ ▇▇▇ - ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇
|
|
10.
|
PEABODY
▇▇▇ ▇▇▇ - ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇
|
|
11.
|
PEABODY
▇▇▇ ▇▇▇ - ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇
|
|
12.
|
PEABODY
LBM 016 - Serial No. 203943
|
|
13.
|
BEE
BRAKE SUA; CONN 002 - Serial No.
214632
|
DISPOSAL
▇▇▇▇▇
|
1.
|
▇▇▇▇
▇ ▇▇▇▇ ET AL SWD 001 - Serial No.
86216
|
|
2.
|
PEABODY
LBM SWD 005 - Serial No.
187698
|
|
3.
|
PEABODY
SWD 001 - Serial No. 214315
|
|
4.
|
PEABODY
SWD 004 - Serial No. 192704
|
|
5.
|
▇▇▇▇▇▇
SWD ▇-▇ - ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇
|
Page 4 of
9
EXHIBIT
A
(CATAHOULA
PARISH PROPERTY)
OIL, GAS AND MINERAL
LEASES
Oil, gas
and mineral lease executed by the State Mineral Board of the State of Louisiana,
as Lessor, in favor of ▇▇▇▇ Resources, Limited, as Lessee, dated June 13, 2001,
recorded August 14, 2001 in COB 391, page 815 of the records of Catahoula
Parish, Louisiana, and SL No. 17129 and affecting ▇▇▇▇▇
▇▇▇▇▇.
PRODUCING
▇▇▇▇▇
|
1.
|
▇▇▇▇
▇▇ ▇▇▇; SL 7763 -KARAM 001 - Serial No.
164144
|
|
2.
|
▇▇▇▇
▇▇ ▇▇▇; SL ▇▇▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇ - ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇
|
Page 5 of
9
EXHIBIT
"A"
(RAPIDES
PARISH PROPERTY)
OIL, GAS AND MINERAL
LEASES
|
1.
|
An
Oil, Gas and Mineral Lease executed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Price, et al, in
favor of Natural Gas and Oil Engineering, Inc, recorded August 3,1987 in
Conveyance Book 1215, page 268, as Document Number 840367 of the records
of Rapides Parish, Louisiana, together with any and all recorded
co-lessor's agreements incidental
thereto.
|
|
2.
|
An
Oil, Gas and Mineral Lease executed by ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇
Deville and ▇▇▇▇ Resources, Inc. (sic) dated March 10, 2006, and recorded
as Document No. 1305445 of the records of Rapides Parish,
Louisiana.
|
|
3.
|
An
Oil, Gas and Mineral Lease executed by ▇▇▇▇▇▇ ▇▇▇▇▇ Deville and ▇▇▇
▇▇▇▇▇▇▇ in favor of ▇▇▇▇ Resources, Limited dated August 1, 2006 and
recorded at COB 1761, page 250 of the records of Rapides Parish,
Louisiana.
|
|
4.
|
An
Oil, Gas and Mineral Lease executed by ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ in favor of
▇▇▇▇ Resources, Limited dated August 1, 2006 and recorded at COB 1761,
page 254 of the records of Rapides Parish,
Louisiana.
|
PRODUCING
▇▇▇▇▇
|
1.
|
▇▇▇▇
1 SU 320; PRICE 001 - Serial No.
121099
|
|
2.
|
DEVILLE
HEIRS ▇▇▇ - ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇
|
|
▇.
|
▇▇▇▇▇▇▇
▇ 001-Serial No. 228817
|
DISPOSAL
▇▇▇▇▇
▇▇▇▇▇ SWD
001 - Serial No. 170845
|
NOTE:
|
This
disposal well is being utilized and operated pursuant to a disposal well
agreement between Wynotte ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ Resources,
Limited.
|
Page 6 of
9
EQUIPMENT
Peabodv 5,6,7 &
10
|
Description
|
Serial
Number
|
|
(1)
National J-l50 triplex pump
|
6137
|
|
(1)
Armco unidraulic vessels
|
77-169-L
|
|
(1)
Armco unidraulic vessels
|
75-82-L
|
|
(1)
Lufkin C-228D-2B-100
|
F119839S-496336
|
|
(1)
Natco 6 x 27 1/2 treater
|
9B32101-01
|
|
(1)
Goulds 3" x 2" SW pump
|
|
|
(1)
30 hp Westinghouse electric motor
|
P6066031005
|
|
(1)
40 hp Worldwide electric motor
|
0511457
|
|
(2)
400 bbl metal stock tanks
|
|
| (2) 400 bbl metal SW tanks | |
|
Peabodv
LBM 4. 10, 11 &
16
|
|
|
Description
|
Serial
Number
|
|
(1)
National 4 x 27 1/2 treater (bad)
|
414797
|
|
(1)
National 4 x 27 1/2 treater
|
412817
|
|
(2)
400 bbl metal stock tanks
|
|
|
(2)
400 bbl metal SW tanks
|
|
|
(1)300
bbl metal SW tank
|
|
|
(1)
Goulds 2" x 1 1/2" SW pump
|
L0549123
|
|
(1)
Westingnouse 15 hp electric motor
|
AQ65101150001
|
|
(1)
88” pumping unit
|
▇▇▇▇-▇▇▇-▇▇▇▇
|
|
(1)
320 Salzgitter 120" stroke
|
25511170
|
|
(1)
Bethlehem 228D-205-64
|
S-505
|
|
▇▇▇▇▇
|
|
|
Description
|
Serial
Number
|
|
(3)
210 bbl metal stock tanks
|
|
|
(1)
▇▇▇▇▇ 4x27 1/2 treater
|
60647
|
|
(1)
American ▇▇▇-▇▇▇-▇▇
|
T20F86-3A-5040
|
|
(2)
300 bbl metal SW tanks
|
|
|
Peabodv 2 &
3
|
|
|
Description
|
Serial
Number
|
|
(1)
▇▇▇▇▇ 4 x 27 1/2 treater (1)4x27 1/2 treater
|
63191
|
|
(4)
300 bbl metal stock tanks
|
|
|
(2)
300 bbl metal SW tanks
|
|
|
(1)
300 bbl metal tank (no good)
|
|
|
(1)
232 Waukesha engine
|
351985
|
|
(1)
1800 Series Gaso pump 21/2-4x6
|
18937
|
|
(1)
Armco unidraulic vessels
|
81-216-L
|
|
(1)
National J-165 triplex pump
|
Page 7 of
9
EQUIPMENT
|
▇▇▇▇▇
S.W.D.
|
|||
|
Description
|
Serial
Number
|
||
|
Injection
pump -
|
▇▇▇▇▇▇▇▇
Triplex pump
|
||
|
P300
– 7956
|
2446
|
||
|
(1)
300 tank
|
|||
|
HTD
T-44 &
T-60
|
|||
|
Description
|
Serial
Number
|
||
|
(1)
300 bbl metal stock tank
|
|||
|
(2)
300 bbl metal SW tanks
|
|||
|
(1)
▇▇▇▇▇ 4 x 20 treater
|
|||
|
(1)
310 Waukesha engine (busted block - bad)
|
327376
|
||
|
(1)
Summit 3" x 1 1/2" SW pump model ▇▇▇▇ ▇▇▇
|
▇▇▇▇▇▇
|
||
|
(1)
American ▇▇▇-▇▇▇-▇▇
|
T15F64-15-3657
|
||
|
(1)
Cabot 160D-143-74
|
166B37
|
||
|
(1)
310 Waukesha engine
|
scratched
off; Spec: G38688
|
||
|
▇▇▇▇▇
- ▇▇▇▇
|
|||
|
Description
|
Serial
Number
|
||
|
(1)
6 x 20 National treater
|
T5190001-03
|
||
|
(1)
CR 15 Grundfos SW pump
|
|||
|
(2)
400 bbl metal stock tanks
|
|||
|
(5)
400 bbl metal stock tanks (bad)
|
|||
|
(2)
Haywards 400 bbl fiberglass tanks
|
|||
|
(1)
#1 Sentinel 22852460G86
|
2507
|
||
|
(1)
Lufkin C228D-213-86
|
E105393N-470421
|
||
|
Conn
#2
|
|||
|
Description
|
Serial
Number
|
||
|
(2)
Lide 300 bbl metal stock tanks
|
|||
|
(1)
Natco 4 x 20 treater
|
9741109-002
|
||
|
(1)
Natco 4 x 20 treater (bad)
|
9A66401-09
|
||
|
(1)
LufkinC320D-298-100
|
AN17974E-268563
|
||
|
▇▇▇▇ ▇▇▇▇▇ (Section 41
T5N-R3E. API #17-079-20070)
|
|||
|
Description
|
Serial
Number
|
||
| Pumping Unit - | Lufkin | ||
|
Type
TC2A3.5
|
|
||
|
Power
30 HP electric motor
|
290 U | ||
| Tanks - (2) 300 barrel stock tanks | |||
| (1) 210 s.w. tank | |||
| (1) 4x20 Heater treater | |||
| (1) ▇▇▇▇▇ Transfer Pump |
ED469023
|
||
| Power 5HP electric motor | |||
Page 8 of
9
EQUIPMENT
Deville
Heirs. (Section 3 T4N-R3E, API #17-079-20301)
|
Description
|
Serial
Number
|
||
|
Pumping
Unit -
|
Lufkin
|
||
|
Type
TC2ATr.35B
|
14U
|
||
| Tanks - (1) 210 stock tank | |||
| (1) 300 s.w. tank | |||
| (1) ▇▇▇▇▇ Transfer pump (bad) | |||
Page 9 of
9
EXHIBIT
B
RESOLUTIONS
OF MORTGAGOR
NOTARY’S
CERTIFICATE
I, the
undersigned Notary Public, in and for the County of , State of
Texas, hereby certify to YA Global Investments, L.P. that, on the date stated
below, ▇▇▇▇ ▇▇▇▇▇ as Chief Executive Officer of Trendsetter Production Company
did execute the document listed below in my actual presence and in the actual
presence of the two witnesses who signed said listed document:
Mortgage,
Assignment, Security Agreement, Fixture Filing and Financing Statement by
Trendsetter Production Company dated as of March 3, 2008, but signed on March
_______, 2008.
Certified
this ____ day of March, 2008, to YA Global Investments, L.P.
|
Name:
|
||
|
Title: Notary
Public
|