DEED OF TRUST, MORTGAGE, LINE OF CREDIT MORTGAGE ASSIGNMENT, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT FROM ST. MARY LAND & EXPLORATION COMPANY TO WACHOVIA BANK, NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT, OR, ALTERNATIVELY, TO JAY...
EXHIBIT 10.2
(CO, LA,
MT, ND, NM, OK, TX, WY)
DEED OF
TRUST, MORTGAGE, LINE OF CREDIT MORTGAGE
ASSIGNMENT,
SECURITY AGREEMENT, FIXTURE FILING
AND
FINANCING STATEMENT
FROM
ST. ▇▇▇▇
▇▇▇▇ & EXPLORATION COMPANY
TO
WACHOVIA
BANK, NATIONAL ASSOCIATION,
AS
ADMINISTRATIVE AGENT,
OR,
ALTERNATIVELY, TO
▇▇▇
▇▇▇▇▇▇▇▇▇, TRUSTEE
FOR THE
BENEFIT OF
WACHOVIA
BANK, NATIONAL ASSOCIATION,
AS
ADMINISTRATIVE AGENT
Dated
Effective as of April 14, 2009
A CARBON,
PHOTOGRAPHIC, FACSIMILE, OR OTHER REPRODUCTION OF THIS INSTRUMENT IS SUFFICIENT
AS A FINANCING STATEMENT.
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 REAL PROPERTY DESCRIBED HEREIN, AND (B) AS-EXTRACTED
COLLATERAL RELATED TO THE REAL 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 BE FILED FOR RECORD, AMONG
OTHER PLACES, IN THE REAL ESTATE OR COMPARABLE RECORDS OF THE COUNTIES AND/OR
PARISHES REFERENCED IN EXHIBIT A HERETO AND
SUCH FILING SHALL 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
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3941837v.4
ESTATE AND/OR IMMOVABLE PROPERTY CONCERNED, WHICH INTEREST IS
DESCRIBED IN SECTION 1.1 OF THIS INSTRUMENT.
A POWER OF
SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW AGENT (AS
HEREINAFTER DEFINED) OR TRUSTEE (AS HEREINAFTER DEFINED) TO TAKE THE MORTGAGED
PROPERTIES AND SELL THEM WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON
DEFAULT BY THE MORTGAGOR (AS HEREINAFTER DEFINED) UNDER THIS
MORTGAGE.
Note
to North Dakota Recording Officer: Attached to counterparts hereto to be filed
in the State of North Dakota (as Annex II) is an adequate statement of the
interest.
EMPLOYER
IDENTIFICATION NUMBER OF MORTGAGOR: 41-05 18430
ORGANIZATIONAL
IDENTIFICATION NUMBER OF MORTGAGOR: 0044728
WHEN
RECORDED OR FILED RETURN TO:
▇▇▇▇▇▇
& ▇▇▇▇▇▇ L.L.P.
2500
First City Tower
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Phone
Number: (▇▇▇) ▇▇▇-▇▇▇▇
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3941837v.4
DEED OF
TRUST, MORTGAGE, LINE OF CREDIT MORTGAGE
ASSIGNMENT,
SECURITY AGREEMENT, FIXTURE FILING
AND
FINANCING STATEMENT
(this
“Mortgage”)
ARTICLE
I.
Granting Clauses: Secured
Indebtedness
Section
1.1
Grant and
Mortgage. St. ▇▇▇▇ ▇▇▇▇ & Exploration Company, a Delaware corporation
(“Company”
and “Mortgagor”),
for and in consideration of the sum of Ten Dollars ($10.00) to Mortgagor in hand
paid, and in order to 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, does hereby (a)
GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN AND SET OVER to Trustee (as
hereinafter defined), and grant to Trustee a POWER OF SALE (pursuant to this
Mortgage and applicable law) with respect to, those of the following described
properties, rights and interests which are located in (or cover properties
located in) the State of Texas or which are located within (or cover properties
located within) the offshore area over which the United States of America
asserts jurisdiction and to which the laws of any such state are applicable with
respect to this Mortgage and/or the liens or security interests created hereby
(the “Deed of
Trust Mortgaged Properties”), and (b) MORTGAGE, ASSIGN, WARRANT, PLEDGE
AND HYPOTHECATE to Agent (as defined in Section 1.3(a) below), and grant to
Agent a POWER OF SALE (pursuant to this Mortgage and applicable law) with
respect to, all of the following described rights, interests and properties
which were not granted to Trustee in clause (a) above (including, without
limitation, those of the following described properties, rights and interests
which are located in (or cover properties located in) the States of Colorado,
Louisiana, Montana, New Mexico, North Dakota, Oklahoma or Wyoming or which are
located within (or cover properties located within) the offshore area over which
the United States of America asserts jurisdiction and to which the laws of any
such state are applicable with respect to this Mortgage and/or the liens or
security interests created hereby) (the “Other
Mortgaged Properties”):
A. The oil,
gas and/or other mineral properties, mineral servitudes, and/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,
(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 and
(iii) any other lands (including submerged lands) located anywhere in the United
States of America or located offshore the United States of America but within
the offshore area over which the United States of America or any State thereof
asserts jurisdiction;
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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, without limitation, 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, but not limited
to, 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, without limitation,
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; and
F. All
rights, estates, powers and privileges appurtenant to the foregoing rights,
interests and properties.
TO HAVE
AND TO HOLD (a) the Deed of Trust Mortgaged Properties unto the Trustee, and its
successors or substitutes in this trust, and to its or their successors and
assigns, in trust, however, upon the terms, provisions and conditions herein set
forth, and (b) the Other Mortgaged Properties unto Agent, and Agent’s successors
and assigns, upon the terms, provisions and conditions herein set forth (the
Deed of Trust Mortgaged Properties and the Other Mortgaged Properties are herein
sometimes collectively called the “Mortgaged
Properties”). As used
throughout this Mortgage, the term “Trustee” shall mean with respect to all of
the Deed of Trust Mortgaged Properties which are located in (or which cover
properties located in) the State of Texas, ▇▇▇ ▇▇▇▇▇▇▇▇▇ whose address is ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
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Section
1.2
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 Agent (as defined in Section
1.3(a) below) 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) to the
extent a security interest may be created therein, the Mortgaged
Properties;
(b) 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”),
together with all proceeds of Production (regardless of whether 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, but not limited to, 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);
(c) without
limitation of any other provisions of this Section 1.2, all payments received in
lieu of production from the Mortgaged Properties (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, without limitation, “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 (c) being herein called “Payments
in Lieu of Production”);
(d) 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;
(e) all
contract rights, choses in action (i.e., rights to enforce contracts or to bring
claims thereunder), commercial tort claims 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, storing, processing, transporting, or
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marketing
of Production (including, without limitation, any of the same relating to
payment of proceeds of Production or to payment of amounts which could
constitute Payments in Lieu of Production);
(f) 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 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;
(g) all
geological, geophysical, engineering, 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,
software and other forms of recording or obtaining access to such
data;
(h) all
money, documents, instruments, chattel paper (including without limitation,
electronic chattel paper and tangible chattel paper), rights to payment
evidenced by chattel paper, securities, accounts, payment intangibles, general
intangibles, letters of credit, letter-of-credit rights, supporting obligations
and rights to payment of money arising from or by virtue of any transaction
(regardless of whether such transaction occurred on or before or after the date
hereof) related to the Mortgaged Properties, the Production or any other item of
Property;
(i) 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, without limitation, 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), (f), (g) and (h) above and
this subsection (i) being herein sometimes collectively called the “Collateral”);
and
(j) all
proceeds of the Collateral, whether such proceeds or payments are goods, money,
documents, instruments, chattel paper, securities, accounts, payment
intangibles, general intangibles, fixtures, real/immovable property, personal/
movable property or other assets (the Mortgaged Properties, the Collateral and
the proceeds 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 Texas Uniform Commercial Code (the “UCC”)
shall have the meanings assigned to them in Article 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
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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
1.3
Secured
Indebtedness. This Mortgage is executed and delivered by the
Mortgagor to secure and enforce the payment and performance of the
following:
(a) Payment
of and performance of any and all indebtedness, obligations and liabilities,
whether now in existence or hereafter arising,
whether by acceleration or otherwise, including the principal of,
interest on (including, without limitation,
interest accruing after the maturity of the “Loans” (as defined in the
hereinafter defined Credit Agreement) made by each Lender and interest accruing
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Mortgagor,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) of the Mortgagor and all other
amounts, payments and premiums due under or in connection with that
certain Third Amended and Restated Credit Agreement dated as of the Effective
Date, by and among Mortgagor, Wachovia Bank, National Association, as
Administrative Agent (in such capacity, together with its successors in such
capacity, by operation of law or as otherwise provided in the hereinafter
defined Credit Agreement, the “Agent”) and the Lenders from
time to time party thereto, and as the same may from time to time be amended or
supplemented, the “Credit
Agreement”) or any other “Loan Document” (as defined in the Credit
Agreement), including, without limitation, the “Notes” (as defined in the Credit
Agreement) in the aggregate original principal amount of $678,000,000 with final
maturity on or before July 31, 2012, and further including any additional Loans
or any increases to the Loans which may be made pursuant to the Credit
Agreement; provided, the Lenders have no obligation to make any such additional
Loans or increase.
(b) Payment
and performance of any and all indebtedness, obligations and liabilities of any
Guarantor (as defined in the Credit Agreement) whether now existing or hereafter
arising under or in connection with the “Guaranty Agreement” (as defined in the
Credit Agreement).
(c) Any
sums which may be advanced or paid by the Agent or any Lender under the terms
hereof or of the Credit Agreement or any Loan Document on account of the failure
of the Mortgagor to comply with the covenants of the Mortgagor contained herein
or in the Credit Agreement or any other Loan Document; and all other
indebtedness of the Mortgagor arising pursuant to the provisions of this
Mortgage.
(d) Payment
of and performance of any and all present or future obligations of the Mortgagor
according to the terms of any present or future interest rate or currency swap,
rate cap, rate floor, rate collar, forward rate agreement or other exchange or
rate protection agreements or any option with respect to any such transaction
now existing or hereafter entered into between the Mortgagor and any Lender or
any Affiliate (as defined in the Credit Agreement) of such Lender.
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(e) Payment
of and performance of any and all present or future obligations of the Mortgagor
according to the terms of any present or future swap agreements, cap, floor,
collar, forward agreement or other exchange or protection agreements relating to
crude oil, natural gas or other hydrocarbons or any option with respect to any
such transaction now existing or hereafter entered into between the Mortgagor
and any Lender or any Affiliate of such Lender.
(f) Performance
of all “Letter of Credit Agreements” (as defined in the Credit Agreement)
executed from time to time by Mortgagor or any Subsidiary of the Mortgagor under
or pursuant to the Credit Agreement and all reimbursement obligations for drawn
or undrawn portions under any “Letter of Credit” (as defined in the Credit
Agreement) now outstanding or hereafter issued under or pursuant to the Credit
Agreement.
(g) All renewals, extensions, amendments, increases and
changes of, or substitutions or replacements for, all or any part of the
obligations described under paragraphs (a) through (f) in this Section
1.3.
Section
1.4
Secured
Indebtedness. The indebtedness referred to in Section 1.3, 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.” It is
contemplated and acknowledged that the secured indebtedness may
include revolving credit loans and advances from time to time, and that this
Mortgage shall have effect, as of the date hereof, to secure all secured
indebtedness, regardless of whether any amounts are advanced on the date hereof
or on a later date or, whether having been advanced, are later repaid in part or
in whole and further advances made at a later date.
Section
1.5
MAXIMUM
SECURED AMOUNT. NOTWITHSTANDING ANY PROVISION HEREOF TO THE
CONTRARY, THE OUTSTANDING INDEBTEDNESS SECURED BY PROPERTY LOCATED IN THE STATES
OF LOUISIANA, MONTANA OR NEW MEXICO SHALL NOT, AT ANY TIME OR FROM TIME TO TIME,
EXCEED AN AGGREGATE MAXIMUM AMOUNT OF $1,500,000,000.
Section
1.6
Line of
Credit Mortgage. THIS INSTRUMENT SECURES A LINE OF CREDIT USED
PRIMARILY FOR BUSINESS, COMMERCIAL, OR AGRICULTURAL PURPOSES. THIS MORTGAGE WILL
CONSTITUTE A LINE OF CREDIT MORTGAGE IN ACCORDANCE WITH SECTION 48-7-4.B ▇▇▇▇
▇▇▇▇ COMP.
ARTICLE
II.
Representations, Warranties
and Covenants
Section
2.1
Mortgagor
represents, warrants, and covenants as follows to the extent that any violation
of such representations, warranties or covenants shall not individually or
collectively created a Material Adverse Effect regarding the Property
:
(a) Title and Permitted
Encumbrances. Mortgagor has, and Mortgagor covenants to maintain,
good and defensible title to the Property, free and clear of all liens, security
interests, and encumbrances except for (i) the contracts, agreements, burdens,
encumbrances and other matters set forth in the descriptions of certain of the
Mortgaged Properties on Exhibit A hereto,
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(ii) the
liens and security interests evidenced by this Mortgage, (iii) statutory liens
for taxes which are not yet delinquent, (iv) liens under operating agreements,
pooling orders and unitization agreements, and mechanics’ and materialmen’s
liens, with respect to obligations which are not yet due, and (v) other liens
and security interests (if any) in favor of Agent (the matters described in the
foregoing clauses (i), (ii), (iii), (iv), and (v) being herein called the “Permitted
Encumbrances”); Mortgagor will warrant and defend title to the Property,
subject as aforesaid, against the claims and demands (including claims which
would be a Permitted Encumbrance under items (iii) and (iv) above) of all
persons claiming or to claim the same or any part thereof. Without limitation of
the foregoing, the ownership by Mortgagor of the Mortgaged Properties does and
will, with respect to each well or unit identified on Schedule I, attached
hereto and made a part hereof, 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 the decimal or percentage share set forth, for such well
or unit, in the column headed “Net Revenue Interest” (or words of similar
import) on Schedule
I, and cause Mortgagor to be obligated to bear a decimal or percentage
share of the cost of operation of such well or unit equal to not more than the
decimal or percentage share set forth, for such well or unit, in the column
headed “Working Interest” (or words of similar import) on Schedule I. 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 Schedule I. 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 Agent as
secured party. Upon request by Agent, Mortgagor will deliver to Agent schedules
of all internal and third party information identifying the Mortgaged Properties
(such as, for example, lease names and numbers assigned by Mortgagor or the
operator of any Mortgaged Property, well and/or unit and/or property names and
numbers assigned by purchasers of Production, and internal identification names
and numbers used by Mortgagor in accounting for revenues, costs, and joint
interest transactions attributable to the Mortgaged Properties). The listing of
Permitted Encumbrances above is made for the purpose of limiting certain
warranties and covenants made by Mortgagor herein; such listing is not intended
to affect the description herein of the Mortgaged Properties nor to subordinate
the liens and security interests hereunder to any Permitted
Encumbrances.
(b)
Leases and Contracts;
Performance of Obligations. The oil, gas and/or mineral leases,
contracts, servitudes and other agreements forming a part of the Property, to
the extent the same cover or otherwise relate to the Property, are in full force
and effect, and Mortgagor agrees to so maintain them in full force and effect.
All rents, royalties and other payments due and payable under such leases,
contracts, servitudes and other agreements, or under the Permitted Encumbrances,
or otherwise attendant to the ownership or operation of the Property, have been,
and will continue to be, properly and timely paid. Mortgagor is not in default
with respect to Mortgagor’s obligations (and Mortgagor is not aware of any
default by any third party with respect to such third party’s obligations) under such
leases, contracts, servitudes and other agreements, or under the Permitted
Encumbrances, or otherwise attendant to the ownership or operation of any part
of the Property, where such default could adversely affect the ownership or
operation of the Property; Mortgagor will fulfill all such obligations coming
due in the future. There are no situations where Mortgagor is aware that a
contingent liability may exist to account
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on a
basis less favorable to Mortgagor than on the basis on which Mortgagor is
currently accounting.
(c) Sale of
Production. No Mortgaged Property is or will become subject to
any contractual or other arrangement (i) whereby payment for production is or
can be deferred for a substantial period after the month in which such
production is delivered (i.e., for ▇▇▇▇▇ in pay status, in the case of oil, not
in excess of 60 days, and in the case of gas, not in excess of 90 days, and for
▇▇▇▇▇ not in pay status, the time period provided by statute) or (ii) whereby
payments are made to Mortgagor other than by checks, drafts, wire transfer
advises or other similar writings, instruments or communications for the
immediate payment of money. Except for production sales contracts, processing
agreements or transportation agreements (or other agreements relating to the
marketing of Production) listed on Exhibit A (in
connection with the Mortgaged Properties to where they relate), and except as
otherwise disclosed to the Agent in writing, (i) no Mortgaged Property is or
will become subject to any contractual or other arrangement for the sale,
processing or transportation of Production (or otherwise related to the
marketing of Production) which cannot be cancelled on 120 days’ (or less) notice
and (ii) all contractual or other arrangements for the sale, processing or
transportation of Production (or otherwise related to the marketing of
Production) shall be bona fide transactions, and except for contractual and
other arrangements with Four Winds Marketing, LLC, will be with third parties
not affiliated with Mortgagor, and shall, with respect to all contracts and
other arrangements be at the best price (and on the best terms) then available
(such price shall, in the case of Production sales which are subject to price
controls, be determined giving consideration to such fact). Mortgagor is
presently receiving a price for all production from (or attributable to) each
Mortgaged Property covered by a production sales contract listed on Exhibit A as computed
in accordance with the terms of such contract, and is not having deliveries of
production from such Mortgaged Property curtailed substantially below such
property’s delivery capacity. Neither Mortgagor, nor any of its predecessors in
title, has received prepayments (including, but not limited to, payments for gas
not taken pursuant to “take or pay” or other similar arrangements) for any oil,
gas or other hydrocarbons produced or to be produced from the Mortgaged
Properties after the date hereof, and Mortgagor hereby covenants not to enter
into any such advance or prepayment arrangements whereby it accepts
consideration for oil, gas or other hydrocarbons not yet produced. No Mortgaged
Property is or will become subject to any “take or pay” or other similar
arrangement (i) which can be satisfied in whole or in part by the production or
transportation of gas from other properties or (ii) as a result of which
production from the Mortgaged Properties may be required to be delivered to one
or more third parties without payment (or without full payment) therefor as a
result of payments made, or other actions taken, with respect to other
properties. To the best of Mortgagor’s knowledge, the gas imbalances set forth
in Schedule 7.19 of the Credit Agreement reflects the net gas balancing position
of the Mortgaged Properties as of the Effective Date (as such term is defined in
the Credit Agreement). Except as otherwise disclosed to Agent in
writing, as of December 31, 2008, there is no Mortgaged Property with respect to
which Mortgagor, or its predecessors in title, has, prior to such date, taken
more (“overproduced”), or less (“underproduced”), gas from the lands covered
thereby (or pooled or unitized therewith) than its ownership interest in such
Mortgaged Property would entitle it to take which has resulted, on such date, in
Mortgagor being materially overproduced or materially underproduced with respect
to such Mortgaged Property. Mortgagor will not after the date hereof become
“overproduced” (as above defined) with respect to any well on the Mortgaged
Properties (or on any unit in which the Mortgaged Properties participate), in an
amount in excess of Mortgagor’s
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3941837v.4
share of
gas produced from such well during the preceding four calendar months. No
Mortgaged Property is or will become subject to a gas balancing arrangement
under which one or more third parties may take a portion of the production
attributable to the Mortgaged Property without payment (or without full payment)
therefor as a result of production having been taken from, or as a result of
other actions or inactions with respect to, other properties. No Mortgaged
Property is subject at the present time to any regulatory refund obligation and,
to the best of Mortgagor’s knowledge, no facts exist which might cause the same
to be imposed.
(d) Condition of Personal or
Movable Property. The equipment, inventory, improvements,
fixtures, goods and other tangible personal/movable property forming a part of
the Property are and will remain (and with respect to Property not operated by
Mortgagor, to the best of Mortgagor’s knowledge, such equipment, inventory,
fixtures, goods and other tangible personal/movable property are and will
remain) in good repair and condition and are and will be adequate for the normal
operation of the Property in accordance with prudent industry standards; all of
such Property is, and will remain, located on the Mortgaged Properties, except
for that portion thereof which is or shall be located elsewhere (including that
usually located on the Mortgaged Properties but temporarily located elsewhere)
in the course of the normal operation of the Property, or which is hereafter
sold or otherwise disposed of as permitted under the Credit
Agreement.
(e) Operation of Mortgaged
Properties. The Mortgaged Properties, and with respect to
Mortgaged Properties not operated by Mortgagor, to the best of Mortgagor’s
knowledge, such non-operated Mortgaged Properties, (and properties unitized
therewith) are being (and, to the extent the same could adversely affect the
ownership or operation of the Mortgaged Properties after the date hereof, have
in the past been), and hereafter will be, maintained, operated and developed in
a good and workmanlike manner, in accordance with prudent industry standards and
in conformity with all applicable laws and all rules, regulations and orders of
all duly constituted authorities having jurisdiction and in conformity with all
oil, gas and/or other mineral leases and other contracts and agreements forming
a part of the Property and in conformity with the Permitted Encumbrances;
specifically in this connection, (i) no Mortgaged Property is subject to having
allowable production after the date hereof reduced below the full and regular
allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) prior to
the date hereof and (ii) none of the ▇▇▇▇▇ located on the Mortgaged Properties
(or properties unitized therewith) are or will be deviated from the vertical
more than the maximum permitted by applicable laws, regulations, rules and
orders, and such ▇▇▇▇▇ are, and will remain, bottomed under and producing from,
with the well bores wholly within, the Mortgaged Properties (or, in the case of
▇▇▇▇▇ located on properties unitized therewith, such unitized properties). There
are no ▇▇▇▇▇ listed on Schedule I hereto
(“Schedule I ▇▇▇▇▇”)
being redrilled, deepened, plugged back or reworked, and no other operations are
being conducted for which consent is required under the applicable operating
agreement (or which are other than normal operation of existing ▇▇▇▇▇ on the
Mortgaged Properties); except as otherwise disclosed to Agent in writing, there
are no proposals in excess of $1,500,000 net to Mortgagor’s interest currently
outstanding (whether made by Mortgagor or by any other party) to re-drill,
deepen, plug back, or rework Schedule I ▇▇▇▇▇, or to conduct any other
operations under the applicable joint operating agreement, or to abandon any
Schedule I ▇▇▇▇▇ (nor are there any such proposals which have been approved
either by Mortgagor or any other party, with respect to which the operations
covered thereby have not been commenced).
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Except as
otherwise disclosed to Agent in writing, there are no dry holes, or otherwise
inactive ▇▇▇▇▇, located on the Mortgaged Properties or on lands pooled or
unitized therewith (including, without limitation, any ▇▇▇▇▇ which would, if
located in Texas, require compliance with Railroad Commission Rule 14(b)(2))
that in the aggregate will cost more than $1,500,000, net to Mortgagor’s
interest and net of salvage proceeds, to plug and abandon, except for ▇▇▇▇▇ that
have been properly plugged and abandoned that have not been taken into account
in Mortgagor’s financial statements as furnished to Agent. Mortgagor has, and
will have in the future, all governmental licenses and permits necessary or
appropriate to own and operate the Property; Mortgagor has not received notice
of any violations in respect of any such licenses or permits.
(f) Sale or
Disposal. Mortgagor will not, without the prior written
consent of Agent, sell, exchange, lease, transfer, or otherwise dispose of any
part of, or interest in, the Property other than (i) sales, transfers and other
dispositions of machinery, equipment and other personal/ movable property and
fixtures made in connection with a release, surrender or abandonment of a lease,
(ii) sales, transfers and other dispositions of machinery, equipment and other
personal/movable property and fixtures in connection with the abandonment of a
well, (iii) sales, transfers and other dispositions of machinery, equipment and
other personal/movable property and fixtures which are (A) obsolete for their
intended purpose and disposed of in the ordinary course of business or (B)
replaced by articles of at least equal suitability and value owned by Mortgagor
free and clear of all liens except this Mortgage and the Permitted Encumbrances,
(iv) sales of Production which are made in the ordinary course of business and
in compliance with Section 2.1(c) hereof; provided that nothing in clause (iv)
shall be construed as limiting Agent’s rights under Article III of this
Mortgage, and (v) sales, transfers and other dispositions of oil and gas leases,
but only to the extent such sale, transfer or other disposition is in the
ordinary course of business and does not materially and adversely affect the
value of the Property in the aggregate. In the event and during the continuation
of a default (as hereinafter defined), Mortgagor shall at all times keep the
Property and its proceeds separate and distinct from other property of Mortgagor
and shall keep accurate and complete records of the Property and its
proceeds.
(g) Suits and
Claims. Except as otherwise disclosed to Agent in writing,
there are no Suits, actions, claims, investigations, inquiries, proceedings or
demands pending (or, to the best of Mortgagor’s knowledge, threatened) which
affect the Properties (including, without limitation, any which challenge or
otherwise pertain to Mortgagor’s title to the Properties) and no judicial or
administrative actions, suits or proceedings pending (or, to the best of
Mortgagor’s knowledge, threatened) against Mortgagor. Notwithstanding the
foregoing, Mortgagor’s representation in this Section with respect to pending
suits, actions, claims, investigations, inquiries, proceedings or demands which
affect Properties which are not operated by Mortgagor, except those pertaining
to Mortgagor’s title to such non-operated Properties, will be limited to the
best of Mortgagor’s knowledge.
(h) Environmental.
(A) Current Status. The
Property (and with respect to Property not operated by Mortgagor, to the best of
Mortgagor’s knowledge, such non-operated Property) and Mortgagor are not in
material violation of Applicable Environmental Laws (as defined below), or
subject to any existing, pending or, to the best knowledge of Mortgagor,
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threatened
investigation or inquiry by any governmental authority or any other person under
or with respect to Applicable Environmental Laws, or subject to any remedial
obligations under Applicable Environmental Laws, and are in compliance with all
permits and licenses required under Applicable Environmental Laws, and this
representation will continue to be true and correct following disclosure to the
applicable governmental authorities of all relevant facts, conditions and
circumstances, if any, pertaining to the Property and Mortgagor. “Applicable Environmental Laws”
shall mean any applicable laws, orders, rules, or regulations (including,
without limitation, the common law) pertaining to safety, health or the
environment, as such laws, orders, rules or regulations now exist or are
hereafter enacted and/or amended. Applicable Environmental Laws include, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (as amended, hereinafter called “CERCLA”), the Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, the Solid Waste Disposal Act Amendments of 1980, and the Hazardous and
Solid Waste Amendments of 1984 (as amended, hereinafter called “RCRA”) and applicable state
and local law). Mortgagor undertook, at the time of acquisition of the Property,
all appropriate inquiry into the previous ownership and uses of the Property
consistent with good commercial or customary practice. Mortgagor has taken all
commercial and reasonable steps necessary to determine and has determined that
no hazardous substances or solid wastes have been disposed of or otherwise
released at, into, upon or under the Property. The use which Mortgagor makes and
intends to make of the Property will not result in the use, treatment, storage
or disposal or other release of any hazardous substance or solid waste at, into,
upon or under the Property, except such usage, and temporary storage in
anticipation of usage, as is in the ordinary course of business and in
compliance with Applicable Environmental Laws. The terms “hazardous substance”
and “release” as used in this Mortgage shall have the meanings specified in
CERCLA, and the terms “solid waste” and “disposal” (or “disposed”) shall have
the meanings specified in RCRA; provided, in the event either CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and
provided further, to the extent that the laws of the states in which the
Mortgaged Properties are located establish a meaning for “hazardous substance,”
“release,” “solid waste,” or “disposal” which is broader than that specified in
either CERCLA or RCRA, such broader meaning shall apply. The “Associated
Property” (as such term is hereinafter defined) is not in violation of any
Applicable Environmental Laws for which Mortgagor or its predecessors in the
Property would be responsible. The term “Associated Property” as used
in this Mortgage shall mean any and all interests in and to (and or carved out
of) the lands which are described or referred to in Exhibit A hereto, or
which are otherwise described in any of the oil, gas and/or mineral leases or
other instruments described in or referred to in such Exhibit A, whether or
not such property interests are owned by Mortgagor.
(B) Future Performance.
Mortgagor will use its best efforts not to cause or permit the Property or the
Associated Property or Mortgagor to be in material violation of, or do anything
or permit anything to be done which will subject the Property or the Associated
Property to any material remedial obligations under, or result in material
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noncompliance
with applicable permits and licenses under, any Applicable Environmental Laws,
assuming disclosure to the applicable governmental authorities of all relevant
facts, conditions and circumstances, if any, pertaining to the Property or the
Associated Property and Mortgagor will promptly notify Agent in writing of any
existing, pending or, to the best knowledge of Mortgagor, threatened
investigation, claim, suit or inquiry by any governmental authority or any
person in connection with any Applicable Environmental Laws, provided that, with
respect to Properties not operated by Mortgagor, Mortgagor shall notify Agent of
any investigations, claims, suits or inquiries, whether existing, pending, or
threatened, of which Mortgagor becomes aware. Mortgagor will take all steps
reasonably necessary to determine that no hazardous substances or solid wastes
have been disposed of or otherwise released on or to the Property or the
Associated Property. Mortgagor will use commercial and reasonable efforts not to
cause or permit the disposal or other release of any hazardous substance or
solid waste at, into, upon or under the Property or the Associated Property and
covenants and agrees to keep or cause the Property and/or the Associated
Property to be kept free of any hazardous substance or solid waste (except such
use, and temporary storage in anticipation of use, as is required in the
ordinary course of business, all while in compliance with Applicable
Environmental Laws), and to remove the same (or if removal is prohibited by law,
to take whatever action is required by law) promptly upon discovery at its sole
expense. Upon Agent’s reasonable request, at any time and from time to time
during the existence of this Mortgage, Mortgagor will provide at Mortgagor’s
sole expense an inspection or audit of the Property and the Associated Property
from an engineering or consulting firm approved by Agent, indicating the
presence or absence of hazardous substances and solid waste on the Property
and/or the Associated Property and compliance with Applicable Environmental
Laws. In the event of a violation, Mortgagor will diligently work to cure such
violation, including remediation, if necessary, and so long as Mortgagor
diligently prosecutes efforts to cure the violation, Mortgagor will not be in
breach of this provision.
(i) Not Abandon ▇▇▇▇▇;
Participate in Operations. Mortgagor will not, without prior written
consent of Agent, 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 feasible to conduct) of
producing oil, gas, or other hydrocarbons or other minerals in commercial
quantities (as determined without considering the effect of this Mortgage). In
the event and during the continuation of a default, Mortgagor will not, without
prior written consent of Agent, 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 material interest in the
Mortgaged Properties.
(j) 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 Agent 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 necessary and proper steps for the defense of such
legal proceedings,
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including,
but not limited to, the employment of counsel, the prosecution or defense of
litigation and the release or discharge of all adverse claims, and Trustee and
Agent, or either of them (whether or not named as parties to legal proceedings
with respect thereto), are hereby authorized and empowered to take such
additional steps as in their judgment and discretion may be 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 but not limited to 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 reasonable 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 Agent or Trustee (as the case may be) 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.
(k) Fees and Expenses;
Indemnity. Mortgagor will pay all reasonable appraisal fees, recording
fees, taxes, brokerage fees and commissions, abstract and other records search
fees, attorneys’ fees and expenses and all other reasonable costs and expenses
of every character incurred by Mortgagor or Agent or any Lender in connection
with the closing of the loan or loans evidenced by the Loan Documents and any
and all amendments, supplements or modifications to such loan transaction or
transactions. Mortgagor will reimburse Trustee, Agent and each Lender (for
purposes of this paragraph, the terms “Trustee”, “Agent” and “Lender” shall
include the directors, officers, partners, employees and agents of Trustee,
Agent or any Lender, respectively, and any persons or entities owned or
controlled by or affiliated with Trustee, Agent or any Lender, respectively) for
all expenditures, including reasonable attorneys’ fees and expenses, incurred or
expended in connection with (i) the breach by Mortgagor of any covenant,
agreement or condition contained herein or in any other Loan Document, (ii) the
exercise of any rights and remedies hereunder or under any other Loan Document,
and (iii) the protection of the Property and/or liens and security interests
therein. Mortgagor will indemnify and hold harmless Trustee, Agent and each
Lender from and against (and will reimburse such indemnified parties for) all
claims, demands, liabilities, losses, damages (including, without limitation
consequential damages), causes of action, judgments, penalties, costs and
expenses (including, without limitation reasonable attorneys’ fees and expenses)
which may be imposed upon, asserted against or incurred or paid by the Trustee,
the Agent or any Lender on account of, in connection with, or arising out of (A)
any bodily injury or death or natural resource, human health or property damage
occurring in, at, into, under or upon (or, to the extent such injury, death or
damage is related to Mortgagor or Mortgagor’s ownership or operation of the
Property, in the vicinity of) the Property through any cause whatsoever, (B) any
act performed or omitted to be performed hereunder or the breach of any
representation or warranty herein, (C) the exercise of any rights and remedies
hereunder or under any other Loan Document, (D) any transaction, act, omission,
event or circumstance arising out of or in any way connected with the Property
or with this Mortgage or any other Loan Document, (E) any violation on or prior
to the Release Date (as hereinafter defined) of any Applicable Environmental
Law, (F) any act, omission, event or circumstance existing or occurring on or
prior to the Release Date (including without limitation the presence on or under
the Property or the Associated Property or release at, into, upon, under or from
the Property or the Associated Property of hazardous substances or solid wastes
disposed of or otherwise released) resulting from or in connection with the
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3941837v.4
ownership,
construction, occupancy, operation, use and/or maintenance of the Property or
the Associated Property, regardless of whether the act, omission, event or
circumstance constituted a violation of any Applicable Environmental Law at the
time of its existence or occurrence, and (G) any and all claims or proceedings
(whether brought by private party or governmental agencies) for human health,
bodily injury, property damage, abatement or remediation, environmental damage,
cleanup, mitigation, removal, natural resource damage or impairment or any other
injury or damage resulting from or relating to any hazardous or toxic substance,
solid waste or contaminated material located upon or migrating into, from or
through the Property or the Associated Property (whether or not the release of
such materials was caused by Mortgagor, a tenant or subtenant or a prior owner
or tenant or subtenant on the Property or the Associated Property and whether or
not the alleged liability is attributable to the use, treatment, handling,
storage, generation, transportation, removal or disposal of such substance,
waste or material or the mere presence of such substance, waste or material on
or under the Property or the Associated Property), which the Trustee and/or the
Agent and/or any Lender may have liability with respect to due to the making
of the loan or
loans evidenced by any Notes, the granting of this Mortgage, the exercise of any
rights under the Loan Documents, or otherwise. Agent 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 in compromise,
satisfaction or discharge of any such claim, action or judgment, and all court
costs, reasonable attorneys’ fees and other expenses of every character expended
by Agent, Trustee or any Lender pursuant to the provisions of this section shall
be a demand obligation (which obligation Mortgagor hereby expressly promises to
pay) owing by Mortgagor to the applicable party or parties. The “Release Date” as used herein
shall mean the earlier of the following two dates: (i) the date on which the
indebtedness and obligations secured hereby have been paid and performed in
full, or (ii) the date on which the lien of this Mortgage is foreclosed or a
deed in lieu of such foreclosure is fully effective and
recorded. WITHOUT
LIMITATION, IT IS THE INTENTION OF MORTGAGOR AND MORTGAGOR AGREES THAT THE
FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO
CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS,
PENALTIES, COSTS AND EXPENSES (INCLUDING WITHOUT LIMITATION REASONABLE
ATTORNEYS’ FEES) 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
and (x) are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such indemnitee or (y) result from a
claim brought by the Mortgagor or any Guarantor against an indemnitee for a
material breach in bad faith of such indemnitee's obligations under this
Mortgage, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, if the Mortgagor or such
Guarantor has obtained a final and nonappealable judgment in its favor on such
claim as determined by a court of competent jurisdiction. The foregoing
indemnities shall not terminate upon the Release Date or upon the release,
foreclosure or other termination of this Mortgage but will survive the Release
Date, foreclosure of this Mortgage or conveyance in lieu of foreclosure, 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. Any amount to be paid hereunder by
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Mortgagor
to Agent, Trustee and/or any Lender shall be a demand obligation owing by
Mortgagor to the applicable party or parties and shall be subject to and covered
by the provisions of Section 2.3 hereof.
(l) Insurance. Mortgagor
will keep (and with respect to Property not operated by Mortgagor, will use its
best efforts to keep) such part of the Property which is of an insurable nature
and of a character usually insured by persons operating similar properties,
insured with companies of recognized responsibility satisfactory to Agent and in
such amounts as are acceptable to Agent (and in the absence of specification of
such amounts by Agent, in the amount of the full value of such property, less
reasonable deductibles not to exceed deductibles customary in the industry for
similarly situated businesses and properties), against loss or damage by fire,
casualty and from other hazards customarily insured against by persons operating
similar properties. Mortgagor shall also provide such other insurance as Agent
may from time to time reasonably require; such coverage to be carried with
companies of recognized responsibility satisfactory to Agent. All policies
evidencing such insurance shall contain clauses providing that the proceeds
thereof shall be payable to Agent as its interest may appear and providing that
such policies may not be cancelled, reduced or otherwise affected without at
least thirty (30) days prior written notice to Agent. Upon request by Agent,
Mortgagor shall deliver to Agent the original policies, evidence of payment of
premiums, certificates evidencing renewals, and such other information regarding
such insurance as Agent may request. In the event of any loss under any
insurance policies so carried by Mortgagor, Agent shall have the right (but not
the obligation) to make proof of loss and collect the same, and all amounts so
received shall be applied toward costs, charges and expenses (including
reasonable attorneys’ fees), if any, incurred in the collection thereof, then to
the payment, in the order determined by Agent in its own discretion, of the
secured indebtedness, and any balance remaining shall be subject to the order of
Mortgagor. Agent is hereby authorized but not obligated to enforce in its name
or in the name of Mortgagor payment of any or all of said policies or settle or
compromise any claim in respect thereof, and to collect and make receipts for
the proceeds thereof and Agent is hereby appointed Mortgagor’s agent and
attorney-in-fact to endorse any check or draft payable to Mortgagor in order to
collect the proceeds of insurance. 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. Mortgagor shall at all
times maintain adequate insurance against its liability on account of damages to
persons or property, which insurance shall be carried by companies of recognized
responsibility satisfactory to Agent, and shall be for such amounts and insure
against such risks as are customary in the industry for similarly situated
businesses and properties. Mortgagor shall at all times maintain cost of
regaining control of well insurance and similar insurance to the extent
customary in the industry in the pertinent area of operations.
(m) Further Assurances.
Mortgagor will, on request of Agent, (i) promptly correct any defect, error or
omission which may be discovered in the contents of this Mortgage, or in any
other Loan Document, or in the execution or acknowledgment of this Mortgage or
any other Loan Document; (ii) execute, acknowledge, deliver and record and/or
file such further instruments (including, without limitation, further deeds of
trust, mortgages, security agreements, financing statements, continuation
statements, and assignments of production, accounts, funds,
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Houston
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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 Loan Documents and to more fully identify and
subject to the liens and security interests hereof any property intended to be
covered hereby, including specifically, but without limitation, any renewals,
additions, substitutions, replacements, or appurtenances to the Property; and
(iii) execute, acknowledge, deliver, and file and/or record any document or
instrument (including specifically any financing statement) desired by Agent to
protect the lien or the security interest hereunder against the rights or
interests of third persons. Mortgagor shall pay all costs connected with any of
the foregoing.
(n) Name and Place of Business
and Formation. Except as disclosed in the Credit Agreement, Mortgagor has
not, during the preceding five years, been known by or used any other corporate
or partnership, trade or fictitious name. Mortgagor will not cause or permit any
change to be made in its name, identity, state of formation or corporate or
partnership structure, or its federal employer identification number unless
Mortgagor shall have notified Agent of such change at least thirty (30) days
prior to the effective date of such change, and shall have first taken all
action required by Agent for the purpose of further perfecting or protecting the
liens and security interests in the Property created hereby. Mortgagor’s exact
name is the name set forth in this Mortgage. Mortgagor’s location is as
follows:
Mortgagor
is a registered organization which is organized under the laws of one of the
states comprising the United States (e.g. corporation, limited partnership,
registered limited liability partnership or limited liability company).
Mortgagor is located (as determined pursuant to the UCC) in the state under the
laws which it was organized, as follows:
Name of
Mortgagor State of
Organization
Company
Delaware
Mortgagor’s
principal place of business and chief executive office, and the place where
Mortgagor keeps its books and records concerning the Property (including,
particularly, the records with respect to “Production Proceeds”, as defined in
Section 3.1 hereof, from the Mortgaged Properties) has for the preceding four
months, been, and will continue to be (unless Mortgagor notifies Agent of any
change in writing at least thirty (30) days prior to the date of such change),
the address set forth opposite the signature of Mortgagor to this
Mortgage.
(o) 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).
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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 such commercial and
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
such commercial and reasonable action and to exercise all rights and remedies as
are reasonably available to Mortgagor (including, but not limited to, 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,
Agent, in Mortgagor’s name or its own name, may, 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 Agent and any money so paid by Agent shall be a demand
obligation owing by Mortgagor to Agent (which obligation Mortgagor hereby
expressly promises to pay) and Agent, 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 Trustee and/or
Agent and/or any Lender pursuant to this Mortgage shall bear interest each day,
from the date of such expenditure or payment until paid, at a rate equal to the
rate as provided for past due principal under the Notes (provided that, should
applicable law provide for a maximum permissible rate of interest on such
amounts, such rate shall not be greater than such maximum permissible rate); all
such amounts, together with such interest thereon, shall be a part of the
secured indebtedness and shall be secured by this Mortgage.
ARTICLE
III.
Assignment of Production,
Accounts and Proceeds
Section
3.1
Assignment of Production. Mortgagor
does hereby absolutely and unconditionally assign, transfer and set over to
Agent all Production which accrues to Mortgagor’s interest in the Mortgaged
Properties, all proceeds of such Production and all Payments in Lieu of
Production (herein collectively referred to as the “Production Proceeds”),
together with the immediate and continuing right to collect and receive such
Production Proceeds. Mortgagor directs and instructs any and all
purchasers of any Production to pay to Agent 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 Agent.
Section
3.2
Effectuating Payment of
Production Proceeds to Agent. 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 Agent or that may be required by any purchaser of any
Production for the purpose of effectuating payment of the Production Proceeds to
Agent. If under any existing sales
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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 Agent,
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 Agent. Without limitation upon any of the
foregoing, Mortgagor hereby constitutes and appoints Agent as Mortgagor’s
special attorney in-fact (with full power of substitution, either generally or
for such periods or purposes as Agent 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 all Production and Production Proceeds (the same having been assigned by
Mortgagor to Agent pursuant to Section 3.1 hereof), expressly inclusive, but not
limited to, the right, power and authority to:
(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 Agent or which Agent 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 Agent, to make, execute and enter into such sales agreements or
other agreements as are necessary to direct Production Proceeds to be payable to
Agent;
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 Agent may be exercised by Agent through any person who, at
the time of the execution of the particular instrument, is an officer of Agent.
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
Agent 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 Agent that all the secured indebtedness is fully and finally
paid. Agent 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 Agent 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.
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
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make
payment promptly to Agent of the Production Proceeds, Agent 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 Agent shall have no liability or responsibility in
connection therewith so long as ordinary care is used in making such
designation.
Section
3.4
Application
of Production Proceeds. So long as no default has occurred
hereunder, the Production Proceeds received by Agent during each calendar month
shall on the first business day of the next succeeding calendar month (or, at
the option of Agent, on any earlier date) be applied by Agent as
follows:
FIRST,
to the payment of
all secured indebtedness then due and payable, in such manner and order as Agent
deems advisable;
SECOND, to the
prepayment of the remainder of the secured indebtedness in such manner and order
and to such extent as Agent deems advisable; and
THIRD, the remainder,
if any, of the Production Proceeds shall be paid over to Mortgagor or to
Mortgagor’s order or to such other parties as may be entitled thereto by
law.
After a
default hereunder has occurred, all Production Proceeds from time to time in the
hands of Agent shall be applied by it toward the payment of all secured
indebtedness (principal, interest, attorneys’ fees and other fees and expenses)
at such times and in such manner and order and to such extent as Agent deems
advisable.
Section
3.5
Release From Liability;
Indemnification. Agent 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 Agent (for purposes of this paragraph, the term “Agent” shall include
the directors, officers, partners, employees and agents of Agent and any persons
or entities owned or controlled by or affiliated with Agent) from and against
all claims, demands, liabilities, losses, damages (including, without
limitation, consequential damages), causes of action, judgments, penalties,
costs and expenses (including, without limitation, reasonable attorneys’ fees
and expenses) imposed upon, asserted against or incurred or paid by Agent by
reason of the assertion that Agent 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
Agent shall have the right to defend against any such claims or actions,
employing attorneys of its own selection, and if not furnished with indemnity
satisfactory to it, Agent 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 Agent in compromise, satisfaction or
discharge of any such claim, action or judgment, and all court costs, reasonable
attorneys’ fees and other expenses of every character expended by Agent pursuant
to the provisions of this section shall be a
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demand
obligation (which obligation Mortgagor hereby expressly promises to pay) owing
by Mortgagor to Agent 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 Date or upon the release, foreclosure or
other termination of this Mortgage but will survive the Release Date,
foreclosure of this Mortgage or conveyance in lieu of foreclosure, 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, WITHOUT LIMITATION,
CONSEQUENTIAL DAMAGES), CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, 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.
Section
3.6
Mortgagor’s Absolute
Obligation to Pay Notes. Nothing herein contained shall
detract from or limit the obligations of Mortgagor to make prompt payment of the
Notes, and any and all other secured indebtedness, at the time and in the manner
provided herein and in the Loan 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
Loan Documents.
Section
3.7
Rights Under Oklahoma Oil
and Gas Owners’ Lien Act. Mortgagor hereby grants, sells,
assigns and sets over unto Agent during the term hereof, all of Mortgagor’s
rights and interests pursuant to the provisions of the Oil and Gas Owners’ Lien
Act (OKLA. STAT. tit. 52, §§ 548.l-548.6 (the “Oklahoma Act”), hereby vesting
in Agent all of Mortgagor’s rights as an interest owner to the continuing
security interest in and lien upon the oil or gas severed or the proceeds of
sale. Agent may, at its option, file the verified notice of lien in order to
perfect such lien, but shall not be obligated to make such filing and shall not
be held liable to Mortgagor for any act or omission pursuant to the Oklahoma
Act.
Section
3.8
Rights Under New Mexico
Act. Mortgagor hereby grants, sells, assigns and sets over
unto Agent, during the term hereof, all of Mortgagor’s rights and interests
pursuant to the provisions of Sections 48-9-1, et seq., N.M.S.A. 1978
Comp. (the “New Mexico
Act”), hereby vesting in Agent all of Mortgagor’s rights as an interest
owner to the continuing security interest in and lien upon the oil or gas
severed or the proceeds of sale. Agent may, at its option, file the verified
notice of lien in order to perfect such lien, but shall not be obligated to make
such filing and shall not be held liable to Mortgagor for any act or omission
pursuant to the New Mexico Act.
Section
3.9
Rights Under Wyoming
Statutes. Mortgagor hereby appoints Agent as its
attorney-in-fact to pursue any and all lien rights of the Mortgagor to liens and
security
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interests
in the Mortgaged Properties securing payment of Production Proceeds attributable
to the Mortgaged Properties, including, without limitation, those liens and
security interests provided for by Section 34.1-9-3 19, Wyoming Statutes
Annotated, 1988 Republished Edition (June 1991), as amended or recodified.
Mortgagor further assigns to Agent any and all such liens, security interests,
financing statements, or similar interests of Mortgagor attributable to its
interests in the Mortgaged Properties or Production Proceeds therefrom arising
under or created by statutory provision, judicial decision, or
otherwise.
ARTICLE
IV.
Remedies Upon
Default
Section
4.1
Default. The
term “default” as used
in this Mortgage shall mean the occurrence of any of the following
events:
(a) the
occurrence of an “Event of Default” as defined in the Credit Agreement;
or
(b) the
failure of Mortgagor to pay over to Agent any Production Proceeds which are
receivable by Agent under this Mortgage but which are paid to Mortgagor rather
than Agent (either as provided for in Section 3.2 hereof or otherwise), except
Production Proceeds paid over to Mortgagor by Agent under clause THIRD of
Section 3.4; or
(c) the
breach or failure of Mortgagor timely and properly to observe, keep or perform
any covenant, agreement, warranty or condition herein required to be observed,
kept or performed, if such breach or failure is not remedied within the
applicable grace period provided for herein or, if no grace period is provided
then within 30 days after the earlier of (i) Mortgagor becoming aware of such
breach or failure or (ii) written notice and demand by Agent for the performance
of such covenant, agreement, warranty or condition; provided, however, if in the
reasonable judgment of the Agent, the Mortgagor is diligently pursuing a cure
for any such breach or failure and such a cure is practicable within a
reasonable time, Agent may grant additional time beyond said 30 days to remedy
such breach or failure; or
(d) any
representation contained herein (or in any certificate delivered by Mortgagor in
connection herewith), or otherwise heretofore or hereafter made by or on behalf
of Mortgagor as Mortgagor, shall prove to have been false or misleading in any
material respect on the date made (or on the date as of which made) and the
result of such misrepresentation shall be material with respect either to the
Mortgagor or the interests of the Agent or the Lenders.
Section
4.2
Acceleration of Secured
Indebtedness. Upon the occurrence of a default described in
Section 4.1 above, all of the secured indebtedness shall thereupon be
immediately due and payable, without presentment, demand, protest, notice of
protest, declaration or notice of acceleration or intention to accelerate,
putting the Mortgagor in default, dishonor, notice of dishonor or any other
notice or declaration of any kind, all of which are hereby expressly waived by
Mortgagor, and the liens evidenced hereby shall be subject to foreclosure in any
manner provided for herein or provided for by law as Agent may elect. During the
continuance of any other default, Agent at any time and from time to time may
without notice to Mortgagor or any other person declare any or all of the
secured indebtedness immediately due
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and
payable and all such secured indebtedness shall thereupon be immediately due and
payable, without presentment, demand, protest, notice of protest, declaration or
notice of acceleration or intention to accelerate, putting the Mortgagor in
default, dishonor, notice of dishonor or any other notice or declaration of any
kind, all of which are hereby expressly waived by Mortgagor, and the liens
evidenced hereby shall be subject to foreclosure in any manner provided for
herein or provided for by law as Agent may elect.
Section
4.3
Pre-Foreclosure
Remedies. Upon the occurrence of a default, or any event or
circumstance which, with the lapse of time or the giving of notice, or both,
would constitute a default hereunder, and following any period to attempt to
cure such default, if any, provided in the Credit Agreement, Agent 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, Agent may invoke any and all remedies to dispossess Mortgagor, including,
without limitation, summary proceeding or restraining order, Mortgagor agrees to
peacefully surrender possession of the Property upon default. All costs,
expenses and liabilities of every character incurred by Agent 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 Agent 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 Agent pursuant to this Section 4.3, AGENT SHALL NOT BE LIABLE FOR ANY
LOSS SUSTAINED BY MORTGAGOR RESULTING FROM ANY ACT OR OMISSION OF AGENT
(INCLUDING AGENT’S OWN NEGLIGENCE) IN MANAGING THE PROPERTY UNLESS SUCH LOSS IS
CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF AGENT, nor shall Agent 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 Encumbrance or otherwise arising. Mortgagor hereby assents to,
ratifies and confirms any and all actions of Agent with respect to the Property
taken under this Section 4.3.
Section
4.4
Foreclosure.
(a) Upon the
occurrence of a default, Trustee is authorized and empowered and it shall be
Trustee’s special duty at the request of Agent to sell the Deed of Trust
Mortgaged Properties, or any part thereof, as an entirety or in parcels as Agent
may elect, at such place or places and otherwise in the manner and upon such
notice as may be required by law or, in the absence of any such requirement, as
Trustee may deem appropriate. If Trustee shall have given notice of sale
hereunder, any successor or substitute Trustee thereafter appointed may complete
the sale and the conveyance of the property pursuant thereto as if such notice
had been given by the successor or substitute Trustee conducting the sale.
Cumulative of the foregoing and the other provisions of this Section
4.4:
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3941837v.4
(i) As to any
portion of the Deed of Trust Mortgaged Properties located in the State of Texas
(or within the offshore area over which the United States of America asserts
jurisdiction and to which the laws of such state are applicable with respect to
this Mortgage and/or the liens or security interests created hereby), such sales
of all or any part of such Deed of Trust Mortgaged Properties shall be conducted
at the courthouse of any county (whether or not the counties in which such Deed
of Trust Mortgaged Properties are located are contiguous) in the State of Texas
in which any part of such Deed of Trust Mortgaged Properties is situated or
which lies shoreward of any Deed of Trust Mortgaged Property (i.e., to the
extent a particular Deed of Trust Mortgaged Property lies offshore within the
reasonable projected seaward extension of the relevant county boundary), at
public venue to the highest bidder for cash between the hours of ten o’clock
a.m. and four o’clock p.m. on the first Tuesday in any month or at such other
place, time and date as provided by the statutes of the State of Texas then in
force governing sales of real estate under powers conferred by deed of trust,
after having given notice of such sale in accordance with such
statutes.
A POWER OF SALE HAS BEEN
GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW TRUSTEE TO TAKE THE
MORTGAGED PROPERTIES AND SELL THEM WITHOUT GOING TO COURT IN A FORECLOSURE
ACTION UPON DEFAULT BY MORTGAGOR UNDER THIS MORTGAGE.
(b) Upon the
occurrence of a default, (i) this Mortgage may be foreclosed as to the Other
Mortgaged Properties, or any part thereof, in any manner permitted by applicable
law, or (ii) the Agent may, to the extent permitted by applicable law, sell the
Other Mortgaged Properties, or any part thereof, as an entirety or in parcels as
Agent may elect, at such place or places and otherwise in the manner and upon
such notice as may be required by law or, in the absence of any such
requirement, as the Agent may deem appropriate (Mortgagor expressly granting the
power of sale). Cumulative of the foregoing and the other provisions of this
Section 4.4:
(i) As to
Other Mortgaged Properties located in the State of Louisiana (or within the
offshore area over which the United States of America asserts jurisdiction and
to which the laws of such state are applicable with respect to this Mortgage
and/or the liens or security interests created hereby), Agent may foreclose this
Mortgage by executory process, or any other process, subject to, and on the
terms and conditions required or permitted by, applicable law, and shall have
the right to appoint a keeper of such Other Mortgaged Properties.
(ii) As to
Other Mortgaged Properties located in the State of Oklahoma, Mortgagor hereby
confers on Agent the power to sell the Mortgaged Properties in accordance with
the Oklahoma Power of Sale Mortgage Foreclosure Act (OKLA. STAT. tit. 46, §§
41-49), as the same maybe amended from time to time. Mortgagor hereby represents
and warrants that this Mortgage transaction does not involve a consumer loan as
said term is defined in Section 3-104 of Title 14A of the Oklahoma Statutes,
that this Mortgage does not secure an extension of credit made primarily for
agricultural purposes
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as
defined in paragraph 4 of Section 1-301 of Title 14A of the Oklahoma Statutes,
and that this Mortgage is not a mortgage on the Mortgagor’s
homestead.
(iii) As to
Other Mortgaged Properties located in the State of New Mexico, Lender may, at
its election, proceed by suit or suits, at law or in equity, to enforce the
payment of the secured indebtedness in accordance with the terms hereof and of
the Notes or other instruments evidencing it, to foreclose the lien and security
interest of this Mortgage against all or any portion of the Other Mortgaged
Properties, and to have said properties sold under the judgment or decree of a
court of competent jurisdiction pursuant to Section 39-5-19 ▇▇▇▇ ▇▇▇▇, as that
statutory provision may be amended or recodified.
A POWER OF SALE HAS BEEN
GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW AGENT TO TAKE THE MORTGAGED
PROPERTIES AND SELL THEM WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON
DEFAULT BY MORTGAGOR UNDER THIS MORTGAGE.
(c) Upon the
occurrence of a default, Agent may exercise its rights of enforcement with
respect to the Collateral under the Texas Business and Commerce Code, as
amended, the Louisiana Commercial Laws, as amended, the Uniform Commercial Code
of the State of Oklahoma, as amended, the Uniform Commercial Code of the State
of New Mexico, or 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) To the
extent permitted by law, Agent 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) Agent may
require Mortgagor to assemble the Collateral and make it available at a place
Agent designates which is mutually convenient to allow Agent to take possession
or dispose of the Collateral; and
(iii) Written
notice mailed to Mortgagor as provided herein at least five (5) 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 Agent, be sold, as a whole or in parts, together
or separately (including, without limitation, 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
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3941837v.4
(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; and
(vii) as to the
Collateral located in or otherwise subject to the laws of the State of
Louisiana, Agent may foreclose this Mortgage as a security agreement affecting
the Collateral by executory process, or any other process, subject to, and on
the terms and conditions required or permitted by applicable law, and shall have
the right to
appoint a keeper of such Collateral.
(d) To the
extent permitted by applicable law, the sale hereunder of less than the whole of
the Property shall not exhaust the powers of sale herein granted or 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. In the event any sale hereunder is not completed or is
defective in the opinion of Agent, such sale shall not exhaust the powers of
sale hereunder or the right to judicial foreclosure, and Agent shall have the
right to cause a subsequent sale or sales to be made. 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. The Trustee or his successor or
substitute, and the Agent acting under power of sale, may appoint or delegate
any one or more persons as agent to perform any act or acts necessary or
incident to any sale held by it (including, without limitation, the posting of
notices and the conduct of sale), and such appointment need not be in writing or
recorded. 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, with
respect to any sale by the Trustee, or any successor or substitute trustee, as
to the refusal, failure or inability to act of Trustee or any substitute or
successor trustee or the appointment of any substitute or successor trustee, 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 Notes or the Credit Agreement or any other Loan
Document, all persons dealing with the Mortgaged Properties shall be entitled to
rely on any document, or certificate, of the Agent 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 Trustee, Agent, 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.
(e) As to
Property now or hereafter located in, or otherwise subject to the laws of, the
State of Louisiana, Mortgagor acknowledges the secured indebtedness, whether now
existing or to arise hereafter, and for Mortgagor, Mortgagor’s heirs, devisees,
personal representatives,
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3941837v.4
successors
and assigns, hereby confesses judgment for the full amount of the secured
indebtedness in favor of the Lender. Mortgagor further agrees that the Agent may
cause all or any part of the Property to be seized and sold after due process of
law, the Mortgagor waiving the benefit of all laws or parts of laws relative to
the appraisement of property seized and sold under executory process or other
legal process, and consenting that all or any part of the Property may be sold
without appraisement, either in its entirety or in lots and parcels, as the
Agent may determine, to the highest bidder for cash or on such terms as the
plaintiff in such proceedings may direct. Mortgagor hereby waives (i) the
benefit of appraisement provided for in articles 2332, 2336, 2723, and 2724 of
the Louisiana Code of Civil Procedure and all other laws conferring the same;
(ii) the demand and three (3) days notice of demand as provided in articles 2639
and 2721 of the Louisiana Code of Civil Procedure; (iii) the notice of seizure
provided for in articles 2293 and 2721 of the Louisiana Code of Civil Procedure;
(iv) the three (3) days delay provided for in articles 2331 and 2722 of the
Louisiana Code of Civil Procedure; and (v) all other laws providing rights of
notice, demand, appraisement, or delay. Mortgagor expressly authorizes and
agrees that Agent shall have the right to appoint a keeper of such Property
pursuant to the terms and provisions of La. R.S. 9:5131 et
seq.
and La. R.S. 9:5136 et
seq., which keeper may be the
Agent, any agent or employee thereof, or any other person, firm, or corporation.
Compensation for the services of the keeper is hereby fixed at five percent
(5%) of the amount
due or sued for or claimed or sought to be protected, preserved, or enforced in
the proceeding for the recognition or enforcement of this Mortgage and shall be
secured by the liens and security interests of this Mortgage.
Section
4.5
Effective as
Mortgage. As to the Deed of Trust Mortgaged Properties, this
instrument shall be effective as a mortgage as well as a deed of trust and upon
the occurrence of a default may be foreclosed as to the Deed of Trust Mortgaged
Properties, or any portion thereof, in any manner permitted by applicable law,
and any foreclosure suit may be brought by Trustee or by Agent. To the extent,
if any, required to cause this instrument to be so effective as a mortgage as
well as a deed of trust, Mortgagor hereby mortgages the Deed of Trust Mortgaged
Properties to Agent. In the event a foreclosure hereunder as to the Deed of
Trust Mortgaged Properties, or any part thereof, shall be commenced by Trustee,
or his substitute or successor, Agent may at any time before the sale of such
properties direct Trustee to abandon the sale, and may then institute suit for
the foreclosure of this Mortgage as to such properties. It is agreed that if
Agent should institute a suit for the foreclosure of this Mortgage, Agent may at
any time before the entry of a final judgment in said suit dismiss the same, and
require Trustee, its substitute or successor, to sell the Deed of Trust
Mortgaged Properties, or any part thereof, in accordance with the provisions of
this Mortgage.
Section
4.6
Receiver. In
addition to all other remedies herein provided for, Mortgagor agrees that, upon
the occurrence of a default or any event or circumstance which, with the lapse
of time or the giving of notice, or both, would constitute a default hereunder,
Agent 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 Agent, and agrees that such appointment shall in no manner impair,
prejudice or otherwise affect the rights
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3941837v.4
of Agent
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 Agent or any Lender 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 Agent in connection with any
such receivership shall be a demand obligation (which obligation Mortgagor
hereby expressly promises to pay) owing by Mortgagor to Agent and shall bear
interest, from the date of making such advancement by Agent until paid, at the
rate described in Section 2.3 hereof.
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 but not limited to all court costs and charges of every
character in the event foreclosed by suit or any judicial proceeding and
including but not limited to a reasonable fee to the Trustee if such sale was
made by the Trustee acting under the provisions of Section 4.4(a) and including
but not limited to the compensation of the keeper, if any;
SECOND, to the
payment of the secured indebtedness (including specifically without limitation
the principal, interest and attorneys’ fees due and unpaid on the Notes and the
amounts due and unpaid and owed under this Mortgage) in such manner and order as
Agent may elect; 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
Lender as
Purchaser. Any Lender shall have the right to become the
purchaser at any sale held in foreclosure of the liens and/or security interests
evidenced hereby, and any Lender 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 such Lender, or if such
Lender holds less than all of such indebtedness, the pro rata part thereof owing
to such Lender, accounting to all other Lenders not joining in such bid in cash
for the portion of such bid or bids apportionable to such non-bidding Lender or
Lenders.
Section
4.9
Foreclosure as to Matured
Debt. Upon the occurrence of a default, Agent 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 as 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 provided in clause SECOND AND
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3941837v.4
THIRD of
Section 3.4 hereof. 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 Loan
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 Loan Document or provided for by law shall not prevent the
concurrent or subsequent employment of any other appropriate remedy or
remedies.
Section
4.11
Discretion as to
Security. Agent 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 Agent in its sole and uncontrolled
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.
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 Properly 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
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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
Waiver of
Oklahoma Appraisement. As to Property situated in or otherwise
subject to the laws of the State of Oklahoma, appraisement of the Property is
hereby waived (or not) at the option of Agent, such option to be exercised at
the time judgment is rendered in any foreclosure hereof or at any time prior
thereto.
Section
4.15
Limitation on New Mexico
Redemption Period. Pursuant to Section 39-5-19 of New Mexico
Statutes, 1978 Annotated, the redemption period after foreclosure sale for any
Property situated in or otherwise subject to the laws of the State of New Mexico
shall be limited to one (1) month.
ARTICLE
V.
Miscellaneous
Section
5.1
Scope of
Mortgage. This Mortgage is a deed of trust and mortgage of
both real/immovable and personal/movable property, a security agreement, a
financing statement and an assignment, and also covers proceeds and
fixtures.
Section
5.2
Effective as a Financing
Statement. This Mortgage, among other things, covers goods
which are or are to become fixtures related to the real property described
herein, and covers as-extracted collateral related to the real property
described herein. This Mortgage shall be effective as a financing statement (i)
filed as a fixture filing with respect to all fixtures included within the
Property, (ii) covering as-extracted collateral with respect to all as-extracted
collateral included within the Property (including, without limitation, all oil,
gas, other minerals and other substances of value which may be extracted from
the earth and all accounts arising out of the sale at the wellhead or minehead
thereof), and (iii) covering all other Property. This Mortgage is to be filed
for record in the real/immovable property records of each county or 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 county or parish
boundaries), and may also be filed in the offices of the Bureau of Land
Management, the Minerals Management Service, the General Land Office or any
relevant federal, state, local or tribal agency (or any successor agencies). The
mailing address of Mortgagor is the address of Mortgagor set forth at the end of
this Mortgage and the address of Agent from which information concerning the
security interests hereunder may be obtained is the address of Agent set forth
at the end of this Mortgage. Nothing contained in this paragraph shall be
construed to limit the scope of this Mortgage nor its effectiveness as a
financing statement covering any type of Property.
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3941837v.4
Section
5.3
Reproduction of Mortgage as
Financing Statement; Authorization to File. 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 purpose. Without limiting any other provision herein,
Mortgagor hereby authorizes Agent to file, in any filing or recording office,
one or more financing statements and any renewal or continuation statements
thereof, describing the Property, including, without limitation, a financing
statement covering “all assets of Mortgagor, all proceeds therefrom and all
rights and privileges with respect thereto.”
Section
5.4
Notice to Account
Debtors. In addition to, but without limitation of, the rights
granted in Article III hereof, Agent 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 Agent directly.
Section
5.5
Waivers. Agent
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, without the joinder of Trustee. Any party liable, either
directly or indirectly, for the secured indebtedness or for any covenant herein
or in any other Loan 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.
Section
5.6
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, but not limited to, 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 maybe granted in respect of the Property (including, without limitation,
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
5.7
Acts Not Constituting
Waiver. Any default may be waived without waiving any other
prior or subsequent default. Any default may be remedied without waiving 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 Agent 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
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3941837v.4
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.
Section
5.8
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
5.9
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 Credit
Agreement (or if no such designation is made, at the address of Agent indicated
at the end of this Mortgage), or at such other place as Agent may designate in
writing.
Section
5.10
Subrogation to Existing
Liens. To the extent that proceeds of the Notes are used to
pay indebtedness secured by any outstanding lien, security interest, charge or
prior encumbrance against the Property, such proceeds have been advanced at
Mortgagor’s request, and the party or parties advancing the same shall be
subrogated to any and all rights, security interests and liens owned by any
owner or holder of such outstanding liens, security interests, charges or
encumbrances, irrespective of whether said liens, security interests, charges or
encumbrances are released, and it is expressly understood that, in consideration
of the payment of such indebtedness, Mortgagor hereby waives and releases all
demands and causes of action for offsets and payments to, upon and in connection
with the said
indebtedness.
Section
5.11
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.
Section
5.12
Compliance With Usury
Laws. It is the intent of Mortgagor, Lender and all other
parties to the Loan 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 none of the terms and
provisions contained herein or in the other Loan Documents 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
charged by applicable law from time to time in effect.
Section
5.13
Substitute
Trustee. The Trustee may resign by an instrument in writing
addressed to Agent, or Trustee may be removed at any time with or without cause
by an
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Houston
3941837v.4
instrument
in writing executed by Agent. In case of the death, resignation, removal, or
disqualification of Trustee, or if for any reason Agent shall deem it desirable
to appoint a substitute or successor trustee to act instead of the herein named
trustee or any substitute or successor trustee, then Agent shall have the right
and is hereby authorized and empowered to appoint a successor trustee, or a
substitute trustee, without other formality than appointment and designation in
writing executed by Agent and the authority hereby conferred shall extend to the
appointment of other successor and substitute trustees successively until the
indebtedness secured hereby has been paid in full, or until the Property is sold
hereunder. In the event the secured indebtedness is owned by more than one
person or entity, the holder or holders of not less than a majority in the
amount of such indebtedness shall also have the right and authority to make the
appointment of a successor or substitute trustee as provided for in the
preceding sentence or to remove Trustee as provided in the first sentence of
this section. Such appointment and designation by Agent shall be full
evidence of the right and authority to make the same and of all facts therein
recited. If Agent is a corporation or association and such
appointment is executed in its behalf by an officer of such corporation or
association, such appointment shall be conclusively presumed to be executed with
authority and shall be valid and sufficient without proof of any action by the
board of directors or any superior officer of the corporation or association.
Agent may act through an agent or attorney-in-fact in substituting trustees.
Upon the making of any such appointment and designation, all of the estate and
title of Trustee in the Deed of Trust Mortgaged Properties shall vest in the
named successor or substitute Trustee and such successor or substitute shall
thereupon succeed to, and shall hold, possess and execute, all the rights,
powers, privileges, immunities and duties herein conferred upon Trustee; but
nevertheless, upon the written request of Agent or of the successor or
substitute Trustee, the Trustee ceasing to act shall execute and deliver an
instrument transferring to such successor or substitute Trustee all of the
estate and title in the Deed of Trust Mortgaged Properties of the Trustee so
ceasing to act, together with all the rights, powers, privileges, immunities and
duties herein conferred upon the Trustee, and shall duly assign, transfer and
deliver any of the properties and moneys held by said Trustee hereunder to said
successor or substitute Trustee. All references herein to Trustee
shall be deemed to refer to Trustee (including any successor or substitute
appointed and designated as herein provided) from time to time acting
hereunder.
Section
5.14
No
Liability for Trustee. THE TRUSTEE SHALL NOT BE LIABLE FOR
ANY ERROR OF JUDGMENT OR ACT DONE BY TRUSTEE IN GOOD FAITH, OR BE OTHERWISE
RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES WHATSOEVER (INCLUDING,
WITHOUT LIMITATION, THE TRUSTEE’S NEGLIGENCE), EXCEPT FOR TRUSTEE’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. The Trustee shall have the right to
rely on any instrument, document or signature authorizing or supporting any
action taken or proposed to be taken by the Trustee hereunder, believed by the
Trustee in good faith to be genuine. All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any other
moneys (except to the extent required by law), and Trustee shall be under no
liability for interest on any moneys received by him hereunder. Mortgagor hereby
ratifies and confirms any and all acts which the herein named Trustee or its
successor or successors, substitute or substitutes, shall do lawfully by virtue
hereof. Mortgagor will reimburse Trustee for, and indemnify and save Trustee
harmless against, any and all liability and expenses (including attorneys fees)
which may be incurred by Trustee in the performance of his duties. The foregoing
indemnities shall not terminate upon the
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3941837v.4
release,
foreclosure or other termination of this Mortgage but will survive such release,
termination and/or foreclosure of this Mortgage, or conveyance in lieu of
foreclosure, 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. Any amount to be paid hereunder by Mortgagor to Trustee
shall be a demand obligation owing by Mortgagor to Trustee and shall be subject
to and covered by the provisions of Section 2.3 hereof.
Section
5.15
Release of
Mortgage. If all of the secured indebtedness be paid as the
same becomes due and payable, all other requirements of the Credit Agreement are
satisfied and all of the covenants, warranties, undertakings and agreements made
in this Mortgage are kept and performed, and if neither the Mortgagor nor any
Lender is bound to the other or to any third person to permit any obligation or
secured indebtedness to be incurred then or thereafter, then, upon sixty (60)
days prior written notice (or such lesser number of days as may be mandated by
applicable law), the Mortgagor may request that this Mortgage be
terminated. Upon such termination the Mortgagor may further request
that a written act of release of this Mortgage be provided (except this Mortgage
shall be reinstated to the extent expressly provided herein, and will continue
with respect to indemnification and other rights which are to continue following
the release hereof). Agent agrees to deliver such an act of release (subject to
the foregoing limitation), all at the cost and expense of the Mortgagor, within
thirty (30) days (or such lesser number of days as may be mandated by applicable
law) of receiving such request unless Agent in good faith, has cause to believe
that Mortgagor is not entitled to a termination of this Mortgage.
Notwithstanding the foregoing, it is understood and agreed that certain
indemnifications, and other rights, which are provided herein to continue
following the release hereof, shall continue in effect notwithstanding such
release; and provided that if any payment to Lender, or Agent, is held to
constitute a preference or a voidable transfer under applicable state or federal
laws or if for any other reason Lender, or Agent, 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.
Section
5.16
Notices. All
notices, requests, consents, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed sufficiently given
or furnished if delivered by personal delivery, by telecopy, by delivery service
with proof of delivery, or by registered or certified United States mail,
postage prepaid, at the addresses specified at the end of this Mortgage (unless
changed by similar notice in writing given by the particular party whose address
is to be changed). Any such notice or communication shall be deemed
to have been given (a) in the case of personal delivery or delivery service, as
of the date of first attempted delivery at the address and in the manner
provided herein, (b) in the case of telecopy, upon receipt, and (c) in the case
of registered or certified United States mail, three days after deposit in the
mail. Notwithstanding the foregoing, or anything else in the Loan 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 Agent, any Lender or Trustee of
their respective rights hereunder or under any other Loan 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.
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Section
5.17
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
5.18
Gender;
Titles. 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.
Section
5.19
Recording. Mortgagor
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 Trustee or Agent shall reasonably request and will pay all
such recording, filing, re-recording and refiling taxes, fees and other
charges.
Section
5.20
Reporting Compliance.
Mortgagor agrees to comply with any and all reporting requirements applicable to
the transaction evidenced by the Notes and secured by this Mortgage which are
set forth in any law, statute, ordinance, rule, regulation, order or
determination of any governmental authority, and further agrees upon request of
Agent to furnish Agent with evidence of such compliance.
Section
5.21
Certain
Consents. Except where otherwise expressly provided herein, in
any instance hereunder where the approval, consent or the exercise of judgment
of Agent or any Lender 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
5.22
Certain
Obligations of Mortgagor. Without limiting Mortgagor’s
obligations hereunder, Mortgagor’s liability hereunder and the indebtedness
secured hereby 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
5.23
Authority
of Agent. The persons constituting Lender may, by agreement
among them, provide for and regulate the exercise of rights and remedies
hereunder, but, unless and until modified to the contrary in writing signed by
all such persons and recorded in the same counties and parishes as this Mortgage
is recorded, (i) all persons other than Mortgagor and its affiliates shall be
entitled to rely on the releases, waivers,
consents, approvals, notifications and other acts (including, without
limitation, appointment of substitute or successor trustee, or trustees,
hereunder and the bidding in of all or any part of the secured indebtedness held
by any one or more Lenders, whether the same be conducted under the provisions
hereof or otherwise) of Agent, without inquiry into any such agreements or the
existence of required
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Houston
3941837v.4
consent
or approval of any persons constituting Lender and without the joinder of any
party other than Agent in such releases, waivers, consents, approvals,
notifications or other acts and (ii) all notices, requests, consents, demands
and other communications required or permitted to be given hereunder may be
given to Agent.
Section
5.24
Counterparts. This
Mortgage may be executed in several counterparts, all of which are identical,
except that, (a) 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 and (b) Schedule I is
attached only to the master counterparts hereof being retained by Mortgagor and
Agent, (c) only those counterparts hereof being retained by Agent and Mortgagor
or otherwise containing counterpart descriptions of Mortgaged 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 State of
Louisiana will have Annex I attached
thereto, Annex
I is included in all other counterparts by reference only, (d) only those
counterparts being retained by Agent and Mortgagor otherwise containing
counterpart descriptions of Mortgaged Properties located in (or otherwise
subject to the recording or filing requirements and/or protections of the
recording or filing acts or regulations of) North Dakota will have Annex II attached
thereto, Annex
II is included in all other counterparts by reference only and (e) the
execution of this Mortgage by Mortgagor may not be witnessed on those
counterparts hereof containing descriptions of Mortgaged Properties located in
states where witnesses are not required and/or encouraged by applicable
law. All of such counterparts together shall constitute one and the
same instrument.
Section
5.25
Multiple Parties
Constituting Mortgagor. Unless the context clearly indicates
otherwise, as used in this Mortgage, “Mortgagor” means the Mortgagors named in
Section 1.1 hereof or any of them. The obligations of Mortgagor
hereunder shall be joint and several.
Section
5.26
Successors and
Assigns. 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 Agent,
Trustee and each person constituting Lender and their respective successors and
assigns, and shall constitute covenants running with the Mortgaged Properties.
Should the agency under which Agent serves be terminated, or otherwise cease to
exist, Lenders (including the respective successors and assigns of each person
constituting Lender named herein) shall be deemed to be the successors to Agent.
All references in this Mortgage to Mortgagor, Agent, Trustee or Lenders shall be
deemed to include all such successors and assigns.
Section
5.27
FINAL
AGREEMENT OF THE PARTIES. THE
WRITTEN LOAN 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.
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Houston
3941837v.4
Section
5.28
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 TEXAS
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 LENDER, 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 TRUSTEE OR THE LENDER
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
5.29
Reliance on Certificate or
Statement of Agent. All third parties may rely upon a
certificate or statement of the Agent as to the occurrence of any act or event,
including, but not limited to, the occurrence of a default hereunder, or the
occurrence of an Event of Default under the Credit Agreement.
Section
5.30
Appearance.
Resolutions, For purposes of Louisiana law, including but not
limited to the availability of executory process, Mortgagor has appeared on this
date before the undersigned Notary Public and witnesses in order to execute this
Mortgage. Mortgagor attaches, as Annex I, to
counterparts hereof being recorded in Louisiana certified resolutions of its
Board of Directors authorizing the execution and delivery of this
Mortgage.
Section
5.31
Paraph. Mortgagor
acknowledges that no promissory note or other instrument has been presented to
the undersigned Notary Public to be paraphed for identification
herewith.
Section
5.32
Acceptance by
Agent. In accordance with the provisions of Louisiana Civil
Code article 3289, Agent has accepted the benefits of the Mortgage without the
necessity of execution by Agent.
[Signatures
Begin on Next Page]
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Houston
3941837v.4
THUS DONE
AND PASSED this 14th day of April, 2009, to be effective, however, as of
April 14, 2009 (the “Effective
Date”), in my presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Mortgagor and me, Notary, after
reading of the whole.
WITNESSES: ST.
▇▇▇▇ ▇▇▇▇ & EXPLORATION
COMPANY
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ SERGIL VMOYRADOV Senior
Vice President and General Counsel
Name: Sergil
Vmoyradov
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
NOTARY PUBLIC
The
address and tax identification number of the Company is:
1776
Lincoln Street, Suite 1100
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇▇▇▇
▇▇▇▇▇▇)
Taxpayer
I.D. No. 41-05 18430
The address
of Agent is:
▇▇▇▇ ▇.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The
address of Trustee is:
▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Signature Page
to
Deed of
Trust, Mortgage, Line of Credit Mortgage Assignment, Security Agreement, Fixture
Filing and Financing Statement
STATE OF
TEXAS §
§
COUNTY OF
▇▇▇▇▇▇ §
BE IT
REMEMBERED THAT I, the undersigned authority, a notary public duly qualified,
commissioned, sworn and acting in and for the county and state aforesaid, and
being authorized in such county and state to take acknowledgments, hereby
certify that, on this __ day of April, 2009, THERE personally appeared before
me: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President and General Counsel of St. ▇▇▇▇
▇▇▇▇ & Exploration Company, a Delaware corporation, known to me to be such
officer, such corporation being a party to the foregoing
instrument.
|
COLORADO,
LOUISIANA, MONTANA, NEVADA, NEW MEXICO, NORTH DAKOTA, OKLAHOMA, SOUTH
DAKOTA, TEXAS, UTAH and
WYOMING
|
The
foregoing instrument was acknowledged before me on this day,
by
such
person, the above designated officer of the corporation
specified
following
such person’s name, on behalf of said corporation.
On
this date before me, the undersigned authority, personally came
and
appeared
such person, to me personally known and known by me to be the person whose
genuine sign ature is affixed to the foregoing document as the above
designated officer of the corporation specified following such and
person’s name, who signed said document before me, and who acknowledged,
in my presence, that he signed the above and foregoing document as his own
free act and deed on behalf of such corporation by authority of its board
of directors and as the free act and deed of such corporation and for the
uses and purposes therein set forth and apparent.
This
instrument was acknowledged before me on this day, by such person, the
above designated officer of the corporation specified following such
person’s name, on behalf of said
corporation.
|
IN
WITNESS WHEREOF, I have hereunto set my hand and official seal in the City of
Houston, ▇▇▇▇▇▇ County, Texas on the day and year first above
written.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
NOTARY PUBLIC, in and for the State of
Texas
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
My
commission
expires: (printed
name)
05-01-2011
[SEAL]
Acknowledgment Page
to
Deed of
Trust, Mortgage, Line of Credit Mortgage Assignment, Security Agreement, Fixture
Filing and Financing Statement
ANNEX
I
Annex I
ANNEX
II
Annex II
EXHIBIT
A
[Description
of leases and lands, grouped with ▇▇▇▇▇]
Need
actual land descriptions for the States of North Dakota, Oklahoma and Wyoming
-references to recorded instruments containing descriptions sufficient for all
other states
Exhibit A
SCHEDULE
I
[List of
▇▇▇▇▇ with corresponding Working Interests and Net Revenue
interests]
Schedule I