Common use of Production Proceeds Clause in Contracts

Production Proceeds. (a) To facilitate the collection and disbursement of the proceeds from the sale of oil and gas from any well covered by this Agreement, each Developer hereby irrevocably appoints Operator as his exclusive agent to collect any and all proceeds from the sale of such oil and gas whether such sale is made by the Developer or the Operator on behalf of the Developer and hereby agrees to name Operator as such agent in any contract for the separate disposition of such oil and gas. Any person or persons making payment to Operator shall be released from any and all liability with regard to the proceeds of such sale. (b) Operator shall make a diligent effort to collect all payments due but shall have no liability with regard to any nonpayment of proceeds from the sale of such oil and gas. (c) All monies collected by Operator shall be held in trust for the account of all parties. (d) Subject to Sections 10 and 20 hereof, Operator shall disburse, no later than the twenty-eighth (28th) day of the month following the month in which proceeds of sale are received, the entire proceeds of such sale, less payment of lessor's royalties and any overriding royalties, production payments, operating expenses or other charges under Section 8 and delinquent advance payments under Section 9; provided, however, if Operator enters into a take-or-pay contract which provides a credit to the purchaser for any payments by it for failing to take delivery, Operator shall have the right, but not the obligation, to deposit all or a portion of such payments in escrow, Operator shall have the right to retain such monies in escrow or disburse them from time to time to such person or persons as it determines are entitled thereto. If Operator disburses such monies to any person who is later determined to be not entitled thereto Operator shall have no liability to Developers or any other persons with respect thereto other than to use its best efforts to recover such monies for the account of the person who is lawfully entitled thereto, Ac-cordingly, Developers hereby release Operator from any and all claims, liabilities and damages related to or arising out of such payments or disbursements provided that Operator acted in good faith.

Production Proceeds. (a) To facilitate the collection and disbursement of the proceeds from the sale of oil and gas from any well covered by this Agreement, each Developer hereby irrevocably appoints Operator as his its exclusive agent to collect any and all proceeds from the sale of such oil and gas whether such sale is made by the Developer or the Operator on behalf of the Developer and hereby agrees to name Operator as such agent in any contract for the separate disposition of such oil and gas. Any person or persons making payment to Operator shall be released from any and all liability with regard to the proceeds of such sale. (b) Operator or affiliates shall make a diligent effort to collect all payments due but shall have no liability with regard to any nonpayment of proceeds from the sale of such oil and gas. (c) All monies collected by Operator for the sale of oil and gas shall be held in trust a segregated account for the account of all parties. (d) Subject to Sections 10 22 and 20 hereof28 below, Operator shall disburse, no later than the twenty-eighth (28thtenth ( 10 ) day of the month following the month in which proceeds of sale are received, the entire proceeds of such sale, less payment of lessor's royalties and any overriding royalties, production payments, operating expenses or other charges under Section 8 20 and delinquent advance payments under Section 921 below; provided, however, if Operator enters into a take-or-pay contract which provides a credit to the purchaser for any payments by it for failing to take delivery, Operator shall have the right, but not the obligation, to deposit all or a portion of such payments in escrow, Operator shall have the right to retain such monies in escrow or disburse them from time to time to such person or persons as it determines are entitled thereto. If Operator disburses such monies to any person who is later determined to be not entitled thereto Operator shall have no liability to Developers Developer or any other persons with respect thereto other than to use its best efforts to recover such monies for the account of the person who is lawfully entitled thereto, Ac-cordinglyAccordingly, Developers Developer hereby release releases Operator from any and all claims, liabilities and damages related to or arising out of such payments or disbursements provided that Operator acted in good faith.

Production Proceeds. (a) To facilitate Notwithstanding that, by the collection and disbursement terms of the proceeds from Mortgage, the sale Borrower and certain other Loan Parties are and will be assigning to the Administrative Agent and Lenders all of oil and gas from any well covered by this Agreement, each Developer hereby irrevocably appoints Operator the “Hydrocarbons” (as his exclusive agent to collect any defined therein) and all proceeds of production attributable to the Hydrocarbons or the Mortgaged Property, so long as no Default has occurred and is continuing, the Borrower or such other Loan Party, as applicable, may continue to receive from the sale purchasers of production all such oil and gas whether such sale is made by proceeds attributable to the Developer Hydrocarbons or the Operator on behalf of the Developer and hereby agrees to name Operator as such agent in any contract for the separate disposition of such oil and gas. Any person or persons making payment to Operator shall be released from any and all liability with regard to the proceeds of such sale. (b) Operator shall make a diligent effort to collect all payments due but shall have no liability with regard to any nonpayment of proceeds from the sale of such oil and gas. (c) All monies collected by Operator shall be held in trust for the account of all parties. (d) Subject to Sections 10 and 20 hereofMortgaged Property, Operator shall disburse, no later than the twenty-eighth (28th) day of the month following the month in which proceeds of sale are received, the entire proceeds of such sale, less payment of lessor's royalties and any overriding royalties, production payments, operating expenses or other charges under Section 8 and delinquent advance payments under Section 9; providedsubject, however, if Operator enters into a take-or-pay contract which provides a credit to the purchaser for any payments by it for failing to take deliveryLiens created under the Security Instruments, Operator shall have which Liens are hereby affirmed and ratified. Upon the rightoccurrence of a Default and during the continuance thereof, but not the obligationAdministrative Agent and Lenders may exercise all rights and remedies granted under the Security Instruments or under applicable law, to deposit all or a portion of such payments in escrow, Operator shall have including the right to retain such monies in escrow or disburse them from time obtain possession of all proceeds attributable to time to such person or persons as it determines are entitled thereto. If Operator disburses such monies to any person who is later determined to be not entitled thereto Operator shall have no liability to Developers the Hydrocarbons and the Mortgaged Property then held by the Borrower or any other persons with respect thereto Loan Party and to receive directly from the purchasers of production all other than proceeds attributable to use its best efforts the Hydrocarbons and the Mortgaged Property. In no case shall any failure, whether intended or inadvertent, by the Administrative Agent or Lenders to recover collect directly any such monies for proceeds attributable to the account Hydrocarbons or the Mortgaged Property constitute in any way a waiver, remission or release of any of their rights under the Security Instruments or under applicable law, nor shall any release of any proceeds attributable to the Hydrocarbons or the Mortgaged Property by the Administrative Agent or Lenders to the Borrower constitute a waiver, remission or release of any other proceeds attributable to the Hydrocarbons or the Mortgaged Property or of any rights of the person who is lawfully entitled thereto, Ac-cordingly, Developers hereby release Operator from Administrative Agent or Lenders to thereafter collect other proceeds attributable to the Hydrocarbons or the Mortgaged Property or any and all claims, liabilities and damages related to or arising out of such payments or disbursements provided that Operator acted in good faithother rights.

Production Proceeds. (a) To facilitate Notwithstanding that, by the collection and disbursement terms of the proceeds from various Security Documents, the sale Borrower and the Specified Subsidiaries are and will be assigning to the Collateral Trustee all of oil the Net Proceeds of Production accruing to the Mortgaged Properties covered thereby, so long as no Event of Default has occurred and gas from any well covered by this is continuing, pursuant to Section 7.03 of the Collateral Trust Agreement, each Developer hereby irrevocably appoints Operator as his exclusive agent to collect any and all proceeds from the sale of such oil and gas whether such sale is made by the Developer or the Operator Collateral Trustee, on behalf of the Developer Secured Parties, has granted each of the Borrower and hereby agrees the Specified Subsidiaries a revocable license to name Operator as such agent in any contract for the separate disposition of such oil and gas. Any person or persons making payment continue to Operator shall be released from any and all liability with regard to the proceeds of such sale. (b) Operator shall make a diligent effort to collect all payments due but shall have no liability with regard to any nonpayment of proceeds receive from the sale purchasers of production all such oil and gas. (c) All monies collected by Operator shall be held in trust for the account Net Proceeds of all parties. (d) Subject to Sections 10 and 20 hereofProduction, Operator shall disburse, no later than the twenty-eighth (28th) day of the month following the month in which proceeds of sale are received, the entire proceeds of such sale, less payment of lessor's royalties and any overriding royalties, production payments, operating expenses or other charges under Section 8 and delinquent advance payments under Section 9; providedsubject, however, if Operator enters into a take-or-pay contract which provides a credit to the purchaser for Liens created under the Security Documents, which Liens are hereby affirmed and ratified. During the continuance of an Event of Default described under Sections 9.1(g) or 9.1(h), pursuant to Section 7.03 of the Collateral Trust Agreement, this license shall be automatically revoked, and during the continuance of any payments other Event of Default, this license shall be revocable by it for failing the Collateral Trustee, subject to take deliverySection 3.04(b) of the Collateral Trust Agreement, Operator shall have upon the rightwritten direction of the Administrative Agent in the sole discretion of the Administrative Agent, but not by notice to the obligationBorrower, to deposit and the Collateral Trustee may exercise all or a portion of such payments in escrowrights and remedies granted under the Security Documents, Operator shall have including the right to retain obtain possession of all Net Proceeds of Production then held by the Borrower and its Specified Subsidiaries or to receive directly from the purchasers of production all other Net Proceeds of Production. In no case shall any failure, whether purposeful or inadvertent, by the Collateral Trustee to collect directly any such monies Net Proceeds of Production constitute in escrow any way a waiver, remission or disburse them from time release of any of its rights under the Security Documents, nor shall any release of any Net Proceeds of Production by the Collateral Trustee to time to such person the Borrower and the Specified Subsidiaries constitute a waiver, remission, or persons as it determines are entitled thereto. If Operator disburses such monies to any person who is later determined to be not entitled thereto Operator shall have no liability to Developers or release of any other persons with respect thereto other than to use its best efforts to recover such monies for the account Net Proceeds of Production or of any rights of the person who is lawfully entitled thereto, Ac-cordingly, Developers hereby release Operator from any and all claims, liabilities and damages related Collateral Trustee to or arising out collect other Net Proceeds of such payments or disbursements provided that Operator acted in good faithProduction thereafter.

Production Proceeds. (a) To facilitate Notwithstanding that, by the collection and disbursement terms of the proceeds from various Security Documents, the sale Company is and will be assigning to the Collateral Trustee all of oil the Net Proceeds of Production accruing to the Mortgaged Properties covered thereby, so long as no Event of Default has occurred and gas from any well covered by this is continuing, pursuant to Section 7.03 of the Collateral Trust Agreement, each Developer hereby irrevocably appoints Operator as his exclusive agent to collect any and all proceeds from the sale of such oil and gas whether such sale is made by the Developer or the Operator Collateral Trustee, on behalf of the Developer Secured Parties, has granted each of the Company and hereby agrees its Subsidiaries a revocable license to name Operator as such agent in any contract for the separate disposition of such oil and gas. Any person or persons making payment continue to Operator shall be released from any and all liability with regard to the proceeds of such sale. (b) Operator shall make a diligent effort to collect all payments due but shall have no liability with regard to any nonpayment of proceeds receive from the sale purchasers of production all such oil and gas. (c) All monies collected by Operator shall be held in trust for the account Net Proceeds of all parties. (d) Subject to Sections 10 and 20 hereofProduction, Operator shall disburse, no later than the twenty-eighth (28th) day of the month following the month in which proceeds of sale are received, the entire proceeds of such sale, less payment of lessor's royalties and any overriding royalties, production payments, operating expenses or other charges under Section 8 and delinquent advance payments under Section 9; providedsubject, however, if Operator enters into a take-or-pay contract which provides a credit to the purchaser for Liens created under the Security Documents, which Liens are hereby affirmed and ratified. During the continuance of an Event of Default described under Sections 9.1(g) or (h), pursuant to Section 7.03 of the Collateral Trust Agreement, this license shall be automatically revoked, and during the continuance of any payments other Event of Default, this license shall be revocable by it for failing the Collateral Trustee, subject to take deliverySection 3.04(b) of the Collateral Trust Agreement, Operator shall have upon the rightwritten direction of the Administrative Agent in the sole discretion of the Administrative Agent, but not by notice to the obligationCompany, to deposit and the Collateral Trustee may exercise all or a portion of such payments in escrowrights and remedies granted under the Security Documents, Operator shall have including the right to retain obtain possession of all Net Proceeds of Production then held by the Company and its Subsidiaries or to receive directly from the purchasers of production all other Net Proceeds of Production. In no case shall any failure, whether purposeful or inadvertent, by the Collateral Trustee to collect directly any such monies Net Proceeds of Production constitute in escrow any way a waiver, remission or disburse them from time release of any of its rights under the Security Documents, nor shall any release of any Net Proceeds of Production by the Collateral Trustee to time to such person the Company and its Subsidiaries constitute a waiver, remission, or persons as it determines are entitled thereto. If Operator disburses such monies to any person who is later determined to be not entitled thereto Operator shall have no liability to Developers or release of any other persons with respect thereto other than to use its best efforts to recover such monies for the account Net Proceeds of Production or of any rights of the person who is lawfully entitled thereto, Ac-cordingly, Developers hereby release Operator from any and all claims, liabilities and damages related Collateral Trustee to or arising out collect other Net Proceeds of such payments or disbursements provided that Operator acted in good faithProduction thereafter.

Production Proceeds. (a) To facilitate The Loan Parties shall provide to Administrative Agent, undated letters, in the collection form of Exhibit "B" to each purchaser of production and disbursement disburser of proceeds of production from or attributable to the proceeds Loan Parties' Mortgaged Properties, with the addressees to make future payments attributable to production from the sale of oil and gas from any well covered by this Agreement, each Developer hereby irrevocably appoints Operator as his exclusive agent Mortgaged Properties directly to collect any and all proceeds from the sale of such oil and gas whether such sale is made by the Developer or the Operator on behalf of the Developer and hereby agrees to name Operator as such agent in any contract for the separate disposition of such oil and gas. Any person or persons making payment to Operator shall be released from any and all liability with regard to the proceeds of such saleAdministrative Agent. (b) Operator Each Loan Party hereby designates Administrative Agent as its agent and attorney-in-fact, to act in its name, place, and stead for the purpose of completing and delivering any and all of the letters in lieu of transfer orders delivered by such Loan Party, as applicable, to Administrative Agent, including, without limitation, completing any blanks contained in such letters and attaching exhibits thereto describing the relevant Collateral. Each Loan Party hereby ratifies and confirms all that Administrative Agent shall make a diligent effort lawfully do or cause to collect all payments due but be done by virtue of this power of attorney and the rights granted with respect to such power of attorney. This power of attorney is coupled with the interest of Administrative Agent in the Collateral, shall have no liability with regard commence and be in full force and effect as of Closing and shall remain in full force and effect and shall be irrevocable so long as any Obligation remains outstanding or unpaid or any Commitment exists. The powers conferred on Administrative Agent by this appointment are solely to protect the interests of the Lenders under the Loan Documents and shall not impose any nonpayment of proceeds from the sale of duty upon Administrative Agent to exercise any such oil and gaspowers. ADMINISTRATIVE AGENT AND LENDERS SHALL BE ACCOUNTABLE ONLY FOR AMOUNTS THAT SUCH PARTY ACTUALLY RECEIVES AS A RESULT OF THE EXERCISE OF SUCH POWERS AND SHALL NOT BE RESPONSIBLE TO BORROWER OR ANY OTHER PERSON FOR ANY ACT OR FAILURE TO ACT WITH RESPECT TO SUCH POWERS, EXCEPT FOR ADMINISTRATIVE AGENT'S OR SUCH LENDER'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. (c) All monies collected by Operator Notwithstanding that, under the Security Documents, Borrower has assigned to Lender all of the proceeds of production accruing to Borrower's share of production from the Mortgaged Properties covered thereby, until such time as an Event of Default shall have occurred and be continuing, Borrower shall be held entitled to receive from the purchasers or disbursers of its production all such proceeds of production, subject however to the Liens created under the Mortgages. Immediately upon the occurrence and during the continuance of an Event of Default under Section 8.01(a), and thirty (30) days following the occurrence and during the continuance of any other Event of Default, Administrative Agent may deliver to the addressees the letters in trust for lieu described in Section 3.05 above and may exercise all rights and remedies granted under the account Mortgages, including the right to obtain possession of all partiesproceeds of runs then held by Borrower or to receive directly from the purchaser or disburser of production such proceeds of production. (d) Subject In no case shall any failure, whether intentional or inadvertent, by Administrative Agent to Sections 10 and 20 hereof, Operator shall disburse, no later than the twenty-eighth (28th) day of the month following the month in which collect directly any such proceeds of sale are receivedruns constitute in any way a waiver, rescission or release of any of its rights under the entire Mortgages, nor shall any release of any other proceeds of such sale, less payment runs or of lessor's royalties and any overriding royalties, production payments, operating expenses or rights of Administrative Agent to collect other charges under Section 8 and delinquent advance payments under Section 9; provided, however, if Operator enters into a take-or-pay contract which provides a credit to the purchaser for any payments by it for failing to take delivery, Operator shall have the right, but not the obligation, to deposit all or a portion proceeds of such payments in escrow, Operator shall have the right to retain such monies in escrow or disburse them from time to time to such person or persons as it determines are entitled thereto. If Operator disburses such monies to any person who is later determined to be not entitled thereto Operator shall have no liability to Developers or any other persons with respect thereto other than to use its best efforts to recover such monies for the account of the person who is lawfully entitled thereto, Ac-cordingly, Developers hereby release Operator from any and all claims, liabilities and damages related to or arising out of such payments or disbursements provided that Operator acted in good faithruns thereafter.

Production Proceeds. (ai) To In order to secure further the performance by Borrower of its obligations hereunder and the repayment of the Obligations and to effect and facilitate the collection and disbursement Lenders’ right of offset, the Borrower shall, upon reasonable request of the Required Lenders after an Event of Default, execute such forms, authorizations, documents and instruments, and do such other things from time to time, as the Required Lenders shall reasonably request, in order to require that pipeline companies, operators of the Mortgaged Properties and others (collectively, the “Purchasers”) purchasing (or acting as agents for, or making payments on behalf of, those purchasing) the oil, gas and other Hydrocarbons produced or to be produced from, or relating to, the Mortgaged Properties, deliver to a lock box to which the Agent has sole access all checks, cash, proceeds and monies (collectively, the “Proceeds”) now or hereafter payable by the Purchasers (or any of them) on account of oil, gas or other minerals produced from or relating to the sale Mortgaged Properties. (ii) After the occurrence of oil an Event of Default, the Required Lenders may require that all Proceeds be delivered to such a lock box. The Agent shall then deposit all Proceeds in a cash collateral account at the Agent styled “Matador Production Account”. Thereafter the Borrower shall, upon receipt, deposit in the Matador Production Account all such payments and gas monies which the Borrower receives directly from any well covered Purchaser relating to the Mortgaged Properties. The Borrower’s obligation to pay the amounts due under the Loans (both principal and interest) shall be absolute, and such amounts shall be due and payable notwithstanding the fact that the funds received by the Agent are insufficient to pay such amounts. (iii) If, after an Event of Default, the Required Lenders cause the Proceeds to be paid to the Matador Production Account, then, not less often than monthly, the Borrower shall submit to the Agent an itemized statement of operating costs and expenses, royalty payments and severance or production taxes required to be paid by the Borrower out of the Proceeds. The application by the Agent of such Proceeds shall, unless the Required Lenders shall agree otherwise in writing, be first to the payment of royalty payments due on the Mortgaged Properties (to the extent the Agent has received funds for royalty owners) and production and severance taxes on such Proceeds to the extent the same have not been withheld by the purchasers of production, second transfer to the Borrower’s operating account sufficient funds for the Borrower to pay the amount of operating costs and overhead expenses related to the operation of the Mortgaged Properties set forth in such itemized statement, provided that such costs and expenses shall, in the Agent’s sole discretion exercised in good faith, be reasonable and relate to the Mortgaged Properties, third to the payment of reasonable costs and expenses due the Lenders or the Agent under this Agreement, each Developer fourth to the payment of accrued interest due on the Notes and last to the payment of the principal then due on the Notes. Agent shall account for all monies received and applied hereunder. After an Event of Default all Proceeds held by the Agent after any transfer described in the second preceding sentence shall remain deposited in the Matador Production Account and shall secure repayment of the Notes or any other Obligations. The Borrower shall not have any right to withdraw funds from the Matador Production Account. (iv) The Borrower hereby irrevocably appoints Operator as his exclusive agent authorizes and directs the Agent to charge, at its discretion, from time to time the Matador Production Account and any other accounts of the Borrower at the Agent for amounts due to the Agent or Lenders hereunder. The Agent is hereby further authorized, in its own name or the name of the Borrower at any time, to notify any or all parties obligated with respect to the Mortgaged Properties to make all payments due or to become due thereon directly to the Agent. With or without such general notification, the Agent may take or bring in the Borrower’s name or that of the Agent or Lenders all steps, actions, suits or proceedings deemed by the Agent necessary or desirable to effect possession or collection of payments. (v) Regardless of any provision hereof, however, the Agent and Lenders shall never be liable for its or their failure to collect or for its or their failure to exercise diligence in the collection, possession, or any transaction concerning, all or part of the Mortgaged Properties or sums due or paid thereon nor shall Agent or Lenders be under any obligation whatsoever to anyone by virtue of its security interests and all proceeds from Liens relating to the sale of such oil and gas whether such sale is made Mortgaged Properties. (vi) Issuance by the Developer or Agent of a receipt to any Person obligated to pay any amounts to the Operator Borrower shall be a full and complete release, discharge and acquittance to such person to the extent of any amount so paid to the Agent. The Agent is hereby authorized and empowered on behalf of the Developer and hereby agrees Borrower to endorse the name Operator as such agent in any contract for the separate disposition of such oil and gas. Any person or persons making payment to Operator shall be released from any and all liability with regard to the proceeds of such sale. (b) Operator shall make a diligent effort to collect all payments due but shall have no liability with regard to any nonpayment of proceeds from the sale of such oil and gas. (c) All monies collected by Operator shall be held in trust for the account of all parties. (d) Subject to Sections 10 and 20 hereof, Operator shall disburse, no later than the twenty-eighth (28th) day of the month following the month in which proceeds of sale are receivedBorrower upon any check, the entire proceeds of such saledraft, less payment of lessor's royalties and any overriding royaltiesinstrument, production paymentsreceipt, operating expenses instruction or other charges under Section 8 and delinquent advance payments under Section 9; provideddocument or items, however, if Operator enters into a take-or-pay contract which provides a credit to the purchaser for any payments by it for failing to take delivery, Operator shall have the rightincluding, but not limited to, all items evidencing payment upon any indebtedness of any person to the obligationBorrower coming into the Agent’s possession, and to receive and apply the proceeds therefrom in accordance with the terms hereof. The Agent is hereby granted an irrevocable power of attorney, which is coupled with an interest, to deposit execute all checks, drafts, receipts, instruments, instructions or a portion other documents, agreements or items on behalf of the Borrower, after an Event of Default, as shall be deemed by the Agent to be necessary or advisable, in the sole discretion of the Agent, to protect the Lenders’ security interests and Liens in the Mortgaged Properties or the repayment of the Obligations, and the Agent shall not incur any liability in connection with or arising from its exercise of such payments in escrow, Operator shall have the right to retain such monies in escrow or disburse them from time to time to such person or persons as it determines are entitled thereto. If Operator disburses such monies to any person who is later determined to be not entitled thereto Operator shall have no liability to Developers or any other persons with respect thereto other than to use its best efforts to recover such monies for the account power of the person who is lawfully entitled thereto, Ac-cordingly, Developers hereby release Operator from any and all claims, liabilities and damages related to or arising out of such payments or disbursements provided that Operator acted in good faithattorney.

Production Proceeds. (a) To facilitate So long as no Event of Default has occurred and is continuing, the collection and disbursement of the proceeds from the sale of oil and gas from any well covered by this AgreementCollateral Trustee, each Developer hereby irrevocably appoints Operator as his exclusive agent to collect any and all proceeds from the sale of such oil and gas whether such sale is made by the Developer or the Operator on behalf of the Developer Secured Parties, has granted each of the Company and hereby agrees its Subsidiaries a revocable license to name Operator as such agent in any contract for continue to receive from the separate disposition purchasers of such oil and gas. Any person or persons making payment to Operator shall be released from any and production all liability with regard of the Net Proceeds of Production accruing to the proceeds of such sale. (b) Operator shall make a diligent effort to collect all payments due but shall have no liability with regard to any nonpayment of proceeds from Mortgaged Properties covered by the sale of such oil and gas. (c) All monies collected by Operator shall be held in trust for the account of all parties. (d) Subject to Sections 10 and 20 hereofSharing Security Documents, Operator shall disburse, no later than the twenty-eighth (28th) day of the month following the month in which proceeds of sale are received, the entire proceeds of such sale, less payment of lessor's royalties and any overriding royalties, production payments, operating expenses or other charges under Section 8 and delinquent advance payments under Section 9; providedsubject, however, if Operator enters into a take-or-pay contract which provides a credit to the purchaser for Liens created under the Sharing Security Documents, which Liens are hereby affirmed and ratified. During the continuance of an Event of Default described under Sections 9.1(g) or (h) of the Second Lien Term Loan Agreement or, until (but only until) the Senior Note Lien Termination Time, Section 6.1(9) of the Senior Notes Indenture as in effect on the Effective Date, this license shall be automatically revoked, and during the continuance of any payments other Event of Default, this license shall be revocable by it for failing the Collateral Trustee, subject to take deliverySection 3.04(b), Operator shall have upon the rightwritten direction of the Administrative Agent in the sole discretion of the Administrative Agent, but not by notice to the obligationCompany, to deposit and the Collateral Trustee may exercise all or a portion of such payments in escrowrights and remedies granted under the Sharing Security Documents, Operator shall have including the right to retain obtain possession of all Net Proceeds of Production then held by the Company and its Subsidiaries or to receive directly from the purchasers of production all other Net Proceeds of Production. In no case shall any failure, whether purposeful or inadvertent, by the Collateral Trustee to collect directly any such monies Net Proceeds of Production constitute in escrow any way a waiver, remission or disburse them from time release of any of its rights under the Sharing Security Documents, nor shall any release of any Net Proceeds of Production by the Collateral Trustee to time to such person the Company and its Subsidiaries constitute a waiver, remission, or persons as it determines are entitled thereto. If Operator disburses such monies to any person who is later determined to be not entitled thereto Operator shall have no liability to Developers or release of any other persons with respect thereto other than to use its best efforts to recover such monies for the account Net Proceeds of Production or of any rights of the person who is lawfully entitled thereto, Ac-cordingly, Developers hereby release Operator from any and all claims, liabilities and damages related Collateral Trustee to or arising out collect other Net Proceeds of such payments or disbursements provided that Operator acted in good faithProduction thereafter.

Production Proceeds. (a) To facilitate the collection and disbursement of the proceeds from the sale of oil and gas from any well covered by this Agreement, each Developer hereby irrevocably appoints Operator as his exclusive agent to collect any and all proceeds from the sale of such oil and gas whether such sale is made by the Developer or the Operator on behalf of the Developer and hereby agrees to name Operator as such agent in any contract for the separate disposition of such oil and gas. Any person or persons making payment to Operator shall be released from any and all liability with regard to the proceeds of such sale. (b) Operator shall make a diligent effort to collect all payments due but shall have no liability with regard to any nonpayment of proceeds from the sale of such oil and gas. (c) All monies collected by Operator shall be held in trust for the account of all parties. (d) Subject to Sections 10 and 20 hereof, Operator shall disburse, no later than the twenty-eighth (28th) day of the month following the month in which proceeds of sale are received, the entire proceeds of such sale, less payment of lessor's royalties and any overriding royalties, production payments, operating expenses or other charges under Section 8 and delinquent advance payments under Section 9; provided, however, if Operator enters into a take-or-pay contract which provides a credit to the purchaser for any payments by it for failing to take delivery, Operator shall have the right, but not the obligation, to deposit all or a portion of such payments in escrow, Operator shall have the right to retain such monies in escrow or disburse them from time to time to such person or persons as it determines are entitled thereto. If Operator disburses such monies to any person who is later determined to be not entitled thereto Operator shall have no liability to Developers or any other persons with respect thereto other than to use its best efforts to recover such monies for the account of the person who is lawfully entitled thereto, Ac-cordinglyAccordingly, Developers hereby release Operator from any and all claims, liabilities and damages related to or arising out of such payments or disbursements provided that Operator acted in good faith.

Production Proceeds. (a) To In order to secure further the performance by Borrower of its obligations hereunder and the repayment of the Obligations and to effect and facilitate the collection and disbursement Lenders' right of offset, the Borrower shall, upon request of the Required Lenders, execute such forms, authorizations, documents and instruments, and do such other things from time to time, as the Required Lenders shall request, in order to require that pipeline companies, operators of the Oil and Gas Properties and others (collectively, the "PURCHASERS") purchasing (or acting as agents for, or making payments on behalf of, those purchasing) the oil, gas and other hydrocarbons produced or to be produced from, or relating to, the Oil and Gas Properties deliver to a lock box to which the Agent has sole access all checks, cash, proceeds and monies (collectively, the "PROCEEDS") now or hereafter payable by the Purchasers (or any of them) on account of oil, gas or other minerals produced from or relating to the Oil and Gas Properties. After the occurrence of an Event of Default, the Required Lenders may require that all Proceeds be delivered to such a lock box. The Agent shall then deposit all Proceeds in a cash collateral account at the Agent styled "Matador Production Account". Thereafter the Borrower shall, upon receipt, deposit in the Matador Production Account all such payments and monies which the Borrower receives directly from any Purchaser relating to the Oil and Gas Properties. The Borrower's obligation to pay the amounts due under the Revolving Loan (both principal and interest) shall be absolute, and such amounts shall be due and payable notwithstanding the fact that the funds received by the Agent are insufficient to pay such amounts. If, after an Event of Default, the Required Lenders cause the Proceeds to be paid to the Matador Production Account, then, not less often than monthly, the Borrower shall submit to the Agent an itemized statement of operating costs and expenses, royalty payments and severance or production taxes required to be paid by the Borrower out of proceeds of production from the sale Oil and Gas Properties. The application by the Agent of oil such Proceeds shall, unless the Required Lenders shall agree otherwise in writing, be first to the payment of royalty payments due on the Oil and gas from any well covered Gas Properties (to the extent the Agent has received funds for royalty owners) and production and severance taxes on such production proceeds to the extent the same have not been withheld by the purchasers of production, second to the payment of costs and expenses due the Lenders or the Agent under this Agreement, each Developer third to the payment of accrued interest due on the Notes and last to the payment of the principal then due on the Notes. Agent shall account for all monies received and applied hereunder. To the extent, but only to the extent, that the Agent retains Proceeds after payment of royalties and taxes, costs and expenses of the Agent and principal and interest on the Notes ("EXCESS PROCEEDS."), the Agent shall transfer to the Matador Operating Account sufficient funds for the Borrower to pay the amount of operating costs and overhead expenses related to the operation of the Mortgaged Properties set forth in such itemized statement, provided that such costs and expenses shall, in the Agent's sole discretion exercised in good faith, be reasonable and relate to the Oil and Gas Properties. After an Event of Default all Proceeds held by the Agent after any transfer described in the immediately preceding sentence shall remain deposited in the Matador Production Account and shall secure repayment of the Notes. The Borrower shall not have any right to withdraw funds from the Matador Production Account. The Borrower hereby irrevocably appoints Operator as his exclusive agent authorizes and directs the Agent to charge, at its discretion, from time to time the Matador Production Account and any other accounts of the Borrower at the Agent for amounts due to the Agent or Lenders hereunder. The Agent is hereby further authorized, in its own name or the name of the Borrower at any time, to notify any or all parties obligated with respect to the Oil and Gas Properties to make all payments due or to become due thereon directly to the Agent. With or without such general notification, the Agent may take or bring in the Borrower's name or that of the Agent or Lenders all steps, actions, suits or proceedings deemed by the Agent necessary or desirable to effect possession or collection of payments. Regardless of any provision hereof, however, the Agent and Lenders shall never be liable for its or their failure to collect or for its or their failure to exercise diligence in the collection, possession, or any transaction concerning, all or part of the Oil and all proceeds from Gas Properties or sums due or paid thereon, nor shall Agent or Lenders be under any obligation whatsoever to anyone by virtue of its security interests and liens relating to the sale of such oil and gas whether such sale is made Mortgaged Properties. Issuance by the Developer or Agent of a receipt to any Person obligated to pay any amounts to the Operator Borrower shall be a full and complete release, discharge and acquittance to such person to the extent of any amount so paid to the Agent. The Agent is hereby authorized and empowered on behalf of the Developer and hereby agrees Borrower to endorse the name Operator as such agent in any contract for the separate disposition of such oil and gas. Any person or persons making payment to Operator shall be released from any and all liability with regard to the proceeds of such sale. (b) Operator shall make a diligent effort to collect all payments due but shall have no liability with regard to any nonpayment of proceeds from the sale of such oil and gas. (c) All monies collected by Operator shall be held in trust for the account of all parties. (d) Subject to Sections 10 and 20 hereof, Operator shall disburse, no later than the twenty-eighth (28th) day of the month following the month in which proceeds of sale are receivedBorrower upon any check, the entire proceeds of such saledraft, less payment of lessor's royalties and any overriding royaltiesinstrument, production paymentsreceipt, operating expenses instruction or other charges under Section 8 and delinquent advance payments under Section 9; provideddocument or items, however, if Operator enters into a take-or-pay contract which provides a credit to the purchaser for any payments by it for failing to take delivery, Operator shall have the rightincluding, but not limited to, all items evidencing payment upon any indebtedness of any person to the obligationBorrower coming into the Agent's possession, and to receive and apply the proceeds therefrom in accordance with the terms hereof. The Agent is hereby granted an irrevocable Power of Attorney, which is coupled with an interest, to deposit execute all checks, drafts, receipts, instruments, instructions or a portion other documents, agreements or items on behalf of the Borrower, after an Event of Default, as shall be deemed by the Agent to be necessary or advisable, in the sole discretion of the Agent, to protect the Lenders' security interests and liens in the Mortgaged Properties or the repayment of the Obligations, and the Agent shall not incur any liability in connection with or arising from its exercise of such payments in escrow, Operator shall have the right to retain such monies in escrow or disburse them from time to time to such person or persons as it determines are entitled thereto. If Operator disburses such monies to any person who is later determined to be not entitled thereto Operator shall have no liability to Developers or any other persons with respect thereto other than to use its best efforts to recover such monies for the account Power of the person who is lawfully entitled thereto, Ac-cordingly, Developers hereby release Operator from any and all claims, liabilities and damages related to or arising out of such payments or disbursements provided that Operator acted in good faithAttorney.