EXHIBIT 10.124
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT (the "Mortgage") dated as of
this 18th day of October, is by and among READING & XXXXX DEVELOPMENT CO.,
a Delaware corporation whose mailing address is 000 Xxxxxxxxxxxx, Xxxxx
000, Xxxxxxx, Xxxxx 00000, and whose federal taxpayer identification
number is 00-0000000 (hereinafter referred to as "Borrower"), and ENSERCH
EXPLORATION, INC., a Texas corporation whose mailing address is 0000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, and whose federal
taxpayer identification number is 00-0000000 (the "Lender"), here present
who accepts this Mortgage.
Recitals
WHEREAS, By assignments dated effective May 1, 1995 and entitled
"Assignment and Xxxx of Sale"( the "Assignments"), Lender has assigned to
Borrower certain leasehold interests in certain parcels of oil and gas
leasehold acreage (which interests and leases are more particularly
described in Exhibit "A" attached hereto) in exchange for Borrower's
agreement to pay to Lender the sum of Eighteen Million Two Hundred Fifty
Thousand and No/100($18,250,000.00) Dollars (the "Loan"), of which Six
Million Two Hundred Fifty Thousand and No/100 ($6,250,000.00) has been
paid and the remainder is evidenced by that certain Promissory Note of
even date herewith executed by Borrower and payable to Lender in the
principal amount of Twelve Million and No/100 ($12,000,000.00) Dollars
(the "Note");
WHEREAS, in order to secure the full and punctual payment and
performance of the Indebtedness (as hereafter defined), the Borrower has
agreed to execute and deliver this Mortgage and to grant a mortgage lien
and continuing security interest in and to the Collateral (as hereafter
defined);
NOW, THEREFORE, in consideration of the premises, the Borrower and
Lender agree as follows:
ARTICLE 1.
General Terms
Section 1.1 Definitions. As used in this Mortgage, the terms
"Assignments," "Borrower," "Lender," "Loan," "Mortgage," and "Note" shall
have the meanings indicated above. As used in this Mortgage, the
following additional terms shall have the meanings indicated:
"Accounts" means all "accounts" (as defined in the UCC) now owned or
hereafter acquired by the Borrower (including without limitation accounts
resulting from the sale of Hydrocarbons at the well head) now or hereafter
arising in connection with the sale or other disposition of any
Hydrocarbons, and further means all rights accrued, accruing or to accrue
to receive payments of any and every kind under all Contracts, including
without limitation bonuses, rents and royalties which are payable out of
or measured by production of any Hydrocarbons or are otherwise
attributable to the Mineral Properties and all other revenues owing to the
Borrower in connection with the Mineral Properties, including revenues
from the treatment, transportation or storage of Hydrocarbons for third
parties.
"Advances" has the meaning set forth in Section 4.23 ("Advances by
Lender") of this Mortgage.
"Collateral" has the meaning set forth in Section 2.2 ("The Security
Interests") of this Mortgage".
"Collateral Documents" means collectively all mortgages, pledges,
security agreements and other documents by which the Borrower grants Liens
and security interests in immovable or movable property to the Lender.
"Contracts" means all contracts, agreements, operating agreements,
farm-out or farm-in agreements, sharing agreements, limited or general
partnership agreements, area of mutual interest agreements, mineral
purchase agreements, contracts for the sale, exchange, transportation or
processing of Hydrocarbons, rights-of-way, easements, surface leases, salt
water disposal agreements, service contracts, permits, franchises,
licenses, pooling or unitization agreements, unit designations and pooling
orders now in effect or hereafter entered into by the Borrower affecting
any of the Mineral Properties, Equipment or Hydrocarbons now or hereafter
covered hereby, or which are useful or appropriate in drilling for,
producing, treating, handling, storing, transporting or marketing oil, gas
or other minerals produced from any lands affected by the Mineral
Properties.
"Default" means the occurrence of any of the events specified as an
Event of Default, whether or not any requirement for notice or lapse of
time or other condition precedent has been satisfied.
"Equipment" means all equipment now owned or hereafter acquired by
the Borrower and now or hereafter located on or used or held for use in
connection with the Mineral Properties or in connection with the operation
thereof or the treating, handling, storing, transporting, processing,
purchasing, exchanging or marketing of Hydrocarbons, including without
limitation all xxxxx, rigs, platforms, constructions, extraction plants,
facilities, gas systems (for gathering, treating, injection and
compression), water systems (for treating, disposal and injection),
compressors, casing, tubing, rods, flow lines, pipelines, derricks, tanks,
separators, pumps, machinery, tools and all other movable property and
fixtures now or hereafter located upon and dedicated to be used (or held
for use) in connection with any of the Mineral Properties, together with
all additions, accessories, parts, attachments, special tools and
accessions now and hereafter affixed thereto or used in connection
therewith, and all replacements thereof and substitutions therefor.
"Event of Default" has the meaning set forth in Section 5.1 ("Events
of Default") of this Mortgage.
"General Intangibles" means all "general intangibles" (as defined in
the UCC) now owned or hereafter acquired by the Borrower related to the
Mineral Properties, the Equipment or the Hydrocarbons, the operation of
the Mineral Properties or the Equipment (whether the Borrower is operator
or non-operator), or the treating, handling, storing, transporting,
processing, purchasing, exchanging or marketing of Hydrocarbons, or under
which the proceeds of Hydrocarbons arise or are evidenced or governed,
including, without limitation, (i) all contractual rights and obligations
or indebtedness owing to the Borrower (other than Accounts) from whatever
source arising in connection with the sale or other disposition of any
Hydrocarbons, including all rights to payment owed or received by the
Borrower pursuant to a "take-or-pay" provision or gas balancing
arrangement, (ii) all Contracts and other general intangibles now or
hereafter arising in connection with or resulting from Contracts, (iii)
all insurance proceeds and unearned insurance premiums affecting all or
any part of the Collateral, and (iv) all things in action, rights
represented by judgments, claims arising out of tort and other claims
relating to the Collateral, including the right to assert and otherwise to
be the plaintiff and proper party of interest to commence and prosecute
such action (whether as claims, counterclaims or otherwise, and whether
involving matters arising from casualty, condemnation, indemnification,
negligence, strict liability, other tort, contract or in any other
manner).
"Hydrocarbons" mean all oil, gas, casinghead gas, condensate,
distillate, other liquid and gaseous hydrocarbons, sulfur, and all other
minerals, whether similar to the foregoing or not, produced, obtained or
secured from or allocable to the Mineral Properties, and any products
refined, processed, recovered or obtained therefrom, including oil in
tanks.
"Indebtedness" means the Note, that certain Payment Agreement of even
date herewith by and between Borrower and Lender (the "Payment Agreement")
and all other present and future amounts, liabilities and obligations of
the Borrower to the Lender or to any successor or transferee thereof under
or pursuant to the Note or the Payment Agreement, this Mortgage, the other
Collateral Documents or otherwise, whether said amounts, liabilities or
obligations are liquidated or unliquidated, now existing or hereafter
arising, direct or indirect, primary or secondary, fixed or contingent,
and irrespective of the manner in which same may be incurred, including
without limitation all promissory notes heretofore or hereafter executed
by the Borrower in favor of Lender, in principal, interest, deferral and
delinquency charges, prepayment premiums, costs and attorneys' fees, as
therein stipulated, and under and pursuant to all amendments, supplements
and restatements to any of said documents, together with any and all
renewals and extensions of such loans, advances, debts, obligations and
liabilities or any part thereof. The Indebtedness includes without
limitation all Advances and other amounts for which the Borrower is
obligated under the terms of this Mortgage.
"Lien" means any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on jurisprudence, statute or contract, and including but
not limited to the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt
or a lease, consignment or bailment for security purposes. The term "Lien"
shall include reservations, exceptions, encroachments, easements,
servitudes, usufructs, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting property.
"Mineral Properties" means the right, title and interest of Borrower
in those certain interests described in Exhibit "A" hereto in the oil, gas
and mineral leases described in Exhibit "A" hereto, together with all
interests of the Borrower with respect to all unitization and pooling
agreements and orders now or hereafter existing or which relate to those
certain interests described in Exhibit "A", and all interests of the
Borrower in agreements and rights pertaining to the use or occupation of
the subsurface depths that relate to those certain interests described in
Exhibit "A".
"Mortgage" means this Mortgage and Security Agreement, as amended or
supplemented from time to time.
"Mortgaged Property" has the meaning set forth in Section 2.1
("Hypothecation") of this Mortgage.
"Permitted Liens" means the Security Interests; any other Liens in
favor of the Lender; any validly perfected mechanic's and materialman's
lien filed as of the date of this Mortgage; the Lien created by the
Financing Statement executed by Borrower, as debtor, in favor of Lender
and other parties, as Secured Party, securing certain obligations of
Borrower under the Operating Agreement dated effective May 1, 1995; Liens
permitted by the Lender in writing to be created or assumed or to
otherwise exist on the Collateral (including without limitation the Liens
permitted by the provisions of Section 4.3 ("Liens") hereof).
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof,
or any other form of entity.
"Proceeds" means all cash and non-cash proceeds of, and all other
profits, rentals or receipts, in whatever form, arising from the
collection, sale, lease, exchange, assignment, licensing or other
disposition of, or realization upon, Collateral, including without
limitation all claims of the Borrower against third parties for loss of,
damage to or destruction of, or for proceeds payable under, or unearned
premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to
any Collateral, and including proceeds of all such proceeds, in each case
whether now existing or hereafter arising.
"Proceeds of Runs" has the meaning set forth in Section 2.3
("Assignment") of this Mortgage.
"Security Interests" means the security interests in the Collateral
granted hereunder securing the Indebtedness.
"UCC" means the Uniform Commercial Code, Commercial Laws-Secured
Transactions (Louisiana Revised Statutes 10:9-101 through 9-605) in the
State of Louisiana, as amended from time to time; provided that if by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the Security Interests in any Collateral
is governed by the Uniform Commercial Code as in effect in a jurisdiction
other than Louisiana, "UCC" means the Uniform Commercial Code as in effect
in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or effect of perfection or non-perfection.
ARTICLE 2.
Liens and Security Interests
Section 2.1 Hypothecation. (a) In order to secure the full and
punctual payment and performance of all present and future Indebtedness,
the Borrower does by these presents specially mortgage, affect,
hypothecate, pledge and assign unto and in favor of the Lender, to inure
to the use and benefit of the Lender, the following described property,
to-wit:
(1) The Mineral Properties, together with all profits, products and
proceeds, whether now or hereafter existing or arising, from the Mineral
Properties.
(2) The Borrower's rights in the improvements and other
constructions now or hereafter located on the Mineral Properties,
including without limitation the Equipment, to the extent (i) any such
property should constitute or be deemed to constitute immovable property
for the purposes of Louisiana law, including without limitation any
buildings, platforms, structures, towers, rigs or other immovable property
or component parts thereof, or (ii) any such property that is otherwise
susceptible of mortgage pursuant to Louisiana Civil Code Article 3286 or
Louisiana Mineral Code Article 203.
The descriptions of the Mineral Properties contained in Exhibit "A"
are qualified by the explanations contained in Exhibit 1 attached hereto
and made a part hereof.
All of the foregoing property and rights covered by and subject to
this Mortgage are herein collectively referred to as the "Mortgaged
Property."
SUBJECT, however, to (i) the restrictions, exceptions, reservations,
conditions, limitations and other matters, if any, set forth or specified
in the specific descriptions of such properties and interests in Exhibit
"A" (including all presently existing royalties, overriding royalties,
payments out of production and other burdens which are specified in
Exhibit "A" and which are taken into consideration in computing any
percentage, decimal or fractional interests set forth in Exhibit "A"), and
(ii) the condition that the Lender shall not be liable in any respect
hereunder for the performance of any covenant or obligation of the
Borrower in respect of the Mortgaged Property.
The Mortgaged Property is to remain so specially mortgaged, affected
and hypothecated unto and in favor of Lender until the full and final
payment or discharge of the Indebtedness, and Borrower is herein and
hereby bound and obligated not to sell or alienate the Mortgaged Property
to the prejudice of this act.
(b) In the event that the Borrower acquires additional undivided
interests in some or all of the Mineral Properties, this Mortgage shall
automatically encumber such additions or increases to the Borrower's
interest in the Mineral Properties without need of further act or
document. Further, in the event the Borrower becomes the owner of an
interest in any part of the land described either in Exhibit A or in the
documents described in Exhibit A or otherwise subject to or covered by the
Mineral Properties, this Mortgage shall automatically encumber such
ownership interest of the Borrower without need of further act or
document.
Section 2.2 The Security Interests. In order to secure the full and
punctual payment and performance of all present and future Indebtedness,
the Borrower hereby grants to the Lender a continuing security interest in
and to all right, title and interest of the Borrower in, to and under the
following property, whether now owned or existing or hereafter acquired or
arising and regardless of where located:
(1) the Mineral Properties;
(2) the Accounts;
(3) the Hydrocarbons;
(4) the Equipment;
(5) the General Intangibles (including the Contracts);
(6) all engineering, seismic, reserve, production, accounting,
title and legal data, reports and all books and records in any form
(including, without limitation, customer lists, credit files, computer
programs, tapes, disks, punch cards, data processing software, transaction
files, master files, printouts and other computer materials and records)
of the Borrower pertaining to any of the Mineral Properties or Collateral;
and
(7) all Proceeds and products of all or any of the Collateral
described in clauses 1 through 6 hereof.
The term "Collateral" means each and all of the items and property
rights described in clauses 1-7 above, together with the Mortgaged
Property.
Section 2.3 Assignment. To further secure the full and punctual
payment and performance of all present and future Indebtedness, up to the
maximum amount outstanding at any time and from time to time set forth in
Section 2.5 ("Maximum Amount") below, the Borrower does hereby absolutely,
irrevocably and unconditionally pledge, pawn, transfer and assign to the
Lender all monies which accrue after 8:00 a.m. Central Time, U.S.A., on
the date of this Mortgage, attributable to the Borrower's interest in the
Mineral Properties and all present and future rents therefrom (which rents
include without limitation all royalties, delay rentals, shut-in payments
and other payments which are rentals under Title 31 of the Louisiana
Revised Statutes) and all proceeds of the Hydrocarbons (which proceeds
include without limitation all payments for Hydrocarbons not yet
delivered, such as those received pursuant to "take or pay" arrangements)
and of the products obtained, produced or processed from or attributable
to the Mineral Properties now or hereafter (which monies, rents and
proceeds are referred to herein as the "Proceeds of Runs"). The Borrower
hereby authorizes and directs all obligors or payors of any Proceeds of
Runs to pay and deliver to Lender, upon request therefor by Lender, all of
the Proceeds of Runs accruing to the Borrower's interest without further
inquiry as to the rights of the Lender to receive the same and without any
further action or consent on the part of Borrower; provided, however, that
Lender hereby agrees that it shall not request that the Proceeds of Runs
be paid directly to Lender unless and until there has occurred an Event of
Default. The Borrower agrees that such obligors shall have no
responsibility to see to the application of any funds so paid to Lender.
Section 2.4 Condemnation. The Borrower hereby assigns to the Lender
any and all awards that may be given or made in any proceedings by any
legally constituted authority to condemn or expropriate the Collateral, or
any part thereof, under power of eminent domain, and if there is such a
condemnation or expropriation, the Lender may, at its election, either pay
the net proceeds thereof toward the payment of the Indebtedness or pay the
net proceeds thereof to the Borrower.
Section 2.5 Maximum Amount. (a) The maximum amount of the
Indebtedness that may be outstanding at any time and from time to time
that this Mortgage secures, including without limitation as a mortgage and
as a collateral assignment, and including any Advances made and included
within the Indebtedness, is Fifteen Million and No/100 ($15,000,000.00)
Dollars.
(b) The Borrower acknowledges that this Mortgage secures all
Indebtedness under or pursuant to the Note, the Payment Agreement, this
Mortgage or the other Collateral Documents, whether such loans or advances
made or incurred by the Lender are optional or obligatory by the Lender.
This Mortgage is and shall remain effective until all of the amounts,
liabilities and obligations, present and future, comprising the
Indebtedness have been incurred and are extinguished. When no
Indebtedness secured by this Mortgage exists, this Mortgage shall
terminate, Borrower shall have no further obligation hereunder and Lender
shall promptly cause this Mortgage to be released of record.
Section 2.6 Delivery of Transfer Orders. Independent of the other
provisions and authorities herein granted, the Borrower agrees to execute
and deliver any and all transfer orders, letters in lieu thereof, division
orders and other instruments that may be requested by Lender or that may
be required by any purchaser of any Hydrocarbons for the purpose of
effectuating payment of the Proceeds of Runs to Lender. If under any
existing sales agreements, other than division orders or transfer orders,
any Proceeds of Runs are required to be paid by the purchaser or any other
payor to the Borrower so that under such existing agreements payment
cannot be made of such Proceeds of Runs to Lender, upon the occurrence of
an Event of Default, the Borrower's interest in all Proceeds of Runs under
such sales agreements and in all other Proceeds of Runs which for any
reason may be paid to the Borrower shall, when received by the Borrower,
constitute trust funds in the Borrower's hands and shall be immediately
paid over to Lender.
Section 2.7 Change of Purchaser. Should any Person now or hereafter
purchasing or taking Hydrocarbons fail to make payment promptly to Lender
of the Proceeds of Runs, Lender shall have the right to make, or to
require Borrower to make, a change of connection and the right to
designate or approve the purchaser with those facilities a new connection
shall be made, and Lender shall have no liability or responsibility in
connection therewith so long as ordinary care is used in making such
designation.
Section 2.8 Application. All Proceeds of Runs from time to time in
the hands of Lender shall be applied by it toward the payment and
prepayment of all Indebtedness at such times and in such manner as Lender
deems advisable, may be held by Lender pending a resolution of any dispute
as to Lender's right to collect such Proceeds of Runs, or may be delivered
by Lender to the Borrower without in any way reducing or paying the
Indebtedness.
Section 2.9 Payment of Proceeds. In the event that, for any reason,
the Lender, upon the occurrence of an Event of Default, should elect with
respect to all or particular Mineral Properties or Contracts not to
exercise immediately its right to receive Proceeds of Runs, then the
purchasers or other Persons obligated to make such payment shall continue
to make payment to the Borrower until such time as written demand has been
made upon them by the Lender that payment be made direct to the Lender.
Such failure to notify such purchasers or other Persons shall not in any
way waive, remit or release the right of the Lender to receive any
payments not theretofore paid over to the Borrower before the giving of
written notice. In this regard, in the event payments are made direct to
the Lender, and then, at the request of the Lender payments are, for a
period or periods of time, paid to the Borrower, the Lender shall
nevertheless have the right, effective upon written notice, to require
future payments be again made to it.
Section 2.10 Limitation of Liability. The Lender and its successors
and assigns are hereby absolved from all liability for failure to enforce
collection of the Proceeds of Runs and from all other responsibility in
connection therewith, except the responsibility of each to account (by
application upon the Indebtedness or otherwise) to the Borrower for funds
actually received. The Borrower agrees to indemnify and hold harmless
Lender against any and all liabilities, actions, claims, judgments, costs,
charges and attorneys' fees by reason of the assertion that such parties
received, either before or after payment and performance in full of the
Indebtedness, funds from the production of Hydrocarbons or the Proceeds of
Runs 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 or (ii) were otherwise made in violation of laws, rules,
regulations and/or orders governing such sales), and the Lender shall have
the right to defend against any such claims or actions, employing
attorneys of Lender's own selection and if not furnished with indemnify
satisfactory to them, the Lender 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 the
Lender in compromise, satisfaction or discharge of any such claim, actions
or judgments, and all court costs, attorneys' fees and other expenses of
every character expended by the Lender pursuant to the provisions of this
Section shall be a demand obligation (which obligation the Borrower hereby
expressly promises to pay) owing by the Borrower to such parties and shall
bear interest, from the date expended until paid, at the rate described in
Section 4.23 ("Advances by Lender") hereof.
Section 2.11 Duty to Perform. Nothing herein contained shall detract
from or limit the obligation of the Borrower to make prompt payment of the
Indebtedness at the time and in the manner provided herein. The Borrower
will do and perform every act required of it by this Mortgage at the time
or times and in the manner specified.
Section 2.12 No Liability. The foregoing mortgage Liens and
Security Interests are granted as security only and shall not subject the
Lender to, or transfer or in any way affect or modify, any obligation or
liability of the Borrower with respect to any of the Collateral or any
transaction in connection therewith.
Section 2.13 Priority. Notwithstanding any other provision in this
Mortgage, Lender hereby agrees that this Mortgage shall in all respects be
subordinate to that Permitted Lien granted by Borrower in favor of Lender
and other parties under and pursuant to Article 6.3 of the Operating
Agreement dated effective May 1, 1995 to which Lender and Borrower are
parties.
ARTICLE 3.
Representations and Warranties
The Borrower represents and warrants to the Lender (such
representations and warranties are limited to the best of Borrower's
knowledge with respect to Sections 3.1, 3.2, 3.3, 3.7, 3.8 and 3.9) that:
Section 3.1 Title. The Collateral (including without limitation the
Mineral Properties) is accurately, completely, adequately and sufficiently
described herein and in Exhibit "A" as required by all applicable laws for
this Mortgage to create a Lien on all of the Collateral. The execution,
delivery and performance of this Mortgage and the creation of the liens
hereunder do not violate any provision of or constitute a default under
any operating agreement or other instrument affecting or comprising any of
the Collateral or to which the Borrower is a party. The Borrower
represents and warrants to the Lender that (a) the Mineral Properties
described in Exhibit "A" hereto are valid, subsisting leases and
contracts, in full force and effect, (b) all producing xxxxx located on
the lands described in Exhibit "A" have been drilled, operated and
produced in conformity with all applicable laws, rules and regulations of
all regulatory authorities having jurisdiction, and are subject to no
penalties on account of past production, and that such xxxxx are in fact
bottomed under and are producing from, and the well bores are wholly
within, lands described in Exhibit "A" (or in the case of xxxxx located on
properties unitized therewith, such unitized properties), (c) upon
approval of the Assignments by the United States of America Department of
Interior, Minerals Management Service, the Borrower, to the extent of the
interest specified in Exhibit "A", shall have legal, valid and defensible
title to each property right or interest constituting the Mineral
Properties and the respective gross working interests and net revenue
interests of the Borrower in and to the Hydrocarbons as set forth on
Exhibit "A" hereto, and the Borrower's percentage interests in the Mineral
Properties, cash flow, net income and other distributions and in the cost
of exploration, development and production, all as set forth in Exhibit
"A" hereto, are true and correct in all material respects and accurately
reflect the respective interests to which the Borrower is legally
entitled, (d) the Borrower is not obligated, by virtue of any prepayment
under any contract providing for the sale by the Borrower of Hydrocarbons
which contains a "take or pay" clause or under any similar arrangement, to
deliver Hydrocarbons at some future time without then or thereafter
receiving full payment therefor and (e) no agreement, contract or
instrument set forth in Exhibit "A" contains any provision which would
prevent the practical realization of the benefits of this Mortgage as to
the Collateral. With respect to all xxxxx existing on the date hereof,
such shares of production and expenses are not subject to change (pursuant
to non-consent provisions of operating agreements described in Exhibit "A"
or otherwise) except, and only to the extent that, such changes are
expressly described in Exhibit "A".
Section 3.2 No Liens Except for Permitted Liens. Other than
financing statements or other similar or equivalent documents or
instruments with respect to the Security Interests and the other Permitted
Liens, no financing statement, mortgage, security agreement or similar or
equivalent document or instrument covering all or any part of the
Collateral has been executed by the Borrower. No Collateral is in the
possession of any Person (other than the Borrower) asserting any claim
thereto or security interest therein, except that the Lender or its
designee may have possession of Collateral as contemplated hereby.
Section 3.3 Rents; Royalties. All rents, royalties and other
payments (except for those which are being contested in good faith and by
appropriate proceedings and for which the Borrower has established
adequate reserves and so long as the payment of same is not a condition to
be met in order to maintain an oil, gas and/or other mineral lease or
other agreement in force) due and payable under the Mineral Properties
which are productive of oil and/or gas (or are included in units
productive of oil and/or gas) and all other oil, gas and/or mineral
leases, contracts and other agreements forming a part of the Mortgaged
Property, have been and are being properly and timely paid, and the
Borrower is not in default with respect to any obligations (and the
Borrower is not aware of any default by any third party with respect to
such third party's obligations) under such leases, contracts and other
agreements, or otherwise attendant to the ownership or operation of the
Collateral, where such default could adversely affect the ownership or
operation of the Collateral to which such obligations relate. The
Borrower is not currently accounting (and does not anticipate accounting)
for any royalties, or overriding royalties or other payments out of
production, on a basis (other than delivery in kind) where such payments
are based other than on proceeds received by Borrower from sale; the
Borrower has advised the Lender in writing of situations, if any, where a
contingent liability to account in such manner may exist.
Section 3.4 No Limitations on Payments for Production. Except as
otherwise specifically disclosed to the Lender in writing with respect to
any particular part of the Mineral Properties, (i) neither Borrower, nor
its predecessors in title, have received prepayments (including, but not
limited to, payments for gas not taken pursuant to "take or pay"
arrangements) for any Hydrocarbons produced or to be produced from the
Mineral Properties after the date hereof; (ii) none of the Mineral
Properties is subject to any contractual or other arrangement whereby
payment for production is to be deferred for a substantial period after
the month in which such production is delivered (i.e., in the case of oil
not in excess of sixty (60) days, and in the case of gas not in excess of
ninety (90) days); (iii) none of the Mineral Properties is subject to a
gas sales contract which contains terms which are not customary in the
industry; (iv) none of the Mineral Properties is subject at the present
time to any regulatory refund obligation and, to the best of Borrower's
knowledge, no facts exist which might cause the same to be imposed; (v)
none of the Mineral Properties is subject to an arrangement or agreement
under which any purchaser or other Person is entitled to "make-up" or
otherwise receive deliveries of Hydrocarbons at any time after the date
hereof without paying at such time the full contract price therefor; and
(vi) no Person is entitled to receive any portion of the interest of the
Borrower in any Hydrocarbons or to receive cash or other payments from the
Borrower to "balance" any disproportionate allocation of Hydrocarbons
under any operating agreement, gas balancing and storage agreement, gas
processing or dehydration agreement, or other similar agreements. Lender
acknowledges that Borrower may be obligated to escrow a portion of the
proceeds of the Hydrocarbons for certain plugging and abandonment
obligations.
Section 3.5 Consents and Preferential Rights. There are no
preferential purchase rights held by third parties affecting any part of
the Collateral or rights of third parties to prohibit the pledge or
mortgage of any part of the Collateral without the consent of such third
parties, other than as set out in the Operating Agreement dated effective
May 1, 1995 to which Lender and Borrower are parties.
Section 3.6 No Inconsistent Agreements. The Borrower has not
performed any acts or signed any agreements which might prevent the Lender
from enforcing any of the terms of this Mortgage or which would limit the
Lender in any such enforcement.
Section 3.7 Status of Contracts. All of the Contracts and
obligations of the Borrower that relate to the Mineral Properties (i) are
in full force and effect and constitute legal, valid and binding
obligations of the Borrower, and (ii) neither the Borrower nor, to the
knowledge of the Borrower, any other party to the Contracts (a) is in
breach of or default, or with the lapse of time or the giving of notice,
or both, would be in breach or default, with respect to any of its
obligations thereunder or (b) has given or threatened to give notice of
any default under or inquiry into any possible default under, or action to
alter, terminate, rescind or procure a judicial reformation of any
Contract.
Section 3.8 Accounts. The Accounts represent bona fide obligations
of the respective account debtors, which obligations are free and clear of
any set off, compensation, counterclaim, defense, allowance or adjustment
other than discounts for prompt payment shown on the invoice, and arose in
the ordinary course of the Borrower's business.
Section 3.9 Status of Equipment. The Equipment, fixtures and other
tangible personal property forming a part of the Collateral are in good
repair and condition and are adequate for the normal operation of the
Collateral in accordance with prudent industry standards; all of such
Collateral is located on the Mineral Properties, except for that portion
thereof which is located elsewhere (including that usually located on the
Mineral Properties but now temporarily located elsewhere) in the course of
the normal operation of the Mineral Properties.
Section 3.10 Name. The corporate name of the Borrower as it appears
in its Articles of Incorporation is as it appears on page 1 of this
Mortgage.
Section 3.11 Taxpayer Identification Number. The federal taxpayer
identification number of the Borrower is as follows: -73-0797067.
Section 3.12 Chief Executive Office. The chief executive office of
the Borrower is located at 000 Xxxxxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000.
Section 3.13 Filing Location. When UCC financing statement(s) have
been filed in the offices of a Louisiana Clerk of Court (or, in the case
of Orleans Parish, the Recorder of Mortgages), the Security Interests
shall constitute perfected security interests in the Collateral to the
extent that a security interest therein may be perfected by filing in the
Uniform Commercial Code records of Louisiana, prior to all other Liens and
rights of others therein except for the Permitted Liens to the extent that
such priority is afforded by the UCC or otherwise.
ARTICLE 4.
Covenants
The Borrower covenants and agrees as follows:
Section 4.1 Taxes. The Borrower will pay and discharge promptly when
due all taxes, license fees, assessments and governmental charges or
levies imposed upon it or upon its income or upon the Collateral or any
part thereof (including production, severance, windfall profit, excise and
other taxes assessed against or measured by the production of, or the
value or proceeds of production of, Hydrocarbons; provided, however, the
Borrower shall not be required to pay any such tax, assessment, charge or
levy if the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings diligently conducted
and if the contesting party shall have set up reserves therefor adequate
under generally accepted accounting principles (provided that such
reserves may be set up under generally accepted accounting principles).
Section 4.2 Insurance. The Borrower will procure and maintain for
the benefit of the Lender and Borrower original paid-up insurance policies
against such liabilities, casualties, risks and contingencies, in such
amounts and form and substance, with such financially sound and reputable
companies, and with such expiration dates, as are reasonably acceptable to
the Lender, and containing a noncontributory standard mortgagee clause or
its equivalent in favor of the Lender. The Borrower will at all times
maintain costs of regaining control of well insurance or similar insurance
to the extent customary in the industry in the pertinent area of
operations. Each policy shall contain an agreement by the insurer not to
cancel or amend the policy without giving the Lender at least thirty (30)
days' prior written notice of its intention to do so. Upon request of the
Lender, the Borrower will furnish or cause to be furnished to the Lender
from time to time a summary of the insurance coverage of the Borrower in
form and substance reasonably satisfactory to the Lender and if requested
will furnish the Lender original certificates of insurance and/or copies
of the applicable policies and all renewals thereof. In the event the
Borrower should, for any reason whatsoever, fail to keep the corporeal
(tangible) Collateral or any part thereof so insured, or to keep said
policies so payable, or fail to deliver to the Lender the original or
certified policies of insurance and the renewals therefor upon demand,
then the Lender, if it so elects, may itself have such insurance effected
in such amounts and with such companies as it may deem proper and may pay
the premiums therefor (as an Advance as defined hereinbelow). The
Borrower will notify the Lender immediately in writing of any material
blowout, fire or other casualty to or accident involving the Mortgaged
Property, the Equipment or the Hydrocarbons, whether or not such blowout,
fire, casualty or accident is covered by insurance. Further, the Borrower
will notify promptly the Borrower's insurance company and submit an
appropriate claim and proof of claim to the insurance company if such a
casualty or accident occurs. In the event of any loss on any of such
policies, the Lender may, at its election, either apply the net proceeds
thereof toward the payment of the Indebtedness or pay the net proceeds
thereof to the Borrower, either wholly or in part, and under such
conditions as the Lender may determine to enable the Borrower to repair or
restore the Collateral.
Section 4.3 Liens. The Borrower will not create, incur, assume or
permit to exist any Lien on any portion of the Collateral, except for (i)
the Lien and Security Interests hereof and the Permitted Liens, (ii)
taxes, assessments or governmental charges or levies if the same shall not
at the time be delinquent or thereafter can be paid without penalty, or
are being contested in compliance with the preceding Section 4.1
("Taxes"), (iii) defects or irregularities of title and Liens which are
not such as to interfere materially with the development, operation or
value of the Mortgaged Property or the title thereto, (iv) those imposed
by law, such as carriers', warehousemen's and mechanics' liens and other
similar liens arising in the ordinary course of business which would
secure obligations not more than ninety (90) days past due or which are
being contested in good faith by appropriate proceedings diligently
conducted and for which adequate reserves shall have been set aside on its
books, (v) those arising out of pledges or deposits under workmen's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation, (vi)
utility easements, building restrictions and such other encumbrances or
charges against real property as are of a nature generally existing with
respect to properties of a similar character as the Mortgaged Property and
which do not in any material way affect the merchantability of the same or
interfere with the use thereof and the business of the Borrower, and (vii)
those consented to in writing by the Lender.
Section 4.4 Sale. Except for (i) sales of severed Hydrocarbons in
the ordinary course of the Borrower's business on the best terms which
would be available in bona fide and arms length transactions with third
parties not affiliated with the Borrower (which in the case of production
which is subject to price controls or is sold in accordance with customary
industry practice pursuant to long term purchase contracts, shall be
determined giving consideration to such matters), (ii) dispositions made
in connection with a permitted (as provided below) release, surrender or
abandonment of a lease, or (iii) in the absence of an Event of Default,
collection of Accounts and General Intangibles, the Borrower will not
sell, convey, lease or otherwise transfer or dispose of all or any portion
of the Collateral without the written consent of Lender (which consent
shall not be unreasonably withheld).
Section 4.5 Compliance with Laws and Covenants. The Borrower will
observe and comply with all laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, certificates,
franchises, permits, licenses, authorizations, directions and requirements
of all federal, state, county, municipal and other governments,
departments, commissions, boards, courts, authorities, officials and
officers domestic or foreign, applicable to the Borrower or to the
Collateral, except those being contested in good faith.
Section 4.6 Payment of Debts. The Borrower will cause all debts and
liabilities of any character (including, without limitation, all debts and
liabilities for labor, material and equipment used or furnished for use on
the Mortgaged Property) incurred in the operation, maintenance and
development of the Collateral to be paid within ninety (90) days after
same becomes due. The Borrower may, however, delay paying or discharging
any such debts and liabilities so long as the validity thereof is
contested in good faith and by appropriate proceedings diligently
conducted and the Borrower has established adequate reserves therefor in
accordance with generally accepted accounting principles and so long as
the payment of same is not a condition to be met in order to maintain an
oil, gas and/or mineral lease in force.
Section 4.7 Operation of the Mortgaged Property. Whether or not the
Borrower is the operator of the Mortgaged Property, the Borrower will, at
the Borrower's own expense, (a) do all things necessary to keep unimpaired
the Borrower's rights in the Mortgaged Property (subject to any permitted
abandonment provisions hereinbelow), (b) use its best efforts to cause the
lands described in Exhibit "A" to be maintained, developed, protected
against drainage, and continuously operated for the production of
hydrocarbons in a good and workmanlike manner as would a prudent operator,
and in accordance with generally accepted practices and applicable
operating agreements, and (c) cause to be paid, promptly as and when due
and payable, all rentals and royalties payable in respect of the Mortgaged
Property, and all expenses incurred in or arising from the operation or
development of the Mortgaged Property. The Borrower will observe and
comply with all terms and provisions, express or implied, of the Mineral
Properties, and all agreements and contracts of any type relating to the
Mortgaged Property, in order to keep the same in full force and effect,
including, without limitation, maintenance of productive capacity of each
well or unit comprising the Mortgaged Property, and will not, without the
prior written consent, which consent shall not be unreasonably withheld,
of the Lender, surrender, abandon or release (or otherwise reduce its
rights under) any such lease, in whole or in part, so long as any well
situated thereon (whether or not such well is located on the Mineral
Properties), or located on any unit containing all or any part of such
leases, is capable (or is subject to being made capable through drilling,
reworking or other operations which it would be economically feasible to
conduct) of producing hydrocarbons in commercial quantities (as determined
without considering the effect of this Mortgage); provided, however that
the Borrower may, to the extent expressly required by the terms of any
such lease under a "Xxxx clause" or similar provision, or to the extent
otherwise required by law, confirm to the lessor thereof that the lease
has by its terms terminated as to any specified portion thereof on which
no such well exists. Without the express prior written consent of the
Lender, which consent shall not be unreasonably withheld, Borrower will
not abandon or consent to the abandonment of any well producing from the
Mortgaged Property (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 hydrocarbons in commercial quantities (as determined
without considering the effect of this Mortgage but considering the cost
of such drilling, reworking and other operations). The Borrower will not
without the express prior written consent of the Lender, which consent
shall not be unreasonably withheld, elect not to participate in a proposed
operation on the Mortgaged Property where the effects of such election
would be the forfeiture either temporarily (i.e., until a certain sum of
money is received out of the forfeited interest) or permanently of any
interest in the Mortgaged Property.
Section 4.8 Pooling and Unitization. The Borrower has the right, and
is hereby authorized, to pool or unitize all or any part of any tract of
land described in Exhibit "A", insofar as relates to the Mortgaged
Property, with adjacent lands, leaseholds and other interests, when, in
the reasonable judgment of the Borrower, it is necessary or advisable to
do so in order to form a drilling unit to facilitate the orderly
development of that part of the Mortgaged Property affected thereby, or to
comply with the requirements of any law or governmental order or
regulation relating to the spacing of xxxxx or proration of the production
therefrom; provided, however, that the Hydrocarbons produced from any unit
so formed shall be allocated among the separately owned tracts or
interests comprising the unit in proportion to the respective surface
areas thereof; and provided further that the Borrower shall not be
entitled to form any such unit without the written consent of the Lender
(which consent shall not be unreasonably withheld) if the effect of such
formation would be to decrease the amount of Hydrocarbons which would be
subject to this Mortgage. Any unit so formed may relate to one or more
zones or horizons, and a unit formed for a particular zone or horizon need
not conform in area to any other unit relating to a different zone or
horizon, and a unit formed for the production of oil need not conform in
area with any unit formed for the production of gas. Immediately after
formation of any such unit, the Borrower shall furnish to the Lender a
true copy of the pooling agreement, declaration of pooling or other
instrument creating such unit, in such number of counterparts as the
Lender may reasonably request. The interest in any such unit attributable
to the Mortgaged Property (or any part thereof) included therein shall
become a part of the Mortgaged Property and shall be subject to the Lien
hereof in the same manner and with the same effect as though such unit and
the interest of the Borrower therein were specifically described in
Exhibit "A". The Borrower may enter into pooling or unitization
agreements not hereinabove authorized only with the prior written consent
of the Lender.
Section 4.9 Contracts. The Borrower will not enter into any
operating agreement, other than the Operating Agreement dated effective
May 1, 1995 entered into by and between Lender, Borrower and other
parties, or other Contract which materially adversely affects the
Collateral or the Mineral Properties, or which is not in the ordinary
course of business. The Borrower will promptly take all action necessary
to enforce or secure the observance or performance of any term, covenant,
agreement or condition to be observed or performed by third parties under
any Contract, or any part thereof, or to exercise any of its rights,
remedies, powers and privileges under any Contract, all in accordance with
the respective terms thereof. The Borrower will not do or permit anything
to be done to the Collateral that may violate the terms of any insurance
covering the Collateral or any part thereof.
Section 4.10 Condition of Equipment. The Borrower will maintain,
preserve and keep the Equipment at all times in thorough repair and good
working order and condition, and from time to time make all needful
repairs, renewals and additions so that its value and the Security
Interests shall at no time become impaired.
Section 4.11 Accounts Collection. The Borrower shall use its best
efforts to cause to be collected from its account debtors, as and when
due, any and all amounts owing under or on account of each Account
(including, without limitation, Accounts which are delinquent, such
Accounts to be collected in accordance with lawful collection procedures)
and shall apply forthwith upon receipt thereof all such amounts as are so
collected to the outstanding balance of such Account. Subject to the
rights of the Lender hereunder if an Event of Default shall have occurred
and be continuing, the Borrower may allow in the ordinary course of
business as adjustments to amounts owing under its Accounts an extension
or renewal of the time or times of payment, or settlement for less than
the total unpaid balance, which the Borrower finds appropriate in
accordance with sound business judgment in accordance with the Borrower's
ordinary course of business consistent with its historical collection
practices. The costs and expenses (including, without limitation,
attorneys' fees) of collection, whether incurred by the Borrower or the
Lender, shall be borne by the Borrower.
Section 4.12 Governmental Accounts. If the Collateral is or becomes
subject to the Federal Assignment of Claims Act, the Borrower will
immediately notify the Lender thereof in writing and execute all
instruments and take all steps required by the Lender to comply with that
act.
Section 4.13 Accounts Aging. The Borrower will from time to time at
the request of the Lender furnish the Lender with a schedule of the
Accounts which shall include the names and addresses of each account
debtor. The Lender shall also have the right to make test verification of
the Accounts or any portion thereof. The Borrower at its expense shall
furnish to the Lender from time to time upon request by the Lender a
listing and aging of all Accounts.
Section 4.14 Right of Inspection and Information. The Borrower will
permit any officer, employee or agent of the Lender to visit and inspect
the Collateral, examine the books of record and accounts of the Borrower,
take copies and extracts therefrom, and discuss the affairs, finances and
accounts of the Borrower with the Borrower's officers, accountants and
auditors, and the Borrower will furnish information concerning the
Collateral, including schedules of all internal and third party
information identifying the Collateral (such as, for example, lease and
well names and numbers assigned by the Borrower or the operator of any
Mineral Properties, division orders and payment names and numbers assigned
by purchasers of the Hydrocarbons, and internal identification names and
numbers used by the Borrower in accounting for revenues, costs and joint
interest transactions attributable to the Mineral Properties), all on
reasonable notice, at such reasonable times without hindrance or delay and
as often as the Lender may reasonably desire. The Borrower will furnish
to the Lender promptly upon request and in the form and content specified
by the Lender lists of purchasers of Hydrocarbons and other account
debtors, schedules of Equipment and other data concerning the Collateral
as the Lender may from time to time specify.
Section 4.15 Financial Statements and Reports. The Borrower will
furnish to the Lender promptly upon the request of the Lender, all regular
financial statements, reports, budgets and such other information
regarding the business and affairs and financial condition of the Borrower
as the Lender may reasonably request. All financial statements shall be
in such detail as the Lender may reasonably request and shall conform to
generally accepted accounting principles applied on a consistent basis,
except only for such changes in accounting principles or practice with
which the independent certified public accountants concur.
Section 4.16 Further Assurances. The Borrower will keep the Lien of
this Mortgage valid and unimpaired except for the Permitted Liens. The
Borrower will promptly (and in no event later than thirty (30) days after
written notice from the Lender is received) (i) correct any defect, error
or omission which may be discovered in the contents of this Mortgage or
any financing statement relating thereto or in the execution or
acknowledgment of this Mortgage or any financing statement; (ii) execute,
acknowledge, deliver and record such further instruments (including,
without limitation, further security agreements, financing statements,
continuation statements and assignments of accounts, 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 to more fully identify and subject to the Liens
hereof any property intended to be covered hereby, including without
limitation any renewals, additions, substitutions, replacements or
accessions to the Collateral; and (iii) execute, acknowledge, deliver and
record any document or instrument (including specifically any financing
statement) and obtain any consents necessary, desirable or proper to
perfect, protect or preserve the Lien and Security Interests hereunder
against the rights or interests of third persons.
Section 4.17 Notice of Changes. The Borrower will not change its
name, identity, federal tax identification number or corporate structure
in any manner unless it shall have given the Lender at least thirty (30)
days' prior written notice thereof.
Section 4.18 Filing. The Borrower agrees that a carbon,
photographic, facsimile, photostatic or other reproduction of this
Mortgage or of a financing statement is sufficient as a financing
statement. This Mortgage may be effective as a financing statement filed
as a fixture filing with respect to all fixtures included within the
Collateral, and shall also be effective as the financing statement
covering minerals or the like (including oil and gas) and accounts subject
to subsection (5) of Section 9-103 of the UCC, as amended, and similar
provisions (if any) of the UCC as enacted in any other state where filing
may be appropriate. The mailing address of the Borrower and the address
of the Lender from which information concerning the Security Interests
evidenced hereunder may be obtained are the respective addresses of the
Borrower and the Lender set forth in Article 6. The Lender shall pay all
costs of or incidental to the recording or filing of this Mortgage and of
any financing, amendment, continuation, termination or other statements
concerning the Collateral.
Section 4.19 Collateral Indemnity. If the validity or priority of
this Mortgage (except with respect to the Permitted Liens) or any rights,
security interests or other interests created or evidenced hereby shall be
attacked, endangered or questioned or if any legal proceedings are
instituted with respect thereto, the Borrower will give prompt written
notice thereof to the Lender and at the Borrower'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, and the Lender (whether or not named as a party to
legal proceedings with respect thereto) is hereby authorized and empowered
to take such additional steps as in its judgment and discretion may be
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,
security interests and other interests created or evidenced hereby, and
all expenses so incurred of every kind and character shall be considered
Advances as provided in Section 4.23 ("Advances by Lender") hereof, and
shall be a part of the Indebtedness.
Section 4.20 Environmental Indemnity. To the extent of its interests
in the Mineral Properties, the Borrower will defend, indemnify and hold
Lender and its directors, officers, agents and employees harmless from and
against all claims, demands, causes of action, liabilities, losses, costs
and expenses (including, without limitation, costs of suit, reasonable
attorneys' fees and fees of expert witnesses) arising from or in
connection with (i) the presence in, on or under or the removal from the
Collateral of any hazardous substances or solid wastes (as hereafter
defined), or any releases or discharges of any hazardous substances or
solid wastes on, under or from such property, (ii) any activity carried on
or undertaken on or off the Collateral, whether prior to or during the
term of this Mortgage, and whether by the Borrower or any predecessor in
title or any officers, employees, agents, contractors or subcontractors of
Borrower or any predecessor in title, or any third persons at any time
operating the Collateral or occupying or present on the Collateral, in
connection with the handling, use, generation, manufacture, treatment,
removal, storage, decontamination, clean-up, transport or disposal of any
hazardous substances or solid wastes at any time located or present on or
under the Collateral or involving the use or operation of the Collateral,
or (iii) any breach of any representation, warranty or covenant under the
terms of this Mortgage. The foregoing indemnity shall further apply to
any residual contamination on or under the Collateral, or affecting any
natural resources, and to any contamination of the Collateral or natural
resources arising in connection with the generation, use, handling,
storage, transport or disposal of any such hazardous substances or solid
wastes, and irrespective of whether any of such activities were or will be
undertaken in accordance with applicable laws, regulations, codes and
ordinances. The terms "hazardous substance" and "release" as used in this
Mortgage shall have the meanings specified in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986 (as
amended, "CERCLA"), and the terms "solid waste" and "disposal" (or
"disposed") shall have the meanings specified in 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, "RCRA"); provided, in the
event that the laws of the State of Louisiana 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. Without prejudice to the survival of any other agreements of
the Borrower hereunder, the provisions of this Section shall survive the
final payment of all Indebtedness and the termination of this Mortgage and
shall continue thereafter in full force and effect.
Section 4.21 Release of Collateral. The Lender may at any time and
without notice to the Borrower, release any part of the Collateral from
the effect of this Mortgage, or grant an extension or deferment of time
for the discharge of any obligation hereunder (or other Indebtedness),
without affecting the liability of the Borrower hereunder.
Section 4.22 Taxation of Mortgage. In the event that any
governmental authority shall impose any taxation of mortgages or the
indebtedness they secure, the Borrower agrees to pay such governmental
taxes, assessments or charges either to the governmental authority or to
the Lender, as provided by law.
Section 4.23 Advances by Lender. The Borrower authorizes the Lender
in the Lender's discretion to advance any sums necessary for the purpose
of paying (i) insurance premiums, (ii) taxes, forced contributions,
service charges, local assessments and governmental charges, (iii) any
Liens or encumbrances affecting the Collateral (whether superior or
subordinate to the Lien of this Mortgage) other than Permitted Liens, (iv)
necessary repairs and maintenance expenses or (v) any other amounts which
are covered by Section 4.16 ("Further Assurances") or which the Lender
deems necessary and appropriate to preserve the validity and ranking of
this Mortgage, to cure any Defaults or to prevent the occurrence of any
Default, or otherwise authorized by this Mortgage (collectively, the
"Advances") of whatever kind; provided, however, that nothing herein
contained shall be construed as making such Advances obligatory upon
Lender, or as making Lender liable for any loss, damage, or injury
resulting from the nonpayment thereof. The Borrower covenants and agrees
that within five (5) days after demand therefor by the Lender, the
Borrower will repay the Advances to the Lender, together with interest
thereon at the rate of twelve (12%) percent per annum from the date
incurred. All such Advances (and interest) shall be included in the
Indebtedness secured hereby, subject to the maximum amount of the
Indebtedness set forth above in Section 2.5 ("Maximum Amount").
ARTICLE 5.
Default and Remedies
Section 5.1 Events of Default. Any of the following events shall be
considered an "Event of Default" as that term is used herein:
(a) Principal and Interest Payments. The Borrower fails to make
payment of any principal or interest installment on the Indebtedness to
the Lender within fifteen (15) days after the same shall become due and
payable.
(b) Representations and Warranties. Any representation or warranty
made by the Borrower proves to have been incorrect in any material respect
as of the date thereof; or any representation, statement (including
financial statements), certificate or data furnished or made by the
Borrower (or any officer, accountant or attorney of the Borrower) under
this Mortgage, proves to have been untrue in any material adverse respect,
as of the date as of which the facts therein set forth were stated or
certified.
(c) Insurance. The Borrower fails to maintain at any time the
insurance required by this Mortgage.
(d) Alienation or Encumbrance of Collateral. The Borrower sells,
conveys or otherwise transfers or disposes of all or any portion of the
Collateral or grants any mortgage, security interest or other Lien (other
than Permitted Liens) affecting all or any portion of the Collateral, or
permits any judgment, Lien (other than Permitted Liens) or other
encumbrance against all or any portion of the Collateral.
(e) Covenants. The Borrower defaults in the observance or
performance of any of the covenants or agreements contained in this
Mortgage to be kept or performed by the Borrower (other than a default
under Subsections (a) through (d) hereof), and such default continues
unremedied for a period of 30 days after the notice thereof being given by
the Lender to the Borrower.
(f) Involuntary Bankruptcy or Receivership Proceedings. A
receiver, conservator, liquidator or trustee of the Borrower, or of any of
its property (including the Collateral), is appointed by order or decree
of any court or agency or supervisory authority having jurisdiction; or an
order for relief is entered against the Borrower under the Federal
Bankruptcy Code; or the Borrower is adjudicated bankrupt or insolvent; or
any material portion of the property (including the Collateral) of the
Borrower is sequestered by court order and such order remains in effect
for more than 60 days; or a petition is filed against the Borrower under
any state, reorganization, arrangement, insolvency, readjustment of debt,
dissolution, liquidation or receivership law of any jurisdiction, whether
now or hereafter in effect, and such petition is not dismissed within 60
days.
(g) Voluntary Petitions. The Borrower files a case under the
Federal Bankruptcy Code or seeking relief under any provision of any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or consents to the filing of any case or petition
against it under any such law.
(h) Assignments for Benefit of Creditors. The Borrower makes an
assignment for the benefit of its creditors', or admits in writing its
inability to pay its debts generally as they become due, or consents to
the appointment of a receiver, trustee or liquidator of the Borrower or of
all or any part of its property (including the Collateral).
(i) Undischarged Judgments. Judgment for the payment of money in
excess of $1,000,000 (which is not covered by insurance) is rendered by
any court or other governmental body against the Borrower, and the
Borrower does not discharge the same or provide for its discharge in
accordance with its terms, or procure a stay of execution thereof within
30 days from the date of entry thereof, and within said 30-day period or
such longer period during which execution of such judgment shall have been
stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal while providing such reserves therefor as may be
required under generally accepted accounting principles.
(j) Attachment. A writ or warrant of executory process, fieri
facias, attachment or any similar process shall be issued by any court
against the Collateral, and such writ or warrant is not released or bonded
within 10 days after its entry.
(k) Condemnation. The Collateral, or any portion thereof, is
condemned or expropriated under power of eminent domain by any legally
constituted governmental authority.
Section 5.2 Remedies. (a) Upon the happening of any Event of Default
specified in the preceding Section (other than Subsections (f) or (g)
thereof), the Lender may by written notice to the Borrower declare the
entire principal amount of all Indebtedness then outstanding including
interest accrued thereon to be immediately due and payable without
presentment, demand, protest, notice of protest or dishonor or other
notice of default of any kind, all of which are hereby expressly waived by
the Borrower.
(b) Upon the happening of any Event of Default specified in
Subsections (f) or (g) of the preceding Section, the entire principal
amount of all obligations then outstanding including interest accrued
thereon shall, without notice or action by the Lender, be immediately due
and payable without presentment, demand, protest, notice of protest or
dishonor or other notice of default of any kind, all of which are hereby
expressly waived by the Borrower.
(c) Upon the occurrence of any Event of Default, the Lender may
take such action, without notice or demand, as it deems advisable to
protect and enforce its rights against the Borrower and in and to the
Collateral, including, but not limited to, the following actions, each of
which may be pursued concurrently or otherwise, at such time and in such
order as the Lender may determine, in its sole discretion, without
impairing or otherwise affecting the other rights and remedies of the
Lender: (i) institute proceedings for the complete foreclosure of this
Mortgage in which case the Collateral or any part thereof may be sold for
cash or upon credit in one or more portions; or (ii) to the extent
permitted and pursuant to the procedures provided by applicable law,
institute proceedings for the partial foreclosure of this Mortgage for the
portion of the Indebtedness then due and payable, subject to the
continuing Lien of this Mortgage for the balance of the Indebtedness not
then due; or (iii) institute an action, suit or proceeding in equity for
the specific performance of any covenant, condition or agreement contained
in this Mortgage; or (iv) apply for the appointment of a trustee,
receiver, liquidator or conservator of the Collateral, without regard for
the adequacy of the security for the Indebtedness and without regard for
the solvency of the Borrower or of any person, firm or other entity liable
for the payment of the Indebtedness; (v) exercise its rights under Section
2.3 ("Assignment") hereof; or (vi) pursue such other remedies as the
Lender may have under applicable law.
(d) The proceeds or avails of any sale made under or by virtue of
this Section, together with any other sums which then may be held by the
Lender under this Mortgage, whether under the provisions of this Section
or otherwise, shall be applied in such manner as the Lender, in its sole
discretion, shall determine.
(e) Upon any sale made under or by virtue of this Section, the
Lender may bid for and acquire the Collateral or any part thereof and in
lieu of paying cash therefor may make settlement for the purchase price by
crediting upon the Indebtedness the net sales price after deducting
therefrom the expenses of the sale and the costs of the action and any
other sums which the Lender is authorized to deduct under this Mortgage.
Section 5.3 General Authority and Power of Attorney. The Borrower
hereby irrevocably appoints the Lender its agent and attorney in fact,
with full power of substitution, in the name of the Borrower or the
Lender, for the sole use and benefit of the Lender, but at the Borrower's
expense, to exercise, at any time and from time to time while an Event of
Default has occurred and is continuing, all or any of the following powers
with respect to all or any of the Collateral:
(i) to endorse the name of the Borrower upon any
check, draft or other instrument payable to the Borrower evidencing
payment upon any Accounts or General Intangible,
(ii) to demand, xxx for, collect, receive and give
acquittance for any and all Accounts and other monies due or to become due
for or as Collateral or by virtue thereof,
(iii) to settle, compromise, compound, prosecute or
defend any action or proceeding with respect to any of the Collateral, and
(iv) to extend the time of payment of any or all of
the Collateral and to make any allowance and other adjustments with
reference thereto.
The aforesaid mandate and power of attorney, being coupled
with an interest, is irrevocable so long as any of the Indebtedness
remains outstanding.
Section 5.4 Accounts and Contracts. While an Event of Default
has occurred and is continuing, (i) the Borrower will make no material
change to the terms of any Account or Contract without the prior written
permission of the Lender, and (ii) the Borrower upon request of the Lender
will promptly notify (and the Borrower hereby authorizes the Lender so to
notify) each account debtor in respect of any Account or General
Intangible that such Collateral has been assigned to the Lender hereunder,
and that any payments due or to become due in respect of such Collateral
are to be made directly to the Lender or its designee.
Section 5.5 Sale. Upon the occurrence of an Event of Default,
the Lender may exercise all rights of a secured party under the UCC and
other applicable law (including the Uniform Commercial Code as in effect
in another applicable jurisdiction) and, in addition, the Lender may,
without being required to give any notice, except as herein provided or as
may be required by mandatory provisions of law, sell the Collateral or any
part thereof at public sale, for cash, upon credit or for future delivery,
and at such price or prices as the Lender may deem satisfactory. The
Lender may be the purchaser of any or all of the Collateral so sold at any
public sale. The Borrower will execute and deliver such documents and
take such other action as the Lender deems necessary or advisable in order
that any such sale may be made in compliance with law. Upon any such sale
the Lender shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any such sale
shall hold the Collateral so sold to it absolutely and free from any claim
or right of whatsoever kind and the Borrower, to the extent permitted by
law, hereby specifically waives all rights of appraisal which it has or
may have under any law now existing or hereafter adopted. The Borrower
agrees that ten (10) days' prior written notice of the time and place of
any sale or other intended disposition of any of the Collateral
constitutes "reasonable notification" within the meaning of Section
9-504(3) of the UCC. The notice (if any) of such sale shall state the
time and place fixed for such sale. Any such public sale shall be held at
such time or times within ordinary business hours and at such place or
places as the Lender may fix in the notice of such sale. At any such sale
the Collateral may be sold in one lot as an entirety or in separate
parcels, as the Lender may determine. The Lender shall not be obligated
to make any such sale pursuant to any such notice. The Lender may,
without notice or publication, adjourn any public sale or cause the same
to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any
part of the Collateral on credit or for future delivery, the Collateral so
sold may be retained by the Lender until the selling price is paid by the
purchaser thereof, but the Lender shall not incur any liability in case of
the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold
upon like notice.
Section 5.6 Set-Off. Upon the occurrence of any Event of
Default, the Lender shall have the right to set-off any funds of the
Borrower in the possession of the Lender against any amounts then due by
the Borrower to the Lender pursuant to the Mortgage.
Section 5.7 Confession of Judgment. For purposes of
foreclosure under Louisiana executory process procedures, the Borrower
hereby acknowledges the Indebtedness and confesses judgment in favor of
Lender for the full amount of the Indebtedness.
Section 5.8 Expenses. The Borrower will pay all reasonable
expenses, including but not limited to reasonable attorneys' fees,
incurred in connection with the full protection and preservation of, and
foreclosure, collection or other realization of or on, the Collateral or
this Mortgage, or in connection with the enforcement of any of the
Borrower's obligations or the Lender's rights and remedies set forth
herein, whether or not suit or any foreclosure proceedings are filed. All
insurance expenses and all expenses of protecting, storing, warehousing,
appraising, preparing for sale, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by
any federal, state or local authority on any of the Collateral, all
expenses in respect of periodic appraisals and inspections of the
Collateral to the extent the same may be requested from time to time, and
all expenses in respect of the sale or other disposition thereof shall be
borne and paid by the Borrower. All such expenses shall be treated as
Advances as provided in Section 4.23 ("Advances by Lender") hereof and
thus included in the Indebtedness secured hereby.
Section 5.9 Keeper. In the event the Collateral, or any part
thereof, is seized as an incident to an action for the recognition or
enforcement of this Mortgage by executory process, ordinary process,
sequestration, writ of fieri facias or otherwise, the Borrower and the
Lender agree that the court issuing any such order shall, if petitioned
for by Lender, direct the applicable sheriff to appoint as a keeper of the
Collateral, the Lender or any agent designated by Lender or any person
named by the Lender at the time such seizure is effected. This
designation is pursuant to Louisiana Revised Statutes 9:5131 through 5135
and 9:5136 through 5140.2, as the same may be amended, and Lender shall be
entitled to all the rights and benefits afforded thereunder. It is hereby
agreed that the keeper shall be entitled to receive as compensation, in
excess of its reasonable costs and expenses incurred in the administration
or preservation of the Collateral, an amount equal to 3% of the gross
revenues of the Collateral, which shall be included as Indebtedness
secured by this Mortgage. The designation of keeper made herein shall not
be deemed to require Lender to provoke the appointment of such a keeper.
Section 5.10 Waivers. The Borrower waives in favor of the
Lender any and all homestead exemptions and other exemptions of seizure or
otherwise to which Borrower is or may be entitled under the constitution
and statutes of the State of Louisiana insofar as the Collateral is
concerned. The Borrower further waives: (a) the benefit of appraisement
as provided in Louisiana Code of Civil Procedure Articles 2332, 2336, 2723
and 2724, and all other laws conferring the same; (b) the demand and three
days' delay accorded by Louisiana Code of Civil Procedure Articles 2639
and 2721; (c) the notice of seizure required by Louisiana Code of Civil
Procedure Articles 2293 and 2721; (d) the three days' delay provided by
Louisiana Code of Civil Procedure Articles 2331 and 2722; and (e) the
benefit of the other provisions of Louisiana Code of Civil Procedure
Articles 2331, 2722 and 2723, not specifically mentioned above.
Section 5.11 Authentic Evidence. Any and all declarations of
facts made by authentic act before a notary public in the presence of two
witnesses by a person declaring that such facts lie within his knowledge,
shall constitute authentic evidence of such facts for the purpose of
executory process. The Borrower specifically agrees that such an
affidavit by a representative of the Lender as to the existence, amount,
terms and maturity of the Indebtedness and of a default thereunder shall
constitute authentic evidence of such facts for the purpose of executory
process.
Section 5.12 Assemble Collateral. For the purpose of
enforcing any and all rights and remedies under this Mortgage the Lender
may (i) require the Borrower to, and the Borrower agrees that it will, at
its expense and upon the request of the Lender, forthwith assemble all or
any part of the Collateral as directed by the Lender and make it available
at a place designated by the Lender which is, in its opinion, reasonably
convenient to the Lender and the Borrower, whether at the premises of the
Borrower or otherwise, and Lender shall be entitled to specific
performance of this obligation, (ii) to the extent permitted by applicable
law of this or any other state, enter, with or without process of law and
without breach of the peace, any premise where any of the Collateral is or
may be located, and without charge or liability to it seize and remove
such Collateral from such premises, (iii) have access to and use the
Borrower's books and records relating to the Collateral, and (iv) prior to
the disposition of the Collateral, store or transfer it without charge in
or by means of any storage or transportation facility owned or leased by
the Borrower, process, repair or recondition it or otherwise prepare it
for disposition in any manner and to the extent the Lender deems
appropriate and, in connection with such preparation and disposition, use
without charge any trademark, trade name, copyright, patent or technical
process used by the Borrower.
Section 5.13 Limitation on Duty of Lender. Beyond the
exercise of reasonable care in the custody thereof, the Lender shall have
no duty as to any Collateral in its possession or control or in the
possession or control of any agent or bailee or any income thereon. The
Lender shall be deemed to have exercised reasonable care in the custody of
the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords its own property, and shall
not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the
act or omission of any warehouseman, carrier, forwarding agency, consignee
or other agent or bailee selected by the Lender in good faith.
Section 5.14 Appointment of Agent. At any time or times, in
order to comply with any legal requirement in any jurisdiction, the Lender
may appoint a bank or trust company or one or more other Persons with such
power and authority as may be necessary for the effectual operation of the
provisions hereof and may be specified in the instrument of appointment.
ARTICLE 6.
Miscellaneous
Section 6.1 Notices. Any notice or demand which, by provision
of this Mortgage, is required or permitted to be given or served to the
Borrower or the Lender shall be deemed to have been sufficiently given and
served for all purposes (if mailed) three calendar days after being
deposited, postage prepaid, in the United States Mail, or (if delivered by
express courier) one business day after being delivered to such courier,
or (if delivered in person) the same day as delivery, in each case if made
addressed to (i) the address of such party shown on page 1 hereof or
(ii) Borrower or Lender at such different address(es) as shall have been
designated by written notice actually received by Borrower or Lender, as
applicable at least ten (10) days in advance of the date upon which such
change of address shall be effective under this Section 6.1.
Section 6.2 Amendment. Neither this Mortgage nor any
provisions hereof may be changed, waived, discharged or terminated orally
or in any manner other than by an authentic instrument in writing signed
by the party against whom enforcement of the change, waiver, discharge or
termination is sought.
Section 6.3 Invalidity. In the event that any one or more of
the provisions contained in this Mortgage shall, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of
this Mortgage.
Section 6.4 Waivers. No course of dealing on the part of the
Lender, its officers, employees, consultants or agents, nor any failure or
delay by the Lender with respect to exercising any of its rights, powers
or privileges under this Mortgage shall operate as a waiver thereof.
Section 6.5 Cumulative Rights. The rights and remedies of the
Lender under this Mortgage and the Collateral Documents shall be
cumulative, and the exercise or partial exercise of any such right or
remedy shall not preclude the exercise of any other right or remedy.
Section 6.6 Titles of Articles, Sections and Subsections. All
titles or headings to articles, sections, subsections or other divisions
of this Mortgage or the exhibits hereto are only for the convenience of
the parties and shall not be construed to have any effect or meaning with
respect to the other content of such articles, sections, subsections or
other divisions, such other content being controlling as to the agreement
between the parties hereto.
Section 6.7 Singular and Plural. Words used herein in the
singular, where the context so permits, shall be deemed to include the
plural and vice versa. The definitions of words in the singular herein
shall apply to such words when used in the plural where the context so
permits and vice versa.
Section 6.8 Termination. Upon full and final payment and
performance of the Indebtedness and the payment or redemption of the Note,
or upon Lender's acquisition of the Mineral Properties (other than by
reason of an Event of Default hereunder), this Mortgage shall terminate,
and the Lender shall pay to the Borrower all amounts then remaining in the
possession of the Lender from collections on or proceeds of the
Collateral. Upon request of the Borrower, the Lender shall execute and
deliver to the Borrower at the Borrower's expense such termination
statements as the Borrower may reasonably request to evidence such
termination.
Section 6.9 Successors and Assigns. (a) All covenants and
agreements contained by or on behalf of the Borrower in this Mortgage
shall bind its successors and assigns and shall inure to the benefit of
the Lender and its successors and assigns.
(b) This Mortgage is for the benefit of the Lender and for
such other Person or Persons as may from time to time become or be the
holder of the Note and the other Indebtedness, and this Mortgage shall be
transferrable and negotiable, with the same force and effect and to the
same extent as the Note may be transferrable, it being understood that,
upon the transfer or assignment by the Lender of the Note (to the extent
transfer is permitted thereby), the legal holder of such Note shall have
all of the rights granted to the Lender under this Mortgage.
(c) The Borrower hereby recognizes and agrees that the
Lender may, from time to time, one or more times, transfer all or any
portion of the Indebtedness to one or more third parties. Such transfers
may include, but not be limited to, sales of participation interests in
such Indebtedness in favor of one or more third party lenders. Upon any
transfer of all or any portion of the Indebtedness, the Lender may
transfer and deliver any or all of the Collateral to the transferee of
such Indebtedness and such Collateral shall secure any and all of the
Indebtedness in favor of such a transferee then existing and thereafter
arising, and after any such transfer has taken place, the Lender shall be
fully discharged from any and all future liability and responsibility to
the Borrower with respect to such Collateral, and the transferee
thereafter shall be vested with all the powers, rights and duties with
respect to such Collateral.
Section 6.10 Governing Law. This Mortgage is made under and
shall be construed in accordance with and governed by the laws of the
United States of America and the State of Louisiana.
Section 6.11 Certificates. The production of mortgage,
conveyance, tax research or other certificates is waived by consent, and
the Borrower and the Lender agree to hold me, Notary, harmless for failure
to procure and attach same.
Section 6.12 No Paraph. The notes and other written
obligations that comprise a part of the Indebtedness have not been
presented to me, Notary, for purposes of being paraphed herewith.
THUS DONE AND PASSED as of the day and in the month and year
hereinabove first written, in the presence of the undersigned witnesses
who hereunto sign their names with the Borrower and Lender and me, Notary,
after due reading of the whole.
WITNESSES: READING & XXXXX DEVELOPMENT CO.
_________________________ By:________________________________
Name:____________________ X. X. Xxxxxxx
(Please Print) President
_________________________ ENSERCH EXPLORATION, INC.
Name:____________________
(Please Print)
By:________________________________
X. X. Xxxxxxxxx
Senior Vice President
Offshore and International
_____________________________________________
Notary Public
My Commission Expires:_______________________
EXHIBIT 1
TO MORTGAGE AND SECURITY AGREEMENT
BY READING & XXXXX DEVELOPMENT CO.
The Borrower and the Lender hereby agree and affirm that this
Introduction to Description of Properties is an explanation of the
terminology, format and information contained in Exhibit "A" and that this
instrument shall be construed as a whole with reference to the entirety of
its provisions (including all Exhibits).
0.1 This instrument covers the Borrower's entire interest in
each of the mineral servitudes, mineral leases, mineral
royalties and other mineral rights described in Exhibit
A, as now owned or as hereafter acquired. The inclusion
of the Borrower's "Net Revenue Interest," "Working
Interest" and undivided leasehold interests, by the
listing of percentage, decimal or fractional numbers or
otherwise, as well as the inclusion of depth
limitations, spacing unit designations and agreements,
well names and well arabic numbers, are in some
instances for purposes of certain representations of the
Borrower contained in this instrument and are generally
for descriptive purposes. The inclusion (or the
inaccuracy thereof) of this information is not in any
way a limitation or restriction on the interest of the
Borrower being subjected to the lien and encumbrance of
this instrument. In the event that the Borrower
acquires additional undivided interests in some or all
of such mineral or leasehold rights, this Mortgage shall
automatically encumber such additions or increases to
the Borrower's interest in such mineral or leasehold
rights without need of further act or document.
0.2 References in Exhibit "A" to instruments on file in the
public records are made for all purposes. Unless
provided otherwise, all recording references in Exhibit
"A" are to the official real property records of the
parish or parishes in which the mortgaged property is
located and in which records of such documents are or in
the past have been customarily recorded, whether
Conveyance Records, Oil and Gas Records, Mineral Lease
Records, Oil and Gas Lease Records or other records.
0.3 A statement herein that a certain interest described
herein is subject to the terms of certain described or
referred to agreements, instruments or other matters
shall not operate to subject such interest to any such
agreement, instrument or other matter except to the
extent that such agreement, instrument or matter is
otherwise valid and presently subsisting nor shall such
statement be deemed to constitute a recognition by the
parties hereto that any such agreement, instrument or
other matter is valid and presently subsisting or
binding against the Lender.
EXHIBIT "A"
TO MORTGAGE AND SECURITY AGREEMENT BY
READING & XXXXX DEVELOPMENT CO.
PROPERTY DESCRIPTION
1. LEASE OCS-G 8504. That certain Oil and Gas Lease of Submerged Lands
under the Outer Continental Shelf Lands Act made and effective as of
June 1, 1986, by and between the United States of America, as
Lessor, and Placid Oil Company, et al., as Lessees, bearing Serial
No. OCS-G 8504 covering all of Block 209, Green Canyon, OCS Official
Protraction Diagram, NA 15-3.
Working Interest 13.333333%
Net Revenue Interest 11.616868%
2. LEASE OCS-G 7049. That certain Oil and Gas Lease of Submerged Lands
under the Outer Continental Shelf Lands Act made and effective as of
June 1, 1984, by and between the United States of America, as
Lessor, and Placid Oil Company, et al., as Lessees, bearing Serial
No. OCS-G 7049 covering all of Block 254, Green Canyon, OCS Official
Protraction Diagram, NA 15-3.
Working Interest 20.000000%
Net Revenue Interest 17.3506665%
3. LEASE OCS-G 8010. That certain Oil and Gas Lease of Submerged Lands
under the Outer Continental Shelf Lands Act made and effective as of
July 1, 1985, by and between the United States of America, as
Lessor, and Placid Oil Company, et al., as Lessees, bearing Serial
No. OCS-G 8010 covering all of Block 298, Green Canyon, OCS Official
Protraction Diagram, NA 15-3.
Working Interest 20.00000%
Net Revenue Interest 17.35066%
4. LEASE OCS-G 8012. That certain Oil and Gas Lease of Submerged Lands
under the Outer Continental Shelf Lands Act made and effective as of
July 1, 1985, by and between the United States of America, as
Lessor, and Placid Oil Company, et al., as Lessees, bearing Serial
No. OCS-G 8012 covering all of Block 342, Green Canyon, OCS Official
Protraction Diagram, NA 15-3.
Working Interest 20.00000%
Net Revenue Interest 17.35066%
5. LEASE OCS-G 8876. That certain Oil and Gas Lease of Submerged Lands
under the Outer Continental Shelf Lands Act made and effective as of
June 1, 1987, by and between the United States of America, as
Lessor, and Xxxx Petroleum Corporation, et al., as Lessees, bearing
Serial No. OCS-G 8876 covering all of Block 297, Green Canyon, OCS
Official Protraction Diagram, NA 15-3.
Working Interest 20.000000%
Net Revenue Interest 16.833333%
6. LEASE OCS-G 13171. That certain Oil and Gas Lease of Submerged
Lands under the Outer Continental Shelf Lands Act made and effective
as of May 1, 1991, by and between the United States of America, as
Lessor, and Exxon Corporation, as Lessees, bearing Serial No. OCS-G
13171 covering all of Block 341, Green Canyon, OCS Official
Protraction Diagram, NA 15-3.
Working Interest 20.000000%
Net Revenue Interest 17.500000%
7. LEASE OCS-G 13696. That certain Oil and Gas Lease of Submerged
Lands under the Outer Continental Shelf Lands Act made and effective
as of July 1, 1992, by and between the United States of America, as
Lessor, and Exxon Corporation, as Lessees, bearing Serial No. OCS-G
13696 covering all of Block 210, Green Canyon, OCS Official
Protraction Diagram, NA 15-3.
Working Interest 20.000000%
Net Revenue Interest 17.500000%
8. LEASE OCS-G 8000. That certain Oil and Gas Lease of Submerged Lands
under the Outer Continental Shelf Lands Act made and effective as of
July 1, 1985, by and between the United States of America, as
Lessor, and Placid Oil Company, et al., as Lessees, bearing Serial
No. OCS-G 8000 covering all of Block 213, Green Canyon, OCS Official
Protraction Diagram, NA 15-3.
Working Interest 20.00000%
Net Revenue Interest 17.35066%
9. LEASE OCS-G 8006. That certain Oil and Gas Lease of Submerged Lands
under the Outer Continental Shelf Lands Act made and effective as of
July 1, 1985, by and between the United States of America, as
Lessor, and Placid Oil Company, et al., as Lessees, bearing Serial
No. OCS-G 8006 covering all of Block 258, Green Canyon, OCS Official
Protraction Diagram, NA 15-3.
Working Interest 20.00000%
Net Revenue Interest 17.35066%
10. LEASE OCS-G 8005. That certain Oil and Gas Lease of Submerged Lands
under the Outer Continental Shelf Lands Act made and effective as of
July 1, 1985, by and between the United States of America, as
Lessor, and Amerada Xxxx, et al., as Lessees, bearing Serial No.
OCS-G 8005 covering all of Block 253, Green Canyon, OCS Official
Protraction Diagram, NA 15-3.
Working Interest 20.000000%
Net Revenue Interest 16.500000%
1. XXXXX:
WORKING REVENUE
INTEREST INTEREST
A. OCS-G 7049 #3 20.00000% 17.350665%
B. OCS-G 7049 #4 20.00000% 17.350665%
C. 0CS-G 7049 #4ST1 20.00000% 17.350665%
D. 0CS-G 7049 #5 20.00000% 17.350665%
2. TEMPLATE:
That certain three well drilling template acquired, inter alia, by
Seller for use in connection with the drilling of the OCS-G 7049 #5
Well.
