EXHIBIT 10.5(b)(ii)
FIRST OF AMERICA BANK-MICHIGAN, N.A.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT
THIS AGREEMENT made and entered this 10th day of September, 1996,
by and between XXXXXX OIL CORPORATION, a Michigan corporation of 0000 Xxxxx
Xxxxxx Xxxx, Xxxxxxxx Xxxx, Xxxxxxxx, 00000 (hereinafter referred to as
"Debtor"), and FIRST OF AMERICA BANK-MICHIGAN, N.A. of 000 X. Xxxxxxxx,
Xxxxxxxx Xxxx, Xxxxxxxx 00000 (hereinafter referred to as "Lender");
W I T N E S S E T H :
Lender is entering into a certain loan transaction with Debtor
wherein Lender has agreed to lend to the Debtor the aggregate sum of
$5,000,000.00. Concurrently herewith the Debtor has delivered its
Promissory Notes, duly executed, in the total principal amount of FIVE
MILLION AND NO/100 DOLLARS, made payable to the Lender all in accordance
with the terms set forth in said Note. The Note and Lender's heretofore
issued Loan Commitment are collectively referred to herein as the "Loan
Documents."
In consideration of the covenants and upon the conditions
contained herein and in the Loan Documents, the parties hereto AGREE:
1. MORTGAGE AND SECURITY AGREEMENT. Debtor hereby mortgages, conveys,
assigns, warrants and grants a security interest to Secured Party in
all of the property, including royalty interests, working interest,
partnership interests and limited partnership interests in certain oil
and gas xxxxx and production units described in Schedule "A" attached
hereto, whether now owned or hereafter acquired (herein referred to as
the "Collateral"), and any proceeds therefrom, together with all of
the Debtor's interest in the following:
(a) Any presently existing lease unitization, pooling or operating
agreements and the units created thereby or operated thereunder,
which are specifically described in Schedule "A" or which relate
to any of the leasehold interests described therein.
(b) The oil, gas and other hydrocarbons which are in, under, upon,
produced or that may be produced from the leasehold interests
described in Schedule "A."
(c) Any production sale contracts, options or other agreements
affecting the sale of production from the leasehold interests
described in Schedule "A," all of which said interests, rights
and leases, together with any additions thereto which may be
subject to the lien hereby created are pledged to secure payment
of the indebtedness and the performance of Debtor's obligations
under the Loan Documents.
2. ASSIGNMENT OF PRODUCTION.
(a) As further security for the payment of the indebtedness, the
Debtor hereby assigns to the Lender, effective upon demand of
Lender, which demand shall only be made upon Debtor's default,
all oil, gas and other hydrocarbons which are hereafter produced
and which accrue to the leasehold interests, royalty interests,
working interests, partnership interests or limited partnership
interests described in Schedule "A" attached hereto.
(b) All parties producing, purchasing or receiving any such
production or hydrocarbons or the proceeds therefrom, including
lessees of any mineral acres mortgaged hereunder, are authorized
and directed by Debtor to deliver or pay all such hydrocarbons,
the proceeds therefrom, production and royalty payments to
Lender, as Assignee, and Lender of Debtor. Such parties shall be
fully protected and held harmless by Debtor and shall be under no
obligation to see to the application by Lender of any proceeds or
payments received by it.
(c) All payments received by the Lender shall be applied in
accordance with the terms of the Loan Documents.
3. DEBTOR'S WARRANTIES AND COVENANTS. Debtor hereby represents, warrants
and agrees that:
(a) Debtor will pay the indebtedness secured by this Mortgage,
Security Agreement and Assignment of production, and any and all
other obligations or liabilities to Lender in accordance with the
Loan Documents.
(b) Debtor is now, or will be at the time Debtor acquires possession
thereof, the owner of the Collateral free from any liens,
encumbrances or security interests except for the security
interest granted hereby and assessments and restrictions of
record and Debtor shall defend the Collateral against all claims
and demands of every kind and nature.
(c) Debtor will keep the Collateral free from liens, encumbrances and
other security interests.
(d) Debtor will not sell or otherwise assign the Collateral or any
interest therein without the prior written consent of Lender.
(e) As its option, Lender may discharge taxes, liens or security
interests or other encumbrances at any time levied or placed on
the Collateral, and Debtor agrees to reimburse Lender on Demand
for any payment made or any expense incurred by Lender pursuant
to the authorization.
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(f) No mortgage or financing statement covering the Collateral or any
part thereof or any proceeds thereof is on file in any public
office, and at the request of Lender, Debtor will join with
Lender in executing one (1) or more financing statements in form
satisfactory to Lender and will pay the cost of filing the same
in all public offices wherever filing is deemed by Lender to be
necessary or desirable.
(g) Debtor has good and marketable title to all of the mortgaged
property, pledged and assigned to the Lender as security for the
loan and that said property interests are free and clear of all
other liens or encumbrances except those being discharged at the
time of closing.
4. FURTHER ASSURANCES. The Debtor will execute and deliver to Lender
such other and further instruments and will do such other and further
acts as in the opinion of the Lender may be necessary to carry out
more effectively the purposes and intent of the Loan Documents.
5. TAXES. The Debtor will promptly pay all taxes, assessments and other
governmental charges legally imposed on the Collateral, the proceeds
therefrom or the Lender's interest therein.
6. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute a default under this Mortgage and Security Agreement.
(a) Debtor's failure to observe and perform any of the terms and
conditions of the Loan Documents.
(b) The occurrence of any event of default specified in any of the
Loan Documents.
(c) The occurrence of any event which results in the acceleration of
the maturity of the indebtedness of Debtor under the Loan
Documents.
(d) Any representation or warranty made by Debtor in any Loan
Document proves to be untrue in any material respect.
(e) The mortgage lien and security interest granted hereunder are
subordinate or inferior in priority to the lien or claim of any
other person or entity.
(f) Debtor becomes insolvent or Lender deems itself insecure, or
feels that Debtor is not capable of meeting the debt service
requirements of the loan.
(g) Debtor becomes the subject of bankruptcy or reorganization
proceedings under the provisions of any bankruptcy or insolvency
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law, a receiver or trustee, or Debtor makes an assignment for the
benefit of creditors.
(h) Failure of Debtor, within thirty (30) calendar days after notice
from Lender, to cure a default in the due performance or
observance of any covenant or agreement contained in the payment
of principal or interest.
7. SECURED PARTY'S RIGHTS UPON DEFAULT.
(a) In the event of a default as provided herein, the entire
indebtedness secured by this Agreement shall become due and
payable immediately at Lender's option and Lender shall have the
rights and remedies provided by law and/or the Loan Documents,
including the right to take possession of the Collateral with or
without demand and with or without process of law and to sell the
Collateral, at one or more sales, as an entirety or in parts, as
Lender may elect.
(b) The parties hereto agree that any requirement of reasonable
notice shall be met if Lender sends such notice to Debtor at
least five (5) days prior to the date of sale, disposition or
other event giving rise to required notice. It is further hereby
agreed that public sale of the Collateral by auction, conducted
after advertisement of the time and place thereof in a newspaper
circulated in the county in which the sale is to be held shall be
deemed to be commercially reasonable disposition of the
Collateral. Debtor shall be liable for any deficiency remaining
after such deficiency or the amount required to redeem the
Collateral shall include reasonable attorneys fees and costs and
expenses incurred in connection with the acquisition of
possession and disposition thereof.
(c) The proceeds of any sale of the Collateral or any part thereof
shall be applied as follows:
(1) To the payment of all expenses incurred by the Lender in the
performance of its duties, including but not limited to
expenses or taking possession, of any sale, of advertisement
thereof, of conveying or court costs, compensation of
agents, employees and legal fees;
(2) To the payment of interest to the date of such payment on
any indebtedness of Debtor to Lender.
(3) To the payment of principal on any indebtedness of Debtor to
Lender.
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(4) Any surplus thereafter remaining shall be paid to the Debtor
or Debtor's successors or assigns as their interests may
appear.
8. INCORPORATION BY REFERENCE. All of the terms, provisions and
conditions contained in the Loan Documents are hereby incorporated by
reference as if fully set forth herein.
9. INDEBTEDNESS SECURED. The indebtedness secured hereunder includes:
(a) All obligations incurred under the Loan Documents.
(b) Any promissory note evidencing additional loans which the Lender
may make from time to time to Debtor, the Lender not being
obligated, however, to make such additional loans.
(c) Any sums advanced, or expenses or costs incurred by Lender which
are made or incurred pursuant to the terms of any of the Loan
Documents plus interest hereon at the rate specified in the Loan
Documents or otherwise agreed upon from the date of advances or
the incurring of such expenses or costs until reimbursed.
(d) Any extensions or renewals of all such indebtedness described in
Paragraph 9(a) through 9(c) above, whether or not the Lender
executes an extension agreement or renewal instruments.
10. INVALIDITY. In the event any term, provision or condition of the
Agreement or of the other Loan Documents is invalid or unenforceable,
the same shall be deemed several from the remainder of such terms,
provisions or conditions which shall remain in full force and effect
to the maximum extent permitted by law.
11. GOVERNING LAW. This Agreement shall be governed by and interpreted
and construed in accordance with the laws of the State of Michigan.
12. REVERSION OF INTERESTS. If the indebtedness shall be fully paid and
the covenants herein contained shall be fully performed, then all
interest of the Debtor in the Collateral shall revert to the Debtor
and Lender's interest in said property shall cease; and upon request
by Debtor, the Lender shall execute such instruments as are necessary
to reconvey the Collateral to Debtor.
13. RIGHTS CUMULATIVE. Each and every right, power and remedy herein
given to the Lender shall be cumulative and not exclusive; and each
and every right, power and remedy may be exercised from time to time
and so often and in such order as may be deemed expedient by Lender,
and the exercise of any such right, power or remedy shall not be
deemed a waiver of any other right, power or remedy.
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14. COUNTERPARTS. This instrument may be executed in counterpart by the
parties hereto, and to facilitate recording, the signature pages of
each identical instrument may be combined into one original document.
15. BINDING EFFECT. This Agreement shall bind and inure to the benefit of
the parties hereto, their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
Signed in the Presence of: DEBTOR:
XXXXXX OIL CORPORATION
____________________________ By: /S/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx
____________________________ Its: President
SECURED PARTY:
FIRST OF AMERICA BANK-MICHIGAN, N.A.
____________________________ By: /S/ XXXX X. XXXXXXXXX
Xxxx X. XxxXxxxxx
____________________________ Its: Senior Vice President
STATE OF MICHIGAN )
: ss.
County of Grand Traverse )
On this 10th day of September, 1996, before me a Notary Public in
and for said County, personally appeared the above-named Xxxxx X. Xxxxxx on
behalf of XXXXXX OIL CORPORATION, a Michigan corporation, to me known to be
the same person in and who executed the foregoing instrument and
acknowledged the same to be his free act and deed.
___________________________________________
Notary Public: ____________________________
County: ___________________________________
My Commission Expires: ____________________
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STATE OF MICHIGAN )
: ss.
County of Grand Traverse )
On this 10th day of September, 1996, before me a Notary Public in and
for said County, personally appeared the above-named XXXX X. XXXXXXXXX,
Senior Vice President of FIRST OF AMERICA BANK-MICHIGAN, N.A., to me known
to be the same person in and who executed the foregoing instrument and
acknowledged the same to be his free act and deed.
___________________________________________
Notary Public: ____________________________
County: ___________________________________
My Commission Expires: ____________________
Prepared by: When recorded, return to: SAME
Xxxxx Xxxxxxxxx
First of America Bank-Michigan, N.A.
000 Xxxxxx Xxxxxx, X.X., Xxxxx Xxxxxx, XX 00000
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