MORTGAGE, SECURITY AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT OF PRODUCTION FROM MIDWEST ENERGY, INC., A NEVADA CORPORATION AND ENERJEX RESOURCES, INC., A NEVADA CORPORATION AS MORTGAGOR, TO DKR SOUNDSHORE OASIS HOLDING FUND LTD., WEST COAST...
MORTGAGE, SECURITY AGREEMENT,
FINANCING STATEMENT AND ASSIGNMENT OF PRODUCTION
FROM MIDWEST ENERGY, INC., A NEVADA CORPORATION AND ENERJEX RESOURCES, INC., A NEVADA CORPORATION AS MORTGAGOR,
TO DKR SOUNDSHORE OASIS HOLDING FUND LTD., WEST COAST OPPORTUNITY FUND, LLC., ENABLE GROWTH PARTNERS LP, ENABLE OPPORTUNITY PARTNERS LP, GLACIER PARTNERS LP AND XXXX LIVING TRUST AS MORTGAGEE
DATED: June 21, 2007.
THIS MORTGAGE IS, AMONG OTHER THINGS, A FINANCING STATEMENT UNDER THE UNIFORM COMMERCIAL CODE COVERING MINERALS, AS-EXTRACTED COLLATERAL AND THE LIKE (INCLUDING OIL AND GAS), ACCOUNTS RESULTING FROM THE SALE OF MINERALS, AS EXTRACTED COLLATERAL AND THE LIKE (INCLUDING OIL AND GAS), AND GOODS WHICH ARE, OR ARE TO BECOME, FIXTURES ON THE REAL/UNMOVABLE PROPERTY HEREIN DESCRIBED. THE OIL AND GAS INTERESTS OR ACCOUNTS INCLUDED IN THE MORTGAGED PROPERTY WILL BE FINANCED AT THE WELLHEADS LOCATED ON THE REAL/UNMOVABLE PROPERTY DESCRIBED IN EXHIBIT A ATTACHED HERETO. THIS MORTGAGE IS TO BE RECORDED IN THE REAL ESTATE OR COMPARABLE RECORDS OF THE COUNTY OR PARISH RECORDER OF EACH COUNTY OR PARISH IN EACH STATE IN WHICH IS SITUATED ANY OF THE COLLATERAL COVERED HEREBY. THE REAL/UNMOVABLE PROPERTY SUBJECT HERETO IS DESCRIBED IN EXHIBIT A ATTACHED HERETO.
THIS MORTGAGE CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.
XXXXXXXXX OWNS A RECORD INTEREST IN THE MORTGAGED PROPERTY.
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AMOUNT OF MORTGAGE: |
$9,000,000.00 |
MORTGAGE, SECURITY AGREEMENT,
FINANCING STATEMENT AND ASSIGNMENT OF PRODUCTION
THIS MORTGAGE, SECURITY AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT OF PRODUCTION (this “Mortgage”) is from MIDWEST ENERGY, INC., a Nevada Corporation and ENERJEX RESOURCES, INC., a Nevada Corporation, as Mortgagor (“Mortgagor” whether single or together), to DKR SOUNDSHORE OASIS HOLDING FUND LTD., WEST COAST OPPORTUNITY FUND, LLC., ENABLE GROWTH PARTNERS LP, ENABLE OPPORTUNITY PARTNERS LP, GLACIER PARTNERS LP AND XXXX LIVING TRUST (“Mortgagee” whether one, more than one or all). The addresses of Mortgagor and Mortgagee are set forth in Section 7.14 hereof.
RECITALS:
WHEREAS, Xxxxxxxxx entered into a Mortgage, Deed of Trust, Security Agreement, Financing Statement and Assignment of Production dated June 21, 2007 in favor of Mortgagee (the “Original Mortgage”).
WHEREAS, in order to secure the Secured Indebtedness (defined below), Xxxxxxxxx has agreed to execute and deliver this Mortgage pursuant to which, among other things, the Mortgaged Property (defined below) is granted and assigned by Xxxxxxxxx to Mortgagee to further secure the Secured Indebtedness (defined below).
NOW, THEREFORE, in consideration of the sum of $10.00 and other good and valuable consideration, in hand paid by Xxxxxxxxx, the receipt and adequacy of which are hereby acknowledged and confessed by Xxxxxxxxx, Xxxxxxxxx hereby agrees as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. For all purposes of this Mortgage, unless the context otherwise requires:
“Accounts and Contract Rights” shall mean all accounts (including accounts in the form of joint interest xxxxxxxx under applicable operating agreements), contract rights and general intangibles of Mortgagor now or hereafter existing, or hereafter acquired by, or on behalf of, Mortgagor, or Mortgagor’s successors in interest, relating to or arising from the ownership, operation and development of the Mortgaged Property and to the production, processing, treating, sale, purchase, exchange or transportation of Hydrocarbons (defined below) produced or to be produced from or attributable to the Mortgaged Property or any units or pooled interest units in which all or a portion of the Mortgaged Property forms a part, together with all accounts and proceeds accruing to Mortgagor attributable to the sale of Hydrocarbons produced from the Mortgaged Property or any units or pooled interest units in which all or a portion of the Mortgaged Property forms a part.
“Article” shall mean and refer to an Article of this Mortgage, unless specifically indicated otherwise.
“Code” shall mean the Uniform Commercial Code in effect in each of the jurisdictions where the Mortgaged Property or a portion thereof is situated.
“Credit Agreements” shall mean, collectively, each Securities Purchase Agreement and the other Related Agreements as defined therein, and “Credit Agreement” shall mean any one of the foregoing.
“Effective Date” shall mean June 21, 2007.
“Event of Default” shall mean the occurrence of any breach by Mortgagor of any term or provision of this Mortgage or the occurrence of any Event of Default under and as defined in the applicable Credit Agreement.
“Exhibit A” shall mean, unless specifically indicated otherwise, Exhibit A attached hereto and incorporated herein by reference for all purposes.
“Gas Balancing Agreement” means any agreement or arrangement whereby Mortgagor, or any other party having an interest in any Hydrocarbons to be produced from Mineral Interests in which Mortgagor owns an interest, has a right or an obligation to take more or less than its proportionate share of production therefrom.
“Hydrocarbons” shall mean oil, gas, coalbed methane gas, casinghead gas, drip gasolines, natural gasoline, condensate, distillate, as-extracted collateral and all other liquid or gaseous hydrocarbons produced or to be produced in conjunction therewith, and all products, byproducts and all other substances derived therefrom or the processing thereof, and all other minerals and substances, including, but not limited to, sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon dioxide, helium and any and all other minerals, ores, or substances of value and the products and proceeds therefrom, including, without limitation, all gas resulting from the in-situ combustion of coal or lignite.
“Lands” shall mean the lands described in Exhibit A and shall include any lands, the description of which is contained in Exhibit A or incorporated in Exhibit A by reference to another instrument or document, including, without limitation, all lands described in the Oil and Gas Leases listed on Exhibit A hereto, and shall also include any lands now or hereafter unitized, pooled, spaced or otherwise combined, whether by statute, order, agreement, declaration or otherwise, with lands the description of which is contained in Exhibit A or is incorporated in Exhibit A by reference.
“Lien” shall mean any mortgage, deed of trust, collateral assignment, lien, pledge, charge, security interest or other encumbrance.
“Loans” shall mean collectively, all amounts advanced by the Mortgagee to Mortgagor under the Agreements executed between the parties and incorporated herein by reference including, but not limited to The Securities Purchase Agreement and Pledge and Security Agreement as well as other credit agreements.
“Material Adverse Effect” shall mean a material adverse effect on (a) the assets, liabilities, financial condition, results of operations or prospects of Mortgagor, (b) the right or ability of Mortgagor to fully, completely and timely perform its obligations under the Credit Agreements, or (c) the validity or enforceability of any Credit Agreement against Mortgagor, or the rights or remedies of Mortgagee thereunder.
“Mortgaged Property” shall have the meaning stated in Article 2 of this Mortgage.
“Net Revenue Interest” shall mean Xxxxxxxxx’s share of all Hydrocarbons produced from the Lands, after deducting the appropriate proportionate part of all lessors’ royalties, overriding royalties, production payments and other payments out of or measured by production which burden Xxxxxxxxx’s share of all such production, subject to non-consent provisions contained in joint operating agreements.
“Note” shall have the meaning set forth in the Credit Agreements.
“Obligations” shall mean all present and future indebtedness, obligations and liabilities, and all renewals, refinancings and extensions thereof, or any part thereof, of Mortgagor to Mortgagee arising pursuant to any of the Credit Agreements, or arising pursuant to any commodity, interest rate, currency or other swap, option, collar, futures contract or other contract pursuant to which a Person xxxxxx risks related to commodity prices, interest rates, currency exchange rates, securities prices or financial market conditions and any other commodity price hedging agreements by and between Mortgagor and Mortgagee and all interest accrued on any of the foregoing, and reasonable costs, expenses, and attorneys’ fees incurred in the enforcement or collection thereof, regardless of whether such indebtedness, obligations and liabilities are direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several or joint and several.
“Oil and Gas Leases” shall mean oil, gas and mineral leases, oil and gas leases, oil leases, gas leases, other mineral leases, subleases, top leases, any rights resulting in an ownership interest in Hydrocarbons and all operating rights relating to any of the foregoing (whether operated by virtue of such leases, or assignments or applicable operating agreements), and all other interests pertaining to any of the foregoing, including, without limitation, all royalty and overriding royalty interests, production payments and net profit interests, production payments and net profit interests, mineral fee interests, and all reversionary, remainder, carried and contingent interests relating to any of the foregoing and all other rights therein which are described and/or to which reference may be made on Exhibit A.
“Operation Equipment” shall mean all Personal Property and fixtures affixed or situated upon all or any part of the Mortgaged Property, including, without limitation, all surface or subsurface machinery, equipment, facilities or other property of whatsoever kind or nature now or hereafter located on any of the Lands which are useful for the production, treatment, storage or transportation of oil or gas, including, but not by way of limitation, all oil xxxxx, gas xxxxx, water xxxxx, injection xxxxx, casing, tubing, rods, pumping units and engines, Christmas trees, derricks, separators, gun barrels, flow lines, tanks, gas systems (for gathering, treating and compression), water systems (for treating, disposal and injection), power plants, poles, lines, transformers, starters and controllers, machine shops, tools, storage yards and equipment stored therein, buildings and camps, telegraph, telephone and other communication systems, roads, loading racks and shipping facilities.
“Permitted Encumbrances” shall mean with respect to the Mortgaged Property:
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(a) |
Liens securing the obligations; |
(b) minor defects in title which do not secure the payment of money and otherwise have no material adverse effect on the value or operation of the subject property, including, without limitation, easements, rights-of-way, servitudes, permits, surface leases, and other similar rights in respect of surface operations, and easements for pipelines, streets, alleys, highways, telephone lines, power lines, railways and other easements and rights-of-way, on,
over or in respect of any of the properties of Mortgagor that are customarily granted in the oil and gas industry;
(c) inchoate statutory or operators’ Liens securing obligations for labor, services, materials and supplies furnished to Mineral Interests, which are not more than 60 days delinquent and are not being contested in good faith by the appropriate actions;
(d) mechanic’s, materialman’s, warehouseman’s, journeyman’s and carrier’s Liens, and other similar Liens arising by operation of law in the ordinary course of business, securing obligations which are not more than 60 days delinquent and are not being contested in good faith by the appropriate actions;
(e) Liens for taxes or assessments not yet due or not yet delinquent, or, if delinquent, that are being contested in good faith in the normal course of business by appropriate action;
(f) Lease burdens payable to third parties which are deducted in the calculation of discounted present value in any reserve report delivered by Mortgagor pursuant to the Credit Agreements including, without limitation, any royalty, overriding royalty, net profits interest, production payment, carried interest or reversionary working interest; and
(g) Liens, charges and encumbrances upon Mortgagor’s assets, other than Proved Mineral Interests, which in the aggregate do not have a value in excess of $50,000.
“Person” shall mean any individual, corporation, partnership, limited liability company, association, trust, other entity or organization, or any court or governmental department, commission, board, bureau, agency, or instrumentality of any nation or of any province, state, commonwealth, nation, territory, possession, county, parish, or municipality, whether now or hereafter constituted or existing.
“Personal Property” shall mean that portion of the Mortgaged Property that is personal property.
“Proved Mineral Interests” shall mean, collectively, Proved Producing Mineral Interests, Proved Nonproducing Mineral Interests, and Proved Undeveloped Mineral Interests.
“Proved Nonproducing Mineral Interests” shall mean all Subject Interests which constitute proved developed nonproducing reserves.
“Proved Producing Mineral Interests” shall mean all Subject Interests which constitute proved developed producing reserves.
“Proved Undeveloped Mineral Interests” shall mean all Subject Interests which constitute proved undeveloped reserves.
“Section” shall mean and refer to a section of this Mortgage, unless specifically indicated otherwise.
“Secured Indebtedness” shall have the meaning stated in Article 3 of this Mortgage.
“Securities Purchase Agreements” means, collectively, the Securities Purchase Agreement and other documents associated therewith executed by and between the parties connected to and associated with this transaction, as each may be amended, modified and supplemented from time to time.
“Subject Interests” shall have the meaning stated in Article 2 of this Mortgage.
“Subsidiary” shall mean, for any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions (including that of a general partner) are at the time directly or indirectly owned, collectively, by such Person and any Subsidiaries of such Person. “Subsidiary” shall include Subsidiaries of Subsidiaries (and so on).
“Well Data” shall mean all logs, drilling reports, division orders, transfer orders, operating agreements, contracts and other agreements, abstracts, title opinions, files, records, seismic data, memoranda and other information in the possession or control of Mortgagor or to which Mortgagor has access relating to the Lands and/or any xxxxx located thereon.
1.2 Other Terms. Unless otherwise defined or indicated herein, all terms with their initial letter capitalized shall have the meaning given such terms in the Revolving Credit Agreement.
ARTICLE II
GRANTING CLAUSE: MORTGAGED PROPERTY
Xxxxxxxxx, for and in consideration of the sum of $10.00 and other good and valuable consideration, in hand paid by Mortgagee, the receipt and adequacy of which are hereby acknowledged and confessed by Xxxxxxxxx, and for and in consideration of the debt and purposes hereinafter set forth, to secure the full and complete payment and performance of the Secured Indebtedness and to secure the performance of the covenants, obligations, agreements and undertakings of Mortgagor hereinafter described, hereby acknowledges, confirms and agrees that Mortgagee has and shall continue to have a security interest in all Collateral heretofore granted by Assignor to Mortgagee pursuant to the Mortgage and Mortgagor has GRANTED, BARGAINED, WARRANTED, MORTGAGED, ASSIGNED, TRANSFERRED and CONVEYED, and by these presents does XXXXX, BARGAIN, WARRANT, MORTGAGE, ASSIGN, TRANSFER and CONVEY (a) unto Mortgagee and Mortgagee’s substitutes or successors, and its and their assigns, or (b) alternatively, with respect to Kansas and any other jurisdiction wherein a portion of the Mortgaged Property is situated that does not recognize, permit or require Mortgagor to mortgage or convey the Mortgaged Property to Mortgagee for the benefit of Mortgagee, then, with respect to the Mortgaged Property located in Kansas and such other jurisdiction, unto Mortgagee and Mortgagee’s successors in title and assigns, as herein provided, for the uses and purposes herein set forth, with warranties and covenants of title only to the extent provided herein and in the Credit Agreements, all of Mortgagor’s right, title and interest, whether now owned or hereafter acquired, in all of the hereinafter described properties, rights and interests; and, insofar as such properties, rights and interests consist of equipment, general intangibles, accounts, contract rights, inventory, goods, chattel paper, instruments, documents, money, fixtures, as-extracted collateral, proceeds and products of collateral or any other Personal Property of a kind or character defined in or subject to the applicable provisions of the Code, Mortgagor hereby grants to Mortgagee a security interest therein, whether now owned or hereafter acquired, namely:
(a) all of those certain Oil and Gas Leases and Lands (all such Oil and Gas Leases and Lands being herein called the “Subject Interests,” as hereinafter further defined) which are described in Exhibit A and/or to which reference may be made in Exhibit A and/or which are covered by any of the leases described on Exhibit A, which Exhibit A is made a part of this Mortgage for all purposes, and is incorporated herein by reference as fully as if copied at length in the body of this Mortgage at this point;
(b) all rights, titles, interests and estates now owned or hereafter acquired by Mortgagor in and to (i) any and all properties now or hereafter pooled or unitized with any of the Subject Interests, and (ii) all presently existing or future operating agreements and unitization, communitization and pooling agreements and the units operated thereby to the extent the same relate to all or any part of the Subject Interests, including, without limitation, all units formed under or pursuant to any applicable laws (the rights, titles, interests and estates described in this clause (b) also being included within the term “Subject Interests” as used herein);
(c) all presently existing and future agreements entered into between Mortgagor and any third party that provide for the acquisition by Mortgagor of any interest in any of the properties or interests specifically described in Exhibit A or which relate to any of the properties and interests specifically described in Exhibit A;
(d) the Hydrocarbons (including inventory) which are in, under, upon, produced or to be produced from or attributable to the Lands from and after the Effective Date;
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(e) |
the Accounts and Contract Rights; |
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(f) |
the Operating Equipment; |
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(g) |
the Well Data; |
(h) the rights and security interests of Mortgagor held by Xxxxxxxxx to secure the obligation of the first purchaser to pay the purchase price of the Hydrocarbons;
(i) all surface leases, rights-of-way, franchises, easements, servitudes, licenses, privileges, tenements, hereditaments and appurtenances now existing or in the future obtained in connection with any of the aforesaid, and all other items of value and incident thereto which Mortgagor may, at any time, have or be entitled; and
(j) all and any different and additional rights of any nature, of value or convenience in the enjoyment, development, operation or production, in any way, of any property or interest included in any of the foregoing clauses, and in all revenues, income, rents, issues, profits and other benefits arising therefrom or from any contract now in existence or hereafter entered into pertaining thereto, and in all rights and claims accrued or to accrue for the removal by anyone of Hydrocarbons from, or other act causing damage to, any of such properties or interests.
All the aforesaid properties, rights and interests, together with any and all substitutions, replacements, corrections or amendments thereto, or renewals, extensions or ratifications thereof, or of any instrument relating thereto, and together with any additions thereto which may be subjected to the Lien of this Mortgage by means of supplements hereto, being hereinafter called the “Mortgaged Property”.
Subject, however, to (i) Permitted Encumbrances, and (ii) the condition that Mortgagee shall not be liable in any respect for the performance of any covenant or obligation of Mortgagor with respect to the Mortgaged Property.
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee and its successors, legal representatives and assigns, forever, subject to Section 7.3 hereof, to secure, in each such instance, the payment and performance of the Secured Indebtedness and the Obligations.
ARTICLE III
SECURED INDEBTEDNESS
This Mortgage is given to secure all of the Obligations under and as described in the Credit Agreements, including, without limitation:
(a) interest on all credit outstanding under the Credit Agreements at the rates provided in the Credit Agreements;
(b) the Obligations, including, without limitation, the indebtedness evidenced by the Debentures;
(c) payment and performance of any and all present and future obligations of Mortgagor according to the terms of any present or future hedge transaction, including, without limitation, any present or future swap agreements, cap, floor, collar, exchange transaction, forward agreement or other exchange or protection agreements relating to any such transaction now existing or hereafter entered into between Mortgagor, on the one hand and Mortgagee on the other hand;
(d) any sums advanced as expenses or costs incurred by, or on behalf of, Mortgagee which are made or incurred pursuant to the terms of this Mortgage or any Credit Agreement, plus interest thereon at the rate set forth in the applicable Debentures from the date of advance or expenditure until reimbursed; and
(e) all other additional debts, obligations and liabilities of every kind and character of Xxxxxxxxx now existing or hereafter arising in connection with any of the Credit Agreements or otherwise. (All of the obligations and indebtedness referred to in this Article 3, and all renewals, refinancings, extensions and modifications thereof, and all substitutions therefor, in whole or in part, are herein sometimes referred to as the “Secured Indebtedness”.)
ARTICLE IV
COVENANTS, REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF MORTGAGOR
Mortgagor hereby covenants, represents, warrants and agrees that:
4.1 Payment of Indebtedness. Xxxxxxxxx will duly and punctually pay or cause to be paid when due all of the Secured Indebtedness.
4.2 Warranties. (a) Mortgagor, to the extent of the interests specified in Exhibit A, has good and defensible title, subject to Permitted Encumbrances, to each property right or interest constituting the Mortgaged Property, and has a good and legal right to make the grant and conveyance made in this Mortgage; (b) Mortgagor’s present Net Revenue Interest in the Mortgaged Property is not less than that specified in Exhibit A and, if no interest is specified, includes all its interests however specified in and to the Oil and Gas Leases and Lands described on Exhibit A; and (c) the Mortgaged Property is free from all Liens other than Permitted Encumbrances. Mortgagor will warrant and forever defend (subject to those Permitted Encumbrances described in clauses (b) and (f) of the definition of “Permitted Encumbrances” set forth above) the Mortgaged Property unto Mortgagee and Mortgagee’s successors, legal representatives and assigns, and Mortgagee and Mortgagee’s successors, legal representatives and assigns, against every Person whomsoever lawfully claiming the same or any part thereof, and Mortgagor will maintain and preserve the Lien hereby created so long as any of the Secured
Indebtedness remains unpaid, except where such failure to comply would not have a Material Adverse Effect.
4.3 Further Assurances. Mortgagor will execute and deliver such other and further instruments and will do such other and further acts as in the reasonable discretion of Mortgagee may be necessary or desirable to carry out more effectively the purposes of this Mortgage, including, without limiting the generality of the foregoing, (a) prompt correction of any material defect which may hereafter be discovered in the title to the Mortgaged Property or in the execution and acknowledgment of this Mortgage, any Notes, or any other document used in connection herewith or at any time delivered to Mortgagee in connection with any Obligations, and (b) if required by Section 8.1 hereof, prompt execution and delivery of all division or transfer orders that in the reasonable discretion of Mortgagee are needed to transfer effectively the assigned proceeds of production from the Mortgaged Property to Mortgagee.
4.4 Taxes. To the extent and in the manner required by the Credit Agreements, and to the extent not prohibited by applicable law, Mortgagor will promptly pay, or cause to be paid, all taxes legally imposed upon this Mortgage or upon the Mortgaged Property or upon the interest of Mortgagee therein, or upon the income, profits, proceeds and other revenues thereof.
4.5 Operation of the Mortgaged Property. So long as the Secured Indebtedness or any part thereof remains unpaid:
(a) Mortgagor shall maintain and operate the Subject Interests in a good and workmanlike manner and will observe and comply with all of the terms and provisions, express or implied, of all Oil and Gas Leases relating to the Subject Interests so long as such Oil and Gas Leases are capable of producing Hydrocarbons in paying quantities, except where such failure to comply would not have a Material Adverse Effect;
(b) Mortgagor shall comply with all contracts and agreements applicable to or relating to the Mortgaged Property or the production and sale of Hydrocarbons therefrom, except to the extent a failure to so comply would not have a Material Adverse Effect;
(c) Mortgagor shall, at all times, maintain, preserve and keep all Operating Equipment used with respect to the Mortgaged Property in proper repair, working order and condition, and make all necessary or appropriate repairs, renewals, replacements, additions and improvements thereto so that the efficiency of such Operating Equipment shall at all times be properly preserved and maintained, except where such failure to comply would not have a Material Adverse Effect; provided that no item of Operating Equipment need be so repaired, renewed, replaced, added to or improved, if Mortgagor shall in good faith determine that such action is not necessary or desirable for the continued efficient and profitable operation of the Subject Interests;
(d) Mortgagor shall cause the Mortgaged Property to be kept free and clear of all Liens other than Permitted Encumbrances;
(e) Mortgagor shall comply with the terms of the Credit Agreements with respect to maintenance of the Mortgaged Property; and
(f) Mortgagor shall not sell, lease, transfer, abandon or otherwise dispose of any portion of the Mortgaged Property or any of Mortgagor’s rights, titles or interests therein or thereto, except as specifically permitted in the Credit Agreements.
4.6 Recording. Mortgagor will promptly and at Mortgagor’s sole cost and expense, record, register, deposit and file this Mortgage and every other instrument in addition or supplemental hereto in such offices and places and at such times and as often as may be necessary to preserve, protect and renew the Lien hereof as a perfected Lien on real or personal property, as the case may be, subject only to Permitted Encumbrances, and the rights and remedies of Mortgagee, and otherwise will do and perform all matters or things necessary or expedient to be done or observed by reason of any law or regulation of any state or of the United States or of any other competent authority, for the purpose of effectively operating, maintaining and preserving the Lien hereof on the Mortgaged Property.
4.7 No Government Approvals. Mortgagor warrants that no approval or consent of any Person is necessary to authorize the execution and delivery of this Mortgage, or any of the other Credit Agreements or the Notes, or to authorize the observance or performance by Xxxxxxxxx of the covenants herein or therein contained.
4.8 Right of Entry. Mortgagor will permit Mortgagee, or the agents or designated representatives of Mortgagee, to enter upon the Mortgaged Property, and all parts thereof, for the purposes of investigating and inspecting the condition and operation thereof.
The representations and warranties set forth in the Credit Agreements are incorporated herein by reference as if set forth herein, and each such representation and warranty is true and correct.
ARTICLE V
ADDITIONS TO MORTGAGED PROPERTY
It is understood and agreed that Xxxxxxxxx may periodically subject additional properties to the Lien of this Mortgage. In the event that additional properties are to be subjected to the Lien hereof, the parties hereto agree to execute a supplemental mortgage, satisfactory in form and substance to Mortgagee, together with any security agreement, financing statement or other security instrument required by Mortgagee, all in form and substance satisfactory to Mortgagee and in a sufficient number of executed (and, where necessary or appropriate, acknowledged) counterparts for recording purposes. Upon execution of such supplemental mortgage, all additional properties thereby subjected to the Lien of this Mortgage shall become part of the Mortgaged Property for all purposes.
ARTICLE VI
ENFORCEMENT OF THE SECURITY
6.1 General Remedies. Upon the occurrence and during the continuance of an Event of Default, Mortgagee may do any one or more of the following, subject to and in accordance with any applicable provision of the Credit Agreements, and to any mandatory requirements or limitations of applicable law then in force:
(a) exercise all of the rights, remedies, powers and privileges of Mortgagor with respect to the Mortgaged Property or any part thereof, give or withhold all consents required therein which, with respect to the Mortgaged Property or any part thereof, Mortgagor would otherwise be entitled to give or withhold, and perform or attempt to perform any covenants in this Mortgage which Mortgagor is obligated to perform; provided, however, Mortgagee may not take possession of the Mortgaged Property or operate the Subject Interests prior to acceleration of the Secured Indebtedness as hereinafter provided; and provided further that, no payment or performance by Mortgagee shall constitute a waiver of any Event of Default, and Mortgagee shall be subrogated to all rights and Liens
securing the payment of any
debt, claim, tax or assessment for the payment of which Mortgagee may make an advance, or which Mortgagee may pay.
(b) execute and deliver to such Person or Persons as may be designated by Mortgagee appropriate powers of attorney to act for and on behalf of Mortgagor in all transactions with any federal, state or local agency with respect to any of the Mortgaged Property.
(c) exercise any and all other rights or remedies granted to Mortgagee pursuant to the provisions of any of the Credit Agreements and applicable law.
(d) if Mortgagor has failed to keep or perform any covenant whatsoever contained in any Credit Agreement or this Mortgage, Mortgagee may, at its option, perform or attempt to perform such covenant except that Mortgagee may not take possession of the Mortgaged Property or operate the Subject Interests prior to acceleration of the Secured Indebtedness as hereinafter provided. Any payment made or expense incurred in the performance or attempted performance of any such covenant shall be a part of the Secured Indebtedness, and Mortgagor promises, upon demand, to pay to Mortgagee, at the place where the Note is payable, or at such other place as Mortgagee may direct by written notice, all sums so advanced or paid by Mortgagee, with interest at the rate set forth in Section 4.11 of the Note from the date when paid or incurred by Mortgagee. No such payment by Mortgagee shall constitute a waiver of any Event of Default.
(e) Mortgagee may, at its option, after giving 30 days written notice to Mortgagor of the acceleration of the Secured Indebtedness and its Declaration that the entire unpaid Secured Indebtedness shall become immediately due and payable at the end of such notice period (if the Event of Default is not cured within such period), declare the entire unpaid balance of the Secured Indebtedness, or any part thereof, immediately due and payable, and upon such declaration, it shall be immediately due and payable, and the Liens hereof shall then be subject to foreclosure in accordance with applicable law. The notice of the acceleration and Declaration shall fully describe the default or defaults comprising the Event of Default for which the notice is given. If the Mortgagor cures the default within the notice period or as hereinbefore provided, the acceleration of the Subject Indebtedness shall not occur and the provisions of this Mortgage shall continue the same as though such Event of Default had not occurred.
(f) Upon the acceleration of the Secured Indebtedness after notice of acceleration and failure to cure the defaults as provided above, this Mortgage may be foreclosed as to the Mortgaged Properties, or any part thereof, in any manner permitted by applicable law.
Upon acceleration, Mortgagee may to the extent permitted by applicable law, proceed with foreclosure and sell all or any part of the Mortgaged Property at one or more sales, as an entirety or in parcels, at such place or places and otherwise in such manner and upon such notice as may be required by applicable law, or, in the absence of any such requirement, as Mortgagee may deem appropriate, and to make conveyance to the purchaser or purchasers thereof. Any such sale shall be made to the highest bidder or bidders for cash, at the courthouse door of the county wherein the Mortgaged Property is situated; provided that, if the Mortgaged Property is situated in more than one county, such sale of the Mortgaged Property, or part thereof, may be made in any county wherein any part of the Mortgaged Property is situated. Such sale shall be made at public outcry, on the day of any month, during the hours of such day, and after written notices thereof have been publicly posted in such places and for such time periods and all Persons
entitled to notice thereof have been sent such notice, all as required by applicable law. If the applicable law in force as of the Effective Date hereof should hereafter be amended to require a different notice of sale applicable to sales of property of the nature of the Mortgaged Property under powers of sale conferred by mortgages or deeds of trust, Mortgagee may, in its sole discretion, to the extent permitted by applicable law, give either the notice of sale required by applicable law in effect on the Effective Date or the notice of sale prescribed by the amended law; and nothing herein shall be deemed to require Mortgagee to do, and Mortgagee shall not be required to do, any act other than as required by applicable law in effect at the time of any such sale. After such sale, Mortgagee shall make to the purchaser or purchasers thereunder good and sufficient deeds, assignments or bills of sale in the name of Mortgagor, conveying or transferring the Mortgaged Property, or any part thereof, so sold to the purchaser or purchasers containing such warranties of title as are customarily given, which warranties shall be binding upon Mortgagor.
Sale of a part of the Mortgaged Property shall not exhaust the power of sale granted hereby, but sales may be made from time to time until the Secured Indebtedness is paid and performed in full. It shall not be necessary to have present or to exhibit at any such sale any of the Personal Property. In addition to the rights and other powers of sale granted under the preceding provisions of this Section 6.1(f), if default is made in the payment of any installment of the Obligations and upon the acceleration of the Secured Indebtedness as hereinbefore provided, Mortgagee may, at its option, at once or at any time thereafter while any matured installment remains unpaid, enforce the Liens created by this Mortgage and sell the Mortgaged Property subject to such matured indebtedness and the Liens securing its payment, in the same manner, on the same terms, at the same place and time and after having given notice in the same manner, all as provided in the preceding provisions of this Section 6.1(f). After such sale, Mortgagee shall make due conveyance to the purchaser or purchasers. Sales made without maturing the Secured Indebtedness may be made hereunder whenever there is a default in the payment of any installment of the Secured Indebtedness without exhausting the power of sale granted hereby and without affecting in any way the power of sale granted under this Section 6.1(f), the unmatured balance of the Secured Indebtedness (except as to any proceeds of any sale which Mortgagee may apply as prepayment of the Secured Indebtedness), or the Liens securing payment of the Secured Indebtedness. The sale or sales of less than the whole of the Mortgaged Property shall not exhaust the power of sale herein granted, and Mortgagee is specifically empowered to make successive sale or sales under such power until the whole of the Mortgaged Property shall be sold. It is intended by each of the foregoing provisions of this Section 6.1(f) that Mortgagee may sell not only the Subject Interests but also all other items constituting a part of the Mortgaged Property along with the Subject Interests, or any part thereof, all as a unit and as a part of a single sale, or may sell any part of the Mortgaged Property separately from the remainder of the Mortgaged Property. If the proceeds of such sale or sales of less than the whole of such Mortgaged Property shall be less than the aggregate of the Secured Indebtedness and the expense of enforcing the trust created by this Mortgage, the Liens of this Mortgage shall remain in full force and effect as to the unsold portion of the Mortgaged Property just as though no sale or sale of less than the whole of the Mortgaged Property had occurred, but Mortgagee shall have the right, at its sole election, to sell less than the whole of the Mortgaged Property. In the event any questions should be raised as to the regularity or validity of any sale hereunder, Mortgagee shall have the right and is hereby authorized to make resale of said property so as to remove any questions or doubt as to the regularity or validity of the previous sale, and as many resales may be made as may be appropriate. It is agreed that, in any deed or deeds given by Mortgagee any and all statements of fact or other recitals therein made as to the identity of Mortgagee, or as to the occurrence or existence of any Event of Default, or as to the request to sell, notice of sale, time, place, terms, and manner of sale, and receipt, distribution, and application of the money realized therefrom, or as to the due and proper appointment of a trustee, and, without being
limited by the foregoing, as to any other act or thing having been duly done by Mortgagee shall be taken by any Governmental Authority as prima facie evidence that the said statements or recitals are true and correct and are without further question to be so accepted, and Xxxxxxxxx does hereby ratify and confirm any and all acts that Mortgagee may lawfully do in the premises by virtue hereof.
(g) Mortgagee may in lieu of or in addition to exercising the power of sale provided for in Section 6.1(f) hereof, proceed by suit or suits, at law or in equity, to enforce the payment and performance of the Secured Indebtedness in accordance with the terms hereof, and of the Credit Agreements evidencing it, to foreclose the Liens of this Mortgage as against all or any part of the Mortgaged Property, and to have all or any part of the Mortgaged Property sold under the judgment or decree of a court of competent jurisdiction.
(h) To the extent permitted by law, upon the acceleration of the Secured Indebtedness, Mortgagee, as a matter of right and without regard to the sufficiency of the Mortgaged Property, and without any showing of insolvency, fraud or mismanagement on the part of Xxxxxxxxx, and without the necessity of filing any judicial or other proceeding other than the proceeding for appointment of a receiver, shall be entitled to the appointment of a receiver or receivers of the Mortgaged Property, or any part thereof, and of the income, royalties, revenues, bonuses, production payments, delay rentals, benefits, rents, issues and profits thereof. Xxxxxxxxx hereby consents to the appointment of such receiver or receivers and agrees not to oppose any application therefor by Xxxxxxxxx.
(i) Upon the acceleration of the Secured Indebtedness, Mortgagee may (upon providing the notice as set forth in 6.1(e), if permitted by applicable law) enter upon the Mortgaged Property, take possession of the Mortgaged Property, and remove the Personal Property, or any part thereof, with or without judicial process, and, in connection therewith, without any responsibility or liability on the part of Mortgagee, take possession of any property located on or in the Mortgaged Property which is not a part of the Mortgaged Property and hold or store such property at Mortgagor’s expense. If necessary to obtain the possession provided for in this Section 6.1 (i), Mortgagee may undertake any and all remedies to dispossess Mortgagor, including, specifically, one or more actions for forcible entry and detainer, trespass to try title and restitution.
(j) Mortgagee may require Mortgagor to assemble any Personal Property and any other items of the Mortgaged Property, or any part thereof, and make it available to Mortgagee at a place to be designated by Mortgagee which is reasonably convenient to Mortgagor and Mortgagee.
(k) Mortgagee may retain the Personal Property and any other items of the Mortgaged Property, or any part thereof, in satisfaction or partial satisfaction of the Secured Indebtedness whenever the circumstances are such that Mortgagee is entitled to do so under the Code.
(l) Mortgagee shall have the right to become the purchaser at any sale of the Mortgaged Property held by Mortgagee or by any court, receiver or public officer, and Mortgagee shall have the right to credit upon the amount of the bid made therefor, the amount payable out of the net proceeds of such sale to Mortgagee. Recitals contained in any conveyance made to any purchaser at any sale made hereunder shall conclusively establish the truth and accuracy of the matters therein stated, including, without limiting the generality of the foregoing, nonpayment of the unpaid principal sum of, interest accrued on, and fees payable in respect of, the Secured Indebtedness after the same have become due and payable,
and advertisement and conduct of such sale in the manner provided herein or appointment of any trustee hereunder.
(m) Mortgagee may buy any Personal Property and any other items of the Mortgaged Property, or any part thereof, at any private disposition if the Mortgaged Property or the part thereof being disposed of, is a type customarily sold in a recognized market or a type which is the subject of widely distributed standard price quotations.
(n) Mortgagee shall have and may exercise any and all other rights which Mortgagee may have under the Code, by virtue of the Credit Agreements, this Mortgage, at law, in equity or otherwise.
Mortgagee shall have no obligation to do, or refrain from doing, any of the acts, or to make or refrain from making any payment, referred to in this Section 6.1.
6.2 Foreclosure by Judicial Proceedings. Upon the occurrence of an Event of Default, Mortgagee may proceed, where permitted by law, by a suit or suits in equity or at law, whether for a foreclosure hereunder, or for the sale of the Mortgaged Property, or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure hereunder or the sale of the Mortgaged Property, or for the enforcement of any other appropriate legal or equitable remedy.
6.3 Receipt to Purchaser. Upon any sale by virtue of judicial proceedings, the receipt of the officer making such sale under judicial proceedings shall be sufficient discharge to the purchaser or purchasers at any sale for his or their purchase money, and such purchaser or purchasers, or his or their assigns or personal representatives, shall not, after paying such purchase money and receiving such receipt of such officer therefor, be obligated to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof.
6.4 Effect of Sale. Any sale or sales of the Mortgaged Property or portions thereof where permitted by law shall operate to divest all right, title, interest, claim and demand whatsoever either at law or in equity, of Mortgagor of, in and to the premises and the property sold, and shall be a perpetual bar, both at law and in equity, against Xxxxxxxxx, and Xxxxxxxxx’s successors, legal representatives or assigns, and against any and all Persons claiming or who shall thereafter claim all or any of the property sold by, through or under Xxxxxxxxx, or Xxxxxxxxx’s successors, legal representatives and assigns. Nevertheless, Xxxxxxxxx, if requested by Mortgagee to do so, shall join in the execution and delivery of all proper conveyances, assignments and transfers of the properties so sold.
6.5 Application of Proceeds. The proceeds of any sale of or other realization on the Mortgaged Property, or any part thereof, shall be applied by Mortgagee to the Secured Indebtedness in such order as Mortgagee shall elect.
6.6 Mortgagor’s Waiver of Appraisement, Marshaling, etc.; Rights. Mortgagor agrees, to the full extent that Mortgagor may lawfully so agree, that Mortgagor will not at any time, insist upon or plead or, in any manner whatsoever, claim the benefit of any stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Mortgage or the absolute sale of the Mortgaged Property or any portion thereof or the possession thereof by any purchaser at any sale made pursuant to any provision hereof, or pursuant to the decree of any court of competent jurisdiction; but Xxxxxxxxx, and all who may claim through or under Xxxxxxxxx, so far as Mortgagor or those claiming through or
under Xxxxxxxxx now or hereafter lawfully may, hereby waives the benefit of all such laws. Xxxxxxxxx and all who may claim through or under Xxxxxxxxx, waives, to the extent that Mortgagor or those claiming through or under Mortgagor may lawfully do so, any and all rights of appraisement and any and all right to have the Mortgaged Property marshaled upon any foreclosure of the Lien hereof, or sold in inverse order of alienation, and agrees that any court having jurisdiction to foreclose such Lien may sell the Mortgaged Property as an entirety. If any law in this Section 6.6 referred to and now in force, of which Mortgagor or Xxxxxxxxx’s successor or successors might take advantage despite the provisions hereof, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the operation or application of the provisions of this Section 6.6.
6.7 Mineral Leasing Act. Notwithstanding any other provisions of this Mortgage, any Oil and Gas Leases covered by this Mortgage which are subject to the Mineral Leasing Act of 1920, as amended, and the regulations promulgated thereunder, shall not be sold or otherwise disposed of to any party other than citizens of the United States, or to associations of such citizens or to any corporation organized under the laws of the United States, or any state or territory thereof that are qualified to own or control interests in such Oil and Gas Leases under the provisions of such Mineral Leasing Act and regulations, or to Persons who may acquire ownership or interest in such Oil and Gas Leases under the provisions of 30 U.S.C. § 184(g), if applicable, as such Mineral Leasing Act or regulations are now or may be from time to time in effect.
6.8 Costs and Expenses. All reasonable costs, expenses (including attorneys’ fees) and payments incurred or made by Mortgagee in protecting and enforcing its rights hereunder, shall constitute a demand obligation owing by Mortgagor to the party incurring such or making such costs, expenses or payments and shall bear interest at a rate per annum equal to the rate set forth in Section 4.11 of the Note, all of which shall constitute a portion of the Secured Indebtedness.
6.9 Operation of the Mortgaged Property by Mortgagee. Upon the occurrence of an Event of Default that is continuing and the acceleration of the Secured Indebtedness under this Mortgage, and in addition to all other rights herein conferred on Mortgagee, Mortgagee (or any Person designated by Mortgagee) shall, to the extent permitted by applicable law, have the right and power, but not the obligation, to enter upon and take possession of any of the Mortgaged Property, and to exclude Xxxxxxxxx, and Xxxxxxxxx’s agents or servants, wholly therefrom, and to hold, use, administer, manage and operate the same to the extent that Xxxxxxxxx shall be at the time entitled to do any of such things and in Xxxxxxxxx’s place and stead. Mortgagee (or any Person designated by Mortgagee) may operate the same without any liability or duty to Mortgagor in connection with such operations, except to use ordinary care in the operation of such Mortgaged Property, and Mortgagee or any Person designated by Mortgagee shall have the right to collect and receive all Hydrocarbons produced and sold from the Mortgaged Property, the proceeds of which shall be applied to the Secured Indebtedness in such order as Mortgagee shall elect, to make repairs, purchase machinery and equipment, conduct workover operations, drill additional xxxxx and to exercise every power, right and privilege of Mortgagor with respect to the Mortgaged Property. When and if such expenses of such operation and development (including costs of unsuccessful workover operations or additional xxxxx) have been paid and the Secured Indebtedness paid and performed in full, such Mortgaged Property shall, if there has been no sale or foreclosure thereof, be returned to Mortgagor.
6.10 Additional Waivers. In order to enforce this Mortgage, Mortgagee shall not be obligated (a) to foreclose any other mortgage or deed of trust covering Mortgaged Property
located in another State, seek a deficiency after any such foreclosure, or otherwise enforce Mortgagee’s rights in any of the other Mortgaged Property; or (b) to seek an injunction (prohibitive or mandatory), the appointment of a receiver, an order modifying any stay in any federal or state bankruptcy, reorganization or other insolvency proceedings relating to any of the Mortgaged Property or any portion thereof, or any other extraordinary relief. Mortgagor waives, to the fullest extent permitted by law, any defense Mortgagor may have to any liability hereunder based on Mortgagee’s failure or refusal to prosecute, or any lack of diligence or delay in prosecuting, any action or proceeding to enforce any other mortgage or deed of trust. If Mortgagee elects to enforce this Mortgage before, or without, enforcing its rights with respect to any Mortgaged Property covered by any other Mortgage, Mortgagor waives, to the fullest extent permitted by law, any right Mortgagor may have, whether statutory or otherwise, to set off the value of any other Mortgaged Property, or any portion thereof, against the Secured Indebtedness. If Mortgagee elects to enforce its mortgages or deeds of trust covering all or any portion of the Mortgaged Property located in other States, or in conjunction with the enforcement of this Mortgage, Mortgagee is authorized to purchase all or any part of such other Mortgaged Property at public or private sale or as otherwise provided by applicable law, and to credit the purchase price against the Secured Indebtedness in such order or manner as Mortgagee determines in its sole discretion and to preserve Mortgagee’s rights and Liens under this Mortgage for any portion of the Secured Indebtedness that remains unpaid. Mortgagor waives to the fullest extent permitted by applicable law any right to claim or seek any credit against the Secured Indebtedness in excess of the actual amount bid or received by Mortgagee in connection with the foreclosure of Mortgagee’s Liens on any of the Mortgaged Property located in such other States. Xxxxxxxxx further agrees that Mortgagee shall not be required (a) to seek or obtain a deficiency judgment in or pursuant to any action or proceeding to foreclose this Mortgage as a condition of later enforcing any mortgage or deed of trust covering Mortgaged Property located in another State, or (b) to seek or obtain a deficiency judgment in or pursuant to any action or proceeding to foreclose any such other mortgage or deed of trust as a condition of later enforcing this Mortgage. Notwithstanding the foregoing, if Mortgagee in good faith believes that it may be required either to obtain a deficiency judgment to enforce this Mortgage after enforcement of a mortgage or deed of trust covering Mortgaged Property located in another State, or to enforce another mortgage or deed of trust after enforcement of this Mortgage, then Xxxxxxxxx agrees that Mortgagee shall be entitled to seek and obtain such a deficiency judgment notwithstanding any contrary or inconsistent provision contained in any Credit Agreement.
ARTICLE VII
MISCELLANEOUS
7.1 Advances by Mortgagee. Each and every covenant herein contained shall be performed and kept by Mortgagor solely at Mortgagor’s expense. If Mortgagor shall fail to perform or keep any of the covenants of whatsoever kind or nature contained in this Mortgage, Mortgagee or any receiver appointed hereunder, may, but shall not be obligated to, make advances to perform the same on Xxxxxxxxx’s behalf, and Xxxxxxxxx hereby agrees to repay such sums upon demand plus interest at a rate per annum equal to the default rate of interest set forth in the applicable Note. No such advance shall be deemed to relieve Mortgagor from any Event of Default hereunder.
7.2 Defense of Claims. Mortgagor will notify Mortgagee, in writing, promptly of the commencement of any legal proceedings of which Xxxxxxxxx has notice affecting or which could adversely affect the Lien hereof or the status of or title to the Mortgaged Property, or any material part thereof, and will take such action, employing attorneys agreeable to Mortgagee, as may be necessary to preserve Mortgagor’s or Mortgagee’s rights affected thereby; and should Mortgagor fail or refuse to take any such action, Mortgagee may take such action on behalf and
in the name of Xxxxxxxxx and at Xxxxxxxxx’s sole cost and expense. Moreover, Mortgagee may take such independent action in connection therewith as it may, in its sole discretion, deem proper without any liability or duty to Mortgagor except to use ordinary care, Mortgagor hereby agreeing that all sums advanced or all expenses incurred in such actions plus interest at a rate per annum equal to the default rate of interest set forth in the applicable Note, will, on demand, be reimbursed to Mortgagee or any receiver appointed hereunder.
7.3 Defeasance. If the Secured Indebtedness shall be paid and discharged in full, then, and in that case only, this Mortgage shall be null and void and the interests of Mortgagor in the Mortgaged Property shall become wholly clear of the Lien created hereby, and such Lien shall be released in due course at the cost of Mortgagor. Mortgagee will, at Xxxxxxxxx’s sole expense, execute and deliver to Xxxxxxxxx all releases and other instruments reasonably requested of the Lien created hereunder. Otherwise, this Mortgage shall remain and continue in full force and effect.
7.4 Renewals, Amendments and Other Security. Renewals, refinancings and extensions of the Secured Indebtedness may be given at any time and amendments may be made to this Mortgage, the Credit Agreements and any other agreements relating to any part of the Secured Indebtedness, and Mortgagee may take or may hold other security for the Secured Indebtedness. Any amendment of this Mortgage shall be by written instrument and need be executed only by the party against whom enforcement of such amendment is asserted. Mortgagee may resort first to such other security or any part thereof or first to the security herein given or any part thereof, or from time to time to either or both, even to the partial or complete abandonment of either security, and such action shall not be a waiver of any rights conferred by this Mortgage, which shall continue as a first Lien upon the Mortgaged Property not expressly released until all Secured Indebtedness secured hereby is fully paid and discharged.
7.5 Instrument and Assignment, etc. This Mortgage shall be deemed to be and may be, enforced from time to time as an assignment, chattel mortgage, contract, financing statement, real estate mortgage, pledge or security agreement, and from time to time as anyone or more thereof; and to the extent that any particular jurisdiction wherein a portion of the Mortgaged Property is situated does not recognize or permit Mortgagor to grant, bargain, sell, warrant, mortgage, assign, transfer or convey Mortgagor’s rights, titles and interests to Mortgagee in the manner herein adopted, then, with respect to the Mortgaged Property located in such jurisdiction, Xxxxxxxxx does hereby grant, bargain, sell, warrant, mortgage, assign, transfer and convey unto Mortgagee, the Mortgaged Property to secure the Secured Indebtedness and the Obligations of Mortgagor contained herein.
7.6 Limitation on Interest. Regardless of any provision contained in this Mortgage or any of the Credit Agreements, Mortgagee shall never be entitled to receive, collect, or apply, as interest on the Loans, any amount in excess of the Maximum Lawful Rate, and in the event Mortgagee ever receives, collects or applies as interest any such excess, such amount which would be deemed excessive interest shall be deemed a partial prepayment of principal and treated hereunder as such; and if the Loans are paid in full, any remaining excess shall promptly be paid to Mortgagor. In determining whether or not the interest paid or payable under any specific contingency exceeds the Maximum Lawful Rate, Mortgagor shall, to the extent permitted under applicable law, (a) characterize any non-principal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effect thereof, and (c) amortize, prorate, allocate and spread, in equal parts, the total amount of the interest throughout the entire contemplated term of the Note, so that the interest rate is the Maximum Lawful Rate throughout the entire term of the Note; provided, however, that if the unpaid principal balance thereof is paid and performed in full prior to the end of the full contemplated term thereof, and if
the interest received for the actual period of existence thereof exceeds the Maximum Lawful Rate, Mortgagee shall refund to Mortgagor the amount of such excess and, in such event, Mortgagee shall not be subject to any penalties provided by any laws for contracting for, charging, taking, reserving or receiving interest in excess of the Maximum Lawful Rate.
7.7 Unenforceable or Inapplicable Provisions. If any provision of this Mortgage or in any of the Credit Agreements is invalid or unenforceable in any jurisdiction, the other provisions hereof or of any of the Credit Agreements shall remain in full force and effect in such jurisdiction, and the remaining provisions hereof shall be liberally construed in favor of Mortgagee in order to effectuate the provisions hereof, and the invalidity of any provision hereof in any jurisdiction shall not affect the validity or enforceability of any such provision in any other jurisdiction. Any reference herein contained to statutes or laws of a state in which no part of the Mortgaged Property is situated shall be deemed inapplicable to, and not used in, the interpretation hereof.
7.8 Rights Cumulative. Each and every right, power and remedy herein given to Mortgagee shall be cumulative and not exclusive; and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and so often and in such order as may be deemed expedient by Mortgagee and the exercise, or the beginning of the exercise, of any such right, power or remedy shall not be deemed a waiver of the right to exercise, at the same time and thereafter, any other right, power or remedy. No delay or omission by Mortgagee in the exercise of any right, power or remedy shall impair any such right, power or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter existing.
7.9 Waiver by Mortgagee. Any and all covenants in this Mortgage may, from time to time, by instrument in writing signed by Mortgagee, be waived to such extent and in such manner as Mortgagee may desire, but no such waiver shall ever affect or impair Mortgagee’s rights and remedies or Liens hereunder, except to the extent specifically stated in such written instrument.
7.10 Successors and Assigns. This Mortgage is binding upon Xxxxxxxxx, and Xxxxxxxxx’s heirs, devisees, successors, personal and legal representatives and assigns, and shall inure to the benefit of Mortgagee, and their successors, legal representatives and assigns, and the provisions hereof shall likewise be covenants running with the Lands.
7.11 Article and Section Headings. The article and section headings in this Mortgage are inserted for convenience and shall not be considered a part of this Mortgage or used in its interpretation.
7.12 Counterparts. This Mortgage may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original, and all of which are identical except that, to facilitate recordation in any particular county or parish, counterpart portions of Exhibit A which describe properties situated in counties or parishes other than the county or parish in which such counterpart is to be recorded may be omitted.
7.13 Special Filing as Financing Statements. This Mortgage shall likewise be a security agreement and a financing statement by virtue of Xxxxxxxxx, as debtor, granting to Mortgagee, its successors, legal representatives and assigns, as secured party, a security interest in all personal property, as-extracted collateral, fixtures, accounts, contract rights, general intangibles, inventory, goods, chattel paper, instruments, documents and money described or referred to in granting clauses (a) through (j) of Article 2 hereof and all proceeds and products from the sale, lease or other disposition of the Mortgaged Property or any part thereof. The addresses shown in
Section 7.14 hereof are the addresses of Mortgagor and Mortgagee and information concerning the security interest may be obtained from Mortgagee at its address. Without in any manner limiting the generality of any of the foregoing provisions hereof: (a) some portion of the goods described or to which reference is made herein are or are to become fixtures on the Lands described or to which reference is made herein; (b) the minerals and the like (including oil and gas) included in the Mortgaged Property and the accounts resulting from the sale thereof will be financed at the wellhead(s) or minehead(s) of the well(s) or mine(s) located on the Lands described or to which reference is made herein; and (c) this Mortgage is to be filed of record, among other places, in the real estate records of each county or parish in which the Lands, or any part thereof, are situated, as a financing statement, but the failure to do so will not otherwise affect the validity or enforceability of this Mortgage. Mortgagor authorizes Mortgagee to file such amendments to this Mortgage, financing statements and amendments thereto, and continuation statements, as Mortgagee deems reasonable or necessary to perfect and maintain the perfection of the Liens granted herein, including such Liens with respect to any additions to the Mortgaged Property as provided in Article 5.
7.14 Notices. Whenever this Mortgage requires or permits any consent, approval, notice, request or demand from one party to another, such consent, approval, notice or demand shall, unless otherwise required under applicable law, be given in accordance with the provisions of the Credit Agreements, addressed to the party to be notified at the address stated below (or such other address as may have been designated in accordance with the provisions of the Credit Agreements):
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MORTGAGOR Midwest Energy, Inc., a Nevada Corporation 0000 Xxxx 000xx Xxxxxx Xxxxxxx Xxxxx Xxxxxxxx Xxxx, Xxxxxx 00000 EnerJex Resources, Inc., a Nevada Corporation 0000 X. 000xx Xxxxxx Xxxxxxx Xxxxx Xxxxxxxx Xxxx, Xxxxxx 00000 Telephone: 000-000-0000 Facsimile: 000-000-0000 Attention: Xxxxx Xxxxxxxxx, CEO
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MORTGAGEE
DKR Soundshore Oasis Holding Fund, Ltd. c/o DKR Oasis Management Company L.P. 0000 Xxxx Xxxx Xxxxxx Xxxxxxxx, XX 00000 Telephone: (000) 000-0000 Facsimile: (000) 000-0000 Attention: Xxxxx X. Xxxxxx, Assoc. General Counsel
West Coast Opportunity Fund, LLC. 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000 Xxxxxxx, XX 00000 Telephone: (000) 000-0000 Facsimile: (000) 000-0000 Attention: Xxxxxxx Xxxx
Enable Growth Partners LP Enable Capital Management Xxx Xxxxx Xxxxxxxx, Xxxxx 000 Xxx Xxxxxxxxx, XX 00000 Telephone: (000) 000-0000 Attention: Xxxxxxx X’Xxxx, CFA and Principal & Portfolio Manager Enable Opportunity Partners LP Enable Capital Management One Ferry Building, Xxxxx 000 Xxx Xxxxxxxxx, XX 00000 Telephone: (000) 000-0000 Attention: Xxxxxxx X’Xxxx, CFA and Manager Glacier Partners LP Glacier Partners Management, LLC 000 Xxxxxxx #x Xxxxx Xxxxxxx, XX 00000 Telephone: (000) 000-0000 Attention: Xxxxx Xxxxxxxxxxx
Xxxx Living Trust 0000 XX Xxxxxx Xxxx Xxx Xxxxxx Xxxxx, XX 00000 Telephone: (000) 000-0000 Attention: Xxxx Xxxx
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with copies to: |
with copies to: |
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Xxxxxxxxxx Law Group |
XxXxxxxxx Will & Xxxxx LLP For DKR Soundshore and West Coast Opportunity Fund
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Xxxxxxx Xxxxxxxxx & Xxxxx LLP 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000 Xxx Xxxx, Xxx Xxxx 00000 Telephone: (000) 000-0000 Facsimile: (000) 000-0000 Attention: Xxxxxx X. Xxxxx For Enable Growth partners and Enable Opportunity Partners |
7.15 GOVERNING LAW. THIS MORTGAGE, THE NOTE AND THE CREDIT AGREEMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF KANSAS AND THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE LAWS OF ANY STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED NECESSARILY GOVERNS THE
VALIDITY, PERFECTION, PRIORITY AND ENFORCEABILITY OF, AND THE EXERCISE OF ANY REMEDIES WITH RESPECT TO, ANY LIEN INTENDED TO BE CREATED HEREBY ON THE MORTGAGED PROPERTY LOCATED IN SUCH STATE.
7.16 Future Advances: Maximum Secured Amount. This Mortgage covers not only the proceeds of the Loan, but all advances hereafter made by Mortgagee to or for the benefit of Mortgagor. The maximum principal amount secured by this Mortgage at anyone time shall be $9,000,000.00.
7.17 Recording. Executed original counterparts of this Mortgage are to be filed for record in the records of the jurisdictions wherein the Mortgaged Property is situated, and shall have annexed thereto as Exhibit A, only the portions or divisions containing specific descriptions of the Mortgaged Property relating to the Lands located in such jurisdictions. Whenever a recorded counterpart of this Mortgage contains specific descriptions which are less than all of the descriptions contained in any full counterpart lodged with Mortgagee, the omitted descriptions are hereby included by reference in such recorded counterpart as if each recorded counterpart conformed to any full counterpart lodged with Mortgagee.
7.18 No Paraphed Notes. Xxxxxxxxx acknowledges that no promissory note or other instrument has been presented to the undersigned notary public(s) to be paraphed for identification herewith.
ARTICLE VIII
ASSIGNMENT OF PRODUCTION
8.1 Assignment. For the purpose of further securing the Secured Indebtedness and the performance of Xxxxxxxxx’s covenants hereunder, Xxxxxxxxx does hereby TRANSFER, ASSIGN, AND CONVEY unto Mortgagee any and all of the interests of Mortgagor in and to the Hydrocarbons that may be produced from, or attributable to, the Mortgaged Property on and after the Effective Date, together with the proceeds of the sale thereof and attributable thereto. This assignment is made upon the following terms and conditions: (a) pipeline companies and others purchasing the oil, gas, minerals and other substances listed above produced and to be produced from said property are hereby authorized and directed to pay directly to Mortgagee the interests of Mortgagor in and to the proceeds of the sale of the oil, gas, minerals and other substances listed above produced, to be produced and attributable to said property, and to continue such payments until they have been furnished with a release hereof executed in writing by Mortgagee, and the receipt of Mortgagee for monies so paid to it shall be a full and complete release, discharge and acquittance to any such pipeline company or other purchaser, to the extent of all amounts so paid, (b) Mortgagee is hereby authorized to receive and collect the proceeds of the sale of the oil, gas, minerals and other substances listed above assigned to it hereunder, and to apply the funds so received first toward the payment of the expenses, if any, incurred in the collection thereof, then in such order as provided in the Intercreditor Agreement toward the payment of the Secured Indebtedness, any balance remaining after the full and final payment of the Secured Indebtedness to be held subject to the order of Mortgagor, (c) Mortgagee shall have the right, at its sole option, at any time, and from time to time, to release to, or on the order of, Mortgagor all or any portion of the funds assigned to Mortgagee hereunder, and no such releases shall affect or impair the Lien of this Mortgage or the validity and effect of the assignment contained in this Article 8, (d) Mortgagee shall never be under any obligation to enforce the collection of the funds assigned to it hereunder, nor shall it ever be liable for failure to exercise diligence in the collection of such funds, but it shall only be accountable for the sums that it shall actually receive, (e) Mortgagor covenants to cause all pipeline companies or other purchasers of the oil, gas, minerals and other substances listed above produced from and attributable to said
property, to pay promptly to Mortgagee, at the office of Mortgagee at the address of Mortgagee stated above, the interests of Mortgagor in and to the proceeds of the sale thereof, and (f) upon the full and final payment of the Secured Indebtedness, Mortgagee, at the request of Xxxxxxxxx, and at Mortgagor’s sole cost and expense, shall execute and deliver to Mortgagor a reassignment hereof, without recourse, representations or warranties. Notwithstanding the foregoing provisions of this Section 8.1, so long as no Event of Default has occurred and shall be continuing, Mortgagor may continue to receive from the purchasers of production, all such Hydrocarbons and proceeds of the sale thereof, subject, however, to the Liens created under this Mortgage. If an Event of Default has occurred and is continuing, Mortgagee may exercise all rights and remedies granted hereunder, including, without limitation, the right to obtain possession of all Hydrocarbons and proceeds of the sale thereof then held by Xxxxxxxxx or to receive directly from the purchasers all other Hydrocarbons and proceeds of the sale thereof.
8.2 Power of Attorney. In consideration of the Loans evidenced by the Note, Xxxxxxxxx hereby designates and appoints Mortgagee as Xxxxxxxxx’s true and lawful agent and attorney-in-fact (with full power of substitution, either generally or for such limited periods or purposes as Mortgagee may, from time to time, prescribe), with full power and authority, for and on behalf and in the name of Xxxxxxxxx, upon the occurrence of an Event of Default that is continuing, to execute, acknowledge and deliver all such division orders, transfer orders, certificates and any and all other documents of every nature as may, from time to time, be necessary or proper to effectuate the intent and purpose of the assignment contained in Section 8.1 hereof. Mortgagor shall be bound thereby as fully and effectively as if Xxxxxxxxx had personally executed, acknowledged and delivered any such division order, transfer order, certificate or other documents. The powers and authorities herein conferred on Mortgagee may be exercised by any authorized officer or director of Mortgagee. The power of attorney conferred by this Section 8.2 is granted for a valuable consideration and hence is coupled with an interest and is irrevocable so long as the Secured Indebtedness, or any part thereof, shall remain unpaid. All Persons dealing with Mortgagee, any officer or director thereof above designated or any substitute thereof, shall be fully protected in treating the powers and authorizations conferred by this Section 8.2 as continuing in full force and effect until advised by Mortgagee that all of the Secured Indebtedness is fully and finally paid.
[Signature Page to Follow]
IN WITNESS WHEREOF, Xxxxxxxxx, acting by and through its duly authorized officer has executed this Mortgage on the date of its acknowledgment.
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MIDWEST ENERGY, INC., |
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BY: |
/s/Xxxxx Xxxxxxxxx
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XXXXX XXXXXXXXX, CEO |
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0000 X. 000xx Xx., 0xx Floor |
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Overland Park, KS 66210 |
/s/Xxxxx Xxxxxxxxx
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XXXXX XXXXXXXXX, CEO |
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0000 X. 000xx Xx., 0xx Floor |
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Overland Park, KS 66210 |
This Mortgage was prepared by, and recorded counterparts should be returned to:
Xxxxx X. Xxxxxxxx, Esq.
000 Xxxxxx Xx.
P.O. Box 122
Burlington, KS 66839
000-000-0000
STATE OF Kansas, COUNTY OF Xxxxxxx, xx:
This instrument was acknowledged before me on June 14, 2007 by Xxxxx Xxxxxxxxx, CEO of EnerJex Resources, Inc.
(SEAL)
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/s/Xxxxxxx Xxxxx |
Printed Name: Xxxxxxx Xxxxx
My commission expires: 9/18/2010
