1
EXHIBIT 10.2
MORTGAGE, ASSIGNMENT, SECURITY AGREEMENT, FIXTURE FILING
AND FINANCING STATEMENT
FROM
UNITED STATES EXPLORATION, INC.
(Taxpayer I.D. No. 00-0000000)
TO
ING (U.S.) CAPITAL CORPORATION, Agent
(Taxpayer I.D. No. 00-0000000)
Dated May 15, 1998
A CARBON, PHOTOGRAPHIC, FACSIMILE, OR OTHER REPRODUCTION OF THIS INSTRUMENT IS
SUFFICIENT AS A FINANCING STATEMENT.
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS, SECURES PAYMENT OF
FUTURE ADVANCES, AND COVERS PROCEEDS OF COLLATERAL.
THIS INSTRUMENT COVERS MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE
EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION OIL AND GAS), AND THE
ACCOUNTS RELATED THERETO, WHICH WILL BE FINANCED AT THE WELLHEADS OR MINEHEADS
OF THE XXXXX OR MINES LOCATED ON THE PROPERTIES DESCRIBED IN SECTION 1.1 OF
THIS INSTRUMENT. THIS INSTRUMENT COVERS GOODS WHICH ARE OR ARE TO BECOME
FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN. THIS INSTRUMENT IS TO BE FILED
FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE OR COMPARABLE RECORDS OF THE
COUNTIES AND/OR PARISHES REFERENCED IN EXHIBIT A HERETO AND SUCH FILING SHALL
SERVE, AMONG OTHER PURPOSES, AS A FIXTURE FILING. THE MORTGAGOR HAS AN
INTEREST OF RECORD IN THE REAL ESTATE AND IMMOVABLE PROPERTY CONCERNED, WHICH
INTEREST IS DESCRIBED IN SECTION 1.1 OF THIS INSTRUMENT.
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW
MORTGAGEE (AS HEREINAFTER DEFINED) TO TAKE THE MORTGAGED PROPERTIES AND SELL
THEM WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE
MORTGAGOR (AS HEREINAFTER DEFINED) UNDER THIS MORTGAGE.
WHEN RECORDED OR FILED RETURN TO: THIS DOCUMENT PREPARED BY:
Xxxxxxxx & Knight, P.C. Xxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxxx Xxxxxxxx & Knight, P.C.
Suite 3300 0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000 Suite 3300
Attention: Xxxxxxxx X. Xxxx Xxxxxx, Xxxxx 00000
2
MORTGAGE, ASSIGNMENT, SECURITY AGREEMENT,
FIXTURE FILING AND FINANCING STATEMENT (this "Mortgage"),
ARTICLE I.
Granting Clauses; Secured Indebtedness
Section 1.1. Lien of Mortgage. United States Exploration, Inc.
(herein called "Mortgagor"), in order to secure the payment of the secured
indebtedness hereinafter referred to and the performance of the obligations,
covenants, agreements, warranties and undertakings of Mortgagor hereinafter
described, does hereby MORTGAGE to ING U.S. Capital Corporation, Agent
(herein called "Mortgagee"), and grant to Mortgagee a POWER OF SALE (pursuant
to this Mortgage and applicable law) with respect to, the following (the
"Mortgaged Properties"):
A. The oil, gas and/or other mineral leases or
properties which are described in Exhibit A-1 attached hereto and made
a part hereof;
B. The entire interest in those certain Oil and Gas
leases from Union Pacific Resources Company and/or Union Pacific Land
Resources Corporation to Mortgagor dated as of May 15, 1998, covering
the lands described in Exhibit A-2 attached hereto and made a part
hereof.
C. Without limitation of the foregoing, all other right,
title and interest of Mortgagor of whatever kind or character (whether
now owned or hereafter acquired by operation of law or otherwise) in
and to (i) the oil, gas and/or mineral leases or other agreements
described in Exhibit A-1 hereto and (ii) the lands described or
referred to in Exhibit A-1 or A-2 (or described in any of the
instruments described or referred to in Exhibit A-1 or A-2), without
regard to any limitations as to specific lands or depths that may be
set forth in Exhibit A-1 or A-2 hereto or in any of the leases or
other agreements described in Exhibit A-1 or A-2 hereto.
D. All of Mortgagor's interest (whether now owned or
hereafter acquired by operation of law or otherwise) in and to all
presently existing and hereafter created oil, gas and/or mineral
unitization, pooling and/or communitization agreements, declarations
and/or orders, and in and to the properties, rights and interests
covered and the units created thereby (including, without limitation,
units formed under orders, rules, regulations or other official acts
of any federal, state or other authority having jurisdiction), which
cover, affect or otherwise relate to the properties, rights and
interests described in clause A or B above;
E. All of Mortgagor's interest in and rights under
(whether now owned or hereafter acquired by operation of law or
otherwise) all presently existing and hereafter created operating
agreements, equipment leases, production sales contracts, processing
agreements, transportation agreements, gas balancing agreements,
farmout and/or farm-in agreements, salt water disposal agreements,
area of mutual interest agreements, and other contracts and/or
agreements which cover, affect, or otherwise relate to the properties,
rights and interests described in clause A, B or C above or to the
operation of such properties, rights and interests or to the treating,
handling, storing, processing, transporting or marketing of oil, gas,
other hydrocarbons, or other minerals produced from (or allocated to)
such properties, rights and interests including, but not limited to,
those contracts listed in Exhibit A hereto, as same may be amended or
supplemented from time to time;
F. All of Mortgagor's interest (whether now owned or
hereafter acquired by operation of law or otherwise) in and to all
improvements, fixtures, movable or immovable property and other real
and/or personal property (including, without limitation, all xxxxx,
pumping units, wellhead equipment, tanks, pipelines, flow lines,
gathering lines, compressors, dehydration units, separators, meters,
buildings, injection facilities, salt water disposal facilities, and
power, telephone and telegraph lines) and all easements, servitudes,
rights-of-way, surface leases, licenses, permits and other surface
rights, which
1
3
are now or hereafter used, or held for use, in connection with the
properties, rights and interests described in clause A, B or C above,
or in connection with the operation of such properties, rights and
interests, or in connection with the treating, handling, storing,
processing, transporting or marketing of oil, gas, other hydrocarbons,
or other minerals produced from (or allocated to) such properties,
rights and interests; and
G. All rights, estates, powers and privileges
appurtenant to the foregoing rights, interests and properties.
TO HAVE AND TO HOLD the Mortgaged Properties unto Mortgagee, and
Mortgagee's heirs, devisees, representatives, successors and assigns, upon the
terms, provisions and conditions herein set forth.
Section 1.2. Grant of Security Interest. In order to further secure
the payment of the secured indebtedness hereinafter referred to and the
performance of the obligations, covenants, agreements, warranties, and
undertakings of Mortgagor hereinafter described, Mortgagor hereby grants to
Mortgagee a security interest in the entire interest of Mortgagor (whether now
owned or hereafter acquired by operation of law or otherwise) in and to:
(a) all oil, gas, other hydrocarbons, and other minerals
produced from or allocated to the Mortgaged Properties on or after
January 1, 1998, and any products processed or obtained therefrom
(herein collectively called the "Production"), together with all
proceeds of such Production (regardless of whether such Production to
which such proceeds relate occurred on or before or after the date
hereof ), and together with all liens and security interests securing
payment of the proceeds of such Production, including, but not limited
to, those liens and security interests provided for under (i) statutes
enacted in the jurisdictions in which the Mortgaged Properties are
located, or (ii) statutes made applicable to the Mortgaged Properties
under federal law (or some combination of federal and state law);
(b) without limitation of any other provisions of this
Section 1.2, all payments received in lieu of such Production from the
Mortgaged Properties (regardless of whether such payments accrued,
and/or the events which gave rise to such payments occurred, on or
before or after the date hereof), including, without limitation, "take
or pay" payments and similar payments, payments received in settlement
of or pursuant to a judgment rendered with respect to take or pay or
similar obligations or other obligations under a production sales
contract, payments received in buyout or buydown or other settlement
of a production sales contract, and payments received under a gas
balancing or similar agreement as a result of (or received otherwise
in settlement of or pursuant to judgment rendered with respect to)
rights held by Mortgagor as a result of Mortgagor (and/or its
predecessors in title) taking or having taken less gas from lands
covered by a Mortgaged Property (or lands pooled or unitized
therewith) than their ownership of such Mortgaged Property would
entitle them to receive (the payments described in this subsection (b)
being herein called "Payments in Lieu of Production");
(c) all equipment, inventory, improvements, fixtures,
accessions, goods and other personal property or movable property of
whatever nature now or hereafter located on or used or held for use in
connection with the Mortgaged Properties (or in connection with the
operation thereof or the treating, handling, storing, processing,
transporting, or marketing of Production), and all licenses and
permits of whatever nature now or hereafter used or held for use in
connection with the Mortgaged Properties (or in connection with the
operation thereof, or the treating, handling, storing, processing,
transporting or marketing of Production), and all renewals or
replacements of the foregoing or substitutions for the foregoing;
(d) all contract rights, choses in action (i.e., rights
to enforce contracts or to bring claims thereunder) and other general
intangibles (regardless of whether the same arose, and/or the events
which gave rise to the same occurred, on or before or after the date
hereof) related to the Mortgaged Properties, the operation thereof
(whether Mortgagor is operator or non-operator), or the treating,
handling, storing, processing, transporting,
2
4
or marketing of Production (including, without limitation, any of the
same relating to payment of proceeds of Production or to payment of
amounts which could constitute Payments in Lieu of Production);
(e) without limitation of the generality of the
foregoing, any rights and interests of the Mortgagor under any present
or future hedge or swap agreements, cap, floor, collar, exchange,
forward or other hedge or protection agreements or transactions
relating to crude oil, natural gas or other hydrocarbons, or any
option with respect to any such agreement or transaction now existing
or hereafter entered into by or on behalf of Mortgagor;
(f) all geological, geophysical, engineering, accounting,
title, legal, and other technical or business data concerning the
Mortgaged Properties, the Production, or any other item of Property
(as hereinafter defined) which are now or hereafter in the possession
of Mortgagor or in which Mortgagor can otherwise grant a security
interest, and all books, files, records, magnetic media, and other
forms of recording or obtaining access to such data;
(g) all money, documents, instruments, chattel paper,
securities, accounts or general intangibles arising from or by virtue
of any transaction (regardless of whether such transaction occurred on
or before or after the date hereof ) including without implied
limitation those transactions related to the Mortgaged Properties, the
Production or any other item of Property (all of the properties,
rights and interests described in subsections (a), (b), (c), (d), (e)
and (f) above and this subsection (g) being herein sometimes
collectively called the "Collateral"); and
(h) all proceeds of the Collateral, whether such proceeds
or payments are goods, money, documents, instruments, chattel paper,
securities, accounts, general intangibles, fixtures, real/immovable
property, personal/movable property or other assets (the Mortgaged
Properties, the Collateral and the proceeds of the Collateral being
herein sometimes collectively called the "Property").
Section 1.3. Note, Loan Documents, Other Obligations. This Mortgage
is made to secure and enforce the payment and performance of the following
promissory notes, obligations, indebtedness and liabilities:
(a) All indebtedness and other obligations now or
hereafter incurred or arising pursuant to the provisions of that
certain Credit Agreement dated of even date herewith between Mortgagor
and Mortgagee and all supplements thereto and amendments or
modifications thereof, and all agreements given in substitution
therefor or in restatement, renewal or extension thereof, in whole or
in part (such Credit Agreement as the same may from time to time be
supplemented, amended or modified, and all other agreements given in
substitution therefor or in restatement, renewal or extension thereof,
in whole or in part, being herein called the "Credit Agreement");
(b) One certain promissory note dated of even date
herewith, in the principal amount of Thirty-five Million Dollars
($35,000,000) made by Mortgagor and payable to the order of ING
Capital, on or before December 31, 2004, bearing interest as therein
provided, and containing a provision for the payment of a reasonable
additional amount as attorneys' fees, as the same may from time to
time be supplemented, amended or modified, and all other notes given
in substitution therefor or in modification, renewal or extension
thereof, in whole or in part (such note, as from time to time
supplemented, amended, or modified and all other notes given in
substitution therefor, or in modification, renewal or extension
thereof, in whole or in part, being herein called the "Note");
(c) All indebtedness and other obligations now or
hereafter incurred or arising pursuant to or permitted by the
provisions of the Note, the Credit Agreement, this Mortgage or any
other instrument now or hereafter evidencing, governing, guaranteeing
or securing the "secured indebtedness" (as hereinafter defined) or any
part thereof or otherwise executed in connection with any advance or
loan evidenced or governed by the
3
5
Note or the Credit Agreement (the Note, the Credit Agreement, this
Mortgage and such other instruments being herein sometimes
collectively called the "Loan Documents");
(d) All present or future "Hedging Obligations" incurred
or owing by Mortgagor to any one or more members of the "Credit
Group," as hereinafter defined; as used in this paragraph and the
following paragraph (e): (i) "Credit Group" means ING (U.S.) Capital
Corporation, any other party from time to time constituting a lender
under the Credit Agreement, and/or any affiliate of any such party,
including without limitation Internationale Nederlanden (U.S.) Capital
Markets, Inc., being an affiliate of ING (U.S.) Capital Corporation,
and (ii) "Hedging Obligations" means any indebtedness or obligations,
however arising, to make payments or take actions under or pursuant to
any present or future agreement (including any individual agreement or
any master agreement and the various transactions and confirmations
made thereunder) governing any swap, put, call, cap, floor or collar
transaction, or other type of agreement or transaction relating to
interest rates, currency exchange rates, or the price or delivery (at
any one or more locations or in any one or more markets) of crude oil,
natural gas, natural gas liquids, petroleum products, other
hydrocarbons, agricultural products, precious metals, stocks or bonds
or indices thereof, or any other commodity, contract or other item of
property traded in any market, and all interest thereon and expenses
and other amounts payable in connection therewith (any agreement or
document, however entitled or described, evidencing or governing and
Hedging Obligations owing by Mortgagor to any one or more members of
the Credit Group being herein called a "Hedging Agreement");
(e) All present or future indebtedness or obligations
incurred or owing to any one or more members of the Credit Group by
Mortgagor, however arising, to make reimbursements or similar payments
to any one or more members of the Credit Group as a result of or
relating to any payments made by any one or more members of the Credit
Group to any third person on account of or for the benefit of
Mortgagor, including without limitation any obligation to reimburse
any one or more members of the Credit Group for payments it makes
under or pursuant to any letter of credit, bond, guaranty, or
indemnity agreement issued or made for the account of or for the
benefit of Mortgagor (such as a letter of credit, guaranty or
indemnity by any one or more members of the Credit Group of any
Hedging Obligations owed by Mortgagor to a third person) and all
interest thereon and expenses and other amounts payable in connection
therewith (any agreement or document, however entitled or described,
evidencing or governing any such indebtedness or obligation owing to
any one or more members of the Credit Group by Mortgagor being herein
called a "Reimbursement Agreement");
(f) All other loans and future advances made by Mortgagee
to Mortgagor and all other debts, obligations and liabilities of
Mortgagor of every kind and character now or hereafter existing in
favor of Mortgagee, whether direct or indirect, primary or secondary,
joint or several, fixed or contingent, and whether originally payable
to Mortgagee or to a third party and subsequently acquired by
Mortgagee, it being contemplated that Mortgagor may hereafter become
indebted to Mortgagee for such further debts, obligations and
liabilities; and
(g) Without limiting the generality of the foregoing, all
post-petition interest, expenses, and other duties and liabilities
with respect to indebtedness or other obligations described above in
this Section 1.3, which would be owed but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization, or similar proceeding.
Section 1.4. Secured Indebtedness. The indebtedness referred to in
Section 1.3, and all renewals, extensions and modifications thereof, and all
substitutions therefor, in whole or in part, are herein sometimes referred to
as the "secured indebtedness" or the "indebtedness secured hereby".
4
6
ARTICLE II.
Representations, Warranties and Covenants
Section 2.1. Mortgagor represents, warrants, and covenants as
follows:
(a) Title and Permitted Encumbrances. Mortgagor has, and
Mortgagor covenants to maintain, good and defensible title to the
Property, free and clear of all liens, security interests, and
encumbrances except for (i) the contracts, agreements, burdens,
encumbrances and other matters set forth in the descriptions of
certain of the Mortgaged Properties on Exhibit A hereto, (ii) the
liens and security interests evidenced by this Mortgage, (iii)
statutory liens for taxes which are not yet delinquent, (iv) liens
under operating agreements, pooling orders and unitization agreements,
and mechanics' and materialmen's liens, with respect to obligations
which are not more than 90 days past due, and (v) other liens and
security interests (if any) in favor of Mortgagee (the matters
described in the foregoing clauses (i), (ii), (iii), (iv), and (v)
being herein called the "Permitted Encumbrances"); Mortgagor will
warrant and defend title to the Property, subject as aforesaid,
against the claims and demands of all persons claiming or to claim the
same or any part thereof. The ownership by Mortgagor of the Mortgaged
Properties does and will, with respect to each well or unit or upside
location identified on Schedule I, attached hereto and made a part
hereof, entitle Mortgagor to receive (subject to the terms and
provisions of this Mortgage) a decimal or percentage share of the oil,
gas and other hydrocarbons produced from, or allocated to, such well
or unit (or, in the case of each upside location, the zone identified
in the column headed "Primary Zone" on Schedule I underlying the lands
described in the columns headed "Location" on Schedule I) equal to not
less than the decimal or percentage share set forth, for such well or
unit, in the column headed "NRI%" on Schedule I, and cause Mortgagor
to be obligated to bear a decimal or percentage share of the cost of
operation of such well or unit (or in the case of an upside location,
such lands or depths) equal to not more than the decimal or percentage
share set forth, for such well or unit, in the column headed "WI%" on
Schedule I. The above-described shares of production which Mortgagor
is entitled to receive, and shares of expenses which Mortgagor is
obligated to bear, are not and will not be subject to change except,
and only to the extent that, such changes are reflected in Schedule I.
There is not and will not be any unexpired financing statement
covering any part of the Property on file in any public office naming
any party other than Mortgagee as secured party. Upon request by
Mortgagee, Mortgagor will deliver to Mortgagee schedules of all
internal and third party information identifying the Mortgaged
Properties (such as, for example, lease names and numbers assigned by
Mortgagor or the operator of any Mortgaged Property, well and/or unit
and/or property names and numbers assigned by purchasers of
Production, and internal identification names and numbers used by
Mortgagor in accounting for revenues, costs, and joint interest
transactions attributable to the Mortgaged Properties).
(b) Leases and Contracts; Performance of Obligations.
The oil, gas and/or mineral leases, contracts, servitudes and other
agreements forming a part of the Property, to the extent the same
cover or otherwise relate to the Property, are in full force and
effect, and Mortgagor agrees to so maintain them in full force and
effect. All rents, royalties and other payments due and payable under
such leases, contracts, servitudes and other agreements, or under the
Permitted
5
7
Encumbrances, or otherwise attendant to the ownership or operation of
the Property, have been, and will continue to be, properly and timely
paid. Mortgagor is not in default with respect to Mortgagor's
obligations (and Mortgagor is not aware of any default by any third
party with respect to such third party's obligations) under such
leases, contracts, servitudes and other agreements, or under the
Permitted Encumbrances, or otherwise attendant to the ownership or
operation of any part of the Property, where such default could
adversely affect the ownership or operation of the Property; Mortgagor
will fulfill all such obligations coming due in the future.
(c) Sale of Production. No Mortgaged Property is or will
become subject to any contractual or other arrangement (i) whereby
payment for production is or can be deferred for a substantial period
after the month in which such production is delivered (i.e., in the
case of oil, not in excess of 60 days, and in the case of gas, not in
excess of 90 days) or (ii) whereby payments are made to Mortgagor
other than by checks, drafts, wire transfer advises or other similar
writings, instruments or communications for the immediate payment of
money. Except for production sales contracts, processing agreements
or transportation agreements (or other agreements relating to the
marketing of Production) listed on Exhibit A (in connection with the
Mortgaged Properties to which they relate), (i) no Mortgaged Property
is or will become subject to any contractual or other arrangement for
the sale, processing or transportation of Production (or otherwise
related to the marketing of Production) for a term longer than one
year and (ii) all contractual or other arrangements for the sale,
processing or transportation of Production (or otherwise related to
the marketing of Production) shall be bona fide arm's length
transactions with third parties not affiliated with Mortgagor and
shall be at the best price (and on the best terms) then available
(such price shall, in the case of Production sales which are subject
to price controls, be determined giving consideration to such fact).
Neither Mortgagor, nor, to the best of Mortgagor's knowledge, any of
its predecessors in title, has received prepayments (including, but
not limited to, payments for gas not taken pursuant to "take or pay"
or other similar arrangements) for any oil, gas or other hydrocarbons
produced or to be produced from the Mortgaged Properties after the
date hereof, and Mortgagor hereby covenants not to enter into any such
advance or prepayment arrangements whereby it accepts consideration
for oil, gas or other hydrocarbons not yet produced. No Mortgaged
Property is or will become subject to any "take or pay" or other
similar arrangement (i) which can be satisfied in whole or in part by
the production or transportation of gas from other properties or (ii)
as a result of which production from the Mortgaged Properties may be
required to be delivered to one or more third parties without payment
(or without full payment) therefor as a result of payments made, or
other actions taken, with respect to other properties. The amount by
which the volume of gas taken by Mortgagor and its predecessors in
title prior to the date hereof exceeds the amount that its ownership
interest in the Mortgage Properties would entitle it to take
("overproduced") is not greater than 250,000 MCF. Mortgagor will not,
after the date hereof, become "overproduced" (as above defined) with
respect to any well on the Mortgaged Properties (or on any unit in
which the Mortgaged Properties participate), in an amount in excess of
Mortgagor's share of gas produced from such well during the preceding
four calendar months plus ten percent (10%) of such actual production
from any such well. No Mortgaged Property is, or will become, subject
to a gas balancing arrangement under which one or more third parties
may take a portion of the production attributable to such Mortgaged
Property without
6
8
payment (or without full payment) therefor as a result of production
having been taken from, or as a result of other actions or inactions
with respect to, other properties. No Mortgaged Property is subject,
at the present time, to any regulatory refund obligation and, to the
best of Mortgagor's knowledge, no facts exist which might cause the
same to be imposed.
(d) Condition of Personal or Movable Property. Subject
to ordinary wear and tear and any sales permitted by Paragraph 7.5 of
the Credit Agreement or Paragraph (f) hereof, (i) the equipment,
inventory, improvements, fixtures, goods and other tangible
personal/movable property forming a part of the Property are and will
remain in good repair and condition and are and will be adequate for
the normal operation of the Property in accordance with prudent
industry standards and (ii) all of such Property is, and will remain,
located on the Mortgaged Properties, except for that portion thereof
which is or shall be located elsewhere (including that usually located
on the Mortgaged Properties but temporarily located elsewhere) in the
course of the normal operation of the Property.
(e) Operation of Mortgaged Properties. The Mortgaged
Properties (and properties unitized therewith) are being (and, to the
extent the same could adversely affect the ownership or operation of
the Mortgaged Properties after the date hereof, have in the past
been), and hereafter will be, maintained, operated and developed in a
good and workmanlike manner, in accordance with prudent industry
standards and in conformity with all applicable laws and all rules,
regulations and orders of all duly constituted authorities having
jurisdiction and in conformity with all oil, gas and/or other mineral
leases and other contracts and agreements forming a part of the
Property and in conformity with the Permitted Encumbrances;
specifically in this connection none of the xxxxx located on the
Mortgaged Properties (or properties unitized therewith) are, or will
be, deviated from the vertical more than the maximum permitted by
applicable laws, regulations, rules and orders, and such xxxxx are,
and will remain, bottomed under and producing from, with the well
bores wholly within, the Mortgaged Properties (or, in the case of
xxxxx located on properties unitized therewith, such unitized
properties). The representation, warranties and covenants in the
preceding sentence are made in the case of existing xxxxx only as to
Mortgagor's knowledge and in regard to future xxxxx only where
Mortgagor is the operator of such well. Mortgagor has, and will have
in the future, all governmental licenses and permits necessary or
appropriate to own and operate the Property; and Mortgagor has not
received notice of any violations in respect of any such licenses or
permits.
(f) Sale or Disposal. Except for sales permitted by
Paragraph 7.5 of the Credit Agreement, Mortgagor will not, without the
prior written consent of Mortgagee, sell, exchange, lease, transfer,
or otherwise dispose of any part of, or interest in, the Property
other than (i) sales, transfers and other dispositions of machinery,
equipment and other personal/movable property and fixtures made in
connection with a release, surrender or abandonment (to which
Mortgagee has given its prior written consent) of a lease, (ii) sales,
transfers and other dispositions of machinery, equipment and other
personal/movable property and fixtures in connection with the
abandonment (to which Mortgagee has given its prior written consent)
of a well, (iii) sales, transfers and other dispositions of machinery,
equipment and other personal/movable property and fixtures which are
(A) obsolete for their intended purpose and disposed of in the
ordinary course of business or (B) replaced by articles of at least
7
9
equal suitability and value owned by Mortgagor free and clear of all
liens except this Mortgage and the Permitted Encumbrances, and (iv)
sales of Production which are made in the ordinary course of business
and in compliance with Section 2.1(c) hereof; provided that nothing in
clause (iv) shall be construed as limiting Mortgagee's rights under
Article III of this Mortgage. Mortgagor shall account fully and
faithfully for and, if Mortgagee so elects, shall promptly pay or turn
over to Mortgagee the proceeds in whatever form received from
disposition in any manner of any of the Property. Mortgagor shall
keep accurate and complete records of the Property and its proceeds.
(g) Ad Valorem and Severance Taxes. In regard to the
Mortgaged Property which Mortgagor operates, Mortgagor, or the prior
owner from whom it acquired the Mortgaged Property, has paid and
discharged, and will continue to pay and discharge, all ad valorem
taxes assessed against the Property or any part thereof and all
production, severance and other taxes assessed against, or measured
by, the Production or the value, or proceeds, of the Production.
(h) Suits and Claims. Except as scheduled or disclosed
in the Credit Agreement, there are no suits, actions, claims,
investigations, inquiries, proceedings or demands pending (or, to
Mortgagor's knowledge, threatened) which affect the Property
(including, without limitation, any which challenge or otherwise
pertain to Mortgagor's title to the Property) and no judicial or
administrative actions, suits or proceedings pending (or, to
Mortgagor's knowledge, threatened) against Mortgagor.
(i) Environmental. Mortgagor will not cause or permit
the Property or the Associated Property or Mortgagor to be in
violation of, or do anything or permit anything to be done which will
subject the Property or the Associated Property to any remedial
obligations under, or result in noncompliance with applicable permits
and licenses under, any Applicable Environmental Laws, assuming
disclosure to the applicable governmental authorities of all relevant
facts, conditions and circumstances, if any, pertaining to the
Property or the Associated Property and Mortgagor will promptly notify
Mortgagee in writing of any existing, pending or, to the best
knowledge of Mortgagor, threatened investigation, claim, suit or
inquiry by any governmental authority or any person in connection with
any Applicable Environmental Laws. Mortgagor will not cause or permit
the disposal or other release of any hazardous substance or solid
waste at, into, upon or under the Property or the Associated Property
and covenants and agrees to keep or cause the Property and/or the
Associated Property to be kept free of any hazardous substance or
solid waste (except such use, and temporary storage in anticipation of
use, as is required in the ordinary course of business, all while in
compliance with Applicable Environmental Laws), and to remove the same
(or if removal is prohibited by law, to take whatever action is
required by law) promptly upon discovery at its sole expense. Upon
Mortgagee's reasonable request, at any time and from time to time
during the existence of this Mortgage, Mortgagor will provide at
Mortgagor's sole expense an inspection or audit of the Property and
the Associated Property from an engineering or consulting firm
approved by Mortgagee, indicating the presence or absence of hazardous
substances and solid waste on the Property and/or the Associated
Property and compliance with Applicable Environmental Laws.
8
10
(j) Defense of Mortgage. If the validity or priority of
this Mortgage or of any rights, titles, liens or security interests
created or evidenced hereby with respect to the Property or any part
thereof or the title of Mortgagor to the Property shall be endangered
or questioned or shall be attacked directly or indirectly or if any
legal proceedings are instituted against Mortgagor with respect
thereto, Mortgagor will give prompt written notice thereof to Lender
and at Mortgagor's own cost and expense will diligently endeavor to
cure any defect that may be developed or claimed, and will take all
necessary and proper steps for the defense of such legal proceedings,
including, but not limited to, the employment of counsel, the
prosecution or defense of litigation and the release or discharge of
all adverse claims, 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, titles, liens and security interests created or evidenced
hereby, including but not limited to the employment of independent
counsel, the prosecution or defense of litigation, the compromise or
discharge of any adverse claims made with respect to the Property, the
purchase of any tax title and the removal of prior liens or security
interests, and all expenditures so made of every kind and character
shall be a demand obligation (which obligation Mortgagor hereby
expressly promises to pay) owing by Mortgagor to Lender and shall bear
interest from the date expended until paid at the rate described in
Section 2.3 hereof, and the party incurring such expenses shall be
subrogated to all rights of the person receiving such payment.
(k) Fees and Expenses; Indemnity. Mortgagor will
reimburse Mortgagee (for purposes of this paragraph, the term
"Mortgagee" shall include the directors, officers, partners, employees
and agents of Mortgagee and any persons or entities owned or
controlled by or affiliated with Mortgagee) for all expenditures,
including reasonable attorneys' fees and expenses, incurred or
expended in connection with (i) the breach by Mortgagor of any
covenant, agreement or condition contained herein or in any other Loan
Document, (ii) the exercise of any rights and remedies hereunder or
under any other Loan Document, and (iii) the protection of the
Property and/or liens and security interests therein. Mortgagor will
indemnify and hold harmless Mortgagee from and against (and will
reimburse Mortgagee for) all claims, demands, liabilities, losses,
damages (including without limitation consequential damages), causes
of action, judgments, penalties, costs and expenses (including without
limitation reasonable attorneys' fees and expenses) which may be
imposed upon, asserted against or incurred or paid by Mortgagee on
account of, in connection with, or arising out of (A) any bodily
injury or death or natural resource, human health or property damage
occurring in, at, into, under or upon or in the vicinity of the
Property through any cause whatsoever, (B) any act performed or
omitted to be performed hereunder or the breach of any representation
or warranty herein, (C) the exercise of any rights and remedies
hereunder or under any other Loan Document, (D) any transaction, act,
omission, event or circumstance arising out of or in any way connected
with the Property or with this Mortgage or any other Loan Document,
(E) any violation on or prior to the Release Date (as hereinafter
defined) of any Applicable Environmental Law, (F) any act, omission,
event or circumstance existing or occurring on or prior to the Release
Date (including without limitation the presence on or under the
Property or the Associated Property or release at, into, upon, under
or from the Property or the Associated Property of hazardous
substances or solid wastes disposed of or otherwise released)
9
11
resulting from or in connection with the ownership, construction,
occupancy, operation, use and/or maintenance of the Property or the
Associated Property, regardless of whether the act, omission, event or
circumstance constituted a violation of any Applicable Environmental
Law at the time of its existence or occurrence, and (G) any and all
claims or proceedings (whether brought by private party or
governmental agencies) for human health, bodily injury, property
damage, abatement or remediation, environmental damage, cleanup,
mitigation, removal, natural resource damage or impairment or any
other injury or damage resulting from or relating to any hazardous or
toxic substance, solid waste or contaminated material located upon or
migrating into, from or through the Property or the Associated
Property (whether or not the release of such materials was caused by
Mortgagor, a tenant or subtenant or a prior owner or tenant or
subtenant on the Property or the Associated Property and whether or
not the alleged liability is attributable to the use, treatment,
handling, storage, generation, transportation, removal or disposal of
such substance, waste or material or the mere presence of such
substance, waste or material on or under the Property or the
Associated Property), which the Mortgagee may have liability with
respect to due to the making of the loan or loans evidenced by the
Note, the granting of this Mortgage, the exercise of any rights under
the Loan Documents, or otherwise. Mortgagee shall have the right to
compromise and adjust any such claims, actions and judgments, and in
addition to the rights to be indemnified as herein provided, all
amounts paid in compromise, satisfaction or discharge of any such
claim, action or judgment, and all court costs, attorneys' fees and
other expenses of every character expended by Mortgagee pursuant to
the provisions of this section shall be a demand obligation (which
obligation Mortgagor hereby expressly promises to pay) owing by
Mortgagor to Mortgagee. The "Release Date" as used herein shall mean
the earlier of the following two dates: (i) the date on which the
indebtedness and obligations secured hereby have been paid and
performed in full and this Mortgage has been released of record, or
(ii) the date on which the lien of this Mortgage is foreclosed or a
deed in lieu of such foreclosure is fully effective and recorded.
WITHOUT LIMITATION, IT IS THE INTENTION OF MORTGAGOR AND MORTGAGOR
AGREES THAT THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED
PARTY WITH RESPECT TO CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES,
CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING
WITHOUT LIMITATION REASONABLE ATTORNEYS' FEES) WHICH IN WHOLE OR IN
PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY
OTHER) INDEMNIFIED PARTY. However, such indemnities shall not apply
to any particular indemnified party (but shall apply to the other
indemnified parties) to the extent the subject of the indemnification
is caused by or arises out of the gross negligence or willful
misconduct of such particular indemnified party. The foregoing
indemnities shall not terminate upon the Release Date or upon the
release, foreclosure or other termination of this Mortgage but will
survive the Release Date, foreclosure of this Mortgage or conveyance
in lieu of foreclosure, and the repayment of the secured indebtedness
and the discharge and release of this Mortgage and the other documents
evidencing and/or securing the secured indebtedness. Any amount to be
paid hereunder by Mortgagor to Mortgagee shall be a demand obligation
owing by Mortgagor to Mortgagee and shall be subject to and covered by
the provisions of Section 2.3 hereof.
(l) Insurance. Mortgagor will carry insurance as
provided in the Credit Agreement. In the event of any loss under any
insurance policies so carried by Mortgagor,
10
12
Mortgagee shall have the right (but not the obligation) to make proof
of loss and collect the same, and all amounts so received shall be
applied toward costs, charges and expenses (including reasonable
attorneys' fees), if any, incurred in the collection thereof, then to
the payment, in the order determined by Mortgagee in its own
discretion, of the secured indebtedness, and any balance remaining
shall be subject to the order of Mortgagor. Mortgagee is hereby
authorized but not obligated to enforce in its name or in the name of
Mortgagor payment of any or all of said policies or settle or
compromise any claim in respect thereof, and to collect and make
receipts for the proceeds thereof and Mortgagee is hereby appointed
Mortgagor's agent and attorney-in-fact to endorse any check or draft
payable to Mortgagor in order to collect the proceeds of insurance.
In the event of foreclosure of this Mortgage, or other transfer of
title to the Property in extinguishment in whole or in part of the
secured indebtedness, all right, title and interest of Mortgagor in
and to such policies then in force concerning the Property and all
proceeds payable thereunder shall thereupon vest in the purchaser at
such foreclosure or other transferee in the event of such other
transfer of title.
(m) Further Assurances. Mortgagor will, on request of
Mortgagee, (i) promptly correct any defect, error or omission which
may be discovered in the contents of this Mortgage, or in any other
Loan Document, or in the execution or acknowledgment of this Mortgage
or any other Loan Document; (ii) execute, acknowledge, deliver and
record and/or file such further instruments (including, without
limitation, further mortgages, deeds of trust, security agreements,
financing statements, continuation statements, and assignments of
production, accounts, funds, contract rights, general intangibles, and
proceeds) and do such further acts as may be necessary, desirable or
proper to carry out more effectively the purposes of this Mortgage and
the other Loan Documents and to more fully identify and subject to the
liens and security interests hereof any property intended to be
covered hereby, including specifically, but without limitation, any
renewals, additions, substitutions, replacements, or appurtenances to
the Property; and (iii) execute, acknowledge, deliver, and file and/or
record any document or instrument (including specifically any
financing statement) desired by Mortgagee to protect the lien or the
security interest hereunder against the rights or interests of third
persons. Mortgagor shall pay all costs connected with any of the
foregoing.
(n) Name and Place of Business. Mortgagor will not cause
or permit any change to be made in its name, identity, or corporate or
partnership structure, or its federal employer identification number
unless Mortgagor shall have notified Mortgagee of such change at least
thirty (30) days prior to the effective date of such change, and shall
have first taken all action required by Mortgagee for the purpose of
further perfecting or protecting the liens and security interests in
the Property created hereby. Mortgagor's principal place of business
and chief executive office, and the place where Mortgagor keeps its
books and records concerning the Property (including, particularly,
the records with respect to "Production Proceeds", as defined in
Section 3.1 hereof, from the Mortgaged Properties) has for the
preceding four months, been, and will continue to be (unless Mortgagor
notifies Mortgagee of any change in writing at least thirty (30) days
prior to the date of such change), the address set forth opposite the
signature of Mortgagor to this Mortgage.
(o) Not a Foreign Person. Mortgagor is not a "foreign
person" within the meaning of the Internal Revenue Code of
11
13
1986, as amended, (hereinafter called the "Code"), Sections 1445 and
7701 (i.e. Mortgagor is not a non-resident alien, foreign corporation,
foreign partnership, foreign trust or foreign estate as those terms
are defined in the Code and any regulations promulgated thereunder).
Section 2.2. Compliance by Operator. As to any part of the Mortgaged
Properties which is not a working interest, Mortgagor agrees to take all such
action and to exercise all rights and remedies as are available to Mortgagor to
cause the owner or owners of the working interest in such properties to comply
with the covenants and agreements contained herein; and as to any part of the
Mortgaged Properties which is a working interest but which is operated by a
party other than Mortgagor, Mortgagor agrees to take all such action and to
exercise all rights and remedies as are available to Mortgagor (including, but
not limited to, all rights under any operating agreement) to cause the party
who is the operator of such property to comply with the covenants and
agreements contained herein.
Section 2.3. Performance on Mortgagor's Behalf. Mortgagor agrees
that, if Mortgagor fails to perform any act or to take any action which
hereunder Mortgagor is required to perform or take, or to pay any money which
hereunder Mortgagor is required to pay, Mortgagee, in Mortgagor's name or its
own name, may, but shall not be obligated to, perform or cause to be performed
such act or take such action or pay such money, and any expenses so incurred by
Mortgagee and any money so paid by Mortgagee shall be a demand obligation owing
by Mortgagor to Mortgagee (which obligation Mortgagor hereby expressly promises
to pay) and Mortgagee, upon making such payment, shall be subrogated to all of
the rights of the person, corporation or body politic receiving such payment.
Each amount due and owing by Mortgagor to Mortgagee pursuant to this Mortgage
shall bear interest each day, from the date of such expenditure or payment
until paid, at a rate equal to the rate as provided for past due principal
under the Note (provided that, should applicable law provide for a maximum
permissible rate of interest on such amounts, such rate shall not be greater
than such maximum permissible rate); all such amounts, together with such
interest thereon, shall be a part of the secured indebtedness and shall be
secured by this Mortgage.
ARTICLE III.
Assignment of Production, Accounts, and Proceeds
Section 3.1. Assignment of Production. Mortgagor does hereby
absolutely and unconditionally assign, transfer and set over to Mortgagee all
Production which accrues to Mortgagor's interest in the Mortgaged Properties,
all proceeds of such Production and all Payments in Lieu of Production (herein
collectively referred to as the "Production Proceeds"), together with the
immediate and continuing right to collect and receive such Production Proceeds.
Mortgagor directs and instructs any and all purchasers of any Production to pay
to Mortgagee all of the Production Proceeds accruing to Mortgagor's interest
until such time as such purchasers have been furnished with evidence that all
secured indebtedness has been paid and that this Mortgage has been released.
Mortgagor agrees that no purchasers of the Production shall have any
responsibility for the application of any funds paid to Mortgagee.
Section 3.2. Effectuating Payment of Production Proceeds to
Mortgagee. Independent of the foregoing provisions and authorities herein
granted, Mortgagor agrees to execute and deliver any and all transfer orders,
division orders and other instruments that may be requested by Mortgagee or
that may be required by any purchaser of any Production for the purpose of
effectuating payment of the Production Proceeds to Mortgagee. If under any
existing sales
12
14
agreements, other than division orders or transfer orders, any Production
Proceeds are required to be paid by the purchaser to Mortgagor so that under
such existing agreements payment cannot be made of such Production Proceeds to
Mortgagee, Mortgagor's interest in all Production Proceeds under such sales
agreements and in all other Production Proceeds which for any reason may be
paid to Mortgagor shall, when received by Mortgagor, constitute trust funds in
Mortgagor's hands and shall be immediately paid over to Mortgagee. Without
limitation upon any of the foregoing, Mortgagor hereby constitutes and appoints
Mortgagee as Mortgagor's special attorney-in-fact (with full power of
substitution, either generally or for such periods or purposes as Mortgagee may
from time to time prescribe) in the name, place and stead of Mortgagor to do
any and every act and exercise any and every power that Mortgagor might or
could do or exercise personally with respect to all Production and Production
Proceeds (the same having been assigned by Mortgagor to Mortgagee pursuant to
Section 3.1 hereof), expressly inclusive, but not limited to, the right, power
and authority to:
(a) Execute and deliver in the name of Mortgagor any and
all transfer orders, division orders, letters in lieu of transfer
orders, indemnifications, certificates and other instruments of every
nature that may be requested or required by any purchaser of
Production from any of the Mortgaged Properties for the purposes of
effectuating payment of the Production Proceeds to Mortgagee or which
Mortgagee may otherwise deem necessary or appropriate to effect the
intent and purposes of the assignment contained in Section 3.1; and
(b) If under any product sales agreements other than
division orders or transfer orders, any Production Proceeds are
required to be paid by the purchaser to Mortgagor so that under such
existing agreements payment cannot be made of such Production Proceeds
to Mortgagee, to make, execute and enter into such sales agreements or
other agreements as are necessary to direct Production Proceeds to be
payable to Mortgagee;
giving and granting unto said attorney-in-fact full power and authority to do
and perform any and every act and thing whatsoever necessary and requisite to
be done as fully and to all intents and purposes, as Mortgagor might or could
do if personally present; and Mortgagor shall be bound thereby as fully and
effectively as if Mortgagor had personally executed, acknowledged and delivered
any of the foregoing certificates or documents. The powers and authorities
herein conferred upon Mortgagee may be exercised by Mortgagee through any
person who, at the time of the execution of the particular instrument, is an
officer of Mortgagee. The power of attorney herein conferred is granted for
valuable consideration and hence is coupled with an interest and is irrevocable
so long as the secured indebtedness, or any part thereof, shall remain unpaid.
All persons dealing with Mortgagee or any substitute shall be fully protected
in treating the powers and authorities conferred by this paragraph as
continuing in full force and effect until advised by Mortgagee that all the
secured indebtedness is fully and finally paid. Mortgagee may, but shall not
be obligated to, take such action as it deems appropriate in an effort to
collect the Production Proceeds and any reasonable expenses (including
reasonable attorney's fees) so incurred by Mortgagee shall be a demand
obligation of Mortgagor and shall be part of the secured indebtedness, and
shall bear interest each day, from the date of such expenditure or payment
until paid, at the rate described in Section 2.3 hereof.
Section 3.3. Change of Purchaser. To the extent a default has
occurred hereunder and is continuing, should any person now or hereafter
purchasing or taking Production fail to make payment promptly to Mortgagee of
the Production Proceeds, Mortgagee shall,
13
15
subject to then-existing contractual prohibitions, have the right to make, or
to require Mortgagor to make, a change of purchaser, and the right to designate
or approve the new purchaser, and Mortgagee shall have no liability or
responsibility in connection therewith so long as ordinary care is used in
making such designation.
Section 3.4. Application of Production Proceeds. So long as no
default has occurred hereunder, the Production Proceeds received by Mortgagee
during each calendar month shall on the first business day of the next
succeeding calendar month (or, at the option of Mortgagee, on any earlier date)
be applied by Mortgagee as follows:
FIRST, to the payment of all secured indebtedness then due and
payable, in such manner and order as Mortgagee deems advisable;
SECOND, to the prepayment of the remainder of the secured
indebtedness in such manner and order and to such extent as Mortgagee
deems advisable; and
THIRD, the remainder, if any, of the Production Proceeds shall
be paid over to Mortgagor or to Mortgagor's order or to such other
parties as may be entitled thereto by law.
After a default hereunder has occurred, all Production Proceeds from
time to time in the hands of Mortgagee shall be applied by it toward the
payment of all secured indebtedness (principal, interest, attorneys' fees and
other fees and expenses) at such times and in such manner and order and to such
extent as Mortgagee deems advisable.
Section 3.5. Release From Liability; Indemnification. Mortgagee and
its successors and assigns are hereby released and absolved from all liability
for failure to enforce collection of the Production Proceeds and from all other
responsibility in connection therewith, except the responsibility of each to
account to Mortgagor for funds actually received by each. Mortgagor agrees to
indemnify and hold harmless Mortgagee (for purposes of this paragraph, the term
"Mortgagee" shall include the directors, officers, partners, employees and
agents of Mortgagee and any persons or entities owned or controlled by or
affiliated with Mortgagee) from and against any and all claims, demands,
liabilities, losses, damages (including without limitation consequential
damages), causes of action, judgments, penalties, costs and expenses (including
without limitation reasonable attorneys' fees and expenses) imposed upon,
asserted against or incurred or paid by Mortgagee by reason of the assertion
that Mortgagee received, either before or after payment in full of the secured
indebtedness, funds from the production of oil, gas, other hydrocarbons or
other minerals claimed by third persons (and/or funds attributable to sales of
production which (i) were made at prices in excess of the maximum price
permitted by applicable law or (ii) were otherwise made in violation of laws,
rules, regulations and/or orders governing such sales), and Mortgagee shall
have the right to defend against any such claims or actions, employing
attorneys of its own selection, and if not furnished with indemnity
satisfactory to it, Mortgagee 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 Mortgagee in compromise,
satisfaction or discharge of any such claim, action or judgment, and all court
costs, attorneys' fees and other expenses of every character expended by
Mortgagee pursuant to the provisions of this section shall be a demand
obligation (which obligation Mortgagor hereby expressly promises to pay) owing
by Mortgagor to Mortgagee and shall bear interest, from the date expended until
paid, at the rate described in Section 2.3 hereof. The foregoing indemnities
shall not
14
16
terminate upon the Release Date or upon the release, foreclosure or other
termination of this Mortgage but will survive the Release Date, foreclosure of
this Mortgage or conveyance in lieu of foreclosure, and the repayment of the
secured indebtedness and the discharge and release of this Mortgage and the
other documents evidencing and/or securing the secured indebtedness. WITHOUT
LIMITATION, IT IS THE INTENTION OF MORTGAGOR AND MORTGAGOR AGREES THAT THE
FOREGOING RELEASES AND INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH
RESPECT TO ALL CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES (INCLUDING WITHOUT
LIMITATION CONSEQUENTIAL DAMAGES), CAUSES OF ACTION, JUDGMENTS, PENALTIES,
COSTS AND EXPENSES (INCLUDING WITHOUT LIMITATION REASONABLE ATTORNEYS' FEES AND
EXPENSES) WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE
NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY. However, such
indemnities shall not apply to any particular indemnified party (but shall
apply to the other indemnified parties) to the extent the subject of the
indemnification is caused by or arises out of the gross negligence or willful
misconduct of such particular indemnified party.
Section 3.6. Mortgagor's Absolute Obligation to Pay Note. Nothing
herein contained shall detract from or limit the obligations of Mortgagor to
make prompt payment of the Note, and any and all other secured indebtedness, at
the time and in the manner provided herein and in the Loan Documents,
regardless of whether the Production and Production Proceeds herein assigned
are sufficient to pay same, and the rights under this Article III shall be
cumulative of all other rights under the Loan Documents.
ARTICLE IV.
Remedies Upon Default
Section 4.1. Default. The term "default" as used in this Mortgage
shall mean the occurrence of an "Event of Default" as defined in the Credit
Agreement.
Section 4.2. Acceleration of Secured Indebtedness. Upon the
occurrence of a default, Mortgagee at any time and from time to time may
without notice to Mortgagor or any other person declare any or all of the
secured indebtedness immediately due and payable and all such secured
indebtedness shall thereupon be immediately due and payable, without
presentment, demand, protest, notice of protest, declaration or notice of
acceleration or intention to accelerate, putting the Mortgagor in default,
dishonor, notice of dishonor or any other notice or declaration of any kind,
all of which are hereby expressly waived by Mortgagor, and the liens evidenced
hereby shall be subject to foreclosure in any manner provided for herein or
provided for by law as Mortgagee may elect. The secured indebtedness may be
(and in certain circumstances shall automatically be) accelerated as provided
in the Credit Agreement.
Section 4.3. Pre-Foreclosure Remedies. Upon the occurrence of a
default, or any event or circumstance which, with the lapse of time or the
giving of notice, or both, would constitute a default hereunder, Mortgagee is
authorized, prior or subsequent to the institution of any foreclosure
proceedings, to enter upon the Property, or any part thereof, and to take
possession of the Property and all books and records relating thereto, and to
exercise without interference from Mortgagor any and all rights which Mortgagor
has with respect to the management, possession, operation, protection or
preservation of the Property. If necessary to obtain the possession provided
for above, Mortgagee may invoke any and all remedies to dispossess Mortgagor.
All costs, expenses and liabilities of every character incurred by Mortgagee in
managing, operating, maintaining, protecting or preserving the Property shall
constitute a demand obligation (which
15
17
obligation Mortgagor hereby expressly promises to pay) owing by Mortgagor to
Mortgagee and shall bear interest from date of expenditure until paid at the
rate described in Section 2.3 hereof, all of which shall constitute a portion
of the secured indebtedness and shall be secured by this Mortgage and by any
other instrument securing the secured indebtedness. In connection with any
action taken by Mortgagee pursuant to this Section 4.3, MORTGAGEE SHALL NOT BE
LIABLE FOR ANY LOSS SUSTAINED BY MORTGAGOR RESULTING FROM ANY ACT OR OMISSION
OF MORTGAGEE (INCLUDING MORTGAGEE'S OWN NEGLIGENCE) IN MANAGING THE PROPERTY
UNLESS SUCH LOSS IS CAUSED BY THE WILLFUL MISCONDUCT AND BAD FAITH OF
MORTGAGEE, nor shall Mortgagee be obligated to perform or discharge any
obligation, duty or liability of Mortgagor arising under any agreement forming
a part of the Property or arising under any Permitted Encumbrance or otherwise
arising. Mortgagor hereby assents to, ratifies and confirms any and all
actions of Mortgagee with respect to the Property taken under this Section 4.3.
Section 4.4. Foreclosure.
(a) Upon the occurrence of a default, this Mortgage may be
foreclosed as to the Mortgaged Properties, or any part thereof, in any manner
permitted by applicable law. Cumulative of the foregoing and the other
provisions of this Section 4.4:
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE
MAY ALLOW MORTGAGEE TO TAKE THE MORTGAGED PROPERTIES AND SELL THEM WITHOUT
GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY MORTGAGOR UNDER THIS
MORTGAGE.
(b) Upon the occurrence of a default, Mortgagee may exercise its
rights of enforcement with respect to the Collateral under the Uniform
Commercial Code or any other statute in force in any state to the extent the
same is applicable law. Cumulative of the foregoing and the other provisions
of this Section 4.4:
(i) Mortgagee may enter upon the Mortgaged Properties or
otherwise upon Mortgagor's premises to take possession of, assemble
and collect the Collateral or to render it unusable; and
(ii) Mortgagee may require Mortgagor to assemble the
Collateral and make it available at a place Mortgagee designates which
is mutually convenient to allow Mortgagee to take possession or
dispose of the Collateral; and
(iii) written notice mailed to Mortgagor as provided herein
at least ten (10) days prior to the date of public sale of the
Collateral or prior to the date after which private sale of the
Collateral will be made shall constitute reasonable notice; and
(iv) in the event of a foreclosure of the liens and/or
security interests evidenced hereby, the Collateral, or any part
thereof, and the Mortgaged Properties, or any part thereof, may, at
the option of Mortgagee, be sold, as a whole or in parts, together or
separately (including, without limitation, where a portion of the
Mortgaged Properties is sold, the Collateral related thereto may be
sold in connection therewith); and
(v) the expenses of sale provided for in clause FIRST of
Section 4.6 shall include the reasonable expenses of retaking the
Collateral, or any part thereof, holding the same and preparing the
same for sale or other disposition; and
16
18
(vi) should, under this subsection, the Collateral be
disposed of other than by sale, any proceeds of such disposition shall
be treated under Section 4.6 as if the same were sales proceeds;
(c) To the extent permitted by applicable law, the sale hereunder
of less than the whole of the Property shall not exhaust the powers of sale
herein granted or the right to judicial foreclosure, and successive sale or
sales may be made until the whole of the Property shall be sold and, if the
proceeds of such sale of less than the whole of the Property shall be less than
the aggregate of the indebtedness secured hereby and the expense of conducting
such sale, this Mortgage and the liens and security interests hereof shall
remain in full force and effect as to the unsold portion of the Property just
as though no sale had been made; provided, however, that Mortgagor shall never
have any right to require the sale of less than the whole of the Property. In
the event any sale hereunder is not completed or is defective in the opinion of
Mortgagee, such sale shall not exhaust the powers of sale hereunder or the
right to judicial foreclosure, and Mortgagee shall have the right to cause a
subsequent sale or sales to be made. Any sale may be adjourned by announcement
at the time and place appointed for such sale without further notice except as
may be required by law. Mortgagee acting under power of sale may appoint or
delegate any one or more persons as agent to perform any act or acts necessary
or incident to any sale held by it (including, without limitation, the posting
of notices and the conduct of sale), and such appointment need not be in
writing or recorded. Any and all statements of fact or other recitals made in
any deed or deeds, or other instruments of transfer, given in connection with a
sale as to nonpayment of the secured indebtedness or as to the occurrence of
any default, or as to all of the secured indebtedness having been declared to
be due and payable, or as to the request to sell, or as to notice of time,
place and terms of sale and the properties to be sold having been duly given,
or as to any other act or thing having been duly done, shall be taken as prima
facie evidence of the truth of the facts so stated and recited. With respect
to any sale held in foreclosure of the liens and/or security interests covered
hereby, it shall not be necessary for the Mortgagee, any public officer acting
under execution or order of the court or any other party to have physically
present or constructively in his/her or its possession, either at the time of
or prior to such sale, the Property or any part thereof.
Section 4.5. Receiver. In addition to all other remedies herein
provided for, Mortgagor agrees that, upon the occurrence of a default or any
event or circumstance which, with the lapse of time or the giving of notice, or
both, would constitute a default hereunder, Mortgagee shall as a matter of
right be entitled to the appointment of a receiver or receivers for all or any
part of the Property, whether such receivership be incident to a proposed sale
(or sales) of such property or otherwise, and without regard to the value of
the Property or the solvency of any person or persons liable for the payment of
the indebtedness secured hereby, and Mortgagor does hereby consent to the
appointment of such receiver or receivers, waives any and all defenses to such
appointment, and agrees not to oppose any application therefor by Mortgagee,
and agrees that such appointment shall in no manner impair, prejudice or
otherwise affect the rights of Mortgagee under Article III hereof. Mortgagor
expressly waives notice of a hearing for appointment of a receiver and the
necessity for bond or an accounting by the receiver. Nothing herein is to be
construed to deprive Mortgagee of any other right, remedy or privilege it may
now or hereafter have under the law to have a receiver appointed. Any money
advanced by Mortgagee in connection with any such receivership shall be a
demand obligation (which obligation Mortgagor hereby expressly promises to pay)
owing by Mortgagor to Mortgagee and shall bear interest, from the date of
making such advancement by Mortgagee until paid, at the rate described in
Section 2.3 hereof.
17
19
Section 4.6. Proceeds of Foreclosure. The proceeds of any sale held
in foreclosure of the liens and/or security interests evidenced hereby shall be
applied:
FIRST, to the payment of all necessary costs and expenses
incident to such foreclosure sale, including but not limited to all
court costs and charges of every character in the event foreclosed by
suit;
SECOND, to the payment of the secured indebtedness (including
specifically without limitation the principal, interest and attorneys'
fees due and unpaid on the Note and the amounts due and unpaid and
owed under this Mortgage) in such manner and order as Mortgagee may
elect; and
THIRD, the remainder, if any there shall be, shall be paid to
Mortgagor, or to Mortgagor's heirs, devisees, representatives,
successors or assigns, or such other persons as may be entitled
thereto by law.
Section 4.7. Mortgagee as Purchaser. Any party constituting
Mortgagee shall have the right to become the purchaser at any sale held in
foreclosure of the liens and/or security interests evidenced hereby, and any
party constituting Mortgagee which is purchasing at any such sale shall have
the right to credit upon the amount of the bid made therefor, to the extent
necessary to satisfy such bid, the secured indebtedness owing to such party, or
if such party holds less than all of such indebtedness, the pro rata part
thereof owing to such party, accounting to all other parties constituting
Mortgagee who are not joining in such bid in cash for the portion of such bid
or bids apportionable to such non-bidding parties.
Section 4.8. Foreclosure as to Matured Debt. Upon the occurrence of
a default, Mortgagee shall have the right to proceed with foreclosure of the
liens and/or security interests evidenced hereby without declaring the entire
secured indebtedness due, and in such event, any such foreclosure sale may be
made subject to the unmatured part of the secured indebtedness and shall not in
any manner affect the unmatured part of the secured indebtedness, but as to
such unmatured part, this Mortgage shall remain in full force and effect just
as though no sale had been made. The proceeds of such sale shall be applied as
provided in Section 4.6 except that the amount paid under clause SECOND thereof
shall be only the matured portion of the secured indebtedness and any proceeds
of such sale in excess of those provided for in clauses FIRST and SECOND
(modified as provided above) shall be applied as provided in clause SECOND and
THIRD of Section 3.4 hereof. Several sales may be made hereunder without
exhausting the right of sale for any unmatured part of the secured
indebtedness.
Section 4.9. Remedies Cumulative. All remedies herein provided for
are cumulative of each other and of all other remedies existing at law or in
equity and are cumulative of any and all other remedies provided for in any
other Loan Document, and, in addition to the remedies herein provided, there
shall continue to be available all such other remedies as may now or hereafter
exist at law or in equity for the collection of the secured indebtedness and
the enforcement of the covenants herein and the foreclosure of the liens and/or
security interests evidenced hereby, and the resort to any remedy provided for
hereunder or under any such other Loan Document or provided for by law shall
not prevent the concurrent or subsequent employment of any other appropriate
remedy or remedies.
18
20
Section 4.10. Discretion as to Security. Mortgagee may resort to any
security given by this Mortgage or to any other security now existing or
hereafter given to secure the payment of the secured indebtedness, in whole or
in part, and in such portions and in such order as may seem best to Mortgagee
in its sole and uncontrolled discretion, and any such action shall not in any
way be considered as a waiver of any of the rights, benefits, liens or security
interests evidenced by this Mortgage.
Section 4.11. Mortgagor's Waiver of Certain Rights. To the full
extent Mortgagor may do so, Mortgagor agrees that Mortgagor will not at any
time insist upon, plead, claim or take the benefit or advantage of any law now
or hereafter in force providing for any appraisement, valuation, stay,
extension or redemption, and Mortgagor, for Mortgagor, Mortgagor's heirs,
devisees, representatives, successors and assigns, and for any and all persons
ever claiming any interest in the Property, to the extent permitted by
applicable law, hereby waives and releases all rights of appraisement,
valuation, stay of execution, redemption, notice of intention to mature or
declare due the whole of the secured indebtedness, notice of election to mature
or declare due the whole of the secured indebtedness and all rights to a
marshaling of assets of Mortgagor, including the Property, or to a sale in
inverse order of alienation in the event of foreclosure of the liens and/or
security interests hereby created. Mortgagor shall not have or assert any
right under any statute or rule of law pertaining to the marshaling of assets,
sale in inverse order of alienation, the exemption of homestead, the
administration of estates of decedents, or other matters whatever to defeat,
reduce or affect the right under the terms of this Mortgage to a sale of the
Property for the collection of the secured indebtedness without any prior or
different resort for collection, or the right under the terms of this Mortgage
to the payment of the secured indebtedness out of the proceeds of sale of the
Property in preference to every other claimant whatever. If any law referred
to in this section and now in force, of which Mortgagor or Mortgagor's heirs,
devisees, representatives, successors or assigns or any other persons claiming
any interest in the Mortgaged Properties or the Collateral might take advantage
despite this section, shall hereafter be repealed or cease to be in force, such
law shall not thereafter be deemed to preclude the application of this section.
Section 4.12. Mortgagor as Tenant Post-Foreclosure. In the event
there is a foreclosure sale hereunder and at the time of such sale Mortgagor or
Mortgagor's heirs, devisees, representatives, successors or assigns or any
other persons claiming any interest in the Property by, through or under
Mortgagor are occupying or using the Property, or any part thereof, each and
all shall immediately become the tenant of the purchaser at such sale, which
tenancy shall be a tenancy from day to day, terminable at the will of either
landlord or tenant, at a reasonable rental per day based upon the value of the
property occupied, such rental to be due daily to the purchaser. To the extent
permitted by applicable law, the purchaser at such sale shall, notwithstanding
any language herein apparently to the contrary, have the sole option to demand
immediate possession following the sale or to permit the occupants to remain as
tenants at will. In the event the tenant fails to surrender possession of said
property upon demand, the purchaser shall be entitled to institute and maintain
a summary action for possession of the property (such as an action for forcible
entry and detainer) in any court having jurisdiction.
19
21
ARTICLE V.
Miscellaneous
Section 5.1. Scope of Mortgage. This Mortgage is a mortgage of both
real/immovable and personal/movable property, a security agreement, a financing
statement and an assignment, and also covers proceeds and fixtures.
Section 5.2. Effective as a Financing Statement. This Mortgage
covers goods which are or are to become fixtures on the real property described
herein, and this Mortgage shall be effective as a financing statement filed as
a fixture filing with respect to all fixtures included within the Property.
This Mortgage shall also be effective as a financing statement, filed as a
fixture filing, covering minerals and other substances of value which may be
extracted from the earth (including without limitation oil and gas), and
accounts related thereto, which will be financed at the wellhead or minehead of
the xxxxx or mines located on the Mortgaged Properties. This Mortgage is to be
filed for record in the real/immovable property records of each county where
any part of the Mortgaged Properties is situated or which lies shoreward of any
Mortgaged Property (i.e., to the extent a Mortgaged Property lies offshore
within the projected seaward extension of the relevant county boundaries), and
may also be filed in the offices of the Bureau of Land Management or the
Minerals Management Service or any relevant state agency (or any successor
agencies). This Mortgage shall also be effective as a financing statement
covering any other Property and may be filed in any other appropriate filing or
recording office. The mailing address of Mortgagor is the address of Mortgagor
set forth at the end of this Mortgage and the address of Mortgagee from which
information concerning the security interests hereunder may be obtained is the
address of Mortgagee set forth at the end of this Mortgage.
Section 5.3. Reproduction of Mortgage as Financing Statement. A
carbon, photographic, facsimile or other reproduction of this Mortgage or of
any financing statement relating to this Mortgage shall be sufficient as a
financing statement for any of the purposes referred to in Section 5.2.
Section 5.4. Notice to Account Debtors. In addition to, but without
limitation of, the rights granted in Article III hereof, Mortgagee may, at any
time after a default has occurred that is continuing, notify the account
debtors or obligors of any accounts, chattel paper, negotiable instruments or
other evidences of indebtedness included in the Collateral to pay Mortgagee
directly.
Section 5.5. Waivers. Mortgagee may at any time and from time to
time in writing waive compliance by Mortgagor with any covenant herein made by
Mortgagor to the extent and in the manner specified in such writing, or consent
to Mortgagor's doing any act which hereunder Mortgagor is prohibited from
doing, or to Mortgagor's failing to do any act which hereunder Mortgagor is
required to do, to the extent and in the manner specified in such writing, or
release any part of the Property or any interest therein or any Production
Proceeds from the lien and security interest of this Mortgage. Any party
liable, either directly or indirectly, for the secured indebtedness or for any
covenant herein or in any other Loan Document may be released from all or any
part of such obligations without impairing or releasing the liability of any
other party. No such act shall in any way impair any rights or powers
hereunder except to the extent specifically agreed to in such writing.
Section 5.6. No Impairment of Security. The lien, security interest
and other security rights hereunder shall not be impaired by any indulgence,
moratorium or release which may be granted
20
22
including, but not limited to, any renewal, extension or modification which may
be granted with respect to any secured indebtedness, or any surrender,
compromise, release, renewal, extension, exchange or substitution which may be
granted in respect of the Property (including without limitation Production
Proceeds), or any part thereof or any interest therein, or any release or
indulgence granted to any endorser, guarantor or surety of any secured
indebtedness.
Section 5.7. Acts Not Constituting Waiver. Any default may be waived
without waiving any other prior or subsequent default. Any default may be
remedied without waiving the default remedied. Neither failure to exercise,
nor delay in exercising, any right, power or remedy upon any default shall be
construed as a waiver of such default or as a waiver of the right to exercise
any such right, power or remedy at a later date. No single or partial exercise
of any right, power or remedy hereunder shall exhaust the same or shall
preclude any other or further exercise thereof, and every such right, power or
remedy hereunder may be exercised at any time and from time to time. No
modification or waiver of any provision hereof nor consent to any departure by
Mortgagor therefrom shall in any event be effective unless the same shall be in
writing and signed by Mortgagee and then such waiver or consent shall be
effective only in the specific instances, for the purpose for which given and
to the extent therein specified. No notice to nor demand on Mortgagor in any
case shall of itself entitle Mortgagor to any other or further notice or demand
in similar or other circumstances. Acceptance of any payment in an amount less
than the amount then due on any secured indebtedness shall be deemed an
acceptance on account only and shall not in any way excuse the existence of a
default hereunder.
Section 5.8. Mortgagor's Successors. In the event the ownership of
the Property or any part thereof becomes vested in a person other than
Mortgagor, then, without notice to Mortgagor, such successor or successors in
interest may be dealt with, with reference to this Mortgage and to the
indebtedness secured hereby, in the same manner as with Mortgagor, without in
any way vitiating or discharging Mortgagor's liability hereunder or for the
payment of the indebtedness or performance of the obligations secured hereby.
No transfer of the Property, no forbearance, and no extension of the time for
the payment of the indebtedness secured hereby, shall operate to release,
discharge, modify, change or affect, in whole or in part, the liability of
Mortgagor hereunder or for the payment of the indebtedness or performance of
the obligations secured hereby or the liability of any other person hereunder
or for the payment of the indebtedness secured hereby.
Section 5.9. Place of Payment. All secured indebtedness which may be
owing hereunder at any time by Mortgagor shall be payable at the place
designated in the Credit Agreement (or if no such designation is made, at the
address of Mortgagee indicated at the end of this Mortgage), or at such other
place as Mortgagee may designate in writing.
Section 5.10. Subrogation to Existing Liens. To the extent that
proceeds of the Note are used to pay indebtedness secured by any outstanding
lien, security interest, charge or prior encumbrance against the Property, such
proceeds have been advanced at Mortgagor's request, and the party or parties
advancing the same shall be subrogated to any and all rights, security
interests and liens owned by any owner or holder of such outstanding liens,
security interests, charges or encumbrances, irrespective of whether said
liens, security interests, charges or encumbrances are released, and it is
expressly understood that, in consideration of the payment of such
indebtedness, Mortgagor hereby waives and releases all demands and causes of
action for offsets and payments to, upon and in connection with the said
indebtedness.
21
23
Section 5.11. Application of Payments to Certain Indebtedness. If
any part of the secured indebtedness cannot be lawfully secured by this
Mortgage or if any part of the Property cannot be lawfully subject to the lien
and security interest hereof to the full extent of such indebtedness, then all
payments made shall be applied on said indebtedness first in discharge of that
portion thereof which is not secured by this Mortgage.
Section 5.12. Compliance With Usury Laws. It is the intent of
Mortgagor, Mortgagee and all other parties to the Loan Documents to contract in
strict compliance with applicable usury law from time to time in effect. In
furtherance thereof, it is stipulated and agreed that none of the terms and
provisions contained herein shall ever be construed to create a contract to
pay, for the use, forbearance or detention of money, interest in excess of the
maximum amount of interest permitted to be charged by applicable law from time
to time in effect.
Section 5.13. Release of Mortgage. If all of the secured
indebtedness be paid as the same becomes due and payable and all of the
covenants, warranties, undertakings and agreements made in this Mortgage are
kept and performed and no further obligation shall exist to provide credit or
advance funds to Mortgagor or the maker of any promissory note (or other
obligor with respect to other indebtedness) secured hereby, then, at
Mortgagor's request, this Mortgage shall be released, in due form and at
Mortgagor's cost; provided, however, that, notwithstanding such release,
certain indemnifications, and other rights, which are provided herein to
continue following the release hereof shall continue in effect unaffected by
such release; and provided further that if any payment to Mortgagee is held to
constitute a preference or a voidable transfer under applicable state or
federal laws or if for any other reason Mortgagee is required to refund such
payment to the payor thereof or to pay the amount thereof to any third party,
this Mortgage shall be reinstated to the extent of such payment or payments.
Section 5.14. Notices. All notices, requests, consents, demands and
other communications required or permitted hereunder shall be in writing and
shall be deemed sufficiently given or furnished if delivered by personal
delivery, by telecopy, by delivery service with proof of delivery, or by
registered or certified United States mail, postage prepaid, at the addresses
specified at the end of this Mortgage (unless changed by similar notice in
writing given by the particular party whose address is to be changed). Any
such notice or communication shall be deemed to have been given (a) in the case
of personal delivery or delivery service, as of the date of first attempted
delivery at the address and in the manner provided herein, (b) in the case of
telecopy, upon receipt, and (c) in the case of registered or certified United
States mail, three days after deposit in the mail. Notwithstanding the
foregoing, or anything else in the Loan Documents which may appear to the
contrary, any notice given in connection with a foreclosure of the liens and/or
security interests created hereunder, or otherwise in connection with the
exercise by Mortgagee of its rights hereunder or under any other Loan Document,
which is given in a manner permitted by applicable law shall constitute proper
notice; without limitation of the foregoing, notice given in a form required or
permitted by statute shall (as to the portion of the Property to which such
statute is applicable) constitute proper notice.
Section 5.15. Invalidity of Certain Provisions. A determination that
any provision of this Mortgage is unenforceable or invalid shall not affect the
enforceability or validity of any other provision and the determination that
the application of any provision of this Mortgage to any person or circumstance
is illegal
22
24
or unenforceable shall not affect the enforceability or validity of such
provision as it may apply to other persons or circumstances.
Section 5.16. Gender; Titles. Within this Mortgage, words of any
gender shall be held and construed to include any other gender, and words in
the singular number shall be held and construed to include the plural, unless
the context otherwise requires. Titles appearing at the beginning of any
subdivisions hereof are for convenience only, do not constitute any part of
such subdivisions, and shall be disregarded in construing the language
contained in such subdivisions.
Section 5.17. Recording. Mortgagor will cause this Mortgage and all
amendments and supplements thereto and substitutions therefor and all financing
statements and continuation statements relating thereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as Mortgagee shall
reasonably request and will pay all such recording, filing, re-recording and
refiling taxes, fees and other charges.
Section 5.18. Reporting Compliance. Mortgagor agrees to comply with
any and all reporting requirements applicable to the transaction evidenced by
the Note and secured by this Mortgage which are set forth in any law, statute,
ordinance, rule, regulation, order or determination of any governmental
authority, and further agrees upon request of Mortgagee to furnish Mortgagee
with evidence of such compliance.
Section 5.19. Certain Consents. Except where otherwise expressly
provided herein, in any instance hereunder where the approval, consent or the
exercise of judgment of Mortgagee is required, the granting or denial of such
approval or consent and the exercise of such judgment shall be within the sole
discretion of Mortgagee, and Mortgagee shall not, for any reason or to any
extent, be required to grant such approval or consent or exercise such judgment
in any particular manner, regardless of the reasonableness of either the
request or Mortgagee's judgment.
Section 5.20. Certain Obligations of Mortgagor. Without limiting
Mortgagor's obligations hereunder, Mortgagor's liability hereunder shall extend
to and include all post petition interest, expenses, and other duties and
liabilities with respect to Mortgagor's obligations hereunder which would be
owed but for the fact that the same may be unenforceable due to the existence
of a bankruptcy, reorganization or similar proceeding.
Section 5.21. Agent and Lenders. On the date hereof, ING is both the
"Agent" under the Credit Agreement and the only Lender thereunder. It is
hereby contemplated that additional persons shall or may hereafter become
Lenders under the Credit Agreement, and in such event: (a) all references
herein to indebtedness, obligations, or promissory notes owing to Mortgagee
shall refer to indebtedness, obligations, or promissory notes owing to any
person included within the definition of Lenders, as used in the Credit
Agreement, and (b) in its capacity as Agent under the Credit Agreement, ING
together with its successors in such capacity, shall have all authority,
without the need to secure the consent or joinder of any other parties
constituting Lenders under the Credit Agreement, to perform any acts and/or
enforce any remedies afforded Mortgagee hereunder, including without limitation
any remedies afforded Mortgagee under Article IV hereof, and to receive any
notices or payments (including without limitation payment of Production
Proceeds pursuant to Article III hereof), on behalf of the parties constituting
Lenders under the Credit Agreement, and (c) any rights, titles, liens and
security interests in or relating to the Property shall be automatically held,
upon and subject to the terms of the Credit Agreement, by ING, as Agent, for
the benefit of all parties constituting Lenders under the Credit
23
25
Agreement, and any rights and remedies afforded Mortgagee hereunder (including
without limitation any of same relating to indemnities) shall be automatically
held and exercised, upon and subject to the terms of the Credit Agreement, by
ING as Agent for all parties constituting Lenders under the Credit Agreement.
Section 5.22. Counterparts. This Mortgage may be executed in
several counterparts, all of which are identical, except that, to facilitate
recordation, certain counterparts hereof may include only that portion of
Exhibits A-1 and A-2 which contains descriptions of the properties located in
(or otherwise subject to the recording or filing requirements and/or
protections of the recording or filing acts or regulations of) the recording
jurisdiction in which the particular counterpart is to be recorded, and other
portions of Exhibits A-1 and A-2 shall be included in such counterparts by
reference only. All of such counterparts together shall constitute one and the
same instrument. Complete copies of this Mortgage containing the entire
Exhibits A-1 and A-2 have been retained by Mortgagor and Mortgagee.
Section 5.23. Successors and Assigns. The terms, provisions,
covenants, representations, indemnifications and conditions hereof shall be
binding upon Mortgagor, and the successors and assigns of Mortgagor, and shall
inure to the benefit of Mortgagee and the successors and assigns of Mortgagee,
and shall constitute covenants running with the Mortgaged Properties. All
references in this Mortgage to Mortgagor or Mortgagee shall be deemed to
include all such successors and assigns.
SECTION 5.24. FINAL AGREEMENT OF THE PARTIES. THE WRITTEN LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
SECTION 5.25. CHOICE OF LAW. WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW, THIS MORTGAGE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE AND THE LAWS OF THE UNITED
STATES OF AMERICA, EXCEPT THAT TO THE EXTENT THAT THE LAW OF A STATE IN WHICH A
PORTION OF THE PROPERTY IS LOCATED (OR WHICH IS OTHERWISE APPLICABLE TO A
PORTION OF THE PROPERTY) NECESSARILY OR, IN THE SOLE DISCRETION OF MORTGAGEE,
APPROPRIATELY GOVERNS WITH RESPECT TO PROCEDURAL AND SUBSTANTIVE MATTERS
RELATING TO THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS, SECURITY
INTERESTS AND OTHER RIGHTS AND REMEDIES OF THE MORTGAGEE GRANTED HEREIN, THE
LAW OF SUCH STATE SHALL APPLY AS TO THAT PORTION OF THE PROPERTY LOCATED IN (OR
WHICH IS OTHERWISE SUBJECT TO THE LAWS OF) SUCH STATE.
IN WITNESS WHEREOF, this instrument is executed by Mortgagor this 15th
day of May, 1998.
MORTGAGOR:
UNITED STATES EXPLORATION, INC.
By: /s/ XXXXX X. XXXXXX
-------------------------------------
Xxxxx X. Xxxxxx
President and Chief Executive Officer
24
26
The address of Mortgagee is: The address of Mortgagor is:
000 X. 00xx Xxxxxx 0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000 Xxxxxx, Xxxxxxxx 00000
ACKNOWLEDGMENT
STATE OF TEXAS )
)
COUNTY OF TARRANT )
The foregoing instrument was acknowledged before me on this 15th day
of May, 1998, by Xxxxx X. Xxxxxx, President and Chief Executive Officer of
United States Exploration, Inc., a Colorado corporation, on behalf of such
corporation.
/s/
-------------------------------------
NOTARY PUBLIC, State of Texas
[SEAL]
25
