ASSIGNMENT OF PRODUCTION ANDPROCEEDS (Whitley County) TO BE RECORDED IN THE REAL ESTATE RECORDS
ASSIGNMENT
OF PRODUCTION ANDPROCEEDS
(Xxxxxxx
County)
TO
BE RECORDED IN THE REAL
ESTATE RECORDS
THIS
ASSIGNMENT OF PRODUCTION AND
PROCEEDS (this “Assignment”) is made
and entered into effective as of January 1, 2008, by and between WILDCAT ENERGY CORP., a Nevada
corporation, with an address of X.X. Xxx 0000, Xxxxxx, Xxxxxxxx 00000
(“Assignor”), and ENERGAS
RESOURCES, INC., a Delaware corporation, with an address of 800 NE
63rd
Street, 3rd
Floor,
Oklahoma City, Xxxxxxxx Xxxxxx, Xxxxxxxx 00000 (“Assignee”).
RECITALS:
A.
Pursuant to the terms and conditions of that certain Agreement of Purchase
and
Sale of Assets among assignor, Assignee, TGC, Inc., and AT Gas Gathering
Systems, Inc., of even date with this Assignment, Assignee has agreed to make
a
term loan in the amount of $2,200,000.00 to Assignor and (the “Loan”), as
evidenced by that certain Non-Recourse Commercial Note of even date herewith
made by Assignor to the order of Assignee in the face principal amount of
$2,200,000.00 (the “Note”). The Maturity Date of the Note, which
shall be the Maturity Date of this Assignment, is January 1, 2010.
B.
In order to induce Assignee to make the Loan to Assignor, without which
inducement Assignee would be unwilling to take such actions, Assignor has agreed
to pledge certain proceeds as security for the Loan, as more fully described
herein.
AGREEMENT:
NOW,
THEREFORE, for and in
consideration of the Recitals, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1.
ASSIGNMENT.
To secure the
full, due and punctual payment of all indebtedness evidenced by the Note, and/or
any extension or renewal thereof, as well as all costs, taxes, assessments,
charges, insurance premiums, compensation of attorneys’ and collection fees, and
the costs and indebtedness incurred and paid hereunder, and to secure the
faithful observance and performance of all of the obligations, agreements,
covenants and stipulations contained herein, in the Loan Agreement, in the
“Loan
Documents,” as that term is defined in the Loan Agreement and in the Note
(collectively with the Note, the “Secured Obligations”), Assignor declares that
it hereby affects, assigns, pledges, grants a security interest, and
hypothecates unto Assignee the following rights, interests, and
properties:
1.1
Assignments.
Any
and all interest
of Assignor in and to the natural gas and oil xxxxx located in Xxxxxxx County,
Kentucky (the “Gas Xxxxx”), and other rights appurtenant thereto, as described
in Exhibit
A attached hereto, whether now existing or that exist in the future.
Said
interests hereinafter are collectively referred to as “Assignor’s
Interest.”
1.2
Proceeds.
The interest of Assignor in, to and under or derived from all presently
existing, or any that exist in the future, operating agreements, oil and natural
gas sales, purchase, exchange and processing contracts and agreements, and
instruments that relate to Assignor’s Interest or to the production of oil,
natural gas and other hydrocarbons from or attributable thereto (the “Oil and
Gas Agreements”) and any and all accounts, accounts receivable, proceeds and
payments generated therefrom, including but not limited to, the working interest
income from the Gas Xxxxx and all as-extracted collateral from the Gas
Xxxxx.
1.3
Property.
Any and all interest, now or hereafter acquired, of Assignor in and
to
all property and fixtures, including corporeal moveables now or hereafter
situated upon or affixed to Assignor’s Interest, the lands covered thereby, or a
unit including all or a part of such lands or the Assignor’s Interest
attributable to or dedicated to the exploration of mineral or oil and gas rights
covered or affected by Assignor’s Interest including the participation or
inclusion of any of Assignor’s Interest in any unit or units, or any part
thereof, and owned or used in connection with the exploration, development
or
operation of Assignor’s Interest or for the production, treatment, storing or
transportation of oil, gas, or other minerals, including by way of illustration
only and not by way of limitation, all platforms, xxxxx, casing, tubing, tanks,
tank batteries, separators, rods, pumps, flow lines, water lines, gas lines,
machinery, other equipment, pipelines and power lines, and product purchase
and
sale contracts, permits, easements, licenses, rights of way, surface leases,
pooling and communitization agreements, gas gathering and transmission
agreements, and any and all other agreements to the extent they pertain to
the
Gas Xxxxx and all pumps, meters, casing, rods, tubing, wellhead equipment,
separators, tanks, compressors, gathering lines, flow lines, and all other
surface and down hole equipment, fixtures, gathering and treating facilities,
used in connection with the Gas Xxxxx.
The
rights, interests and properties
hereinabove described or referred to under Subsections 1.1, 1.2 and 1.3 are
sometimes collectively referred to hereinafter as the “Assigned
Property.”
To
the extent that the Assigned
Property includes personal property or items of personal property which are
or
are to become fixtures under applicable law, or oil, gas and other minerals
(including the products obtained or processed therefrom) owned by Assignor
and
produced or to be produced, obtained or secured from or attributable to or
accrued or accruing to the Assignor’s Interest, together with proceeds of every
character payable therefrom, this Assignment shall also be construed as a
security agreement under the Uniform Commercial Laws of Kentucky, and if an
event of default is continuing, Assignee shall be entitled with respect to
such
property to all remedies available under applicable law.
2.
REPRESENTATIONS,
WARRANTIES AND
COVENANTS.
2.1
Binding
Obligations. Assignor represents, warrants and covenants that this
Assignment is a legal, valid, and binding obligation of Assignor and that no
consent or other third party consent or approval related to the Assignor’s
Interest, the Oil and Gas Agreements, or otherwise is required for Assignor
to
enter into this Assignment.
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2.2
Assignments.
Assignor
represents,
warrants and covenants that (a) the assignments thereof comprising Assignor’s
Interest are in full force and effect and have not been amended, supplemented
or
otherwise modified except as disclosed to Assignee in writing, and (b) there
is
no currently existing default or breach under any such assignment, nor is there
currently existing any condition or circumstance which, with the giving of
notice, the passage of time, or both, would constitute a default or breach
under
any such assignment.
2.3
Payments.
So long as the indebtedness secured hereby or any part hereof remains
unpaid, Assignor, for itself, its successors and assigns, covenants and agrees
with Assignee as follows:
(a)
To
pay and to
discharge promptly, as and when due, and in apt time to prevent and to avoid
any
sale or forfeiture of the Assigned Property therefor, all taxes, assessments,
forced contributions, local assessments and governmental charges of every
description, which shall, from time to time, be legally imposed, or assessed,
or
levied by any lawful taxing authority, federal, state or local, upon the
Assigned Property, or any part thereof, so that the priority of these presents,
as herein stipulated for, shall at all times be duly maintained and preserved;
provided, however, that Assignor shall not be required to pay any such taxes,
assessments, or charges, so long as the validity or the amount thereof shall
be
contested in good faith by Assignor in a court of competent jurisdiction, and
so
long as such contestation shall remain undetermined; but provided further that,
in any such event, Assignee, at its option, and as a condition precedent to
any
such contest, shall be entitled to demand of Assignor, and Assignor hereby
agrees to furnish, adequate security to protect Assignee in the premises. In
the
event Assignor should, for any reason, fail to pay promptly any such taxes,
assessments, forced contributions, local assessments and governmental charges,
as and when due, Assignee shall be authorized to pay the same with full
subrogation to all rights of the taxing authorities by reason of such payment
and the amounts so paid, which sum shall be secured by the Assignment, and
Assignor, its successors and assigns, covenants and agrees that within 10 days
after payment by Assignee the amount so paid by Assignee as aforesaid, shall
become immediately due and payable and Assignor covenants and agrees to pay
same
upon demand. Nothing herein contained shall be construed, however, as making
any
such payments of any obligatory upon Assignee, or as making it liable for any
loss, damage or injury resulting from any such non-payment;
(b)
Promptly
to
pay and to discharge all debts, claims and demands of whatever name or nature
which might by law be entitled to liens superior in rank to that hereby created;
but nothing herein contained shall be construed to require Assignor to pay
any
such debt, claim or demand, so long as the validity or amount thereof shall
be
contested in good faith in a competent court by Assignor and such contestation
shall remain undetermined; provided, however, that if Assignor elects to contest
any such debt, claim or demand, Assignee, at its option, and as a condition
precedent to such contest, shall be entitled to demand of Assignor, and Assignor
agrees to furnish, security satisfactory to Assignee to protect Assignee in
the
premises;
(c)
To
furnish to
Assignee, if Assignee shall so request, periodic statements showing that all
severance taxes or any other taxes, charges or assessments due on production
of
oil or other minerals attributable to Assignor’s Interest have been properly
paid;
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(d)
That
Assignee
will promptly correct any defect, error or omission which may be discovered
in
the contents of this Assignment or in the execution or acknowledgment thereof,
and will execute and deliver any and all additional instruments as may be
required to correct such defect, error or omission or to identify any additional
properties which are or become subject to the Assignment;
(e)
That
Assignor
will cause the Assigned Property, at all times during which such property is
being actively operated, to be operated in a good and workmanlike manner in
accordance with all applicable laws, rules, regulations and orders promulgated
by all duly constituted authorities and in accordance with the provisions of
the
Assignor’s Interest, and will maintain all of the Assigned Property, at all
times during which such property is being actively operated, in good operating
condition, causing all necessary repairs, renewals, replacements, additions
and
improvements to be promptly made;
(f)
That
Assignor
will observe and comply with all of the terms and provisions, express or
implied, of the Assignor’s Interest and all agreements, pertaining thereto, and
will not amend any agreement relating to the Assignor’s Interest, so as to
affect materially the value of the Assigned Property, or to terminate any of
the
agreements or other instruments, or to surrender, abandon, or release any of
the
Assignor’s Interest, in whole or in part.
(g)
That
Assignor
will forward to Assignee any and all default notices received which apply to
the
Assignor’s Interest, including, but not limited to any default notices received
pursuant to any of the assignments comprising the Assignor’s Interest.
3.
ASSIGNMENT
ANDPLEDGE OF PRODUCTION.
3.1
Assignment.
For the purpose of additionally securing the payment of all indebtedness
and other obligations secured hereby, and to facilitate the discharge of all
such indebtedness and obligations, and as cumulative of any and all rights
and
remedies herein provided for, Assignor hereby transfers, assigns, conveys,
pledges, sets over and delivers to Assignee all oil, gas and other hydrocarbons
accruing to or receivable by Assignor by virtue of its ownership in the
Assignor’s Interest (such oil, gas and other hydrocarbons hereinafter
collectively referred to as “Hydrocarbons”) and all proceeds, accounts, and
payments from the Hydrocarbons (after deduction for production and severance
taxes applicable thereto). Upon the occurrence of an Event of Default, Assignor
will promptly execute and deliver any and all transfer orders, division orders
and other instruments that may be requested by Assignee for the purpose of
effectuating the pledge and assignment made hereunder. Upon the occurrence
of an
Event of Default, all parties producing, purchasing, or receiving any
Hydrocarbons or having in their possession any Hydrocarbons or proceeds
therefrom are hereby authorized and directed (until notified in writing by
Assignee that all amounts and indebtedness secured hereby have been paid) to
pay
directly to Assignee, as the assignee and transferee of Assignor, in its place
and stead, the Hydrocarbons and the proceeds and accounts therefrom, and each
of
them shall be fully protected in so treating and so regarding the Assignee
as
such assignee and shall be under no obligation to see to the application by
Assignee of any such process received by it.
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3.2
Limited
Liability. Assignee is hereby absolved from all liability for its failure
to enforce collection of the proceeds, payments or accounts generated from
the
Hydrocarbons so assigned and from all other responsibility in connection
therewith. Assignor agrees to indemnify and to hold harmless Assignee against
any and all liabilities, actions, claims, judgments, costs, charges and
attorneys’ fees incurred by reason of the assertion that the Assignee has
received, either before or after the payment in full of the indebtedness secured
hereby, proceeds of Hydrocarbons claimed by third persons. Assignee shall have
the right to defend against any such claims or actions, employing attorneys
of
its own selection, and Assignee 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 Assignee in compromise,
satisfaction, or discharge of any such claim, action or judgment and all court
costs, attorneys’ fees and other expenses of every character incurred shall be a
demand obligation owing by Assignor to Assignee, shall bear interest at the
rate
as provided in the Note from the date of expenditure until paid, and shall
constitute a portion of the indebtedness secured by the lien evidenced by this
Assignment.
3.3
Payment.
Nothing herein contained shall detract from or limit the obligation
of
Assignor to make prompt payment of the Secured Obligations in accordance with
its terms and conditions.
4.
WAIVER
AND PARTIAL RELEASE.
Assignee may, at any time and from time to time in writing (i) waive compliance
by Assignor with any covenant herein made by Assignor to the extent and in
the
manner specified in such writing; or (ii) consent to Assignor’s commission of
any act which hereunder Assignor is prohibited from doing, or to Assignor’s
failure to do an act which hereunder Assignor is required to do, to the extent
and in the manner specified in such writing; or (iii) release any part of the
Assigned Property, or any interest therein, or any proceed of Hydrocarbons
from
the lien of this Assignment. No such waiver, consent or release shall in any
manner be construed as waiving, consenting to or releasing any rights of
Assignee or obligations of Assignor hereunder except as specifically provided
in
writing by Assignee hereunder.
5.
REMEDIES
INEVENT OF DEFAULT.
5.1
Event
of Default.
The term “Event of Default” as used in this Assignment shall mean the
occurrence of any of the following events:
(a)
Assignor
and/or Other Borrowers default in the payment of principal or interest on any
of
the Secured Obligations; or
(b)
Assignor
defaults in the performance or observance of any term, warranty, covenants,
representation, condition or agreement contained herein; or
(c)
An
event of
default occurs under the Loan Agreement, Note, or any of the other “Loan
Documents,” as that term is defined in the Loan Agreement; or
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(d)
If
the
Assigned Property or any portion thereof, be seized in the execution of writ
of
executory process, attachment, or of any other legal process; or
(e)
Assignor
becomes insolvent or makes an assignment for the benefit of creditors; or
(f)
A
receivership is appointed for any/all of the properties of Assignor or of
Assignor’s Interest in any Assigned Property; or
(g)
Assignor
is
adjudicated bankrupt or requests, either by way of petition or answer, to be
adjudicated a bankrupt, or for any rearrangement, extension, reorganization
or
other remedy at law for the relief of debtors now or hereafter existing, or
a
petition is filed by creditors of said party in which it is sought that the
party be adjudicated a bankrupt or that there be granted with respect to said
party any rearrangement, extension, reorganization, or other relief under any
bankruptcy law or under any other law for the relief of debtors now or hereafter
existing.
5.2
Acceleration.
Upon the occurrence of an Event of Default, all indebtedness secured
hereby in its entirety may be accelerated and immediately due and payable,
and
the liens evidenced hereby shall be subject to foreclosure in any manner
provided for herein or provided for by law.
5.3
Remedies.
Upon the occurrence of an Event of Default, Assignee is authorized prior
to or subsequent to the institution of any foreclosure proceedings to enter
upon
the Assigned Property, or any part thereof, and to exercise without interference
from Assignor any and all rights which Assignor has with respect to the
management, possession, operation and collection of the Assigned Property.
All
costs, expenses and liabilities of every character incurred by Assignee in
managing, operating, maintaining or collecting such properties, shall be payable
upon Assignee’s demand, shall draw interest from the date of expenditure until
paid at the rate as provided in the Note, all of which shall constitute a
portion of the indebtedness secured by the lien evidenced by this
Assignment.
5.4
Foreclosure.
Assignor, for itself, its successors and assigns, hereby agrees and
stipulates that it shall be lawful for, and Assignor hereby authorizes Assignee,
upon the occurrence of an Event of Default, to cause all or any portion of
the
Assigned Property to be seized and sold by executory process, without
appraisement, either in its entirety or in lots or parcels, as Assignee may
determine, to the highest bidder for cash or on such terms and conditions as
Assignee in such proceedings may direct; and Assignor, for itself and its
successors and assigns, hereby acknowledges the obligations secured hereby,
whether now existing or to arise hereafter.
5.5
Proceeds
of
Foreclosure. The proceeds of any sale held by any receiver or public
officer in foreclosure of the liens evidenced hereby shall be applied by
Assignee in its sole and uncontrolled discretion in any order and amount to
the
payment of all necessary costs and expenses incident to such foreclosure sale,
including, but not limited to, all court costs, attorney fees and charges of
every character and to the payment of the indebtedness secured hereby, to
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unpaid
interest and unpaid principal thereon in such order and in such amounts as
Assignee shall determine in its sole discretion; the remainder, if any, shall
be
paid to Assignor, its successors or assigns, as its interests may appear.
Assignee shall have the right to become the purchaser at any sale held by any
receiver or public officer, and Assignee shall have the right to credit upon
the
amount of the bid made therefor, to the extent necessary to satisfy such
bid.
5.6
Cumulative Remedies.
All remedies herein expressly provided for are cumulative of any and
all
other remedies now existing at law, and Assignee shall, in addition to the
remedies herein provided, be entitled to avail itself of all such other remedies
as may now or hereafter exist at law for the collection of said indebtedness,
the enforcement of the covenants herein, and the foreclosure of the lien
evidenced hereby. The resort to any remedy provided for hereunder, or
provided for by law shall not prevent the concurrent or subsequent employment
of
any other appropriate remedy or remedies.
5.7
Security.
Assignee
may resort
to any security given by this Assignment or to any other security now existing
or hereafter given to secure the payment of the indebtedness secured hereby,
in
whole or in part, and in such portions and in such order as may seem best to
said Assignee in its sole and uncontrolled discretion, and any such action
shall
not in any manner be considered a waiver of any of the rights, benefits or
liens
evidenced by this instrument.
6.
GOVERNING
LAW. This Assignment
shall in all respects be construed under the laws of the Commonwealth of
Kentucky.
7.
BINDING TERMS.
The
terms, provisions,
covenants and conditions hereof shall be binding upon Assignor, its successors
and assigns, and shall inure to the benefit of Assignee, whether or not
expressly provided for herein.
8.
RELEASE. If
the
Assignor and other obligors shall pay or cause to be paid unto the Assignee,
its
successors and assigns, all of the principal and interest under all of the
Secured Obligations at the time and in the manner prescribed by the Secured
Obligations, then this Assignment shall, at Assignor’s expense, be released of
record by the Assignee.
9.
COLLECTION
OF PAYMENTS. If no
Event of Default or default shall have occurred under any of the Secured
Obligations, this Assignment, the Loan Agreement, or any of the other Loan
Documents, as that term is defined in the Loan Agreement, then Assignor shall
be
entitled to collect directly any payments made on account of the Assigned
Property.
10.
JURISDICTION. ASSIGNOR
HEREBY IRREVOCABLY AGREES AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY
STATE
OR FEDERAL COURT LOCATED WITHIN XXXXXXX COUNTY, KENTUCKY, OR, AT THE OPTION
OF
ASSIGNEE IN ITS SOLE DISCRETION, OF ANY STATE OR FEDERAL COURT(S) LOCATED WITHIN
ANY OTHER COUNTY, STATE OR JURISDICTION IN WHICH THE BANK AT ANY TIME OR FROM
TIME TO TIME CHOOSES IN ITS SOLE DISCRETION TO BRING AN ACTION OR OTHERWISE
EXERCISE A RIGHT OR REMEDY, AND ASSIGNOR WAIVES ANY OBJECTION BASED ON AN
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INCONVENIENT
FORUM AND ANY OBJECTION TO VENUE OF ANY SUCH ACTION OR PROCEEDING.
11.
JURY TRIAL
WAIVER. ASSIGNOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY
LITIGATION BASED, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
ASSIGNMENT, THE NOTE, OR ANY OTHER LOAN DOCUMENT OR OUT OF ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER WRITTEN OR ORAL) OR ACTIONS
OF
THE ASSIGNOR OR ASSIGNEE.
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IN
WITNESS WHEREOF, the
parties have entered into this Assignment on the dates of the acknowledgments
herein below taken,
to be effective for all purposes, however, as of the dated first written
above.
ASSIGNEE:
ASSIGNOR:
WILDCAT
ENERGY
CORP. ENERGAS RESOURCES, INC.
By: /s/
Xxxxx X. Xxxxxxx By: /s/
Xxxxxx Xxxx
Xxxxx X. Xxxxxxx
Xxxxxx Xxxx
Title: V. Pres. Title: President
Title: V. Pres. Title: President
STATE
OF
Oklahoma
COUNTY
OF
XxXxxxx
The
foregoing instrument was subscribed, sworn to and acknowledged before me on
January 17, 2008, by Xxxxxx Xxxx, as President of Energas
Resources, Inc., a Delaware corporation, Assignor herein, on behalf of said
corporation.
[AFFIX
SEAL] /s/
Xxxxx Xxxx
Notary
Public
My
Commission
Expires:8/28/2011
STATE
OF
Oklahoma
COUNTY
OF
XxXxxxx
The
foregoing instrument was subscribed, sworn to and acknowledged before me on
January 17, 2008, by
Xxxxx Xxxxxxx, as V. Pres. of Wildcat
Energy Corp., a Nevada corporation, Assignee herein, on behalf of said
corporation.
[AFFIX
SEAL] /s/
Xxxxx Xxxx
Notary
Public
My
Commission
Expires:8/28/2011
This
Instrument Prepared By:
XXXXX
XXXXX XXXX LLC
Xxxxx
X.
Xxxxxxxx
000
Xxxx
Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx,
Xxxxxxxx 00000-0000
(000)
000-0000
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EXHIBIT
A
Xxxxx
TGC,
Inc. Operated Oil and Gas Xxxxx And Leases
|
Well
|
Permit
No.
|
Quadrangle
|
County
|
Xxxxxx
Coordinates
|
X.X.
|
X.X.X.
|
|
Xxx,
Xxxxxx #0
|
00000
|
Xxxxxxxxxxxx
|
Xxxxxxx
|
21-C-64
3150FNL,
675FEL
|
100%
|
87.5%
|
|
Xxxxxxxx,
Xxx X. #1
|
65731
|
Williamsburg
|
Xxxxxxx
|
21-C-64
1580FNL,
2250FWL
|
100%
|
87.5%
|
|
Xxxxx,
Xxxxxxxx #1**
|
64625
|
Williamsburg
|
Xxxxxxx
|
16-C-65
2480FNL,
40FEL
|
100%
|
85%
|
|
Xxx,
Xxxxxxx X. #0
|
00000
|
Xxxxxxxxxxxx
|
Xxxxxxx
|
21-C-64
1840FNL,
1075FEL
|
100%
|
87.5%
|
|
Xxxxxxxx,
Xxxx #2
|
82871
|
Williamsburg
|
Xxxxxxx
|
24-C-65
2790FSL,
1120FEL
|
100%
|
87.5%
|
|
Xxxxxxx,
Xxxxx #1***
|
95189
|
Williamsburg
|
Xxxxxxx
|
21-C-64
708FNL,
2119FEL
|
100%
|
87.5%
|
**The
Xxxxxxxx Xxxxx #1 well has an adjoining landowner that is in suspense and TGC,
Inc. is awaiting a signed lease for his minority interest. Once the
signed lease is received, TGC, Inc. will transfer the lease immediately to
Wildcat Energy Corp.
***The
Xxxxx Xxxxxxx well has not been produced for over one (1) year due to the
landowner’s request that the well be shut-in or re-worked.
Being
part of the same property conveyed to Wildcat Energy Corp. by virtue of Xxxx
of
Sale, Assignment and Assumption Agreement with Energas Resources, Inc., TGC,
Inc., and AT Gas Gathering Systems, Inc., of even date herewith.
