EXHIBIT 10.5(b)(i)
FIRST OF AMERICA BANK-MICHIGAN, N.A.
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT
THIS AGREEMENT made and entered into this 1st day of May, 1995, by and
between XXXXXX OIL CORPORATION, a Michigan corporation of 0000 Xxxxx Xxxxxx
Xxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000 (hereinafter referred to as "Debtor"), and
FIRST OF AMERICA BANK-MICHIGAN, N.A., a national banking association, of 000
Xxxxx Xxxxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000 (hereinafter referred to as
"Lender");
W I T N E S S E T H :
Lender and Debtor are parties to that certain loan transaction dated July
22, 1994 wherein Lender has agreed to lend to the Debtor the aggregate sum of
FIVE MILLION ($5,000,000.00) DOLLARS. Debtor has delivered its Promissory Note,
duly executed, in the total principal amount of FIVE MILLION ($5,000,000.00)
DOLLARS, made payable to the Lender all in accordance with the terms set forth
in said Note. The Note, Business Loan Agreement and all documents referenced
therein or executed conjunction therewith are collectively referred to herein as
the "Loan Documents."
Debtor heretofore provided Lender certain collateral to collateralize its
obligations under the Loan Documents. Debtor proposes to sell the collateral to
Xxxxxx Shale Limited Partnership (the "Limited Partnership") pursuant to that
certain Purchase and Sale Agreement dated as of January 1, 1995. Debtor has
requested of Lender that Lender release the collateral and in substitution
thereof take a mortgage and security interest in all of Debtor's right, title
and interest in the proceeds of said sale and Debtor's reserved interest in the
collateral. Lender has agreed to release the collateral and accept in
substitution thereof all of Debtor's right, title and interest in the proceeds
of said sale and Debtor's reserved interest in the collateral.
In consideration of the above and upon the conditions contained herein
and in the Loan Documents, the parties hereto AGREE:
1. MORTGAGE AND SECURITY AGREEMENT. Debtor hereby mortgages, conveys,
assigns, warrants and grants a security interest to Lender in any and all of the
property reserved and excepted to Debtor (as "Assignor") in that certain
Assignment, Xxxx of Sale and Conveyance dated as of January 1, 1995, from Debtor
as Assignor to Xxxxxx Shale Limited Partnership as Assignee, and recorded in
Liber 390, Page 504 of the Xxxxxxxx County Register of Deeds and Liber 580, Page
024 of the Otsego County Register of Deeds (the "Assignment"), including but not
limited to the first and second production payments (the "Production Payments")
reserved by Debtor in the Assignment (herein referred to as the "Collateral"),
and any proceeds therefrom.
2. ASSIGNMENT OF PAYMENT.
(a) As further security for the payment of any and all of the
Debtor's obligations to Lender, the Debtor hereby assigns to the Lender,
effective upon demand of Lender, which demand shall only be made upon
Debtor's default, the Production Payments.
(b) Upon Debtor's default, and upon receipt of a direction for
payment in the form attached hereto, the limited partnership is authorized
and directed by Debtor to deliver or pay all Production Payments to Lender,
as Assignee and Lender of Debtor. Such parties shall be fully protected and
held harmless by Debtor and shall be under no obligation to see to the
application by Lender of any proceeds or payments received by it.
(c) All payments received by the Lender shall be applied in
accordance with the terms of the Loan Documents.
3. DEBTOR'S WARRANTIES AND COVENANTS. Debtor hereby represents, warrants
and agrees that:
(a) Debtor will pay the indebtedness secured by this Mortgage,
Security Agreement and Assignment, and any and all other obligations or
liabilities to Lender in accordance with the Loan Documents.
(b) Except as described in the Assignment, Debtor (1) is now, or will
be at the time Debtor acquires possession thereof, the owner of the
Collateral free from any liens, encumbrances or security interests except
for the security interest granted hereby and assessments and restrictions
of record, (2) shall defend the Collateral against all claims and demands
of every kind and nature, and (3) shall keep the collateral free from
liens, encumbrances and other security interests.
(c) Debtor will not sell or otherwise assign the Collateral or any
interest therein without the prior written consent of Lender.
(d) At its option, Lender may discharge taxes, liens or security
interests or other encumbrances at any time levied or placed on the
Collateral, and Debtor agrees to reimburse Lender on demand for any payment
made or any expense incurred by Lender pursuant to this authorization.
(e) Except for the Assignment, no mortgage or financing statement
covering the Collateral or any part thereof or any proceeds thereof is on
file in any public office, and at the request of Lender, Debtor will join
with Lender in executing one
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(1) or more financing statements in form satisfactory to Lender and will
pay the cost of filing the same in all public offices wherever filing is
deemed by Lender to be necessary or desirable.
(f) Debtor has good and marketable title to all of the Collateral .
4. FURTHER ASSURANCES. The Debtor will execute and deliver to Lender such
other and further instruments and will do such other and further acts as in the
opinion of the Lender may be necessary to carry out more effectively the
purposes and intent hereof.
5. TAXES. The Debtor will promptly pay all taxes, assessments and other
governmental charges legally imposed on the Collateral, the proceeds therefrom
or the Lender's interest therein.
6. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute a default under this Mortgage and Security Agreement:
(a) Debtor's failure to observe and perform any of the terms and
conditions of the Loan Documents as modified hereby.
(b) The occurrence of any event of default specified in any of the
Loan Documents as modified hereby.
(c) The occurrence of any event which results in the acceleration of
the maturity of the obligations of Debtor under the Loan Documents.
(d) Any representation or warranty made by Debtor in any Loan
Document as modified hereby proves to be untrue in any material respect.
(e) Except as set forth in the Assignment, the mortgage lien and
security interest granted hereunder become subordinate or inferior in
priority to the lien or claim of any other person or entity.
(f) Debtor becomes insolvent; becomes the subject of bankruptcy or
reorganization proceedings under the provisions of any bankruptcy or
insolvency law; if a receiver or trustee is appointed; or if Debtor makes
an assignment for the benefit of creditors.
(g) Failure of Debtor, within thirty (30) calendar days after notice
from Lender, to cure a default in the due performance or observance of any
covenant or agreement contained in any Loan Document and not constituting a
default in the payment of principal or interest.
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7. LENDER'S RIGHT UPON DEFAULT.
(a) In the event of a default as provided herein, the entire
indebtedness secured by this Agreement shall become due and payable
immediately at Lender's option and Lender shall have the rights and
remedies provided by law and/or the Loan Documents, including the right to
take possession of the Collateral with demand and with or without process
of law and to sell the Collateral, at one or more sales, as an entirety or
in parts, as Lender may elect.
(b) The parties hereto agree that any requirement of reasonable
notice shall be met if Lender sends such notice to Debtor at least five (5)
days prior to the date of sale, disposition or other event giving rise to
required notice. It is further hereby agreed that public sale of the
Collateral by auction, conducted after advertisement of the time and place
thereof in a newspaper circulated in the county in which the sale is to be
held, shall be deemed to be commercially reasonable disposition of the
Collateral. Debtor shall be liable for any deficiency remaining after such
disposition and the amount required to redeem the Collateral shall include
reasonable attorney fees and costs and expenses incurred in connection with
the acquisition of the Collateral and disposition thereof.
(c) The proceeds of any sale of the Collateral or any part thereof
shall be applied as follows:
(1) To the payment of all expenses incurred by the Lender in the
performance of its duties, including but not limited to expenses or
taking possession, of any sale, of advertisement thereof, of conveying
or court costs, compensation of agents, employees and legal fees;
(2) To the payment of interest to the date of such payment on
any indebtedness of Debtor to Lender.
(3) To the payment of principal on any indebtedness of Debtor to
Lender.
(4) Any surplus thereafter remaining shall be paid to the Debtor
or Debtor's successors or assigns as their interests may appear.
8. INCORPORATION BY REFERENCE. Except as modified hereby, all of the
terms, provisions and conditions contained in the Loan Documents are hereby
incorporated by reference as if fully set forth herein.
9. INDEBTEDNESS SECURED. The indebtedness secured hereunder includes:
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(a) All obligations incurred under the Loan Documents.
(b) Any promissory note evidencing additional loans which the Lender
may make from time to time to Debtor, the Lender not being obligated,
however, to make such additional loans.
(c) Any sums advanced, or expenses or costs incurred by Lender which
are made or incurred pursuant to the terms of any of the Loan Documents
plus interest thereon at the rate specified in the Loan Documents or
otherwise agreed upon from the date of advances or the incurring of such
expenses or costs until reimbursed.
(d) Any extensions or renewals of all such indebtedness described in
Paragraph 9(a) through 9(c) above, whether or not the Lender executes an
extension agreement or renewal instruments.
10. INVALIDITY. In the event any term, provision or condition of this
Agreement or of the Loan Documents is invalid or unenforceable, the same shall
be deemed several from the remainder of such terms, provisions or conditions
which shall remain in full force and effect to the maximum extent permitted by
law.
11. GOVERNING LAW. This Agreement shall be governed by and interpreted and
construed in accordance with the laws of the State of Michigan.
12. REVERSION OF INTERESTS. If the indebtedness shall be fully paid and
the covenants herein contained shall be fully performed, then all interest of
the Debtor in the Collateral shall revert to the Debtor and Lender's interest in
said property shall cease; Lender shall execute and deliver such instruments as
are necessary to discharge or terminate its mortgage and security interests; and
upon request by Debtor, the Lender shall execute such instruments as are
necessary to reconvey the Collateral to Debtor.
13. RIGHTS CUMULATIVE. Each and every right, power and remedy herein given
to the Lender shall be cumulative and not exclusive; and each and every right,
power and remedy may be exercised from time to time and so often and in such
order as may be deemed expedient by Lender, and the exercise of any such right,
power or remedy shall not be deemed a waiver of any other right, power or
remedy.
14. COUNTERPARTS. This instrument may be executed in counterpart by the
parties hereto, and to facilitate recording, the signature pages of each
identical instrument may be combined into one original document.
15. BINDING EFFECT. This Agreement shall bind and inure to the benefit of
the parties hereto, their respective successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
Signed in the Presence of: DEBTOR:
/s/ XXXXX X. XXXXXXXXXX XXXXXX OIL CORPORATION
Xxxxx X. Xxxxxxxxxx
/s/ XXXXXX X. XXXXXX By: /s/ XXXXX X. XXXXXX
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx
Its: President
SECURED PARTY:
/s/ XXXXX X. XXXX FIRST OF AMERICA BANK-
Xxxxx X. Xxxx MICHIGAN, N.A.
/s/ XXXX XXXXX By: /s/ XXXX X. XXXXXXXXX
Xxxx Xxxxx Xxxx X. XxxXxxxxx
Its: Senior Vice President
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STATE OF MICHIGAN )
: ss.
County of Grand Traverse )
On this 1st day of May, 1995, before me a Notary Public in and for
said County, personally appeared the above-named XXXXX X. XXXXXX, President of
XXXXXX OIL CORPORATION, a Michigan corporation, to me known to be the same
person in and who executed the foregoing instrument and acknoweldged the same to
be his free act and deed.
/s/ XXXXX X. XXXXXXXXXX
Xxxxx X. Xxxxxxxxxx
(SEAL) Notary Public
County: Grand Traverse
My Commission Expires: 4/27/96
STATE OF MICHIGAN )
: ss.
County of Grand Traverse )
On this 1st day of May, 1995, before me a Notary Public in and for
said County, personally appeared the above-named XXXX X. XxxXXXXXX, Senior Vice
President of FIRST OF AMERICA BANK-MICHIGAN, N.A., to me known to be the same
person in and who executed the foregoing instrument and acknoweledged the same
to be his free act and deed.
/s/ CHARLOTTE XXXXX XXXXX
Charlotte Xxxxx Xxxxx
(SEAL) Notary Public, Leelanau County, Michigan
Acting in Grand Traverse County
My Commission Expires: 7/24/95
Prepared in the Law Office of:
XXXXXX X. XXXXXX, ESQ.
Xxxxx, Xxxxxxx & Xxxxxx, Attorneys, P.C.
000 Xxx Xxxxxx, X.X. Xxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
(000) 000-0000
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