Loading...
HomeMy WebLinkAbout949426W400 E First St. Casper, WY 82601 RECEIVED 9/14/2009 at 11:51 AM RECEIVING # 949426 BOOK: 731 PAGE: 724 JEANNE WAGNER LINCOLN COUNTY CLERK, KEMMERER, WY MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT AND FINANCING STATEMENT FROM CIM ENERGY PROPERTIES, LLC (Nevada Entity I.D. No. E0354212009-5) to CRAIG I. SHANOR, AS TRUSTEE for the benefit of AMERICAN NATIONAL BANK, DATED AS OF AUGUST 14, 2009 j cs, y72 4 THIS MORTGAGE CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS. THIS MORTGAGE COVERS "AS-EXTRACTED COLLATERAL." THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES. THE OIL AND GAS INTERESTS INCLUDED IN THE MORTGAGED PROPERTY WILL BE FINANCED AT THE WELLHEADS OF THE WELLS LOCATED ON THE PROPERTIES DESCRIBED IN EXHIBIT A ATTACHED HERETO, AND THIS FINANCING STATEMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS. THE MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE CONCERNED, WHICH IS DESCRIBED IN EXHIBIT A ATTACHED HERETO. WHEN RECORDED AND/OR FILED RETURN TO: j&_AmeelcanNafionalBaW 400 E First St. Casper, WY 82601 THIS MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT AND FINANCING STATEMENT, dated as of August 14, 2009 is from CIM ENERGY PROPERTIES, LLC, a Nevada limited liability company (herein called the "Mortgagor"), with an address at 1333 N. Buffalo Drive, # 140, Las Vegas, NV 89128-3636; to CRAIG I. SHANOR, as Trustee (herein called the "Trustee"), with an 25 address at 123 W. 1St Street, Suite 620, Casper, WY 82601, for the benefit of AMERICAN NATIONAL BANK (herein called "ANB"), with an address of 400 E. 1St Street, Casper, WY 82601, or subsequent Holder (as defined below). Pursuant to the terms of that certain Consolidated Loan Agreement dated August 14, 2009, between Mortgagor and ANB (the "Loan Agreement"), the Mortgagor has delivered to ANB its Promissory Note dated August 14, 2009 in the amount of $3,650,000.00 (the "Note") and wishes to secure the payment of the Note, together with all other Indebtedness, as set forth herein. 2. For all purposes of this instrument, unless the context otherwise requires: (a) "Holder" means, ANB or any subsequent holder of the Note at that time. (b) "Hydrocarbons" shall mean oil, natural gas, condensate, casinghead gas, coalbed methane and other liquid or gaseous hydrocarbons and any by- products or other compounds or products derived therefrom. (c) "Indebtedness" shall have the meaning set forth in Article I hereof. (d) "Lands" shall include any lands which are either described in Exhibit A or the description of which is incorporated in Exhibit A by reference to another instrument or document and shall also include any lands now or hereafter unitized or pooled with lands which are either described in Exhibit A or the description of which is incorporated in Exhibit A by reference. (e) "Leases" shall include any and all oil, gas and mineral leases covering any or all of the Lands, including without limitation, the oil and gas leases described in Exhibit A, and shall also include subleases and assignments of operating rights. (fl "Operating Equipment" shall mean all surface or subsurface machinery, equipment, facilities, supplies or other personal property or fixtures of whatsoever kind or nature (excluding trucks, automotive equipment or other property taken to the premises for temporary uses) now or hereafter located in, on or under any of the Lands which are useful for the treatment, storage or transportation of Hydrocarbons, including, but not by way of limitation, separators, flow lines, pipelines, tanks, gas systems (for gathering, treating and compression), chemicals, solutions, water systems (for treating, disposal and injection), power plants, poles, lines, transformers, starters and controllers, machine shops, tools, storage yards and equipment stored therein, buildings and camps, telegraph, telephone and other communication systems, roads, loading racks, loading docks and shipping facilities. (g) "Mortgaged Property" shall mean the properties, rights and interests hereinafter described and defined as the Mortgaged Property. (h) "Sale Contracts" shall mean contracts now in effect or hereafter entered into by the Mortgagor, or the Mortgagor's predecessors in interest, for the r,, il'~ 7 2 sale, purchase, exchange or processing of Hydrocarbons produced from the Lands. NOW, THEREFORE, the Mortgagor, for good and valuable consideration, including but not limited to the debts and trusts hereinafter mentioned, has granted, bargained, hypothecated, warranted, mortgaged, assigned, transferred and conveyed, and by these presents does grant, bargain, hypothecate, warrant, mortgage, assign, transfer and convey unto the Trustee, in trust, with power of sale, for the use and benefit of the Holders, all of Mortgagor's present right, title and interest, together with any other interests hereafter acquired by Mortgagor, in any or all of the hereainafter described properties, rights and interests; and, insofar as such properties, rights and interests consist of equipment, general intangibles, accounts, contract rights, inventory, fixtures, proceeds of collateral or any other personal property of a kind or character defined in or subject to the applicable provisions of the Uniform Commercial Code (as in effect in the appropriate jurisdiction with respect to each of said properties, rights and interests), the Mortgagor hereby grants to the Trustee, for the use and benefit of the Holder, a security interest therein; namely; (a) (1) the Lands, (2) the Leases, (3) any and all oil and/or gas wells now or hereafter located on any of the Lands, (4) any and all Hydrocarbons in, on or attributable to any or all of the Lands or that may be severed or extracted therefrom after the date hereof, including without limitation "as-extracted collateral" (as defined in the applicable version of the Uniform Commercial Code), and (5) logs, maps, geological and geophysical data, engineering data, formation tests, core samples, division orders, title reports and opinions, well files, lease files and other information, data and records, whether in paper, electronic or other form, (b) the Sale Contracts, (c) the Operating Equipment, and (d) all general intangibles, payment intangibles, inventory, accounts, contract rights and other proceeds (including, without limitation, insurance proceeds and proceeds from sale, barter or exchange), whether now or hereafter existing or arising, relating to, or arising in connection with, any of the foregoing, together with any and all corrections or amendments to, or renewals, extensions or ratifications of, any of the same, or of any instrument relating thereto, and all contracts, operating agreements, rights-of-way, franchises, easements, surface leases, permits, licenses, tenements, hereditaments and appurtenances now existing or in the future obtained in connection with any of the aforesaid, and all other things of value and incident thereto which the Mortgagor might at any time have or be entitled to, all the aforesaid properties, rights and interests, together with any additions thereto which may be subjected to the other lien of this instrument by means of supplements hereto, being hereinafter called the "Mortgaged Property." Subject, however, to (i) the restrictions, exceptions, reservations, conditions, limitations, interests and other matters, if any, set forth or referred to in the specific 3 D 727 , 4J) descriptions of such properties and interests in Exhibit A (including all presently existing burdens), (ii) the assignment contained in Article III hereof, but only insofar and so long as said assignment is not inoperative under the provisions of Section 3.5 hereof, and (iii) the condition that the Trustee shall not be liable in any respect for the performance of any covenant or obligation of the Mortgagor in respect to the Mortgaged Property. TO HAVE AND TO HOLD the Mortgaged Property unto the Trustee forever to secure the payment of the Indebtedness and to secure the performance of the obligations of the Mortgagor herein contained. The Mortgagor, in consideration of the premises, hereby covenants and agrees with the Trustee as follows: ARTICLE I INDEBTEDNESS SECURED 1.1 Items of Indebtedness Secured. The following items of indebtedness are secured hereby: (a) The Note and all other obligations and liabilities related thereto; (b) All other indebtedness, liabilities and obligations of Mortgagor, and any entity which is a parent, subsidiary or affiliate of Mortgagor (including, without limitation, Black Bear Oil Corporation, a Nevada Corporation, which is the sole owner of Mortgagor), to ANB, of every kind and character, now existing or hereafter arising, whether direct or indirect, primary or secondary, joint, several or joint and several (including, without limitation, any and all obligations of Mortgagor, and any entity which is a parent, subsidiary or affiliate of Mortgagor, including, without limitation, Black Bear Oil Corporation, a Nevada Corporation, to ANB for fees, costs and expenses pursuant to or in connection with any loan agreements now or hereafter in force), it being contemplated that Mortgagor may hereafter become indebted to ANB in such further sums; (c) Any sums advanced or expenses or costs incurred (including, without limitation, all attorney's fees and other legal, management and consulting expenses) by the Trustee (or any receiver appointed hereunder) which are made or incurred pursuant to, or permitted by, the terms hereof, plus interest thereon at the rate herein specified or otherwise agreed upon, from the date of the advances or the incurring or such expenses or costs until reimbursed; (d) Any extensions or renewals of all such indebtedness described in subparagraphs (a) through (c) above, whether or not the Mortgagor executes any extension agreement or renewal instruments. 1.2 Indebtedness Defined. All the above items of indebtedness are hereinafter collectively referred to as the "Indebtedness." 4 c,C'U)72 ARTICLE II PARTICULAR COVENANTS AND WARRANTIES 2.1 Payment of the Indebtedness. The Mortgagor will duly and punctually pay the Indebtedness, including each and every obligation owing on account of the Note. 2.2 Warranties. The Mortgagor represents and warrants that the Leases are valid, subsisting leases, superior and paramount to all other leases respecting the properties to which they pertain; the Mortgagor has valid and indefeasible title to each property right or interest constituting the Mortgaged Property and has a good and legal right to grant and convey the same hereunder; the Mortgaged Property is free from all encumbrances or liens whatsoever, except those which are specifically set forth in Exhibit B or those which are permitted by the provisions of Section 2.5 (e) hereof. The Mortgagor will warrant and forever defend the Mortgaged Property unto the Trustee against every person whomsoever lawfully claiming the same or any part thereof, and the Mortgagor will maintain and preserve the lien hereby created so long as any of the Indebtedness remains unpaid. 2.3 Further Assurances. The Mortgagor will execute and deliver such other and further instruments and will do such other and further acts as, in the opinion of the Trustee, may be necessary or desirable to carry out more effectually the purposes of this instrument, including, with limiting the generality of the foregoing, prompt correction of any defect which may hereafter be discovered in the title to the Mortgaged Property or in the execution and acknowledgment of this instrument, the Note, or any other document executed in connection herewith. 2.4 Payment of Taxes. The Mortgagor shall promptly pay or cause to be paid and in all events prior to delinquency all taxes, assessments and governmental charges now or hereafter assessed or imposed upon or with respect to, measured by or charged against the Mortgaged Property, the development, operation, production, sale and transmission of the Hydrocarbons, or this instrument and the Indebtedness, or assessed against or imposed upon the Mortgagor because of the Mortgagor's ownership of the Mortgaged Property or any part thereof or the Trustee because of the interest of the Trustee therein, all federal and state income taxes payable generally by the Mortgagor regardless of their relation to the Mortgaged Property, and all federal and state Social Security taxes, payments and contributions for which the Mortgagor may be liable; provided, however, that as to any of the above-described taxes, assessments and governmental charges that are being contested in good faith by appropriate proceedings, the same shall be paid promptly after the final determination of such contest, together with any interest and penalty payable in connection therewith. 2.5 Operation of the Mortgaged Property. So long as the Indebtedness or any part thereof remains unpaid, and whether or not the Mortgagor is the operator of the Mortgaged Property, the Mortgagor shall, at the Mortgagor's own expense: 5 (a) do or cause to be done all things necessary to keep unimpaired the Mortgagor's rights in the Mortgaged Property and not, except in the ordinary course of business, abandon, surrender or release any rights in the Mortgaged Property without the prior written consent of the Trustee; (b) cause the Lands to be maintained, developed and operated in a good and workmanlike manner as would a prudent operator, and in accordance with generally accepted practices and all applicable federal, state and local laws, rules and regulations, excepting those being contested in good faith, where Mortgagor is the operator and to the best of its abilities where it is not the operator; (c) cause to be paid, promptly as and when due and payable, all rentals and royalties payable in respect of the Mortgaged Property, and all expenses incurred in or arising from the operation of the Mortgaged Property, where Mortgagor is the operator and to the best of its abilities where it is not the operator; (d) cause the Operating Equipment to be kept in good and effective operating condition, and all repairs, renewals, replacements, additions and improvements thereof or thereto to be promptly made, where Mortgagor is the operator and to the best of its abilities where it is not the operator; (e) cause the Mortgaged Property to be kept free and clear of liens, charges and encumbrances of every character, other than the lien hereof, taxes constituting a lien but not due and payable, defects or irregularities in title, and liens, charges or encumbrances, which are not such as to interfere materially with the development, operation or value of the Mortgaged Property and not such as to affect materially title thereto, those set forth or referred to in Exhibit B, those being contested by the Mortgagor in good faith in such manner as not to jeopardize the Trustee's and the Trustee's rights in and to the Mortgaged Property, and those consented to in writing by the Trustee; and (fl carry in financially sound and reputable insurance companies the following insurance: workmen's compensation insurance and public liability and property damage insurance in respect of all activities in which the Mortgagor might incur personal liability for the death of or injury to an employee or third person, or damage to or destruction of another's property; and to the extent such insurance is carried by others engaged in similar undertakings in the same general areas in which the Mortgaged Property is located, insurance in respect of the Operating Equipment, against loss or damage by fire, lightning, hail, tornado, flood, explosion and other similar risks, with loss payable endorsements in favor of the Trustee as its interests may appear and a provision for maximum time for prior written notice to the Trustee of cancellation, where Mortgagor is the operator and to the best of its abilities where it is not the operator; and the Trustee will apply all proceeds of such insurance which it receives to the Mortgagor for the repair or 6 A. . {•x,730 replacement of such parts of the Mortgaged Property as may have been damaged or destroyed. 2.6 Recording and Filing. The Mortgagee will, at the Mortgagor's expense, record, register, deposit and file this and every other instrument in addition or supplemental hereto in such offices and places at such times and as often as may be necessary to create, preserve, protect and renew the lien hereof as a first lien on real or personal property, as the case may be, and the rights and remedies of the Trustee, and otherwise will do and observe all things or matters necessary or expedient to be done or observed by reason of any law or regulation of any State or of the United States of America or of any other competent authority, for the purpose of effectively creating, maintaining and preserving the lien hereof on the Mortgaged Property. 2.7 Sale or Mortgake of the Mortgaged Property. Except for sales in the ordinary course of the Mortgagor's business and the lien and security interest created by this instrument, the Mortgagor will not sell, convey, mortgage, pledge, or otherwise dispose of or encumber the Mortgaged Property nor any portion thereof, nor any of the Mortgagor's right, title or interest therein, without first securing the written consent of the Trustee, which consent shall not be unreasonably withheld, or will deliver the proceeds thereof to the Trustee. 2.8 Records, Statements and Reports. The Mortgagor will keep proper books of record and account in which the complete and correct entries will be made of the Mortgagor's transactions in accordance with generally accepted accounting principles, and will furnish or cause to be furnished to the Trustee upon its request all records and reports relating to, or prepared in connection with the operation of, the Mortgaged Property (including, without limitation, reports of the estimated income therefrom and expenses attributable thereto), and such other information concerning the business, affairs and financial condition of the Mortgagor as the Trustee may from time to time reasonably request. 2.9 No Governmental Approvals. The Mortgagor warrants that no approval or consent of any regulatory or administrative commission or authority, or of any other governmental body, is necessary to authorize the execution and delivery of this instrument or the Note, or to authorize the observance or performance by the Mortgagor of the covenants herein or in the Note, or that such approvals as are required have been obtained or will be obtained promptly. 2.10 Right of Entry. The Mortgagor will permit the Trustee, employees of the Trustee and such other persons or entities as the Trustee may in its discretion designate, reasonable access to the Mortgaged Property and to the field offices and other offices, including the principal place of business of the Mortgagor, to inspect and examine the Mortgaged Property and to inspect, review and reproduce as necessary any books, records, accounts, contracts or other documents of the Mortgagor. 2.11 Qualified Mortgagor. The Mortgagor will continue to be duly qualified to transact business in each state where the conduct of its business requires it to be qualified. .7 Cis ( f C11 ARTICLE III ASSIGNMENT OF PRODUCTION 3.1 Assignment. As further security for the payment of the Indebtedness, the Mortgagor hereby transfers, assigns, warrants and conveys to the Trustee, effective as of August 1, 2009 at 7:00 a.m., local time, all proceeds which are thereafter received from and which accrue to the Mortgaged Property. All parties having proceeds therefrom in their possession for which they or others are accountable to the Trustee by virtue of the provisions of this Article are authorized and directed to treat and regard the Trustee as the assignee and transferee of the Mortgagor and entitled in the Mortgagoz's place and stead to receive such proceeds, and said parties and each of them shall be fully protected in so treating and regarding the Trustee and shall be under no obligation to see to the application by the Trustee of any such proceeds or payments received by it. The Trustee will not exercise its rights under this Article III until the occurrence of an Event of Default hereunder and expiration of any applicable grace or cure period. 3.2 Application of Proceeds. All payments of proceeds received by the Trustee pursuant to Section 3.1 hereof shall be placed in a cash collateral account at ANB and on the first business day of each month applied as follows: First: To the payment and satisfaction of all costs and expenses incurred in connection with the collection of such proceeds, and to the payment of all items of the Indebtedness not evidenced by any Note. Second: To the payment of the interest of the Note accrued to the date of such payment. Third: To the payment of the amounts of principal then due and owing on the Note. Fourth: The balance, if any, to the Mortgagor. 3.3 No Liability of the Trustee in Collecting. The Trustee is hereby absolved from all liability for failure to enforce collection of any proceeds so assigned (and no such failure shall be deemed to be a waiver of any right of the Trustee under this Article) and from all other responsibility in connection therewith, except the responsibility to account to the Mortgagor for funds actually received. 3.4 Assignment Not a Restriction on the Trustee's Rights. Nothing herein contained shall detract from or limit the absolute obligation of the Mortgagor to make payment of the Indebtedness regardless of whether the proceeds assigned by this Article are sufficient to pay the same, and the rights under this Article shall be in addition to all other security now or hereafter existing to secure the payment of the Indebtedness. 3.5 Status of Assignment. Notwithstanding the other provisions of this Article, the Trustee or any receiver appointed in judicial proceedings for the enforcement of this instrument shall have the right to receive all proceeds from the Mortgaged Property after the occurrence of an Event of Default hereunder and expiration of any applicable grace or cure period, and to apply all of said proceeds as 8 provided in Section 3.2 hereof. Upon any sale of the Mortgaged Property or any part thereof pursuant to Article V, the proceeds therefrom shall be included in such sale and shall pass to the purchaser free and clear of the assignment contained in this Article. 3.6 Indemnity. The Mortgagor agrees to indemnify the Trustee against all claims, actions, liabilities, judgments, costs, attorneys' fees or other charges of whatsoever kind or nature (all hereinafter in this Section 3.6 called "claims") made against or incurred by them or either of them as a consequence of the assertion, either before or after the payment in full of the Indebtedness, that they or either of them received proceeds hereunder claimed by third persons, and the Trustee shall have the right to defend against any such claims, employing attorneys therefor, and unless furnished with reasonable indemnity, they or any of them shall have the right to pay or compromise and adjust all such claims. The Mortgagor will indemnify and pay to the Trustee any and all such amounts as may be paid in respect thereof or as may be successfully adjudged against the Trustee or any of them. The obligations of the Mortgagor as hereinabove set forth in this Section 3.6 shall survive the release of this instrument. ARTICLE IV HAZARDOUS SUBSTANCES 4.1 Representations and Warranties. The Mortgagor hereby represents and warrants that neither the Mortgagor nor, to the best of the Mortgagor's knowledge, any other person or entity has ever caused or permitted any Hazardous Substances (as such term is hereinafter defined) to be placed, held, located or disposed of on, under or at the Mortgaged Property or any part thereof and that neither the Mortgaged Property nor any part thereof has ever been used (whether by the Mortgagor or by any other person or entity) as a treatment, storage or disposal facility or site (whether permanent or temporary) for any Hazardous Substances. 4.2 Indemnification. The Mortgagor hereby agrees to protect, defend, indemnify and hold the Trustee, its officers, directors, agents, representatives, employees, parents, affiliates and subsidiaries (the "Indemnified Parties") harmless from and against any and all losses, liabilities (including strict or absolute liability), damages, injuries, expenses, and costs including, without limitation, court costs and reasonable attorneys' fees, of any suit, settlement or judgment and claims of any and every kind whatsoever paid (including any fees, expenses and court costs incurred to enforce this indemnity), incurred or suffered by, or asserted against the Indemnified Parties by any person or entity or governmental agency for, with respect to, or as a direct or indirect result of, the presence on, under or at, or the escape, seepage, leakage, spillage, emission, discharge or release from, the Mortgaged Property of any Hazardous Substance including, without limitation, any suit, settlement or judgment or claim asserted or arising under, as amended, the Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendment and Reauthorization Act, the Resource Conservation Recovery Act, the Federal Water Pollution Control Act, the Federal Environmental Pesticides Act, the Toxic Substances Control Act, the Clean Water Act, the Clean Air Act, and any other applicable environmental protection, waste management, resource recovery, hazardous waste control or other related rule, regulation or statute of any state of local in which the Mortgaged Property is located, including any so-called federal, state or local "Superfund" or "Superlien" statute, or any other statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing liability (including strict liability), or standards of conduct concerning any Hazardous Substance, as now or at any time by, on the behalf of, or within the control of the Mortgagor. 4.3 Definition of Hazardous Substances. For purposes of this Mortgage, the term "Hazardous Substances" shall mean and include those elements or compounds which exhibit any of the characteristics of a "hazardous" waste or are contained in the list of substances determined to the "hazardous," expressly including oil field wastes if exhibiting any such characteristics listed as hazardous or if not receiving an exemption or exclusion, as adopted by the United States Environmental Protection Agency ("EPA") and the list of toxic pollutants designated by Congress, or the EPA, or defined by any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability (including strict liability) or standards or conduct concerning any solid, hazardous, toxic or dangerous waste, substance or material, as now or at any time hereinafter are in effect. 4.4 Notification. If the Mortgagor receives any notice or knowledge of (i) the occurrence of any event involving the use, spill, release, leak, seepage, discharge or cleanup of any Hazardous Substance, or (ii) any complaint, order, citation or other notice with regard to air emissions, water discharges, or any other environmental, health or safety matter affecting the Mortgagor or the Mortgaged Property (an "Environmental Complaint") from any person or entity (including, without limitation, the EPA), then the Mortgagor shall immediately notify the Trustee orally and in writing of any such notice, and, if the Environmental Complaint is in writing, shall immediately deliver a copy of the Environmental Complaint to the Trustee. 4.5 Trustee's Right to Act. In addition to all other rights granted to the Trustee under any other agreements, the Trustee shall have the right, but not the obligation, to enter onto the Mortgaged Property or to take such other actions as it deems necessary or advisable to clean up, remove, resolve, eliminate or minimize the impact of, or otherwise deal with, any such Hazardous Substance or Environmental Complaint following receipt of any notice from any person or entity (including, without limitation, the EPA) asserting the existence of any Hazardous Substance or an Environmental Complaint pertaining to the Mortgaged Property or any part thereof which, if true, could result in an order, suit or other action against the Trustee and/or which, in the sole opinion of the Trustee, could have an adverse impact on the value of the Mortgaged Property or otherwise jeopardize the Trustee's lien against the Mortgaged Property granted or created under this Mortgage. 4.6 Environmental Audit and Risk Assessment. The Trustee shall have the right, but not the obligation, in its sole discretion, to require the Mortgagor to 10 `734 periodically perform (at the Mortgagor's sole cost and expense) an environmental audit and, if reasonably deemed necessary by the Trustee, an environmental risk assessment of the Mortgaged Property, of the Mortgagor's solid, oilfield and hazardous waste management practices and/or the solid, oilfield or hazardous waste disposal sites used by the Mortgagor, each of which must be satisfactory to the Trustee. Said audit and/or risk assessment must be performed and reported by an environmental consultant satisfactory to the Trustee. Should the Mortgagor fail to perform any such reasonably requested environmental audit or risk assessment within thirty days of the Trustee's written request to the Mortgagor for same, the Trustee shall have the right, but not the obligation, to retain an environmental consultant to perform said environmental audit or risk assessment and to enter upon Mortgaged Property and perform such tests or sampling procedures as are deemed necessary by Trustee. Any funds of the Trustee used for any purpose referred to in Section 4.5 or this Section 4.6, together with interest thereon as provided herein, shall constitute obligations included in the Indebtedness secured by this Mortgage. Such advances of funds by the Trustee shall bear interest at the rate provided in the Note until repaid by the Mortgagor to the Trustee. ARTICLE V EVENTS OF DEFAULT 5.1 Events of Default Hereunder. In case any one or more of the following "Events of Default" shall occur and shall not have been remedied: (a) default in the payment of principal of or interest on the Note or in the payment of any other Indebtedness secured hereby, when due; (b) the occurrence of an event of default under the terms and provisions of the Note or the Loan Agreement and the continuance of such event of default for the applicable period of grace; (c) the Mortgagor shall dissolve or terminate its existence, without the prior written consent of the Trustee; or (d) the Mortgagor shall fail to maintain the lien and priority of this instrument as against any other person or entity as required by the Note, then and in any such event the Trustee, at its option, may declare the entire unpaid principal of and the interest accrued on the Note and all other Indebtedness secured hereby to be forthwith due and payable, without any notice or demand of any kind, both of which are hereby expressly waived. ARTICLE VI ENFORCEMENT OF THE SECURITY 6.1 Power of Sale of Real Property Constituting a Part of the Mortgaged Property. Upon the occurrence of an Event of Default and if such event shall be continuing, the Trustee shall have the right and power to sell, to the extent permitted by law, at one or more sales, as an entirety or in parcels, as they may 11 elect, the real property constituting a part of the Mortgaged Property, at such place or places and otherwise in such manner and upon such notice as may be required by law, or, in the absence of any such requirement, as the Trustee may deem appropriate, and to make conveyance to the purchaser or purchasers; and the Mortgagor shall warrant title to such real property to such purchaser or purchasers. The Trustee may postpone the sale of all or any portion of such real property by public announcement at the time and place of such sale, and from time to time thereafter may further postpone such sale by public announcement made at the time of sale fined by the preceding postponement. The right of sale hereunder shall not be exhausted by one or any sale, and the Trustee may make other and successive sales until all of the trust estate be legally sold. 6.2 Rights of the Trustee with Respect to Personal Property Constituting a Part of the Mortgaged Property. Upon the occurrence of an Event of Default and if such event shall be continuing, the Trustee will have all rights and remedies granted by law, and particularly by the Uniform Commercial Code, including, but not limited to, the right to take possession of all personal property constituting a part of the Mortgaged Property, and for this purpose the Trustee may enter upon any premises on which any or all of such personal property is situated and take possession of and operate such personal property (or any portion thereof) or remove it therefrom. The Trustee may require the Mortgagor to assemble such personal property and make it available to the Trustee at a place to be designated by the Trustee which is reasonably convenient to all parties. Unless such personal property is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Trustee will give the Mortgagor reasonable notice of the time and place of any public sale or of the time after which any private sale or other disposition of such personal property is to be made. This requirement of sending reasonable notice will be met if the notice is mailed first-class mail, postage prepaid, to the Mortgagor at the address shown below the signatures at the end of this instrument at least five days before the time of the sale or disposition. 6.3 Rights of Trustee with Respect to Fixtures Constituting a Part of the Mortgaged Property. Upon the occurrence of an Event of Default and if such event shall be continuing, the Trustee may elect to treat the fixtures constituting a part of the Mortgaged Property as either real property collateral or personal property collateral and proceed to exercise such rights as apply to such type of collateral. 6.4 Judicial Proceedings. Upon occurrence of an Event of Default and if such event shall be continuing, the Trustee, in lieu of or in addition to exercising any power of sale hereinabove given, may proceed by a suit or suits in equity or at law, whether for a foreclosure hereunder, or for the sale of the Mortgaged Property, or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure hereunder or the sale of the Mortgaged Property, or for the enforcement of any other appropriate legal or equitable remedy. 12 6.5 Possession of the Mortgaged Property. It shall not be necessary for the Trustee to have physically present or constructively in their possession at any sale held by the Trustor or by any court, receiver or public officer any or all of the Mortgaged Property; and the Mortgagor shall deliver to the purchaser at such sale on the date of sale the Mortgaged Property purchased by such purchasers at such sale, and if it should be impossible or impracticable for any of such purchasers to take actual delivery of the Mortgaged Property, then the title and right of possession to the Mortgaged Property shall pass to the purchaser at such sale as completely as if the same had been actually present and delivered. 6.6 Certain Aspects of a Sale. The Trustee shall have the right to become the purchaser at any sale held by the Trustee or by any court, receiver or public officer, and the Trustee shall have the right to credit upon the amount of the bid made therefor the amount payable out of the net proceeds of such sale to it. Recitals contained in any conveyance made to any purchaser at any sale made hereunder shall conclusively establish the trust and accuracy of the matters therein stated, including, without limiting the generality of the foregoing, non- payment of the unpaid principal sum of, and the interest accrued on, the Debentures after the same have become due and payable, advertisement and conduct of such sale in the manner provided herein or appointment of any successor Trustee hereunder. 6.7 Receipt to Purchaser. Upon any sale, whether made under the power of the sale herein granted and conferred or by virtue of judicial proceedings, the receipt of the Trustee, or of the officer making sale under judicial proceedings, shall be sufficient discharge to the purchaser or purchasers at any sale for his or their purchase money, and such purchaser or purchasers, or his or their assigns or personal representatives, shall not, after paying such purchase money and receiving such receipt of the Trustee or of such officer therefor, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. 6.8 Effect of Sale. Any sale or sales of the Mortgaged Property, whether under the power of sale herein granted or conferred or by virtue of judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever either at law or in equity, of the Mortgagor of, in and to the premises and the property sold, and shall be a perpetual bar, both at law and in equity, against the Mortgagor, and the Mortgagor's successors or assigns, and against any and all persons claiming or who shall thereafter claim all or any of the property sold from, through or under the Mortgagor or the Mortgagor's successors or assigns. Nevertheless, the Mortgagor, if requested by the Trustee so to do, shall join in the execution and delivery of all proper conveyances, assignments and transfers of the properties so sold. 6.9 Application of Proceeds. The proceeds of any sale of the Mortgaged Property, or any part thereof, whether under the power of sale herein granted and conferred or by virtue of judicial proceedings, shall be applied as follows: First: To the payment and satisfaction of all costs and expenses incurred by the Trustee in the performance of its duties including, without 13 limiting the generality of the foregoing, a commission to Trustee not to exceed five percent of the proceeds of any sale of the Mortgaged Property and costs and expenses of any entry, or taking of possession, of any sale or advertisement thereof, and of conveyances, and as well, court costs, compensation of agents and employees and legal fees. Second: To the payment of the interest on the Note and the other items of Indebtedness accrued to the date of such payment. Third: To the payment of the amounts of principal of the Note and of the other items of Indebtedness due and owing at the time of such payment. Fourth: Any surplus thereafter remaining shall be paid to the Mortgagor or the Mortgagor's successors or assigns, as their interests shall appear. 6.10 Liability for Deficiency. The Mortgagor will remain liable for any deficiency owing to the Trustee after application of the proceeds of any sale of the Mortgaged Property as set forth in Section 6.9 hereof. 6.11 The Mortgagor's Waiver of Abpraisement, Marshalling and Other Rights The Mortgagor agrees, to the full extent that the Mortgagor may lawfully so agree, that the Mortgagor will not at any time insist upon or plead or in any manner whatever claim the benefit of any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this instrument or the absolute sale of the Mortgaged Property or the possession thereof by any purchaser at any sale made pursuant to any provision hereof, or pursuant to the decree of any court of competent jurisdiction; but the Mortgagor, for the Mortgagor and all who may claim through or under the Mortgagor, so far as the Mortgagor or those claiming through or under the Mortgagor now or hereafter lawfully may, hereby waives the benefit of all such laws. The Mortgagor, for the Mortgagor and all who may claim through or under the Mortgagor, waives, to the extent that the Mortgagor may lawfully do so, any and all right to have the Mortgaged Property marshaled upon any foreclosure of the lien hereof, or sold in inverse order of alienation, and agrees that the Trustee or any court having jurisdiction to foreclosure such lien may sell the Mortgaged Property as an entirety or in separate parts. If any law in this paragraph referred to and now in force, of which the Mortgagor or the Mortgagor's successor or successors might take advantage despite the provisions hereof, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the operation or application of the provisions of this paragraph. 6.12 Costs and expenses. All costs and expenses (including attorney's fees and other legal, management and consulting expenses) incurred by the Trustee in protecting and enforcing its rights hereunder shall constitute a demand obligation owing by the Mortgagor to the party incurring such costs and expenses and shall draw interest at an annual rate equal to the highest rate of interest from time to time accruing under the Note until paid, all of which shall constitute a portion of the Indebtedness. 14 .7 38 6.13 Operation of the Mortgaged Property by the Trustee. Upon the occurrence of an Event of Default and expiration of any applicable grace or cure period and in addition to all other rights herein conferred on the Trustee, the Trustee (or any person, firm or corporation designated by the Trustee) shall have the right and power, but shall not be obligated, to enter upon and take possession of any of the Mortgaged Property, and to exclude the Mortgagor, and the Mortgagor's agents or servants, wholly therefrom, and to hold, use, administer, manage and operate the same to the extent that the Mortgagor shall be at the time entitled and in its place and stead. The Trustee, or any person, firm or corporation designated by the Trustee, may operate the same without any liability to the Mortgagor in connection with such operations, except to use ordinary care in the operation of such properties, and the Trustee or any person, firm or corporation designated by the Trustee, shall have the right to collect, receive and receipt for all Hydrocarbons produced and sold from said properties, to make repairs, purchase machinery and equipment, conduct work-over operations, drill additional wells and to exercise every power, right and privilege of the Mortgagor with respect to the Mortgaged Property. When and if the expenses of such operation and development (including costs of unsuccessful work-over operations or additional wells) have been paid and the Indebtedness paid, said properties shall, if there has been no sale or foreclosure, be returned to the Mortgagor. ARTICLE VII MISCELLANEOUS PROVISIONS 7.1 Successor Trustee. The Trustee may resign in writing addressed to the Holder or may be removed at any time with or without cause by an instrument in writing .duly executed by the Holder. In case of the death, resignation or removal of the Trustee, a successor Trustee may be appointed by the Holder by instrument of substitution complying with any applicable requirements of law, and in the absence of any such requirement without formality other than appointment and designation in writing. Such appointment and designation shall be full evidence of the right and authority to make the same and all facts therein recited, and upon the making of any such appointment and designation this conveyance shall vest in the named successor Trustee all the estate and title of the prior Trustee in all of the Mortgaged Property, and he shall thereupon succeed to all the rights, powers, privileges, immunities and duties hereby conferred upon the prior Trustee. All references herein to the Trustee shall be deemed to refer to the Trustee from time to time acting hereunder. 7.2 Right to Perform the Mortgaf4or's Obligations. Each and every covenant herein contained shall be performed and kept by the Mortgagor solely at the Mortgagor's expense. If the Mortgagor shall fail to perform or keep any of the covenants of whatsoever kind or nature contained in this instrument, the Trustee or any receiver appointed hereunder, may, but shall not be obligated to, take action and/or make advances to perform the same in the Mortgagor's behalf, and the Mortgagor hereby agrees to repay the expense of such action including, but not limited to, reasonable attorneys' and management fees and such advances on demand plus interest at an annual rate equal to the highest 15 rate of interest from time to time accruing on the Note until paid, or, in the event any promissory note evidences such indebtedness, upon the terms and conditions thereof. No such advance or action by the Trustee, the Trustee or any receiver appointed hereunder shall be deemed to relieve the Mortgagor from any default hereunder. 7.3 Defense of Claims. The Mortgagor will notify the Trustee, in writing, promptly of the commencement of any legal proceedings affecting the lien hereby or the Mortgaged Property, or any part thereof, and will take such action, employing attorneys agreeable to the Trustee, as may be necessary to preserve the Mortgagor's, the Trustee's rights affected thereby; and should the Mortgagor fail or refuse to take any such action, the Trustee may, in its discretion, upon giving written notice thereof to the Mortgagor, take such action in behalf and in the name of the Mortgagor and at the Mortgagor's expense. Moreover, the Trustee may take such independent action in connection therewith as it may in its discretion deem proper, the Mortgagor hereby agreeing that all sums advanced or all expenses incurred in such actions including reasonable attorneys' fees plus interest at an annual rate equal to the highest rate of interest from time to time accruing under the Note, will, on demand, be reimbursed, as appropriate, to the Trustee or any receiver appointed hereunder. 7.4 The Mortgaged Property to Revert. If the Indebtedness shall be fully paid and the covenants herein contained shall be well and truly performed, then all of the Mortgaged Property shall revert to the Mortgagor and the entire estate, right, title and interest of the Trustee shall thereupon cease; and the Trustee in such case shall, upon the request of the Mortgagor and at the Mortgagor's cost and expense, deliver to the Mortgagor proper instruments acknowledging satisfaction of this instrument. 7.5 Renewals, Amendments and Other Security. Renewals and extensions of the Indebtedness may be given at any time and amendments may be made to agreements relating to any part of such Indebtedness or the Mortgaged Property and the Trustee may take or may now hold other security for the Indebtedness, all without notice to or consent of the Mortgagor. The Trustee may resort first to such other security or any part thereof or first to the security herein given or any part thereof, or from time to time to either or both, even to the partial or complete abandonment of either security, and such action shall not be a waiver of any rights conferred by this instrument, which shall continue as a first lien upon the Mortgaged Property not expressly released until the Note and all other Indebtedness secured hereby are fully paid. 7.6 Construction of Instrument as an Assignment. This instrument shall be deemed to be and may be enforced from time to time as an assignment, chattel mortgage, contract, deed of trust, financing statement, real estate mortgage, or security agreement, and from time to time as any one or more thereof. 7.7 Limitation on Interest. No provision of this instrument or of the Note shall require the payment or permit the collection of interest in excess of the maximum permitted by law or which is otherwise contrary to law. If any excess of interest in such respect is herein or in the Note provided for, or shall be 16 740 adjudicated to be so provided for herein or in the Debentures, the Mortgagor shall not be obligated to pay such excess. 7.8 Unenforceable or Inapplicable Provisions. If any provision hereof or of the Note is invalid or unenforceable in any jurisdiction, the other provisions hereof or of the Note shall remain in full force and effect in such jurisdiction, and the remaining provisions hereof shall be liberally construed in favor of the Trustee in order to effectuate the provisions hereof, and the invalidity of any provision hereof in any jurisdiction shall not affect the validity or enforceability of any such provision in any other jurisdiction. In lieu of such invalid or unenforceable provision, there shall be added automatically as a part of this deed of trust a provision as similar to the invalid or unenforceable provision as may be possible and be legal, valid and enforceable. Any reference herein contained to a statute or law of a state in which no part of the Mortgaged Property is situated shall be deemed inapplicable to, and not used in, the interpretation hereof. 7.9 Rights Cumulative. Each and every right, power and remedy herein given to the Trustee shall be cumulative and not exclusive; and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and so often and in such order as may be deemed expedient by the Trustee, as the case may be, and the exercise, or the beginning of the exercise, of any such right, power or remedy shall not be deemed a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Trustee in the exercise of any right, power or remedy shall impair any such right, power or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter existing. 7.10 Indemnification. The Mortgagor shall indemnify the Trustee and hold it harmless against, and the Trustee shall not be liable for, any loss, cost or damage, including, without limitation, attorneys' fees, resulting from exercise by the Trustee of any right, remedy, power, or privilege conferred upon it by this instrument or any other instrument pertaining hereto, or from the attempt or failure of the Trustee to exercise any such right, remedy, power or privilege; and notwithstanding any provision hereof to the contrary the foregoing indemnity shall in all respects continue and remain in full force and effect even though all Indebtedness may be fully paid and the lien of this instrument released. 7.11 Partial Releases. No release from the lien of this instrument of any part of the Mortgaged Property by the Trustee shall in anywise alter, vary or diminish the force, effect or lien of this instrument against the balance or remainder of the Mortgaged Property. 7.12 Waiver by the Trustee. Any and all covenants in this instrument may from time to time by instrument in writing signed by the Trustee by waived to such extent and in such manner as the Trustee may desire, but no such waiver shall ever affect or impair the Trustee's rights or liens hereunder, except to the extent specifically stated in such written instrument. 17 7.13 Successors and Assigns. This instrument in binding upon the Mortgagor and the Mortgagor's successors and assigns, and shall inure to the benefit of the Trustee, its successors and assigns, and the provisions hereof shall likewise be covenants running with the land. 7.14 Article and Section Headings. The Article and section headings and any references to gender and singular or plural parties in this instrument are inserted for convenience of reference and shall not be considered a part of this instrument or used in its interpretation. 7.15 Execution in Counterparts. This instrument may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which are identical, except that, to facilitate recordation or filing, in any particular counterpart portions of Exhibit A attached hereto which describe properties situated in parishes or counties other than the parish or county in which such counterpart is to be recorded may have been omitted. 7.16 Special Filing as Financing Statement. This Mortgage and Deed of Trust shall likewise be a Security Agreement and a Financing Statement. This Mortgage and Deed of Trust shall be filed for record, among other places, in real estate records of each county in which the Mortgaged Property, or any part thereof, is situated, and, when filed in such counties shall be effective as a financing statement covering fixtures located thereon (and accounts arising therefrom). This instrument shall also be filed for record in conjunction with the applicable UCC forms as a financing statement in the office of the Secretary of State in each State in which the Mortgaged Property, or any part thereof, is situated. 7.17 Notices. Any notice, request, demand or other instrument which may be required or permitted to be given or served upon the Mortgagor shall be sufficiently given when mailed by first-class mail, addressed to the Mortgagor at the address shown below the signatures at the end of this instrument or to such different address as the Mortgagor shall have designated by written notice received by the Trustee. IN WITNESS WHEREOF, the Mortgagor has executed or caused to be executed this Mortgage, Deed of Trust, Assignment of Production, Security Agreement and Financing Statement as of the date, month and year first above written. MORTGAGOR: ATTEST: By: Title: if 1 /I+^ •~/trca CIM ENERGY PROPERTIES, LLC Z Title: C1 o/ Al'ninttA.Q _ 18 ACKNOWLDGEMENT ` ° q<_" STATE OF Nw COUNTY OF The foregoing instrument was acknowledged before me on this n day of August, 2009, by F4V- ADAt-4 , as 60 J" of CIM Energy Properties, LLC, a Nevada limited liability company, on behalf of said company. (Seal) _ Notary Public My commission expires: 1?-b AMA JOHN N NYIMr i~IRC, =tNt of N~M~11 A3p ft OI+IMI NY A pt. ERWOS hb 9.20f3 19 743 S~)Jqovv'~Vxb )SS. COUNTY OF L2n- tv v~,a ) The foregoing instrument was acknowledged before me on this L q ~ day of , 2009, by SQo + W Q,,u cr , as t1,g of American National Bank, a corporation, on behalf of said company. (Seal) My commission expires: io (ao 1 XO t 2- Notary Public Up" IL rw nv W EXHIBIT "A" "LANDS" MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT AND FINANCING STATEMENT DATED AS OF AUGUST 14, 2009 o 0 0 0 n ii. N W z _ W 4 r 0 J ~ UWto WN .C O N d ~ N 01 zz N N J r In p N 0 OI ro a Y O O II1 C O C Q O U 'I w x ~ W a" m Q' O m o o y J a W CL CA m z LL r N O u: I- m m U' ~ U v U J li 0 Y P O INn S } w LL- ~ m O a o 7 U U M U A N O 0 V O O II > 0 O , N in N o L ui o o N N 0 ~ O N ~ J S J W C d. 0 M (O U1 FO zO N zr pM1 N N V) En 0 I-W FO -O NI- U rn ~O OLL V (J) UZUU ~ Ln CO, u .r..N~W ro ~Z33 (mryV~ NNr~n J FNF N FN- L, N d Q' d O) ro a Y O O ID N M1 tl C] C7 O n 0 0 n a H ~'upi 1 O S . C U 3 d o U 7 .N r ~ o K N r d UI r A m vi 4 N o 0 U) N ~ J O , "L N Ll Q 2 N Q O K w O = .v v r~ ~ n rn rp u > ip } v U } 2 N v O 2 W ~ J T R1 w M 0 ° o J ui o o n v o z z N 0 0 ~ i O `h 2S - o y o O v mp v o y ru o N r- v 0 0 y 0 0 0 zol w z~ .n M p CO M CO r+~'' • •~r' 6 S O v 0'' LL J J Ol U 'U" N O a ? = W O u` to uJ N ad ~~oCC o m `D , s vJ to N d a d dl b A O O m w O C U Q , C U 41 x N rn w a d m r m Q' p d ^o N J ~ H Q to Q d p d g d ~ U W r o ,p N p J co tL C UJ v ? co p Y n ui o Zv d o O ` O U ) U ro m Q Z d v d .u v u i n 3 m u v d J d lL a` Exhibit B Wells r- x'48 U1406000 0 don J ca J = w X W 0 o z ~ Q ° o Q W u W o a a a ` a Ir LL U U p U _ W: ~ X Q. LA m m m t to N 00 O O H N r+ m .1 0 0 0 0 z 00~ . _a.'' 00 00 r-i 00 w lD D 0 -i c-1 --I N N N r-1 ' 0 O O O A Q' zzzz z z;z U' m d' N kD lD LO h to U1 vl N N : N N 0 0 0 0 0 Co O ` f.r . z z w z r X X X J 0 0 0 0 J 0 J 0 LU O: ~ O ~ Z Z Z U: U U U J v1 v J J } U' N N ¢ w l9 l9 w a cz co V lD lD =2 =2 V C7 06 O O cc a a: O; w z z w w 0 Q, O Ow w w w z 2 x• F I-- F- w w w : w. a s z o o ca 0 t- ti ~ 0. a v v a a V z H Y ~ N ~ ri w a N N w Yk V vai YY c w J Z Z ~ _ " W LL ry) O w a z z w z } : a z < J J a . ui h Z Z O Q D 0 W J J O O N O I A V) C) 0 0 0 0 0 0 0 0 0 0 0 0 O O O O O O O O O O o 0 0 0 . ' . n m [t m m tl Ct u It 00 IT N 'T .--1 ct L 0 Q) ul N l0 to 10 f-I O ri H N O N N N N O N O Cl N N C1 ~ r+ ~ m m m u~ 0 N (D N N M L CD O O O O O O O a - c It a It v b er