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HomeMy WebLinkAbout952052Lincoln County, Wyoming Sublette County, Wyoming Sweetwater County, Wyoming Uinta County, Wyoming MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT Dated as of January 28, 2010 RECEIVED 2/8/2010 at 1:07 PM RECEIVING 952052 BOOK: 742 PAGE: 76 JEANNE WAGNER LINCOLN COUNTY CLERK, KEMMERER, WY C 06076 THIS INSTRUMENT CONTAINS AFTER ACQUIRED PROPERTY PROVISIONS, SECURES PAYMENT OF FUTURE ADVANCES, AND COVERS PROCEEDS OF COLLATERAL. THIS INSTRUMENT COVERS AS- EXTRACTED COLLATERAL; THE INTEREST OF MORTGAGOR IN MINERALS OR THE LIKE (INCLUDING OIL AND GAS) BEFORE EXTRACTION AND THE SECURITY INTEREST CREATED BY THIS INSTRUMENT ATTACHES TO SUCH MINERALS AS EXTRACTED AND TO THE ACCOUNTS RESULTING FROM THE SALE THEREOF AT THE WELLHEAD OR WELLHEADS OF THE WELL OR WELLS LOCATED ON THE REAL PROPERTY DESCRIBED HEREIN. THIS INSTRUMENT COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES RELATED TO THE REAL PROPERTY DESCRIBED HEREIN. THIS INSTRUMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE OR COMPARABLE RECORDS OF THE COUNTIES REFERENCED IN EXHIBIT A HERETO, AND SUCH FILING SHALL SERVE, AMONG OTHER PURPOSES, AS A FIXTURE FILING AND AS A FINANCING STATEMENT FOR AS- EXTRACTED COLLATERAL. MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE AND IMMOVABLE PROPERTY CONCERNED, WHICH INTEREST IS DESCRIBED HEREIN. For purposes of filing this Mortgage as a financing statement: Mortgagor is the debtor and Mortgagee is the secured party. Mortgagor is a limited liability company organized under the Laws of the State of Delaware and qualified to do business in the State of Wyoming, its organizational identification number in Delaware is 4506452, and its mailing address is 61 Inverness Drive East, Suite 220, Englewood, Colorado 80112. Mortgagee's mailing address is One Shell Plaza, 910 Louisiana, Houston, Texas 77002. 5471386v.3 3134/1433 Please return this document with filing information to Bradley R. Geier Winstead PC 1201 Elm Street, Suite 5400 Dallas, Texas 75270 MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT KNOW ALL MEN BY THESE PRESENTS: c ,.et077 THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF PRODUCTION, AND FINANCING STATEMENT (this "Mortgage is made and entered into as of January 28, 2010, by CROWN ENERGY PARTNERS, LLC, a Delaware limited liability company "Mortgagor to COMERICA BANK, as Administrative Agent "Mortgagee for the ratable benefit of the Secured Parties. The addresses of Mortgagor and Mortgagee appear on the cover page and in Section 6.10 of this Mortgage. Capitalized terms not defined in the body of this Mortgage are defined in Section 6.13 hereof. RECITALS A. Lenders have extended a credit facility to Mortgagor which is evidenced by Mortgagor's promissory notes made payable to the order of Lenders in the aggregate principal sum of $50,000,000 further described in Section 1.2 hereof. B. One or more of the Secured Parties may from time to time enter into one or more Hedging Transactions, and Mortgagor will directly or indirectly benefit therefrom. C. Mortgagor is the owner of an interest in all of the properties described on Exhibit A to this Mortgage. Mortgagor desires to mortgage the property as described on Exhibit A hereto in order to secure the notes described in Recitals A. NOW THEREFORE, Mortgagor and Mortgagee agree as follows: CONVEYANCE AND GRANT OF LIEN Mortgagor, to secure payment and performance of the Obligation (hereinafter defined), and for and in consideration of the sum of TEN AND NO /100 DOLLARS ($10.00) cash and other valuable consideration in hand paid to Mortgagor, the receipt and sufficiency of which are hereby acknowledged, and for and in consideration of the debt hereinafter mentioned, has GRANTED, BARGAINED, SOLD, ASSIGNED, TRANSFERRED, MORTGAGED, CONVEYED AND WARRANTED, and by these presents does hereby GRANT, BARGAIN, SELL, ASSIGN, TRANSFER, MORTGAGE, CONVEY AND WARRANT, to Mortgagee, WITH POWER OF SALE, the real and personal properties, rights, titles, interests, and estates described or to which reference is made in Paragraphs I through V, inclusive, below, whether now owned by Mortgagor or hereafter acquired by Mortgagor (herein collectively called the "Mortgaged Property to -wit: Paragraph I. Oil and Gas Leases and Other Properties. All of Mortgagor's undivided interest and title, now owned or hereafter acquired, in and to (i) the oil, gas and mineral leases described and/or to which reference may be made on Exhibit A attached hereto and made a part hereof for all purposes and incorporated herein by reference as fully as if copied verbatim without regard to any surface acreage and/or depth limitations set forth on Exhibit A, and any instrument executed in amendment, correction, modification, confirmation, renewal or extension of any such leases (the "Subject Leases (ii) the oil, gas and other minerals in and under the lands covered by the Subject Leases and/or the lands spaced, pooled or unitized therewith (the "Lands (iii) the oil, gas and other mineral interests and estates in and under the Lands including working interests, royalties, overriding royalties, net profits interests and production payments (the "Subject Interests'); (iv) any and all oil and gas units covering, in whole or in part, the Lands covered by, or derived or carved from, the Subject Leases and/or the Lands spaced, pooled or unitized therewith; (v) all pooling, communitization, unitization and similar orders of governmental authorities, bodies and commissions that cover all or any portion of the Lands; and (vi) the Lands and all lands pooled, unitized or communitized therewith. It is expressly understood and agreed that (1) Mortgagee shall not be liable in respect of the performance of any covenant or obligation of Mortgagor MORTGAGE— Page 1 concerning such Subject Leases, and (2) any decimal fractional interests set out on Exhibit A pertaining to the Subject Leases have been appended for purposes of certain representations and warranties of Mortgagor with respect to title and for informational purposes only, and shall not limit in any way whatsoever the interest of Mortgagor in the Subject Leases; Paragraph II. Hydrocarbons. All oil, gas, casinghead gas, drip gasoline, natural gasoline and condensate, all other liquid and gaseous hydrocarbons, and all other minerals, whether similar to the foregoing or not (herein collectively called "Hydrocarbons now or hereafter accruing to or produced from the Subject Interests and/or to which Mortgagor now or hereafter may be entitled as a result of or by virtue of its record and/or beneficial ownership of any one or more of the Subject Interests; Paragraph III. Contracts. All present and future rights of Mortgagor (including all rights to receive payments, including lease bonuses, rents, tolls, incomes, and royalties) under or by virtue of all present and future operating agreements, contracts for the purchase, exchange, processing, transportation or sale of Hydrocarbons, and other contracts and agreements relating in any way to all or any part of the Mortgaged Property, as the same may be amended or supplemented from time to time (herein collectively called the "Subject Contracts Paragraph N. Other Property. All tenements, hereditaments, appurtenances, and properties in anywise appertaining, belonging, affixed, or incidental to the Subject Interests, in which Mortgagor now owns or hereafter acquires an interest, including any and all property, real or personal, in which Mortgagor now owns or hereafter acquires an interest which is situated upon and/or used or useful in connection with all or any part of the Subject Interests and including all pipelines, gathering lines, trunk lines, lateral lines, pipeline easements and rights -of- way, compressor, dehydration units, separators, heater treaters, valves, flow lines, gauge meters, alarms, supplies, machinery, derricks, buildings, tanks, wells, well bores, casings, christmas trees, tubing, rods, liquid extractors, engines, boilers, tools, appliances, cables, wires, surface leases, rights -of -way, easements, servitudes, and franchises, and all accessions, additions, substitutes and replacements to or for, and all accessories and attachments to any of the foregoing (all such surface leases, easements, licenses, rights -of -way, and franchises being herein called the "Subject Easements," and all such tangible property described in this Paragraph N being herein called the "Personal Property and Paragraph V. Other Rights to Hydrocarbons. Any and all other rights, titles, estates, royalties, and interests (whether or not presently included in the Subject Interests) now owned or hereafter acquired by Mortgagor in and to all reversions, remainder, tolls, rents, revenues, issues, proceeds, earnings, income, and profits from the Lands. TO HAVE AND TO HOLD the Mortgaged Property, together with all and singular the rights, privileges, contracts, and appurtenances now or hereafter at any time before the foreclosure or release hereof in anywise appertaining or belonging thereto, unto Mortgagee and to Mortgagee's successors or substitutes hereunder and to their successors and assigns, forever, and Mortgagor hereby binds and obligates Mortgagor and Mortgagor's successors to warrant and forever defend, all and singular, the Mortgaged Property unto Mortgagee and to Mortgagee's successors or substitutes hereunder and to their successors and assigns, against the lawful claims of any and all Persons whomsoever claiming or to claim the same, or any part thereof, subject to the Permitted Liens. This conveyance is made upon the terms and provisions hereinafter set out to secure the full and final payment and performance of the Obligation. (a) the Mortgaged Property; MORTGAGE Page 2 SECURITY INTEREST To further secure the Obligation, Mortgagor hereby grants to Mortgagee a security interest in the entire interest of Mortgagor (whether now owned or hereafter acquired) in and to: CO-C2079 (b) all as- extracted collateral and all oil, gas and other Hydrocarbons and minerals produced from or allocated to the Mortgaged Property, and any products processed or obtained therefrom (herein collectively called the "Production and all Liens in the Production securing payment of the proceeds of the Production, including those Liens provided under statutes enacted in the jurisdictions in which the Mortgaged Property is located; (c) all equipment, inventory, improvements, fixtures, accessions, goods and other personal property of whatever nature now or hereafter located on or used or held for use in connection with the Mortgaged Property (or in connection with the operation thereof or the treating, handling, storing, transporting, processing or marketing of Production) and all renewals or replacements thereof or substitutions therefor; (d) all contract rights, contractual rights and other general intangibles related to the Mortgaged Property, the operation thereof (whether Mortgagor is operator or non operator), or the treating, handling, storing, transporting, processing or marketing of Production, or under which the proceeds of Production arise or are evidenced or governed; (e) all geological, geophysical, engineering, accounting, title, legal and other technical or business data concerning the Mortgaged Property or the Production that are in the possession of Mortgagor or in which Mortgagor can otherwise grant a security interest, and all books, files, records, magnetic media, computer records and other forms of recording or obtaining access to such data; (f) all money, documents, instruments, chattel paper, securities, accounts or general intangibles arising from or by virtue of any transaction related to the Mortgaged Property or the Production (all of the properties, rights and interests described in Subsections (a), (b), (c), (d) and (e) above and this Subsection (f) being herein sometimes collectively called the "Collateral and (g) all proceeds of the Collateral or payments in lieu of Production (such as "take or pay" payments), whether such proceeds or payments are goods, money, documents, instruments, chattel paper, securities, accounts, general intangibles, fixtures, real property or other assets (the Mortgaged Property, Collateral and the proceeds of the Collateral and payments in lieu of Production, collectively, the "Property"). Upon the occurrence of any Event of Default, Mortgagee is and shall be entitled to all of the rights afforded a secured party by the applicable Uniform Commercial Code with reference to the Collateral, or Mortgagee may proceed as to both the real and personal property covered hereby in accordance with the rights granted under this Mortgage with respect to the real property covered hereby. Such rights shall be cumulative and in addition to those granted to Mortgagee under any other provision of this Mortgage or under any other instrument executed in connection with or as security for all or any part of the Obligation. REFERENCE IS MADE TO SECTION 6.13 FOR THE DEFINITIONS OF SEVERAL OF THE TERMS USED HEREIN. ARTICLE 1 SECURED OBLIGATION This Mortgage is made to secure and enforce the following note or notes, guaranty, obligations, indebtedness, covenants, conditions, agreements, loans, advances, debts, and liabilities (herein collectively called the "Obligation Section 1.1 Credit Agreement. All indebtedness and other obligations now or hereafter incurred or arising pursuant to the provisions of that certain Revolving Credit Agreement dated as of January 28, 2010, by and among Mortgagor, as borrower, the financial institutions from time to time party thereto (with their successors and assigns, being collectively called herein the "Lenders"), and Mortgagee, as Administrative Agent for the Lenders, and all supplements thereto and amendments or modifications thereof, and all agreements given in substitution therefor or in restatement, renewal or extension thereof, in whole or in part (such Revolving Credit MORTGAGE— Page 3 0:080 Agreement, as the same may from time to time be supplemented, amended or modified, and all other agreements given in substitution therefor or in restatement, renewal or extension thereof, in whole or in part, being herein called the "Credit Agreement including the "Indebtedness" as defined in the Credit Agreement. Section 1.2 Notes. Those certain promissory notes executed and delivered by Mortgagor pursuant to the Credit Agreement, having principal sums aggregated in an amount up to but not exceeding Fifty Million Dollars ($50,000,000), bearing interest as specified therein (including interest occurring during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), being payable as provided therein, and, if not sooner matured (by acceleration or otherwise), finally maturing on January 28, 2013 (as the same may be supplemented, amended, modified, extended, and renewed, being collectively referred to herein as the "Notes Section 1.3 Other Obligations of Mortgagor. Any and all other or additional indebtedness or liabilities for which Mortgagor is now or may hereafter become liable to Lenders at any time and from time to time, in any manner, either primarily or secondarily, absolutely or contingently, directly or indirectly, jointly, severally, or jointly and severally, and whether matured or unmatured, including all indebtedness and liabilities now or hereafter arising directly out of transactions between Mortgagor and Lenders or acquired by Lenders outright, conditionally or as collateral security from another Person and whether or not created after payment in full of the Notes if this Mortgage shall not have been released of record by Mortgagee. Section 1.4 Indebtedness Arising Under Security Instruments. All indebtedness, obligations, covenants, conditions, agreements, and liabilities arising pursuant to the provisions of this Mortgage and/or any other security agreement, mortgage, collateral pledge agreement, contract, assignment, Credit Agreement of any kind now or hereafter existing as security for, executed in connection with, or related to the Indebtedness (as defined in the Credit Agreement) and/or any part thereof (each such agreement being herein called "other security instruments Section 1.5 Future Advances to Mortgagor. All other loans and future advances that any Secured Party may now or hereafter make to Mortgagor, that Mortgagor and Secured Parties contemplate may be necessary from time to time. Such future advances, if any, shall be made on such conditions as Mortgagor and Secured Parties may negotiate, but it is specifically agreed that Secured Parties have not hereby agreed to advance any such additional sums. Section 1.6 Hedging Agreements. Any and all obligations, contingent or otherwise, whether now existing or hereafter arising under any Hedging Agreement (which amounts shall be deemed to be the Swap Termination Values under such Hedging Agreements as of the date the Obligation is being determined). Section 1.7 Costs and Expenses. All sums advanced and costs and expenses incurred by Mortgagee and/or Secured Parties, including all accounting, engineering, management, consulting or like fees, and reasonable legal fees, made and incurred in connection with the foregoing Sections 1.1, 1.2, 1.3, 1.4, 1.5 and 1_6, or any part thereof, or in connection with the acquisition, perfection, realization, maintenance, or preservation of the security therefor, or in connection with the following Section 1.8, or any part thereof, whether such advances, costs, or expenses shall have been made and incurred at the request of Mortgagor or Mortgagee and/or Secured Parties. Section 1.8 Renewals, Extensions, and Rearrangements. Any and all renewals, extensions, increases, rearrangements and/or substitutions of all or any part of the Notes, indebtedness, obligations, debts, loans, advances, covenants, agreements, and liabilities described or to which reference is made in the foregoing Sections 1.1, 1.2, 1.3, 1.4, 1.5, 1.6 and 1.7. MORTGAGE— Page 4 ARTICLE 2 CERTAIN REPRESENTATIONS, WARRANTIES, AND COVENANTS OF MORTGAGOR co Section 2.1 Representations and Warranties. With knowledge that Mortgagee is relying on the representations and warranties made herein without independent investigation, Mortgagor hereby covenants, agrees, represents, and warrants to Mortgagee that: (a) Valid and Subsisting Leases. The Subject Leases are valid and subsisting and are in full force and effect. (b) Authority. Mortgagor has authority to execute this Mortgage, to grant, bargain, sell, mortgage, assign, transfer, and convey the Mortgaged Property to Mortgagee pursuant to this Mortgage, and to make the covenants, representations, warranties, and assignments contained in this Mortgage. (c) Title. Mortgagor (i) has good and defensible title to, (ii) is lawful owner and holder of, and (iii) is possessed of the Mortgaged Property free and clear of any and all Liens except Permitted Liens. (d) Interests. With respect to each Mortgaged Property, the ownership of Mortgagor in such Mortgaged Property does and will, (i) with respect to each well described in Exhibit A hereto in connection with such Mortgaged Property, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal share of the Production produced from, or allocated to, such well equal to not less than the decimal share set forth in Exhibit A in connection with such well opposite the words "Net Revenue Interest" (or words of similar import), (B) cause Mortgagor to be obligated to bear a decimal share of the cost of exploration, development and operation of such well not greater than the decimal share set forth in Exhibit A in connection with such well opposite the words "Working Interest" (or words of similar import) and (ii) if such Mortgaged Property is shown in Exhibit A to be subject to a unit or units, with respect to each such unit, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal share of Production produced from, or allocated to, such unit equal to not less than the decimal share set forth in Exhibit A in connection with such Mortgaged Property opposite the words "Unit Net Revenue Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit), and (B) obligate Mortgagor to bear a decimal share of the cost of exploration, development and operation of such unit not greater than the decimal share set forth in Exhibit A in connection with such Mortgaged Property opposite the words "Unit Working Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit); such shares of Production which Mortgagor is entitled to receive, and shares of expenses which Mortgagor is obligated to bear, are not and will not be subject to change (other than changes which arise pursuant to non consent provisions of operating agreements described in Exhibit A in connection with such Mortgaged Property, respectively, in connection with operations hereafter proposed) except, and only to the extent that, such changes are reflected in Exhibit A. There is not and will not be any unexpired financing statement covering any part of the Property on file in any public office naming any party other than Mortgagee as secured party. The execution, delivery and performance of this Mortgage and the creation of the Liens hereunder do not violate any provision or constitute a default under any operating agreement or other instrument which affects any Mortgaged Property or to which Mortgagor is a party. (e) Advance Payment Contract. Mortgagor is not a party to any Advance Payment Contract affecting or relating to any of the Subject Interests not heretofore disclosed to Mortgagee in writing. (f) Environmental. (i) Current Status. The Mortgaged Property and Mortgagor and, to the best knowledge of Mortgagor, any property adjoining the Mortgaged Property are not in violation of or subject to any existing, pending or, to the best knowledge of Mortgagor, threatened investigation or inquiry by any governmental authority or to any remedial obligations under any Hazardous Material Laws, and this representation will continue to be true and correct following disclosure to the applicable governmental authorities of all relevant facts, conditions, and circumstances, if any, pertaining to the Mortgaged Property and Mortgagor. The Associated Property is not in violation of any Hazardous Material Law for which Mortgagor or its predecessors in interest in the Mortgaged Property would be responsible. As used MORTGAGE— Page 5 C.: 0610 32 in this Mortgage, the term "Associated Property" means any and all real and/or personal property interests in and to (and/or carved out of) the Lands which are described or referred to as Exhibit A hereto, or which are otherwise described in any of the oil, gas and/or mineral leases or other instruments described or referred to in such ExhibitA. (ii) Future Performance. Mortgagor will not cause or permit the Property, the Associated Mortgaged Property or Mortgagor to be in violation of, or do anything or permit anything to be done which will subject the Mortgaged Property or the Associated Property to any remedial obligations under any Hazardous Material Laws assuming disclosure to the applicable governmental authorities of all relevant facts, conditions and circumstances, if any, pertaining to. the Mortgaged Property or Associated Property and Mortgagor will promptly notify Mortgagee in writing of the presence of any Hazardous Material on the Mortgaged Property or Associated Property for which remediation is required and of any existing, pending or, to the best knowledge of Mortgagor, threatened investigation or inquiry by any governmental authority in connection with any Hazardous Material Laws. Mortgagor will take all steps necessary to determine that no Hazardous Materials have been disposed of or otherwise released on or to the Mortgaged Property or Associated Property except in accordance with Hazardous Material Laws. Mortgagor will not cause or permit the disposal or other release of any Hazardous Materials on or to the Mortgaged Property, or the Associated Property or any property adjoining the Mortgaged Property except in accordance with Hazardous Material Laws and covenants and agrees to keep or cause the Mortgaged Property and the Associated Property to be kept free of any Hazardous Materials and to remove the same (or if removal is prohibited by Law, to take whatever action is required by Law) promptly upon discovery at its sole expense. Without limitation of Mortgagee's rights to declare an Event of Default hereunder and to exercise all remedies available by reason thereof, in the event Mortgagor fails to comply with or perform any of the foregoing covenants and obligations, Mortgagee may (without any obligation, express or implied) remove any Hazardous Materials from the Mortgaged Property or the Associated Property (or if removal is prohibited by Law, take whatever action is required by Law) and the cost of the removal or such other action shall be a demand obligation owing by Mortgagor to Mortgagee pursuant to this Mortgage. Mortgagor grants to Mortgagee and its agents, employees, contractors and consultants access to the Mortgaged Property and the Associated Property and the license (which is coupled with an interest and irrevocable while this Mortgage is in effect) to remove the Hazardous Materials (or if removal is prohibited by Law, to take whatever action is required by Law) and agrees to indemnify and hold Mortgagee and Secured Parties harmless from all costs and expenses involved therewith. Upon Mortgagee's reasonable request, at any time and from time to time during the existence of this Mortgage, Mortgagor will provide at Mortgagor's sole expense an inspection or audit of the Mortgaged Property and the Associated Property from an engineering or consulting firm approved by Mortgagee, indicating the presence or absence of Hazardous Materials on the Mortgaged Property. If Mortgagor fails to provide same after ten (10) days' notice, Mortgagee may order same, and Mortgagor grants to Mortgagee and its employees, agents, contractors and consultants access to the Mortgaged Property and the Associated Property and a license (which is coupled with an interest and irrevocable while this Mortgage is in effect) to perform such inspections and tests. The cost of such inspections and tests shall be a demand obligation owing by Mortgagor to Mortgagee pursuant to this Mortgage. Mortgagee's rights under this paragraph are for the sole purpose of protecting Mortgagee's security for the repayment of the secured indebtedness and shall not under any circumstance be construed as granting the right to participate or constitute participation in the management of the Mortgaged Property or the business conducted thereon. (g) Compliance with Applicable Laws. Mortgagor represents that, to the best of its knowledge, Mortgagor is currently in compliance with all applicable Laws governing Mortgagor's ownership, use and operation of the Mortgaged Property. (h) Rents, Royalties and Taxes. All rents and royalties due and payable under the Subject Leases have been paid or otherwise accounted for and all Hydrocarbon severance and production Taxes, windfall profit Taxes, and all property Taxes payable by Mortgagor with respect to the Mortgaged Property have been paid. MORTGAGE— Page 6 o.: ®3 (i) Condition of Personal or Movable Property. The equipment, inventory, improvements, fixtures, goods and other tangible personal /movable property forming a part of the Property are and will remain in good repair and condition and are and will be adequate for the normal operation of the Property in accordance with prudent industry standards; all of such Property is, and will remain, located on the Mortgaged Property, except for that portion thereof which is or shall be located elsewhere (including that usually located on the Mortgaged Property but temporarily located elsewhere) in the course of the normal operation of the Property. Section 2.2 Covenants of Mortgagor. Mortgagor, for Mortgagor and Mortgagor's successors, covenants and agrees, unless otherwise specifically permitted or allowed in the Credit Agreement, to do the following: (a) Additional Documents. At any time, and from time to time, upon request by Mortgagee, Mortgagor will forthwith execute and deliver to Mortgagee any and all additional instruments and further assurances, and Mortgagor will do all other acts and things, as may be necessary or proper, in Mortgagee's opinion, to effect the intent of these presents and to evidence and perfect more fully the rights and Liens herein created and intended to be created and to protect the rights of Mortgagee hereunder. (b) Existence. If applicable, Mortgagor will continuously maintain Mortgagor's existence in good standing as a limited liability company in the State in which organized and its due qualification as a foreign limited liability company under the Laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification. (c) Cure of Defects. (1) If the validity or priority of this Mortgage or of any rights or Liens created or evidenced hereby with respect to the Mortgaged Property or any material part thereof shall be endangered or questioned, or shall be attacked directly or indirectly, or (2) if any legal proceedings are instituted against Mortgagor with respect thereto, or (3) should any adverse claim be made against or cloud develop upon the title to any of the Mortgaged Property other than Permitted Liens, Mortgagor will give written notice thereof within three (3) business days of such event to Mortgagee and, at Mortgagor's own cost and expense, and Mortgagor will diligently endeavor to cure any defect that may be developed or claimed, and Mortgagor will take all necessary and proper steps for the defense of such legal proceedings, including the employment of counsel acceptable to Mortgagee, the prosecution or defense of litigation and the release or discharge of all adverse claims, and Mortgagee (whether or not named as a party to legal proceedings with respect thereto), are hereby authorized and empowered to take such additional steps as in their judgment and discretion may be necessary or proper for the defense of any such legal proceedings, including the prosecution or defense of litigation, and the compromise or discharge of any adverse claims made with respect to the Mortgaged Property, and all expense so incurred of every kind and character shall be a demand obligation owing by Mortgagor to Mortgagee. (d) [Reserved] (e) Payment of Taxes. Mortgagor will pay, or cause to be paid, before delinquent, all lawful taxes in respect to the Mortgaged Property, or any part thereof, and from time to time, upon request of Mortgagee, Mortgagor will furnish to Mortgagee evidence satisfactory to Mortgagee of the timely payment of such taxes. (0 Maintenance of Subject Leases, Contracts, and Easements. Mortgagor will perform all obligations under and maintain all Subject Leases, Subject Contracts, and Subject Easements in full force and effect and Mortgagor will not permit to occur the surrender, abandonment, release, or termination of any Subject Lease, Subject Contracts, or Subject Easements, so long as the Subject Interests covered thereby or relating thereto are capable of producing Hydrocarbons in paying quantities. (g) Maintenance of Mortgaged Property. Mortgagor will at all times maintain, preserve, and keep the Mortgaged Property in good repair and condition, reasonable wear and tear excepted, and from time to time, make all necessary and proper repairs, replacements, and renewals, and Mortgagor will not commit or permit any waste on or of the Mortgaged Property, or do anything to the Mortgaged Property that may impair its value. MORTGAGE— Page 7 k. 06 (h) Payment for Labor and Materials. Mortgagor will promptly pay all bills for labor and materials incurred in connection with the Mortgaged Property, and Mortgagor will never permit to be fixed against the Mortgaged Property, or any part thereof, any Lien, even though inferior to the Lien hereof, for any such bill which may be legally due and payable, except a Permitted Lien. (i) Mortgage Taxes. At. any time any Law shall be enacted imposing or authorizing the imposition of any tax upon this Mortgage, or upon any Lien created hereby, Mortgagor will immediately pay all such taxes; provided that, in the. alternative, Mortgagor may, in the event of the enactment of such a Law, and must, if it is unlawful for Mortgagor to pay such taxes, prepay that portion of the Obligation which Mortgagee in good faith determines is secured by property covered by such Law within sixty (60) days after demand therefor by Mortgagee. (j) Performance of Covenants. Mortgagor will punctually and properly perform all of Mortgagor's covenants, duties, and liabilities under the Credit Agreement, this Mortgage and any other security instrument. (k) Inspection of Mortgaged Property. Mortgagor will allow Mortgagee to inspect the Mortgaged Property and all records relating thereto, and to make and take away copies of such records. (1) Operation of Mortgaged Property. Mortgagor will operate the Mortgaged Property, or cause it to be operated, in a careful and efficient manner in accordance with the practices of the industry and in compliance with all Subject Leases, Subject Contracts, Subject Easements, and Laws. (m) Development Work. Mortgagor will do, or cause to be done, such development and other work as may be reasonably necessary to protect from diminution and production capacity of the Mortgaged Property and each producing well thereon. (n) [Reserved] (o) Compliance with Laws. Mortgagor will comply with all Laws, ordinances, rules and regulations applicable to the Mortgaged Property and its ownership, use and operation. (p) [Reserved] (q) [Reserved] (r) Title Assurances. Mortgagor will furnish to Mortgagee copies of any title opinions, any abstracts of title, and any title information as Mortgagee may request from time to time that Mortgagor has or may hereafter obtain affecting any part of the Mortgaged Property. (s) Principal Office. Mortgagor will maintain the principal office and place of business of Mortgagor with all of Mortgagor's records and files relating to the Mortgaged Property at its address on the cover page hereof, except for those customarily maintained where the Mortgaged Property is located. (t) [Reserved] (u) [Reserved] (v) Properties Not Operated by Mortgagor. Anything in this Section 2.2 to the contrary notwithstanding, Mortgagor, with respect to those Subject Interests which are operated by operators other than Mortgagor, shall not be obligated itself to perform undertakings performable only by such operators and which are beyond the control of Mortgagor. In each such case, however, Mortgagor will use such commercially reasonable efforts to bring about the performance of any such undertakings required to be performed by such operators. MORTGAGE— Page 8 00I.PO85 (w) Mortgage Registration Taxes and Recording Fees. Mortgagor will promptly pay any mortgage registration or similar Taxes, recording fees and filing fees which may be required to be paid with respect to or in connection with the filing and recordation of this Mortgage. ARTICLE 3 DEFAULTS AND REMEDIES Section 3.1 Defaults. The term "Event of Default" as used herein means an Event of Default under and as defined in the Credit Agreement. Section 3.2 Remedies. If an Event of Default shall occur and be continuing, Mortgagee may, at its option, do any one or more of the following to the extent permitted by applicable Law: (a) Payment or Performance by Mortgagee. If Mortgagor has failed to keep or perform any covenant whatsoever contained in this Mortgage or any other security instrument, Mortgagee may, but shall not be obligated to any Person to do so, perform or attempt to perform such covenant, and any payment made or expense incurred in the performance or attempted performance of any such covenant shall be a part of the Obligation, and Mortgagor promises, upon demand, to pay to Mortgagee, at the place where the Notes are payable, or at such other place as Mortgagee may direct by written notice, all sums so advanced or paid by Mortgagee, with interest at the Maximum Rate, from the date when paid or incurred by Mortgagee until paid by Mortgagor. No such payment by Mortgagee shall constitute a waiver of any Event of Default. In addition to the Liens hereof, Mortgagee shall be subrogated to all rights and Liens securing the payment of any debt, claim, tax, or assessment for the payment of which Mortgagee may make an advance, or which Mortgagee may pay. (b) Acceleration. Mortgagee may, at its option, declare the aggregate unpaid principal amount of and interest on the Notes, and all other parts of the Obligation (other than liabilities under any Hedging Agreement) to be, and the same shall thereupon become immediately due and payable without presentment, demand, protest, notice of acceleration, notice of intent to accelerate, notice of protest or notice of dishonor, or any other notice of any kind, all of which are expressly waived by Mortgagor. (c) Foreclosure. Mortgagee may proceed with foreclosure, either by judicial foreclosure or statutory foreclosure by advertisement and sale pursuant to the power of sale herein granted, in accordance with applicable Law. In such event Mortgagee is hereby authorized and empowered, to the extent permitted by and in accordance with applicable Law, to sell all or any part of the Mortgaged Property at one or more sales, as an entirety or in parcels, at such place or places and otherwise in such manner and upon such notice as may be required by applicable Law, or in the absence of any such requirement, as Mortgagee may deem appropriate, and to make conveyance to the purchaser or purchasers thereof. Any sale of any part of the Mortgaged Property shall be made to the highest bidder or bidders for cash, at the courthouse door of, or at such other place as may be required or permitted by applicable Law in, the county (or judicial district) wherein the Lands included within the Mortgaged Property to be sold is situated; provided that if the Lands are situated in more than one county (or judicial district), such sale of the Mortgaged Property, or any part thereof, may be made in any county (or judicial district) wherein any part of the Lands included within the Mortgaged Property to be sold is situated. Any such sale shall be made at public outcry, on the day of any month, during the hours of such day and after written notices thereof have been publicly posted in such places and for such time periods and after all Persons entitled to notice thereof have been sent such notice, all as required by applicable Law in effect at the time of such sale; and nothing herein shall be deemed to require Mortgagee to do, and Mortgagee shall not be required to do, any act other than as required by applicable Law in effect at the time of such sale. Any such sale may be as a whole or in such parcels as Mortgagee may select. After such sale, Mortgagee shall make to the purchaser or purchasers thereunder good and sufficient deeds and assignments, in the name of Mortgagor, conveying the Mortgaged Property, or part thereof, so sold to the purchaser or purchasers with special warranty of title (subject to Permitted Liens) by Mortgagor. Sale of a part of the Mortgaged Property shall not exhaust the power of sale, but sales may be made from time to time until the Obligation is paid and performed in full. It shall not be necessary to have present or to exhibit at any such sale any of the Collateral. In addition to the rights and powers granted under the preceding provisions of MORTGAGE— Page 9 000086 this Subsection 3.2(c), if an Event of Default results from the failure to make a payment of any installment of the Obligation, Mortgagee, at its option, at once or at any time thereafter while any matured installment remains unpaid, without declaring the entire Obligation to be due and payable may orally or in writing direct Mortgagee to enforce this Mortgage and to sell the Mortgaged Property subject to such unmatured Obligation and the Liens securing its payment, in the same manner, on the same terms, at the same place and time, and after having given notice in the same manner, all as provided in the preceding provisions of this Subsection 3.2(c). After such sale, Mortgagee shall make due conveyance to the purchaser or purchasers. Sales made without maturing the Obligation may be made hereunder whenever there is an Event of Default resulting from the failure to make a payment of any installment of the Obligation without exhausting the power of sale granted hereby, and without affecting in any way the power of sale granted under this Subsection 3.2(c) on the unmatured balance of the Obligation (except as to any proceeds of any sale which Mortgagee may apply as a prepayment on the Obligation) or the Liens securing payment of the Obligation. It is intended by each of the foregoing provisions of this Subsection 3.2(c) that Mortgagee may, after any request or direction by Mortgagee, sell, not only the Subject Interests included within, but also, all other items constituting a part of, the Mortgaged Property, or any part thereof, along with the Lands, or any part thereof, included within the Mortgaged Property all as a unit and as a part of a single sale, or may sell any part of the Mortgaged Property separately from the remainder of the Mortgaged Property. It is agreed that, in any deed or assignment given by Mortgagee, any and all statements of fact or other recitals therein made as to the identity of Mortgagee, or as to the occurrence or existence of any Event of Default, or as to the acceleration of the maturity of the Obligation, or as to the request to sell, notice of sale, time, place, terms and manner of sale, and the receipt, distribution and application of the money realized therefrom, or as to the due and proper appointment of a substitute Mortgagee, and, without being limited by the foregoing, as to any other act or thing having been duly done by Mortgagee, shall be taken by all courts of Law and equity as prima facie evidence that the said statements or recitals state facts and are without further question to be so accepted, and Mortgagor does hereby ratify and confirm any and all acts that Mortgagee may lawfully do in the premises by virtue hereof. Mortgagee may appoint, in writing, any one or more Persons as Mortgagee's agent and attorney -in -fact to act as Mortgagee under him and in his name, place and stead, to perform any one or more acts necessary or incident to any sale under the rights and powers granted under the preceding provisions of this Subsection 3.2(c) and the power of sale granted herein„ including the posting and filing of any notices, the conduct of such sale and the execution and delivery of any instruments conveying the Mortgaged Property so sold, but in the name and on behalf of Mortgagee. All acts done or performed by any such agent and attorney -in- fact shall be valid, lawful and binding as if done or performed by Mortgagee. (d) Suit. Mortgagee may proceed by suit or suits, at law or in equity, to enforce the payment and performance of the Obligation in accordance with the terms hereof, of the Notes or the other security instruments, or other documents and/or writings securing and/or evidencing the Obligation, to foreclose the Liens of this Mortgage as against all or any part of the Mortgaged Property and to have all or any part of the Mortgaged Property sold under the judgment or decree of a court of competent jurisdiction. (e) Rights under the Uniform Commercial Code. Mortgagee may exercise any and all of the rights and remedies available to a secured party under the Code or any other applicable Law. (f) Appointment of Receiver. Mortgagee, as a matter or right and without regard to the sufficiency of the security, and without any showing of insolvency, fraud or mismanagement on the part of Mortgagor, and without the necessity of filing any judicial or other proceeding other than the proceeding for appointment of a receiver, shall be entitled to the appointment of a receiver or receivers of the Mortgaged Property, or any part thereof, and of the income, rents, issues and profits thereof. (g) Possession of Mortgaged Property. Mortgagee may enter upon the Lands included within the Mortgaged Property, take possession of the Mortgaged Property, and remove the Personal Property included within the Mortgaged Property, or any part thereof, with or without any responsibility or liability on the part of Mortgagee, take possession of any property located on or in the Mortgaged Property which is not a part of the Mortgaged Property and hold or store such property at Mortgagor's expense. MORTGAGE— Page 10 C.:06/037 (h) Assemble Collateral. Mortgagee may require Mortgagor to assemble the Collateral included within the Mortgaged Property, or any part thereof, and make it available to Mortgagee at a place to be designated by Mortgagee which is reasonably convenient to Mortgagor and Mortgagee. (i) Disposition of Collateral. After notification, if any, as hereafter provided in this Subsection 3.2(h), Mortgagee may sell, lease or otherwise dispose of, at the office of Mortgagee, or on the Lands, or elsewhere, as chosen by Mortgagee, all or any part of the Collateral included within the Mortgaged Property, in its then condition, or following any commercially reasonable preparation or processing, and each sale [as used in this Subsection 3.2(h), the term "sale" means any such sale, lease, or other disposition made pursuant to this Subsection 3.2(h)] may be a unit or in parcels, by public or in private proceedings, and by way of one or more contracts, and, at any sale, it shall not be necessary to exhibit the Collateral, or part thereof, being sold, leased or otherwise disposed of. The sale of any part of the Collateral shall not exhaust Mortgagee's power of sale, but sales may be made from time to time until the Obligation is paid and performed in full. Reasonable notification of the time and place of any public sale pursuant to this Subsection 3.2(h), or reasonable notification of the time after which any private sale is to be made pursuant to this Subsection 3.2(h), shall be sent to Mortgagor and to any other Person entitled under the applicable Code to notice. It is agreed that notice sent or given not less than twenty -one (21) calendar days prior to the taking of the action to which the notice relates, is reasonable notification and notice for such purposes of this Subsection 3.2(h). Mortgagee shall be entitled to the expenses of retaking, holding, preparing for sale or the like which shall include reasonable attorneys' fees and other expenses of Mortgagee, which expenses shall be secured by this Mortgage. (j) Surrender of Insurance Policies. Mortgagee may surrender the insurance policies maintained pursuant to Subsection 2.2(n) hereof, or any part thereof, and receive and apply the unearned premiums as a credit on the Obligation, and, in connection therewith, Mortgagor hereby appoints Mortgagee as the agent and attorney in -fact for Mortgagor to collect such premiums. (k) Other Remedies. Mortgagee shall have the right to exercise all other rights and remedies herein, in any of the Loan Documents, or provided by law or in equity. Section 3.3 Purchase of Mortgaged Property by Mortgagee. If Mortgagee is the purchaser of the Mortgaged Property, or any part thereof (and it is specifically agreed that Mortgagee may be the purchaser of the Mortgaged Property, or any part thereof, if permitted by applicable Law), at any sale thereof, whether such sale be under the power of sale hereinabove vested in Mortgagee, or upon any other foreclosure of the Liens hereof, or otherwise, Mortgagee shall, upon any such purchase, acquire good title to the Mortgaged Property so purchased, free of the Liens of these presents. Section 3.4 Operation of Properties by Mortgagee. Should any part of the Mortgaged Property come into the possession of Mortgagee, whether before or after an Event of Default, Mortgagee may use or operate (to the extent allowed under applicable operating arrangements) the Mortgaged Property for the purpose of preserving it or its value, pursuant to the order of a court of appropriate jurisdiction, or in accordance with any other rights held by Mortgagee in respect to the Mortgaged Property. Mortgagor covenants promptly to reimburse and pay to Mortgagee, at the place where Notes are payable, or at such other place as may be designated by Mortgagee in writing, the amount of all expenses (including the cost of any insurance, taxes, reasonable attorneys' fees and other charges) incurred by Mortgagee in connection with its custody, preservation, use or operation of the Mortgaged Property, together with interest thereon from the date incurred by Mortgagee at the Maximum Rate, and all such expenses, cost, taxes, interest and other charges shall be a part of the Obligation. It is agreed, however, that the risk of loss or damage to the Mortgaged Property is on Mortgagor, and Mortgagee shall have no liability whatever for decline or diminution in value of the Mortgaged Property, nor for failure to obtain or maintain insurance, nor for failure to determine whether any insurance ever in force is adequate as to amount or as to the risks insured. Section 3.5 Possession of Property After Foreclosure. In case the Liens hereof shall be foreclosed by Mortgagee's sale, or by other judicial or non judicial action, the purchaser at any such sale shall receive, as an MORTGAGE— Page 11 006S8 incident to his ownership, immediate possession of the Mortgaged Property, or any part thereof so conveyed, and, subsequent to foreclosure, Mortgagor and Mortgagor's successors shall be considered as tenants at sufferance of the purchaser at foreclosure sale, and anyone occupying the property after demand made for possession thereof shall be guilty of forcible detainer and shall be subject to eviction and removal, forcible, or otherwise, with or without process of law, and all damages by reason thereof are hereby expressly waived. Section 3.6 Application of Proceeds. The proceeds from any sale, lease or other disposition made pursuant to this Article 3, any proceeds of Hydrocarbons collected by Mortgagee pursuant to Article 4, and sums received pursuant to Section 6.5 shall be applied by Mortgagee, first to the payment of any and all expenses incurred by Mortgagee in foreclosing upon the Property and carrying out such sale (including any attorneys' fees); second to the payment of any fees assessed by Mortgagee, and third to the payment or prepayment of the Obligation, whether or not matured, as may be determined by Mortgagee in its sole discretion until the Obligation is paid in full. Section 3.7 Abandonment of Sale. In the event a foreclosure hereunder should be commenced by Mortgagee in accordance with Subsection 3.2(c), Mortgagee may at any time before the sale direct Mortgagee to abandon the sale, and exercise any other remedies available to Mortgagee. Section 3.8 Waiver of Appraisement and Redemption. To the full extent Mortgagor may lawfully do so, Mortgagor agrees that Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of any appraisement, valuation, stay, extension or redemption Laws, now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Mortgaged Property or any part thereof, or the possession thereof by any purchaser at any such sale, but Mortgagor, insofar as Mortgagor now or hereafter may lawfully do so, hereby waives the benefit of all such Laws; provided, however, that the appraisement of any of the Mortgaged Property is hereby expressly waived or not waived at the option of Mortgagee, such option to be exercised prior to or at the time judgment is rendered in any foreclosure of this Mortgage. Mortgagor also expressly waives, to the extent Mortgagor may lawfully do so, all rights to have the Mortgaged Property marshaled upon any foreclosure of this Mortgage. ARTICLE 4 ASSIGNMENT OF PRODUCTION Section 4.1 Assignment and Additional Security. In addition to the conveyance to Mortgagee herein made and to additionally secure the Obligation, Mortgagor has, subject to Section 7.21 of the Credit Agreement, effective as of 7:00 o'clock a.m., local time, on the first day of the month in which this Mortgage is executed, at the site of each of the Subject Leases, ASSIGNED, TRANSFERRED, MORTGAGED, CONVEYED AND WARRANTED, and does hereby ASSIGN, TRANSFER, MORTGAGE, CONVEY AND WARRANT, unto Mortgagee all of the following: (a) All Hydrocarbons, and the proceeds therefrom and products obtained or processed therefrom (such proceeds and products being herein called "Proceeds produced and to be produced from the Mortgaged Property, and all rights of Mortgagor to security interests and Liens securing payment of Proceeds, including those security interests and Liens provided for in the Code. Mortgagor hereby authorizes and empowers Mortgagee to demand, collect and receive such Hydrocarbons and Proceeds, to endorse and cash any checks and drafts payable to Mortgagor or Mortgagee for the account of Mortgagor received from or in connection with such Hydrocarbons and Proceeds, to execute any release, receipt, division order, transfer order, and relinquishment or other instrument that may be required or necessary to collect and receive such Hydrocarbons and Proceeds, and to exercise any rights as the holder of security interests and Liens securing payment of Proceeds. Mortgagor hereby authorizes and directs all pipeline companies, gathering companies, and others purchasing such Hydrocarbons or having in their possession any such Hydrocarbons or Proceeds, to pay and deliver to Mortgagee all such Hydrocarbons and Proceeds upon the written request of Mortgagee. Mortgagor agrees that all division orders, transfer orders, receipts and other instruments which Mortgagee may from time to time execute and deliver for the purpose of collecting or receipting for Hydrocarbons or Proceeds may be relied upon in all respects and that the MORTGAGE— Page 12 00i)089 same shall be binding upon Mortgagor and Mortgagor's successors. Mortgagor agrees to execute and deliver all necessary, convenient and appropriate instruments, including transfer and division orders, which may be required by Mortgagee in connection with the receipt by Mortgagee of such Hydrocarbons or Proceeds and to indemnify and keep and hold Mortgagee free and harmless from all parties whomsoever having or claiming an adverse interest in such Hydrocarbons and Proceeds and in this respect agrees to pay all expenses, costs, charges and attorneys' fees that may be incurred by Mortgagee as to any of such matters. (b) All proceeds hereafter payable to or to become payable to Mortgagor or to which Mortgagor is entitled under all gas sales or exchange contracts, all oil, distillate, or condensate sales or exchange contracts, all gas transportation contracts, and all gas processing contracts now or hereafter to become a part of the Mortgaged Property. (c) All amounts, sums, revenues, and income which become payable to Mortgagor from any of the Mortgaged Property (including any after- acquired properties) or under any contract, present or future, relating to, any gas pipeline system and processing plant or unit now or hereafter constituting a part of the Mortgaged Property. (d) All lease bonus, delay rentals, royalties and shut -in gas royalties which become payable to Mortgagor from any of the Mortgaged Property. Section 4.2 Transfer Orders. Mortgagor agrees to execute such transfer orders, payment orders, division orders and other instruments as may be needed by Mortgagee or requested by it incident to its having all assigned payments made direct to it. Mortgagor hereby authorizes and directs all such pipeline companies, purchasers, transporters and other parties owing moneys to Mortgagor under contracts herein assigned, to pay such amounts direct to Mortgagee upon the written request by Mortgagee as follows: Comerica Bank, as Administrative Agent 999 18th Street, Suite 2001 Denver, Colorado 80202 and such authorization shall continue until this Mortgage is released. Mortgagee is authorized to collect, receive, and give receipt for all such amounts, and no party making payment shall have any responsibility to see to the application of any funds paid to Mortgagee but shall be fully protected in making such payment to Mortgagee under the assignments herein contained. Should Mortgagee bring suit against any third party for collection of any amounts or sums included within this assignment (and Mortgagee shall have the right to bring any such suit), it may sue either in its own name or in the name of Mortgagor. Section 4.3 Payment of Proceeds. In the event that, for its convenience, Mortgagee should elect with respect to particular properties or contracts not to exercise immediately its right to receive Hydrocarbons or proceeds, then the purchasers or other Persons obligated to make such payment shall continue to make payment to Mortgagor until such time as written demand has been made upon them by Mortgagee that payment be made directly to Mortgagee. Such failure to notify shall not in any way waive the right of Mortgagee to receive any payments not theretofore paid out to Mortgagor before the giving of written notice. In this regard, in the event payments are made directly to Mortgagee, and then, at the request of Mortgagee payments are, for a period of time, paid to Mortgagor, Mortgagee shall nevertheless have the right, effective upon written notice, to require that future payments be again made to Mortgagee. Section 4.4 Proceeds Held in Trust by Mortgagor. If under any existing gas sales or exchange agreements or products sales or exchange contracts, other than division orders or transfer orders, or under any gas transportation contract, any proceeds are required to be paid by the purchaser or transporter direct to Mortgagor so that under such existing agreements payment cannot be made to Mortgagee in the absence of foreclosure, then Mortgagor's interest in all proceeds under such sales agreement and in all other proceeds which for any reason may be paid to Mortgagor shall, when received by Mortgagor, constitute trust funds in his hands and shall be MORTGAGE— Page 13 e.06090 immediately paid over to Mortgagee, if Mortgagee has requested that such payments be delivered to it under this assignment. Section 4.5 Limitation of Liability of Mortgagee. Mortgagee is hereby absolved from all liability for failure to enforce collection of the proceeds and amounts assigned under Section 4.1 above and from all other responsibility in connection therewith, except the responsibility to account to the Person legally entitled thereto (by application upon the Obligation or otherwise) for funds actually received. Mortgagor agrees to indemnify and hold harmless Mortgagee against any and all liabilities, actions, claims, judgments, costs, charges, and attorneys' fees by reason of the assertion that they or either of them have received, either before or after payment and performance in full of the Obligation, funds from the production of Hydrocarbons claimed by third Persons, and Mortgagee shall have the right to compromise and adjust any such claims, actions, and judgments, and in addition to the rights to be indemnified as herein provided, all amounts paid by Mortgagee in compromise, satisfaction, or discharge of any such claim, action or judgment, and all court costs, attorneys' fees, and other expenses of every character incurred by Mortgagee, pursuant to the provisions of this section, shall be demand obligations owing by Mortgagor and shall bear interest at the Maximum Rate from date of expenditure until paid and shall be secured by the Liens created and granted by this Mortgage. Section 4.6 Duty to Pay Obligation. Nothing contained herein shall limit Mortgagor's absolute duty to make payment when due of the Obligation when the Proceeds received by Mortgagee pursuant to Section 4.1 hereof are insufficient to pay the same, and receipt of Proceeds under said Section 4.1 shall be in addition to all other security now or hereafter existing to secure payment of the Obligation. Section 4.7 Power of Attorney to Mortgagee. Mortgagor does hereby designate Mortgagee as the agent of Mortgagor to act in the name, place and stead of Mortgagor for the purpose of taking any and all actions deemed by Mortgagee necessary for the realization by Mortgagee of the benefits of the assignment of Proceeds provided herein, recognizing such agency in favor of Mortgagee to be coupled with the interests of Mortgagor under this Mortgage and, thus, irrevocable as long as this Mortgage is in force and effect. All Persons dealing with Mortgagee, or any officer thereof, or any substitute, shall be fully protected in treating the powers and authorities conferred by this Section as continuing in full force and effect until advised by Mortgagee that the entire Obligation is fully and finally paid. ARTICLE 5 FINANCING STATEMENT Section 5.1 Effective as a Financing Statement. This Mortgage covers goods which are or are to become fixtures on the real property described herein. This Mortgage shall be effective as a financing statement filed as a fixture filing with respect to all fixtures included within the Property and is to be filed for record in the real property records of each county in which any part of the Mortgaged Property (including said fixtures) is situated. This Mortgage shall also be effective as a financing statement covering as- extracted collateral, minerals or the like (including oil and gas) and accounts arising out of the sale at the wellhead or minehead of the wells or mines located on the Mortgaged Property of oil, gas, or other minerals in which Mortgagor has an interest before extraction, and is to be filed for record in the real property records of each county in which any part of the Mortgaged Property is situated. Mortgagor is the debtor. This Mortgage shall also be effective as a financing statement covering any other Property and may be filed in any other appropriate filing or recording office. Regarding Mortgagor as debtor, Mortgagor's mailing address, type and state of organization, organizational identification number are set forth on the cover page of this Mortgage. Regarding Mortgagee as secured party, Mortgagee's mailing address is set forth on the cover page of this Mortgage. Section 5.2 Reproduction of Mortgage as Financing Statement. A photographic or other reproduction of this Mortgage or of any financing statement relating to this Mortgage shall be sufficient as a financing statement for any of the purposes referred to in Section 5.1. MORTGAGE— Page 14 000091 Section 5.3 Notice to Account Debtors. In addition to the rights granted in Article 4 hereof, Mortgagee may at any time notify the account debtors or obligors of any accounts, chattel paper, negotiable instruments or other evidences of indebtedness included in the Collateral to pay Mortgagee directly. Section 5.4 Filing of Financing Statement. Mortgagee shall have the right, without the consent or joinder of Mortgagor, to execute and file with any governmental authority such financing statements, financing statement amendments and continuation statements as may, in the sole discretion of Mortgagee, be necessary or advisable to maintain, perfect or otherwise evidence the Lien of Mortgagee in and to any of the Mortgaged Property. Mortgagor, as debtor, hereby expressly authorizes Mortgagee, as secured party, to file any such financing statement without the signature of Mortgagor to the extent permitted by applicable Law. ARTICLE 6 MISCELLANEOUS Section 6.1 Release. If the Obligation is paid and performed in full in accordance with the terms of this Mortgage and the Notes and other security instruments and documents and writings evidencing or securing all or any part of the Obligation, and if Mortgagor shall well and truly perform all of Mortgagor's covenants contained herein, then this conveyance shall be released at Mortgagor's request and expense; otherwise, it shall remain in full force and effect, provided, however, that Mortgagor's warranties and indemnities contained in this Mortgage shall survive the payment and performance of the Obligation and the release of this Mortgage. Section 6.2 Rights Cumulative. All rights and Liens herein expressly conferred are cumulative of all other rights and Liens herein, or by law or in equity provided, or provided in any other security instruments, and shall not be deemed to deprive Mortgagee or Secured Parties of any such other legal or equitable rights and Liens by judicial proceedings, or otherwise, appropriate to enforce the conditions, covenants and terms of this Mortgage and other security instruments, and the employment or enforcement of any rights hereunder, or otherwise, shall not prevent the concurrent or subsequent employment or enforcement of any other rights. Section 6.3 Waivers. Any and all covenants in this Mortgage may from time to time, by instrument in writing signed by Mortgagee and the Majority Lenders (as defined in the Credit Agreement) and delivered to Mortgagor, be waived to such extent and in such manner as Mortgagee and the Majority Lenders may desire, but no such waiver shall ever affect or impair Mortgagee's rights and Liens hereunder, except to the extent specifically stated in such written instruments. Section 6.4 Sale of Mortgaged Property. In the event Mortgagor or any of Mortgagor's successors conveys any interest in the Mortgaged Property, or in any part thereof, to any other party, Mortgagee may, without notice to Mortgagor or Mortgagor's successors, deal with any owner of any part of the Mortgaged Property with reference to this Mortgage and the Obligation, either by way of forbearance on the part of Mortgagee, or extension of time of payment of the Obligation, or release of all or any part of the Mortgaged Property, or any other property securing payment and performance of the Obligation, without in any way modifying or affecting Mortgagee's rights and Liens hereunder or the liability of Mortgagor or any other party liable for payment and performance of the Obligation, in whole or in part; provided, that no action taken or omitted to be taken by Mortgagee under this Section 6.4 shall be deemed a waiver of any Event of Default occurring by reason of any such conveyance. Section 6.5 Condemnation Sale. Mortgagee shall be entitled to receive any and all sums which may be awarded or become payable to Mortgagor for the condemnation of the Mortgaged Property, or any part thereof, for public or quasi public use, or by virtue of private sale in lieu thereof, and any sums which may be awarded or become payable to Mortgagor for damages caused by public works or construction on or near the Mortgaged Property. All such sums are hereby assigned to Mortgagee, and Mortgagor shall, upon request of Mortgagee, make, execute, acknowledge and deliver any and all additional assignments and documents as may be necessary from time to time to enable Mortgagee to collect and receipt for any such sums. Mortgagee shall not be, under MORTGAGE— Page 15 any circumstances, liable or responsible for failure to collect, or exercise diligence in the collection of, any of such sums. Crown Energy Partners, LLC 61 Inverness Drive East, Suite 220 Englewood, Colorado 80112 Section 6.6 Renewals of Indebtedness. It is understood and agreed that the proceeds of the Notes or of any further loans or advances, to the extent the same are utilized to renew or extend any indebtedness or take up any outstanding Liens against the Mortgaged Property, or any portion thereof, have been advanced by Secured Parties at Mortgagor's request and upon Mortgagor's representation that such amounts are due and payable. Secured Parties shall be subrogated to any and all rights and Liens owned or claimed by any owner or holder of such outstanding rights and Liens, however remote, regardless of whether such rights and Liens are acquired by assignment or are released by the holder thereof upon payment. Section 6.7 Waiver of Marshaling. Mortgagor hereby waives all rights of marshaling in the event of any foreclosure of the Liens hereby created. Section 6.8 Number and Gender of Words. Whenever herein the singular number is used, the same shall include the plural where appropriate, and vice versa, and words of any gender shall include each other gender where appropriate. Section 6.9 Headings. The captions, headings, and arrangements used in this Mortgage are for convenience only and do not in any way affect, limit, amplify, or modify the terms and provisions hereof. Section 6.10 Notices. Whenever this Mortgage requires or permits any consent, approval, notice, request or demand from one party to another, the consent, approval, notice, request, or demand must be in writing to be effective and shall be deemed to have been given on the day personally delivered or, if mailed, on the day it is enclosed in an envelope, properly stamped, sealed and deposited in a post office or official depository maintained by the United States Postal Service, certified mail, return receipt requested, addressed to the party to be notified at the address stated below (or at such other address as may have been designated by written notice): If to Mortgagor: If to Mortgagee: Comerica Bank, as Administrative Agent 999 18th Street, Suite 2001 Denver, Colorado 80202 C; u92 Section 6.11 Governing Law. WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, THIS MORTGAGE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES OF AMERICA EXCEPT THAT TO THE EXTENT THAT THE LAW OF THE STATE IN WHICH A PORTION OF THE MORTGAGED PROPERTY IS LOCATED (OR WHICH IS OTHERWISE APPLICABLE TO A PORTION OF THE MORTGAGED PROPERTY) NECESSARILY OR, IN THE SOLE DISCRETION OF MORTGAGEE, APPROPRIATELY GOVERNS WITH RESPECT TO PROCEDURAL AND SUBSTANTIVE MATTERS RELATING TO THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS, SECURITY INTERESTS AND OTHER RIGHTS AND REMEDIES OF MORTGAGEE GRANTED HEREIN, THE LAWS OF SUCH STATE SHALL APPLY AS TO THAT PORTION OF THE MORTGAGED PROPERTY LOCATED IN (OR OTHERWISE SUBJECT TO THE LAWS OF) SUCH STATE. Section 6.12 Invalid Provisions. If any provision of this Mortgage is invalid or unenforceable in any jurisdiction applicable to this Mortgage, then, to the extent permitted by Law, (a) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of Mortgagee in order MORTGAGE— Page 16 C 0u093 to carry out the intentions of the parties hereto as nearly may be possible; and (b) the invalidity or unenforceability of such provision in any jurisdiction shall not affect the validity or enforceability thereof in any other jurisdiction. If the rights and Liens created by this Mortgage shall be invalid or unenforceable as to any part of the Obligation, the unsecured portion of the Obligation shall be completely paid prior to the payment of the remaining and secured portion of the Obligation, and all payments made on the Obligation shall be considered to have been paid on and applied first to the complete payment of the unsecured portion of the Obligation. Section 6.13 Definitions. In addition to the terms defined elsewhere herein, as used herein, the following terms shall have the meanings indicated: "Advance Payment Contract" has the meaning given such term in the Credit Agreement. "Affiliate" has the meaning given such term in the Credit Agreement. "Associated Property" has the meaning given such term in Section 2.1(f)(i) hereof. "Capitalized Lease" means, as applied to any Person, any lease of any property (whether real, personal or mixed) with respect to which the discounted present value of the rental obligations of such Person as lessee thereunder, in conformity with GAAP, is required to be capitalized on the balance sheet of that Person. "Code" means the applicable Uniform Commercial Code, if any, of each state where any of the Mortgaged Property is situated. "Collateral" has the meaning given such term in Paragraph (f) under the heading of "Security Interest" in this Mortgage. "Credit Agreement" has the meaning given such term in Section 1.1 hereof. "Credit Parties" means Mortgagor and its Subsidiaries, and "Credit Party" means any one of them, as the context indicates or otherwise requires. "disposal or disposed" have the meanings specified in RCRA. "Event of Default" has the meaning given such term in Section 3.1 hereof. "GAAP" means, as of any applicable date of determination, generally accepted accounting principles in the United States of America, as applicable on such date, consistently applied, as in effect from time to time. "Hazardous Material" has the meaning given such term in the Credit Agreement. "Hazardous Material Laws" has the meaning given such term in the Credit Agreement. "Hedging Agreement" means any agreement relating to a Hedging Transaction entered into between Mortgagor and any Lender or an Affiliate of a Lender. "Hedging Transaction" means each interest rate swap transaction, basis swap transaction, forward rate transaction, equity transaction, equity index transaction, foreign exchange transaction, cap transaction and floor transaction, and a swap transaction, collar transaction, cap transaction or other derivative transaction which is intended to reduce or eliminate risks related to interest rates, currency exchange rates, fluctuations in the price of Hydrocarbons or financial market conditions (including any option with respect to any of these transactions and any combination of any of the foregoing). "holder" means any present or future holder of the Obligation or any part thereof. MORTGAGE— Page 17 "Hydrocarbons" has the meaning given such term in Paragraph II under the heading of "Conveyance and Grant of Lien" in this Mortgage. xO 94 "Issuing Lender" means Comerica Bank in its capacity as issuer of one or more Letters of Credit pursuant to the Credit Agreement, or its successor designated in accordance with the Credit Agreement. "Lands" has the meaning given such term in Paragraph I under the heading of "Conveyance and Grant of Lien" in this Mortgage. "Laws" means all applicable constitution, treaties, statues, laws, ordinances, regulations, orders, writs, injunctions or decrees of the United States or of any state, commonwealth, county, parish, municipality or Tribunal. "Lenders" has the meaning given such term in Section 1.1 hereof. "Letter(s) of Credit" has the meaning given such term in the Credit Agreement. "Lien" means any security interest in or lien on or against any property arising from any pledge, assignment, hypothecation, mortgage, security interest, deposit arrangement, trust receipt, conditional sale or title retaining contract, sale and leaseback transaction, Capitalized Lease, consignment or bailment for security, or any other type of lien, charge, encumbrance, title exception, preferential or priority arrangement affecting property (including with respect to stock, any stockholder agreements, voting rights agreements, buy -back agreements and all similar arrangements), whether based on common law or statute. "Loan Documents" has the meaning given such term in the Credit Agreement. "Maximum Rate" has the meaning given such term in the Credit Agreement. "Mortgage" has the meaning given such term in the preamble hereof. "Mortgagee" means Comerica Bank, acting on behalf of the Secured Parties and its successors and assigns in such capacity. "Mortgagor" has the meaning given such term in the introductory paragraph hereof. "Mortgaged Property" has the meaning given such term under the heading of "Conveyance and Grant of Lien" in this Mortgage. "Mortgagor's successors" means each and all of the immediate and remote successors, assigns, heirs, executor, administrators, and legal representatives of Mortgagor. "Note" or "Notes" has the meaning given to such term in Section 1.2 hereof. "Obligation" has the meaning given such term in Article I hereof. "other security instrument" has the meaning given such term in Section 1.4 hereof. "Permitted Liens" has the meaning given such term in the Credit Agreement. "Person has the meaning given such term in the Credit Agreement. "Personal Property" has the meaning given such term in Paragraph IV under the heading of "Conveyance and Grant of Lien" in this Mortgage. MORTGAGE— Page 18 "Proceeds" has the meaning given such term in Section 4.1(a) hereof. MORTGAGE Page 19 "Production" has the meaning given such term in Paragraph (b) under the heading of "Security Interest" in this Mortgage. "Property" has the meaning given such term in Paragraph (g) under the heading of "Security Interest" in this Mortgage. "release" shall have the meanings specified in CERCLA. O✓5 "sale" has the meaning given such term in Subsection 3.2(h) hereof. "Section" means a section of this Mortgage, unless specifically indicated otherwise. "Secured Parties" means (a) Comerica Bank, in its capacity as Administrative Agent, the Lenders, any Issuing Lender, the beneficiaries of each indemnification obligation undertaken by any Credit Party under any Loan Documents, and the successors and assigns of each of the foregoing, (b) any Lender or Affiliate of any Lender under any Hedging Agreement, but only while such Person (or in the case of its Affiliate, the Person affiliated therewith) is a Lender under the Credit Agreement and (c) without duplication, and notwithstanding anything to the contrary contained in the Loan Documents, Comerica Bank, as a counterparty under any Hedging Transaction with any Credit Party. "Subject Contracts" has the meaning given such term in Paragraph III under the heading of "Conveyance and Grant of Lien" in this Mortgage. "Subject Easements" has the meaning given such term in Paragraph IV under the heading of "Conveyance and Grant of Lien" in this Mortgage. "Subject Interests" has the meaning given such term in Paragraph I under the heading of "Conveyance and Grant of Lien" in this Mortgage. "Subject Leases" has the meaning given such term in Paragraph I under the heading of "Conveyance and Grant of Lien" in this Mortgage. Subsidiary(ies)" means any other corporation, association, joint stock company, business trust, limited liability company, partnership or any other business entity of which more than 50% of the outstanding voting stock, share capital, membership, partnership or other interests, as the case may be, is owned either directly or indirectly by any Person or one or more of its Subsidiaries, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by any Person and/or its Subsidiaries. Unless otherwise specified to the contrary herein or the context otherwise requires, Subsidiary(ies) shall refer to the Subsidiary(ies) of Mortgagor. "Taxes" means all taxes, assessments, fees, levies, imposts, duties, deductions, withholdings or other similar charges from time to time or at any time imposed by any Law or any Tribunal. "Tribunal" means any court or any governmental department, commission, board, bureau, agency or instrumentality of the United States or of any state, commonwealth, nation, territory, possession, county, parish or municipality, whether now or hereafter constituted and/or existing. All other capitalized terms defined in the Credit Agreement which are used in this Mortgage and which are not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. All meanings of or assigned to defined terms, unless otherwise indicated, are to be equally applicable to both the singular and plural forms of the terms defined. Article, Paragraph, Section, Schedule, and Exhibit references are y..O r�O96 to Articles, Paragraphs, and Sections of and Schedules and Exhibits to this Mortgage, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified. The words "hereof', "herein" and "hereunder" and words of similar import when used in this Mortgage shall refer to this Mortgage as a whole and not to any particular provision of this Mortgage. As used herein, the words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation." Section 6.14 Form of Mortgage. This instrument may be construed and enforced from time to time whether within the State of Wyoming, and elsewhere outside the State of Wyoming, as a mortgage, deed of trust, chattel mortgage, conveyance, assignment, security agreement, pledge, financing statement, hypothecation or contract, or any one or more of them as may be appropriate under applicable Laws, in order fully to effectuate the Lien hereof and the purposes and agreements herein set forth. Insofar as this instrument is a security agreement, pledge, financing statement, hypothecation or contract, or any one or more of them as may be appropriate under applicable Laws, in order fully to effectuate the Lien hereof and the purposes and agreements herein set forth, Mortgagor is the debtor and Mortgagee is the secured party. The addresses shown in Section 6.10 are the addresses of the debtor and the secured party and information concerning the security interest granted hereby may be obtained from the secured party at such address. Without in any manner limiting the generality of any of the foregoing provisions hereof: (a) some portions of the goods described or to which reference is made herein are or are to become fixtures on the Lands described or to which reference is made herein; (b) the minerals and the like (including oil and gas) included in the Mortgaged Property and the accounts resulting from the sale thereof will be financed at the wellhead(s) or minehead(s) or the well(s) or mine(s) located on the Lands described or to which reference is made herein; and (c) this instrument is to be filed of record in the real estate records in the counties in which any portion of the Mortgaged Property is situated as a financing statement but the failure to do so will not otherwise affect the validity or enforceability of this instrument. Section 6.15 Multiple Counterparts. This Mortgage has simultaneously been executed in a number of identical counterparts, each of which shall be deemed an original, and all of which are identical, except that in order to facilitate recordation, portions of Exhibit A hereto which describe Mortgaged Property situated in counties other than the particular county in which a counterpart hereof is being recorded may be omitted from such counterpart. Section 6.16 Binding Effect. This Mortgage is binding upon Mortgagor and Mortgagor's successors and shall inure to the benefit of Mortgagee and each of the Lenders and their respective successors and assigns, and the provisions hereof shall likewise be covenants running with the Land. The duties, covenants, conditions, obligations, and warranties of Mortgagor in this Mortgage shall be joint and several obligations of Mortgagor and Mortgagor's successors. Each and every party who signs this Mortgage, other than Mortgagee, and each and every subsequent owner of the Mortgaged Property, or any part thereof, jointly and severally covenants and agrees that he or it will perform, or cause to be performed, each and every condition, term, provision, and covenant of this Mortgage. Section 6.17 Credit Agreement Controls. In the event of a conflict between the terms and provisions of this Mortgage and the terms and provisions of the Credit Agreement, the terms and provisions of the Credit Agreement shall control. above. EXECUTED on the date(s) of the acknowledgment(s) below to be effective as of the date first set forth MORTGAGE— Page 20 [This space is left intentionally blank. The signature page follows.] STATE OF COLORADO COUNTY OF DENVER SEAL MORTGAGE— Page 24 MORTGAGOR CROWN ENERGY PARTNERS, LLC By: This instrument was acknowledged before me on January, 2010, by Brian H. Ary, as Chief Executive Officer of Crown Energy Partners, LLC, a Delaware limited liability company, on behalf of said limited liability company. Brian I Ary, Chief xe� t fficer de." Qe t/A Notar' Public 1 My Commission Expires: ■j (A C OFO97 PREFACE TO EXHIBIT A TO MORTGAGE, ASSIGNMENT, SECURITY AGREEMENT AND FINANCING STATEMENT, DATED AS OF JANUARY 28, 2010 FROM CROWN ENERGY PARTNERS, LLC TO COMERICA BANK, AS ADMINISTRATIVE AGENT, MORTGAGEE This Exhibit A contains a description of those Subject Leases and Lands referred to in the foregoing Mortgage. The Subject Leases and Lands consist of producing and non producing oil and gas leases, oil, gas and mineral interests, oil and gas royalty interests, and oil and gas overriding royalty interests affecting lands situated in Lincoln, Sublette, Sweetwater and Uinta Counties, Wyoming, together with all of Mortgagor's interest in all leases, lands and interests with which any of said interests may now or hereafter be pooled, unitized or communitized. This Exhibit A shall include all of Mortgagor's interest in the leases described or referred to in this Exhibit A, whether beneficially owned or as now or hereafter reflected of record in the county records, and whether or not all lands covered by said leases are specifically described or referred to. The net revenue interests and/or interests in gross production set forth herein are the interests in production of oil and/or gas hereby represented and warranted to be owned by Mortgagor in the properties described, but this Exhibit A shall be deemed to cover any additional interests of Mortgagor that are in excess of the net revenue interests indicated herein and such designation shall not be deemed a limitation on the interests covered hereby. Reference is hereby made to each particular instrument described and referred to in this Exhibit A for further description and for all the terms and conditions thereof and the lands covered thereby. Where references in this Exhibit A state that any described interest is subject to any referenced agreement, instrument, or outstanding interest, such reference is made only to the extent, if any, that such agreement, instrument or interest is valid and subsisting, and such references shall not create rights in or have any effect upon any Person not parties to this Mortgage, to which the Exhibit A is attached. The Subject Leases and Lands are conveyed or mortgaged subject to valid and presently subsisting easements and rights -of -way, either of record or on the ground. All recording references in this Exhibit A are to the official records of the Clerk of the County in which the lands affected by the described instrument are situated. This Mortgage may be executed in multiple counterparts, each of which is an original and all of which are substantially identical and shall together constitute but one and the same Mortgage except that to facilitate recordation, there is attached to each counterpart which is to be recorded only that portion of this Exhibit A which contains the description of the Lands located in the County where that particular counterpart will be recorded. The Exhibit A to be attached to the financing statement filed in the central filing jurisdiction of each state shall contain descriptions of all of the Subject Leases and Lands in that state that are affected by this Mortgage. It is the intention of Mortgagor herein to convey or mortgage all of its interests in the Subject Leases and the Lands, even though any such oil and gas property may not be accurately described herein. Any acreage or depth limitation language in this Exhibit A is included for the sole purpose of specifying or limiting the warranties made by Mortgagor, but it is the intention of Mortgagor to subject Mortgagor's entire interest in the leases and/or lands described or referred to in this Exhibit A without regard to acreage or depth limitations. "Working Interest" or "WI" (expressed as a decimal) shall mean the interest of Mortgagor in a particular Subject Lease, well, or unit as the case may be, entitling Mortgagor to produce oil, gas and other Hydrocarbons produced therefrom and being equivalent to the proportionate part of the cost of exploration, development and production of oil, gas and other minerals borne by the owners thereof with respect to such Subject Lease or well. Exhibit A Page 1 C: O O99 "Net Revenue Interest" or "NRI" (expressed as a decimal) means the warranted interest of Mortgagor representing the proportionate share of the production of oil, gas and other Hydrocarbons produced from the Subject Lease or well as the case may be, to which Mortgagor is entitled after deduction of all royalties, overriding royalty interests, production payments and other burdens on or payments out of production, except severance, production, and other similar taxes. "Overriding Royalty Interest "ORRI" or "ORI" (expressed as a decimal) means an interest in production which is free of any obligation for the expense of exploration, development and production, bearing only its pro rata share of severance, production and other similar taxes and, in instances where the document creating the overriding royalty interest so provides, costs associated with compression, dehydration, other treating or processing or transportation of production of oil, gas or other minerals relating to the marketing of such production. "Royalty Interest" or "RI" (expressed as a decimal) means an interest in production which results from an ownership in the mineral fee estate or royalty estate in the relevant Lands and which is free of any obligation for the expense of exploration, development and production, bearing only its pro rata share of severance, production and other similar taxes and, in instances where the document creating the royalty interest so provides, costs associated with compression, dehydration, other treating or processing or transportation of production of oil, gas or other minerals relating to the marketing of such production. Notwithstanding the percentage of Working Interest, Net Revenue Interest, Overriding Royalty Interest or Royalty Interest set forth with respect to a particular oil, gas and mineral lease or well, Mortgagor intends that this Mortgage shall convey or mortgage the entirety of their interest in the Subject Leases and Lands. Any reference herein to wells or well names, prospects or prospect names, if any, shall be for information purposes and shall not limit the description of the interests made subject to this Mortgage. Each reference to a lease herein shall be deemed a reference to said lease as said lease may have been heretofore amended and/or ratified, whether or not such amendments and ratifications are referred to herein. Exhibit A Page 2 EXHIBIT A [Legal descriptions follow this cover page.] 0 31.0 W LU Z w Z m /$I�§ k 4 a «2± u�N u n y 0 =0 =0 m =u� w Jw Z z Z §o Z� 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 °u�uxz� u m W u 0) m u u A CO eCO u <o 2 n m /m en n p m em p V) 0_ j i E i CO c 0 I ƒ co E CO e as G 0 0 z z z 0 a a) k 0 w 7 a En En 2 7 co k 3 7 5 R 0 CL 0) 0 2 N CO u j 0 0 0 iii CC y co CUD t:":00101. O u_ w z h. °o. 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