HomeMy WebLinkAbout963073WHEN RECORDED OR FILED,
PLEASE RETURN TO:
Locke Lord LLP
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Attention: Vicky Gunning
(WY)
MORTGAGE, LINE OF CREDIT MORTGAGE, MULTIPLE INDEBTEDNESS
MORTGAGE, FIXTURE FILING, ASSIGNMENT OF AS- EXTRACTED
COLLATERAL, SECURITY AGREEMENT AND FINANCING STATEMENT
FROM
KAISER- FRANCIS MID CONTINENT LIMITED PARTNERSHIP,
AS MORTGAGOR,
TO
JPMORGAN CHASE BANK, N.A.,
AS ADMINISTRATIVE AGENT,
AS MORTGAGEE
FOR THE BENEFIT OF
THE SECURED PERSONS
JANUARY 25, 2012
THIS MORTGAGE SECURES IN PART A LINE OF CREDIT.
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED
FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMI3ER.
A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT. IN CERTAIN STATES, A POWER OF
SALE MAY ALLOW THE TRUSTEE OR MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND
SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE
MORTGAGOR UNDER THIS INSTRUMENT.
A CARBON, PHOTOGRAPHIC, OR OTHER REPRODUCTION OF THIS INSTRUMENT IS SUFFICIENT AS
A FINANCING STATEMENT.
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00800
RECEIVED 2/6/2012 at 10:07 AM
RECEIVING 963073
BOOK: 780 PAGE: 800
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
THIS INSTRUMENT CONTAINS AFTER ACQUIRED PROPERTY PROVISIONS, SECURES PAYMENT OF
FUTURE ADVANCES, AND COVERS PROCEEDS OF THE MORTGAGED PROPERTY.
THIS INSTRUMENT COVERS MINERALS, AS- EXTRACTED COLLATERAL AND OTHER SUBSTANCES
OF VALUE WHICH MAY BE EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION
OIL AND GAS) AND THE ACCOUNTS RELATED THERETO, WHICH WILL BE FINANCED AT THE
WELLHEADS OF THE WELL OR WELLS LOCATED ON THE PROPERTIES DESCRIBED AS
MORTGAGED PROPERTY HEREIN. THIS INSTRUMENT COVERS GOODS WHICH ARE OR ARE TO
BECOME FIXTURES ON THE REAL /IMMOVABLE PROPERTY DESCRIBED HEREIN. THIS
INSTRUMENT IS TO BE FILED FOR RECORD (INCLUDING AS A FIXTURE FILING), AMONG OTHER
PLACES, IN THE REAL PROPERTY RECORDS OR SIMILAR RECORDS OF THE COUNTY RECORDERS
OF THE COUNTIES LISTED ON EXHIBIT A HERETO. MORTGAGOR HAS AN INTEREST OF RECORD IN
THE REAL ESTATE /IMMOVABLE PROPERTY CONCERNED, WHICH INTEREST IS DESCRIBED IN
SECTION 1.01 OF THIS INSTRUMENT. THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF
FINANCING STATEMENTS. THE ADDRESSES OF MORTGAGOR AND BENEFICIARY ARE CONTAINED
IN THIS INSTRUMENT.
THE FINAL MATURITY DATE OF THE INDEBTEDNESS SECURED HEREBY IS FEBRUARY 1, 2014,
UNLESS SUCH MATURITY DATE IS SOONER ACCELERATED IN ACCORDANCE WITH THIS
INSTRUMENT AND THE INDEBTEDNESS SECURED HEREBY.
INDEXING INSTRUCTIONS, IF REQUIRED, ARE ATTACHED HERETO AS EXHIBIT B
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Page
ARTICLE I. Grant of Lien and Obligations Secured 1
Section 1.01. Grant of Liens 1
Section 1.02. Grant of Security Interest 4
Section 1.03. Obligations Secured 5
Section 1.04. Fixture Filing, Etc 6
Section 1.05. Pro Rata Benefit 6
Section 1.06. Defined Terms 7
ARTICLE II. Assignment of As- Extracted Collateral 7
Section 2.01. Assignment. 7
Section 2.02. No Modification of Payment Obligations 8
Section 2.03. Rights of Producers 9
ARTICLE III. Representations, Warranties and Covenants 9
Section 3.01. Title 9
Section 3.02. Perfected Liens; Defend Title; Further Assurances 9
Section 3.03. Further Assurances. 10
Section 3.04. Not a Foreign Person 11
Section 3.05. Power to Create Lien and Security 11
Section 3.06. Revenue and Cost Bearing Interest 11
Section 3.07. Abandonment, Sales 11
Section 3.08. Further Identification of Collateral 11
Section 3.09. Failure to Perform 11
ARTICLE IV. Rights and Remedies 11
Section 4.01. Event of Default 11
Section 4.02. Foreclosure and Sale 12
Section 4.03. Collections on Accounts, Etc 14
Section 4.04. Proceeds 14
Section 4.05. Substitute Agents 15
Section 4.06. Judicial Foreclosure; Receivership 15
Section 4.07. Foreclosure for Installments 16
Section 4.08. Separate Sales 16
Section 4.09. Possession of Mortgaged Property and Collateral 16
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TABLE OF CONTENTS
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Section 4.10.
Section 4.11.
Section 4.12.
Section 4.13.
Section 4.14.
Section 4.15.
Section 4.16.
Section 4.17.
Section 4.18.
Section 4.19.
Section 4.20.
Section 4.21.
ARTICLE V. Miscellaneous
Section 5.01. Instrument Construed as Mortgage, Etc
Section 5.02. Release of Mortgage
Section 5.03. Severability
Section 5.04. Partial Releases
Section 5.05. Successors and Assigns of Parties
Section 5.06. Satisfaction of Prior Encumbrance
Section 5.07. Nature of Covenants
Section 5.08. Notices
Section 5.09. Amendments
Section 5.10. Counterparts
Section 5.11. Governing Law
Section 5.12. Exculpation Provisions
Section 5.13. Terms Generally; Rules of Construction
Section 5.14. Recording
Section 5.15. Application of Payments to Certain Secured Obligations
Section 5.16. Compliance with Usury Laws
Section 5.17. Acknowledgement of Receipt
Exhibit A
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Occupancy After Foreclosure
Remedies Cumulative, Concurrent and Nonexclusive
No Release of Secured Obligations
No Impairment of Security
Release of and Resort to Collateral
Sales Acknowledgment
Waiver of Redemption, Notice and Marshalling of Assets, Etc
Discontinuance of Proceedings
Application of Proceeds
Resignation of Operator
Indemnity
Mortgagee Not "Mortgagee -In- Possession"
Mortgaged Property
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MORTGAGE, LINE OF CREDIT MORTGAGE, MULTIPLE INDEBTEDNESS
MORTGAGE, FIXTURE FILING, ASSIGNMENT OF AS- EXTRACTED
COLLATERAL, SECURITY AGREEMENT AND FINANCING STATEMENT
This MORTGAGE, LINE OF CREDIT MORTGAGE, MULTIPLE INDEBTEDNESS
MORTGAGE, FIXTURE FILING, ASSIGNMENT OF AS- EXTRACTED COLLATERAL,
SECURITY AGREEMENT AND FINANCING STATEMENT (as the same may from time to
time be amended, modified, supplemented or replaced, this "Mortgage is entered into as of
January 25, 2012 by KAISER FRANCIS MID CONTINENT LIMITED PARTNERSHIP, an
Oklahoma limited partnership "Mortgagor in the case of the Mortgaged Property located in or
adjacent to the Mortgage State (as hereinafter defined), in favor of JPMORGAN CHASE
BANK, N.A., as Administrative Agent for the Secured Persons (the Administrative Agent,
together with its successors and assigns in such capacity, being herein referred to as
"Mortgagee
RECITALS:
A. On even date herewith, George B. Kaiser, as borrower "Borrower the Lenders
party thereto (the "Lenders certain guarantors and the Mortgagee, as administrative agent for
the Lenders, are executing a Sixth Amended and Restated Revolving Credit Agreement (such
agreement, as may from time to time be amended, modified or supplemented, the "Credit
Agreement pursuant to which, upon the terms and conditions stated therein, the Lenders have
agreed to make loans and other extensions of credit to the Borrower.
B. The Mortgagee and the other Secured Persons (as defined herein) have
conditioned their obligations under the Secured Documents (as defined herein) upon the
execution and delivery by the Mortgagor of this Mortgage.
D. Mortgagee and the Lenders have conditioned their obligations under the Credit
Agreement upon the execution and delivery by Mortgagor of this Mortgage, and Mortgagor has
agreed to enter into this Mortgage to secure the Secured Obligations (as hereinafter defined),
including its obligations under the Credit Agreement.
E. Therefore, in order to comply with the terms and conditions of the Credit
Agreement and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Mortgagor hereby agrees as follows:
ARTICLE I.
Grant of Lien and Obligations Secured
Section 1.01. Grant of Liens. To secure the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or otherwise) of the Secured Obligations and
the performance of the covenants and obligations herein contained, Mortgagor does by these presents
hereby GRANT, BARGAIN, MORTGAGE, ASSIGN, REMISE, RELEASE, WARRANT, AND
CONVEY to and for the benefit of the Mortgagee and grant to the Mortgagee a POWER OF SALE
(pursuant to this Mortgage and applicable law) with respect to, those of the following described
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properties, rights, and interests which are located in (or cover or relate to properties located in) the State
of Wyoming (the "Mortgage State (collectively, the "Mortgaged Property"):
(a) All rights, titles, interests and estates now owned or hereafter acquired by
Mortgagor in and to the following (collectively, the "Hydrocarbon Properties
(i) the oil, gas, and /or other mineral properties, mineral servitudes,
overriding royalty interests, and /or other mineral rights and interests described in Exhibit A, including,
without limitation, the oil, gas and /or other mineral leases or other agreements described in Exhibit A and
other interests and estates and the lands and premises covered or affected thereby which are described or
referred to in Exhibit A (or described in any of the instruments described or referred to in Exhibit A),
including without limitation, the undivided interests of Mortgagor which are more particularly described
on attached Exhibit A (collectively, the "Hydrocarbon Interests and
(ii) any and all properties now or hereafter pooled or unitized with any of the
Hydrocarbon Interests, including any and all presently existing or future unitization, communitization,
and pooling agreements and declarations of pooled units and the units created thereby (including, without
limitation, all units created under orders, regulations, rules or other official acts of any federal, state or
other governmental body or agency having jurisdiction and any units created solely among working
interest owners pursuant to operating agreements or otherwise) which may affect all or any portion of any
Hydrocarbon Interest, including, without limitation, those units which may be described or referred to on
Exhibit A,
without regard to any limitations as to specific lands or depths that may be set forth in Exhibit A,
it being agreed and understood that the Hydrocarbon Interests and the Hydrocarbon Properties
shall include (1) all of Mortgagor's rights, titles, interests, and estates therein even though
Mortgagor's interests therein may be incorrectly described or a description of a part or all thereof
or of Mortgagor's interests therein be omitted or incomplete, it being intended by Mortgagor and
Mortgagee herein to cover and affect hereby all interests which Mortgagor may now own or may
hereafter acquire therein and thereto notwithstanding that the interests as specified on Exhibit A
may be limited to particular lands, specified depths or particular types of property interests, and
(2) any enlargements thereof arising from the discharge of any payments out of production or by
the removal of any charges or Excepted Liens or Liens permitted to exist by Section 6.04 of the
Credit Agreement to which any of the Hydrocarbon Interests or Hydrocarbon Properties are
subject, or otherwise.
(b) All rights, titles, interests and estates now owned or hereafter acquired by
Mortgagor in and to all operating agreements, production sales agreements, farmout agreements, farm -in
agreements, area of mutual interest agreements, equipment leases and other agreements described or
referred to in this Mortgage or that relate to any of the Hydrocarbon Properties or any interests in any of
the Hydrocarbon Properties or to the production, sale, purchase, exchange, processing, handling, storage,
transporting or marketing of Hydrocarbons (as hereinafter defined) from or attributable to any of the
Hydrocarbon Properties.
(c) All rights, titles, interests, and estates now owned or hereafter acquired by
Mortgagor in and to all geological, geophysical, engineering, accounting, title, legal, and other technical
or business data concerning any of the Hydrocarbon Properties, any Hydrocarbons, or any other items of
Mortgaged Property which are in the possession of Mortgagor or in which Mortgagor can otherwise grant
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a security interest, and all books, files, records, magnetic media, computer records, and other forms of
recording or obtaining access to such data.
(d) All rights, titles, interests, and estates now owned or hereafter acquired by
Mortgagor in and to the surface of all lands relating to the Hydrocarbon Properties, including without
limitation such as are described in Exhibit A, and all compressor sites, settling ponds, equipment or pipe
yards, office sites, office buildings and property and fixtures located thereon, whether such lands,
compressor sites, settling ponds, equipment or pipe yards, office sites, and office buildings are fee simple
estates, leasehold estates or otherwise, together with all present and future rights, titles, easements and
estates now owned or hereafter acquired by Mortgagor under or in connection with such any such interest.
(e) All rights, titles, interests and estates now owned or hereafter acquired by
Mortgagor in and to all oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate,
liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom and all other
minerals (collectively, "Hydrocarbons in and under and which may be produced and saved from or
attributable to any of the Hydrocarbon Properties, including all oil in tanks and all rents, issues, profits,
proceeds, products, revenues and other income from or attributable to any of the Hydrocarbon Properties,
including specifically but without limitation all Liens securing payment of proceeds from the sale of
Hydrocarbons, including, without limitation, those liens and security interests provided in Section 9.343
of the Uniform Commercial Code as enacted in the State of Texas and in the correlative provisions of the
Uniform Commercial Code as enacted in the other states in which Mortgaged Property is located.
(f) All tenements, hereditaments, appurtenances and properties in any way
appertaining, belonging, affixed or incidental to any of the Hydrocarbon Properties that are now owned or
which may hereafter be acquired by Mortgagor, including, without limitation, any and all property, real or
personal, now owned or hereafter acquired and situated upon, used, held for use, or useful in connection
with the operating, working or development of any of the Hydrocarbon Properties and including any and
all oil wells, gas wells, injection wells or other wells, buildings, structures, field separators, liquid
extraction plants, plant compressors, pumps, pumping units, pipelines, sales and flow lines, gathering
systems, field gathering systems, salt water disposal facilities, tanks and tank batteries, fixtures, valves,
fittings, machinery and parts, engines, boilers, steam generation facilities, meters, apparatus, equipment,
appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights -of-
way, easements, servitudes, licenses and other surface and subsurface rights together with all additions,
substitutions, replacements, accessions and attachments to any and all of the foregoing properties.
(g) Any property that may from time to time hereafter, by delivery or by writing of
any kind, be subjected to the Lien and security interest hereof by Mortgagor or by anyone on Mortgagor's
behalf (and Mortgagee is hereby authorized to receive the same at any time as additional security
hereunder).
(h) Any and all renewals and extensions of any of the Mortgaged Property described
in paragraphs (a) through (g) above, including all contracts and agreements supplemental to or
amendatory of or in substitution for the contracts and agreements described or mentioned above, and any
and all additional interests of any kind hereafter acquired by Mortgagor therein or thereto.
(i) All property of every kind and character which Mortgagor has or at any time
hereafter acquires, whether real or personal property, tangible or intangible, or mixed, all other interests
of every kind and character which Mortgagor has or at any time hereafter acquires in and to the types and
items of property and interests described in Section 1.01(a) through (g) preceding, all property which is
Section 1.02. Grant of Security Interest. Mortgagor hereby grants to Mortgagee, for its benefit
and the ratable benefit of the Secured Persons, a security interest in and to all of Mortgagor's right, title
and interest in and to the following Property of Mortgagor now owned or at any time hereafter acquired
by Mortgagor or in which Mortgagor now has or at any time in the future may acquire any right, title or
interest and whether now existing or hereafter coming into existence (collectively, the "Collateral as
DAL:
used or useful in connection with the Mortgaged Property or otherwise, and the proceeds and products of
all of the foregoing, whether now owned or hereafter acquired, including, without limitation:
(j) All present and future personal property;
(k) All present and future increases, profits, combinations, reclassifications,
improvements and products of accessions, attachments and other additions to, tools, parts and equipment
used in connection with, and substitutes and replacements for, all or any part of the Mortgaged Property
described in this or any other clause of this Section 1.01(1);
(1) All present and future As- extracted collateral, Accounts, Equipment, Inventory,
contract rights, General Intangibles, Chattel Paper, Documents, Instruments, Fixtures, cash and noncash
Proceeds and other rights arising from or by virtue of, or from the voluntary or involuntary sale or other
disposition of or collections with respect to, or insurance proceeds or unearned insurance premiums
payable with respect to, or proceeds payable by virtue of warranty or other claims against manufacturers
of, or claims against any other person or entity with respect to, all or any part of the Mortgaged Property;
and
(m) All present and future security for the payment to Mortgagor of any of the
Mortgaged Property and goods which gave or will give rise to any of such Mortgaged Property or are
evidenced, identified, or represented therein or thereby.
Notwithstanding any provision in this Mortgage to the contrary, in no event is any Building (as
defined in the applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as
defined in the applicable Flood Insurance Regulation) included in the definition of "Mortgaged
Property" and no Building or Manufactured (Mobile) Home is hereby encumbered by this
Mortgage. As used herein, "Flood Insurance Regulations" shall mean (i) the National Flood
Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood
Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii)
the National Flood Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same
may be amended or recodified from time to time, and (iv) the Flood Insurance Reform Act of
2004 and any regulations promulgated thereunder.
Any fractions or percentages specified on Exhibit A in referring to Mortgagor's interests are
solely for purposes of the warranties made by Mortgagor pursuant to Section 3.06 hereof and
shall in no manner limit the quantum of interest affected by this Section 1.01 with respect to any
Hydrocarbon Property or with respect to any unit or well identified on Exhibit A.
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, and Mortgagee's
successors and assigns, forever, to secure the payment of the Secured Obligations and to secure
the performance of the covenants, agreements, and obligations of the Mortgagor herein
contained.
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writing);
(g)
(j) all As- extracted collateral;
(k) all books and records pertaining to the Collateral;
(I) to the extent not otherwise included in the Collateral, the Mortgaged Property
insofar as the Mortgaged Property consists of personal property of any kind or character; and
(m) to the extent not otherwise included, all Proceeds and products of any and all of
the foregoing and all collateral security, guarantees and other Supporting Obligations given with respect
to any of the foregoing.
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all Instruments;
Section 1.03. Obligations Secured. This Mortgage is executed and delivered by Mortgagor to
secure and enforce the following (collectively, the "Secured Obligations
(a) All indebtedness, obligations and liabilities, whether now in existence or
hereafter arising, whether by acceleration or otherwise, of Borrower, arising out of, under or pursuant to
the Credit Agreement and each other Loan Document to which Borrower is a party, including, without
limitation, all Obligations evidenced by those certain promissory notes up to the aggregate principal
amount of Five Hundred Million and No /100 Dollars ($500,000,000.00) executed and delivered by
Borrower pursuant to the Credit Agreement and payable to the order of the Lenders on or before February
1, 2014, and all other notes given in substitution for the foregoing promissory notes, or in modification,
renewal, rearrangement or extension thereof, in whole or in part (such promissory notes, as from time to
time supplemented, amended or modified and all other notes given in substitution therefor or in
modification, renewal, rearrangement or extension thereof, in whole or in part, being hereafter
collectively called the "Notes and with interest, collection and attorneys' fees, all as provided therein.
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collateral security for the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Secured Obligations:
(a) all Accounts;
(b) all Chattel Paper (whether Tangible Chattel Paper or Electronic Chattel Paper);
(c) all Commercial Tort Claims;
(d) all Deposit Accounts other than payroll, withholding tax and other fiduciary
Deposit Accounts;
(e) all Documents;
(f) all General Intangibles (including, without limitation, rights in and under any
Swap Agreement) and all rights under insurance contracts and rights to insurance proceeds;
(h) all Goods (including, without limitation, all Inventory, all Equipment and all
Fixtures relating to the Mortgaged Property);
(1) all Letter -of- Credit Rights (whether or not the letter of credit is evidenced by a
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(b) All indebtedness, Obligations and liabilities, whether now in existence or
hereafter arising, whether by acceleration or otherwise, in respect of Letters of Credit issued pursuant to
the Credit Agreement and all reimbursement obligations in respect thereof.
(c) All additional loans or advances made by the Lenders to or for the benefit of
Borrower or any of its Subsidiaries pursuant to the Credit Agreement or any other Loan Document (it
being contemplated that the Lenders may lend additional sums to Borrower pursuant to the Credit
Agreement from time to time, but shall not be obligated to do so).
(d) All indebtedness, Obligations and liabilities, whether now in existence or
hereafter arising, whether by acceleration or otherwise, of Mortgagor under the Guaranty and each other
Loan Document to which Mortgagor is a party.
(e) Any sums which may be advanced or paid by Mortgagee or the Lenders under
the terms hereof or of the Credit Agreement or other Loan Documents on account of the failure of
Mortgagor to comply with the covenants of Mortgagor contained herein, or the failure of Borrower or.
Mortgagor to comply with the covenants of Borrower, Mortgagor or any other obligor contained in the
Credit Agreement or any other Loan Documents; and all other indebtedness of Mortgagor arising
pursuant to the provisions of this Mortgage, including penalties, indemnities, legal and other fees, charges
and expenses, and amounts advanced by and expenses incurred in order to preserve any collateral or
security interest, whether due after acceleration or otherwise.
(f) All interest (including, without limitation, interest accruing at any post default
rate and interest accruing after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, whether or not a claim for post -filing or post- petition
interest is allowed in such proceeding) in respect of all of the Secured Obligations described in this
Section 1.03 and all costs of collection and attorneys' fees, all as provided herein and in the other Loan
Documents.
(g) All renewals, extensions, amendments, increases and changes of, or substitutions
or replacements for, all or any part of the Secured Obligations described under paragraphs (a) through (f)
in this Section 1.03.
Section 1.04. Fixture Filing, Etc. Without in any manner limiting the generality of any of the
other provisions of this Mortgage: (a) some portions of the goods described or to which reference is made
herein are or are to become fixtures on the land described or to which reference is made herein or on
Exhibit A; (b) the security interests created hereby under applicable provisions of the Uniform
Commercial Code will attach to all As- extracted collateral, including the Hydrocarbons (minerals
including oil and gas) or the accounts resulting from the sale thereof at the wellhead or minehead located
on the land described or to which reference is made herein; (c) this Mortgage is to be filed of record in the
real estate records of the county in which the Mortgaged Property is located as a financing statement, a
fixture filing and an As- extracted collateral filing; (d) Mortgagor (debtor) is the record owner of the real
estate or interests in the real estate comprised of the Mortgaged Property; (e) the name and address of
Mortgagor (debtor) is set forth in Section 5.08 of this Mortgage; and (f) the name and address of the
Mortgagee (secured party) is set forth in Section 5.08 of this Mortgage. A carbon, photographic,
facsimile or other reproduction of this Mortgage or of any financing statement relating to this Mortgage
shall be sufficient as a financing statement for any of the purposes referred to in this Section 1.04.
Section 1.05. Pro Rata Benefit. This Mortgage is executed and granted for the pro rata benefit
and security of the Secured Persons, any Person secured hereby and any and all future holders of an
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interest in the Secured Obligations and the interest thereon for so long as same remains unpaid and
thereafter for so long as any Lender or any Person secured hereby (or any Affiliate) has any obligations
under the Credit Agreement to lend money or issue Letters of Credit or until the Liens hereby created are
released by Mortgagee; it being understood and agreed that possession of any Note at any time by
Mortgagor shall not in any manner extinguish the Secured Obligations, such Notes or this Mortgage
securing payment thereof, and Mortgagor shall have the right to issue and reissue any of the Notes from
time to tune as its interest or as convenience may require, without in any manner extinguishing or
affecting the Secured Obligations, the obligations under any of the Notes, or the security of this
Mortgage.
Section 1.06. Defined Terms. Each capitalized term used in this Mortgage and not defined in
this Mortgage shall have the meaning assigned such term in the Credit Agreement, and if not therein
defined, such capitalized term shall have the meaning assigned such term in the Uniform Commercial
Code. Uncapitalized terms used herein that are defined in the Uniform Commercial Code shall have the
same meaning in this Mortgage. As used herein, the following terms have the meanings specified below:
"Lien" means any interest in Property securing an obligation owed to, or a claim by, a
Person other than the owner of the Property, whether such interest is based on the common law,
statute or contract, and whether such obligation or claim is fixed or contingent, and including but
not limited to (a) the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or bailment for
security purposes or (b) production payments and the like payable out of Oil and Gas Properties.
The term "Lien" shall include easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations.
"Secured Persons" means the Administrative Agent, each other Agent, each Lender, the
Issuing Bank, each Indemnified Party and any legal owner, holder, assignee or pledgee of any of
the Secured Obligations.
"Uniform Commercial Code" means the Uniform Commercial Code presently in effect in
the State of Texas, as the same may be amended from time to time, and any successor statute
thereto, except to the extent that the Uniform Commercial Code of some other jurisdiction
applies mandatorily or as is specified herein.
Section 2.01 Assignment.
(a) Mortgagor has absolutely and unconditionally assigned, transferred, conveyed
and granted a security interest, and does hereby absolutely and unconditionally assign, transfer, convey
and grant a security interest unto Mortgagee, its successors and assigns, in and to:
(b) all of its As- extracted collateral located in or relating to Oil and Gas Properties
located in the county where this Mortgage is filed, including without limitation, all As- extracted collateral
relating to the Hydrocarbon Properties, the Hydrocarbons and all products obtained or processed
therefrom;
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ARTICLE II.
Assignment of As- Extracted Collateral
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(c) the revenues and proceeds now and hereafter attributable to such Oil and Gas
Properties, including the Hydrocarbons, and said products and all payments in lieu, such as "take or pay"
payments or settlements; and
(d) all amounts and proceeds hereafter payable to or to become payable to Mortgagor
or now or hereafter relating to any part of the Mortgaged Property and all amounts, sums, monies,
revenues and income which become payable to Mortgagor from, or with respect to, any of the Mortgaged
Property, present or future, now or hereafter constituting a part of the Mortgaged Property.
(e) The Hydrocarbons and products are to be delivered into pipe lines connected
with the Mortgaged Property, or to the purchaser thereof, to the credit of Mortgagee, free and clear of all
taxes, charges, costs, and expenses; and all such revenues and proceeds shall be paid directly to
Mortgagee, with no duty or obligation of any party paying the same to inquire into the rights of
Mortgagee to receive the same, what application is made thereof, or as to any other matter. Mortgagor
agrees to perform all such acts, and to execute all such further assignments, transfers and division orders,
and other instruments as may be required or desired by Mortgagee or any party in order to have said
proceeds and revenues so paid to Mortgagee. In addition to any and all rights of a secured party under
Sections 9.607 and 9.609 of the Uniform Commercial Code, Mortgagee is fully authorized to receive and
receipt for said revenues and proceeds; to endorse and cash any and all checks and drafts payable to the
order of Mortgagor or Mortgagee for the account of Mortgagor received from or in connection with said
revenues or proceeds and to hold the proceeds thereof in a bank account as additional collateral securing
the Secured Obligations; and to execute transfer and division orders in the name of Mortgagor, or
otherwise, with warranties binding Mortgagor. During the continuation of an Event of Default, all
proceeds received by Mortgagee pursuant to this grant and assignment shall be at Mortgagee's sole
discretion either remitted to Mortgagor or applied to the Obligations in such order as Mortgagee may
determine in its sole discretion. Mortgagee shall not be liable for any delay, neglect, or failure to effect
collection of any proceeds or to take any other action in connection therewith or hereunder; but
Mortgagee shall have the right, at its election, in the name of Mortgagor or otherwise, to prosecute and
defend any and all actions or legal proceedings deemed advisable by Mortgagee in order to collect such
funds and to protect the interests of Mortgagee, and /or Mortgagor, with all costs, expenses and attorneys'
fees incurred in connection therewith being paid by Mortgagor. Mortgagor hereby appoints Mortgagee as
its attorney -in -fact to pursue any and all rights of Mortgagor to Liens on and security interests in the
Hydrocarbons securing payment of proceeds of runs attributable to the Hydrocarbons. In addition to the
rights granted to Mortgagee in Section 1.01 of this Mortgage, Mortgagor hereby further transfers and
assigns to Mortgagee any and all such Liens, security interests, financing statements or similar interests of
Mortgagor attributable to its interest in the Hydrocarbons and proceeds of runs therefrom arising under or
created by any statutory provision, judicial decision or otherwise. The power of attorney granted to
Mortgagee in this Section 2.01, being coupled with an interest, shall be irrevocable so long as the Secured
Obligations or any part thereof remains unpaid and thereafter for so long as any Lender or any Person
secured hereby (or any Affiliate) has any obligations under the Credit Agreement to lend money or issue
Letters of Credit or until the Liens hereby created are released by Mortgagee. Until such time as an Event
of Default has occurred and is continuing, Mortgagee hereby grants to Mortgagor a license to sell such
Hydrocarbons and receive proceeds from the sale of Hydrocarbons, which license shall automatically
terminate upon such Event of Default and for so long as the same continues.
Section 2.02. No Modification of Payment Obligations. Nothing herein contained shall modify
or otherwise alter the obligation of Mortgagor to make prompt payment of all principal and interest owing
on the Secured Obligations when and as the same become due regardless of whether the proceeds of the
Hydrocarbons are sufficient to pay the same and the rights provided in accordance with the foregoing
assignment provision shall be cumulative of all other security of any and every character now or hereafter
8
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existing to secure payment of the Secured Obligations. Nothing in this Article II is intended to be an
acceptance of collateral in satisfaction of the Secured Obligations.
Section 2.03. Rights of Producers. Mortgagor hereby grants, sells, assigns, sets over and
mortgages unto Mortgagee during the term hereof, all of Mortgagor's rights and interests pursuant to any
provision of applicable law granting producers of oil and gas a Lien on the oil and gas produced by them
and on the resulting accounts receivable, including, without limitation, the provisions of Section 9.343 of
the Uniform Commercial Code as enacted in the State of Texas and in the correlative provisions of the
Uniform Commercial Code as enacted in the other states in which Mortgaged Property is located, hereby
vesting in Mortgagee all of Mortgagor's rights as an interest owner to the continuing security interest in
and Lien upon the Mortgaged Property.
ARTICLE III.
Representations, Warranties and Covenants
00812
Mortgagor hereby represents, warrants and covenants as follows:
Section 3.01. Title. To the extent of the undivided interests specified on attached Exhibit A,
Mortgagor has good and defensible title to and is possessed of the Mortgaged Property. The Mortgaged
Property is free of any and all Liens except Liens allowed by Section 6.04 of the Credit Agreement.
Mortgagor is the legal and beneficial owner of the Collateral free and clear of any and all Liens except
Liens allowed by Section 6.04 of the Credit Agreement. No financing statement or other public notice
with respect to all or any part of the Collateral is on file or of record in any public office, except such as
have been filed in favor of Mortgagee, for its benefit and the ratable benefit of the Secured Persons,
pursuant to this Mortgage, the Security Instruments or as are filed to secure Liens permitted by Section
6.04 of the Credit Agreement.
Section 3.02. Perfected Liens; Defend Title; Further Assurances.
(a) This Mortgage is, and always will be kept, a direct first priority (provided that
Excepted Liens of the type described in clauses (a) to (d) and (f) of the definition thereof may exist, but
subject to the proviso at the end of such definition) Lien and security interest upon the real and personal
property presently constituting the Mortgaged Property, subject only to Liens permitted by Section 6.04
of the Credit Agreement. The security interests granted in the Collateral pursuant to this Mortgage upon
the filing of financing statements in the appropriate offices in the appropriate jurisdictions (which filings
have been delivered to Mortgagee in completed form) will constitute valid perfected security interests in
all of the Collateral in favor of Mortgagee, for the ratable benefit of the Secured Persons, as collateral
security for the Secured Obligations, enforceable in accordance with the terms hereof against all creditors
of Mortgagor and any Persons purporting to purchase any Collateral from Mortgagor and are prior to all
other Liens on the Collateral in existence on the date hereof except for Liens that have priority claim on
the Collateral by operation of law.
(b) Mortgagor will not create or suffer to be created or permit to exist any Lien,
security interest or charge prior to or on a parity with the Lien and security interest of this Mortgage upon
the Mortgaged Property or the Collateral or any part thereof or upon the rents, issues, revenues, profits
and other income therefrom other than as permitted by Section 6.04 of the Credit Agreement. Mortgagor
will not create or suffer to be created or permit to exist any Lien, security interest or charge junior to the
Lien and security interest of this Mortgage upon the Mortgaged Property or the Collateral or any part
thereof or upon the rents, issues, revenues, profits and other income therefrom other than as contemplated
by Section 6.04 of the Credit Agreement.
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(c) Mortgagor will warrant and defend the title to the Mortgaged Property and the
Collateral against the claims and demands of all other Persons whomsoever and will maintain and
preserve the Lien created hereby so long as any of the Secured Obligations secured hereby remains
unpaid and thereafter for so long as any Lender or any Person secured hereby (or any Affiliate) has any
obligations under the Credit Agreement to lend money or issue Letters of Credit or until the Liens hereby
created are released by Mortgagee. Should an adverse claim (other than as contemplated by this Section
3.02) be made against or a cloud develop upon the title which materially affects part of the Mortgaged
Property or the Collateral, Mortgagor agrees it will immediately defend against such adverse claim or take
appropriate action to remove such cloud at Mortgagor's cost and expense, and Mortgagor further agrees
that Mortgagee may take such other action as they deem advisable to protect and preserve their interests
in the Mortgaged Property and the Collateral, and in such event Mortgagor will indemnify Mortgagee
against any and all cost, attorney's fees and other expenses which they may incur in defending against any
such adverse claim or taking action to remove any such cloud.
Section 3.03. Further Assurances.
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(a) At any time and from time to time, upon the request of Mortgagee or any Lender,
and at the sole expense of Mortgagor, Mortgagor will promptly and duly give, execute, deliver, indorse,
file or record any and all financing statements, continuation statements, amendments, notices (including,
without limitation, notifications to financial institutions and any other Person), contracts, agreements,
assignments, certificates, stock powers or other instruments, obtain any and all governmental approvals
and consents and take or cause to be taken any and all steps or acts that may be necessary or advisable or
as Mortgagee or any Lender may request to create, perfect, establish the priority of or to preserve the
validity, perfection or priority of the Liens granted by this Mortgage or to enable Mortgagee or any
Lender to enforce its rights, remedies, powers and privileges under this Mortgage and any other Loan
Document with respect to such Liens or to otherwise obtain or preserve the full benefits of this Mortgage
and the rights, powers and privileges herein granted.
(b) Without limiting the obligations of Mortgagor under Section 3.03(a) or under any
other provision of this Mortgage, upon the request of Mortgagee, Mortgagor shall take or cause to be
taken all actions (other than any actions required to be taken by Mortgagee) requested by Mortgagee to
cause Mortgagee to (i) have "control" (within the meaning of Sections 9.104, 9.105, 9.106 and 9.107 of
the Uniform Commercial Code) over any Mortgaged Property or Collateral constituting Deposit
Accounts, Electronic Chattel Paper, Investment Property or Letter -of- Credit Rights, including, without
limitation, executing and delivering any agreements, in form and substance satisfactory to Mortgagee,
with securities intermediaries, issuers or other Persons in order to establish "control and Mortgagor shall
promptly notify Mortgagee of Mortgagor's acquisition of any such Collateral, and (ii) be a "protected
purchaser" (as defined in Section 8.303 of the Uniform Commercial Code). With respect to Collateral
other than Goods covered by a Document in the possession of a Person other than Mortgagor or
Mortgagee, Mortgagor shall obtain written acknowledgment that such Person holds possession for
Mortgagee's benefit, and with respect to any Collateral constituting Goods that are in the possession of a
bailee, Mortgagor shall provide prompt notice to Mortgagee of any such Collateral then in the possession
of such bailee, and Mortgagor shall take or cause to be taken all actions (other than any actions required
to be taken by Mortgagee) necessary or requested by Mortgagee to cause Mortgagee to have a perfected
security interest in such Mortgaged Property or Collateral under applicable law.
(c) This Section 3.03 and the obligations imposed on Mortgagor by this Section 3.03
shall be interpreted as broadly as possible in favor of Mortgagee and the Secured Persons in order to
effectuate the purpose and intent of this Mortgage.
00814
Section 3.04. Not a Foreign Person. Mortgagor is not a "foreign person" within the meaning of
the Internal Revenue Code of 1986, as amended (hereinafter called the "Code Sections 1445 and 7701
(i.e. Mortgagor is not a non- resident alien, foreign corporation, foreign partnership, foreign trust or
foreign estate as those terms are defined in the Code and any regulations promulgated thereunder).
Section 3.05. Power to Create Lien and Security. Mortgagor has full power and lawful
authority to grant, bargain, sell, assign, transfer, mortgage, and convey a security interest in all of the
Mortgaged Property and the Collateral in the manner and form herein provided and without obtaining the
authorization, approval, consent or waiver of any lessor, sublessor, Governmental Authority or other party
or parties whomsoever.
Section 3.06. Revenue and Cost Bearing Interest. Mortgagor's ownership of the Hydrocarbon
Property and the undivided interests therein as specified on Exhibit A will afford Mortgagor an interest in
production not in any material respect less than those net interests in the production from or which is
allocated to such Hydrocarbon Property specified as "Net Revenue Interest" or "NRI" (expressed as a
fraction, percentage or decimal) on Exhibit A to that certain Letter Agreement dated of even date
herewith, by and between Mortgagor and Mortgagee (the "Letter Agreement and will cause Mortgagor
to bear not in any material respect more than that portion (expressed as a fraction, percentage or decimal),
specified as "Working Interest" or "WI" on Exhibit A to the Letter Agreement, of the costs of drilling,
developing and operating the wells identified on Exhibit A except to the extent of any proportionate
corresponding increase in the Net Revenue Interest.
Section 3.07. Abandonment, Sales. Mortgagor will not sell, lease, assign, transfer or otherwise
dispose or abandon any of the Mortgaged Property or the Collateral except as permitted by the Credit
Agreement or this Mortgage.
Section 3.08. Further Identification of Collateral. Mortgagor will furnish to Mortgagee and the
Lenders from time to time, at Mortgagor's sole cost and expense, statements and schedules further
identifying and describing the Mortgaged Property and the Collateral and such other reports in connection
with the Mortgaged Property and Collateral as Mortgagee may reasonably request, all in reasonable
detai I.
Section 3.09. Failure to Perform. Mortgagor agrees that if Mortgagor fails to perform any act
or to take any action which Mortgagor is required to perform or take hereunder or pay any money which
Mortgagor is required to pay hereunder, Mortgagee in Mortgagor's name or its or their own name may,
but shall not be obligated to, perform or cause to perform such act or take such action or pay such money,
and any expenses so incurred by either of them and any money so paid by either of them shall be a
demand obligation owing by Mortgagor to Mortgagee, as the case may be, and Mortgagee, upon making
such payment, shall be subrogated to all of the rights of the Person receiving such payment. Each amount
due and owing by Mortgagor to Mortgagee pursuant to this Mortgage shall bear interest from the date of
such expenditure or payment or other occurrence which gives rise to such amount being owed to such
Person until paid at the post default rate set forth in Section 2.13(c) of the Credit Agreement, and all such
amounts together with such interest thereon shall be a part of the Secured Obligations described in
Section 1.03.
DAL:0040100/00868:2072354v3
ARTICLE IV.
Rights and Remedies
Section 4.01. Event of Default, An "Event of Default" under the Credit Agreement shall be an
Event of Default under this Mortgage.
11
Section 4.02. Foreclosure and Sale. (a) If an Event of Default shall occur and be continuing, to
the extent provided by applicable law, Mortgagee shall become and be entitled, as of right, without notice
and without regard to the adequacy of the Mortgaged Property or the Collateral as security for the
Secured Obligations hereby secured (a) to employ counsel to enforce payment of the obligations secured
hereby, (b) to proceed with foreclosure by, with respect to that portion of the Mortgaged Property located
in or adjacent to any Mortgage State, (A) judicial action or proceeding, or (B) if permitted in the
Mortgage State by power of sale to sell all or any portion of such Mortgaged Property and (c) to exercise
such other rights and remedies granted herein, in any other Loan Document or by law and equity, which
rights and remedies shall be cumulative and not exclusive. Mortgagee may sell said Mortgaged Property
either as a whole or in separate parcels, and in such order as it may determine. The purchase price shall
be payable in lawful money of the United States at the time of the sale. In exercising the power of sale
contained herein, Mortgagee may hold one or more sales of all or any portion of the Mortgaged Property
by public announcement at the time and place of sale set forth in the notice thereof, and from time to time
thereafter may postpone such sale or sales of all or any portion of the Mortgaged Property to the same or
separate days by public announcement at such time fixed by the preceding postponement. Any Person,
including Mortgagee, may purchase at such sale. Mortgagee may credit bid at any such sale, and if
Mortgagee is the successful purchaser, it may apply any of the outstanding Secured Obligations secured
hereby in settlement of the purchase price. Mortgagee may resort to and realize upon the security
hereunder and any other real or personal property security now or hereafter held by Mortgagee for the
Secured Obligations secured hereby in such order and manner as Mortgagee may, in its sole discretion,
determine. Resort to any or all such security may be taken concurrently or successively and in one or
several consolidated or independent judicial actions or nonjudicial proceedings, or both. Nothing
contained herein shall be construed so as to limit in any way Mortgagee's rights to sell the Mortgaged
Property, or any portion thereof, by private sale if and to the extent that, such private sale is permitted
under the laws of the applicable jurisdiction or by public or private sale after entry of a judgment by any
court of competent jurisdiction so ordering. Mortgagor hereby irrevocably appoints Mortgagee to be the
attorney of Mortgagor and in the name and on behalf of Mortgagor to execute and deliver any deeds,
transfers, conveyances, assignments, assurances and notices which Mortgagor ought to execute and
deliver and do and perform any and all such acts and things which Mortgagor ought to do and perform
under the covenants herein contained and generally, to use the name of Mortgagor in the exercise of all or
any of the powers hereby conferred on Mortgagee. At any such sale: (i) whether made under the power
e Mortgaged Property or the Collateral by, through or under Mortgagor are occupying or using the
Property or the Collateral or any part thereof, each for Mortgagee to have physically present, or to have
constructive possession of, the Mortgaged Property (Mortgagor hereby covenanting and agreeing to
deliver to Mortgagee any portion of the Mortgaged Property not actually or constructively possessed by
Mortgagee immediately upon demand by Mortgagee) and the title to and right of possession of any such
property shall pass to the purchaser thereof as completely as if the same had been actually present and
delivered to purchaser at such sale, (ii) each instrument of conveyance executed by Mortgagee shall
contain a general warranty of title, binding upon Mortgagor and its successors and assigns, (iii) each and
every recital contained in any instrument of conveyance made by Mortgagee shall conclusively establish
the truth and accuracy of the matters recited therein, including, without limitation, nonpayment of the
Secured Obligations, advertisement and conduct of such sale in the manner provided herein and otherwise
by law and appointment of any successor Mortgagee hereunder, (iv) any and all prerequisites to the
validity thereof shall be conclusively presumed to have been performed, (v) the receipt of Mortgagee or
of such other party or officer making the sale shall be a sufficient discharge to the purchaser or purchasers
for its purchase money and no such purchaser or purchasers, or its assigns or personal representatives,
shall thereafter be obligated to see to the application of such purchase money, or be in any way
answerable for any loss, misapplication or nonapplication thereof, (vi) to the fullest extent permitted by
law, Mortgagor shall be completely and irrevocably divested of all of its right, title, interest, claim and
DAL:
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demand whatsoever, either at law or in equity, in and to the property sold and such sale shall be a
perpetual bar both at law and in equity against Mortgagor, and against any and all other persons claiming
or to claim the property sold or any part thereof, by, through or under Mortgagor and (vii) to the extent
and under such circumstances as are permitted by law, Mortgagee may be a purchaser at any such sale,
and shall have the right, after paying or accounting for all costs of said sale or sales, to credit the amount
of the bid upon the amount of the Secured Obligations in lieu of cash payment.
(b) Upon the happening and during the continuance of any of the Events of Default,
Mortgagee is and shall be entitled to all of the rights, powers and remedies afforded a secured party by the
Uniform Commercial Code with respect to the Collateral, or Mortgagee may proceed as to both the real
and personal property covered hereby in accordance with the rights and remedies granted under this
Mortgage in respect of the real property covered hereby. Without limiting the generality of the foregoing,
Mortgagee, without demand of performance or other demand, presentment, protest, advertisement, notice
of intent to accelerate, notice of acceleration or notice of any kind (except any notice required by law
referred to below) to or upon Mortgagor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and /or may forthwith sell, lease, assign,
give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of Mortgagee or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. Mortgagee or any Lender shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in
Mortgagor, which right or equity is hereby waived and released. If an Event of Default shall occur and be
continuing, Mortgagor further agrees, at Mortgagee's request, to assemble the Collateral and make it
available to Mortgagee at places which Mortgagee shall reasonably select, whether at Mortgagor's
premises or elsewhere. Any such sale or transfer by Mortgagee either to itself or to any other Person shall
be absolutely free from any claim of right by Mortgagor, including any equity or right of redemption, stay
or appraisal which Mortgagor has or may have under any rule of law, regulation or statute now existing or
hereafter adopted. Upon any such sale or transfer, Mortgagee shall have the right to deliver, assign and
transfer to the purchaser or transferee thereof the Collateral so sold or transferred. Mortgagee shall apply
the net proceeds of any action taken by it pursuant to this Section 4.02, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights of Mortgagee and the Secured
Persons hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the
payment in whole or in part of the Secured Obligations, in accordance with Article VII of the Credit
Agreement, and only after such application and after the payment by Mortgagee of any other amount
required by any provision of law, including, without limitation, Section 9.615 of the Uniform Commercial
Code, need Mortgagee account for the surplus, if any, to Mortgagor. To the extent permitted by
applicable law, Mortgagor waives all claims, damages and demands it may acquire against Mortgagee or
any Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.
(c) In the event that Mortgagee elects not to sell the Collateral, Mortgagee retains its
rights to dispose of or utilize the Collateral or any part or parts thereof in any manner authorized or
permitted by law or in equity, and to apply the proceeds of the same towards payment of the Secured
Obligations. Each and every method of disposition of the Collateral described in this Mortgage shall
DAL:00
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00816
DA L:004 0100/00868:2072354v3
00817
constitute disposition in a commercially reasonable manner. Mortgagee may appoint any Person as agent
to perform any act or acts necessary or incident to any sale or transfer of the Collateral.
(d) Mortgagee may proceed as to the Mortgaged Property constituting Collateral in
accordance with Mortgagee's rights and remedies in respect to the Mortgaged Property or sell the
Mortgaged Property constituting Collateral separately and without regard to the remainder of the
Mortgaged Property in accordance with Mortgagee's rights and remedies provided by this Mortgage, the
other Loan Documents, the Uniform Commercial Code, as well as other rights and remedies at law or in
equity.
(e) Upon the occurrence of an Event of Default, this Mortgage may be foreclosed as
to the Mortgaged Property, or any part thereof, in any manner permitted by applicable law. Cumulative of
the foregoing and the other provisions of this Section 4.01, as to the Mortgaged Property located in the
Mortgage State, without limitation, the Mortgagee's rights and remedies hereunder upon the occurrence
of a default shall include, without limitation, in the event Mortgagee invokes the power of sale,
Mortgagee shall send to Mortgagor and any other Person required to receive such notice, written notice of
Mortgagee's election to cause the Mortgaged Property to be sold.
(f) Mortgagor acknowledges that the power of sale granted in this Mortgage may be
exercised or directed by Mortgagee without prior judicial hearing. In the event Mortgagee invokes the
power of sale, Mortgagee shall have the authority to determine the terms of the sale. In connection with
any such sale, the whole of the Mortgaged Property may be sold in one (1) parcel as an entirety or in
separate lots or parcels at the same or different times. Mortgagee shall have the right to become the
purchaser at any such sale. Mortgagee shall be entitled to receive costs and expenses from such sale not
to exceed the amount permitted by applicable law.
(g) Within a reasonable period of time after the sale, Mortgagee shall deliver to the
purchaser of the Mortgaged Property a deed or such other appropriate conveyance document conveying
the Mortgaged Property so sold without any express or implied covenant or warranty. The recitals in such
deed or document shall be prima facie evidence of the truth of the statements made in those recitals;
(h) The outstanding principal amount of the Secured Obligations, if not previously
due, shall be and become immediately due and payable without demand or notice of any kind. If the
Mortgaged Property is sold for an amount less than the amount outstanding under the Secured
Obligations, the deficiency shall be determined by the purchase price at the sale or sales.
Section 4.03. Collections on Accounts, Etc. Mortgagee hereby authorizes Mortgagor to collect
upon the Accounts, Instruments, Chattel Paper and Payment Intangibles subject to Mortgagee's direction
and control, and Mortgagee may curtail or terminate said authority at any time after the occurrence and
during the continuance of an Event of Default. Upon the request of Mortgagee at any time after the
occurrence and during the continuance of an Event of Default, Mortgagor shall notify the Account
Debtors that the applicable Accounts, Chattel Paper and Payment Intangibles have been assigned to
Mortgagee, for its benefit and the ratable benefit of the Secured Persons, and that payments in respect
thereof shall be made directly to Mortgagee. Mortgagee may in its own name or in the name of others
communicate with the Account Debtors to verify with them to its satisfaction the existence, amount and
terms of any Accounts, Chattel Paper or Payment Intangibles.
Section 4.04. Proceeds. If required by Mortgagee at any time after the occurrence and during
the continuance of an Event of Default, any payments of Accounts, Instruments, Chattel Paper and
Payment Intangibles, when collected or received by Mortgagor, and any other cash or non -cash Proceeds
14
00818
received by Mortgagor upon the sale or other disposition of any Collateral, shall be forthwith (and, in any
event, within two Business Days) deposited by Mortgagor in the exact form received, duly indorsed by
Mortgagor to Mortgagee if required, in a special collateral account maintained by Mortgagee, subject to
withdrawal by Mortgagee, for its benefit and the ratable benefit of the Secured Persons, only, as
hereinafter provided, and, until so turned over, shall be held by Mortgagor in trust for Mortgagee, for its
benefit and the ratable benefit of the Secured Persons, segregated from other funds of Mortgagor. All
Proceeds (including, without limitation, Proceeds constituting collections of Accounts, Chattel Paper, and
Instruments) while held by Mortgagee (or by Mortgagor in trust for Mortgagee, for its benefit and the
ratable benefit of the Secured Persons) shall continue to be collateral security for all of the Secured
Obligations and shall not constitute payment thereof until applied as hereinafter provided. If an Event of
Default shall have occurred and be continuing, at any time at Mortgagee's election, Mortgagee shall apply
all or any part of the funds on deposit in said special collateral account on account of the Secured
Obligations in such order as Mortgagee may elect, and any part of such funds which Mortgagee elects not
so to apply and deems not required as collateral security for the Secured Obligations shall be paid over
from time to time by Mortgagee to Mortgagor or to whomsoever may be lawfully entitled to receive the
same.
Section 4.05. Substitute Agents. Mortgagee or its successor or substitute may appoint or
delegate any one or more Persons as agent to perform any act or acts necessary or incident to any sale
held by Mortgagee, including, without limitation, the posting of notices and the conduct of sale, but in the
name and on behalf of Mortgagee or its successor or substitute, as applicable. If Mortgagee or its
successor or substitute shall have given notice of sale hereunder, any successor or substitute to such
Person thereafter appointed may complete the sale and the conveyance of the property pursuant thereto as
if such notice had been given by the successor or substitute conducting the sale.
Section 4.06. Judicial Foreclosure; Receivership. If any of the Secured Obligations shall
become due and payable and shall not be promptly paid, Mortgagee shall have the right and power to
proceed by a suit or suits in equity or at law, whether for the specific performance of any Covenant or
agreement herein contained or in aid of the execution of any power herein granted, or for any foreclosure
hereunder or for the sale of the Mortgaged Property or the Collateral under the judgment or decree of any
court or courts of competent jurisdiction, or for the appointment of a receiver pending any foreclosure
hereunder or the sale of the Mortgaged Property or the Collateral under the order of a court or courts of
competent jurisdiction or under executory or other legal process, or for the enforcement of any other
appropriate .legal or equitable remedy. Any money advanced by Mortgagee in connection with any such
receivership shall be a demand obligation (which obligation Mortgagor hereby expressly promises to pay)
owing by Mortgagor to Mortgagee and shall bear interest from the date of making such advance by
Mortgagee until paid at the post default rate set forth in Section 2.13(c) of the Credit Agreement. In
addition, Mortgagor agrees that, upon the occurrence of an Event of Default or any event or circumstance
which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default,
Mortgagee shall as a natter of right be entitled to the appointment of a receiver or receivers for all or any
part of the Mortgaged Property, whether such receivership be incident to a proposed sale (or sales) of
such property or otherwise, and without regard to the value of the Mortgaged Property or the solvency of
any person or persons liable for the payment of the Secured Obligations, and Mortgagor does hereby
consent to the appointment of such receiver or receivers, waives any and all defenses to such
appointment, and agrees not to oppose any application therefor by Mortgagee and agrees that such
appointment shall in no manner impair, prejudice or otherwise affect the rights of Mortgagee under
Article II hereof. Mortgagor expressly waives notice of a hearing for appointment of a receiver and the
necessity for bond or an accounting by the receiver. Nothing herein is to be construed to deprive
Mortgagee or any other Lender of any other right, remedy or privilege it may now or hereafter have under
the law to have a receiver appointed. Any money advanced by Mortgagee or any other Lender in
15
DA L:004 0100/00868:2072354v3
connection with any such receivership shall be a demand obligation (which obligation Mortgagor hereby
expressly promises to pay) owing by Mortgagor to Mortgagee or such Lender and shall bear interest from
the date of making such advancement by Mortgagee or such Lender until paid, at the post default rate set
forth in Section 2.13(c) of the Credit Agreement.
Section 4.07. Foreclosure for Installments. Mortgagee shall also have the option to proceed
with foreclosure in satisfaction of any installments of the Secured Obligations which have not been paid
when due either through the courts or by proceedings with foreclosure in satisfaction of the matured but
unpaid portion of the Secured Obligations as if under a full foreclosure, conducting the sale as herein
provided and without declaring the entire principal balance and accrued interest due; such sale may be
made subject to the unmatured portion of the Secured Obligations, and any such sale shall not in any
manner affect the unmatured portion of the Secured Obligations, but as to such unmatured portion of the
Secured Obligations this Mortgage shall remain in full force and effect just as though no sale had been
made hereunder. it is further agreed that several sales may be made hereunder without exhausting the
right of sale for any unmatured part of the Secured Obligations, it being the purpose hereof to provide for
a foreclosure and sale of the security for any matured portion of the Secured Obligations without
exhausting the power to foreclose and sell the Mortgaged Property for any subsequently maturing portion
of the Secured Obligations..
Section 4.08. Separate Sales. The Mortgaged Property may be sold in one or more parcels and
to the extent permitted by applicable law and in such manner and order as Mortgagee, in its sole
discretion, may elect, it being expressly understood and agreed that the right of sale arising out of any
Event of Default shall not be exhausted by any one or more sales.
Section 4.09. Possession of Mortgaged Property and Collateral. Mortgagor agrees to the full
extent that it lawfully may, that, in case one or more of the Events of Default shall have occurred and
shall not have been remedied, then, and in every such case, Mortgagee shall have the right and power to
enter into and upon and take possession of all or any part of the Mortgaged Property or the Collateral in
the possession of Mortgagor, its successors or assigns, or its or their agents or servants, and may exclude
Mortgagor, its successors or assigns, and all Persons claiming under Mortgagor, and its or their agents or
servants wholly or partly therefrom; and, holding the same, Mortgagee may use, administer, manage,
operate and control the Mortgaged Property or the Collateral and conduct the business thereof to the same
extent as Mortgagor, its successors or assigns, might at the time do and may exercise all rights and
powers of Mortgagor, in the name, place and stead of Mortgagor, or otherwise as Mortgagee shall deem
best. All reasonable and customary costs, expenses and liabilities incurred by Mortgagee in
administering, managing, operating, and controlling the Mortgaged Property or the Collateral shall
constitute a demand obligation (which obligation Mortgagor hereby expressly promises to pay) owing by
Mortgagor to Mortgagee and shall bear interest from date of expenditure until paid at the post- default rate
set forth in Section 2.13(c) of the Credit Agreement, all of which shall constitute a portion of the Secured
Obligations and shall be secured by this Mortgage and all other Security Instruments.
Section 4.10. Occupancy After Foreclosure. In the event there is a foreclosure sale hereunder
and at the time of such sale Mortgagor or Mortgagor's heirs, devisees, representatives, successors or
assigns or any other Person claiming any interest in the Mortgaged Property or the Collateral by, through
or under Mortgagor are occupying or using the Mortgaged Property or the Collateral or any part thereof,
each and all shall immediately become the tenant of the purchaser at such sale, which tenancy shall be a
tenancy from day to day, terminable at the will of either the landlord or tenant, or at a reasonable rental
per day based upon the value of the property occupied, such rental to be due daily to the purchaser; to the
extent permitted by applicable law, the purchaser at such sale shall, notwithstanding any language herein
apparently to the contrary, have the sole option to demand immediate possession following the sale or to
DA L:004 0 1 00/00868:20723 54v3
16
00819
DAL:0040100/00868:2072354v3
17
00820
permit the occupants to remain as tenants at will. In the event the tenant fails to surrender possession of
said property upon demand, the purchaser shall be entitled to institute and maintain a summary action for
possession of the Mortgaged Property or the Collateral (such as an action for forcible entry and detainer)
in any court having jurisdiction.
Section 4.11. Remedies Cumulative, Concurrent and Nonexclusive. Each and every right,
power, privilege and remedy shall be cumulative and in addition to those granted to Mortgagee or any
Lender under this Mortgage, any other Loan Document and in any other instrument or agreement
securing, evidencing or relating to the Secured Obligations, all rights, remedies, powers and privileges of
a secured party under the applicable Uniform Commercial Code (whether the Uniform Commercial Code
is in effect in the jurisdiction where such rights, remedies, powers or privileges are asserted) or any other
applicable law or otherwise available at law or equity; each and every right, power, privilege and remedy
whether specifically herein given or otherwise existing may be exercised from time to time and so often
and in such order as may be deemed expedient by Mortgagee or any Secured Persons and the exercise, or
the beginning of the exercise, or the abandonment, of any such right, power, privilege or remedy shall not
be deemed a waiver of the right to exercise, at the same time or thereafter any other right, power,
privilege or remedy. No delay or omission by Mortgagee or any Secured Persons in the exercise of any
right, power, privilege or remedy shall impair any such right, power, privilege or remedy or operate as a
waiver thereof or of any other right, power, privilege or remedy then or thereafter existing.
Section 4.12. No Release of Secured Obligations. Neither Mortgagor nor any other Person
hereafter obligated for payment of all or any part of the Secured Obligations shall be relieved of such
obligation by reason o (a) the failure of Mortgagee to comply with any request of Mortgagor or any other
Person so obligated to foreclose the Lien of this Mortgage or to enforce any provision hereunder or under
the Credit Agreement, (b) the release, regardless of consideration, of the Mortgaged Property or the
Collateral or any portion thereof or interest therein or the addition of any other property to the Mortgaged
Property or the Collateral, (c) any agreement or stipulation between any subsequent owner of the
Mortgaged Property or the Collateral and Mortgagee extending, renewing, rearranging or in any other
way modifying the terms of this Mortgage without first having obtained the consent of given notice to or
paid any consideration to Mortgagor or such other Person, and in such event Mortgagor, guarantor and all
such other Persons shall continue to be liable to make payment according to the terms of any such
extension or modification agreement unless expressly released and discharged in writing by Mortgagee or
(d) by any other act or occurrence save and except the complete payment of the Secured Obligations and
the complete fulfillment of all obligations hereunder or under the Credit Agreement.
Section 4.13. No Impairment of Security. The Lien, security interest and other security rights
of Mortgagee hereunder shall not be impaired by any indulgence, moratorium or release granted by
Mortgagee including, but not limited to, any renewal, extension or modification which Mortgagee may
grant with respect to any of the Secured Obligations, or any surrender, compromise, release, renewal,
extension, exchange or substitution which Mortgagee may grant in respect of the Mortgaged Property or
any part thereof or any interest therein, or any release or indulgence granted to any endorser, guarantor or
surety of any of the Secured Obligations.
Section 4.14. Release of and Resort to Collateral. Mortgagee may release, regardless of
consideration, any part of the Mortgaged Property or the Collateral without, as to the remainder, in any
way impairing, affecting, subordinating or releasing the Lien or security interest created in or evidenced
by this Mortgage or its stature as a first and prior Lien and security interest in and to the Mortgaged
Property and the Collateral, and without in any way releasing or diminishing the liability of any Person or
entity liable for the repayment of the Secured Obligations. For payment of the Secured Obligations,
00821
Mortgagee may resort to any other security therefor held by Mortgagee in such order and manner as
Mortgagee may elect.
Section 4.15. Sales Acknowledgment. Any and all statements of fact or other recitals made in
any deed or deeds, or other instruments of transfer, given in connection with a sale as to nonpayment of
the Secured Obligations or as to the occurrence of any Event of Default, or as to Mortgagee having
declared all of the Secured Obligations to be due and payable, or as to the request to sell, or as to notice of
time, place and terms of sale and the Mortgaged Property to be sold having been duly given, or as to any
other act or thing having been duly done, shall be taken as prima facie evidence of the truth of the facts so
stated and recited. With respect to any sale held in foreclosure of the liens and /or security interests
covered hereby, it shall not be necessary for Mortgagee, or any public officer acting under execution or
order of the court or any other party, to have physically present or constructively in his /her or its
possession either at the time of or prior to such sale, the Mortgaged Property or any part thereof.
Section 4.16. Waiver of Redemption, Notice and Marshalling of Assets, Etc. To the fullest
extent permitted by law, Mortgagor hereby irrevocably and unconditionally waives and releases (a) all
benefits that might accrue to Mortgagor by virtue of any present or future moratorium law or other law
exempting the Mortgaged Property or the Collateral from attachment, levy or sale on execution or
providing for any appraisement, valuation, stay of execution, exemption from civil process, redemption or
extension of time for payment, (b) all notices of any Event of Default or of Mortgagee's intention to
accelerate maturity of the Secured Obligations or of Mortgagee's election to exercise or his actual
exercise of any right, remedy or recourse provided for hereunder or under the Credit Agreement and (c)
any rights, legal and equitable, to a marshalling of assets or a sale in inverse order of alienation. Each
successor and assign of Mortgagor, including without limitation, a holder of a Lien subordinate to the
Lien created hereby (without implying that Mortgagor has, except as expressly provided herein, a right to
grant an interest in, or a subordinate Lien on, the Mortgaged Property or the Collateral), by acceptance of
its interest or Lien agrees that it shall be bound by the above waiver, as if it gave the waiver itself. The
right to plead any and all statutes of limitation as a defense to any demand secured by or made pursuant to
this Mortgage is hereby waived to the full extent permitted by law. If any law referred to in this
Mortgage and now in force, of which Mortgagor or its successor or successors might take advantage
despite the provisions hereof, shall hereafter be repealed or cease to be in force, such law shall thereafter
be deemed not to constitute any part of the contract herein contained or to preclude the operation or
application of the provisions hereof. Mortgagee may enforce its rights hereunder without prior judicial
process or judicial hearing to the extent permitted by law, and to the extent permitted by law, Mortgagor
expressly waives any and all legal rights which might otherwise require Mortgagee to enforce its rights by
judicial process. Mortgagor waives and agrees not to assert any rights or privileges which it may acquire
under the Uniform Commercial Code or any other applicable law. Mortgagor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Mortgaged Property or the Collateral are
insufficient to pay its Secured Obligations and the fees and disbursements of any attorneys employed by
Mortgagee and any Lender to collect such deficiency.
Section 4.17. Discontinuance of Proceedings. In case Mortgagee shall have proceeded to
invoke any right, remedy or recourse permitted hereunder or under the Credit Agreement and shall
thereafter elect to discontinue or abandon same for any reason, Mortgagee shall have the unqualified right
so to do and, in such an event, Mortgagor and Mortgagee shall be restored to their former positions with
respect to the Secured Obligations, this Mortgage, the Credit Agreement, the Mortgaged Property and the
Collateral and otherwise, and the rights, remedies, recourses and powers of Mortgagee shall continue as if
same had never been invoked.
DA L:0040100/00868:20723 54 v3
18
Section 4.18. Application of Proceeds. The proceeds of any sale of the Mortgaged Property or
the Collateral or any part thereof and all other monies received by Mortgagee in any proceedings for the
enforcement hereof, whose application has not elsewhere herein been specifically provided for, shall be
applied first to the payment of all reasonable expenses incurred by Mortgagee incident to the enforcement
of this Mortgage, the Credit Agreement or any of the Secured Obligations (including, without limiting the
generality of the foregoing, expenses of any entry or taking of possession, of any sale, of advertisement
thereof, and of conveyances, and court costs, compensation of agents and employees, legal fees and a
reasonable commission to Mortgagee acting), and to the payment of all other reasonable charges,
expenses, liabilities and advances incurred or made by Mortgagee under this Mortgage or in executing
any trust or power hereunder; and then as set forth in Article VII of the Credit Agreement.
Section 4.19. Resignation of Operator. In addition to all rights and remedies under this
Mortgage, at law and in equity, if any Event of Default shall occur and Mortgagee shall exercise any
remedies under this Mortgage with respect to any portion of the Mortgaged Property or the Collateral (or
Mortgagor shall transfer any Mortgaged Property or the Collateral "in lieu of' foreclosure), Mortgagee
shall have the right to request that any operator of any Mortgaged Property which is either Mortgagor or
any Affiliate of Mortgagor to resign as operator under the joint operating agreement applicable thereto,
and no later than 60 days after receipt by Mortgagor of any such request, Mortgagor shall resign (or cause
such other party to resign) as operator of such Mortgaged Property.
Section 4.20. Indemnity. In connection with any action taken by Mortgagee pursuant to this
Mortgage, Mortgagee, each Agent, the Issuing Bank, the Secured Persons and their respective officers,
directors, employees, representatives, agents, attorneys, accountants and experts "Indemnified Parties
shall not be liable for any loss sustained by Mortgagor resulting from an assertion that Mortgagee has
received funds from the production of hydrocarbons claimed by third persons or any act or omission of
any Indemnified Party in administering, managing, operating or controlling the Mortgaged Property or the
Collateral including such loss which may result from the ordinary negligence of an Indemnified Party
unless such loss is caused by the willful misconduct or gross negligence of an Indemnified Party, nor
shall Mortgagee and any other Indemnified Party be obligated to perform or discharge any obligation,
duty or liability of Mortgagor. Mortgagor shall and does hereby agree to indemnify each Indemnified
Party for, and to hold each Indemnified Party harmless from, any and all liability, loss or damage which
may or might be incurred by any Indemnified Party by reason of this Mortgage or the exercise of rights or
remedies hereunder; should Mortgagee make any expenditure on account of any such liability, loss or
damage, the amount thereof, including costs, expenses and reasonable out of pocket attorneys' fees, shall
be a demand obligation (which obligation Mortgagor hereby expressly promises to pay) owing by
Mortgagor to Mortgagee and shall bear interest from the date expended until paid at the post default rate
set forth in Section 2.13(c) of the Credit Agreement, shall be a part of the Secured Obligations and shall
be secured by this Mortgage and any other Loan Document. Mortgagor hereby assents to, ratifies and
confirms any and all actions of Mortgagee with respect to the Mortgaged Property or the Collateral taken
under this Mortgage. The liabilities of Mortgagor as set forth in this Section 4.20 shall survive the
termination of this Mortgage.
Section 4.21. Mortgagee Not "Mortgagee -In- Possession It is understood and agreed that
neither the assignment of Hydrocarbons, products therefrom, revenues and proceeds to Mortgagee
pursuant to Section 2.01 nor the exercise by Mortgagee of any of its rights or remedies hereunder shall be
deemed to make Mortgagee a "beneficiary -in- possession" or otherwise responsible or liable in any
manner with respect to the Mortgaged Property or the use, occupancy, enjoyment or operation of all or
any portion thereof, nor shall appointment of a receiver for the Mortgaged Property by any court at the
request of Mortgagee or by agreement with Mortgagor or the entering into possession of the Mortgaged
Property or any part thereof by such receiver be deemed to make Mortgagee a "beneficiary -in- possession"
DAL:0040100/00868:2072354v3
19
00822
or otherwise responsible or liable in any manner with respect to the Mortgaged Property or the use,
occupancy, enjoyment or operation of all or any portion thereof.
ARTICLE V.
Miscellaneous
00823
Section 5.01. Instrument Construed as Mortgage, Etc. With respect to any portions of the
Mortgaged Property located in any state or other jurisdiction the laws of which do not provide for the use
or enforcement of a deed of trust or the office, rights and authority of Mortgagee as herein provided, the
general language of conveyance hereof to Mortgagee is intended and the same shall be construed as
words of mortgage unto and in favor of Mortgagee and the rights and authority granted to Mortgagee
herein may be enforced and asserted by Mortgagee in accordance with the laws of the jurisdiction in
which such portion of the Mortgaged Property is located and the same may be foreclosed at the option of
Mortgagee as to any or all such portions of the Mortgaged Property in any manner permitted by the laws
of the jurisdiction in which such portions of the Mortgaged Property is situated. This Mortgage may be
construed 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, in order fully to
effectuate the Liens hereof and the purposes and agreements herein set forth.
Section 5.02. Release of Mortgage. If all Secured Obligations secured hereby shall be paid in
full in cash and all of the Commitments of the Lenders under the Credit Agreement, Mortgagee shall
forthwith cause reconveyance, satisfaction and discharge of this Mortgage to be entered upon the record
at the expense of Mortgagor and shall execute and deliver or cause to be executed and delivered such
instruments of reconveyance, satisfaction and reassignment as may be appropriate. Otherwise, this
Mortgage shall remain and continue in full force and effect.
Section 5.03. Severability. If any provision hereof is invalid or unenforceable in any
jurisdiction, the other provisions hereof shall remain in full force and effect in such jurisdiction and the
remaining provisions hereof shall be liberally construed in favor of Mortgagee in order to effectuate the
provisions hereof, and the invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of any such provision in any other jurisdiction.
Section 5.04. Partial Releases. If any of the Mortgaged Property shall be sold, transferred or
otherwise disposed of by Mortgagor in a transaction permitted by the Credit Agreement, then Mortgagee,
at the request and sole expense of Mortgagor, shall promptly execute and deliver to Mortgagor all releases
or other documents reasonably necessary or desirable for the release of the Liens created hereby on the
Mortgaged Property.
Section 5.05. Successors and Assigns of Parties. The term "Mortgagee" as used herein shall
mean and include JPMorgan Chase Bank, N.A., and its successors and assigns acting as Administrative
Agent for the benefit of any legal owner, holder, assignee or pledgee of any of the Secured Obligations
secured hereby. The terms used to designate Mortgagee and Mortgagor shall be deemed to include the
respective heirs, legal representatives, successors and assigns of such parties.
Section 5.06. Satisfaction of Prior Encumbrance. To the extent that proceeds of the Credit
Agreement are used to pay indebtedness secured by any outstanding Lien, security interest, charge or
prior encumbrance against the Mortgaged Property, such proceeds have been advanced by Mortgagee at
Mortgagor's request, and Mortgagee shall be subrogated to any and all rights, security interests and Liens
owned by any owner or holder of such outstanding Liens, security interests, charges or encumbrances,
irrespective of whether said Liens, security interests, charges or encumbrances are released, and it is
DAL:0040100/00868:2072354v3
20
expressly understood that, in consideration of the payment of such other indebtedness by Mortgagee,
Mortgagor hereby waives and releases all demands and causes of action for offsets and payments to, upon
and in connection with the said indebtedness.
Section 5.07. Nature of Covenants. The covenants and agreements herein contained shall
constitute covenants running with the land and interests covered or affected hereby and shall be binding
upon the heirs, legal representatives, successors and assigns of the parties hereto.
Section 5.08. Notices. All notices, requests, consents, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed sufficiently given or furnished if
delivered by registered or certified United States mail, postage prepaid, or by personal service (including
express or courier service) at the following addresses:
If to Mortgagor:
With a copy to:
Kaiser- Francis Mid Continent Limited Partnership
6733 S. Yale Avenue
Tulsa, Oklahoma 74136
(Telecopy No. 918- 491 -4694)
Frederick Dorwart
Frederick Dorwart Lawyers
124 E. Fourth Street
Old City Hall
Tulsa, Oklahoma 74103
(Telecopy No. 918 -583 -8251)
If to Mortgagee: JPMorgan Chase Bank, N.A.
Mail Code TX 1 -2970
2200 Ross Avenue, 10 Floor
Dallas, Texas 75201
Attention: Jeff Knott
(Telecopy No. 214 965 -3433)
(unless changed by similar notice in writing given by the particular party whose address is to be
changed). Any such notice or communication shall be deemed to have been given either at the
time of personal delivery or, in the case of delivery at the address and in the manner provided
herein, upon receipt; provided that, service of notice as required by the laws of any state in which
portions of the Mortgaged Property may be situated shall for all purposes be deemed appropriate
and sufficient with the giving of such notice.
Section 5.09. Amendments. Neither this Mortgage nor any provision hereof may be waived,
amended or modified except in accordance with Section 9.02(b) of the Credit Agreement.
Section 5.10. Counterparts. This Mortgage is being executed in several counterparts, all of
which are identical, except that to facilitate recordation, if the Mortgaged Property is situated in more than
one county, descriptions of only those portions of the Mortgaged Property located in the county in which
a particular counterpart is recorded shall be attached as Exhibit A thereto. An Exhibit A containing a
description of all Mortgaged Property wheresoever situated will be attached to that certain counterpart to
be attached to a Financing Statement and filed with the Secretary of State of Oklahoma in the Uniform
DAL:
21
00824
DAL:0040100/00868:2072354v3
00825
Commercial Code Records. Each of such counterparts shall for all purposes be deemed to be an original
and all such counterparts shall together constitute but one and the same instrument.
Section 5.11. Governing Law. Insofar as permitted by otherwise applicable law, this Mortgage
and the Secured Obligations shall be construed under and governed by the laws of the State of Texas
(excluding choice of law and conflict of law rules); provided, however, that the laws of the state in which
the Mortgaged Property or Collateral is located shall apply to the extent of procedural and substantive
matters relating only to the creation, perfection, foreclosure of liens and enforcement of rights and
remedies against the Mortgaged Property or Collateral.
Section 5.12. Exculpation Provisions. Each of the Parties hereto specifically agrees that it has
a duty to read this Mortgage; and agrees that it is charged with notice and knowledge of the terms of this
Mortgage; that it has in fact read this Mortgage and is fully informed and has full notice and knowledge
of the terms, conditions and effects of this Mortgage; that it has been represented by independent legal
counsel of its choice throughout the negotiations preceding its execution of this Mortgage; that it has
received the advice of its attorney in entering into this Mortgage; and that it recognizes that certain of the
terms of this Mortgage result in one Party assuming the liability inherent in some aspects of the
transaction and relieving the other Party of its responsibility for such liability. Each party hereto agrees
and covenants that it will not contest the validity or enforceability of any exculpatory provision of this
Mortgage on the basis that the Party had no notice or knowledge of such provision or that the provision is
not "conspicuous."
Section 5.13. Terms Generally; Rules of Construction. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include
"includes" and "including" shall be deemed to be followed by the phrase "without limitation The word
"will" shall be construed to have the same meaning and effect as the word "shall Unless the context
requires otherwise (a) any definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other document as from time to
time amended, supplemented or otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth in the Loan Documents), (b) any reference herein to any law shall
be construed as referring to such law as amended, modified, codified or reenacted, in whole or in part, and
in effect from time to time, (c) any reference herein to any Person shall be construed to include such
Person's successors and assigns (subject to the restrictions contained in the Loan Documents), (d) the
words "herein "hereof" and "hereunder and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (e) with respect to the determination
of any time period, the word "from" means "from and including" and the word "to" means "to and
including" and (f) any reference herein to Articles, Sections and Exhibits shall be construed to refer to
Articles and Sections of, and Exhibits to, this Mortgage. No provision of this Mortgage or any other Loan
Document shall be interpreted or construed against any Person solely because such Person or its legal
representative drafted such provision.
Section 5.14. Recording. Mortgagor will cause this Mortgage and all amendments and
supplements thereto and substitutions therefor and all financing statements and continuation statements
relating thereto to be recorded, filed, re- recorded and refiled in such a manner and in such places as
Mortgagee shall reasonably request and will pay all such recording, filing, re- recording and refiling taxes,
fees and other charges.
Section 5.15. Application of Payments to Certain Secured Obligations. If any part of the
Secured Obligations cannot be lawfully secured by this Mortgage or if any part of the Mortgaged Property
22
00826
cannot be lawfully subject to the lien and security interest hereof to the full extent of the Secured
Obligations, then all payments made shall be applied on said Secured Obligations first in discharge of that
portion thereof which is not secured by this Mortgage.
Section 5.16. Compliance with Usury Laws. It is the intention of the parties hereto that
Mortgagee and all Lenders conform strictly to usury laws applicable to them, and this Mortgage is
expressly made subject to the provisions of the Credit Agreement pertaining to applicable usury laws. In
furtherance thereof, it is stipulated and agreed that none of the terms and provisions contained herein shall
ever be construed to create a contract to pay, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged by applicable law from time to time in
effect, and neither Mortgagor nor any present or future guarantors, endorsers or other parties now or
hereafter becoming liable for payment of the Secured Obligations shall ever be liable for unearned
interest thereon or shall ever be required to pay interest thereon in excess of the maximum interest that
may be lawfully charged under applicable law from time to time in effect; reference is made to the Credit
Agreement for further provisions with respect thereto.
Section 5.17. Acknowledgement of Receipt. Mortgagor acknowledges receipt of a copy of this
Mortgage, the Notes, and the other Loan Documents.
DAL:0040100/00868:2072354v3
[SIGNATURES BEGIN NEXT PAGE]
23
EXECUTED this <'._l day of January, 2012, to be effective as of the 1 7 st day of January, 2012.
Mortgagor:
KAISER- FRANCIS MID CONTINENT LIMITED PARTNERSHIP, an Oklahoma
limited partnership
STATE OF OK- (.A.h4mG-
COUNTY OF ..1
Witness my hand and official seal
This instrument was acknowledged before me on this d day of Yl 2012,
by Don P. Millican, as Vice President and CFO of Kaiser Francis Mid Continent L.C., an
Oklahoma limited liability company, acting in its capacity as the general partner of KAISER
FRANCIS MID CONTINENT LIMITED PARTNERSHIP, an Oklahoma limited partnership, on
behalf of said entities.
My commission expires: 1 112, Notary Public
.0 013 a
M 0RG s
I 'Seal: al R 1
1" 08011190
EXP.10/31/12 a
V'
By: Kaiser Francis Mid Continent L.L.C., an
Oklahoma limited liability company, its
General Partner
Wyoming Mortgage Signature Page
Name: Don P. Millican
Title: Vice President and CFO
uut: rte
00827
DAL:0040100/0086820723543
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WILMA 41 -17 1 -H 1
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SWEETWATER 41-17 1H j
SUNLIGHT 41-20 1H
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128 018N 094W
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