HomeMy WebLinkAbout889463 REOEIVED
'LINcot t,! ~n~WTy OLERK
ASSIGNMENT, SECURITY AGREEMENT, FIXTURE FIL~O
AND F~ANC~G STATEMENT
FROM BOOK--PR PAGE
ST. MARY LAND & EXPLORATION COMPANY
(Taxpayer I.D. No. 41-05 18430)
ST. MARY ENERGY COMPANY
(Taxpayer I.D. No. 76-0554924)
NANCE PETROLEUM CORPORATION
(Taxpayer I.D. No. 8 1-0309883)
ST. MARY MINERALS INC.
(Taxpayer I.D. No. 84-1200318)
ROSWELL, L.L.C.
(Taxpayer I.D. No. 74-2788509)
ST. MARY OPERATING COMPANY
(Taxpayer I.D. No. 84-0723492)
NPC INC.
(Taxpayer I.D. No. 11-3668557)
TO
JAY. CHERNOSKY, TRUSTEE
FIRST AMERICAN TITLE COMPANY OF UTAH, TRUSTEE (for Utah Properties only)
AND
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent
Dated Effective as of April [~, 2003
A CARBON, PHOTOGRAPHIC, FACSIMILE, OR OTHER REPRODUCTION OF THIS
INSTRUMENT IS SUFFICIENT AS A FINANCING STATEMENT.
THIS INSTRUMENT
SECURES PAYMENT
COLLATERAL.
CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS,
OF FUTURE ADVANCES, AND COVERS PROCEEDS OF
THIS INSTRUMENT COVERS, AMONG OTHER THINGS, (A) GOODS WHICH ARE OR
ARE TO BECOME FIXTURES RELATED TO THE REAL PROPERTY DESCRIBED
Houston: 1178.3.54 1 .DOC
HEREIN, AND (B) AS-EXTRACTED COLLATERAL RELATED TO THE REAL
PROPERTY DESCRIBED HEREIN (INCLUDING WITHOUT LIMITATION, OIL, GAS,
OTHER MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE
EXTRACTED FROM THE EARTH AND ACCOUNTS ARISING OUT OF THE SALE AT
THE WELLHEAD OR MINEHEAD THEREOF). THIS INSTRUMENT IS TO BE FILED
FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE OR COMPARABLE
RECORDS OF THE COUNTIES AND/OR PARISHES REFERENCED IN EXHIBIT A
HERETO AND SUCH FILING SHALL SERVE, AMONG OTHER PURPOSES, AS A
FIXTURE FILING AND AS A FINANCING STATEMENT COVERING AS-EXTRACTED
COLLATERAL. THE MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL
ESTATE AND/OR IMMOVABLE PROPERTY cONCERNED, WHICH INTEREST IS
DESCRIBED IN SECTION 1.1 OF THIS INSTRUMENT.
A POWER OF SAI,E HAS BEEN GRANTED IN THIS MORTGAGE. APOWER OF SALE
MAY ALLOW AGENT (AS HEREINAFTER DEFINED) OR TI-IF TRUSTEE (AS
HEREINAFTER DEFINED) TO TAKE THE MORTGAGED PROPERTIES AND SELL
THEM WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT
BY THE MORTGAGOR (AS HEREINAFTER DEFINED) UNDER THIS MORTGAGE.
Note to Utah Recording Officer: This is not a Purchase Money Mortgage
WHEN RECORDED OR FILED RETURN TO:
Vinson & Elkins L.L.P.
2300 First City Tower
Houston, Texas 77002
Attention: Craig W. Murray
THIS DOCUMENT PREPARED BY:
Craig W. Murray
Vinson & Elkins L.L.P.
2300 First City Tower
Houston, Texas 77002
Houston: 1178354_1.DOC
DEED OF TRUST, MORTGAGE, LINE OF CREDIT MORTGAGE
ASSIGNMENT, SECURITY AGREEMENT, FIXTURE FILING
AND FINANCING STATEMENT
(this "Mortgage")
749
ARTICLE I.
Granting Clauses: Secured Indebtedness
Section 1.1 Grant and Mortgage. St. Mary Land & Exploration Company, a Delaware
corporation ("Parent"), St. Mary Energy Company, a Delaware corporation ("Energy"), Nance
Petroleum Corporation, a Montana corporation ("Nance"), St. Mary Minerals Inc., a Colorado
corporation ("Minerals"), Roswell, L.L.C., a Texas limited liability company ("Roswell"), St.
Mary Operating Company, a Colorado corporation ("Operating"), and NPC Inc., a Colorado
corporation ("NPC"); Parent, Energy, Nance, Minerals, Roswell, Operating and NPC being
herein collectively called "Mortgagor" and Energy, Nance, Minerals, Roswell, Operating and
NPC being herein sometimes collectively called a "Subsidiary Mortgagor"), for and in
consideration of the sum of Ten Dollars ($10.00) to Mortgagor in hand paid, and in order to
secure the Payment of the secured indebtedness hereinafter referred to and the performance of
the obligations, covenants, agreements, warranties and undertakings of Mortgagor hereinafter
described, does hereby (a) GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN AND
SET OVER to Trustee (as hereinafter defined), and grant to Trustee a POWER OF SALE
(pursuant to this Mortgage and applicable law) with respect to, those of the following described
properties, rights and interests which are located in (or cover properties located in) the State of
Texas or the State of Utah or 'which are located within (or cover properties located within) the
offshore area over which the United States of America asserts jurisdiction and to which the laws
of any such state are applicable with respect to this Mortgage and/or the liens or security interests
created hereby (the "Deed of Trust Mortgaged Properties"), and (b) MORTGAGE, ASSIGN,
WARRANT, PLEDGE AND HYPOTHECATE to Agent (as defined in Section 1.3(a) below),
and grant to Agent a POWER OF SALE (pursuant to this Mortgage and applicable law) with
respect to, all of the following described rights, interests and properties which were not granted
to Trustee in clause (a) above (including, without limitation, those of the following described
properties, rights and interests which are located in (or cover properties located in ) the States of
Louisiana, Montana, New Mexico, North Dakota, Oklahoma or Wyoming or which are located
within (or cover properties located within) the offshore area over which the United States of
America asserts jurisdiction and to which the laws of any such state are applicable with respect
to this Mortgage and/or the lienS or security interests created hereby) (the "Other Mortgaged
Properties"):
A. The oil, gas and/or other mineral properties, mineral servitudes, and/or
mineral rights which are described in Exhibit A attached hereto and made a part hereof;
B. Without limitation of the foregoing, all other right, title and interest Of
Mortgagor of whatever kind or character (whether now owned or hereafter acquired by operation
of law or otherwise) in and to (i) the oil, gas and/or mineral leases or other agreements described
in Exhibit A hereto, (ii) the lands described or referred to in Exhibit A (or described in any of the
instruments described or referred to in Exhibit A), without regard to any limitations as to specific
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75O
lands or depths that may be set forth in Exhibit A hereto or in any of the leases or °ther
agreements described in Exhibit A hereto and (iii) any other lands (including submerged lands)
located anywhere in the United States of America or located offshore the United States of
America bm within the offshore'area over which the United States of America or any State
thereof asserts jurisdiction;
C. All of Mortgagor's interest (whether now owned or hereafter acquired by
operation of law or otherwise) in and to all presently existing and hereafter created oil, gas
and/or mineral unitizatiOn, pooling and/or communitization agreements, declarations and/or
orders, and in and to the properties, rights and interests covered and the units created thereby
(including, without limitation, units formed under orders, rules, regulations or other official acts
of any federal, state or other authority having jurisdiction), which cox{er, affect or otherwise
relate to the properties, rights and interests described in clause A or B above;
D. All of Mortgagor's interest in and rights under (whether now owned or
hereafter acquired bY operation of law or otherwise) all presently existing and hereafter created
operating agreements, equipment leases, production sales contracts, processing agreements,
transportation agreements, gas balancing agreements, farmout and/or farm-in agreements, salt
water disposal agreements, area of mutual interest agreements, and other contracts and/or
agreements which cover, affect, or otherwise relate to the properties, rights and interests
described in clause A, B or C above or to the operation of such properties, rights and interests or
to the treating, handling, storing, processing, transporting or marketing of oil, gas, other
hYdrocarbons, or other minerals .produced from (or allocated to) such properties, rights and
interests (including, but not limited to, those contracts listed in Exhibit A hereto), as same may
be amended or supplemented from time to time;
E. All of Mortgagor's interest (whether now owned or hereafter acquired by
operation of law or otherwise) in and to all improvements, fixtures, movable or immovable
property and other real and/or personal property (including, without limitation, all wells,
pumping units, wellhead equipment, tanks, pipelines, flow lines, gathering lines, compressors,
dehydration units, separators, meters, buildings, injection facilities, salt water disposal facilities,
and power, telephone and telegraph lines), and all easements, servitudes, rights-of-way, surface
leases, licenses, permits and other surface rights, which are now or hereafter used, or held for
use, in connection with the properties, rights and interests described in clause A, B or C above,
or in connection with the operation of such properties, rights and interests, or in connection with
the treating, handling, storing, processing, transporting or marketing of oil, gas, 'other
hydrocarbons, or other minerals produced from (or allocated to) such properties, rights and
interests; and
F. All rights, estates, powers and privileges appurtenant to the foregoing
rights, interests and properties.
TO HAVE AND TO HOLD (a) the Deed of Trust Mortgaged Properties unto the Trustee,
and its successors or substitutes in this trust, and to its or their successors and assigns, in trust,
however, upon the terms, provisions and conditions herein set forth, and Co) the Other Mortgaged
Properties unto Agent, and Agent's successors and assigns, upon the terms, provisions and
conditions herein set forth (the Deed of Trust Mortgaged Properties and the Other Mortgaged
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Properties are herein sometimes collectively called the "Mortgaged Properties"). As used
throughout this Mortgage, the term "Trustee" shall mean (a) with respect to all of the Deed
of Trust Mortgaged Properties which are located in (or which cover properties located in)
the State of Utah, The First American Title Company of Utah, and (b) with respect to all
other Deed of Trust Mortgaged Properties, Jay Chernosky.
Section 1.2 Grant of Security Interest. In order to further secure the payment of the
secured indebtedness hereinafter referred to and the performance of the obligations, covenants,
agreements, warranties, and Undertakings of Mortgagor hereinafter described, Mortgagor hereby
grants to Agent (as defined in Section 1.3(a) below) a security interest in the entire interest of
Mortgagor (whether now owned or hereafter acquired by operation of law or otherwise) in and
to:
(a) to the extent a security interest may be created therein, the Mortgaged Properties;
(b) all oil, gas, other hydrocarbons, and other minerals produced from or allocated to
the Mortgaged Properties, and any products processed or obtained therefrom (herein collectively
called the "Production"), together with all proceeds of Production (regardless of whether
Production to which such proceeds relate occurred on or before or after the date hereof), and
together with all liens and security interests securing payment of the proceeds of the Production,
including, but not limited to, those liens and security interests provided for under (i) statutes
enacted in the jurisdictions in which the Mortgaged Properties are located, or (ii) statutes made
applicable to the Mortgaged ProPerties under federal law (or some combination of federal and
state law);
(c) without limitation of any other provisions of this Section 1.2, all payments
received in lieu of production from the Mortgaged Properties (regardless of whether such
payments accrued, and/or the events which gave rise to such payments occurred, on or before or
after the date hereof), including, without limitation, "take or pay" payments and similar
payments, payments received in settlement of or pursu, ant to a judgment rendered with respect to
take or pay or similar obligations or other obligations under a production sales contract,
payments received in buyout or buydown or other settlement of a production sales contract, and
payments received under a gas balancing or similar agreement as a result of (or received
otherwise in settlement of or pursuant to judgment rendered with respect to) rights held by
Mortgagor as a result of Mortgagor (and/or its predecessors in title) taking or having taken less
gas from lands covered by a Mortgaged Property (or lands pooled or unitized therewith) than
their ownership of such Mortgaged Property would entitle them to receive (the payments
described in this subsection (c) being herein called "Payments in Lieu of Production");
(d) all equipment, inventory, improvements, fixtures, accessions, goods and other
personal property or movable property of whatever nature now or hereafter located on or used or
held for use in connection with the Mortgaged Properties (or in connection with the operation
thereof or the treating, handling, storing, processing, transporting, or marketing of Production),
and all licenses and permits of whatever nature now or hereafter used or held for use in
connection with the Mortgaged Properties (or in connection with the operation thereof or the
treating, handling, storing, processing, transporting, or marketing of Production), and all
renewals or replacements of the foregoing or substitutions for the foregoing;
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(e) all contract rights, choses in action (i.e., rights to enforce contracts or to bring
claims thereunder), commercial tort claims and other general intangibles (regardless of whether
the same arose, and/or the events which gave rise to the same occurred, on or before or after the
date hereof) related 'to the Mortgaged Properties, the operation thereof (whether Mortgagor is
operator or non-operator), or the treating, handling, storing, processing, transporting, or
marketing of Production (including, without limitation, any of the same relating to payment of
proceeds of Production or to payment of amounts which could constitute Payments in Lieu of
Production);
(f) Without limitation of the generality of the foregoing, any rights and interests of
Mortgagor under any present or future hedge or swap agreements, cap, floor, collar, exchange,
forward or other hedge or protection agreements or transactions relating to crude oil, natural gas
or other hydrocarbons, or any oPtion with respect to any such agreement or transaction now
existing or hereafter entered into by or on behalf of Mortgagor;
(g) all geological, geophysical, engineering, accounting, title, legal, and other
technical or business data concerning the Mortgaged Properties, the Production or any other item
of Property (as hereinafter defined) which are now or hereafter in the possession of Mortgagor or
in which Mortgagor can otherwise grant a security interest, and all books, files, records,
magnetic media, software and other forms of recording or obtaining access to such data;
(h) all money, documents, instruments, chattel paper (including without limitation,
electronic chattel paper and tangible chattel paper), rights to payment evidenced by chattel paper,
securities, accounts, payment intangibles, general intangibles, letters of credit, letter-of-credit
rights, supporting obligations and rights to payment of money arising from or by virtue of any
transaction (regardless of whether such transaction occurred on or before or after the date hereof)
related to the Mortgaged Properties, the Production or any other item of Property;
(i) all rights, titles and interests now owned or hereafter acquired by Mortgagor in
any and all goods, inventory, equipment, as-extracted collateral, documents, money, instruments,
intellectual property, certificated seCUrities, uncertificated securities, investment property, letters
of credit, rights to proceeds of written letters of credit and other letter-of-credit rights,
commercial tort claims, deposit accounts, payment intangibles, general intangibles, contract
rights, chattel paper (including, without limitation, electronic chattel paper and tangible chattel
paper), rights to payment evidenced by chattel paper, software, supporting obligations and
accounts, wherever located, and all rights and privileges with respect thereto (all of the
properties, rights and interests described in subsections (a), Co), (c), (d), (e), (f), (g) and (h) above
and this subsection (i) being herein sometimes collectively called the "Collateral"); and
(j) all proceeds of the Collateral, whether such proceeds or payments are goods,
money, docUments, instruments, chattel paper, securities, accounts, payment intangibles, general
intangibles, fixtures, real/immovable property, personal/movable property or other assets (the
Mortgaged Properties, the Collateral and the proceeds of the Collateral being herein sometimes
collectively called the "Property").
Except as otherwise expressly provided in this Mortgage, all terms in this Mortgage relating to
the Collateral and the grant of the foregoing security interest which are defined in the Texas
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Uniform Commercial Code (the "UCC';) shall have the meanings assigned to them 'in Article 9
(or, absent definition in Article 9, in any other Article) of the UCC, as those meanings may be
amended, revised or replaced from time to time. Notwithstanding the foregoing, the parties
intend that the terms used herein which are defined in the UCC have, at all times, the broadest
and most inclusive meanings possible. Accordingly, if the UCC shall in the future be amended or
held by a court to define any term used herein more broadly or inclusively than the UCC in effect
on the date of this Mortgage, then such term, 'as used herein, shall be given such broadened
meaning. If the UCC shall in the future be amended or held by a court to define any term used
herein more narrowly, or less inclusively, than the UCC in effect on the date of this Mortgage,
such amendment or holding shall be disregarded in defining terms used in this Mortgage
Section 1.3 Secured Indebtedness. This Mortgage is executed and delivered by the
Mortgagor to secure and enforce the payment and performance of the following:
(a) Payment of and performance of any and all indebtedness, obligations and
liabilities, including interest (including, without limitation, interest accruing after the maturity of
the "Loans" (as defined in the hereinafter defined Credit Agreement) made by each Lender and
interest accruing after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Parent, whether or not a claim for
post:filing or post-petition interest is allowed in such proceeding) of the Parent whether now
existing or hereafter arising under or in connection with that certain Credit Agreement dated as
of January 27, 2003, by and ~among Parent, Wachovia Bank, National Association, as
Administrative Agent (in such capacity, the "Agent") and the Lenders (as amended by First
Amendment to Credit Agreement dated as of January 27, 2003, and as the same may from time
to time be further amended or supplemented, the "Credit Agreement'') or any other "Loan
Document" (as defined in the Credit Agreement), including, without limitation, the "Notes" (as
defined in the Credit Agreement) in the aggregate original principal amount of $300,000,000
with final maturity on or before January 27, 2006.
(b) Payment and performance of any and all indebtedness, obligations and liabilities
of Energy, Nance, Operating and NPC whether now existing or hereafter arising under or in
connection with the "Guaranty Agreement" (as defined in the Credit Agreement).
(c) Any sums which may be advanced or paid by the Agent or any Lender under the
terms hereof or of the Credit Agreement or any Loan Document on account of the failure of the
Mortgagor to comply with the covenants of the Mortgagor contained herein or in the Credit
Agreement or any other Loan Document; and all other indebtedness of the Mortgagor arising
pursuant to the provisions of this Mortgage.
(d) Payment of and performance of any and all present or future obligations of the
Mortgagor according to the terms of any present or future interest rate or currency swap, rate
cap, rate floor, rate collar, forward rate agreement or other exchange or rate protection
agreements or any option with respect to any such transaction now existing or hereafter entered
into between the Mortgagor and any Lender (or any Affiliate of such Lender).
(e) Payment of and performance of any and all present or future obligations of the
Mortgagor according to the terms of any present Or future swap agreements, cap, floor, collar,
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forward agreement or other exchange or protection agreements relating to crude oil, natural gas
or other hydrocarbons or any option with respect to any such transaction now existing or
hereafter entered into between the Mortgagor and any Lender (or any Affiliate of such Lender).
(f) Performance of all "Letter of Credit Agreements" (as defined in the Credit
Agreement) executed from time to time by the Parent or any Subsidiary of the Parent under or
pursuant to the Credit Agreement and all reimbursement obligations for drawn or undrawn
portions under any "Letter of Credit" (as defined in the Credit Agreement) now outstanding or
hereafter issued under or pursuant to the Credit Agreement.
Section 1.4 Secured Indebtedness. The indebtedness referred to in Section 1.3, and all
renewals, extensions and modifications thereof, and all substitutions therefor, in whole or in part,
are herein sometimes referred to as the "secured indebtedness" or the "indebtedness secured
hereby". It is contemplated and acknowledged that the secured indebtedness may include
revolving credit loans and advances from time to time, and that this Mortgage shall have effect,
as of the date hereof, to secure all secured indebtedness, regardless of whether any amounfs are
advanced on the date hereof or on a later date or, whether having been advanced, are later repaid
in part or in whole and further advances made at a later date.
Section 1.5 MAXIMUM SECURED AMOUNT. NOTWITHSTANDING ANY
PROVISION HEREOF TO THE CONTRARY, THE OUTSTANDING INDEBTEDNESS
SECURED BY PROPERTY LOCATED IN THE STATES OF LOUISIANA, MONTANA OR
NEW MEXICO SHALL NOT, AT ANY TIME OR FROM TIME TO TIME, EXCEED AN
AGGREGATE MAXIMUM AMOUNT OF $400,000,000.
Section 1.6 Line of Credit Mortgage. THIS INSTRUMENT SECURES A LINE OF
CREDIT USED PRIMARILY FOR BUSINESS, COMMERCIAL, OR AGRICULTURAL
PURPOSES. THIs MORTGAGE WILL CONSTITUTE A LINE OF CREDIT MORTGAGE'IN
ACCORDANCE WITH SECTION 48-7-4.B NMSA 1978 COMP.
Section 1.7 Limit on Secured Indebtedness and Collateral. It is the intention of each
Subsidiary Mortgagor, Agent and Lenders that this Mortgage not constitute a fraudulent transfer
or fraudulent conveyance under any state or federal law that may be applied hereto. Each
Subsidiary Mortgagor and, by its acceptance hereof, Agent hereby acknowledge and agree that,
notwithstanding any other provision of this Mortgage: (a) the indebtedness secured hereby by
such Subsidiary Mortgagor shall be limited to the maximum amount of indebtedness that can be
incurred or secured by such Subsidiary Mortgagor without rendering this Mortgage subject to
avoidance under Section 548 of the United States Bankruptcy Code or any comparable
provisions of any applicable state or federal law, and (b) the Property granted by such Subsidiary
Mortgagor hereunder shall be limited to the maximum amount of Property that can be granted by
such Subsidiary Mortgagor without rendering this Mortgage subject 'to avoidance under Section
548 of the United States Bankruptcy Code or any comparable provisions of any applicable state
or federal law.
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ARTICLE II.
Representations, Warranties and Covenants
Section 2.1 Mortgagor represents, warrants, and covenants as follows:
(a) Title and Permitted Encumbrances. Mortgagor has, and Mortgagor covenants to
maintain, good and defensible title to the Property, free and clear of all liens, security interests,
and encumbrances except for (i) the contracts, agreements, burdens, encumbrances and other
matters set forth in the descriptions of certain of the Mortgaged Properties on Exhibit A hereto,
(ii) the liens and security interests evidenced by this Mortgage, (iii) statutory liens for taxes
which are not yet delinquent, (iv) liens under operating agreements, pooling orders and
unitization agreements, and mechanics' and materialmen's liens, with respect to obligations
which are not yet due, and (v) other liens and security interests (if any) in favor of Agent (the
matters described in the foregoing clauses (i), (ii), (iii), (iv), and (v) being herein called the
"Permitted Encumbrances"); Mortgagor will warrant and defend title to the Property, subject as
aforesaid, against the claims and demands (including claims which would be a Permitted
Encumbrance under item (vi) above) of all persons claiming or to claim the same or any part
thereof. Without limitation of the foregoing, the ownership by Mortgagor of the Mortgaged
Properties does and will, with respect to each well or unit identified on Schedule I, attached
hereto and made a part hereof, entitle Mortgagor to receive (subject to the terms and provisions
of this Mortgage) a decimal or percentage share of the oil, gas and other hydrocarbons produced
from, or allocated to, such well or unit equal to not less than the decimal or percentage share set
forth, for such well or unit, in the column headed "Net Revenue Interest" (or words of similar
import) on Schedule I, and cause Mortgagor to be obligated to bear a decimal or percentage
share of the cost of operation of such well or unit equal to not more than the decimal or
percentage share set forth, for such well or unit, in the column headed "Working Interest" (or
words of similar import) on Schedule I. The above-described shares of production which
Mortgagor is entitled to receive and shares of expenses which Mortgagor is obligated to bear are
not and will not be subject to change (other than changes which arise pursuant to non-consent
provisions of operating agreements described in Exhibit A in connection with operations
hereafter proposed), excePt, and only to the extent that, such changes are reflected in Schedule I.
There is not and will not be any unexpired financing statement covering any part of the Property
on file in any public office naming any party other than Agent as secured party. Upon request by
Agent, Mortgagor will deliver.to Agent schedules of all internal and third party information
identifying the Mortgaged Properties (such as, for example, lease names and numbers assigned
by Mortgagor or the operator of any Mortgaged ProPerty, well and/or unit and/or property names
and numbers assigned by purchasers of Production, and internal identification names and
numbers used by Mortgagor in accounting for revenues, costs, and joint interest transactions
attributable to the Mortgaged ProPerties). The listing of Permitted Encumbrances above is made
for the purpose of limiting certain warranties and covenants made by Mortgagor herein; such
listing is not intended to affect the description herein of the Mortgaged Properties nor to
subordinate the liens and security interests hereunder to any Permitted Encumbrances.
(b) Leases and Contracts; Performance of Obligations. The oil, gas and/or mineral
leases, contracts, servitudes and other agreements forming a part of the Property, to the extent the
same cover or otherwise relate to the Property, are in full force and effect, and Mortgagor agrees
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0S 94 L 756
to so maintain them in full force and effect. All rents, royalties and other payments due and
payable under such leases, contracts, servitudes and other agreements, or under the Permitted
Encumbrances, or otherwise attendant to the ownership or operation of the Property, have been,
and will continue to be, properly and timely paid. Mortgagor is not in default with respect to
Mortgagor's obligations (and Mortgagor is not aware of any default by any third party with
respect to such third party's obligations) under such leases, contracts, servitudes and other
agreements, or under the Permitted Encumbrances, or otherwise attendant to the ownership or
operation of any part of the Property, where such default could adversely affect the ownership or
operation of the Property; Mortgagor will fulfill all such obligations coming due in the future.
There are no situations where Mortgagor is aware that a contingent liability may exist to account
on a basis less favorable, to Mortgagor than on the basis on which Mortgagor is currently
accounting.
(c) .Sale of Production. No Mortgaged Property is or will become subject to any
contractual or other arrangement (i) whereby payment for production is or can be deferred for a
substantial period after the month in which such production is delivered (i.e., for wells in pay
status, in the case of oil, not in excess of 60 days, and in the case of gas, not in excess of 90 days,
and for wells not in pay status, the time period' provided by statute) or (ii) whereby payments are
made to Mortgagor other than by checks, drafts, wire transfer advises or other similar writings,
instruments or communications for the immediate payment of money. Except for production
sales contracts, processing agreements or transportation agreements (or other agreements relating
to the marketing of Production) listed on Exhibit A (in connection with the Mortgaged Properties
to where they relate), (1) except for the contracts and Mortgaged Properties associated therewith
as set forth on Schedule 2.1 (c)A, no Mortgaged Property is or will become sUbject to any
contractual or other arrangement for the sale, processing or transportation of Production (or
otherwise related to the marketing of Production) which cannot be cancelled on 120 days' (or
less) notice and (ii) all contractual or other arrangements for the sale, processing or
transportation of Production (or otherwise related to the marketing of Production) shall be bona
fide transactions, and except for contractual and other arrangements with Four Winds Marketing,
LLC, will be with third parties not affiliated with Mortgagor, and shalI, with respect to all
contracts and other arrangements be at the best price (and on the best terms) then available (such
price shall, in the case of Production sales which are subject to price controls, be determined
giving consideration to such fact). Mortgagor is presently receiving a price for all production
from (or attributable to) each Mortgaged Property covered by a production sales contract listed
on Exhibit A as computed in accordance with the terms of such contract, and is not having
deliveries of production from such Mortgaged Property curtailed substantially below such
property's delivery capacity. Neither Mortgagor, nor any of its predecessors in title, has received
prepayments (including, but not limited to, payments for gas not taken Pursuant to "take or pay"
or other similar arrangements) for' any oil, gas or other hydrocarbons produced or to be produced
from the Mortgaged Properties after the date hereof, and Mortgagor hereby covenants not to
enter into any such advance or prepayment arrangements whereby it accepts consideration for
oil, gas or other hydrocarbons not yet produced. No Mortgaged Property is or will become
subject to any "take or pay" or other similar arrangement (i) which can be satisfied in whole or in
part by the production or transportation of gas from other properties or (ii) as a result of which
production from the Mortgaged Properties may be required to be delivered to one or more third
parties without payment (or without full payment) therefor as a result of payments made, or other
actions taken, with respect to other properties. To the best of Mortgagor's knowledge, the gas
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imbalances set forth in Schedule 7.19 of the Credit Agreement reflects the gas balancing position
of the Mortgaged Properties as of January 27, 2003. Except as otherwise disclosed to Agent in
writing, as of December 31, 2001, there is no Mortgaged Property with respect to which
Mortgagor, or its predecessors in title, has, prior to such date, taken more ("overproduced"), or
less ("underproduced"), gas from the lands covered 'thereby (or pooled or unitized therewith)
than its ownership interest in such Mortgaged Property would entitle it to take which has
resulted, on such date, in Mortgagor being materially overproduced or materially underproduced
with respect to such Mortgaged Property. Mortgagor will not after the date hereof become
"overproduced" (as above defined) with respect to any Well on the Mortgaged Properties (or on
any unit in which the Mortgaged Properties participate), in an amount in excess' of Mortgagor's
share of gas produced from such well during the preceding four calendar months. No Mortgaged
Property is or will become subject to a gas balancing arrangement under which one or more third
parties may take a portion of the production attributable to such Mortgaged Property without
payment (or without full payment) therefor as a result of production having been taken from, or
as a result of other actions or inactions with respect to, other properties. No Mortgaged Property
is subject at the present time to any regulatory refund obligation and, to the best of Mortgagor's
knowledge, no facts exist which might cause the same to be imposed.
(d) Condition of Personal or Movable Property. The equipment, inventory,
improvements, fixtures, goods and other tangible personal/movable property forming a part of
the Property are and will remain (and with respect to Property not operated by Mortgagor, to the
best of Mortgagor's knowledge, such equipment, inventory, fixtures, goods and other tangible
personal/movable property are and will remain) in good repair and condition and are and will be
adequate for the normal operation of the Property in accordance with prudent industry standards;
all of such Property is, and will remain, located on the Mortgaged Properties, except for that
portion thereof which is or shall be located elsewhere (including that usually located on the
Mortgaged Properties but temporarily located elsewhere) in the course of the normal operation of
the Property, or which is hereafter sold or otherwise disposed of as permitted under the Credit
Agreement.
(e) Operation of Mortgaged Properties. The Mortgaged Properties, and With respect
to Mortgaged Properties not operated by Mortgagor, to the best of Mortgagor's knowledge, such
non-operated Mortgaged Properties, (and properties unitized therewith) are being (and, to the
extent the same could adversely affect the ownership or operation of the Mortgaged Properties
after the date hereof, have in the past been), and hereafter will be, maintained, operated and
developed in a good and workmanlike manner, in accordance with prudent industry standards
and in conformity with all applicable laws and all rules, regulations and orders of all duly
constituted authorities having jurisdiction and in conformity with all oil, gas and/or other mineral
leases and other contracts and agreements forming a part of the Property and in conformity with
the Permitted Encumbrances; specifically in this connection, (i) no Mortgaged Property is
subject to having allowable production after the date hereof reduced below the full and regular
allowable (including the maximum permissible tolerance) because of any overproduction
.(whether or not the same was permissible at the time) prior to the date hereof and (ii) none of the
wells located on the Mortgaged Properties (or properties unitized therewith) are or will be
deviated from the vertical more than the maximum permitted by applicable laws, regulations,
rules and orders, and such wells are, and will remain, bottomed under and producing from, with
the well bores wholly within, the Mortgaged Properties (or, in the case of wells located on
Houston: l 178354._1 .DOC -9-
758
properties unitized therewith, such unitized properties). There are no wells listed on Schedule I
hereto ("Schedule I Wells") being redrilled, deepened, plugged back or reworked, and no other
operations are being conducted for which consent is required under the applicable operating
agreement (or which are other than normal operation of existing wells on the Mortgaged
Properties); except as otherwise disclosed to Agent in writing, there are no proposals in excess of
$500,000 net to Mortgagor's interest currently outstanding (whether made by Mortgagor or by
any other party) to re-drill, deepen, plug back, or rework Schedule I Wells, or to conduct any
other operations under the applicable joint operating agreement, or to abandon any Schedule I
Wells (nor are there any such proposals which have been approved either by Mortgagor or any
other party, with respect to which the operations covered thereby have not been commenced).
Except as otherwise disclosed to Agent in writing, there are no dry holes, or otherwise inactive
wells, located on the Mortgaged Properties or on lands pooled or unitized therewith (including,
without limitation, any wells which would, if located in Texas, require compliance with Railroad
Commission 'Rule 14(b)(2)) that in the aggregate Will cost more than $500,000, net to
Mbrtgagor's interest and net of salvage proceeds, 'to plug and abandon, except for wells that have
been properly plugged and abandoned. Mortgagor has, and will have in the future, all
governmental licenses and permits necessary or appropriate to own and operate the Property;
Mortgagor has not received notice, of any violations in respect of any such licenses or permits.
(f) Sale or Disposal. Mortgagor will not, without the prior written consent of Agent,
sell, exchange, lease, transfer, or otherwise dispose of any part of, or interest in, the Property
other than (i) sales, transfers and other dispositions of machinery, equipment and other personal/
movable property and fixtures made in connection with a release, Surrender or abandonment of a
lease, (ii) sales, transfers and other dispositions of machinery, equipment and other
personal/movable property and fixtures in connection with the abandonment of a well, (iii) sales,
transfers and other dispositions of machinery, equipment and other personal/movable property
and fixtures which are (A) obsolete for their intended purpose and disposed of in the ordinary
course of business or (B) replaced by articles of at least equal suitability and value owned by
Mortgagor free and clear of all liens except this Mortgage and the Permitted Encumbrances, (iv)
sales of Production which are made in the ordinary course of business and in compliance with
Section 2.1(c) hereof; provided that nothing in clause (iv) shall be construed as limiting Agent's
rights under Article III of this Mortgage, and (v) sales, transfers and other dispositions of oil and
gas leases, but only to the extent such sale, transfer or other disposition is in the ordinary course
of business and does not materially and adversely affect the value of the Property in the
aggregate. In the event and during the continuation of a default (as hereinafter de£med),
Mortgagor shall at all times keep the Property and its proceeds separate and distinct fi.om other
property of Mortgagor and shall keep accurate and complete records of the' Property and its
proceeds.
(g) Suits and Claims. Except as otherwise disclosed to Agent in writing, there are no
Suits, actions, claims, investigations, inquiries, proceedings or demands pending (or. to the best
of Mortgagor's knowledge, threatened)which affect the Properties (including, without
limitation, any which challenge or otherwise pertain to Mortgagor's title to the Properties) and
no judicial or admirfistrative actions, suits or proceedings pending (or, to the best of Mortgagor's
knowledge, threatened) against Mortgagor. Notwithstanding the foregoing, Mortgagor's
representation in this Section with respect to pending suits, actions, claims, investigations,
inquiries, proceedings or demands which affect Properties which are not operated by Mortgagor,
Houston: 1178354_1.DOC -10-
759
except those pertaining to Mortgagor's title to such non-operated Properties, will be limited to
the best of Mortgagor's knowledge.
(h) Environmental.
(A) Current Status. The Property (and with respect to Property not operated by
Mortgagor, to the best of Mortgagor's knowledge, such non-operated Property) and
Mortgagor are not in material violation of Applicable Environmental Laws (below
defined), or subject to any existing, pending or, to the best knowledge of Mortgagor,
threatened investigation or inquiry by any governmental authority or any other person
under or with respect to Applicable Environmental Laws, or subject to any remedial
obligations under Applicable Environmental Laws, and are in compliance with all
permits and licenses required under Applicable Environmental Laws, and this
representation will continue to be true and correct following disclosure to the applicable
governmental authorities of all relevant facts, conditions and circumstances, if any,
pertaining to the Property and Mortgagor. "Applicable Environmental Laws" shall mean
any applicable laws, orders, rules, or regulations (including, without limitation, the
common law) pertaining to safety, health or the environment, as such laws, orders, rules
or regulations now exist or are hereafter enacted and/or amended. Applicable
Environmental Laws include, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, hereinafter called
"CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended by the
Used Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980,
and the Hazardous and Solid Waste Amendments of 1984 (as amended, hereinafter called
"RCRA") and applicable state and local law). Mortgagor undertook, at the time of
acquisition of the Property, all appropriate inquiry into the previous ownership and uses
of the Property consistent with good commercial or customary practice. Mortgagor has
taken all commercial and'reasonable steps necessary to determine and has determined
that no hazardous substances or solid wastes have been disposed of or otherwise released
at, into, upon or under the Property. The use which Mortgagor makes and intends to make
of the Property will not result in the use, treatment, storage or disposal or other release of
any hazardous substance or solid waste at, into, upon or under the Property, except such
usage, and temporary storage in anticipation of usage, as is in the ordinary course of
business and in compliance with Applicable Environmental Laws. The terms "hazardous
substance" and "release" as used in this Mortgage shall have the meanings specified in
CERCLA, and the terms "solid waste" and "disposal" (or "disposed") shall have the
meanings specified in RCRA; provided, in the event either CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and provided
further, to the extent that the laws of the states in which the Mortgaged Properties are
located establish a meaning for "hazardous substance," "release, .... solid waSte," or
"disposal" which is broader than that specified in either CERCLA or RCRA, such
broader meaning shall apply. The "Associated Property' (as such term is hereinafter
defined) is not in violation of any Applicable Environmental Laws for which Mortgagor
or its predecessors in the Property would be responsible. The term "Associated Property"
as used in this Mortgage shall mean any and all interests in and to (and or carved out of)
Houston: 1178354_1.DOC
-11-
760
the lands which are described or referred to in Exhibit A hereto, or which are otherwise
described in any of the oil, gas and/or mineral leases or other instruments described in or
referred to in such Exhibit A, whether or not such property interests are owned by
Mortgagor.
(B) Future Performance, Mortgagor will use its best efforts not 'to cause or
permit the Property or the Associated Property or Mortgagor to be in material violation
of, 'or do anything or permit anything to be done which will subject the Property or the
Associated Property to any material remedial obligations under, or result in material
noncompliance with applicable permits and licenses under, any Applicable
Environmental Laws, assuming disclosure to the applicable governmental authorities of
all relevant facts, conditions and circumstances, if any, pertaining to the Property or the
Associated Property and Mortgagor will promptly notify Agent in writing of any existing,
pending or, to the best knowledge of Mortgagor, threatened investigation, claim, suit or
inquiry by any governmental authority or any person in connection with any Applicable
Environmental Laws, provided that, with respect to Properties not operated by
Mortgagor, Mortgagor shall notify Agent of any investigations, claims, suits or inquiries,
whether existing, pending, or threatened, of which Mortgagor becomes aware. Mortgagor
will take all steps reasonably necessary to determine that no hazardoUs substances or
solid wastes have been disposed of or otherwise released on or to the Property or the
Associated Property. Mortgagor will use commercial and reasonable efforts not to cause
or permit the disposal or other :release of any hazardous substance or solid waste at, into,
upon or under the Property or the Associated Property and covenants and agrees to keep
or cause the Property and/or the Associated Property to be kept free of any hazardous
substance or solid waste (except such use, and temporary storage in anticipation of use, as
is required in the ordinary course of business, all while in compliance with Applicable
Environmental Laws), and. to remove the same (or if removal is prohibited by law, to take
whatever action is required by law) promptly upon discovery at its sole expense. Upon
Agent's reasOnable request, at any time and from time to time during the existence of this
Mortgage, Mortgagor will provide at Mortgagor's sole expense an inspection or audit of
the Property and the Associated Property from an engineering or consulting firm
approved by Agent, indicating the presence or absence of hazardous substances and solid
waste on the Property and/or the Associated Property and compliance with Applicable
Envir°nmental Laws. In the event of a violation, Mortgagor will diligently work to cure
such violation, including remediation, if necessary, and so long as Mortgagor diligently
prosecutes efforts to cure the violation, Mortgagor will not be in breach of this provision.
(i) _Not Abandon Wells; Participate in OperatiOns. Mortgagor will not, without prior
written consent of Agent, abandon, or consent to the abandonment of, any well producing from
the Mortgaged Properties (or properties unitized therewith) so long as such well is capable (or is
subject to being made capable through drilling, reworking or other operations which it would be
commercially feasible to conduct) of producing oil, gas, or other hydrocarbons or other minerals
in commercial quantities (as determined without considering the effect of this Mortgage). In the
event and during the continuation of a default, Mortgagor will not, without prior written consent
of Agent, elect not to participate in a proposed operation on the Mortgaged ProPerties where the
effect of such election would be the forfeiture either temporarily (i.e. until a certain sum of
Houston: 1178354_1.DOC - 12-
761
money is received out of the forfeited interest) or permanently or,ny material interest in the
Mortgaged Properties.
(j) _Defense of Mortgage. If the validity or priority of this Mortgage or of any rights,
titles, liens or security interests created or evidenced hereby with respect to the Property or any
part thereof or the title of Mortgagor to the Property shall be endangered or questioned or shall
be attacked directly or indirectly or if any legal proceedings are instituted against Mortgagor with
respect thereto, Mortgagor will give prompt written notice thereof to Agent and at Mortgagor's
own cost and expense will diligently endeavor to cure any defect that may be developed or
claimed, and will take all necessary and proper steps for the defense of such legal proceedings,
including, but not limited to, the employment of counsel, the prosecution or defense of litigation
and the release or discharge of all adverse claims, and Trustee and Agent, or either of them
(whether or not named as parties to legal proceedings with respect thereto), are hereby
authOrized and empowered to take such additional steps as in their judgment and discretion may
be necessary or proper for the defense of any such legal proceedings or the protection of the
validity or priority of this Mortgage and the rights, titles, liens and security interests created or
evidenced hereby, including but .not limited to the employment of independent counsel, the
prosecution or defense of litigation, the compromise or discharge of any adverse claims made
with respect to the Property, the purchase of any taX title and the removal of prior liens or
security interests, and all reasonable expenditures so made of every kind and character shall be a
demand obligation (which obligation Mortgagor hereby expresslY promises to pay) owing by
Mortgagor to Agent or Trustee (as the case may be) and shall bear interest fi-om the date
expended until' paid at the rate described in Section 2.3 hereof, and the party incurring such
expenses shall be subrogated to all rights of the person receiving such payment.
(k) Fees and Expenses; Indemnity. Mortgagor will pay all reasonable appraisal fees,
recording fees, taxes, brokerage fees and commissions, abstract and other records search fees,
attorneys' fees and expenses and all other reasonable costs and expenses of every character
incurred by MOrtgagor or Agent or any Lender in connection with the closing of the loan or
loans evidenced by the Loan Documents and any and all amendments, supplements or
modifications to such loan transaction or transactions. Mortgagor will reimburse Trustee, Agent
and each Lender (for purposes of this paragraph, the terms "Trustee", "Agent" and "Lender"
shall include the directors, officers, partners, employees and agents of Trustee, Agent or any
Lender, respectively, and any persons or entities owned or controlled by or affiliated with
Trustee, Agent or any Lender, respectively) for all expenditures, including reasonable attorneys'
fees and expenses, incurred or expended in connection with (i) the breach by Mortgagor of any
covenant, agreement or condition contained herein or in any other Loan Document, (ii) the
exercise of any rights and remedies hereunder or under any other Loan Document, and (iii) the
protection of the Property and/or liens and security interests therein. Mortgagor will indemnify
and hold harmless Trustee, Agent and each Lender from and against (and will reimburse such
indemnified parties for) all claims, demands, liabilities, losses, damages (including without
limitation consequential damages), causes of action, judgments, Penalties, costs and expenses
(including without limitation reasonable attorneys' fees and expenses) which may be-imposed
upon, asserted against or incurred or paid by the Trustee, the Agent or any Lender on account of,
in connection with, or arising out of (A) anY bodily injury or death or natural resource, human
health or property damage occurring in, at, into, under or upon (or, to the extent such injury,
death or damage is related to Mortgagor or Mortgagor's ownership or operation of the Property,
Houston: 1178354_I .DOC
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762
in the vicinity of) the Property through any cause whatsoever, (B) any act performed or omitted
to be performed hereunder or the breach of any representation or warranty herein, (C) the
exercise of any rights and remedies hereunder or under any other Loan Document, (D) any
transaction, act, omission, event or circumstance arising out of or in any way connected with the
Property or with this Mortgage or any other Loan Document, (E)any violation on or prior to the
Release Date (as hereinafter defined) of any Applicable Environmental Law, (F) any act,
omission, event or circumstance existing or occurring on or prior to the Release Date (including
without limitation the presence on or under the Property or the Associated Property or release at,
into, upon, under or fi:om the Property or the Associated Property of hazardous substances or
solid wastes disposed of or otherwise released) resulting from or in connection with the
ownership, construction, occupancy, operation, use and/or maintenance of the Property or the
Associated Property, regardless of whether the act, omission, event or circumstance constituted a
violation of any Applicable Environmental Law at the time of its existence or occurrence, and
(G) any and all claims or proceedings (whether brought by private party or governmental
agencies) for human health, bodily injury, property damage, abatement or remediation.
environmental damage, cleanup, mitigatiOn, removal, natural resource damage or impairment or
any other injury or damage resulting fi:om or relating to any hazardous or tOxic substance, solid
waste or contaminated material located upon or migrating into, fi.om or through the Property or
the Associated Property (whether or not the release of such materials was caused by Mortgagor,
a tenant or subtenant or a prior owner or tenant or subtenant on the Property or the Associated
Property and whether or not the alleged liability is attributable to the use, treatment, handling,
storage, generation, transportation, removal or disposal of such substance, waste or material or
the mere presence of such substance, waste or material on or under the Property or the
Associated Property), which the Trustee and/or the Agent and/or any Lender may have liability
with respect to due to the making of the loan or loans evidenced by any Notes, the granting of
this Mortgage, the exercise of any rights under the Loan Documents, or otherwise. Agent shall
have the right to compromise and adjust any such claims, actions and judgments, and in addition
to the fights to be indemnified as herein provided, all amounts paid in compromise, satisfactiOn
or discharge of any such claim, action or judgment, and all court costs, reasonable attorneys' fees
and other expenses of every character expended by Agent, Trustee or any Lender pursuant to the
provisions of this section shall be a demand obligation (which obligation Mortgagor hereby
expressly promises to pay) owing by Mortgagor to'the applicable party or parties. The "Release
Date" as used herein shall mean the earlier of the following two dates: (i) the date on which the
indebtedness and obligations secured hereby have been paid and performed in full, or (ii) the
date on which the lien of this Mortgage is foreclosed or a deed in lieu of such foreclosure is fully
effective and recorded. WITHOUT LIMITATION, IT IS THE INTENTION OF
MORTGAGOR. AND MORTGAGOR AGREES THAT THE FOREGOING
INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT
TO CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION,
JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING WITHOUT
LIMITATION REASONABLE ATTORNEYS' FEES) WHICH IN WHOLE OR IN PART
ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY
OTHER) INDEMNIFIED PARTY. However, such indemnities shall not apply to any
particular indemnified party (but shall apply to the other indemnified parties) to the extent the
subject of the indemnification is caused by or arises out of the gross negligence or willful
misconduct of such particular indemnified party. The foregoing indemnities shall not terminate
Houston: l 178354__1.DOC - 14-
upon the Release Date or upon the release, foreclosure or other termination of this Mortgage but
will surVive the Release Date, foreclosure of this Mortgage or conveyance in lieu of foreclosure,
and the repayment of the secured indebtedness and the discharge and release of this Mortgage
and the other documents evidencing and/or securing the secured indebtedness. Any amount to be
paid hereunder by Mortgagor to Agent, Trustee and/or any Lender shall be a demand obligation
owing by Mortgagor to the applicable party or parties and shall be subject to and covered by the
provisions of Section 2.3 hereof.
(1) Insurance. Mortgagor will keep (and with respect to Property not operated by
Mortgagor, will use its best efforts to keep) such part of the Property which is of an insurable
nature and of a character usually insured by persons operating similar properties, insured with
companies of recognized responsibility satisfactory to Agent and in Such amounts as are
acceptable to Agent (and in the absence of specification of such amounts by Agent, in the
amount of the full value of such property, less reasonable deductibles not to exceed deductibles
customary in the industry for similarly situated businesses and properties), against loss or
damage by fire, casualty and from other hazards customarily insured against by persons
operating similar properties. Mortgagor shall also provide such other insurance as Agent may
from time to time reasonably require; such coverage to be carried with companies of recognized
responsibility satisfactory to Agent. All policies evidencing such insurance shall contain clauses
providing that the proceeds thereof shall be payable to Agent as its interest may appear and
providing that such policies may not be cancelled, reduced or otherwise affected without at least
thirty (30) days prior written notice to Agent. Upon request by Agent, Mortgagor shall deliver to
Agent the original policies, evidence of paYment of premiums, certificates evidencing renewals,
and such other information regarding such insurance as Agent may request. In the event of any
loss under any insurance policies so carried by Mortgagor, Agent shall have the fight (but not the
obligation) to make proof of loss and collect the same, and all amounts so received shall be
applied toward costs, charges and expenses (including reasonable attorneys' fees), if any,
incurred in the collection thereof, then to the payment; in the order determined by Agent in its
own discretion, of the secured indebtedness, and any balance remaining shall be subject to the
order of Mortgagor. Agent is hereby authorized but not obligated to enforce in its name or in the
name of Mortgagor payment of any or all of said policies or settle or compromise any claim in
'respect thereof, and to collect and make receipts for the proceeds thereof and Agent is hereby
appointed Mortgagor's agent and attorney-in-fact to endorse any check or draft payable to
Mortgagor in order to collect the proceeds of insurance. In the event of foreclosure of this:
Mortgage, or other transfer of title to the Property in extinguishment in whole or in part of the
secured indebtedness, all fight, title and interest of Mortgagor in and to such policies then in
force concerning the Property and all proceeds payable thereunder shall thereupon vest in the
purchaser at such foreclosure or other transferee in the event of such other transfer of title.
Mortgagor shall at all times maintain adequate insurance against its liability on account of
damages to persons or property, which insurance shall be carried by companies of recognized
responsibility satisfactory to Agent, and shall be for such amounts and insure against such risks
as are customary in the industry for similarly situated .businesses and properties. Mortgagor shall
at all times maintain cost of regaining control of well insurance and similar insurance to the
extent customary in the industry in the pertinent area of operations.
(m) Further Assurances. Mortgagor will, on request of Agent, (i) promptly correct any
defect, error or omission which may be discovered in the contents of this Mortgage, or in any
Houston: I 17835~4_1.DOC - 15-
764
other Loan Document, or in the execution or acknowledgrnent of this Mortgage or any other
Loan Document; (ii) execute, acknowledge, deliver and record and/or file such further
instruments (including, without limitation, further deeds of trust, mortgages, security agreements,
financing statements, continuation statements, and assignments of production, accounts, funds,
contract rights, general intangibles, and proceeds) and do such further acts as may be necessary,
desirable or proper to carry out more effectively the purposes of this Mortgage and the other
Loan Documents and to more fully identify and subject to the liens and security interests hereof
any property intended to be covered hereby, including specifically, but without limitation, any
renewals, additions, substitutions, replacements, or appurtenances to the Property; and (iii)
execute, acknowledge, deliver, and file and/or record any document or instrument (including
specifically any financing statement) desired by Agent to protect the lien or the security interest
hereunder against the rights or interests of third persons. Mortgagor shall pay all costs cOnnected
with any of the foregoing.
(n) Name and Place of Business and Formation. Except as disclosed in the Credit
Agreement, Mortgagor has not, during the preceding five years, been known by or used any
other corpOrate or partnership, trade or fictitious name. Mortgagor will not Cause or permit any
change to be made in its name, identity, state of formation or corporate or partnership structure,
or its federal employer identification number unless Mortgagor shall have notified Agent of such
change at least thirty (30) days prior to the effective date of such change, and shall have first
taken all action required by Agent for the purpose of further perfecting or protecting the liens and
security interests in the Property Created hereby. Mortgagor's exact name is the name set forth in
this'Mortgage. Mortgagor's location is as follows:
Mortgagor is a registered organization which is organized under the laws
of one of the states comprising the United States (e.g. corporation, limited
partnership, registered limited liability partnership or limited liability
company). Mortgagor is located (as determined pursuant to the UCC) in
the state under the laws which it was organized, as follows:
Name of Mortgagor
State of Organization
Parent Delaware
Energy Delaware
Minerals Colorado
Nance Montana
Roswell Texas
Operating Colorado
NPC Colorado
Mortgagor's principal place of business and chief executive office, and the
place where Mortgagor keeps its books and records concerning the
Property (including, particularly, the records with respect to "Production
Proceeds", as. defined in Section 3.1 hereof, from the Mortgaged
Properties) has for the preCeding four months, been, and will continue to
be (unless Mortgagor notifies Agent of any change in writing at least thirty
Houston: I 178354_1.DOC
-16-
(30) days prior to the date of such change), the address set forth opposite
the signature of Mortgagor to this Mortgage.
(o) 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 2.2 Compliance by Operator. As to any part of the Mortgaged Properties
which is not a working interest, Mortgagor agrees to take all such commercial and reasonable
action and to exercise all rights and remedies as are reasonably available to Mortgagor to cause
the owner or owners of the working interest in such properties to comply with the covenants and
agreements contained herein; and as to any part of the Mortgaged Properties which is a working
interest but which is operated by a party other than Mortgagor, Mortgagor agrees to take all such
commercial and reasonable action and to exercise all rights and remedies as are reasonably
available t° Mortgagor (including, but not limited to, all rights under any operating agreement) to
cause the party who is the operator of such property to comply with the covenants and
agreements contained herein.
Section 2.3 Performance on Mortgagor's Behalf. Mortgagor agrees that, if Mortgagor
fails to perform any act or to take any action which hereunder Mortgagor is required to perform
or take, or to pay any money which hereunder Mortgagor is required to pay, Agent, in
Mortgagor's name or its own name, may, but shall not be obligated to, perform or cause to be
performed such act or take such action or pay such money, and any expenses so incurred by
Agent and any money so paid by Agent shall be a demand obligation owing by Mortgagor to
Agent (which obligation Mortgagor hereby expressly promises to pay) and Agent, upon making
such payment, shall be subrogated to all of the rights of the person, corporation or body politic
receiving such payment. Each amount due and owing by Mortgagor to Trustee and/or Agent
and/or any Lender pursuant to this Mortgage shall bear interest each day, from the date of such
expenditure or payment until Paid, at a rate equal to the rate as provided for past due principal
under the Notes (provided that, should applicable law provide for a maximum permissible rate of
interest on such amounts, such rate shall not be greater than such maximum permissible rate); all
such amounts, together with such interest thereon, shall be a part of the secured indebtedness and
shall be secured by this Mortgage..
ARTICLE III.
Assignment of Production, Accounts and Proceeds
Section 3.1 Assignment of Production. Mortgagor does hereby absolutely and
unconditionally assign, transfer and set over to Agent all Production which accrues to
Mortgagor's interest in the Mortgaged Properties, all proceeds of such Production and all
Payments in Lieu of Production (herein collectively referred to as the "Production Proceeds"),
together with' the immediate and continuing right to collect and receive such Production
Proceeds. Mortgagor directs and instructs any and all purchasers of any Production to pay to
Agent all of the Production Proceeds accruing to Mortgagor's interest until such time as such
Houston: 1178354_1 .DOC ~ 17-
purchasers have been furnished with evidence that all secured indebtedness has been paid and
that this Mortgage has been released. Mortgagor agrees that no purchasers of the Production
shall have any responsibility for the application of any funds paid to Agent.
Section 3.2 _Effectuating Payment of Production Proceeds to Agent. Independent of
the foregoing provisions and authorities herein granted, Mortgagor agrees to execute and deliver
any and all transfer orders, division orders and other instruments that may be requested by Agent
or that may be required by any purchaser of any Production for the purpose of effectuating
payment of the Production Proceeds to Agent. If under any existing sales agreements, other than
division orders or transfer orders, any Production Proceeds are 'required to be paid by the
purchaser to Mortgagor so that under such existing agreements payment cannot be made of such
Production Proceeds to Agent, Mortgagor's interest in all Production Proceeds under such sales
agreements and in all other Production Proceeds which for any reason may be paid to Mortgagor
shall, when received by Mortgagor, constitute trust funds in Mortgagor's hands and shall be
immediately paid over to Agent. Without limitation upon any of the foregoing, Mortgagor
hereby constitutes and appoints Agent as Mortgagor's special attorney in-fact (with full power of
substitution, either generally or for such periods or purposes as Agent may from time to time
prescribe) in the name, place and stead of Mortgagor to do any and every act and exercise any
and every power that Mortgagor might or cOuld do or exercise personally with respect to all
Production and Production Proceeds (the same having been assigned by Mortgagor to Agent
pursuant to Section 3.1 hereof), expressly inclusive, but not limited to, the right, power and
authority to:
(a) Execute and deliver in the name of Mortgagor any and all transfer orders, division
orders, letters in lieu of transfer Orders, indemnifications, certificates and other instruments of
every nature that may be requested or required by any purchaser of Production from any of the
Mortgaged Properties for the purposes of effectuating payment of the Production Proceeds to
Agent or which Agent may otherwise deem necessary or appropriate to effect the intent and
purposes of the assignment contained in Section 3.1; and '
(b) If under any product sales agreements other than division orders or transfer
orders, any Pi-oduction Proceeds are required to be paid by the purchaser to Mortgagor so that
under such existing agreements payment cannot be made of such Production Proceeds to Agent,
to make, execute and enter into such sales agreements or other agreements as are necessary to
direct Production Proceeds to be payable to Agent;
giving and granting unto said attorney-in-fact full power and authority to do and perform any and
every act and thing whatsoever necessary and requisite to be done as fully and to all intents and
purposes, as Mortgagor might or could do if personally present; and Mortgagor shall be bound
thereby as fully and effectively as if Mortgagor had personally executed, acknowledged and
delivered any of the foregoing certificates or documents. The powers and authorities herein
conferred upon Agent may be exercised by Agent through any person who, at the time of the
execution of the particular instrument, is an officer of Agent. The power of attorney herein
conferred is granted for valuable consideration and hence is coupled with an interest and is
irrevocable so long as the secured indebtedness, or any part thereof, shall remain unpaid. All
persons dealing with Agent or any substitute shall be fully protected in treating the powers and
authorities conferred by this paragraph as continuing in full force and effect until advised by
Houston:1178354_1.DOC -18-
767
Agent that all the secured indebtedness is fully and £mally paid: Agent may, but shall not be
obligated to, take such action as it deems appropriate in an effort to collect the Production
Proceeds and any reasonable expenses (including reasonable attomey's fees) so incurred by
Agent shall be a demand obligation of Mortgagor and shall be part of the secured indebtedness,
and shall bear interest each day, from the date of such expenditure or payment until paid, at the
rate described in Section 2.3 hereof.
Section 3.3 Change of Purchaser. To the extent a default has occurred hereunder and
is continuing, should any person now or hereafter purchasing or taking Production fail to make
payment promptly to Agent of the Production Proceeds, Agent shall, subject to then existing
contractual prohibitions, have the right to make, or to require Mortgagor to make, a change of
purchaser, and the right to designate or approve the new purchaser, and Agent shall have no
liability Or responsibility in Connection therewith so long as ordinary care is used in making such
designation.
Section 3.4 Application of Production Proceeds. So long as no default has occurred
hereunder, the Production Proceeds received by Agent during each calendar month shall on the
first business day of the next 'succeeding calendar month (or, at the option of Agent, on any
earlier date) be applied by Agent as follows:
FIRST, to the payment of all secured indebtedness then due and payable, in such
manner and order as Agent deems advisable;
SECOND, to the prepayment of the remainder of the secured indebtedness in such
manner and order and to sUch extent as Agent deems advisable; and
THIRD, the remainder, if any, of the Production Proceeds shall be paid over to
MOrtgagor or to Mortgagor's order or to such other parties as may be entitled thereto by
law.
After a default hereUnder has occurred, all Production Proceeds from time to time in the hands of
Agent shall be applied by it toward the payment of all secured indebtedness (principal, interest,
attorneys' fees and other fees and expenses) at such times and in such manner and order and to
such extent as Agent deems advisable.
Section 3.5 Release From Liability; Indemnification. Agent and its successors and
assigns are hereby released and absolved from all liability for failure to enforce collection of the
Production Proceeds and from all other responsibility in connection therewith, except the
responsibility of each to account to Mortgagor for funds actually received by each. Mortgagor
agrees to indemnify and hold harmless Agent (for purposes of this paragraph, the term "Agent"
shall include the directors, officers, partners, employees and agents of Agent and any persons or
entities owned or controlled by or affiliated with Agent) from and against all claims, demands,
liabilities, losses, damages (including without limitation consequential damages), causes of
action, judgments, penalties, costs and expenses (including without limitation reasonable
attorneys' fees and expenses) imposed upon, asserted against or incurred or paid by Agent by
reason of the assertion that Agent received, either before or after payment in full of the secured
indebtedness, funds from the production of oil, gas, other hydrocarbons or other minerals
Houston: 1178354_1.DOC -19-
758
claimed by third persons (and/or funds a~butable to sales of production w~ch (i) were made at
prices ~ excess of the maximum price pe~i~ed by applicable law or (ii) were othe~ise made
in violation of laws, ~les, re~lations ~or orders gove~ng such sales), ~d Agent shall have
· e fi~t to defend aga~st ~y such claims· or actions, emplo~ng a~omeys of its own selection,
and if not finished with indemity satisfactow to it, Agent shall have the fi~t to compromise
~d adjust ~y such claims, actions and jud~ents, ~d in addition to the fi~ts to be inde~fied
as herein provided, all amounts paid by Agent ~ compro~se, satisfaction or disch~ge of ~y
such claim, action or jud~ent, ~d all cou~ costs, reasonable a~omeys' fees ~d other expenses
of evew ch~acter expended by Agent pursuant to ~e provisions of t~s section shall be a
dem~d obligmion (w~ch obligation Mo~gagor hereby expressly promises to pay) ow~g by
Mo~gagor to Agent ~d shall be~ ~terest, ~om the date expended ~til paid, at the rate
deschbed in Section 2.3 hereof. ~e foregoing indemities shall not te~inate upon the Release
Date or upon ~e release, foreclosure or other te~nation of this Mo~gage but will su~ive the
Rele~e Date, foreclosure of t~s Mo~gage or conveyance ~ lieu of foreclosure, ~d the
repa~ent of the secured indebtedness ~d the disch~ge and release of this Mo~gage ~d the
other documents evidencing an~or securing the secured indebtedness. WITHOUT
LIMITATION, IT IS THE ~TENTION OF MORTGAGOR ~D MORTGAGOR
AG~ES T~T THE FO~GO~G ~LEASES ~ ~EMNITIES S~L APPLY
TO EACH ~DE~IFIED PARTY WITH ~SPECT TO ALL CLAIMS, DEM~DS,
L~BILITIES, LOSSES, D~GES ~NCLUD~G WITHOUT LIMITATION
CONSEQUENT~L D~AGES), CAUSES OF ACTION, ~DGMENTS, PEN~TIES,
COSTS ~D E~ENSES ~CLUD~G WITHOUT LIMITATION ~ASONABLE
ATTO~EYS' FEES ~ E~ENSES) WHICH ~ WHOLE OR ~ P~T ~
CAUSED BY OR ~SE OUT OF T~ NEGLIGENCE OF SUCH (~/OR ~
OTHER) ~DE~IFIED PARTY. However, such ~de~ties shall not apply to ~y
pa~icular ~de~fied pa~y ~ut shall apply to the other inde~fied p~ies) to the extent the
subject of the inde~fication is caused by or roses out of the ~oss negligence or will~l
~sconduct of such p~icular indemified pa~y.
Section 3.6 _Mortgagor's Absolute Obligation to Pay Notes. Nothing herein contained
shall detract from or limit the obligations of Mortgagor to make prompt payment of the Notes,
and any and ali other secured indebtedness, at the time and in the manner provided herein and in
the Loan Documents, regardless of whether the Production and ProductiOn Proceeds herein
assigned are sufficient to pay same, and the rights under this Article III shall be cumulative of all
other rights under the Loan Documents.
Section 3.7 Rights Under Oklahoma Oil and Gas Owners' Lien Act.. Mortgagor
hereby grants, sells, assigns and sets over unto Agent during the term hereof, all of Mortgagor's
rights and interests· pursuant to the provisions of the Oil and Gas Owners' Lien Act (OKLA.
STAT. tit. 52, §§ 548.1-548.6 (the "Oklahoma Act"), hereby vesting in Agent all of Mortgagor's
rights as an interest Owner to the continuing security interest in and lien upon the oil or gas
severed or the proceeds of sale. Agent may, at its option, file the verified notice of lien in order
to perfect such lien, but shall not be obligated to make such filing and shall not be held liable to
Mortgagor for any act or omission pursuant to the Oklahoma Act.
Section 3.8 Rights Under New Mexico Act. Mortgagor hereby grants, sells, assigns
and sets over unto Agent, during the term hereof, all of Mortgagor's rights and interests pursuant
Houston: 1178354_1 .DOC -20-
769
to the provisions of Sections 48-9-1, et seq., N.M.S.A. 1978 Comp. (the "New Mexico Act"),
hereby vesting in Agent all of Mortgagor's rights aS an interest owner to the continuing security
interest in and lien upon the oil or gas severed or the proceeds of sale. Agent may, at its option,
file the verified notice of lien in order to perfect such lien, but shall not be obligated to make
such filing and shall not be held liable to Mortgagor for any act or omission pursuant to the New
Mexico Act.
Section 3.9 .Rights Under Wyoming Statutes. Mortgagor hereby appoints Agent as its
attorney-in-fact to pursue any and all lien rights of the Mortgagor to liens and security interests
in the Mortgaged Properties securing payment of Production Proceeds attributable to the
Mortgaged Properties, including, without limitation, those liens and security interests provided
for by Section 34.1-9-3 19, Wyoming Statutes Annotated, 1988 Republished Edition (June
1991), as amended or recodified. Mortgagor further assigns to Agent any and all such liens,
security interests, financing statements, or similar interests of Mortgagor attributable to its
interests in the Mortgaged Properties or Production Proceeds therefrom arising under or created
by statutory provision, judicial decision, or otherwise.
ARTICLE IV.
Remedies Upon Default
Section 4.1 Default. The term "default" as used in this Mortgage shall mean the
occurrence of any of the following events:
(a) the occurrence of an "Event of Default" as defined in the Credit Agreement; or
(b). the failure of Mortgagor to make due and punctual payment of any Note or of any
other secured indebtedness or of any inStallment of principal thereof or interest thereon, or any
part thereof, as the same shall become due and payable (taking into account any applicable grace
period, if any, provided in the Loan Documents), whether at a date for payment of a fixed
installment or contingent or other payment, or as a result of acceleration, or otherwise; or
(c) the failure of Mortgagor to pay over to Agent any Production Proceeds which are
receivable by Agent under this Mortgage but which are paid to Mortgagor rather than Agent
(either as provided for in Section 3.2 hereof or otherwise), except Production Proceeds paid over
to Mortgagor by Agent under clause THIRD of Section 3.4; or
(d) the failure'of Mortgagor timely and properly to observe, keep or perform any
covenant, agreement, warranty or condition herein or in any other Loan Document required to be
observed, kept or performed, if such failure is not remedied within the applicable grace period
provided for in such Loan Document or, if such Loan Document does not provide for such a
grace period, within 30 days after written notice and demand by Agent for the performance of
such covenant, agreement, warranty or condition; or
(e) any representation contained herein (or in any certificate delivered by Mortgagor
in connection herewith) or contained in any other Loan Document, or otherwise heretofore or
hereafter made by or on behalf of Mortgagor, shall prove to have 'been false or misleading in any
material respect on the date made (or on the date as of which made); or
Houston: 1178354_I .DOC -21 -
0 3 4G3 770
(f) the occurrence of a "default" or "event of default" under any Loan Document
other than this Mortgage, which default is not cured within the applicable grace period (if any)
'provided for in such other Loan Document; or
(g) Mortgagor suffers the entry against it of a judgment, decree or order for relief by a
court of competent jurisdiction in an involuntary proceeding commenced under any applicable
bankruptcy, insolvency or other similar law of any jurisdiction now or hereafter in effect,
including the United States Bankruptcy Code, as from time to time amended, or has such a
proceeding commenced against it which remains undismissed for a period of 30 days; or
(h) Mortgagor commences a voluntary case under any applicable bankruptcy,
insolvency or similar law now or hereafter in effect, including the United States Bankruptcy
Code, as from time to time amended, or applies for or consents to the entry of an order for relief
in an involuntary case under any such law; or Mortgagor makes a general assignment for the
benefit of creditors or fails to pay (or admits in writing its inability to pay) its debts as such debts
become due; or Mortgagor takes corporate or other action in furtherance of any of the foregoing;
or
(i) Mortgagor suffers the appointment of or taking of possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for a substantial part of its
assets or for any part of the Property in a proceeding brought against or initiated by it and
(1) such appointment or taking is neither made ineffective nor discharged within 30 days after
the making of such appointment or within 30 days after such taking, or (2) such appointment or
taking is consented to, requested by, or acquiesced to by Mortgagor; or
(j) Mortgagor suffers a writ or warrant of attachment or any similar process to be
issued by any court against all or any substantial part of its assets or any part of the Property, and
such writ or warrant of attachment or any similar process is not stayed or released within 30 days
after the entry or levy thereof or after any stay is vacated or set aside; or
(k) Any of the events 'referred to above in subsections (g), (h), (i) or (j) shall occur
with respect to any guarantor of the secured indebtedness and shall not be remedied within the
applicable grace period (if any) set forth in such subsections.
Section 4.2 Acceleration of Secured Indebtedness. Upon the occurrence of a default
described in subsection (g), (h), (i) or (j) of Section 4.1 above, all of the secured indebtedness
shall thereupon be immediately due and payable, without presentment, demand, protest, notice of
protest, declaration or notice of acceleration or intention to accelerate, putting the Mortgagor in
default, dishonor, notice of dishonor or any other notice or declaration of any kind, all of which
are hereby expressly waived by Mortgagor, and the liens evidenced hereby shall be subject to
foreclosure in any manner provided for herein or provided for by law as Agent may elect. During
the continuance of any other default, Agent at any time and from time to time may without notice
to Mortgagor or any other person declare any or all of the secured indebtedness immediately due.
and payable and all such secured indebtedness shall thereupon be immediately due and payable,
without presentment, demand, protest, notice of protest, declaration or notice of acceleration or
intention to accelerate, putting the Mortgagor in default, dishonor, notice of dishonor or any
other notice or declaration of any kind, all of which are hereby expressly waived by Mortgagor,
Houston: 1178354_1.DOC -22-
771
and the liens evidenced hereby shall be subject to foreclosure in any manner provided for herein
or provided for by law as Agent may elect.
Section 4.3 Pre-Foreclosure Remedies. Upon the occurrence of a default, or any event
Or circumstance which, with the lapse of time or the giving of notice, or both, would constitute a
default hereunder, and following any period to attempt to cure such default, if any, provided in
the Credit Agreement, Agent is authorized, prior or subsequent to the institution of any
foreclosure proceedings, to enter upon the Property, or any part thereof, and to take possession of
the Property and all books and records relating thereto, and to exercise without interference from
Mortgagor any and all rights which Mortgagor has with respect to the management, possession,
operation, protection or preservation of the Property. If necessary to obtain the possession
provided for above, Agent may invoke any and all remedies to dispossess Mortgagor, including,
without limitation, summary proceeding or restraining order, Mortgagor agrees to peacefully
surrender possession of the Property upon default. All cOsts, expenses and liabilities of every
character incurred by Agent in managing, operating, maintaining, protecting or preserving the
Property shall constitute a demand obligation (which obligation Mortgagor hereby expressly
promises to pay) owing by Mortgagor to Agent and shall bear interest from date of expenditure
until paid at the rate described in Section 2.3 hereof, all of which shall constitute a portion of the
secured indebtedness and shall be secured by this Mortgage and by any other instrument securing
the secured indebtedness. In connection with any action taken by Agent pursuant to this. Section
4.3, AGENT SHALL NOT' BE LIABLE FOR ANY LOSS SUSTAINED BY
MORTGAGOR RESULTING FROM ANY ACT OR OMISSION OF AGENT
(INCLUDING AGENT'S OWN NEGLIGENCE) IN MANAGING THE PROPERTY
UNLESS SUCH LOSS IS CAUSED BY THE WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE OF AGENT, nor shall Agent be obligated to perform or discharge any
obligation, duty or liability of Mortgagor arising under any agreement forming a part of the
Property or arising under any Permitted Encumbrance or otherwise arising. Mortgagor hereby
assents to, ratifies and confirms any and all actions of Agent with respect to the Property taken
under this section 4.3.
Section 4.4 'Foreclosure.
(a) Upon the occurrence of a default, Trustee is authorized and empowered and it
shall be Trustee's special duty at the request of Agent to sell the Deed of Trust Mortgaged
Properties, or any part thereof, as an entirety or in parcels as Agent may elect, at such place or
places and otherwise in the manner and upon such notice as may be required by law or, in the
absence of any such requirement, as Trustee may deem appropriate. If Trustee shall have given
notice of sale hereunder, any successor or substitute Trustee 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 Trustee conducting the sale. Cumulative of the foregoing and the
other provisions of this Section 4.4:
(i) As to any portion of the Deed of Trust Mortgaged Properties located in the
State of Texas (or within the offshore area over which the United States of America
asserts jurisdiction and to which the laws of such state are applicable with respect to this
Mortgage and/or the liens or security interests created hereby), such sales of all or any
part of such Deed of Trust Mortgaged Properties shall be conducted at the courthouse of
Houston: 1178354_1 .DOC -23-
772
any county (whether or not the counties in which such Deed of Trust Mortgaged
Properties are located are contiguous) in the State of Texas in which any part of such
Deed of Trust Mortgaged Properties is situated or which lies shoreward of any Deed of
Trust Mortgaged Property (i.e., to the extent a particUlar Deed Of Trust Mortgaged
Property lies offshore within the reasonable projected seaward extension of the relevant
county boundary), at public venue to the highest bidder for cash between the hours often
o'clock a.m. and four o'clock p.m. on the first Tuesday in any month or at such other
place, time and date as provided by the statutes of the State of Texas then in force
· governing sales of real estate under powers conferred by deed of trust, after having given
notice of such sale in accordance with such statutes.
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A
POWER OF SALE MAY ALLOW TRUSTEE TO TAKE THE MORTGAGED
PROPERTIES AND SELL THEM WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON DEFAULT BY MORTGAGOR UNDER THIS
MORTGAGE.
(b) Upon the occurrence of a default, this Mortgage may be foreclosed as to the Other
Mortgaged Properties, or any part thereof, in any manner permitted by applicable law.
Cumulative of the foregoing and the other provisions of this Section 4.4:
(i) As to Other Mortgaged' Properties located in the State of Louisiana (or
within the offshore area over which the United States of America asserts jurisdiction and
to which the laws of such state are applicable with respect to this Mortgage and/or the
liens or security interests created hereby), Agent may foreclose this Mortgage by
executory .process, or any other process, subject to, and on the terms and conditions.
required or permitted by, applicable law, and shall have the right to appoint a keeper of
such Other Mortgaged Properties.
(ii) As to Other Mortgaged Properties located in the State of Oklahoma,
Mortgagor hereby confers on Agent the power to sell the Mortgaged Properties in
accordance with the Oklahoma Power of Sale Mortgage Foreclosure Act (OKLA. STAT.
tit. 46, §§ 41-49), as the same maybe amended from time to time. 'Mortgagor hereby
represents and warrants that this Mortgage transaction does not involve a consumer loan
as said term is defined in Section 3-104 of Title 14A of the Oklahoma Statutes, that this
Mortgage does not secure an extension of credit made primarily for agricultural purposes
as defined in paragraph 4 of Section 1-301 of Title 14A of the Oklahoma Statutes, and
that this Mortgage is not a mortgage on the Mortgagor's homestead.
(iii) As to Other Mortgaged Properties located in the State of New Mexico,
Lender may, at its election, proceed by suit or suits, at law or in equity, to enforce the
payment of the secured indebtedness in accordance with the terms hereof and of the
Notes or other instruments evidencing it, to foreclose the lien and security interest of this
Mortgage against all or any portion of the Other Mortgaged Properties, and to have said
properties sold under the judgment or decree of a court of competent jurisdiction pursuant
to Section 39-5-19 NMSA 1978, as that statutory provision may be amended or
recodified.
Houston: 1178354_1 .DOC -24-
773
A POWER OF SALE HAS BEEN GRANTED IN THIS
MORTGAGE. A POWER OF SALE MAY ALLOW AGENT TO TAIl,
THE MORTGAGED PROPERTIES AND SELL THEM WITHOUT
GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT
BY MORTGAGOR UNDER THIS MORTGAGE.
(c) Upon the occurrence of a default, Agent may exercise its rights of enforcement
with respect to the Collateral under the Texas Business and Commerce Code, as amended, the
Louisiana Commercial Laws, as amended, the Uniform Commercial Code of the State of
Oklahoma, as amended, the Uniform .Commercial Code of the State of New Mexico, or under the
Uniform Commercial Code or any other statute in force in any state to the extent the same is
applicable law. Cumulative of the foregoing and the other provisions of this Section 4.4:
(i) To the extent permitted by law, Agent may enter upon the Mortgaged
Properties or otherwise upon Mortgagor's premises to take possession of, assemble and
collect the Collateral or to render it unusable; and
(ii) Agent may require Mortgagor to assemble the Collateral and make it
available at a place Agent designates which is mutually convenient to allow Agent to take
possession or dispose of the Collateral; and
(iii) Written notice mailed to Mortgagor as provided herein at least five (5)
days prior to the date of public sale of the Collateral or prior to the date after which
private sale of the Collateral will be made shall constitute reasonable notice; and
(iv) in the event of a foreclosure of the liens and/or security interests evidenced
hereby, the Collateral, or any part thereof, and the Mortgaged Properties, or any part
thereof, may, at the option'of Agent, be sold, as a whole or in parts, together or separately
(including, without limitation, where a portion of the Mortgaged Properties is sold, the
Collateral related thereto may be sold in connection therewith); and
(v) the expenses of sale provided for in clause FIRST of Section 4.7 shall
include the reasonable expenses of retaking the Collateral, or any part thereof, holding
the same and preparing the same for sale or other disposition; and
(vi) should, under this subsection, the Collateral be disposed of other than by
sale, any proceeds of such disposition shall be treated under Section 4.7 as if the same
were sales proceeds; and
(vii) as to the Collateral located in or otherwise subject to the laws of the State
Of Louisiana, Agent may foreclose this Mortgage as a security agreement affecting the
Collateral by executory process, or any other process, subject to, and on the terms and
conditions required or permitted by applicable law, and shall have the right to appoint a
keeper of such Collateral.
(d) To the extent permitted by applicable law, the sale hereunder of less than the
whole of the Property shall not exhaust the powers of sale herein granted or the right to judicial
foreclosure, and successive sale or sales may be made until the whole of the Property shall be
Houston: 1178354_1.DOC -25 -
sold, and, if the proceeds of such sale of less than the whole of the Property shall be less than thc
aggregate of the indebtedness secured hereby and the expense of conducting such sale, this
Mortgage and thc liens and security interests hereof shall remain in full force and effect as to the
unsold portion of the Property just as though no sale had been made; provided, however, that
Mortgagor shall never have any right to require the sale of less than the whole of thc Property. In
the event any sale hereunder is not completed or is dc£ective in the opinion of Agent, such sale
shall not exhaust the powers of sale hereunder or the right to judicial foreclosure, and Agent shall
have the right to cause a subsequent sale or sales to be made. Any sale may bc adjourned by
announcement at the time and place appointed for such sale without further notice except as may
be required by law. The Trustee or his successor ~or substitute, and the Agent acting under power
of sale, 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 it (including, without limitation, thc posting of notices
and the conduct of sale), and such appointment need not bc in writing or recorded, Any and all
statements of fact or other rccitals made in any deed or deeds, or other instruments of trans£cr,
given in connection with a sale as to nonpayment of the secured indebtedness or as to the
occurrence of any default, or as to all of the secured indebtedness having been declared 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
properties to be sold having been duly given, or, with respect to any sale by the Trustee, or any
successor or substitute trustee, as to the refusal, failure or inability to act of Trustee or any
substitute or successor trustee or the app°intmcnt of any substitute or successor trustee, or as to
any other act or thing having been duly done, shall bc taken as prima facie evidence of the truth
of the facts so stated and recited. Notwithstanding any reference herein to the Notes or the Credit
Agreement or any other Loan Document, all persons dealing with thc Mortgaged Properties shall
be entitled to rely on any document, or certificate, of the Agent as to the occurrence of an event,
such as an Event of Default, and shall not be charged with or forced to review any provision of
any' other document to determine thc accuracy thereof. With respect to any sale held in
foreclosure of the liens and/or security interests covered hereby, it shall not be necessary for the
Trustee, Agent, 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 salc, the Property or any part therco£.
(e) As to Property now or hereafter located in, or otherwise subject to the laws of, the
State of Louisiana, Mortgagor acknowledges the secured indebtedness, whether now existing or
to arise hereafter, and for Mortgagor, Mortgagor's heirs, devisees, personal representatives,
successors and assigns, hereby confesses judgment for the full amount of the secured
indebtedness in favor of the Lender. Mortgagor further agrees that the Agent may cause all or
any part of the Property to be seized and sold after due process of law, the Mortgagor waiving
the benefit of all laws or parts of laws relative to the appraisement of property seized and sold
under executory process or other legal process, and consenting that all or any part of the Property
may be sold without appraisement, either in its entirety or in lots and parcels, as the Agent may
determine, to the highest bidder for cash or on such terms as the plaintiff in such proceedings
may direct. Mortgagor hereby waives (i) the benefit of appraisement provided for in articles
2332, 2336, 2723, and 2724 of the Louisiana Code of Civil Procedure and all other laws
conferring the same; (ii) the demand and three (3) days notice of demand as provided in articles
2639 and 2721 of the Louisiana Code of Civil Procedure; (iii) the notice of seizure provided for
in articles 2293 and 2721 of the Louisiana Code of Civil Procedure; (iv) the three (3) daYs delay
provided for in articles 2331 and 2722 of the Louisiana Code of Civil Procedure; and (v) all
Houston: 1178354._1 ,DOC -26-
775
other laws providing rights of notice, demand, appraisement, or delay. Mortgagor expressly
authorizes and agrees that Agent shall have the right to appoint a keeper of such Property
pursuant to the terms and provisions of La. R.S. 9:5131 et seq. and La. R.S. 9:5136 et seq., which
keeper may be the Agent, any agent or employee thereof, or any other person, firm, or
corporation. Compensation for the services of the keeper is hereby fixed at five percent (5%) of
the amount due or sued for or claimed or sought to be protected, preserved, or enforced in the
proceeding for the recognition or enforcement of this Mortgage and shall be secured by the liens
and security interests of this Mortgage.
Section 4.5 Effective as Mortgage. As to the Deed of Trust Mortgaged Properties, this
instrument shall be effective as a mortgage as well as a deed of trust and upon the occurrence of
a default may be foreclosed as to the Deed of Trust Mortgaged Properties, or any portion thereof,
in any manner permitted by applicable law, and any foreclosure suit may be brought by Trustee
or by Agent. To the extent, if any, required to cause this instrument to be so effective asa
mortgage as well as a deed of trust, Mortgagor hereby mortgages the Deed of Trust Mortgaged
Properties to Agent. In the event a foreclosure hereunder as to the Deed of Trust Mortgaged
Properties, or any part thereof, shall be commenced by Trustee, or his substitute or successor,
Agent may at any time before the. sale of sUch properties direct Trustee to abandon the sale, and
may then institute suit for the foreclosure of this Mortgage as to such properties. It is agreed that
if Agent should institute a suit for the foreclosure of this Mortgage, Agent may at any time
before the entry of a final judgment in said suit dismiss the same, and require Trustee, its
substitute or successor, to sell the Deed of Trust Mortgaged Properties, or any part thereof, in
accordance with the provisions of this Mortgage.
Section 4.6 Receiver. In addition to all other remedies herein provided for, Mortgagor
agrees that, upon the occurrence of a default or any event or circumstance which, with the lapse
of time or the giving of notice, or both, would constitute a default hereunder, Agent shall as a
matter of right be entitled to the appointment of a receiver or receivers for all or any part of the
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 Property or the solvency of any person or
persons liable for the payment of the indebtedness secured hereby, 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 Agent, and agrees that such
appointment shall in no manner impair, prejudice or otherwise affect the rights of Agent under
Article III hereof. Mortgagor expressly waives notice of a heating for appointment of a receiver
and the necessity for bond or an accounting by the receiver. Nothing herein is to be construed to
deprive Agent or any 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 Agent in connection with
any such receivership shall be a demand obligation (which obligation Mortgagor hereby
expressly promises to pay) owing by Mortgagor to Agent and shall bear interest, fi.om the date of
making such advancement by Agent until paid, at the rate described in Section 2.3 hereof.
Section 4.7 Proceeds of Foreclosure. The proceeds of any 'sale held in foreclosure of
the liens and/or security interests evidenced hereby shall be applied:
FIRST, to the payment of ali necessary costs and expenses incident to such
foreclosure sale, including but not limited to all court costs and charges of every
Houston: 1178354_1 .DOC -27-
character in the event foreclosed by suit or any judicial proceeding and including but not
limited to a reasonable fee to the Trustee if such sale was made by the Trustee acting
under the provisions of Section 4.4(a) and including but not limited to the compensation
of the keeper, if any;
SECOND, to the payment of the secured indebtedness (including specifically
without limitation the principal, interest and attorneys' fees due and unpaid on the Notes
and the amounts due and unpaid and owed under this Mortgage) in such manner and
order as Agent may elect; and
THIRD, the remainder, if any there shall be, shall be paid to Mortgagor, or to
Mortgag°r's heirs, devisees, representatives, successors or assigns, or such other persons
as may be entitled thereto by law.
Section 4.8 Lender as Purchaser. Any Lender shall have the right to become the
purchaser at any sale held in foreclosure of the liens and/or security interests evidenced hereby,
and any Lender purchasing at any such sale shall have the right to credit upon the amount of the
bid made thereifor, to the extent necessary to satisfy such bid, the secured indebtedness oWing to
such Lender, or if such Lender holds less than all of such indebtedness, the pro rata part thereof
owing to such Lender, accounting to all other Lenders not joining in such bid in cash for the
portion of such bid or bids apportionable to such non-bidding Lender or Lenders.
Section 4.9 Foreclosure as to Matured Debt. Upon the occurrence of a default, Agent
shall 'have the right to proceed with foreclosure of the liens and/or security interests evidenced
hereby without declaring the entire secured indebtedness due, and in such event, any such
foreclosure sale may be made subject to the unmatured part of the secured indebtedness and shall
not in any manner affect the unmatured part of the secured indebtedness, but as to such
unmatured part, this Mortgage shall remain in full force and effect just as though no sale had
been made. The proceeds of such sale shall be applied as provided in Section 4.7 except that the
amount paid under clause SECOND thereof shall be only the matured portion of the secured
indebtedness and any proceeds of such sale in excess of those provided for in clauses FIRST and
SECOND (modified as provided above) shall be applied as provided in clause SECOND AND
THIRD of Section 3.4 hereof. Several sales may be made hereunder without exhausting the right
of sale for any unmatured part of the secured indebtedness.
Section 4.10 Remedies Cumulative. All remedies herein provided for are cumulative of
each other and of all other remedies existing at law or in equity and are cumulative of any and all
other remedies provided for in any other Loan Document, and, in addition to the remedies herein
provided, there shall continue to be available all such other remedies as may now or hereafter
exist at law or in equity for the collection of the secured indebtedness and the enforcement of the
covenants herein and the foreclosure of the liens and/or security interests evidenced hereby, and
the resort to any remedy provided for hereunder or under any such other Loan Document or
provided for by law shall not prevent the concurrent or subsequent employment of any other
'appropriate remedy or remedies.
Section 4.11 Discretion as to Security. Agent may resort to any security given by this
Mortgage or to any other security now existing or hereafter given to secure the payment of the
Houston: 1178354_1.DOC -28-
secured indebtedness, in whole or in part, and in such portions and in such order as may seem
best to Agent in its sole and uncontrolled discretion, and any such action shall not in any way be
considered as a waiver of any of the ~ights, benefits, liens or security interests evidenced by this
Mortgage.
Section 4.12 Mortgagor's Waiver of Certain Rights. To the full extent Mortgagor may
do so, Mortgagor agrees that Mortgagor will not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any appraisement,
valuation, stay, extension or redemption, and Mortgagor, for Mortgagor, Mortgagor's heirs,
devisees, representatives, successors and assigns, and for any and all persons ever claiming any
interest in the Property, to the extent permitted by applicable law, hereby waives and releases all
fights of appraisement, valuation, stay of execution, redemption, notice of intention to mature or
declare due the whole of the secured indebtedness, notice of election to mature or declare due the
whole of the secured indebtedness and all rights to a marshaling of assets of Mortgagor,
including the Property, or to a sale in inverse order of alienation in the event of foreclosure of the
liens and/or security interests hereby created. Mortgagor shall not have or assert any right under
any statute or rule of law pertaining to the marshaling of assets, sale in inverse order of
alienation, the exemption of homestead, the administration of estates of decedents, or other
matters whatever to defeat, reduce or affect the right under the terms of this Mortgage to a sale of
the Property for the collection of the secured indebtedness without any prior or different resort
for collection, or the right under the terms of this Mortgage to the payment of the secured
indebtedness out of the proceeds of sale of the Properly in preference to every other claimant
whatever. If any law referred to in this section and now in force, of which Mortgagor or
Mortgagor's heirs, devisees, representatives, successors or assigns or any other persons claiming
any interest in the Mortgaged Properties or the Collateral might take advantage despite this
section, shall hereafter be repealed or cease to be in force, such law shall not thereafter be
deemed to preclude the application of this section.
Section 4.13 Mortgagor as Tenant Post-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 persons claiming any interest in the Property
by, through or under Mortgagor are occupying or using the Property, 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 landlord or tenant, 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 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 property (such
as an action for forcible entry and detainer), in any court having jurisdiction.
Section4.14 WaiVer of Oklahoma Appraisement. As to Property situated in or
otherwise subject to the laws of the State of Oklahoma, appraisement of the Property is hereby
waived (or not) at the option of Agent, such option to be exercised at the time judgment is
rendered in any foreclosure hereof or at any time prior thereto.
Houston: 1178354_1 .DOC -29-
778
Section 4.]5 Limitation on New Mexico Redemption Period. Pursuant to Section 39-5-
19 of New Mexico Statutes, 1978 Annotated, the redemption period after foreclosure sale for any
Property situated in or otherwise subject to the laws of the State of New Mexico shall be limited
to one (1) month,
ARTICLE V.
Miscellaneous
Section 5.1 Scope of Mortgage. This Mortgage is a deed of trust and mortgage of
both real/immovable and personal/movable property, a security agreement, a financing statement
and an assignment, and also covers proceeds and fixtures.
Section 5.2 Effective as a Financing Statement. This Mortgage; among Other things,.
covers goods which are or are to become fixtures related to the real property described herein,
and covers as-extracted collateral related to the real property described herein. This Mortgage
shall be effective as a financing statement (i) filed as a fixture filing with respect to all fixtures
included within the Property, (ii) covering as-extracted collateral with respect to all aS-extracted
collateral included within the Property (including, without limitation, all oil, gas, other minerals
and other substances of value which may be extracted fi.om the earth and all accounts arising out
of the sale at the wellhead or minehead thereof), and (iii) covering all other Property. This
Mortgage is to be filed for record in the real/immovable property records of each county or
parish where any part of the Mortgaged Properties is situated or which lies shoreward of any
Mortgaged Property (i.e., to the extent a Mortgaged Property lies offshore within the projected
seaward extension of the relevant county or parish boundaries), and may also be filed in the
offices of the Bureau of Land Management, the Minerals Management service, the General Land
Office or any relevant federal, state, local or tribal agency (or any successor agencies). The
mailing address of Mortgagor is the address of Mortgagor set forth at the end of this Mortgage
and the address of Agent from which information concerning the security interests hereunder
may be' obtained is the address of Agent set forth at the end of this Mortgage. Nothing contained
in this paragraph shall be construed to limit the scope of this Mortgage nor its effectiveness as a
fmancing statement covering any type of Property.
Section 5.3 Reproduction of Mortgage as Financing Statement; Authorization to File.
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 purpose.
Without limiting any other provision herein, Mortgagor hereby authorizes Agent to file, in any
filing or recording office, one or more financing statements and any renewal or continuation
statements thereof, describing the Property, including, without limitation, a financing statement
coveting "all assets of Mortgagor, all proceeds therefrom and all rights and privileges with
respect thereto."
Section 5.4 Notice to Account Debtors. In addition th, but without limitation of, the
rights granted in Article III hereof, Agent may, at any time after a default has occurred that is
continuing, notify the account debtors or obligors of any accounts, chattel paper, negotiable
instruments or other evidences of indebtedness included in the Collateral to pay Agent directly.
Houston: 1178354_.1 .DOC -30-
779
Section 5.5 Waivers. Agent may at any time and from time to time in writing waive
compliance by Mortgagor with any covenant herein made by Mortgagor to the extent and in the
manner specified in such writing, or consent to Mortgagor's doing any act which hereunder
Mortgagor is prohibited from doing, or to Mortgagor's failing to do any act which hereunder
Mortgagor is required to do, to the extent and in the manner specified in such writing, or release
any part of the Property or any interest therein or any Production Proceeds from the lien and
security interest of this Mortgage, without the joinder of Trustee. Any party liable, either directly
or indirectly, for the secured indebtedness or for any covenant herein or in any other Loan
DocUment may be released from all or any part of such obligations without impairing or
releasing the liability of any other party. No such act shall in any way impair any rights or
powers hereunder except to the extent specifically agreed to in such writing.
Section 5.6 No Impairment of Security. The lien, security interest and other security
rights hereunder shall not be impaired by any indulgence, moratorium or release which may be
granted, including, but not limited to, any renewal, extension or modification which may be
granted with respect to any secured indebtedness, or any surrender, compromise, release,
renewal, extension, exchange or substitution which maybe granted in respect of the Property
(including without limitation Production Proceeds), or any part thereof or any interest therein, or
any release or indulgence granted to any endorser, guarantor or surety of any secured
indebtedness.
Section 5.7 Acts Not Constituting Waiver. Any default may be waived without
waiving any other prior or subsequent default. Any default may be remedied without waiving the
default-remedied. Neither failure to exercise, nor delay in exercising, any right, power or remedy
upon any default shall be construed as a waiver of such default or as a waiver of the right to
exercise any such right, power or remedy at a later date. No single or partial exercise of any
right, power or remedy hereunder shall exhaust the same or shall preclude any other or further
exercise thereof, and every such right, power or remedy hereunder may be exercised at ~any time
and from time to time, No modification or waiver of any provision hereof nor consent to any
departure by Mortgagor therefrom shall in any event be effective unless the same shall be in
writing and signed by Agent and then such waiver or consent shall be effective only in the
specific instances, for the purpose for which given and to the extent therein specified. No notice
to nor demand on Mortgagor in any case shall of itself entitle Mortgagor to any other or further
notice or demand in similar or other circumstances. Acceptance of any payment in an amount
less than the amount then due on any secured indebtedness shall be deemed an acceptance on
account only and shall not in any way excuse the existence of a default hereunder.
Section 5.8 Mortgagor's Successors.' In the event the .ownership of the Property or
any part thereof becomes vested in a person other than Mortgagor, then, without notice to
Mortgagor, suCh successor or successors in interest may be dealt with, with reference to this
Mortgage and to the indebtedness secured hereby, in the same manner as with Mortgagor,
without in any way vitiating or discharging Mortgagor's liability hereunder or for the payment of
the indebtedness or performance of the obligations secured hereby. No transfer of the Property,
no forbearance, and no extension of the time for the payment of the indebtedness secured hereby
shall operate to release, discharge, modify, change or affect, in whole or in part, the liability of
Mortgagor hereunder or for the payment of the indebtedness or performance of the obligations
H6uston: 1178354_1.DOC -31 -
780
secured hereby or the liability of any other person hereunder or for the payment of the
indebtedness secured hereby.
Section 5.9 Place of payment. All secured indebtedness which may be owing
hereunder at any time by Mortgagor shall be payable at the place designated in the Credit
Agreement (or if no such designation is made, at the address of Agent indicated at the end of this
Mortgage), or at such other place as Agent may designate in writing.
Section 5.10 ..Subrogation to Existing Liens. To the extent that proceeds of the Notes
are used to pay indebtedness secured by any outstanding lien, security interest, charge or prior
encumbrance against the Property, such proceeds have been advanced at Mortgagor's request,
and the party or parties advancing the same 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 eXpressly understood that, in consideration of the payment
of such indebtedness, 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 5.11 Application of payments to Certain Indebtedness. If any part of the
secured indebtedness cannot be lawfully secured by this Mortgage or if any part of the Property
cannot be lawfully subject to the lien and security interest hereof to the full extent of such.
indebtedness, then all payments made shall be applied on said indebtedness first in discharge of
that portion thereof which is not secured by this Mortgage.
Section 5.12 Compliance With Usury Laws. It is the intent of Mortgagor, Lender and
all other parties to the Loan Documents to contract in strict compliance with applicable usury
law froTM time to time in effect. In furtherance thereof, it is stipulated and agreed that none of the
terms and provisions contained herein or in the other Loan Documents 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.
Section 5.13 Substitute Trustee. The Trustee may resign by an instrument in writing
addressed to Agent, or Trustee may be removed at any time with or without cause byan
instrument in writing executed by Agent. In case of the death, resignation, removal, or
disqualification of Trustee, or if for any reason Agent shall deem it desirable to appoint a
substitute or successor trustee to act instead of the herein named trustee or any substitute or
successor trustee, then Agent shall have the right and is hereby authorized and empowered to
appoint a successor trustee, or a substitute trustee, without other formality than appointment and
designation in writing executed by Agent and the authority hereby conferred shall extend to the
appointment of other successor and substitute trustees successively until the indebtedness
secured hereby has been paid in full, Or until the Property is sold hereunder. In the event the
secured indebtedness is owned by more than one person or entity, the holder or holders of not
less than a majority in the amount of such indebtedness shall also have the right and authority to
make the appointment of a successor or substitute trustee as provided for in the preceding
sentence or to remove Trustee as provided in the first sentence of this section, Such appointment
and designation by Agent shall.be full evidence of the right and authority to make the same and
Houston: 1178354_1 .DOC
-32-
i)8a 4 3 78i
of all facts therein recited. If .~gent is a corporation or association and such appointment is
executed in its behalf by an officer of such corporation or association, such appointment shall be
conclusively presumed to be executed with authority and shall be valid and sufficient without
proof of any action by the board of directors or any superior officer of the corporation or
association. Agent may act through an agent or attorney-in-fact in substituting trustees. Upon the
making of any such appointment and designation, all of the estate and title of Trustee in the Deed
of Trust Mortgaged Properties shall vest in the named successor or substitute Trustee and such
successor or substitute shall thereupon succeed to, and shall hold, possess and exeCUte, all the
rights, powers, privileges, immunities and duties herein conferred upon Trustee; but
nevertheless, upon the written request of Agent or of the successor or substitute Trustee, the
Trustee ceasing to act shall execute and deliver an instrument transferring to such successor or
substitute Trustee all of the estate and title in the Deed of Trust Mortgaged Properties of the
Trustee so ceasing to act, together with all the rights, powers, privileges, immunities and duties
herein conferred upon the Trustee, and shall duly assign, transfer and deliver any of the
properties and moneys held by said Trustee hereunder to said successor or substitute Trustee, All
references herein to Trustee shall be deemed to refer to Trustee (including any successor or
substitute appointed and designated as herein provided) from time to time acting hereunder.
Section 5.14 No Liability for Trustee. THE TRUSTEE SHALL NOT BE LIABLE
FoR ANY ERROR OF JUDGMENT OR ACT DONE BY TRUSTEE IN GOOD FAITH,
OR BE OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER ANY
CIRCUMSTANCES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE
TRUSTEE'S NEGLIGENCE), EXCEPT FOR TRUSTEE'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. The Trustee shall have the right to rely on any instrument,
document or signature authorizing or supporting any action taken or proposed to be taken by the
Trustee hereunder, believed by the Trustee in good faith to be genuine. All moneys received by
Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which
they were received, .but need not be segregated in any manner from any other moneys (except to
the extent required by law), and Trustee shall be under no liability for interest on any moneys
received by him hereunder. Mortgagor hereby ratifies and confirms any and all acts which the
herein named Trustee or its successor or successors, substitute or substitutes, shall do lawfully by
virtue hereof. Mortgagor will reimburse Trustee for, and indemnify and save Trustee harmless
against, any and all liability and expenses (including attorneys fees) which may be incurred by
Trustee in the performance of his duties. The foregoing indemnities shall not terminate upon the
release, foreclosure or other termination of this Mortgage but will survive such release,
termination and/or foreclosure of this Mortgage, or conveyance in lieu of foreclosure, and the
repayment of the secured indebtedness and the discharge and release of this Mortgage and the
other documents evidencing and/or securing the secured indebtedness. Any amount to be paid
hereunder by Mortgagor to Trustee shall be a demand obligation owing by Mortgagor to Trustee
and shall be subject to and covered by the provisions of Section 2.3 hereof.
Section 5.15 Release of Mortgage. If all of the secured indebtedness be paid as the
same becomes due and payable, all other requirements of the Credit Agreement are satisfied and
all of the covenants, warranties, .undertakings and agreements made in this Mortgage are kept
and performed, and if neither the Mortgagor nor any Lender is bound to the other or to any third
person to permit any obligation or secured indebtedness to be incurred then or thereafter, then,
upon sixty (60) days prior written notice (or such lesser number of days as may be mandated by
Houston: 1178354_1.DOC -33-
782
applicable law), the Mortgagor may request that this Mortgage be terminated. Upon such
termination the Mortgagor may further request that a written act of release of this Mortgage be
provided (except this Mortgage shall be reinstated to the extent expressly provided herein, and
will continue with respect to indemnification and other rights which are to continue following the
release hereof). Agent agrees to deliver such 'an act of release (subject to the foregoing
limitation), all at the cost and expense of the Mortgagor, within thirty (30) days (or such lesser
number of days as may be mandated by applicable law) of receiving such request unless Agent in
good faith, has cause to believe that Mortgagor is not entitled to a termination of this Mortgage.
Notwithstanding the foregoing, it is understood and agreed that certain indemnifications, and
other rights, which are provided herein to continue following the release hereof, shall continue in
effect notwithstanding such release; and provided that if any payment t° Lender, or Agent, is
held to constitute a preference or a voidable transfer under applicable state or federal laws or if
for any other reason Lender, or Agent, is required to refund such payment to the payor thereof or
to pay the amount thereof to any. third party, this Mortgage shall be reinstated to the extent of
such payment or payments.
Section 5.16 Notices. All notices, requests, consents, demands and other
communicati~)ns required or permitted hereunder shall be in writing and shall be deemed
sufficiently given or furnished if delivered by personal delivery, by telecopy, by delivery service
with proof of delivery, or by registered or certified United States mail, postage prepaid, at the
'addresses specified at the end of this Mortgage (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 (a) in the case of personal delivery or
delivery service, as of the date of first attempted delivery at the address and in the manner
provided herein, Co) in the case of telecopy, upon receipt, and (c) in the case of registered or
certified United States mail, three days after deposit in the mail. Notwithstanding the foregoing,
or anything else in the Loan Documents which may appear to the contrary, any notice given in
connection with a foreclosure of the liens and/or security interests created hereunder, or
otherwise in connection with the exercise by Agent, any Lender or Trustee of their respective
rights hereunder or under anY other Loan Document, which is given in a manner permitted by
applicable law shall constitute proper notice; without limitation of the foregoing, notice given in
a form required or permitted by statute shall (as to the portion of the Property to which such
statute is applicable) constitute proper notice.
Section 5.17 .Invalidity of Certain Provisions. A determination that any provision of
this Mortgage is unenforceable or invalid shall not affect the enforceability or validity of any
other provision and the determination that the application of any provision of this Mortgage to
any person or circumstance is illegal or unenforceable shall not affect the enforceability or
validity of such provision as it may apply to other persons or circumstances.
Section 5.18 Gender; Titles. Within this Mortgage, words of any gender shall be held
and construed to include any other gender, and words in the singular number shall be held and
c°nstrued to include the plural, unless the context otherwise requires. Titles appearing at the
beginning of any subdivisions hereof are for convenience only, do not constitute any part of such
subdivisions, and shall be disregarded in construing the language contained in such subdivisions.
Houston: 1 ! 78354_1 .DOC -34-
783
Section 5.19 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 manner and in
such places as Trustee or Agent shall reasonably request and will pay all such recording, filing,
re-recording and refiling taxes, fees and other charges.
Section 5.20 Reporting Compliance. Mortgagor agrees to comply with any and all
reporting requirements applicable to the transaction evidenced by th'e Notes and secured by this
Mortgage which are set forth in any law, statute, ordinance, rule, regulation, order or
· determination of any govermnental authority, and further agrees upon request of Agent to furnish
Agent with evidence of such compliance.
Section 5.21 Certain Consents. Except where otherwise expressly provided herein, in
any instance hereunder where the approval, consent or the exercise of judgment of Agent or any
Lender is required, the granting Or denial of such approval or consent and the exercise of such
judgment shall be within the sole discretion of such party, and such party shall not, for any
reason or to any extent, be required to grant such approval or consent or exercise such judgment
in any particular manner, regardless of the reasonableness of either the request or the judgment
of such party.
Section5.22 Certain Obligations of Mortgagor. Without limiting Mortgagor's
obligations hereunder, Mortgagor's liability hereunder and the indebtedness secured hereby shall
extend to and include all post petition interest, expenses, and other duties and liabilities with
respect to Mortgagor's obligations hereunder which would be owed but for the fact that the same
may be unenforceable due to the existence of a bankruptcy, reorganization or similar proceeding.
Section 5.23 Authority of Agent. The persons constituting Lender may, by agreement
among them, provide for and regulate the exercise of rights and remedies hereunder, but, unless
and until modified tothe contrary in writing signed by all such persons and recorded in the same
counties and parishes as this Mortgage is recorded, (i) all persons other than Mortgagor and its
affiliates shall be entitled to rely on the releases, waivers, consents, approvals, notifications and
other acts (including, without limitation, appointment of substitute or successor trustee, or
trustees, hereunder and the bidding in of all or any part of the secured indebtedness held by any
one or more Lenders, whether the same be conducted Under the provisions hereof or otherwise)
of Agent, without inquiry into any such agreements or the existence of required consent or
approval of any persons constituting Lender and without the joinder of any party other than
Agent in such releases, waivers, consents, approvals, notifications or other acts and (ii) all
notices, requests, consents, demands and other communications required or permitted to be given
hereunder may be given to Agent. '
SeCtion 5.24 Counterparts. This Mortgage may be executed in several counterparts, all
of which are identical, except that, (a) to facilitate recordation, certain counterparts hereof may
include only that portion of Exhibit A which contains descriptions of the properties located in (or
otherwise subject to the recording or filing requirements and/or protections of the recording or
filing acts or regulations of) the recording jurisdiction in which the particular counterpart is to be
recorded, and other portions of Exhibit A shall be included in such counterparts by reference
only and (b) Schedule I is attached only to the master counterparts hereof being retained by
Houston: 1178354_1.DOC -35~
Mortgagor and Agent, (c) only those counterparts hereof being retained by Agent and Mortgagor
or otherwise containing counterpart descriptions of Mortgaged Properties located in (or
otherwise subject to the recording or filing requirements and/or protections of the recording or
filing acts or regulations of) the State of Louisiana will have Annex I attached thereto, Annex I is
included in all other counterparts by reference only, and (d) the execution of this Mortgage by
Mortgagor may not be witnessed on those counterparts hereof containing descriptions of
Mortgaged Properties located in states where witnesses are not required and/or encouraged by
applicable law. All of such counterparts together shall constitute one and the same instrument.
Section 5.25 Multiple Parties Constitutin~ Mortgagor. Unless the context clearly
indicates otherwise, as used in this Mortgage, "Mortgagor" means the Mortgagors named in
Section 1.1 hereof or any of them. The obligations of Mortgagor hereunder shall be joint and
several.
Section 5.26 Successors and Assigns. The terms, provisions, covenants,
representations, indemnifications and conditions hereof shall be binding upon Mortgagor, and
the successors and assigns of Mortgagor, and shall inure to the benefit of Agent, Trustee and
each person constituting Lender and their respective successors and assigns, and shall constitute
covenants running with the Mortgaged Properties. Should the agency under which Agent serves
be terminated, or otherwise cease to exist, Lenders (including the respective successors and
assigns of each person constituting Lender named herein) shall be deemed to be the successors to
Agent. All references in this Mortgage to Mortgagor, Agent, Trustee or Lenders shall be deemed
to include all such successors and assigns.
Section 5.27 FINAL AGREEMENT OF THE PARTIES. THE WRITTEN LOAN
DOCUMENTS REPRESENT TIlE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR.
CONTEMPORANEOUS. OR SUBSEQUENT ORAL AGREEMENTS OF THF,
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
..PARTIES.
Section 5.28 CHOICE OF LAW. WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW, THIS MORTGAGE SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE AND THE LAWS OF THE UNITED
STATES OF AMERICA, EXCEPT THAT TO THE EXTENT THAT THE LAW OF A
STATE IN WHICH A PORTION OF THE PROPERTY IS LOCATED (OR WHICH IS
OTHERWISE APPLICABLE TO A PORTION OF THE PROPERTY) NECESSARILY
OR, IN THE SOLE DISCRETION OF LENDER, APPROPRIATELY GOVERNS WITH
RESPECT TO PROCEDURAL AND SUBSTANTIVE MATTERS RELATING TO THE
CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS, SECURITY
INTERESTS AND OTHER RIGHTS AND REMEDIES OF THE TRUSTEE OR THE
LENDER GRANTED HEREIN, THE LAW OF SUCH STATE SHALL APPLY AS TO
THAT PORTION OF THE PROPERTY LOCATED IN (OR WHICH IS OTHERWISE
SUBJECT TO THE LAWS OF) SUCH STATE.
Houston: 1178354_1.DOC -3 6-
785
Section 5.29 Reliance on Certificate or Statement of Agent. All third parties may rely
upon a certificate or statement of the Agent as to the occurrence of any act or event, including,
but not limited to, the occurrence of a default hereunder, or the occurrence of an Event of Default
under the Credit Agreement.
Seclion 5.30 Appearance. Resolutions, For purposes of Louisiana law, including but
not limited to the availability of executory process, Mortgagor has appeared on this date before
the undersigned Notary Public and witnesses in order to execute this Mortgage. Mortgagor
attaches, as Annex I, to Counterparts hereof being recorded in Louisiana certified resolutions of
its Board of Directors authorizing the execution and delivery of this Mortgage.
Section 5.31 Paraph. Mortgagor acknowledges that no promissory note or other
instrument has been presented to the undersigned Notary Public to be paraphed for identification
herewith.
Section 5.32 Acceptance by Agent. In accordance with the provisions of Louisiana
Civil Code article 3289, Agent has accepted the benefits of the Mortgage without the necessity of
execution by Agent.
[Signatures Begin on Next Page]
Houston:1178354__1.DOC -37-
786
THUS DONE AND PASSED this 16th day of April, 2003, to be effective, however, as of
April 16, 2003, in my presence and in the presence of the undersigned competent witnesses who
hereunto sign their names xvith Mortgagor and me, Notary, after reading of the whole.
WITNESSES:
Name: ~'andy'~. B~-~)ok~
'Nta~e:- Karen ~l.'Po~
ST. MARY LAND & EXPLORATION
COMPANY
By:
2Vlil ar~Ra'nd'o lph" Ph aro
Vice President - Land & Legal
NOTARY PUB~']}IC
The address and tax identification number of Parent are:
1776 Lincoln Street, Suite 700
Denver, Colorado 80203
(Denver County)
Taxpayer I.D. No. 41-05 18430
The address of Agent is:
201 South College Street
8th Floor NC 0680
Charlotte, NC 28288
The addresses of Trustees are:
Jay Chernosky
1001 Fmmin Street, Suite 2255
Houston, Texas 77002
The First American Title Company of Utah
3300 East 400 South
Salt Lake City, Utah 84111
This instrument prepared by:
Craig W. MmTay
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2300
Houston, TX 77002
H0uston:1178354 1.DOC
-38-
STATE OF COLORADO
COUNTY OF DENVER
787
BE IT REMEMBERED THAT I, the undersigned authority, a notary public duly
qualified, commissioned, sworn and acting in and for the county and state aforesaid, and being
authorized in such county and state to take acknowledgments, hereby certify that, on this 16th
day of April, 2003, THERE personally appeared before me: Milam Randolph Pharo, die Vice
President - Land & Legal of St. Mary Land & Exploration Company, a Delaware corporation,
known to me to be such officer, such corporation being a party to the foregoing instrument.
MONTANA, NEW
MEXICO, NORTH
DAKOTA
OKLAHOMA, TEXAS,
UTAH, WYOMING and
LOUISiANA
The foregoing instrument was acknowledged before me on this day, by
such person, the above designated officer of the corporation specified
following such person's name, on behalf of said corporation.
On this date before me, the undersigned authority, personally came
and appeared such person, to. me personally known and known by me
to be the person whose genuine signature is affixed to the foregoing
document as the above designated officer of the corporation specified
following such person's name, who signed said document before me in
the presence of the two witnesses, whose names are thereto subscribed
as such, being competent witnesses, and xvho acknowledged, in my
presence and in the presence of said witnesses, that he signed the
above and foregoing document as his own free act and deed on behalf
of such corporation by authority of its board of directors and as the
free act and deed of such corporation and for the uses and purposes
therein set forth and apparent.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the City of
Denver, Denver County, Colorado on the day and ye/a~)first above %tt?
NOT~ PUBLIC, in and for the State of Colorado
My commission eXpires:
James C. Robertson
(printed name)
Febnlary 14, 2005
[SEAL]
Houston:1178354 1.DOC -39-
THUS DONE AND PASSED this 16th day of April, 2003, to be effective, however, as of
April 16, 2003, in my presence and in the presence of the undersigned competent witnesses who
hereunto sign their names xvith Mortgagor and me, Notary, after reading of the whole.
WITNESSES' ST. MARY ENERGY COMPANY
. . . Vice President - Land & Legal
The address and taX identification number of Energy are:
1776 Lincoln Street, Suite 700
Denver, Colorado 80203
(Denver County)
Taxpayer ID. Nol 76-0554924
STATE OF COLORADO §
COUNTY OF DENVER §
BE IT REMEMBERED THAT I, the undersigned authority, a notary public duly
qualified, commissioned, sworn and acting in and for the county and state aforesaid, and being
authorized in such county and state to take acknowledgments, hereby certify that, on this 16th
daY of April, 2003, there personally appeared before me: Milam Randolph Pharo, the Vice
President - Land & Legal of St. Mary Energy Company, a Delaware corporation, known to me to
be such officer, such corporation being a party to the foregoing instrument.
MONTANA, NEW
MEXICO, NORTH
DAKOTA
OKLAHOMA, TEXAS,
UTAH, WYOMiNG and
LOUISIANA
The foregoing instrument was acknowledged before me on this
day, by such person, the above designated officer of the
' corporation sPecified following such person's name, on behalf of
said corporation.
On this date before me, the undersigned authority, personally came
and appeared such person, to me personally kno~vn and knoWn by
me to be the person whose genuine signature is affixed to the
foregoing document as the above designated officer of the
corporation specified following such person's name, who signed
said document before me in the presence of the t~vo witnesses,
whose names are thereto subscribed as such, being competent
Houston: l 178354_1 .DOC
-40-
789
witnesses, and who acknowledged, in my presence and in the
presence of said witnesses, that he signed the above and foregoing
document as his own free act and deed on behalf of such
corporation by authority of its board of directors and as the free act
and deed of such corporation and for the uses and purposes therein
set forth and apparent.
IN WITNESS. WHEREOF, I have hereunto set my hand and official seal in the City of
Denver, Denver County, Colorado on the day and~ov~
NO~PUBI~IC, in and for the St'~a~ of Colorado
My commission expires:
James C. Robertson
(printed name)
February 14, 2005
[SEAL]
Houston:l 178354 1 .DOC -41 -
THUS DONE AND PASSED this 16th day of April, 2003, to be effective, however, as of
April 16, 2003, in my presence and in the presence of the undersigned competent witnesses who
hereunto sign their names with Mortgagor and me, Notary, after reading of the whole.
WITNESSES-
Name: B~c.~dy A. Brooks
Nature: -Karen lQ. Polly,/
NANCE PETROLEUM CORPORATION
obert T. Hanley/ ff
Vice President and Treasurer//
//~N~T-"A-RY PU~3LIC
The address and tax identification number of Nance are:
550 North 31st Street, Suite 500
Billings, Montana 59101
(Yellowstone County)
Taxpayer I.D. No. 8 1-0309883
STATE OF COLORADO
COUNTY OF DENVER
BE IT REMEMBERED THAT I, the undersigned authority, a notary public duly
qualified, commissioned, sworn and acting in and for the county and state aforesaid, and being
authorized in such county and state to take acknowledgments, hereby certify that, on this 16th
day of April, 2003, there personally appeared before me: Robert T. Hanley, the Vice President
and Treasurer of Nance Petroleum Corporation, a Montana corporation, known to me to be such
officer, such corporation being a party to the foregoing instrument.
MONTANA, NEW
MEXICO, NORTH
DAKOTA
OKLAHOMA, TEXAS,
UTAH, WYOMING and
LOUISIANA
The foregoing instrument was acknowledged before me on this day,
by such person, the above designated officer of the corporation
specified following such person's name, on behalf of said
corporation.
On this date before me, the undersigned authority, personally came
and appeared such person, to me personally known and known by
me to be the person whose genuine signature is affixed to the
foregoing document as the above designated officer of the-
corporation specified following such person's name, who signed
said document before me in the presence of the two witnesses, .
whose names are thereto subscribed as such, being competent
Houstonil178354 I.DOC
-42-
791
witnesses, and who acknowledged, in my presence and in the
presence of said witnesses, that he signed the above and foregoing
document as his own free act and deed on behalf of such
corporation by authority of its board of directors and as the free act
and deed of such corporation and for the uses and purposes therein
set forth and apparent.
IN WITNESS WHEREOF. I have hereunto set my hand and official seal in the City of
Denver, Denver County, Colorado, on the day and ffar first above written.
N TC~? P~L~LIC, in and for theXState of Colorado
My commission expires'
James C. Robertson
(printed name)
February 14, 2005
[SEAL]
Houston:l 178354_1 .DOC -43-
792
THUS DONE AND PASSED this 16th day of April, 2003, to be effective, however, as of
April 16, 2003, in my presence and in the presence of the undersigned competent witnesses who
hereunto sign their names with Mortgagor and me, Notary, after reading of the whole.
WITNESSES: '
Namei ~ff/~ndy ~. Brooks
Name: Kare~
ST. MARY MINERALS INC.
Richard C. Noms
Vice President - Finance
NOTARY' POBLI~ x~
The address and tax identification number of Minerals are:
1776 Lincoln Street, Suite 700
Denver, Colorado 80203
(Denver County)
Taxpayer I.D. No. 84-12003 18
STATE OF COLORADO
COUNTY OF DENVER
BE IT REMEMBERED THAT I, the undersigned authority, a notary public duly
qualified, commissioned, sworn and acting in and for the county and state aforesaid, and being
authorized iff'such county and state to take acknowledgments, hereby certify that, on this 16th
day of April, 2003, there personally appeared before me: Richard C. Noms, the Vice President -
Finance of St. Mary Minerals Inc., a Colorado corporation, known to me to be such officer, such
corporation being a party to the foregoing instrument.
MONTANA, NEW
MEXICO, NORTH
DAKOTA
OKLAHOMA, TEXAS,
UTAH, WYOMING and
LOUISIANA
The foregoing .instrument was acknowledged before me on this
day, by such person, the above designated officer of the
corporation specified following such person's name, on behalf of
said corporation.
On this date before me, the undersigned authority, personally came
and appeared such person, to me personally known and known by
me to be the person whose genuine signature is affixed to the
foregoing document as the above designated officer of the
corporation specified following such person's name, who signed
said document before me in the presence of the two witnesses,
whose names are thereto subscribed as such, being competent
Houston:1178354 I.DOC
-44-
793
witnesses, and who acknowledged, in my presence and in the
presence of said witnesses, that he signed the above and foregoing
document as his own free act and deed on behalf of such
corporation by authority of its board of directors and as the free act
and deed of such corporation and for the uses and purposes therein
set forth and apparent.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the City of
Denver, Denver County, Colorado, on the day and y/~ar first above written.
NO~A/~Y PUBLIC, 'in and for th~ State of Colorado
My commission expires:
James C. Robertson
(printed name)
Febmar,/14, 2005
Houston:1178354 1.DOC -45-
THUS DONE AND PASSED this 16th day of April, 2003, to be effective, however, as of
April 16, 2003, in my presence and in the presence of the undersigned competent witnesses xvho
hereunto sign their names with Mortgagor and me, Notary, after reading of the whole.
WITNESSES:
Name: E}~ady A. Brooks
Na~e: ~Karen M.'PollJ
ROSWELL, L.L.C.
By:
St. Mary Land & Exploration Company,
as Member
By: .~
NOT{/~~entk Land & Legal
A~-Y'PUBLIC -
The address and tax identification number of Roswell are:
1776 Lincoln Street, Suite 700
Denver, Colorado 80203
(Denver County)
Taxpayer I.D. No. 74-2788509
STATE OF COLORADO {}
COUNTY OF DENVER §
BE IT REMEMBERED THAT I, the undersigned authority, a notary public duly
qualified, commissioned, sworn and acting in and for the county and state aforesaid, and being
authorized in such county and state to take acknowledgments, hereby certify that, on this 16th
day of April, 2003, there personally appeared before me: Milam Randolph Pharo, the Vice
President - Land & Legal of St Mary Land & Exploration Company, a Delaware corporation, in
its Capacity as a member of Roswell, L.L.C., a Texas limited liability company, known to me to
be such officer of such corporation, such corporation acting in its capacity as member and on
behalf of such limited liability company, and such limited liability company being a party to the
foregoing instrument.
MONTANA, NEW
MEXICO, NORTH
DAKOTA
OKLAHOMA, TEXAS,
UTAH,
WYOMING
and
The foregoing instrument was acknowledged before me on this
day, by such person, the above designated officer of St. Mary Land
& Exploration Company acting in its capacity as member of the
limited liability company specified following such person'k name,
on behalf of said corporation acting in its capacity as member of
the limited liability company, and on behalf of said limited liability
company.
Houston: 1178354_1 .DOC
-46-
795
LOUISIANA
On this date before me, the undersigned authority, personally came
and appeared such person, to me personally known and known by
me o be the person whose genuine signature is affixed to the
foregoing document as the above designated officer of the.above
mentioned corporation acting in its capacitY as member of the
limited liability company specified following such person's name,
who signed said document before me in the presence of the two
witnesses, whose names are thereto subscribed as such, being
competent witnesses, and who acknowledged, in my presence and
in the presence of said witnesses, that he signed the above and
foregoing document as his own free act and deed on behalf of such
corporation acting in its capacity as member of such limited
liability company, and on behalf of such limited liability company,
bY authority of its board of directors and by authority of its
members, respectively, and as the free act and deed of such
corporation, acting in its capacity as member of such limited
liability company, and of such limited liability company and for
the uses and purposes therein set forth and apparent.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the City of
D enver,.Denver County, Colorado, on the day and~o~~
NO~'~ PUBLIC, in and for the S~ate of Colorado
My commission expires:
James C. Robertson
(printed name)
February 14, 2005
Houston:1178354 1.DOC -47-
?96
THUS DONE AND PASSED this 16th day of April, 2003, to be effective, however, as of
April 16, 2003, in my presence and in the presence of the undersigned competent witnesses who
hereunto sign their names with Mortgagor and me, Notary, after reading of the whole.
WITNESSES:
Name'. ~f~andy . A~. Br~ok~
Name: Karen M. i~olly~
ST. MARY OPERATING COMPANY
1Qlilam~i~and~olph P~aro
Vice President - Land & Legal
The address and tax identification number of Operating are:
1776 Lincoln Street, Suite 700
Denver, Colorado 80203
(Denver County)
Taxpayer I.D. No. 84-0723492
STATE OF COLORADO
COUNTY OF DENVER
BE IT REMEMBERED THAT I, the undersigned authority, a notary public duly
qualified, commissioned, sworn and acting in and for the county and state aforesaid, and being
authorized in such county and state to take acknowledgments, hereby certify that, on this 16th
day' of April, 2003, there personally appeared before me: Milam Randolph Pharo, the Vice
President - Land & Legal of St. Mary Operating Company, a Colorado corporation, known to me
to be such officer, such corporation being a party to the foregoing instrument.
MONTANA, NEW
MEXICO, NORTH
DAKOTA
OKLAHOMA, TEXAS,
UTAH, WYOMING and
LOUISIANA
The foregoing instrument was acknowledged before me on this
day, by such person, the above designated officer of the
corporation specified following such person's name, on behalf of
said corporation.
On this date before me, the undersigned author/ty, personally came
and appeared such person, to me personally known and kno~vn by
me to be the person whose genuine signature is affixed to the
foregoing document as the above designated office~- of the
corporation specified following such person's name, who signed
said document before me in the presence of the two witnesses,
whose names are thereto subscribed as such, being competent
Houston:1178354 I.DOC
-48-
797
witnesses, and who acknowledged, in my presence and in the
presence of said witnesses, that he signed the above and foregoing
document as his own free act and deed on behalf of such
corporation by authority of its board of directors and as the free act
and deed of such corporation and for the uses and purposes therein
set forth and apparent.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the City of
Denver, Denver County, Colorado, on the day an ear first above written.
N T(~P(RY PUBLIC, in and for the State of Colorado
My commission expires:
James C. Robertson
(printed name)
February 14, 2005
[SEAL],
Houston:1178354 1.DOC -49-
798
THUS DONE AND PASSED this 16th day of April, 2003, to be effective, however, as of
April 16, 2003, in my presence and in the presence of the undersigned competent witnesses who
hereunto sign their names with Mortgagor and me, Notary, after reading of the whole.
WITNESSES:
Name: ]~c,~dy A.~Brc}ok~'
Name: KarenM. 1:
Vice President and Treasurer
NOTARY PUBLIC ~
The address and tax identification number of NPC are:
550 North 31st Street, Suite 500
Billings, Montana 59101
(Yellowstone County)
Taxpayer I.D. No. 11-3668557
STATE OF COLORADO
COUNTY OF DENVER
BE IT REMEMBERED THAT I, the undersigned author/ty, a notary public duly
qualified, commissioned, sworn and acting in and for the county and state aforesaid, and being
authorized in such county and state to take acknowledgments, hereby certify that, on this 16th
day of Apr/l, 2003, there personally appeared before me: Robert T. Hanley, the Vice President
and Treasurer of NPC Inc., a Colorado corporation, known to me to be such officer, such
corporation being a party to the foregoing instrument.
MONTANA, NEW
MEXICO, NORTH
DAKOTA
OKLAHOMA, TEXAS,
UTAH, WYOMING and
LOUISIANA
The foregoing instrument was acknowledged before me on this
day, by such person, the above designated officer of the
corporation specified following such person's name, on behalf of
said corporation.
On this date before me, the undersigned author/ty, personally came
and appeared such person, to me personally known and known by
me to be the person whose genuine signature is affixed to the
foregoing document as the above designated officer of the
corporation specified following such person's name, who signed
said document before me in the presence of the two witnesses,
whose names are thereto subscribed as such, being competent
Houston:1178354 1.DOC
-50-
799
witnesses, and who acknowledged, in my presence and in the
presence of said witnesses, that he signed the above and foregoing
document as his own free act and deed on behalf of such
corporation by authority of its board of directors and as the free act
and deed of such corporation and for the uses and purposes therein
set forth and apparent.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the City of
Denver, Denver County, Colorado, on the day and y~ar first above written.
NO Y PUBLI
'Y PuB C, 'in and for the State of Colorado
My commission expires:
James C. Robertson
(printed name)
February 14, 2005
Houston:1178354 1.DOC -5 1-
800
BIG WEST OIL & GAS INC.
LINCOLN COUNTY, WY
LEASE
LEASE LSE EXP GROSS NET RECORDED
NO. LEASENAME DArE DArE LANDDESCRIPT/ON ACRE~ ACRES BOOK PAGE ENTRY
WY6260~01_~__ USA WYW 135832 4/1/~95_~_ 3131/0~5 T24N RI 12W, 6TH PM 24-~ 24----~
SEC 26: S2NW, SW .....
WY628001 USA WYW 0312801 12/1/64 11/30/74 T24N, R114W, 6TH PM 80 80
,SEC. 14: N2NE
WY628001 USA WYW 0312801 12/1/64 11/30/74 T24N, R114W, 6TH PM 120 120
SEC. 15: N2NE, NENW
WY628001 USA WYW 0312801 12/1/64 11/30/74 T24N, RI 14W, 6TH PM 80 80
SEC. 14: N2NW
WY628001 USA WYW 0312801 12/i/64 11/30/74 T24N, R114W, 6TH PM 80 80:
SEC. 14: N2NW,
BELOW 5643'
WY628002 USA WYW 0243909 10/i/63 9/30/73 T24N R114W, 6TH PM *RT* 41.39 41.39
SEC 11: TRACT 44D(41.39) [AKA NESE]
.WY628002 USA WYW 0243909 10/1/63 9/30/73 T24N RI 14W, 6TH PM *OPR* I 41.43 41.43
SEC 11: TRACT 44C(41.43) [AKA NWSE]
BELOW THE SE OF 5,643'
WY628003 USA WYW 0243909 A 10/I/63 9/30/73 T24N RI 14W, 6TH PM *RT* 40 40
SEC 2: LOT 15(40.00)
WY628003 USA WYW 0243909 A 10/1/63 9/30/73 T24N RI 14W, 6TH PM *OPR* 40 40
SEC 2: LOT 15(40.00) [AKA NESW]
BELOW 5,643' [
'WY628003 USA WYW 0243909 A 10/1/63 9/30/73 T24N R114W, 6TH PM *RT* 157.94 157.94
SEC 2: LOTS 7(39 19), 8(39.60), 9(39.15), 10(40.00)
WY628004 USA WYW 0243909 D 10/1/63 9/30/73 'T24N Rll4W, 6TH PM *RT* I 136.16 136.16
SEC 3: SWSW, LOTS 16(38.32), 17(20.50),
20(37.34) [AKA N2SW, SESW
WY628004 USAWYW 0243909 D 10/1/63 9/30/73 T24N RII4W, 6TH PM *RT* 160 160
SEC 9: SE
WY628004 USA WYW 0243909 D 10/1/63 9/30/73 T24N RI 14W, 6TH PM *RT* 560 560~
SEC I0: W2NE, W2, SE
NY628004 USA WY9/0243909 D 10/1/63 9/30/73 T24N RI 14W, 6TH PM *RT* 67.11 67.1]
SEC I 1: SESE, LOT 5(27.11) [AKA NESE]
WY628004 USA WYW 0243909 D 10/1/63 9/30/73 T24N RiI4W, 6TH PM *OPR* I 215.84 215.84
SEC 11: LOTS 3 AND4, SWSE, W2SW, SES
W, SWSE, LOTS 3(28.35) AND 4(27.49)
[AKA NESW, NWSE]
BELOW 5,643'
WY628005 USA WYW 42389 7/1/74 6/30/79 T24N R114W, 6TH PM *RT* 71.69 71.69
SEC 10: SENE, LOT 1(31.69)
WY628005 :USA WYW 42389 7/1/74 6/30/79 T24N RI 14W, 6TH PM *RT* 37.1 37.1
SEC 3: LOT 19(37.10)
WY628005 USA WYW 42389 7/1/74 6/30/79 T24N RI 14W, 6TH PM *OPR* 156.26 156.2t
SEC 11: LOTS 1(31.94) AND 2(41.42), T
RACTS 44-A(41.44) AND 44-B(41.46)
BELOW 5,64Y [
WY628006 ARNOLD A LARSON ET UX 9/18/53 9/17/63 T24N RI 14W, 6TH PM 195.68 195.68
SEC 3: LOTS 14(17.84) AND 18(17.84)
AKA W2S2SWNE, W2NESE], A PORTION
OF TRACT 48 [AKA E2SE], TRACT 49 - TH
E MOST EASTERLY 80 ACRES OF THIS TRACT
[AKA W2SE] I
WY628006 ARNOLD A LARSON ET UX 9/18/53 9/17/63 T24N RI14W, 6TH PMI 40 40
SEC 10: TRACT 45 ~ THE MOST WESTERLY
1/3 OF THIS TRACT [AKA NENE]
WY628007.01 THOMAS F STROOCK ET UX 8/12/74 8/11/84 T24N R114W, 6TH PM 40 5
SEC 2: TRACT 46-A [AKA SWSE]
WY628007.01 THOMAS F STROOCK ET UX 8/12/74 8/11/84 T24N R114W, 6TH PM 120 15
SEC 11: TRACT 43 - PORTION OFTHE W2
OF THIS TRACT [AKA W2NE], TRACT 45
~ NENW]
BELOW THE SE OF 5,643'
WY628007.01 'r~ar~'~ieFSTROOCKETUX 8/12/74 8/11/84 T2~"'?"A'V, 6THPM 89.11 11.1388
SEI ' :' tCT 43 OF THE E2 OF THIS TR
801
! ACT [AKA E2NE]
WY628007.02 ARNOLD A LARSON ET UX 9/28/73 9/27/83 T24N R114W, 6TH PM 40 10:
SEC 2: TRACT 46-A [AKA SWSE]
WY628007.02 ARNOLD A LARSON ET UX 9/28/73 9/27/83 T24N R114W, 6TH PM 120 30
SEC 11: TRACT 43 - PORTION OF THE W2
OF THIS TRACT [AKA W2NE], TRACT 45
[A~ NENW]
BELOW THE SE OF 5,643'
WY628007.02 ARNOLD A LARSON ET UX 9/28/73 9/27/83 T24N R114W, 6TH PM 89.11 22.27?5
SEC 1 l: TRACT 43 OF THE E2 OF THIS TR
ACT tAKA E2NE]
wv628007.03 CALVIN E BARNES ET OX 9/28/?3 9/27/83 T24NR114W, 6TnPM 40 10
SEC 2: TRacT 46-A [AKA SWSE]
WY628007.03 CALVIN E BARNES ET UX 9/28/73 9/2?/83 T24N R114W, 6TH PM 120 30
SEC 11: TRACT 43 - PORTION OF THE W2
OF THIS TRACT [AKA W2NE], TRACT 45
AKA NENW]
BELOW THE SE OF 5,643'
WY628007.03 CALVIN E BARNES ET UX 9/28/73 9/27/83 T24N RI 14W, 6TH PM 89.1 22.2775
SEC 11: TRACT 43 OF THE E2 OF THIS TR
ACT [AXA E2NE]
WY628007.04 RAINBOW RESOURCES 11/19/73 11/18/83 T24N R114W, 6TH PM 40 10
SEC 2; TRACT 46-A [AKA SWSE]
WY628007.04 RAINBOW RESOURCES 11/19/73 11/18/83 T'24N R114W, 6TH PM 120 30
SEC 11: TRACT 43 - PORTION OF THE W2
OF mis TRACT [AVA W2NE], TRACT 45
[AKA NENW]
BELOW THE SE OF 5,643'
WY628007.04 RAINBOW RESOURCES 11/19/73. 11/18/83 T24N R114W, 6TH PM 89.11 22.2?75
SEC 11: TRACT 43 OF THE E2 OF THIS TR
ACT [AVA E2NE]
WY628007.05 JOHN P ELLBOGEN ET UX 8/12/74 8/11/84 T24N R114W, 6TH PM 40 5
SEC 2: TRACT 46-A [AKA SWSE]
WY628007.05 JOHN P ELLBOGEN ET UX 8/12/74 8/11/84 T24N R114W, 6TH PM 120 15
SEC 11: TRACT 43 - PORTION OF THE W2
OF THIS TRACT [A/CA W2NE], TRACT 4S
£AICA NENW]
BELOW THE SE OF S,643'
WY628007.05 JOHN P ELLBOGEN ET UX 8/12/74 8/11/84 T24N RI 14W, 6TH PM 89.11 11.1388
SEC 11: TRACT 43 OF THE E2 OF THIS TR
ACT [ArA E2NE] I