Mortgage, Deed of Trust, Security Agreement., Financing Statement



 Exhibit 10.27.4 
 MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT, 
 FINANCING STATEMENT AND ASSIGNMENT OF
PRODUCTION 
 (THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS) 
 FROM 
 PRIME OFFSHORE L.L.C.

 Taxpayer Identification Number: 76-0688905 
 (Mortgagor and Debtor) 
 TO 
 Matthias Eckenstein, Trustee 
 for the benefit of 
 ARTIC MANAGEMENT CORPORATION 
 (Mortgagee and Secured Party) 
 Effective March 31, 2008 
 For purposes of filing this Deed of Trust as a financing statement, the mailing address of Mortgagor is Attn: Chief Executive Officer, 1 Landmark Square, 11th
 Floor, Stamford, Connecticut 06901; the mailing address of Mortgagee is Attn: Matthias Eckenstein, Solothurnerstrasse 94, CH-4008 Basel, Switzerland. 
 v v v v v v v v v v v
 v v v v v v 
 This instrument, prepared by David G. Dunlap, Jackson Walker L.L.P., 1401 McKinney, Suite 1900, Houston, Texas 77010, 713-752-4200, contains after-acquired property
provisions and covers future advances and proceeds to the fullest extent allowed by applicable law. 
 ATTENTION OF RECORDING OFFICER: This instrument
is a mortgage of both real and personal property and is, among other things, a Security Agreement and Financing Statement under the Uniform Commercial Code. This instrument creates a lien on rights in or relating to lands of Mortgagor which are
described in Exhibit A hereto or in documents described in Exhibit A. 
 RECORDED DOCUMENT SHOULD BE RETURNED TO: 
 JACKSON WALKER L.L.P. 
 1401 McKinney, Suite
1900 
 Houston, Texas 77010 
 Attn.: Donna Gatliff 







 MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT, 
 FINANCING STATEMENT AND ASSIGNMENT OF PRODUCTION 
 (THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS) 
 This Mortgage, Deed of Trust,
Security Agreement, Financing Statement, and Assignment of Production (this “Deed of Trust”) is executed pursuant to and as security for that certain Subordinated Promissory Note dated March 31, 2008 in the face principal
amount of up to $50,000,000 executed by PRIME OFFSHORE L.L.C., a Delaware limited liability company (“Mortgagor”) and payable to ARTIC MANAGEMENT CORPORATION, a corporation incorporated under the laws of Panama
(“Mortgagee”) (the “Initial Note”) evidencing an initial loan and, possibly, one or more additional loans by Mortgagee to Mortgagor and, possibly, one or more additional Subordinated Promissory Notes hereafter
executed by Mortgagor and payable to Mortgagee (the “Additional Notes”, whether one or more, and the Initial Note and the Additional Notes, collectively, the “Notes”). Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Notes. 
 Mortgagor, acting
herein by and through its proper officer who has heretofore been duly authorized, the mailing address for which, for purposes hereof, is Attn: Chief Executive Officer, 1 Landmark Square, 11th
 Floor, Stamford, Connecticut 06901, hereby agrees as follows: 
 ARTICLE 1 
 GRANT 
 1.1 Lien. Mortgagor,
for valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the debt and trust hereinafter mentioned, has granted, bargained, sold, conveyed, transferred and assigned, and by these presents does grant, bargain,
sell, convey, transfer and assign to Matthias Eckenstein, Trustee, whose address is Solothurnerstrasse 94, CH-4008 Basel, Switzerland, and his successors and substitutes in trust, as hereinafter provided (the “Trustee”), for the
benefit of Mortgagee, whose mailing address is Attn: Matthias Eckenstein, Solothurnerstrasse 94, CH-4008 Basel, Switzerland, the following described Property: 
 (a) all right, title, and interest, whether now owned and existing or hereafter acquired or arising, of Mortgagor in and to the leases,
rights of way, easements, or other documents described in Exhibit A attached hereto and incorporated herein for all purposes or described or referred to in the documents described in Exhibit A, without regard to any surface acreage
and/or depth limitations set forth in Exhibit A, and all renewals and extensions thereof and all new leases, rights of way, easements, or other documents (i) in which an interest is acquired by Mortgagor after the termination or
expiration of any lease, right of way, easement, or other document described or referred to in Exhibit A, and (ii) that covers all or any part of the Property described in and covered by such terminated or expired lease, right of way,
easement, or other document, to the 








 
extent, and only to the extent, such new leases, rights of way, easements, or other documents may cover such Property (all of the foregoing in this
subsection (a) being the “Leases”); 
 (b) all right, title, and interest, whether now owned and
existing or hereafter acquired or arising, of Mortgagor in and to the lands subject to the Leases or otherwise described or referred to in Exhibit A, without regard to any surface acreage and/or depth limitations set forth in Exhibit A
(the “Lands”), including, without limitation, the oil, gas, mineral, and leasehold estates in and to the Lands; 
 (c) all right, title, and interest, whether now owned and existing or hereafter acquired or arising, of Mortgagor in and to any of the oil, gas, and minerals in, on, or under the Lands, including, without limitation, all contractual rights,
fee interests, leasehold interests, overriding royalty interests, non-participating royalty interests, mineral interests, production payments, net profits interests, or any other interest measured by or payable out of production of oil, gas, or
other minerals from the Leases and/or Lands; 
 (d) all of the foregoing interests of Mortgagor as such interests may be
enlarged by the discharge of any payments out of production or by the removal of any charges or encumbrances; 
 (e) all
right, title, and interest, whether now owned and existing or hereafter acquired or arising, of Mortgagor in, to, and under or derived from any present or future operating, farmout, bidding, pooling, unitization, and communitization agreements,
assignments, and subleases, whether or not described in Exhibit A, to the extent, and only to the extent, that such agreements, assignments, and subleases cover or include any right, title, and interest, whether now owned and existing or
hereafter acquired or arising, of Mortgagor in and to all or any portion of the Leases and/or the Lands, and all units created by any such pooling, unitization, and communitization agreements and all units formed under orders, regulations, rules, or
other official acts of any Governmental Authority having jurisdiction, to the extent and only to the extent that such units cover or include all or any portion of the Leases and/or the Lands; 
 (f) all right, title, and interest, whether now owned and existing or hereafter acquired or arising, of Mortgagor in, to, and under or
derived from all presently existing and future advance payment agreements, oil, casinghead gas, and gas sales, exchange, and processing contracts and agreements, including, without limitation, those contracts and agreements that are described or
referred to in Exhibit A, to the extent, and only to the extent, those contracts and agreements cover or include all or any portion of the Leases and/or the Lands; and 
 (g) all right, title, and interest, whether now owned and existing or hereafter acquired or arising, of Mortgagor in, to, and under or
derived from all existing and future permits, licenses, easements, and similar rights and privileges that relate to or are appurtenant to any of the Leases and/or the Lands. 
  

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 1.2 Security Interest. Mortgagor, for the same consideration, hereby grants to Mortgagee a
continuing security interest in all improvements and all personal Property of any kind or character defined in and subject to the provisions of the Uniform Commercial Code (“UCC”), including, but not limited to, substitutions and
replacements for, accessions to, and the proceeds and products from any and all of such improvements and personal Property, as well as any and all “as-extracted collateral” as such term is defined in the UCC, whether now owned and existing
or hereafter acquired or arising, and situated on any of the Lands, including, but not limited to, pipe, casing, tubing, rods, storage tanks, boilers, loading racks, pumps, foundations, warehouses, and all other personal Property and equipment of
every kind and character upon, incident, appurtenant, or belonging to and used in connection with the interest of Mortgagor, whether now owned and existing or hereafter acquired or arising, in the Lands and/or the Leases, including all oil, gas, and
other minerals produced or to be produced to the account of Mortgagor from the Lands and all accounts receivable, general intangibles, and contract rights of Mortgagor in connection with the Lands and/or the Leases and all proceeds, products,
substitutions, and exchanges thereof (the Lands, the Leases, and the real and personal Property interests described in this Section being the “Mortgaged Property”). 
 1.3 Assignment of Security. Mortgagor, for the same consideration, hereby grants to Mortgagee any and all rights of Mortgagor to Liens securing
payment of proceeds from the sale of production from the Mortgaged Property. 
 1.4 After-Acquired Property. Mortgagor, for the same
consideration, hereby grants, bargains, sells, conveys, transfers, and assigns to the Trustee or grants to Mortgagee a continuing security interest in, as the case may be, all additional right, title, or interest which Mortgagor may hereafter
acquire or become entitled to in the interests, Properties, Lands, Leases, and premises aforesaid, and in the oil, gas, or other minerals in and under or produced from or attributable to any of the Lands or Leases, which additional right, title, and
interest, when acquired, shall constitute “Mortgaged Property,” the same as if expressly described and conveyed herein. 
 1.5
Habendum. TO HAVE AND TO HOLD all and singular the Mortgaged Property and all other Property which, by the terms hereof, has or may hereafter become subject to the Liens of this Deed of Trust, together with all rights, hereditaments, and
appurtenances in anywise belonging thereto, to the Trustee or Mortgagee, as the case may be, or the successors or assigns of either of them forever. 
 ARTICLE 2 
 INDEBTEDNESS SECURED 
 This conveyance is made, IN TRUST, HOWEVER, to secure and enforce the payment of the following indebtedness, obligations, and liabilities: 
 2.1 Specific Obligations. The Notes, which bear interest and are payable as provided therein and each of which matures on the Maturity Date (as defined in the Initial Note or the relevant Additional Note, as
the case may be). 
  

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 2.2 Other and Further Indebtedness. This Deed of Trust is intended to secure a revolving credit
lines. If intermediate paydowns by Mortgagor reduce the outstanding indebtedness to zero, it is intended that the Liens created under this Deed of Trust shall remain in full force and effect to secure subsequent advances by Mortgagee. In addition,
it is contemplated that Mortgagor may from time to time borrow additional sums of money from or otherwise be or become obligated to Mortgagee. This Deed of Trust is given to secure any and all indebtedness of Mortgagor, present or future, either
direct or indirect, primary or secondary, fixed or contingent, which Mortgagor may now or hereafter owe, or as to which Mortgagor may in any manner become obligated to Mortgagee for payment, including, without limitation, indebtedness arising by way
of guaranty as to obligations of another to Mortgagee and indebtedness originally owed to a party other than Mortgagee but which becomes owing to Mortgagee as the result of Mortgagee having acquired the right to payment thereof. This Deed of Trust
shall likewise secure not only the above described indebtedness, but any and all renewals for any period, extensions, and rearrangements of all or any portion thereof; and the Liens under this Deed of Trust shall be cumulative of all other Liens and
security of any and every other kind or character whatsoever securing the above-described indebtedness. Notwithstanding the foregoing, it is not the intention of the parties hereto to extend the Liens of this Deed of Trust so as to violate, or give
rise to an allegation of violation of, any provision of any statute, regulation, rule, ordinance or order of any applicable jurisdiction, or any agency or subdivision of any of such jurisdictions. In this connection, this Deed of Trust shall not,
solely as to the relevant indebtedness, serve as security for any indebtedness when for it to do so would violate any provision of any statute, regulation, rule, ordinance or order of any applicable jurisdiction, or any agency or subdivision of any
of such jurisdictions. 
 2.3 Indebtedness. The word “Indebtedness” wherever used in this Deed of Trust shall refer
to all present and future debts, obligations, and liabilities described or referred to in this Article 2, subject, however, to the limitations provided hereinabove in this Article 2. 
 ARTICLE 3 
 WARRANTIES 
 3.1 Warranty of Title. Mortgagor hereby binds itself, its legal representatives, successors, and assigns, to warrant and forever defend all and
singular the Mortgaged Property to the Trustee and the successors and assigns of the Trustee forever against every Person whomsoever lawfully claiming or to claim the same or any part thereof. Notwithstanding that this Deed of Trust covers all of
the right, title, and interest, whether now owned and existing or hereafter acquired or arising, of Mortgagor in and to the Mortgaged Property, Mortgagor, for itself, its legal representatives, successors, and assigns, further covenants, represents,
and warrants that Mortgagor has good and indefeasible title to the Mortgaged Property and that the interests of Mortgagor in and to the Leases and/or Lands described in Exhibit A are not greater than the working interest nor less than the net
revenue interest, overriding royalty interest, net profit interest, production payment interest, royalty interest, or other interest payable out of or 

  

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measured by production set forth in connection with each oil and gas well described in Exhibit A. In the event Mortgagor owns any other or greater
interest, such additional interest is nonetheless included in, covered by, and subject to the liens and security interests created by this Deed of Trust. 
 3.2 Additional Warranties. In consideration of the Indebtedness, Mortgagor, for itself, its legal representatives, successors, and assigns, covenants, represents, and warrants that: 
 (a) Leases in Effect. All of the Leases specifically described or referred to in Exhibit A are in full force and effect. All
covenants, express or implied, in respect of the Leases specifically described or referred to in Exhibit A, or of any assignment of any of such Leases, which may affect the validity of any of such Leases, have been performed insofar as such
Leases pertain to the Lands. 
 (b) Interests Free of Liens. The interests of Mortgagor in the Mortgaged Property are
free and clear of all Liens except for Permitted Liens. All gross production taxes and all taxes as to which non-payment could result in a Lien against any of the Mortgaged Property have been paid. 
 ARTICLE 4 
 COVENANTS OF MORTGAGOR

 In consideration of the Indebtedness, Mortgagor, for itself, its legal representatives, successors, and assigns, covenants and agrees
as follows: 
 4.1 Maintenance of Leases. Mortgagor will keep and continue all Leases, estates, and interests herein described and all
contracts and agreements relating thereto in full force and effect in accordance with the terms thereof and will not permit the same to lapse or otherwise become impaired for failure to comply with the obligations thereof, whether express or
implied. In this connection, Mortgagor shall not release any of the Leases without the prior written consent of Mortgagee. 
 4.2
Maintenance of Property. Mortgagor will keep and maintain all improvements, personal Property, and equipment now or hereafter situated on the Lands and constituting a portion of the Mortgaged Property and used or obtained in connection
therewith in good repair and condition, ordinary wear and tear excepted, and will not tear down or remove the same or permit the same to be torn down or removed without the prior consent of Mortgagee, except in the usual course of operations as may
be required for replacement when otherwise in compliance with the provisions of this Deed of Trust. 
 4.3 Pooling or Unitization.
Mortgagor will not, without the prior written consent of Mortgagee, pool or unitize all or any part of the Mortgaged Property where the pooling or unitization would result in the diminution of the net revenue interest of Mortgagor in production from
the pooled or unitized lands attributable to the Mortgaged Property constituting a portion of such pooled or unitized lands. Immediately after the formation of any pool or unit in accordance herewith, Mortgagor will furnish to Mortgagee a conformed
copy of the pooling 

  

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agreement, declaration of pooling, or other instrument creating the pool or unit. The interest of Mortgagor included in any pool or unit attributable to the
Mortgaged Property or any part thereof shall become a part of the Mortgaged Property and shall be subject to the Liens hereof in the same manner and with the same effect as though the pool or unit and the interest of Mortgagor therein were
specifically described in Exhibit A. In the event any proceedings of any Governmental Authority which could result in pooling or unitizing all or any part of the Mortgaged Property are commenced, Mortgagor shall give immediate written notice
thereof to Mortgagee. Any pooling or unitization of all or any part of the Mortgaged Property in violation of this Section shall be of no force or effect against the Trustee or Mortgagee. 
 4.4 Operation of Mortgaged Property. Mortgagor will operate or, to the extent that the right of operation is vested in others, will exercise its
best efforts to require the operator to operate the Mortgaged Property and all wells now or hereafter located thereon continuously and in a prudent and workmanlike manner in accordance with the best usage of the field and in accordance with all
applicable Requirements of Law. Mortgagor will comply with all terms and conditions of the Leases and each assignment or contract obligating Mortgagor in any way with respect to the Mortgaged Property; but nothing herein shall be construed to
empower Mortgagor to bind the Trustee or Mortgagee to any contract or obligation or render the Trustee or Mortgagee in any way responsible or liable for bills or obligations incurred by Mortgagor. 
 4.5 Compliance with Operating Agreements. Mortgagor agrees to promptly pay all bills for labor and materials incurred in the operation of the
Mortgaged Property and will promptly pay its share of all costs and expenses incurred under any joint operating agreement affecting the Mortgaged Property or any portion thereof; will furnish Mortgagee, as and when requested, full information as to
the status of any joint account maintained with others under any such operating agreement; will not take any action to incur any liability or Lien thereunder; and will not enter into any new operating agreement or any amendment of any existing
operating agreement affecting the Mortgaged Property without the prior written consent of Mortgagee. Furthermore, Mortgagor will not consent or agree to participate in any proposed operation under any presently existing operating agreement affecting
the Mortgaged Property unless Mortgagor obtains the prior written consent of Mortgagee and, if requested by Mortgagee, deposits with the operator or Mortgagee, where Mortgagor is a non-operator, or with Mortgagee, where Mortgagor is an operator,
Mortgagor’s share of the estimated cost of the proposed operation prior to electing to participate in the operation. To the extent that Mortgagor is unable to consent to any proposed operation with respect to any of the Mortgaged Property,
prior to electing not to participate in the proposed operation, Mortgagor will use its best efforts, to the extent practicable and to the extent allowed to do so under the relevant operating agreement or other applicable contract, to farmout to
others acceptable to Mortgagee, on the best terms obtainable and acceptable to Mortgagee, the interest or relevant portion of the interest of Mortgagor in the proposed operation. 
 4.6 Access to Mortgaged Property. Mortgagor will permit Mortgagee and his accredited agents, representatives, and attorneys, at the expense of
Mortgagor, at all times to go upon, examine, inspect, conduct environmental audits and other testing of, and remain on, the Mortgaged Property, and to go upon the derrick floor of any well at any time drilled or being drilled thereon, and will
furnish Mortgagee, upon request, all pertinent information regarding the development and operation of the Mortgaged Property. 
  

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 4.7 Waivers. Mortgagor hereby expressly waives, to the full extent permitted by applicable law,
any and all rights or privileges of marshalling of assets, sale in inverse order of alienation, notices, appraisements, redemption, and any prerequisite in the event of foreclosure of the Liens created herein. Mortgagee at all times shall have the
right to release any part of the Mortgaged Property now or hereafter subject to the Liens of this Deed of Trust, any part of the proceeds of production or other income herein or hereafter assigned or pledged, or any other security it now has or may
hereafter have securing the Indebtedness, without releasing any other part of the Mortgaged Property, proceeds, or income, and without affecting the Liens hereof as to the part or parts of the Mortgaged Property, proceeds, or income not so released
or the right to receive future proceeds and income. 
 4.8 Compliance with Laws. Mortgagor will comply with all Requirements of Law
applicable to the Mortgaged Property and the operations conducted thereon, including, without limitation, the Natural Gas Policy Act of 1978, as amended, and Environmental Laws; and cause all employees, crew members, agents, contractors,
sub-contractors, and future lessees (pursuant to appropriate lease provisions) of Mortgagor, while such Persons are acting within the scope of their relationship with Mortgagor, to comply with all such Requirements of Law as may be necessary or
appropriate to enable Mortgagor to so comply. 
 4.9 Hazardous Substances Indemnification. MORTGAGOR
HEREBY INDEMNIFIES AND HOLDS MORTGAGEE AND ITS AGENTS, ATTORNEYS-IN-FACT,
AND AFFILIATES AND THE TRUSTEE HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES, CHARGES, ADMINISTRATIVE AND JUDICIAL
PROCEEDINGS AND ORDERS, JUDGMENTS, REMEDIAL ACTIONS, REQUIREMENTS AND ENFORCEMENT ACTIONS
OF ANY KIND, AND ALL COSTS AND EXPENSES INCURRED IN CONNECTION
THEREWITH (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES), ARISING DIRECTLY
OR INDIRECTLY, IN WHOLE OR IN PART, FROM (A) THE PRESENCE OF
ANY HAZARDOUS SUBSTANCES ON, UNDER, OR FROM ANY MORTGAGED PROPERTY, WHETHER
PRIOR TO OR DURING THE TERM HEREOF, (B) ANY ACTIVITY CARRIED ON
OR UNDERTAKEN ON OR OFF ANY MORTGAGED PROPERTY, WHETHER PRIOR TO OR
DURING THE TERM HEREOF, AND WHETHER BY MORTGAGOR OR ANY PREDECESSOR
IN TITLE, EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF MORTGAGOR OR ANY
OTHER PERSON AT ANY TIME OCCUPYING OR PRESENT ON ANY MORTGAGED
PROPERTY, IN CONNECTION WITH THE HANDLING, TREATMENT, REMOVAL, STORAGE, DECONTAMINATION,
CLEANUP, TRANSPORTATION, OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES AT ANY TIME
LOCATED OR PRESENT ON OR UNDER SUCH PROPERTY, (C) ANY RESIDUAL
CONTAMINATION ON OR UNDER ANY MORTGAGED PROPERTY, (D) ANY CONTAMINATION OF
ANY MORTGAGED PROPERTY OR NATURAL RESOURCES ARISING IN CONNECTION WITH THE
GENERATION, USE, HANDLING, STORAGE, TRANSPORTATION, OR DISPOSAL OF ANY HAZARDOUS
SUBSTANCE BY MORTGAGOR OR ANY EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF
MORTGAGOR WHILE SUCH PERSONS ARE ACTING WITHIN THE SCOPE OF THEIR
RELATIONSHIP WITH MORTGAGOR, IRRESPECTIVE OF WHETHER ANY OF SUCH ACTIVITIES WERE
OR WILL BE UNDERTAKEN IN ACCORDANCE WITH APPLICABLE REQUIREMENTS OF LAW,
OR (E) THE PERFORMANCE AND ENFORCEMENT OF THIS DEED OF TRUST OR
ANY OTHER ACT OR OMISSION IN CONNECTION WITH OR RELATED TO THIS
DEED OF TRUST OR THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING, WITHOUT
LIMITATION, ANY OF THE FOREGOING IN THIS SECTION ARISING FROM NEGLIGENCE,
WHETHER SOLE OR CONCURRENT, ON THE PART OF MORTGAGEE OR ANY OF
ITS AGENTS OR ATTORNEYS-IN-FACT OR THE TRUSTEE; WITH THE FOREGOING
INDEMNITY SURVIVING SATISFACTION OF THE INDEBTEDNESS AND THE RELEASE OF THE
LIENS CREATED HEREBY. 
  

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 4.10 Site Assessments. Mortgagee at any time and from time to time, either prior to or after the
occurrence of an Event of Default, may contract, at the expense of Mortgagor, for the services of Persons (the “Site Reviewers”) to perform environmental site assessments and other tests (“Site Assessments”) on all
or any portion of the Mortgaged Property for the purpose of determining whether any environmental condition exists on any Mortgaged Property which could reasonably be expected to result in any liability, cost, or expense to Mortgagee or any owner,
occupier, or operator of such Mortgaged Property. The Site Assessments may be performed at any time or times, upon reasonable notice, and under reasonable conditions established by Mortgagor which do not impede the performance of the Site
Assessments. The Site Reviewers are hereby authorized to enter upon all or any portion of the Mortgaged Property for such purposes. The Site Reviewers are further authorized to perform both above and below the ground testing for environmental damage
or the presence of Hazardous Substances on the Mortgaged Property and such other tests on the Mortgaged Property as may be necessary to conduct the Site Assessments in the reasonable opinion of the Site Reviewers. Mortgagor will supply to the Site
Reviewers such historical and operational information regarding the Mortgaged Property as may be reasonably requested by the Site Reviewers to facilitate the Site Assessments and will make available for meetings with the Site Reviewers appropriate
personnel having knowledge of such matters. On request, Mortgagee shall make the results of such Site Assessments available to Mortgagor, which, prior to an Event of Default, may at its election participate under reasonable procedures in the
direction of such Site Assessments and the description of tasks of the Site Reviewers. The cost of performing all Site Assessments shall be paid by Mortgagor upon demand of Mortgagee and any such obligations shall be Indebtedness secured by this
Deed of Trust. 
 4.11 Uneconomic Wells. Should proceeds from the sale of production from any oil and/or gas well constituting part of
the Mortgaged Property (net of production, severance and windfall profit taxes and royalties, overriding royalties and other payments out of or measured by production) not exceed the expense of operation of such well (including, but not limited to,
operator’s overhead, payments to contractors and suppliers, and annual taxes assessed on the basis of the value of the Property prorated on a monthly basis, but expressly excluding any portion of the cost of drilling or completing the relevant
well or the cost of non-routine workover or remedial operations) for a period in excess of three consecutive calendar months, then, upon receipt by Mortgagor of written notification from Mortgagee, Mortgagor will (a) take all necessary steps to
abandon the relevant well, or (b) provide from sources other than proceeds from the sale of production attributable to the Mortgaged Property (i.e., through borrowings or contractual commitments obtained from third parties not in violation of
any provision of this Deed of Trust or any other Loan Document) the funds required to pay the share of Mortgagor of the expenses associated with the continuing operation of such well. 
 4.12 Performance of Gas Contracts. Mortgagor will perform and observe in all material respects all of its obligations under each contract relating
to the sale of gas produced from or attributable to the Mortgaged Property and will not, except in good faith and as the result of arm’s length negotiations and with prior written notice to Mortgagee, change, modify, amend or waive any of the
terms or provisions of any such contract or take any other action which would release any other party from its obligations or liabilities under any such contract. 
  

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 4.13 Covenants Running with the Land. All covenants and agreements herein contained shall
constitute covenants running with the Land. 
 ARTICLE 5 
 DEFEASANCE, FORECLOSURE 
 AND OTHER REMEDIES 
 5.1 Defeasance. Should the Indebtedness be paid, then the conveyance of the Mortgaged Property shall become of no further force and effect, and,
at the request and expense of Mortgagor, the Lien granted hereunder shall be released, without recourse or warranty; otherwise, it shall remain in full force and effect. 
 5.2 Events of Default. The occurrence of any Event of Default under any of the Notes shall constitute an Event of Default under this Deed of Trust. 
 5.3 Acceleration and Exercise of Power of Sale. 
 (a) Upon the occurrence of an Event of Default specified in the Intercreditor Agreement, the aggregate principal amount of all Indebtedness then outstanding and all interest accrued thereon shall automatically become
immediately due and payable, without presentment, demand, protest, notice of protest, default or dishonor, notice of intent to accelerate maturity, notice of acceleration of maturity, or other notice of any kind, all of which are hereby expressly
waived by Mortgagor to the full extent permitted by applicable law. Upon the occurrence of any other Event of Default, Mortgagee may declare the aggregate principal amount of all Indebtedness then outstanding and all interest accrued thereon
immediately due and payable, whereupon the same shall become immediately due and payable without presentment, demand, protest, notice of protest, default or dishonor, notice of intent to accelerate maturity, notice of acceleration of maturity, or
other notice of any kind, all of which are hereby expressly waived by Mortgagor to the full extent permitted by applicable law. 
 (b) Upon the occurrence of any Event of Default arising from a voluntary or involuntary Insolvency Proceeding in which Mortgagor is a debtor or at any time thereafter while the Indebtedness or any part thereof remains unpaid, it shall be
the duty of the Trustee, on request of Mortgagee (which request is hereby presumed), to enforce this Trust and, after advertising the time and place of the sale for at least 21 days prior to the day of sale, by posting or causing to be posted a
written or printed notice thereof at the courthouse door and by filing a copy of such notice in the office of the county clerk of each county in which the Mortgaged Property or any part thereof may be situated, and serving written notice of the
proposed sale on each debtor obligated to pay the Indebtedness according to the records of Mortgagee, by postage prepaid, certified United States 

  

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mail, at the most recent address for such debtor as shown by the records of Mortgagee, at least 21 days prior to the day of sale, to sell the Mortgaged
Property, either as a whole or in parcels, as the Trustee may deem proper, at public venue at the courthouse of the county in which the Mortgaged Property or any part thereof may be situated (and being the county designated in the notice of sale) on
the first Tuesday of any month between the hours of 10:00 a.m. and 4:00 p.m., to the highest bidder for cash, and after such sale to execute and deliver to the purchaser or purchasers good and sufficient deeds and assignments, conveying such
Property so sold to the purchaser or purchasers with general warranty of title made on behalf of Mortgagor. The Trustee, or his successor or substitute, is hereby authorized and empowered to appoint any one or more Persons as his attorneys-in-fact
or agents to act as Trustee under him and in his name, place and stead, such appointment to be evidenced by a written instrument executed by the Trustee, or his successor or substitute, to perform any one or more act or acts necessary or incident to
any sale under the power of sale hereunder, including, without limitation, the posting and filing of any notices, the conduct of the sale and the execution and delivery of any instruments conveying the Mortgaged Property as a result of the sale, but
in the name and on behalf of the Trustee, or his successor or substitute; and all acts done or performed by such attorneys-in-fact or agents shall be valid, lawful and binding as if done or performed by the Trustee, or his successor or substitute.
No single sale or series of sales by the Trustee shall extinguish the Lien or exhaust the power of sale hereunder except with respect to the items of Property sold, but such Lien and power shall exist for so long as and may be exercised in any
manner by law or as herein provided as often as the circumstances require to give Mortgagee full relief hereunder. The purchaser at any such sale shall not assume, nor shall the heirs, legal representatives, successors or assigns of such purchaser,
be deemed to have assumed, by reason of the acquisition of Property or rights mortgaged hereunder, any liability or obligation of any lessee or operator of the Mortgaged Property, or any part thereof, arising by reason of any occurrence taking place
prior to such sale. It shall not be necessary to have present, or to exhibit at any such sale, any of the personal Property subject to the Lien hereof. 
 5.4 Rights as Secured Party. Upon the occurrence of any Event of Default, Mortgagee shall be entitled to all of the rights, powers, and remedies afforded a secured party by the UCC with respect to the personal
Property and fixtures and as-extracted collateral in which Mortgagee has been granted a security interest hereby, or Mortgagee may proceed in accordance with the provisions hereof as to both the real and personal Property covered hereby. 

5.5 Application of Proceeds of Sale. The Trustee is authorized to receive the proceeds of each sale of Mortgaged Property and apply the same as
follows: 
 FIRST: to the payment of all necessary costs and expenses incident to the execution of this Deed of Trust, including, but
not limited to, a fee to the Trustee of 5% of the amount realized at the sale, if required by the Trustee; 
  

 10 








 SECOND: to any and all Indebtedness then hereby secured, application to be made in such order and
in such manner as Mortgagee may, in his discretion, elect; 
 THIRD: the balance, if any, to Mortgagor or its successors or assigns, or
other Person legally entitled thereto. 
 5.6 Substitute Trustee. In the event of the death of the Trustee, or his removal from the
State of Texas, or his failure, refusal, or inability for any reason to make any such sale or to perform any of the trusts herein declared, or at any time, whether with or without cause, Mortgagee may appoint, in writing, a substitute trustee who
shall thereupon succeed to all the estates, rights, powers, and trusts herein granted to and vested in the Trustee. In the same events as first above stated, and in the same manner, successive substitute Trustees may thereafter be appointed.

 5.7 Statements by Trustee. It is agreed that in any deed or deeds given by any Trustee any and all statements of fact or other
recitals therein made as to the identity of the holder or holders of the Indebtedness, or as to default in the payments thereof or any part thereof, or as to the breach of any covenants herein contained, or as to the request to sell, notice of sale,
time, place, terms and manner of sale, and receipt, application, and distribution of the money realized therefrom, or as to the due and proper appointment of a substitute trustee, and, without being limited by the foregoing, as to any other or
additional act or thing having been done by Mortgagee or the Trustee, shall be taken by all courts of law and equity as prima facie evidence that the statements or recitals state facts and are without further question to be so accepted. Mortgagor
does hereby ratify and confirm any and all acts that the Trustee may lawfully do in the premises by virtue of the terms and conditions of this Deed of Trust. 
 5.8 Suit to Collect and Foreclose. Mortgagee, at its election, or the Trustee, upon written request of Mortgagee, may proceed by suit or suits, at law or in equity, to enforce the payment of the Indebtedness in
accordance with the terms hereof and of the notes, guaranties, or other documents evidencing it, and to foreclose the Lien of this Deed of Trust as against all or any portion of the Mortgaged Property and to have such Property sold under the
judgment or decree of a court of competent jurisdiction. 
 5.9 Mortgagee or Trustee as Purchaser. Mortgagee or the Trustee may be a
purchaser of all or any portion of the Mortgaged Property at any sale thereof, whether such sale be under the power of sale hereinabove vested in the Trustee, upon any other foreclosure of the Lien hereof, or otherwise. Mortgagee or the Trustee so
purchasing shall, upon any such purchase, acquire title to the Mortgaged Property so purchased, free of the Lien of this Deed of Trust and free of all rights of redemption in Mortgagor. 
 5.10 Entry and Operation. Upon the occurrence of any Event of Default, then in each and every such case and in addition to the other rights and
remedies hereunder, the Trustee or Mortgagee, whether or not the Indebtedness shall have become due and payable, may, but shall not be obligated to, enter into and upon and take possession of all or any portion of the Mortgaged Property and may
exclude Mortgagor, its agents and servants wholly therefrom and have, hold, use, operate, manage, and control all or any portion of the Mortgaged Property and 

  

 11 








 
produce the oil, gas, and other minerals therefrom and market the same, all at the sole risk and expense of Mortgagor and at the expense of the Mortgaged
Property, applying the net proceeds so derived, first, to the cost of maintenance and operation of such Mortgaged Property; second, to the payment of the Indebtedness, application to be made first to interest and then to principal; and the balance
thereof, if any, shall be paid to Mortgagor. Upon such payment of all such costs and Indebtedness, the Mortgaged Property shall be returned to Mortgagor in its then condition, and neither the Trustee nor Mortgagee shall be liable to Mortgagor for
any damage or injury to the Mortgaged Property except such as may be caused through the fraud or willful misconduct of the Trustee or Mortgagee, as the case may be. 
 5.11 Power of Attorney to Mortgagee. Mortgagor does hereby designate Mortgagee as the agent of Mortgagor to act in the name, place, and stead of Mortgagor in the exercise of each and every remedy set forth
herein and in conducting any and all operations and taking any and all action reasonably necessary to do so, recognizing such agency in favor of Mortgagee to be coupled with the interests of Mortgagee under this Deed of Trust and, thus, irrevocable
so long as this Deed of Trust is in force and effect. 
 5.12 Remedies Cumulative and Non-Exclusive. The rights of entry, sale, or
suit, as hereinabove or hereinafter conferred, are cumulative of all other rights and remedies herein or by law or in equity provided, and shall not be deemed to deprive Mortgagee or the Trustee of any such other legal or equitable rights or
remedies, by judicial proceedings or otherwise, appropriate to enforce the conditions, covenants, and terms of this Deed of Trust and the other Loan Documents. The employment of any remedy hereunder or otherwise shall not prevent the concurrent or
subsequent employment of any other appropriate remedy or remedies. 
 ARTICLE 6 
 ASSIGNMENT OF PRODUCTION 
 6.1
Assignment. In addition to the conveyance to the Trustee herein made, Mortgagor does hereby transfer, assign, deliver and convey unto Mortgagee, its successors and assigns, all of the oil, gas, and other minerals produced, saved, or sold from
the Mortgaged Property and attributable to the interests of Mortgagor therein subsequent to 7:00 a.m. on the first day of the month in which this Deed of Trust is executed, together with the proceeds of any sale thereof. Mortgagor hereby directs any
purchaser now or hereafter taking any production from the Mortgaged Property to pay to Mortgagee such proceeds derived from the sale thereof and to continue to make payments directly to Mortgagee until notified in writing by Mortgagee to discontinue
the same. The purchaser of any such production shall not be required to see to the application of the proceeds thereof by Mortgagee, and payment made to Mortgagee shall be binding and conclusive as between such purchaser and Mortgagor. Mortgagor
further agrees to perform all such acts and to execute all such further assignments, transfer and division orders, and other instruments as may be required or desired by Mortgagee or any other party to have such proceeds and revenues so paid to
Mortgagee. 
 6.2 Postponement of Payment. For its convenience, Mortgagee has elected not to exercise immediately its right to receive
payment to it directly of the proceeds of any sale of the oil , gas and other minerals produced or sold from the Mortgaged Property and the 

  

 12 








 
purchasers may continue to make such payment or delivery of the proceeds to Mortgagor until such time as Mortgagor and the purchasers have received notice
that an Event of Default has occurred and is continuing, and that the purchasers are directed to make payment or delivery of the proceeds directly to Mortgagee. Such failure by Mortgagee to exercise its rights immediately shall not in any way waive
the right of Mortgagee to receive any of the proceeds, or to make any such demand, or to affect any such assignment as to any proceeds not theretofore paid or delivered to Mortgagor. In this regard, if any of the proceeds are paid or delivered
directly to Mortgagee and then, at the request of Mortgagee, the proceeds are, for a period or periods of time, paid or delivered to Mortgagor, Mortgagee shall nevertheless have the right, effective upon written notice, to require that future
proceeds be again paid or delivered directly to it. Mortgagee shall never be required to send any such notice to all purchasers, and may direct such notice only to those purchasers as it may, in its discretion, desire. It shall never be necessary
for Mortgagee to institute legal proceedings to enforce the assignment of hydrocarbons, proceeds, or other rents, profits, or income contained in this instrument. It shall not be necessary for Mortgagee to obtain possession of the Mortgaged Property
as a prerequisite to Mortgagee’s right to collect or receive any hydrocarbons, other minerals, proceeds, or other rents, profits, or income assigned to Mortgagee under this instrument. Mortgagor and Mortgagee expressly agree and it is the
express intention of Mortgagor and Mortgagee that in no event will any reduction in the obligations be measured by the fair market value of the hydrocarbons, other minerals, proceeds, or other rents, profits, or income assigned to Mortgagee under
this instrument. 
 6.3 Change of Purchaser. Should any purchaser taking the production from the Mortgaged Property fail to make
prompt payment to Mortgagee in accordance with the provisions of Section 6.1, Mortgagee shall have the right, at the expense of Mortgagor, to demand a change of connection and to designate another purchaser with whom a new connection may be
made, without any liability on the part of Mortgagee in making such selection, so long as ordinary care is used in the making thereof. Promptly upon such demand, Mortgagor shall take all necessary and appropriate action to effect such change of
connection. 
 6.4 Application of Proceeds. Mortgagor authorizes and empowers Mortgagee to receive, hold, and collect all sums of
money paid to Mortgagee in accordance with the provisions of Section 6.1, and to apply the same as hereinafter provided, all without any liability or responsibility on the part of Mortgagee, save and except as to good faith in so receiving and
applying such sums. Mortgagee may apply all sums received by Mortgagee pursuant to Section 6.1 to the payment of the Indebtedness, application to be made in such manner as Mortgagee may elect, regardless of whether the application so made shall
exceed the payments of principal and interest then due as provided in the Loan Documents. After such application has been so made by Mortgagee, the balance of any such sums shall be paid to Mortgagor. 
 6.5 No Postponement of Installments on Indebtedness. It is understood and agreed that should such payments provided for by Section 6.1 be
less than the sum or sums then due on the Indebtedness, such sum or sums then due shall nevertheless be paid by Mortgagor in accordance with the provisions of the Loan Documents, and neither the assignment made pursuant to Section 6.1 nor any
other provisions hereof shall in any manner be construed to affect the terms and provisions of the Loan Documents. Likewise, neither the assignment made pursuant to Section 6.1 nor any other provisions hereof shall in any manner be
construed to affect the Liens, rights, title, and remedies herein granted securing the Indebtedness or the 

  

 13 








 
liability of Mortgagor therefor. The rights under this Article VI are cumulative of all other rights, remedies, and powers granted under this Deed of Trust
and are cumulative of any other security which Mortgagee now holds or may hereafter hold to secure the payment of the Indebtedness. 
 6.6
Turnover to Mortgagee. Should Mortgagor receive any of the proceeds of any sale of oil, gas, or other minerals produced, saved, or sold from the Mortgaged Property, which under the terms hereof should have been remitted to Mortgagee,
Mortgagor will immediately remit same in full to Mortgagee. 
 6.7 Release of Proceeds Upon Payment of Indebtedness. Upon payment in
full of all Indebtedness and the termination of the Commitment, the remainder of such proceeds held by Mortgagee, if any, shall be paid over to Mortgagor upon demand, and a release of the interest hereby assigned will be made, without recourse or
warranty, by Mortgagee to Mortgagor at its request and its expense. 
 6.8 Duty of Mortgagee. Mortgagee shall not be liable for any
failure to collect, or for any failure to exercise diligence in collecting, any funds assigned hereunder. Mortgagee shall be accountable only for funds actually received. 
 6.9 Power of Attorney to Mortgagee. Mortgagor does hereby designate Mortgagee as the agent of Mortgagor to act in the name, place, and stead of Mortgagor for the purpose of taking any and all actions deemed by
Mortgagee necessary for the realization by Mortgagee of the benefits of the assignment of production provided herein, recognizing such agency in favor of Mortgagee to be coupled with the interests of Mortgagee under this Deed of Trust and, thus,
irrevocable so long as this Deed of Trust is in force and effect. 
 ARTICLE 7 
 MISCELLANEOUS 
 7.1 Further Assurances. Upon request of Mortgagee,
Mortgagor will promptly correct any defects, errors, or omissions in the execution or acknowledgment of this Deed of Trust or any other Loan Document, and execute, acknowledge, and deliver such other assurances and instruments as shall, in the
opinion of Mortgagee, be necessary to fulfill the terms of this Deed of Trust. 
 7.2 Interest. Any provision in any document that may
be executed in connection herewith to the contrary notwithstanding, Mortgagee shall in no event be entitled to receive or collect, nor shall any amounts received hereunder be credited so that Mortgagee shall be paid, as interest a sum greater than
that authorized by law. If any possible construction of this Deed of Trust or any Loan Document seems to indicate any possibility of a different power given to Mortgagee or any authority to ask for, demand, or receive any larger rate of interest,
this clause shall override and control, and proper adjustments shall be made accordingly. 
 7.3 Agreement as Entirety. This Deed of
Trust, for convenience only, has been divided into Articles, Sections, and subsections. The rights, powers, privileges, duties, and 

  

 14 








 
other legal relations of Mortgagor, the Trustee, and Mortgagee shall be determined from this Deed of Trust as an entirety and without regard to the aforesaid
division into Articles, Sections, and subsections and without regard to headings affixed to such Articles, Sections, or subsections. 
 7.4
Number and Gender. Whenever the context requires, reference herein made to the single number shall be understood to include the plural, and the plural shall likewise be understood to include the singular. Words denoting sex shall be construed
to include the masculine, feminine, and neuter when such construction is appropriate; and specific enumeration shall not exclude the general, but shall be construed as cumulative. 
 7.5 Rights and Remedies Cumulative. All rights, powers, immunities, remedies, and Liens of Mortgagee existing and to exist hereunder or under any
other instruments or at law or in equity and all other or additional security shall be cumulative and not exclusive, each of the other. Mortgagee shall, in addition to the rights and remedies herein expressly provided, be entitled to such other
remedies as may now or hereafter exist at law or in equity for securing and collecting the Indebtedness, for enforcing the covenants herein, and for foreclosing the Liens hereof. Resort by Mortgagee to any right or remedy provided for hereunder or
at law or in equity shall not prevent concurrent or subsequent resort to the same or any other right or remedy. No security heretofore, herewith, or subsequently taken by Mortgagee shall in any manner impair or affect the security given by this Deed
of Trust or any security by endorsement or otherwise presently or previously given; and all security shall be taken, considered, and held as cumulative. 
 7.6 Parties in Interest. This Deed of Trust shall be binding upon the parties and their respective successors and assigns and shall inure to the benefit of Mortgagee and its successors and assigns. The terms
used to designate any of the parties herein shall be deemed to include the successors and assigns of such parties. The term “Mortgagee” shall also include any lawful owner, holder or pledgee of any Indebtedness. 
 7.7 Supplements. Without in any manner limiting the effect of Section 1.4 or any other provisions of this Deed of Trust as to the binding
effect of this Deed of Trust on after-acquired rights of Mortgagor, it is contemplated by the parties hereto that from time to time additional interests and properties may or will be added to the interests and properties subject to the Liens,
rights, titles, and interests created by this Deed of Trust by means of supplemental indentures identifying this Deed of Trust and describing such interests and properties to be so added and included. Upon the execution of any such supplemental
indenture, the Liens, rights, titles, and interests created herein shall immediately attach to and be effective with respect to any such interests and properties so described, the same as if such interests and properties had been specifically
described herein, and such interests and properties being included in the term “Mortgaged Property,” as used herein. 
 7.8
Invalidity. In the event that any one or more of the provisions contained in this Deed of Trust shall for any reason be held invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect
any other provision of this Deed of Trust or any other Loan Document. 
  

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 7.9 Construction. All titles or headings to Articles, Sections, subsections, or other divisions of
this Deed of Trust or the exhibits hereto are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such Articles, Sections, subsections, or other divisions, such other
content being controlling as to the agreement among the parties hereto. Article, Section, subsection, and Exhibit references herein are to such Articles, Sections, subsections, and Exhibits of this Deed of Trust unless otherwise specified. The words
“hereby,” “herein,” “hereinabove,” “hereinafter,” “hereinbelow,” “hereof,” and “hereunder” when used in this Deed of Trust shall refer to this Deed of Trust as a whole and not to
any particular Article, Section, subsection, or provision of this Deed of Trust. 
 7.10 Fixtures, Minerals and Accounts. Without in
any manner limiting the generality of any of the foregoing hereof, some portions of the personal Property described hereinabove are or are to become fixtures on the Lands. In addition, the security interest created hereby under applicable provisions
of the UCC attaches to minerals, including oil and gas, and accounts resulting from the sale thereof, at the wellhead or minehead located on the Lands. 
 7.11 Financing Statement Filings. This Deed of Trust may be filed as provided in Article 9 of the UCC to assure that the security interests granted by this Deed of Trust are perfected. In this connection, this
Deed of Trust may be presented to a filing officer under the UCC to be filed in the real estate records as a Financing Statement covering minerals and fixtures. Further, Mortgagor authorizes Mortgagee to execute and file at any time and from time to
time any and all Financing Statements and amendments thereto in any UCC jurisdiction, pursuant to Article 9 of the UCC, as Mortgagee deems necessary in his sole discretion, in conjunction with this Deed of Trust, and Mortgagor expressly authorizes
execution and filing of such Financing Statements by Mortgagee without need of signature or execution by Mortgagor. 
 7.12 Addresses.
For purposes of filing this Deed of Trust as a financing statement, the addresses for Mortgagor, as the debtor, and Mortgagee, as the secured party, are as set forth hereinabove. 
 7.13 Counterparts. For the convenience of the parties, this Deed of Trust may be executed in multiple counterparts, each of which for all purposes
shall be deemed, and may be enforced from time to time as, a chattel mortgage, real estate mortgage, deed of trust, security agreement, assignment or contract, or as one or more thereof. For recording purposes, various counterparts have been
executed, and there may be attached to each such counterpart an Exhibit A containing only the description of the Mortgaged Property, or portions thereof, which relates to the county or state in which the particular counterpart is to be
recorded. A complete, original counterpart of this Deed of Trust with a complete Exhibit A may be obtained from Mortgagee. Each of the counterparts hereof so executed shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument. 
 7.14 No Waiver by Mortgagee. No course of dealing on the
part of Mortgagee, nor any failure or delay by Mortgagee with respect to exercising any of its rights or remedies hereunder shall operate as a waiver thereof nor shall the exercise or partial exercise of any such right or remedy shall preclude the
exercise of any other right or remedy. 
  

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 7.15 Governing Agreement. This Deed of Trust is made pursuant and subject to the terms and
provisions of the Notes. In the event of a conflict between the terms and provisions of this Deed of Trust and those of any of the Notes, the terms and provisions of the relevant Note shall govern and control. The inclusion in this Deed of Trust of
provisions not addressed in the relevant Note shall not be deemed a conflict, and all such additional provisions contained herein shall be given full force and effect. 
 7.16 Subordination. Notwithstanding any provision of this Deed of Trust to the contrary, the liens, security interests, assignments and pledges created by and existing under this Deed of Trust are subordinate
and inferior to the liens, security interests, assignments and pledges with respect to the Mortgaged Property in favor of Guaranty Bank, FSB, as Agent for the lenders party to that certain Credit Agreement dated June 29, 2006 among Mortgagor,
such lenders and Guaranty Bank, FSB, as Agent for such Lenders, as more fully provided in that certain Intercreditor and Subordination Agreement dated effective as of March 31, 2008 among Guaranty Bank, FSB, as Agent, Mortgagee and Mortgagor.

 (Signature appears on following page) 
  

 17 








 IN WITNESS WHEREOF, this Deed of Trust is executed
on the date of the acknowledgment below but effective as of the 31st day of March, 2008. 
  

			
	 MORTGAGOR (DEBTOR):
  
 PRIME OFFSHORE L.L.C.

		
	By:	 	  

		 	Beverly A. Cummings
		 	Chief Executive Officer


  

			
	THE STATE OF TEXAS	 	§
		 	§
	COUNTY OF HARRIS	 	§

 The foregoing instrument was acknowledged before me, the undersigned authority, on this
     day of April, 2008 by Beverly A. Cummings, Chief Executive Officer of PRIME OFFSHORE L.L.C., a Delaware limited liability company, on behalf of such limited liability company. 
  

	
	  
 NOTARY PUBLIC in and for

	the State of Texas


  

 18 








 EXHIBIT A 
 TO 
 MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT, 
 FINANCING STATEMENT AND ASSIGNMENT OF PRODUCTION 
 The designation “Working Interest” or “WI” when used in this Exhibit means an interest owned in an oil, gas, and mineral lease that determines the cost-bearing percentage of the owner
of such interest. The designation “Net Revenue Interest” or “NRI” means that portion of the production attributable to the owner of a working interest after deduction for all royalty burdens, overriding royalty
burdens or other burdens on production, except severance, production, and other similar taxes. The designation “Overriding Royalty Interest” or “ORRI” means an interest in production which is free of any obligation
for the expense of exploration, development, and production, bearing only its pro rata share of severance, production, and other similar taxes and, in instances where the document creating the overriding royalty interest so provides, costs
associated with compression, dehydration, other treating or processing, or transportation of production of oil, gas, or other minerals relating to the marketing of such production. The designation “Royalty Interest” or
“RI” means an interest in production which results from an ownership in the mineral fee estate or royalty estate in the relevant land and which is free of any obligation for the expense of exploration, development, and production,
bearing only its pro rata share of severance, production, and other similar taxes and, in instances where the document creating the royalty interest so provides, costs associated with compression, dehydration, other treating or processing or
transportation of production of oil, gas, or other minerals relating to the marketing of such production. 
 Any reference in this Exhibit to
wells or units is for warranty of interest, administrative convenience, and identification and shall not limit or restrict the right, title, interest, or properties covered by this Deed of Trust. All right, title, and interest of Mortgagor in the
properties described herein are and shall be subject to this Deed of Trust, regardless of the presence of any units or wells not described herein. 
 The references to book or volume and page herein refer to the recording location of each respective Mortgaged Property described herein in the county where the land covered by the Mortgaged. 







 OIL, GAS AND MINERAL INTERESTS 
 South Padre Island 1113 
 Oil and Gas Lease OCS-G-24302,
granted by the United States of America to F-W Oil Exploration L.L.C., dated effective November 1, 2002, covering all of Block 1113, South Padre Island Area, OCS Leasing Map, Texas Map No. 1, offshore Cameron County, Texas. 
  

			
	 Working Interest
	  	75.0000
	 Net Revenue Interest
	  	60.2500

 South Padre Island 1133 
 1. Oil and Gas Lease OCS-G-26431, granted by the United States of America to F-W Oil Exploration L.L.C., dated effective November 1, 2004, covering all of Block 1133, South Padre Island Area, OCS Leasing Map,
Texas Map No. 1, offshore Cameron County, Texas. 
  

			
	 Working Interest
	  	75.0000
	 Net Revenue Interest
	  	60.2500

 2. All right, title and interest in and to pipeline right-of-way assigned Pipeline right-of-way Number OCS-G28213,
Segment Number 15802, by the United States Minerals Management Service, from South Padre Island Block 1133 Well No. 1 to South Padre Island Block 1132 subsea tie-in. 
 North Padre Island 998 
 1. Oil and Gas Lease OCS-G-23123, granted by the United States of America to Manti
Resources, Inc., dated effective October 1, 2001, covering all of Block 998, North Padre Island Area, OCS Texas Leasing Map, TX2, Gulf of Mexico, offshore Kleberg County, Texas. 
  

			
	 Working Interest
	  	75.0000
	 Net Revenue Interest
	  	58.5000

 2. All right, title and interest in and to pipeline right-of-way assigned Pipeline Right-of-Way Number
OCS-G-28212, Segment Number 15801, by the United States Minerals Management Service, from Block 998 Platform A through Block 997 to an existing subsea tie-in on Block 996. 







 South Padre Island 1073 
 1. Oil and Gas Lease OCS-G-23102, granted by the United States of America to Marathon Oil Company, dated effective October 1, 2001, covering all of Block 1073, South Padre Island Area, OCS Leasing Map, Texas Map
No. 1, Gulf of Mexico, offshore Cameron County, Texas, INSOFAR AND ONLY INSOFAR as such lease covers and affects interests from the surface down to 2,000 feet subsea TVD. 
  

			
	 Working Interest
	  	75.0000
	 Net Revenue Interest
	  	57.2500

 2. All right, title and interest in and to pipeline right-of-way assigned Pipeline Right-of-Way Number
OCS-G-28201, Segment Number 15747, by the United States Minerals Management Service, from South Padre Island Area Block 1073 Well “A” to a subsea tie-in point in South Padre Island Area Block 1072. 
 South Padre Island 1059 
 1. Oil and Gas Lease OCS-G-23100,
granted by the United States of America to Marathon Oil Company, dated effective October 1, 2001, covering all of Block 1059, South Padre Island Area, OCS Leasing Map, Texas Map No. 1, Gulf of Mexico, offshore Cameron County, Texas,
INSOFAR AND ONLY INSOFAR as such lease covers and affects interests from the surface down to 2,000 feet subsea TVD. 
  

			
	 Working Interest
	  	75.0000
	 Net Revenue Interest
	  	57.2500