ex10-8.htm


    Exhibit
      10.8
 

     

    AMENDED
      AND RESTATED MORTGAGE,

     

    DEED
      OF TRUST, SECURITY AGREEMENT, FINANCING

     

    STATEMENT
      AND ASSIGNMENT OF PRODUCTION

     

    THIS
      AMENDED AND RESTATED MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT, FINANCING
      STATEMENT AND ASSIGNMENT OF PRODUCTION (this “Mortgage”) is from NEW CENTURY
      ENERGY CORP., a Colorado corporation, and CENTURY RESOURCES, INC., a Delaware
      corporation, together as Mortgagors (individually and together, “Mortgagors”),
      to EUGENE GRIN, 825 Third Avenue, New York, New York 10022, as Trustee
      (“Trustee”) for the benefit of LV ADMINISTRATIVE SERVICES, INC., a Delaware
      corporation, as administrative and collateral agent for VALENS U.S. SPV I,
      LLC,
      a Delaware limited liability company, and VALENS OFFSHORE SPV II, CORP., a
      Delaware corporation (collectively, “Mortgagee”) dated as of November 30,
      2007.

     

    RECITALS

     

    WHEREAS,
      Mortgagors entered into a Mortgage, Deed of Trust, Security Agreement, Financing
      Statement and Assignment of Production, dated as of November 20, 2007, in favor
      of Mortgagee, which has been recorded as set forth in Schedule 1 (the “Original
      Mortgage”);

     

    WHEREAS,
      in order to secure the Secured Indebtedness (defined below), each Mortgagor
      has
      agreed to execute and deliver this Mortgage pursuant to which, among other
      things, the Mortgaged Property (defined below) is granted and assigned by
      Mortgagors to Mortgagee to further secure the Secured Indebtedness (defined
      below).

     

    NOW,
      THEREFORE, in consideration of the sum of $10.00 and other good and valuable
      consideration, in hand paid by Mortgagee, the receipt and adequacy of which
      are
      hereby acknowledged and confessed by Mortgagors, Mortgagors hereby agree as
      follows:

     

    ARTICLE
      I

     

    DEFINITIONS

     

    1.1.           Certain
      Defined Terms.  For all purposes of this Mortgage, unless the context
      otherwise requires:

     

    “Accounts
      and Contract Rights” shall mean all accounts (including accounts in the form of
      joint interest billings under applicable operating agreements), contract rights
      and general intangibles of Mortgagors now or hereafter existing, or hereafter
      acquired by, or on behalf of, Mortgagors, or Mortgagors’ successors in interest,
      relating to or arising from the ownership, operation and development of the
      Mortgaged Property and to the production, processing, treating, sale, purchase,
      exchange or transportation of Hydrocarbons (defined below) produced or to be
      produced from or attributable to the Mortgaged Property or any units or pooled
      interest units in which all or a portion of the Mortgaged Property forms a
      part,
      together with all accounts and proceeds accruing to Mortgagors attributable
      to
      the sale of Hydrocarbons produced from the Mortgaged Property or any units
      or
      pooled interest units in which all or a portion of the Mortgaged Property forms
      a part.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    “Article”
      shall mean and refer to an Article of this Mortgage, unless specifically
      indicated otherwise.

     

    “Code”
      shall mean the Uniform Commercial Code in effect from time to time in each
      of
      the jurisdictions where the Mortgaged Property or a portion thereof is
      situated.

     

    “Credit
      Agreements” shall mean, collectively, the Securities Purchase Agreement the
      Related Agreements as defined therein, the Guaranty Agreements, and “Credit
      Agreement” shall mean any one of the foregoing.

     

    “Event
      of
      Default” shall mean the occurrence of any breach by Mortgagors of any term or
      provision of this Mortgage or the occurrence of any Event of Default under
      and
      as defined in the applicable Credit Agreement.

     

    “Exhibit
      A” and “Exhibit B” shall mean, unless specifically indicated otherwise,
      respectively Exhibit A and Exhibit B attached hereto and incorporated herein
      by
      reference for all purposes.

     

    “Gas
      Balancing Agreement” means any agreement or arrangement whereby Mortgagors, or
      any other party having an interest in any Hydrocarbons to be produced from
      mineral interests in which Mortgagors own an interest, have a right or an
      obligation to take more or less than their proportionate share of production
      therefrom.

     

    “Guaranties”
      shall mean, collectively, each Guaranty dated as of the date hereof executed
      by
      Mortgagors in favor of Mortgagee pursuant to which Mortgagors guaranteed all
      debts, liabilities and obligations of Gulf Coast Oil Corporation to Mortgagee,
      as the same may be amended, modified and supplemented from time to
      time.

     

    “Guaranty
      Agreements” shall mean, collectively, the Guaranties and all the other
      documents, instruments and agreements executed in connection therewith, as
      each
      of the same may be amended, modified and supplemented from time to
      time.

     

    “Guaranty
      Obligations” shall mean all present and future indebtednesses of Mortgagors
      arising pursuant to any Guaranty Agreement.

     

    “Hydrocarbons”
      shall mean oil, gas, coalbed methane gas, casinghead gas, drip gasolines,
      natural gasoline, condensate, distillate, as-extracted collateral and all other
      liquid or gaseous hydrocarbons produced or to be produced in conjunction
      therewith, and all products, byproducts and all other substances derived
      therefrom or the processing thereof, and all other minerals and substances,
      including, but not limited to, sulphur, lignite, coal, uranium, thorium, iron,
      geothermal steam, water, carbon dioxide, helium and any and all other minerals,
      ores, or substances of value and the products and proceeds therefrom, including,
      without limitation, all gas resulting from the in-situ combustion of coal or
      lignite.

     

    “Lands”
      shall mean the lands described in Exhibit A, shall include any lands the
      description of which is incorporated in Exhibit A by reference to another
      instrument or document, including, without limitation, all lands described
      in
      the Oil and Gas Leases listed on Exhibit
      A
      hereto, and shall also include any lands now or hereafter unitized, pooled,
      spaced or otherwise combined, whether by statute, order, agreement, declaration
      or otherwise, with lands the description of which is contained in Exhibit A
      or
      is incorporated in Exhibit A by reference.


    
      
        
        

      

      
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    “Lien”
      shall mean any mortgage, deed of trust, collateral assignment, lien, pledge,
      charge, security interest or other encumbrance.

     

    “Loans”
      shall mean, collectively, all amounts advanced by the Mortgagee to Mortgagors
      under the Notes and the Credit Agreements.

     

    “Material
      Adverse Effect” shall mean a material adverse effect on (a) the assets,
      liabilities, financial condition, results of operations or prospects of any
      Mortgagor, (b) the right or ability of any Mortgagor to fully, completely and
      timely perform its obligations under the Credit Agreements or Guaranty
      Agreements, or (c) the validity or enforceability of any Credit Agreement or
      Guaranty Agreement against any Mortgagor, or the rights or remedies of Mortgagee
      thereunder.

     

    “Mortgaged
      Property” shall have the meaning stated in Article 2 of this
      Mortgage.

     

    “Net
      Revenue Interest” shall mean Mortgagors’ share of all Hydrocarbons produced from
      the Lands, after deducting the appropriate proportionate part of all lessors’
royalties, overriding royalties, production payments and other payments out
      of
      or measured by production which burden Mortgagors’ share of all such production,
      subject to non-consent provisions contained in joint operating
      agreements.

     

    “Notes”
      shall have the meaning set forth in the Securities Purchase
      Agreement.

     

    “Obligations”
      shall mean all present and future indebtedness, obligations, and liabilities
      (including, without limitation, all Guaranty Obligations) and all renewals,
      refinancings and extensions thereof, or any part thereof, of Mortgagors to
      Mortgagee arising pursuant to any of the Credit Agreements, or arising pursuant
      to any commodity, interest rate, currency or other swap, option, collar, futures
      contract or other contract pursuant to which a Person hedges risks related
      to
      commodity prices, interest rates, currency exchange rates, securities prices
      or
      financial market conditions and any other commodity price hedging agreements
      by
      and between Mortgagors and Mortgagee and all interest accrued on any of the
      foregoing, and reasonable costs, expenses, and attorneys’ fees incurred in the
      enforcement or collection thereof, regardless of whether such indebtedness,
      obligations and liabilities are direct, indirect, fixed, contingent, liquidated,
      unliquidated, joint, several or joint and several.

     

    “Oil
      and
      Gas Leases” shall mean oil, gas and mineral leases, oil and gas leases, oil
      leases, gas leases, other mineral leases, subleases, top leases, any rights
      resulting in an ownership interest in Hydrocarbons and all operating rights
      relating to any of the foregoing (whether operated by virtue of such leases,
      or
      assignments or applicable operating agreements) and all other interests
      pertaining to any of the foregoing, including, without limitation, all royalty
      and overriding royalty interests, production payments and net profit interests,
      production payments and net profit interests, mineral fee interests, and all
      reversionary, remainder, carried and contingent
      interests relating to any of the foregoing and all other rights therein which
      are described and/or to which reference may be made on Exhibit
      A.


    
      
        
        

      

      
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    “Operating
      Equipment” shall mean all Personal Property and fixtures affixed or situated
      upon all or any part of the Mortgaged Property, including, without limitation,
      all surface or subsurface machinery, equipment, facilities or other property
      of
      whatsoever kind or nature now or hereafter located on any of the Lands which
      are
      useful for the production, treatment, storage or transportation of oil or gas,
      including, but not by way of limitation, all oil wells, gas wells, water wells,
      injection wells, casing, tubing, rods, pumping units and engines, Christmas
      trees, derricks, separators, gun barrels, flow lines, tanks, gas systems (for
      gathering, treating and compression), water systems (for treating, disposal
      and
      injection), power plants, poles, lines, transformers, starters and controllers,
      machine shops, tools, storage yards and equipment stored therein, buildings
      and
      camps, telegraph, telephone and other communication systems, roads, loading
      racks and shipping facilities.

     

    “Permitted
      Encumbrances” shall mean with respect to the Mortgaged Property:

     

    (a)           Liens
      securing the Secured Indebtedness;

     

    (b)           the
      Senior Liens;

     

    (c)           minor
      defects in title which do not secure the payment of money and otherwise have
      no
      material adverse effect on the value or operation of the Subject Properties,
      including, without limitation, easements, rights-of-way, servitudes, permits,
      surface leases, and other similar rights in respect of surface operations,
      and
      easements for pipelines, streets, alleys, highways, telephone lines, power
      lines, railways and other easements and rights-of-way, on, over or in respect
      of
      any of the properties of Mortgagors that are customarily granted in the oil
      and
      gas industry;

     

    (d)           inchoate
      statutory or operators’ Liens securing obligations for labor, services,
      materials and supplies furnished for operations on the Lands, which are not
      more
      than 60 days delinquent;

     

    (e)           
      mechanic’s, materialman’s, warehouseman’s, journeyman’s and carrier’s Liens, and
      other similar Liens arising by operation of law in the ordinary course of
      business, securing obligations which are not more than 60 days
      delinquent;

     

    (f)           
      Liens for taxes or assessments not yet due or not yet delinquent, or, if
      delinquent, that are being contested in good faith in the normal course of
      business by appropriate action;

     

    (g)           lease
      burdens payable to third parties which are deducted in the calculation of
      discounted present value in any reserve report delivered by Mortgagors pursuant
      to the Credit Agreements, including, without limitation, any royalty, overriding
      royalty, net profits interest, production payment, carried interest or
      reversionary working interest; and

     

    (h)           Liens,
      charges and encumbrances upon Mortgagors’ assets, other than Proved Mineral
      Interests, which in the aggregate do not have a value in excess of
      $50,000.

     

    
      
        
        

      

      
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    “Person”
      shall mean any individual, corporation, partnership, limited liability company,
      association, trust, other entity or organization, or any court or governmental
      department, commission, board, bureau, agency, or instrumentality of any nation
      or of any province, state, commonwealth, nation, territory, possession, county,
      parish, or municipality, whether now or hereafter constituted or
      existing.

     

    “Personal
      Property” shall mean that portion of the Mortgaged Property that is personal
      property.

     

    “Proved
      Mineral Interests” shall mean, collectively, Proved Producing Mineral Interests,
      Proved Nonproducing Mineral Interests, and Proved Undeveloped Mineral
      Interests.

     

    “Proved
      Nonproducing Mineral Interests” shall mean all Subject Properties which
      constitute proved developed nonproducing reserves.

     

    “Proved
      Producing Mineral Interests” shall mean all Subject Properties which constitute
      proved developed producing reserves.

     

    “Proved
      Undeveloped Mineral Interests” shall mean all Subject Properties which
      constitute proved undeveloped reserves.

     

    “Section”
      shall mean and refer to a section of this Mortgage, unless specifically
      indicated otherwise.

     

    “Secured
      Indebtedness” shall have the meaning stated in Article 3 of this
      Mortgage.

     

    “Securities
      Purchase Agreement” shall mean the Securities Purchase Agreement dated as of
      November 30, 2007, among Mortgagors and Mortgagee, as the same may be amended,
      modified and supplemented from time to time.

     

    “Senior
      Liens” means the liens against and security interests in the Mortgaged Property
      granted by Mortgagors and described more particularly on Exhibit B.

     

    “Subject
      Properties” shall have the meaning stated in Article 2 of this
      Mortgage.

     

    “Subsidiary”
      shall mean, for any Person, any corporation or other entity of which securities
      or other ownership interests having ordinary voting power to elect a majority
      of
      the board of directors or other persons performing similar functions (including
      that of a general partner) are at the time directly or indirectly owned,
      collectively, by such Person and any Subsidiaries of such
      Person.  “Subsidiary” shall include Subsidiaries of Subsidiaries (and
      so on).

     

    “Well
      Data” shall mean all logs, drilling reports, division orders, transfer orders,
      operating agreements, contracts and other agreements, abstracts, title opinions,
      files, records, seismic
      data, memoranda and other information in the possession or control of Mortgagors
      or to which Mortgagors have access relating to the Lands and/or any wells
      located thereon.

     

    1.2.           Other
      Terms.  Unless otherwise defined or indicated herein, all terms
      with their initial letter capitalized shall have the meaning given such terms
      in
      the Credit Agreements.

     

    
      
        
        

      

      
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    ARTICLE
      II

     

    GRANTING
      CLAUSE: MORTGAGED PROPERTY

     

    For
      and
      in consideration of the sum of $10.00 and other good and valuable consideration,
      in hand paid by Mortgagee, the receipt and adequacy of which are hereby
      acknowledged and confessed by Mortgagors, and for and in consideration of the
      debt and purposes hereinafter set forth, to secure the full and complete payment
      and performance of the Secured Indebtedness and to secure the performance of
      the
      covenants, obligations, agreements and undertakings of Mortgagors hereinafter
      described, Mortgagors hereby acknowledge, confirm and agree that Mortgagee
      has
      and shall continue to have a security interest and mortgage lien in all of
      the
      Mortgaged Property heretofore granted by Mortgagors to Mortgagee pursuant to
      the
      Original Mortgage, and Mortgagors have GRANTED, BARGAINED, WARRANTED, MORTGAGED,
      ASSIGNED, TRANSFERRED and CONVEYED, and by these presents do GRANT, BARGAIN,
      WARRANT, MORTGAGE, ASSIGN, TRANSFER and CONVEY unto Trustee and Trustee’s
      substitutes or successors, and his and their assigns, for the uses and purposes
      herein set forth, with warranties and covenants of title only to the extent
      provided herein and in the Credit Agreements, all of Mortgagors’ right, title
      and interest, whether now owned or hereafter acquired, in all of the hereinafter
      described properties, rights and interests; and, insofar as such properties,
      rights and interests consist of equipment, general intangibles, accounts,
      contract rights, inventory, goods, chattel paper, instruments, documents, money,
      fixtures, as extracted collateral, proceeds and products of collateral or any
      other Personal Property of a kind or character defined in or subject to the
      applicable provisions of the Code, Mortgagors hereby grants to Mortgagee a
      security interest therein, whether now owned or hereafter acquired,
      namely:

     

    (a)           all
      of those certain Oil and Gas Leases and Lands (all such Oil and Gas Leases
      and
      Lands being herein called the “Subject Properties,” as hereinafter further
      defined) which are described in Exhibit A and/or to which reference may be
      made
      in Exhibit A and/or which are covered by any of the leases described on Exhibit
      A, which Exhibit A is made a part of this Mortgage for all purposes, and is
      incorporated herein by reference as fully as if copied at length in the body
      of
      this Mortgage at this point;

     

    (b)           all
      rights, titles, interests and estates now owned or hereafter acquired by
      Mortgagors in and to (i) any and all properties now or hereafter pooled or
      unitized with any of the Subject Properties, and (ii) all presently existing
      or
      future operating agreements and unitization, communitization and pooling
      agreements and the units operated thereby to the extent the same relate to
      all
      or any part of the Subject Properties, including, without limitation, all units
      formed under or pursuant to any applicable laws (the rights, titles, interests
      and estates described in this clause (b) also being included within the term
      “Subject Properties” as used herein);


     

    (c)           all
      presently existing and future agreements entered into between Mortgagors and
      any
      third party that provide for the acquisition by Mortgagors of any interest
      in
      any of the properties or interests specifically described in Exhibit A or which
      relate to any of the properties and interests specifically described in Exhibit
      A;

     

    (d)           the
      Hydrocarbons (including inventory) which are in, under, upon, produced or to
      be
      produced from or attributable to the Lands from and after the date of this
      Mortgage;

     

    (e)           the
      Accounts and Contract Rights;

     

    (f)           
      the Operating Equipment;

     

    (g)           the
      Well Data;

     

    (h)          the
      rights and security interests of Mortgagors held by Mortgagors to secure the
      obligation of the first purchaser to pay the purchase price of the
      Hydrocarbons;

     

    (i)           
      all surface leases, rights-of-way, franchises, easements, servitudes, licenses,
      privileges, tenements, hereditaments and appurtenances now existing or in the
      future obtained in connection with any of the aforesaid, and all other items
      of
      value and incident thereto which Mortgagors may, at any time, have or be
      entitled; and

     

    (j)           
      all and any different and additional rights of any nature, of value or
      convenience in the enjoyment, development, operation or production, in any
      way,
      of any property or interest included in any of the foregoing clauses, and in
      all
      revenues, income, rents, issues, profits and other benefits arising therefrom
      or
      from any contract now in existence or hereafter entered into pertaining thereto,
      and in all rights and claims accrued or to accrue for the removal by anyone
      of
      Hydrocarbons from, or other act causing damage to, any of such properties or
      interests.

     

    All
      the
      aforesaid properties, rights and interests, together with any and all
      substitutions, replacements, corrections or amendments thereto, or renewals,
      extensions or ratifications thereof, or of any instrument relating thereto,
      and
      together with any additions thereto which may be subjected to the Lien of this
      Mortgage by means of supplements hereto, being hereinafter called the “Mortgaged
      Property”.

     

    Subject,
      however, to (i) Permitted Encumbrances, and (ii) the condition that Mortgagee
      shall not be liable in any respect for the performance of any covenant or
      obligation of Mortgagors with respect to the Mortgaged Property.

     

    TO
      HAVE
      AND TO HOLD the Mortgaged Property unto Mortgagee and its successors, legal
      representatives and assigns, forever, subject to Section 7.3 hereof, to secure,
      in each such instance, the payment and performance of the Secured Indebtedness
      and the performance of the covenants, obligations, agreements, and undertakings
      of Mortgagors described herein.


    
      
        
        

      

      
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    ARTICLE
      III

     

    SECURED
      INDEBTEDNESS

     

    This
      Mortgage is given to secure the Loans and all of the Obligations under and
      as
      described in the Credit Agreements and the Guaranty Agreements, including,
      without limitation:

     

    (a)           interest
      on all credit outstanding under the Credit Agreements at the rates provided
      in
      the Credit Agreements;

     

    (b)           the
      Loans, including, without limitation, the indebtedness evidenced by the
      Notes;

     

    (c)           the
      Obligations;

     

    (d)           payment
      and performance of any and all present and future obligations of Mortgagors
      according to the terms of any present or future hedge transaction, including,
      without limitation, any present or future swap agreements, cap, floor, collar,
      exchange transaction, forward agreement or other exchange or protection
      agreements relating to any such transaction now existing or hereafter entered
      into between Mortgagors and Mortgagee;

     

    (e)           any
      sums advanced as expenses or costs incurred by, or on behalf of, Mortgagee
      which
      are made or incurred pursuant to the terms of this Mortgage or any Credit
      Agreement, plus interest thereon at the rate set forth in Section 1.1 of the
      Notes from the date of advance or expenditure until reimbursed; and

     

    (f)           
      all other and additional debts, obligations and liabilities of every kind and
      character of Mortgagors now existing or hereafter arising in connection with
      any
      of the Credit Agreements or otherwise (all of the obligations and indebtedness
      referred to in this Article 3, and all renewals, refinancings, extensions and
      modifications thereof, and all substitutions therefor, in whole or in part,
      are
      herein sometimes referred to as the “Secured Indebtedness”).

     

    ARTICLE
      IV

     

    COVENANTS,
      REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF MORTGAGORS

     

    Mortgagors
      hereby covenant, represent, warrant and agree that:

     

    4.1.           Payment
      of Indebtedness.  Mortgagors will duly and punctually pay or cause
      to be paid when due all of the Secured Indebtedness.

     

    4.2.           Warranties.  a)  Mortgagors,
      to the extent of the interests specified in Exhibit A, have good and defensible
      title, subject to Permitted Encumbrances, to each property right or interest
      constituting the Mortgaged Property, and have a good and legal right to make
      the
      grant and conveyance made in this Mortgage; (b) Mortgagors’ present Net Revenue
      Interest in the Mortgaged Property is not less than that specified in Exhibit
      A
      and if no interest is specified, includes all their interests however specified
      in and to the Oil and Gas Leases and Lands described on Exhibit A; and (c)
      the
      Mortgaged Property is free from all Liens other than Permitted
      Encumbrances.  Mortgagors will warrant and forever defend (subject to
      those Permitted Encumbrances described in clauses (b) and (f) of the definition
      of “Permitted Encumbrances” set forth above) the Mortgaged Property unto
      Mortgagee and Mortgagee’s successors, legal representatives and assigns, and
      Trustee and Trustee’s successors, legal representatives and assigns, against
      every Person whomsoever lawfully claiming the same or any part thereof, and
      Mortgagors will maintain and preserve the Lien hereby created so long as any
      of
      the Secured Indebtedness remains unpaid, except where such failure to comply
      would not have a Material Adverse Effect.


    
      
        
        

      

      
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    4.3.           Further
      Assurances.  Mortgagors will execute and deliver such other and
      further instruments and will do such other and further acts as in the reasonable
      discretion of Mortgagee may be necessary or desirable to carry out more
      effectively the purposes of this Mortgage, including, without limiting the
      generality of the foregoing, (a) prompt correction of any material defect which
      may hereafter be discovered in the title to the Mortgaged Property or in the
      execution and acknowledgment of this Mortgage, any Notes, the Credit Agreements,
      or any other document used in connection herewith or at any time delivered
      to
      Mortgagee in connection with any of the Secured Indebtedness, and (b) if
      required by Section 8.1 hereof, prompt execution and delivery of all division
      or
      transfer orders that in the reasonable discretion of Mortgagee are needed to
      transfer effectively the assigned proceeds of production from the Mortgaged
      Property to Mortgagee.

     

    4.4.           Taxes.  To
      the extent and in the manner required by the Credit Agreements, and to the
      extent not prohibited by applicable law, Mortgagors will promptly pay, or cause
      to be paid, all taxes legally imposed upon this Mortgage or upon the Mortgaged
      Property or upon the interest of Mortgagee therein, or upon the income, profits,
      proceeds and other revenues thereof.

     

    4.5.           Operation
      of the Mortgaged Property.  So long as the Secured Indebtedness or
      any part thereof remains unpaid:

     

    (a)           Mortgagors
      shall maintain and operate the Mortgaged Property in a good and workmanlike
      manner and will observe and comply with all of the terms and provisions, express
      or implied, of all Oil and Gas Leases relating to the Mortgaged Property so
      long
      as such Oil and Gas Leases are capable of producing Hydrocarbons in paying
      quantities, except where such failure to comply would not have a Material
      Adverse Effect;

     

    (b)           Mortgagors
      shall comply with all contracts and agreements applicable to or relating to
      the
      Mortgaged Property or the production and sale of Hydrocarbons therefrom, except
      to the extent a failure to so comply would not have a Material Adverse
      Effect;

     

    (c)           Mortgagors
      shall, at all times, maintain, preserve and keep all Operating Equipment used
      with respect to the Mortgaged Property in proper repair, working order and
      condition, and make all necessary or appropriate repairs, renewals,
      replacements, additions and improvements thereto so that the efficiency of
      such
      Operating Equipment shall at all times be properly preserved and maintained,
      except where such failure to comply would not have a Material Adverse Effect;
      provided that no item of Operating Equipment need be so repaired, renewed,
      replaced, added to or improved, if Mortgagors shall in good faith determine
      that
      such action
      is
      not necessary or desirable for the continued efficient and profitable operation
      of the Mortgaged Property;


    
      
        
        

      

      
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    (d)           Mortgagors
      shall cause the Mortgaged Property to be kept free and clear of all Liens other
      than Permitted Encumbrances;

     

    (e)           Mortgagors
      shall comply with the terms of the Credit Agreements with respect to maintenance
      of insurance.  All loss payable clauses or provisions in said policy
      or policies shall be endorsed in favor of and made payable to Mortgagee, as
      its
      interest may appear.  Mortgagee shall have the right to collect, and
      Mortgagors hereby assign to Mortgagee, any and all monies that may become
      payable under any such policies of insurance by reason of damage, loss or
      destruction of any of the Mortgaged Property, and Mortgagee may, at its
      election, either apply all or any part of the sums so collected toward payment
      of the Secured Indebtedness, whether or not such Secured Indebtedness, or any
      portion thereof, is then due and payable, in such manner as Mortgagee may elect,
      or release same to Mortgagors; and

     

    (f)           Mortgagors
      shall not sell, lease, transfer, abandon or otherwise dispose of any portion
      of
      the Mortgaged Property or any of Mortgagors’ rights, titles or interests therein
      or thereto, except as specifically permitted in the Credit
      Agreements.

     

    4.6.           Recording.  Mortgagors
      will promptly, and at Mortgagors’ sole cost and expense, record, register,
      deposit and file this Mortgage and every other instrument in addition
      or  supplemental hereto in such offices and places and at such times
      and as often as may be necessary to place of record and perfect the Lien hereof
      as a perfected Lien on real or personal property, as the case may be, subject
      only to Permitted Encumbrances, and the rights and remedies of Mortgagee, and
      otherwise will do and perform all matters or things necessary or expedient
      to be
      done or observed by reason of any law or regulation of any state or of the
      United States or of any other competent authority, for the purpose of
      effectively operating, maintaining and preserving the Lien hereof on the
      Mortgaged Property.

     

    4.7.           Records,
      Statements and Reports.  Mortgagors will keep proper books of
      record and account in which complete and correct entries will be made of
      Mortgagors’ transactions in accordance with sound accounting principles,
      consistently applied and will, to the extent required by the Credit Agreements,
      furnish or cause to be furnished to Mortgagee (a) all reports required under
      the
      Credit Agreements, and (b) such other information concerning the business and
      affairs and financial condition of Mortgagors as Mortgagee may, from time to
      time reasonably request.

     

    4.8.           No
      Government Approvals.  Mortgagors warrant that no approval or
      consent of any Person is necessary to authorize the execution and delivery
      of
      this Mortgage or any of the  other Credit Agreements or the Notes, or
      to authorize the observance or performance by Mortgagors of the covenants herein
      or therein contained.

     

    4.9.           Right
      of Entry.  Mortgagors will permit Mortgagee, or the agents or
      designated representatives of Mortgagee, to enter upon the Mortgaged Property,
      and all parts thereof, for the purposes of investigating and inspecting the
      condition and operation thereof.


    
      
        
        

      

      
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    The
      representations and warranties set forth in the Credit Agreements are
      incorporated herein by reference as if set forth herein, and each such
      representation and warranty is true and correct.

     

    ARTICLE
      V

     

    ADDITIONS
      TO MORTGAGED PROPERTY

     

    It
      is
      understood and agreed that Mortgagors may periodically subject additional
      properties to the Lien of this Mortgage.  In the event that additional
      properties are to be subjected to the Lien hereof, the parties hereto agree
      to
      execute a supplemental mortgage, satisfactory in form and substance to
      Mortgagee, together with any security agreement, financing statement or other
      security instrument required by Mortgagee, all in form and substance
      satisfactory to Mortgagee and in a sufficient number of executed (and, where
      necessary or appropriate, acknowledged) counterparts for recording
      purposes.  Upon execution of such supplemental mortgage, all
      additional properties thereby subjected to the Lien of this Mortgage shall
      become part of the Mortgaged Property for all purposes.

     

    ARTICLE
      VI

     

    ENFORCEMENT
      OF THE SECURITY

     

    6.1.           General
      Remedies.  Upon the occurrence and during the continuance of an
      Event of Default, Mortgagee may perform or direct Trustee to perform any one
      or
      more of the following acts, subject to and in accordance with any applicable
      provision of the Credit Agreements and to any mandatory requirements or
      limitations of applicable law then in force:

     

    (a)           exercise
      all of the rights, remedies, powers and privileges of Mortgagors with respect
      to
      the Mortgaged Property or any part thereof, give or withhold all consents
      required therein which, with respect to the Mortgaged Property or any part
      thereof, Mortgagors would otherwise be entitled to give or withhold and perform
      or attempt to perform any covenants in this Mortgage which Mortgagors are
      obligated to perform; provided that no payment or performance by Mortgagee
      shall
      constitute a waiver of any Event of Default, and Mortgagee shall be subrogated
      to all rights and Liens securing the payment of any debt, claim, tax or
      assessment for the payment of which Mortgagee may make an advance or which
      Mortgagee may pay;

     

    (b)           execute
      and deliver to such Person or Persons as may be designated by Mortgagee
      appropriate powers of attorney to act for and on behalf of Mortgagors in all
      transactions with any federal, state or local agency with respect to any of
      the
      Mortgaged Property;

     

    (c)           exercise
      any and all other rights or remedies granted to Mortgagee pursuant to the
      provisions of any of the Credit Agreements and applicable law;

     

    (d)           if
      Mortgagors have failed to keep or perform any covenant whatsoever contained
      in
      any Credit Agreement or this Mortgage, Mortgagee may, at its option, perform
      or
      attempt to perform such covenant.  Any payment made or expense
      incurred in the performance or attempted performance of any such covenant shall
      be a part of the Secured Indebtedness, and Mortgagors promise, upon demand,
      to
      pay to Mortgagee, at the place where the Notes are payable,
      or at such other place as Mortgagee may direct by written notice, all sums
      so
      advanced or paid by Mortgagee, with interest at the rate set forth in Section
      2.2 of the Notes from the date when paid or incurred by Mortgagee.  No
      such payment by Mortgagee shall constitute a waiver of any Event of
      Default;


    
      
        
        

      

      
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    (e)           Mortgagee
      may, at its option, without notice, demand, presentment, notice of intent to
      accelerate or of acceleration, or notice of protest, all of which are hereby
      expressly waived by Mortgagors, declare the entire unpaid balance of the Secured
      Indebtedness, or any part thereof, immediately due and payable, and upon such
      declaration it shall be immediately due and payable, and the Liens hereof shall
      then be subject to foreclosure in accordance with applicable law;
      and

     

    (f)           
      upon the occurrence of an Event of Default, this Mortgage may be foreclosed
      as
      to the Mortgaged Property, or any part thereof, in any manner permitted by
      applicable law.

     

    Mortgagee
      may request Trustee to, and in such event Trustee is hereby authorized and
      empowered and it shall be his or her special duty upon such request of Mortgagee
      and to the extent permitted by applicable law, proceed with foreclosure and
      sell
      all or any part of the Mortgaged Property at one or more sales, as an entirety
      or in parcels, at such place or places and otherwise in such manner and upon
      such notice as may be required by applicable law or, in the absence of any
      such
      requirement, as Trustee or Mortgagee may deem appropriate, and to make
      conveyance to the purchaser or purchasers thereof.  Any such sale
      shall be made to the highest bidder or bidders for cash, at the courthouse
      door
      of the county wherein the Mortgaged Property is situated; provided that, if
      the
      Mortgaged Property is situated in more than one county, such sale of the
      Mortgaged Property, or part thereof, may be made in any county wherein any
      part
      of the Mortgaged Property is situated.  Such sale shall be made at
      public outcry, on the day of any month, during the hours of such day, and after
      written notices thereof have been publicly posted in such places and for such
      time periods and all Persons entitled to notice thereof have been sent such
      notice, all as required by applicable law.  If the applicable law in
      force as of the date of execution hereof should hereafter be amended to require
      a different notice of sale applicable to sales of property of the nature of
      the
      Mortgaged Property under powers of sale conferred by mortgages or deeds of
      trust, Trustee may, in his or her sole discretion, to the extent permitted
      by
      applicable law, give either the notice of sale required by applicable law in
      effect on the date of execution hereof or the notice of sale prescribed by
      the
      amended law; and nothing herein shall be deemed to require Mortgagee or Trustee
      to do, and Mortgagee and Trustee shall not be required to do, any act other
      than
      as required by applicable law in effect at the time of any such
      sale.  After such sale, Trustee shall make to the purchaser or
      purchasers thereunder good and sufficient deeds, assignments or bills of sale
      in
      the name of Mortgagors, conveying or transferring the Mortgaged Property, or
      any
      part thereof, so sold to the purchaser or purchasers containing such warranties
      of title as are customarily given, which warranties shall be binding upon
      Mortgagors.

     

    Sale
      of a
      part of the Mortgaged Property shall not exhaust the power of sale granted
      hereby, but sales may be made from time to time until the Secured Indebtedness
      is paid and performed in full.  It shall not be necessary to have
      present or to exhibit at any such sale any of the Personal
      Property.  In addition to the rights and other powers of sale granted
      under the preceding
      provisions of this Section 6.1(f), if default is made in the payment of any
      installment of the Secured Indebtedness, Mortgagee may, at its option, at once
      or at any time thereafter while any matured installment remains unpaid, without
      declaring the entire Secured Indebtedness to be due and payable, orally or
      in
      writing, enforce, or direct Trustee to enforce (as provided by applicable law),
      the Liens created by this Mortgage and sell the Mortgaged Property subject
      to
      such matured indebtedness and the Liens securing its payment, in the same
      manner, on the same terms, at the same place and time and after having given
      notice in the same manner, all as provided in the preceding provisions of this
      Section 6.1(f).  After such sale, Mortgagee or Trustee (as provided by
      applicable law) shall make due conveyance to the purchaser or
      purchasers.  Sales made without maturing the Secured Indebtedness may
      be made hereunder whenever there is a default in the payment of any installment
      of the Secured Indebtedness without exhausting the power of sale granted hereby
      and without affecting in any way the power of sale granted under this Section
      6.1(f), the unmatured balance of the Secured Indebtedness (except as to any
      proceeds of any sale which Mortgagee may apply as prepayment of the Secured
      Indebtedness), or the Liens securing payment of the Secured
      Indebtedness.  The sale or sales of less than the whole of the
      Mortgaged Property shall not exhaust the power of sale herein granted, and
      Mortgagee or Trustee (as provided by applicable law) is specifically empowered
      to make successive sale or sales under such power until the whole of the
      Mortgaged Property shall be sold.  It is intended by each of the
      foregoing provisions of this Section 6.1(f) that Trustee may, after any request
      or direction by Mortgagee, sell not only the Subject Properties but also all
      other items constituting a part of the Mortgaged Property along with the Subject
      Properties, or any part thereof, all as a unit and as a part of a single sale,
      or may sell any part of the Mortgaged Property separately from the remainder
      of
      the Mortgaged Property.  If the proceeds of such sale or sales of less
      than the whole of such Mortgaged Property shall be less than the aggregate
      of
      the Secured Indebtedness and the expense of enforcing the trust created by
      this
      Mortgage, the Liens of this Mortgage shall remain in full force and effect as to
      the unsold portion of the Mortgaged Property just as though no sale or sale
      of
      less than the whole of the Mortgaged Property had occurred, but Mortgagee shall
      have the right, at its sole election, to request Trustee to sell less than
      the
      whole of the Mortgaged Property.  In the event any questions should be
      raised as to the regularity or validity of any sale hereunder, Mortgagee or
      Trustee (as provided by applicable law) shall have the right and is hereby
      authorized to make resale of said property so as to remove any questions or
      doubt as to the regularity or validity of the previous sale, and as many resales
      may be made as may be appropriate.  It is agreed that, in any deed or
      deeds given by Mortgagee or Trustee (as provided by applicable law), any and
      all
      statements of fact or other recitals therein made as to the identity of
      Mortgagee, or as to the occurrence or existence of any Event of Default, or
      as
      to the request to sell, notice of sale, time, place, terms, and manner of sale,
      and receipt, distribution, and application 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 act or thing having been duly done
      by
      Mortgagee or by Trustee shall be taken by any Governmental Authority as prima
      facie evidence that the said statements or recitals are true and correct and
      are
      without further question to be so accepted, and Mortgagors do hereby ratify
      and
      confirm any and all acts that Trustee or Mortgagee may lawfully do in the
      premises by virtue hereof.  In the event of the resignation or death
      of Trustee, or his or her failure, refusal, or inability, for any reason, to
      make any such sale or to perform any of the trusts herein declared, or, at
      the
      option of Mortgagee, without cause, Mortgagee may appoint at its sole
      discretion, in writing, a substitute trustee, who shall thereupon succeed to
      all
      the estates, titles, rights, powers, and trusts herein granted to and vested
      in
      Trustee.  If Mortgagee is a national banking association or a
      corporation, such appointment may be made on behalf of such Mortgagee by any
      Person who is then the president, or any vice-president, or the cashier or
      secretary, or any other authorized officer or agent of Mortgagee.  In
      the event of the resignation or death of any such substitute trustee, or his
      or
      her failure, refusal, or inability to make such sale or perform such trusts,
      or,
      at the option of Mortgagee, without cause, Mortgagee may appoint successive
      substitute trustees from time to time in the same manner.  Wherever
      herein the word “Trustee” is used, the same shall mean the Person who is the
      duly appointed Trustee or substitute trustee hereunder at the time in
      question.


    
      
        
        

      

      
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    (g)           Mortgagee
      may, or Trustee may upon written request of Mortgagee, in lieu of or in addition
      to exercising the power of sale provided for in Section 6.1(f) hereof, proceed
      by suit or suits, at law or in equity, to enforce the payment and performance
      of
      the Secured Indebtedness in accordance with the terms hereof and of the Credit
      Agreements evidencing it, to foreclose the Liens of this Mortgage as against
      all
      or any part of the Mortgaged Property, and to have all or any part of the
      Mortgaged Property sold under the judgment or decree of a court of competent
      jurisdiction.

     

    (h)           To
      the extent permitted by law, upon the acceleration of the Secured Indebtedness,
      Mortgagee, as a matter of right and without regard to the sufficiency of the
      Mortgaged Property, and without any showing of insolvency, fraud or
      mismanagement on the part of Mortgagors, and without the necessity of filing
      any
      judicial or other proceeding other than the proceeding for appointment of a
      receiver, shall be entitled to the appointment of a receiver or receivers of
      the
      Mortgaged Property, or any part thereof, and of the income, royalties, revenues,
      bonuses, production payments, delay rentals, benefits, rents, issues and profits
      thereof.  Mortgagors hereby consent to the appointment of such
      receiver or receivers and agree not to oppose any application therefor by
      Trustee or Mortgagee.

     

    (i)           
      Upon the acceleration of the Secured Indebtedness, Mortgagee may (without
      notification, if permitted by applicable law) enter upon the Mortgaged Property,
      take possession of the Mortgaged Property and remove the Personal Property
      or
      any part thereof, with or without judicial process and, in connection therewith,
      without any responsibility or liability on the part of Mortgagee, take
      possession of any property located on or in the Mortgaged Property which is
      not
      a part of the Mortgaged Property and hold or store such property at Mortgagors’
expense.  If necessary to obtain the possession provided for in this
      Section 6.1 (i), Mortgagee or Trustee may undertake any and all remedies to
      dispossess Mortgagors, including, specifically, one or more actions for forcible
      entry and detainer, trespass to try title and restitution.

     

    (j)           
      Mortgagee may require Mortgagors to assemble any Personal Property and any
      other
      items of the Mortgaged Property, or any part thereof, and make it available
      to
      Mortgagee at a place reasonably convenient to Mortgagors and Mortgagee to be
      designated by Mortgagee.

     

    (k)           Mortgagee
      may surrender the insurance policies maintained pursuant to the Credit
      Agreements, or any part thereof, and receive and apply the unearned premiums
      as
      a credit on the Secured Indebtedness, and, in connection therewith, Mortgagors
      hereby appoint Mortgagee as the agent and attorney-in-fact for Mortgagors (with
      full powers of substitution) to collect
      such premiums, which power of attorney shall be deemed to be a power coupled
      with an interest and therefore irrevocable until the release of the Liens
      evidenced by this Mortgage.


    
      
        
        

      

      
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    (l)           
      Mortgagee may retain the Personal Property and any other items of the Mortgaged
      Property, or any part thereof, in satisfaction or partial satisfaction of the
      Secured Indebtedness whenever the circumstances are such that Mortgagee is
      entitled to do so under the Code.

     

    (m)           Mortgagee
      shall have the right to become the purchaser at any sale of the Mortgaged
      Property held by Mortgagee, Trustee or by any court, receiver or public officer,
      and Mortgagee shall have the right to credit upon the amount of the bid made
      therefor, the amount payable out of the net proceeds of such sale to
      Mortgagee.  Recitals contained in any conveyance made to any purchaser
      at any sale made hereunder shall conclusively establish the truth and accuracy
      of the matters therein stated, including, without limiting the generality of
      the
      foregoing, nonpayment of the unpaid principal sum of, interest accrued on,
      and
      fees payable in respect of the Secured Indebtedness after the same have become
      due and payable, and advertisement and conduct of such sale in the manner
      provided herein or appointment of any successor Trustee hereunder.

     

    (n)           Mortgagee
      may buy any Personal Property and any other items of the Mortgaged Property
      or
      any part thereof at any private disposition if the Mortgaged Property or the
      part thereof being disposed of is a type customarily sold in a recognized market
      or a type which is the subject of widely distributed standard price
      quotations.

     

    (o)           Mortgagee
      shall have and may exercise any and all other rights which Mortgagee may have
      under the Code, by virtue of the Credit Agreements, this Mortgage, at law,
      in
      equity or otherwise.

     

    Mortgagee
      shall have no obligation to do, or refrain from doing, any of the acts, or
      to
      make or refrain from making any payment, referred to in this Section
      6.1.

     

    6.2.           Foreclosure
      by Judicial Proceedings.  Upon the occurrence of an Event of
      Default, Mortgagee may proceed, where permitted by law, by a suit or suits
      in
      equity or at law, whether for a foreclosure hereunder, or for the sale of the
      Mortgaged Property, or for the specific performance of any covenant or agreement
      herein contained or in aid of the execution of any power herein granted, or
      for
      the appointment of a receiver pending any foreclosure hereunder or the sale
      of
      the Mortgaged Property, or for the enforcement of any other appropriate legal
      or
      equitable remedy.

     

    6.3.           Receipt
      to Purchaser.  Upon any sale by virtue of judicial proceedings,
      the receipt of the officer making such sale under judicial proceedings shall
      be
      sufficient discharge to the purchaser or purchasers at any sale for his or
      their
      purchase money, and such purchaser or purchasers, or his or their assigns or
      personal representatives, shall not, after paying such purchase money and
      receiving such receipt of such officer therefor, be obligated to see to the
      application of such purchase money or be in any way answerable for any loss,
      misapplication or non-application thereof.


    
      
        
        

      

      
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    6.4.           Effect
      of Sale.  Any sale or sales of the Mortgaged Property or portions
      thereof where permitted by law shall operate to divest all right, title,
      interest, claim and demand whatsoever either at law or in equity, of Mortgagors
      of, in and to the premises and the property sold and shall be a perpetual bar,
      both at law and in equity, against Mortgagors, and Mortgagors’ successors, legal
      representatives or assigns, and against any and all Persons claiming or who
      shall thereafter claim all or any of the property sold by, through or under
      Mortgagors, or Mortgagors’ successors, legal representatives and
      assigns.  Nevertheless, Mortgagors, if requested by Mortgagee to do
      so, shall join in the execution and delivery of all proper conveyances,
      assignments and transfers of the properties so sold.

     

    6.5.           Application
      of Proceeds.  The proceeds of any sale of or other realization on
      the Mortgaged Property, or any part thereof, shall be applied by Mortgagee
      to
      the Secured Indebtedness in such order as Mortgagee shall elect.

     

    6.6.           Mortgagors’
      Waiver of Right to Appraisement, Marshaling, etc.  Mortgagors
      agree, to the full extent that Mortgagors may lawfully so agree, that Mortgagors
      will not at any time, insist upon or plead or, in any manner whatsoever, claim
      the benefit of any stay, extension or redemption law now or hereafter in force
      in order to prevent or hinder the enforcement or foreclosure of this Mortgage
      or
      the absolute sale of the Mortgaged Property or any portion thereof or the
      possession thereof by any purchaser at any sale made pursuant to any provision
      hereof or pursuant to the decree of any court of competent jurisdiction; but
      Mortgagors, and all who may claim through or under Mortgagors, so far as
      Mortgagors or those claiming through or under Mortgagors now or hereafter
      lawfully may, hereby waive the benefit of all such laws.  Mortgagors
      and all who may claim through or under Mortgagors, waive, to the extent that
      Mortgagors or those claiming through or under Mortgagors may lawfully do so,
      any
      and all rights of appraisement and any and all right to have the Mortgaged
      Property marshaled upon any foreclosure of the Lien hereof or sold in inverse
      order of alienation and agree that any court having jurisdiction to foreclose
      such Lien may sell the Mortgaged Property as an entirety.  If any law
      in this Section 6.6 referred to and now in force, of which Mortgagors or
      Mortgagors’ successor or successors might take advantage despite the provisions
      hereof, shall hereafter be repealed or cease to be in force, such law shall
      not
      thereafter be deemed to constitute any part of the contract herein contained
      or
      to preclude the operation or application of the provisions of this Section
      6.6.

     

    6.7.           Costs
      and Expenses.  All reasonable costs, expenses (including
      attorneys’ fees) and payments incurred or made by Mortgagee in protecting and
      enforcing its rights hereunder shall constitute a demand obligation owing by
      Mortgagors to the party incurring such or making such costs, expenses or
      payments and shall bear interest at a rate per annum equal to the rate set
      forth
      in Section 2.2 of the Notes, all of which shall constitute a portion of the
      Secured Indebtedness.

     

    6.8.           Mineral
      Leasing Act. Notwithstanding any other provisions of this Mortgage, any Oil
      and Gas Leases covered by this Mortgage which are subject to the Mineral Leasing
      Act of 1920, as amended, and the regulations promulgated thereunder, shall
      not
      be sold or otherwise disposed of to any party other than citizens of the United
      States, or to associations of such citizens or to any corporation organized
      under the laws of the United States, or any state or territory
      thereof that are qualified to own or control interests in such Oil and Gas
      Leases under the provisions of such Mineral Leasing Act and regulations, or
      to
      Persons who may acquire ownership or interest in such Oil and Gas Leases under
      the provisions of 30 U.S.C. § 184(g), if applicable, as such Mineral Leasing Act
      or regulations are now or may be from time to time in
      effect.


    
      
        
        

      

      
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    6.9.           Operation
      of the Mortgaged Property by Mortgagee.  Upon the occurrence of an
      Event of Default that is continuing and the acceleration of the Secured
      Indebtedness under any Credit Agreement, and in addition to all other rights
      herein conferred on Mortgagee, Mortgagee (or any Person designated by Mortgagee)
      shall, to the extent permitted by applicable law, have the right and power,
      but
      not the obligation, to enter upon and take possession of any of the Mortgaged
      Property and to exclude Mortgagors, and Mortgagors’ agents or servants, wholly
      therefrom and to hold, use, administer, manage and operate the same to the
      extent that Mortgagors shall be at the time entitled to do any of such things
      and in Mortgagors’ place and stead.  Mortgagee (or any Person
      designated by Mortgagee) may operate the same without any liability or duty
      to
      Mortgagors in connection with such operations, except to use ordinary care
      in
      the operation of such Mortgaged Property, and Mortgagee or any Person designated
      by Mortgagee shall have the right to collect and receive all Hydrocarbons
      produced and sold from the Mortgaged Property, the proceeds of which shall
      be
      applied to the Secured Indebtedness in such order as Mortgagee shall elect,
      to
      make repairs, purchase machinery and equipment, conduct workover operations,
      drill additional wells and to exercise every power, right and privilege of
      Mortgagors with respect to the Mortgaged Property.  When and if such
      expenses of such operation and development (including costs of unsuccessful
      workover operations or additional wells) have been paid and the Secured
      Indebtedness paid and performed in full, such Mortgaged Property shall, if
      there
      has been no sale or foreclosure thereof, be returned to Mortgagors.

     

    6.10.         Additional
      Waivers.  In order to enforce this Mortgage, Mortgagee or Trustee
      shall not be obligated (a) to foreclose any other mortgage or deed of trust
      covering Mortgaged Property located in another State, seek a deficiency after
      any such foreclosure or otherwise enforce Mortgagee’s rights in any of the other
      Mortgaged Property; or (b) to seek an injunction (prohibitive or mandatory),
      the
      appointment of a receiver, an order modifying any stay in any federal or state
      bankruptcy, reorganization or other insolvency proceedings relating to any
      of
      the Mortgaged Property or any portion thereof, or any other extraordinary
      relief.  Mortgagors waive, to the fullest extent permitted by law, any
      defense Mortgagors may have to any liability hereunder based on Mortgagee’s
      failure or refusal to prosecute, or any lack of diligence or delay in
      prosecuting, any action or proceeding to enforce any other mortgage or deed
      of
      trust.  If Mortgagee elects to enforce this Mortgage before, or
      without, enforcing its rights with respect to any Mortgaged Property covered
      by
      any other Mortgage, Mortgagors waive, to the fullest extent permitted by law,
      any right Mortgagors may have, whether statutory or otherwise, to set off the
      value of any other Mortgaged Property, or any portion thereof, against the
      Secured Indebtedness.  If Mortgagee elects to enforce its mortgages or
      deeds of trust covering all or any portion of the Mortgaged Property located
      in
      other States, or in conjunction with the enforcement of this Mortgage, Mortgagee
      is authorized to purchase all or any part of such other Mortgaged Property
      at
      public or private sale or as otherwise provided by applicable law, and to credit
      the purchase price against the Secured Indebtedness in such order or manner
      as
      Mortgagee determines in its sole
      discretion and to preserve Mortgagee’s rights and Liens under this Mortgage for
      any portion of the Secured Indebtedness that remains
      unpaid.  Mortgagors waive to the fullest extent permitted by
      applicable law any right to claim or seek any credit against the Secured
      Indebtedness in excess of the actual amount bid or received by Mortgagee in
      connection with the foreclosure of Mortgagee’s Liens on any of the Mortgaged
      Property located in such other States.  Mortgagors further agree that
      Mortgagee shall not be required (a) to seek or obtain a deficiency judgment
      in
      or pursuant to any action or proceeding to foreclose this Mortgage as a
      condition of later enforcing any mortgage or deed of trust covering Mortgaged
      Property located in another State, or (b) to seek or obtain a deficiency
      judgment in or pursuant to any action or proceeding to foreclose any such other
      mortgage or deed of trust as a condition of later enforcing this
      Mortgage.  Notwithstanding the foregoing, if Mortgagee in good faith
      believes that it may be required either to obtain a deficiency judgment to
      enforce this Mortgage after enforcement of a mortgage or deed of trust covering
      Mortgaged Property located in another State or to enforce another mortgage
      or
      deed of trust after enforcement of this Mortgage then Mortgagors agree that
      Mortgagee shall be entitled to seek and obtain such a deficiency judgment
      notwithstanding any contrary or inconsistent provision contained in any Credit
      Agreement.

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    ARTICLE
      VII

     

    MISCELLANEOUS

     

    7.1.           Advances
      by Mortgagee.  Each and every covenant herein contained shall be
      performed and kept by Mortgagors solely at Mortgagors’ expense.  If
      Mortgagors shall fail to perform or keep any of the covenants of whatsoever
      kind
      or nature contained in this Mortgage, Mortgagee or any receiver appointed
      hereunder may, but shall not be obligated to, make advances to perform the
      same
      on Mortgagors’ behalf, and Mortgagors hereby agree to repay such sums upon
      demand plus interest at a rate per annum equal to the rate of interest set
      forth
      in Section 2.2 of the Notes.  No such advance shall be deemed to
      relieve Mortgagors from any Event of Default hereunder.

     

    7.2.           Defense
      of Claims.  Mortgagors will notify Mortgagee, in writing, promptly
      of the commencement of any legal proceedings of which Mortgagors have notice
      affecting or which could adversely effect the Lien hereof or the status of
      or
      title to the Mortgaged Property or any material part thereof and will take
      such
      action, employing attorneys agreeable to Mortgagee, as may be necessary to
      preserve Mortgagors’ or Mortgagee’s rights affected thereby; and should
      Mortgagors fail or refuse to take any such action, Mortgagee may take such
      action on behalf and in the name of Mortgagors and at Mortgagors’ sole cost and
      expense.  Moreover, Mortgagee may take such independent action in
      connection therewith as it may, in its sole discretion, deem proper without any
      liability or duty to Mortgagors except to use ordinary care, Mortgagors hereby
      agreeing that all sums advanced or all expenses incurred in such actions plus
      interest at a rate per annum equal to the rate of interest set forth in Section
      2.2 of the Notes will, on demand, be reimbursed to Mortgagee or any receiver
      appointed hereunder.

     

    7.3.           Defeasance.  If
      the Secured Indebtedness shall be paid and discharged in full then, and in
      that
      case only, this Mortgage shall be null and void and the interests of Mortgagor
      in the Mortgaged Property shall become wholly clear of the Lien created hereby,
      and such Lien shall be released in due course at the cost of
      Mortgagors.  Mortgagee will, at Mortgagors’ sole expense, execute
      and deliver to Mortgagors all releases and other instruments reasonably
      requested of the Lien created hereunder.  Otherwise, this Mortgage
      shall remain and continue in full force and effect.

     

    7.4.           Renewals,
      Amendments and Other Security.  Renewals, refinancings and
      extensions of the Secured Indebtedness may be given at any time, and amendments
      may be made to this Mortgage, the Credit Agreements, and any other agreements
      relating to any part of the Secured Indebtedness, and Mortgagee may take or
      may
      hold other security for the Secured Indebtedness.  Any amendment of
      this Mortgage shall be by written instrument and need be executed only by the
      party against whom enforcement of such amendment is
      asserted.  Mortgagee may resort first to such other security or any
      part thereof or first to the security herein given or any part thereof, or
      from
      time to time to either or both, even to the partial or complete abandonment
      of
      either security, and such action shall not be a waiver of any rights conferred
      by this Mortgage, which shall continue as a first Lien upon the Mortgaged
      Property not expressly released until all Secured Indebtedness secured hereby
      is
      fully paid and discharged.

     

    7.5.           Instrument
      and Assignment, etc.  This Mortgage shall be deemed to be and may
      be enforced from time to time as an assignment, chattel mortgage, contract,
      financing statement, real estate mortgage, pledge, security agreement, or any
      combination thereof, and to the extent that any particular jurisdiction wherein
      a portion of the Mortgaged Property is situated does not recognize or permit
      Mortgagors to grant, bargain, sell, warrant, mortgage, assign, transfer or
      convey Mortgagors’ rights, titles and interests to Mortgagee in the manner
      herein adopted, with respect to the Mortgaged Property located in such
      jurisdiction, Mortgagors do hereby grant, bargain, sell, warrant, mortgage,
      assign, transfer and convey unto Mortgagee the Mortgaged Property to secure
      the
      Secured Indebtedness and the obligations of Mortgagors contained
      herein.

     

    7.6.           Limitation
      on Interest.  Regardless of any provision contained in this
      Mortgage or any of the Credit Agreements, Mortgagee shall never be entitled
      to
      receive, collect, or apply, as interest on the Loans, any amount in excess
      of
      the Maximum Lawful Rate, and in the event Mortgagee ever receives, collects
      or
      applies as interest any such excess, such amount which would be deemed excessive
      interest shall be deemed a partial prepayment of principal and treated hereunder
      as such; and if the Loans are paid or discharged in full, any remaining excess
      shall promptly be paid to Mortgagors.  In determining whether or not
      the interest paid or payable under any specific contingency exceeds the Maximum
      Lawful Rate, Mortgagors shall, to the extent permitted under applicable law,
      (a)
      characterize any non-principal payment as an expense, fee or premium rather
      than
      as interest, (b) exclude voluntary prepayments and the effect thereof, and
      (c) amortize, prorate, allocate and spread, in equal parts, the total
      amount of the interest throughout the entire contemplated term of the particular
      Note, so that the interest rate is the Maximum Lawful Rate throughout the entire
      term of such Note; provided, however, that if the unpaid principal balance
      thereof is paid and performed in full prior to the end of the full contemplated
      term thereof, and if the interest received for the actual period of existence
      thereof exceeds the Maximum Lawful Rate, Mortgagee shall refund to Mortgagors
      the amount of such excess, and, in such event, Mortgagee shall not be subject
      to
      any penalties provided by any laws for contracting for, charging, taking,
      reserving or receiving interest in excess of the Maximum Lawful
      Rate.


    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    


     

    7.7.           Unenforceable
      or Inapplicable Provisions.  If any provision of this Mortgage or
      in any of the Credit Agreements is invalid or unenforceable in any jurisdiction,
      the other provisions hereof or of any of the Credit Agreements shall remain
      in
      full force and effect in such jurisdiction, and the remaining provisions hereof
      shall be liberally construed in favor of Mortgagee in order to effectuate the
      provisions hereof, and the invalidity of any provision hereof in any
      jurisdiction shall not affect the validity or enforceability of any such
      provision in any other jurisdiction.  Any reference herein contained
      to statutes or laws of a state in which no part of the Mortgaged Property is
      situated shall be deemed inapplicable to, and not used in, the interpretation
      hereof.

     

    7.8.           Rights
      Cumulative.  Each and every right, power and remedy herein given
      to Mortgagee shall be cumulative and not exclusive; and each and every right,
      power and remedy whether specifically herein given or otherwise existing may
      be
      exercised from time to time and so often and in such order as may be deemed
      expedient by Mortgagee, and the exercise, or the beginning of the exercise,
      of
      any such right, power or remedy shall not be deemed a waiver of the right to
      exercise, at the same time and thereafter, any other right, power or
      remedy.  No delay or omission by Mortgagee in the exercise of any
      right, power or remedy shall impair any such right, power or remedy or operate
      as a waiver thereof or of any other right, power or remedy then or thereafter
      existing.

     

    7.9.           Waiver
      by Mortgagee.  Any and all covenants in this Mortgage may, from
      time to time, by instrument in writing signed by Mortgagee be waived to such
      extent and in such manner as Mortgagee may desire, but no such waiver shall
      ever
      affect or impair Mortgagee’s rights and remedies or Liens hereunder, except to
      the extent specifically stated in such written instrument.

     

    7.10.         Successors
      and Assigns.  This Mortgage is binding upon Mortgagors, and
      Mortgagors’ heirs, devisees, successors, personal and legal representatives and
      assigns, and shall inure to the benefit of Mortgagee and Trustee and their
      successors, legal representatives and assigns, and the provisions hereof shall
      likewise be covenants running with the Lands.

     

    7.11.         Article
      and Section Headings.  The article and section headings in this
      Mortgage are inserted for convenience and shall not be considered a part of
      this
      Mortgage or used in its interpretation.

     

    7.12.         Counterparts.  This
      Mortgage may be executed in any number of counterparts, each of which shall
      for
      all purposes be deemed to be an original and all of which are identical, except
      that, to facilitate recordation in any particular county or parish, counterpart
      portions of Exhibit A which describe properties situated in counties or parishes
      other than the county or parish in which such counterpart is to be recorded
      may
      be omitted.

     

    7.13.         Special
      Filing as Financing Statements.  This Mortgage shall likewise be a
      security agreement and a financing statement by virtue of Mortgagors, as
      debtors, granting to Mortgagee, its successors, legal representatives and
      assigns, as secured party, a security interest in all personal property,
      as-extracted collateral, fixtures, accounts, contract rights, general
      intangibles, inventory, goods, chattel paper, instruments, documents and money
      described or referred to in granting clauses (a) through (j) of Article 2 hereof
      and all proceeds and products from
      the
      sale, lease or other disposition of the Mortgaged Property or any part
      thereof.  The addresses shown in Section 7.14 hereof are the addresses
      of Mortgagors and Mortgagee and information concerning the security interest
      may
      be obtained from Mortgagee at its address.  Without in any manner
      limiting the generality of any of the foregoing provisions hereof: (a) some
      portion of the goods described or to which reference is made herein are or
      are
      to become fixtures on the Lands described or to which reference is made herein;
      (b) the minerals and the like (including oil and gas) included in the Mortgaged
      Property and the accounts resulting from the sale thereof will be financed
      at
      the wellhead(s) or minehead(s) of the well(s) or mine(s) located on the Lands
      described or to which reference is made herein; and (c) this Mortgage is to
      be
      filed of record, among other places, in the real estate records of each county
      or parish in which the Lands, or any part thereof, are situated, as a financing
      statement, but the failure to do so will not otherwise affect the validity
      or
      enforceability of this Mortgage.  Mortgagors authorize Mortgagee to
      file such amendments to this Mortgage, financing statements and amendments
      thereto, and continuation statements as Mortgagee deems reasonable or necessary
      to perfect and maintain the perfection of the Liens granted herein, including
      such Liens with respect to any additions to the Mortgaged Property as provided
      in Article 5.


    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    


     

     

    7.14.         Notices.  Whenever
      this Mortgage requires or permits any consent, approval, notice, request or
      demand from one party to another, such consent, approval, notice or demand
      shall, unless otherwise required under applicable law, be given in accordance
      with the provisions of the Credit Agreements, addressed to the party to be
      notified at the address stated below (or such other address as may have been
      designated in accordance with the provisions of the Credit
      Agreements):

    


    
      	
              MORTGAGORS-DEBTORS

            	
              MORTGAGEE-SECURED
                PARTY

            
	
               

              New
                Century Energy Corp.

              Attn:
                Chief Financial Officer

              5851
                San Felipe, Suite 775

              Houston,
                Texas 77057

              Fax:
                713-266-4358

              Century
                Resources, Inc.

              Attn:
                Chief Financial Officer

              5851
                San Felipe, Suite 775

              Houston,
                Texas 77057

              Fax:           713-266-4358

               

            	
               

              LV
                Administrative Services, Inc.

              c/o
                Laurus Capital Management, LLC

              335
                Madison Avenue, 10th
                Floor

              New
                York, New York 10017

              Facsimile: 212-581-5037

            
	
              with
                copies to:

            	
              with
                copies to:

            
	
               

              David
                M. Loev, Esquire

              The
                Loev Law Firm, PC

              6300
                West Loop South, Suite 280

              Bellaire,
                Texas 77401

              Facsimile: 713-524-4122

            	
               

              Loeb
                & Loeb, LLP

              Attn:
                Scott J. Giordano, Esq.

              345
                Park Avenue

              New
                York, New York 10154

              Facsimile: 212-407-4990

               

              and
                to:

               

              Jackson
                Walker L.L.P.

              Attn:
                Michael P. Pearson

              1401
                McKinney St., Suite 1900

              Houston,
                Texas 77010

              Facsimile: 713-752-4221

            


    

     

    7.15.         GOVERNING
      LAW.  THIS MORTGAGE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
      GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES
      OF
      AMERICA.

     

    7.16.         Future
      Advances: Maximum Secured Amount.  This Mortgage covers not only
      the proceeds of the Loan, but all advances hereafter made by Mortgagee to or
      for
      the benefit of Mortgagors (the “Future Advances”), including, without
      limitation, any amounts advanced by Mortgagee in satisfying, on Mortgagors’
behalf, any of the Secured Indebtedness, and any advances made in accordance
      herewith by Mortgagee to protect its security, and any other advances by
      Mortgagee.  The maximum amount secured hereby may be advanced and
      repaid, and again advanced and repaid from time to time, in Mortgagee’ sole and
      absolute discretion, and this Mortgage shall become enforceable upon recording
      and shall have priority over all other parties whose rights arose after the
      recording hereof, with respect to all funds advanced by Mortgagee to Mortgagors,
      regardless of whether such funds were advanced before or after the arising
      of
      such other party’s rights.  Nothing herein shall be interpreted as
      requiring Mortgagee to make any Future Advances hereunder.

     

    7.17.         Recording.  Executed
      original counterparts of this Mortgage are to be filed for record in the records
      of the Counties wherein the Mortgaged Property is situated, and shall have
      annexed thereto as Exhibit A, only the portions or divisions containing specific
      descriptions of the Mortgaged Property relating to the Lands located in such
      Counties.  Whenever a recorded counterpart of this Mortgage contains
      specific descriptions which are less than all of the descriptions contained
      in
      any full counterpart lodged with Mortgagee, the omitted descriptions are hereby
      included by reference in such recorded counterpart as if each recorded
      counterpart conformed to any full counterpart lodged with
      Mortgagee.

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    ARTICLE
      VIII

     

    ASSIGNMENT
      OF PRODUCTION

     

    8.1.           Assignment.  For
      the purpose of further securing the Secured Indebtedness and the performance
      of
      Mortgagors’ covenants hereunder, Mortgagors do hereby TRANSFER, ASSIGN, AND
      CONVEY unto Mortgagee any and all of the interests of Mortgagors in and to
      the
      Hydrocarbons that may be produced from, or attributable to, the Mortgaged
      Property on and after
      the
      date of execution hereof, together with the proceeds of the sale thereof and
      attributable thereto.  This assignment is made upon the following
      terms and conditions: (a) pipeline companies and others purchasing the oil,
      gas,
      minerals and other substances listed above produced and to be produced from
      said
      property are hereby authorized and directed to pay directly to Mortgagee the
      interests of Mortgagors in and to the proceeds of the sale of the oil, gas,
      minerals and other substances listed above produced, to be produced and
      attributable to said property and to continue such payments until they have
      been
      furnished with a release hereof executed in writing by Mortgagee, and the
      receipt of Mortgagee for monies so paid to it shall be a full and complete
      release, discharge and acquittance to any such pipeline company or other
      purchaser, to the extent of all amounts so paid; (b) Mortgagee is hereby
      authorized to receive and collect the proceeds of the sale of the oil, gas,
      minerals and other substances listed above assigned to it hereunder and to
      apply
      the funds so received first toward the payment of the expenses, if any, incurred
      in the collection thereof then toward the payment of the Secured Indebtedness,
      any balance remaining after the full and final payment of the Secured
      Indebtedness to be held subject to the order of Mortgagors; (c) Mortgagee shall
      have the right, at its sole option, at any time, and from time to time, to
      release to, or on the order of, Mortgagors all or any portion of the funds
      assigned to Mortgagee hereunder, and no such releases shall affect or impair
      the
      Lien of this Mortgage or the validity and effect of the assignment contained
      in
      this Article 8; (d) Mortgagee shall never be under any obligation to enforce
      the
      collection of the funds assigned to it hereunder, nor shall it ever be liable
      for failure to exercise diligence in the collection of such funds, but it shall
      only be accountable for the sums that it shall actually receive; (e) Mortgagors
      covenant to cause all pipeline companies or other purchasers of the oil, gas,
      minerals and other substances listed above produced from and attributable to
      said property to pay promptly to Mortgagee, at the office of Mortgagee at the
      address of Mortgagee stated above, the interests of Mortgagors in and to the
      proceeds of the sale thereof; and (f) upon the full and final payment of the
      Secured Indebtedness, Mortgagee, at the request of Mortgagors, at Mortgagors’
sole cost and expense, shall execute and deliver to Mortgagors a reassignment
      hereof, without recourse, representations or
      warranties.  Notwithstanding the foregoing provisions of this Section
      8.1, so long as no Event of Default has occurred and shall be continuing,
      Mortgagors may continue to receive from the purchasers of production all such
      Hydrocarbons and proceeds of the sale thereof, subject, however, to the Liens
      created under this Mortgage.  If an Event of Default has occurred and
      is continuing, Mortgagee may exercise all rights and remedies granted hereunder,
      including, without limitation, the right to obtain possession of all
      Hydrocarbons and proceeds of the sale thereof then held by Mortgagors or to
      receive directly from the purchasers all other Hydrocarbons and proceeds of
      the
      sale thereof.

     

    8.2.           Power
      of Attorney.  In consideration of the Loans evidenced by the
      Notes, Mortgagors hereby designate and appoint Mortgagee as Mortgagors’ true and
      lawful agent and attorney-in-fact (with full power of substitution, either
      generally or for such limited periods or purposes as Mortgagee may, from time
      to
      time, prescribe) with full power and authority for and on behalf and in the
      name
      of Mortgagors upon the occurrence of an Event of Default that is continuing,
      to
      execute, acknowledge and deliver all such division orders, transfer orders,
      certificates and any and all other documents of every nature as may, from time
      to time, be necessary or proper to effectuate the intent and purpose of the
      assignment contained in Section 8.1 hereof.  Mortgagors shall be
      bound thereby as fully and effectively as if Mortgagors had personally executed,
      acknowledged and delivered any such division order, transfer order, certificate
      or other documents.  The powers and authorities herein conferred on
      Mortgagee may be exercised by any authorized officer or director of
      Mortgagee.  The power of attorney conferred by this Section 8.2 is
      granted for a 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 Mortgagee, any officer or
      director thereof above designated or any substitute thereof shall be fully
      protected in treating the powers and authorizations conferred by this Section
      8.2 as continuing in full force and effect until advised by Mortgagee that
      all
      of the Secured Indebtedness is fully and finally paid.

     

    8.3.           Amendment
      and Restatement.  As of the date of this Mortgage, the terms,
      conditions, covenants, agreements, representations and warranties contained
      in
      the Original Mortgage shall be deemed amended and restated in their entirety
      as
      set forth in this Mortgage and the Original Mortgage shall be consolidated
      with
      and into and superseded by this Mortgage; provided, however, that nothing
      contained in this Mortgage shall impair, limit or affect the liens or security
      interests heretofore granted, pledged and/or assigned to Mortgagee as security
      for the Secured Indebtedness under the Original Mortgage.

     

    [Signature
      Page to Follow]


    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    


     

    IN
      WITNESS WHEREOF, Mortgagors, acting by and through their duly authorized
      officers have executed this Mortgage on the date of its
      acknowledgment.

     

    NEW
      CENTURY ENERGY CORP.

    


    


    By: 
      /s/ Edward R.
      DeStefano                                                                          

    Edward
      R. DeStefano

    President
      and Chief Executive
      Officer

    


     

    CENTURY
      RESOURCES, INC.

    


    


    By:  /s/
      Edward R.
      DeStefano                                                                         

    Edward
      R. DeStefano

    President
      and Chief Executive
      Officer

     

    


     

    The
      addresses of Mortgagors are:

     

    New
      Century Energy Corp.

    5851
      San
      Felipe, Suite 775

    Houston,
      Texas 77057

    Century
      Resources, Inc.

    5851
      San
      Felipe, Suite 775

    Houston,
      Texas 77057

     

    This
      Mortgage was prepared by, and recorded counterparts should be returned
      to:

     

    Michael
      P. Pearson

    Jackson
      Walker L.L.P.

    1401
      McKinney St., Suite 1900

    Houston,
      Texas 77010


    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    


    


     

    THE
      STATE
      OF
      TEXAS                               

     

    COUNTY
      OF
      HARRIS          

     

    BEFORE
      ME, the undersigned authority, on this day personally appeared Edward R.
      DeStefano, President and Chief Executive Officer of New Century Energy
      Corp., a Colorado corporation, and known to me to be the person whose
      name is subscribed to the foregoing instrument, and acknowledged to me that
      he
      executed the same for the purposes and considerations therein expressed, as
      the
      act and deed of such corporation and in the capacity therein
      stated.

     

    GIVEN
      UNDER MY HAND AND SEAL OF OFFICE this 30th day of November,
      2007.

     

    /s/
      Sharon Mork

    Notary
      Public, State of Texas

     

    THE
      STATE
      OF
      TEXAS                                                      

     

    COUNTY
      OF
      HARRIS                                                    

     

    BEFORE
      ME, the undersigned authority, on this day personally appeared Edward R.
      DeStefano, President and Chief Executive Officer of Century Resources,
      Inc., a Delaware corporation, and known to me to
      be the person whose name is subscribed to the foregoing instrument, and
      acknowledged to me that he executed the same for the purposes and considerations
      therein expressed, as the act and deed of such corporation and in the capacity
      therein stated.

     

    GIVEN
      UNDER MY HAND AND SEAL OF OFFICE this 30th day of November,
      2007.

     

    /s/
      Sharon Mork

    Notary
      Public, State of Texas


    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    


    Schedule
      1

    to

    AMENDED
      AND RESTATED MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT
      AND ASSIGNMENT OF PRODUCTION

    


    NEW
      CENTURY ENERGY CORP. AND CENTURY RESOURCES, INC.

    The
      Original Mortgage

    


    
      	
              Mortgage,
                Deed of Trust, Security Agreement, Financing Statement and Assignment
                of
                Production, dated as of November 20, 2007, from New Century Energy
                Corp.
                and Century Resources, Inc., as Mortgagors, to Eugene Grin, as Trustee,
                for the benefit of LV Administrative Services, Inc., as administrative
                and
                collateral agent for Valens U.S. SPV I, LLC, and Valens Offshore
                SPV II,
                Corp., collectively as Mortgagee, filed and recorded as
                follows:

            
	 
	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 
	
              TEXAS

            	 
	 	 
	
              Goliad
                County

            	
              Filed
                on November 20, 2007, under Instrument No. 00120746, Volume 302 Page
                421

            
	 	 
	
              Jim
                Hogg County

            	
              Filed
                on November 20, 2007

            
	 	 
	
              Matagorda
                County

            	
              Filed
                on November 20, 2007, under Instrument No. 079096

            
	 	 
	
              McMullen
                County

            	
              Filed
                on November 20, 2007, under Instrument No. 63226, Volume 176
                Page 223

            
	 	 
	
              Wharton
                County

            	
              Filed
                on November 20, 2007, under Instrument No. 277730, Official
                Records

            


    

    



    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    


    Exhibit
      A

    to

    AMENDED
      AND RESTATED MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT, FINANCING
      STATEMENT AND ASSIGNMENT OF PRODUCTION

    


    NEW
      CENTURY ENERGY CORP. AND CENTURY RESOURCES, INC.

    Schedule
      of Leases and Rights-of-Way

     

     

    [CONFIDENTIAL
      INFORMATION REMOVED]


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
      B

    to

    AMENDED
      AND RESTATED MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT
      AND ASSIGNMENT OF PRODUCTION

    


    NEW
      CENTURY ENERGY CORP. AND CENTURY RESOURCES, INC.

    Senior
      Liens

    


    
      	
              1.

            	
              Mortgage,
                Deed of Trust, Security Agreement, Financing Statement and Assignment
                of
                Production, from New Century Energy Corp. and Century Resources,
                Inc., as
                Mortgagors, to Eugene Grin, as Trustee, for the benefit of Laurus
                Master
                Fund, Ltd., as Mortgagee, dated June 30, 2005, filed and recorded
                as
                follows:

            
	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on July 5, 2005, under Instrument No. 055103, Official
                Records

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on July 5, 2005, under Instrument No. 255765, Volume 614 Page 333,
                Official Records

            


    

    


    
      	
              2.

            	
              UCC-1
                Financing Statement reflecting New Century Energy Corp. and Century
                Resources, Inc., as Debtors, and Laurus Master Fund, Ltd., as Secured
                Party, relating to the Mortgage dated as of June 30, 2005, and covering
                fixtures and as-extracted collateral, filed and recorded as
                follows:

            
	 	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on July 5, 2005, under Instrument No. 055104, Official
                Records

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on July 5, 2005, under Instrument No. 255766, Volume 614 Page 358,
                Official Records

               

            
	
              3.

            	
              Mortgage,
                Deed of Trust, Security Agreement, Financing Statement and Assignment
                of
                Production from New Century Energy Corp. and Century Resources, Inc.,
                as
                Mortgagors, to Eugene Grin, as Trustee, for the benefit of Laurus
                Master
                Fund, Ltd., as Mortgagee, dated as of September 19, 2005, filed and
                recorded as follows:

            
	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on September 20, 2005, under Instrument No. 057328, Official
                Records

            
	 	 	 
	 	
              McMullen
                County

            	
              Filed
                on September 20, 2005, Volume 163 Page 276

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on September 21, 2005, under Instrument No. 257742, Volume 624
                Page 304, Official Records

            


    

    


    


    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

    
      	
              4.

            	
              UCC-1
                Financing Statement reflecting New Century Energy Corp. and Century
                Resources, Inc., as Debtors, and Laurus Master Fund, Ltd., as Secured
                Party, relating to the Mortgage dated as of September 19, 2005, and
                covering fixtures and as-extracted collateral, filed and recorded
                as
                follows:

            
	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on September 20, 2005, under Instrument No. 057329, Official
                Records

            
	 	 	 
	 	
              McMullen
                County

            	
              Filed
                on September 20, 2005, Volume 163 Page 308

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on September 21, 2005, under Instrument No. 257743, Volume 624
                Page 330, Official Records

               

            
	
              5.

            	
              Amended
                and Restated Mortgage, Deed of Trust, Security Agreement, Financing
                Statement and Assignment of Production from New Century Energy Corp.
                and
                Century Resources, Inc., as Mortgagors, to Eugene Grin, as Trustee,
                for
                the benefit of Laurus Master Fund, Ltd., as Mortgagee, dated April
                26,
                2006, filed and recorded as follows:

            
	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on April 27, 2006, under Instrument No. 063043, Official
                Records

            
	 	 	 
	 	
              McMullen
                County

            	
              Filed
                on April 27, 2006, Volume 168 Page 336

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on April 27, 2006, under Instrument No. 263022, Volume 650 Page 320,
                Official Records

            


    

    


    


    
      	
              6.

            	
              UCC-1
                Financing Statement reflecting New Century Energy Corp. and Century
                Resources, Inc., as Debtors, and Laurus Master Fund, Ltd., as Secured
                Party, relating to the Mortgage dated April 26, 2006, and covering
                fixtures and as-extracted collateral, filed and recorded as
                follows:

            
	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on April 28, 2006, under Instrument No. 063108

            
	 	 	 
	 	
              McMullen
                County

            	
              Filed
                on April 28, 2006, Volume 168 Page 413

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on April 28, 2006, under Instrument No. 263056, Volume 650 Page 481,
                Official Records

            


    

    


    
      	
              7.

            	
              UCC-1
                Financing Statement reflecting New Century Energy Corp. and Century
                Resources, Inc., as Debtors, and Laurus Master Fund, Ltd., as Secured
                Party, covering fixtures and as-extracted collateral, filed and recorded
                as follows:

            
	 	 
	 	
              JURISDICTION

            	
              FILING
                DATA

            
	 	 	 
	 	
              TEXAS

            	 
	 	 	 
	 	
              Matagorda
                County

            	
              Filed
                on January 5, 2007, under Instrument No. 070109, Official
                Records

            
	 	 	 
	 	
              McMullen
                County

            	
              Filed
                on January 9, 2007, Volume 173 Page 13

            
	 	 	 
	 	
              Wharton
                County

            	
              Filed
                on January 5, 2007, under Instrument No. 269469, Volume 683 Page
                99,
                Official Records

            


    

    


     

    



    
      
        
        

      

      
        -33-