Document:

beardkex1012-041510.htm

Exhibit 10.11

 

AMENDED AND RESTATED BUSINESS LOAN AGREEMENT

 

 

THIS AGREEMENT is made effective as of December 8, 2008, by and among THE BEARD COMPANY, an Oklahoma corporation, having an address of Harvey Parkway, 301 NW 63rd Street, Suite 400, Oklahoma City, Oklahoma 73116 (“Borrower”) and FIRST FIDELITY BANK. N.A., a national banking association, whose address is 5100 North Classen, Oklahoma City, Oklahoma 73118 (“Lender”).

 

WHEREAS, the Borrower and the Lender entered into a Business Loan Agreement dated June 8, 2007 pursuant to which Borrower executed a $1,500,000.00 Promissory Note # 72818 dated June 8, 2007 (the “2007 Lender Note”) secured by a June 8, 2007 Amended and Restated Deed of Trust, Assignment of Production, Security Agreement and Financing Statement (the “2007 Lender Deed of Trust”); and

 

WHEREAS, on October 11, 2007, The Borrower and Lender executed a Change in Terms Agreement  which modified the terms of the 2007 Lender Note; and

 

WHEREAS, on March 25, 2008, the Borrower and Lender executed a second Change in Terms Agreement which again modified the terms of the 2007 Lender Note (as so modified, the “2008 Lender Note”) and which is secured by a March 25, 2008 Amended and Restated Deed of Trust, Assignment of Production, Security Agreement and Financing Statement (the “2008 Lender Deed of Trust”); and

 

WHEREAS, on the effective date of this Agreement, the principal balance owed under the 2008 Lender Note is $650,000.00; and

 

WHEREAS, the Borrower will execute a promissory note dated December 8, 2008 in the original principal amount of $1,000,000.00 (the “Note”) in renewal and extension of the unpaid balance of indebtedness evidenced by the 2008 Lender Note which shall be subject to the terms and conditions of this Agreement and, therefore, in consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows:

 

1.     Definitions.  Terms used in this Agreement with their initial letters capitalized shall have the meanings set forth in Section 11 of this Agreement, except where the context otherwise requires.

 

2.     Loan.  Subject to the terms and conditions hereof, and the terms and conditions of the other Loan Documents, the Lender agrees to extend credit to the Borrower and the Borrower agrees to such extension of credit from the Lender, in the maximum principal amount of $1,000,000.00, but not to exceed the Reducing Commitment Amount.  Such extension of credit shall be evidenced by and payable in accordance with the terms and conditions of the Note.

  

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3.     Conditions of Lending.  The obligation of the Lender to perform this Agreement and to extend the Loan as described herein is subject to the performance of the following conditions precedent: (i) this Agreement, the Note, the Loan Documents, and all other documents required by the Lender shall have been duly executed, acknowledged (where appropriate) and delivered to the Lender, all in form and substance satisfactory to the Lender; (ii) Borrower and any Guarantor shall have furnished to the Lender such financial statements and other information as the Lender shall have requested; (iii) no Events of Default shall have occurred and be continuing under this Agreement or the Loan Documents and all representations and warranties contained herein shall be true and correct; (iv) Borrower shall have delivered to the Lender such authorizations and other documents reasonably required by Lender to authorize the execution, delivery and performance of the Loan Documents, all in form and substance satisfactory to the Lender; (v) Lender shall have received satisfactory evidence that no litigation, investigation or proceeding before or by an arbitrator, administrative agency or court is continuing or threatened against the Borrower, any Guarantor or the Collateral; (vi) Borrower shall have provided to the Lender evidence satisfactory to Lender of the existence of insurance on Borrower’s properties, assets and business in such amounts and against such risks as Lender shall deem appropriate in its sole discretion, with endorsements to all such insurance policies of the Borrower naming Lender as a loss payee or an additional insured as Lender’s interest may appear; (vii) Borrower shall have paid all of the Lender’s costs and expenses, including reasonable fees of legal counsel, incurred in the preparation of the Loan Documents and in closing and perfecting the Liens and rights of the Lender under the Loan Documents; and (viii) Borrower shall have provided Lender with any such other information as Lender might reasonably request.

 

3.1       Real Estate and Oil and Gas Secured Loan.  The Lender shall have received such of the following items as may be indicated, all of which shall be satisfactory to Lender after reasonable opportunity for review by Lender and its representatives:

 

	
(a)  

	
Title Evidence.  The Lender shall have received satisfactory evidence of the Borrower’s ownership interest in the Oil and Gas Properties described in the attached Exhibit A.

 

	
(b)  

	
Engineering Information.  The Lender shall have received satisfactory engineering reports and other information concerning the production capabilities of the Oil and Gas Properties.

 

	
(c)  

	
Division Orders, Evidence of Production Payments, Division Order Title Opinions.  Lender shall have received copies of all division orders, evidence of production payments, and division order title opinions applicable to the Oil and Gas Properties, review of which must be acceptable to Lender.

 

	
(d)  

	
Environmental Information.  The Lender shall have received, reviewed and approved environmental information with respect to the Oil and Gas Properties, the results of which shall be satisfactory to the Lender.

 

	
(e)  

	
UCC and Lien Search.  The Lender shall have received a UCC and lien search with respect to the Borrower, the results of which shall be satisfactory to the Lender.

 

	
(f)  

	
Inspections.  At the Lender's sole election, the Lender may conduct such physical inspections of the Collateral as the Lender deems necessary, the results of which shall be satisfactory to the Lender.

 

	
(g)  

	
Loan Documents.  The Lender shall have received all of the Loan Documents fully executed by Borrower.

 

	
(h)  

	
Other Information.  The Borrower shall have provided the Lender with any such other information concerning the Borrower or Collateral as the Lender might reasonably require.

 

	
(i)  

	
No Default.  No Event of Default shall have occurred and be continuing under any of the Loan Documents.

  

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4.     Representations and Warranties.  To induce the Lender to extend the Loan and enter into this Agreement, the Borrower represents and warrants to the Lender during the term of the Loan and any and all renewals and extensions thereof, as follows: (i) this Agreement and the Loan Documents, when duly executed and delivered, will constitute legal, valid, and binding obligations of the Borrower, fully enforceable in accordance with their respective terms; (ii) all financial statements and information which have been or may hereafter be furnished to the Lender in connection herewith, do or shall fairly represent the financial condition of the Borrower and any Guarantor as of the dates and the results of operations for the periods for which the same are furnished, and shall be accurate, correct and complete; (iii) there is no action, suit, investigation or proceeding pending or threatened against the Borrower, any Guarantor or any of the Collateral; (iv) Borrower and any Guarantors have timely filed all tax returns that are required to be filed and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Borrower or any Guarantor; (v) except for Permitted Liens, all of the Collateral is free and clear of all Liens, and Borrower (or any other party for whom Lender has been provided proper evidence of ownership) has good and marketable title to such Collateral; (vi) there is no material fact that Borrower has not disclosed to Lender which could have a material adverse effect on the properties, business, prospects or condition (financial or otherwise) of Borrower or any Guarantor; (vii) Borrower and all Guarantors are not in violation of any law, rule, regulation, order or decree which is applicable to Borrower, any Guarantor or their properties; (viii) the Collateral is insured in accordance with the coverages approved by Lender, with the Lender named as a loss payee or an additional insured to the extent of its interest therein and Borrower and all other applicable parties are in full compliance with all such insurance contracts, the same are in full force and effect and are enforceable in accordance with their terms; and (ix) no Event of Default has occurred and is continuing

 

4.1       Survival of Representations.  All of the representations and warranties made by the Borrower herein will survive the delivery of the Loan Documents and any renewal and extension of the Loan hereunder.  All statements contained in any certificate or other instrument delivered by or on behalf of the Borrower or any Guarantor under or pursuant to this Agreement or in connection with the transactions contemplated hereby shall constitute representations and warranties made by the Borrower hereunder as applicable.

 

5.     Security.  The Loan shall be secured by first and prior Liens on the Collateral in favor of the Lender pursuant to the Loan Documents, subject only to Permitted Liens and such other exceptions or other liens or encumbrances as may be consented to by the Lender in writing.  From time to time during the term of this Agreement, the Lender may reasonably require the Borrower to execute and deliver other and further Loan Documents to confirm and further secure the interest of the Lender in the Collateral, which Borrower agrees it will so execute and deliver upon request.

 

6.     Affirmative Covenants.  Until payment in full of the Loan, the Borrower agrees, unless the Lender shall otherwise consent in writing, to perform or cause to be performed the following agreements:

 

6.1       Financial Statements and Information.  Borrower shall provide, or cause to be provided, to Lender within the time limits designated, the following financial statements and other information:

 

	
  

	
(a)

	
Annual Audited Financial Statements of Borrower within 100 days of the end of Borrower’s fiscal year beginning with the year ending December 31, 2008.

 

	
  

	
(b)

	
Borrower’s 10K due within 100 days of Borrower’s fiscal year end.

 

	
  

	
(c)

	
Borrower’s 10Q filing due within 60 days of each quarter end beginning with March 31, 2009.

 

	
  

	
(d)

	
Quarterly production information for the Oil and Gas Properties (including but not limited to McElmo Dome Unit revenue and expenses) as may be requested by Lender and in form and substance satisfactory to Lender, due within 60 days of each quarter end beginning with December 31, 2008.

 

	
  

	
(e)

	
Quarterly compliance certificate detailing Borrower’s compliance with the requirements described in this paragraph 6.3, due within 60 days of each quarter end beginning with December 31, 2008.

  

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6.2       Expenses.  The Borrower shall pay all costs and expenses required to satisfy the conditions of this Agreement.  Without limitation of the generality of the foregoing Borrower will pay:  (i) all of the reasonable fees and expenses of counsel employed by the Lender in connection with preparing and perfecting the loan documentation as well as the closing of this transaction; (ii) all of the fees, expenses and costs of perfecting the Liens on the Collateral; (iii) all reasonable costs and expenses of Lender (including, without limitation, the reasonable attorneys’ fees of Lender’s legal counsel) incurred by Lender in connection with the preservation and enforcement of this Agreement, the Note, and/or the other Loan Documents; (iv) all reasonable costs and expenses, including any reasonable fees and expenses of counsel employed by the Lender, in regard to any litigation arising out of or relating to this transaction and all other reasonable costs, fees and expenses involved in the enforcement or defense of this Agreement, the Loan Documents or any instrument executed pursuant hereto; and (v) all fees associated with any third party analysis of the engineering reports and related information with respect to Borrower’s Oil and Gas Properties.

 

6.3       Financial Covenants.                                        The Borrower shall at all times hereunder maintain a minimum debt service ratio of 1.25:1 measured on a quarterly basis beginning with the quarter ending December 31, 2008.  The ratio will be calculated as the sum of Borrower’s gross revenues from the McElmo Dome Unit for the quarter, less severance taxes and lease operating expenses for the quarter, divided by the sum of the Reducing Commitment Amount required for the respective quarter.  

 

7.     Negative Covenants.  Until payment in full of the Loan, the Borrower shall not, unless the Lender shall otherwise consent in writing, violate or cause to be violated the following:

 

7.1       Limitation on Liens.  Borrower shall not create, incur, permit or suffer to exist any Lien upon any of the Collateral, except Permitted Liens.

 

7.2       Sale or Disposition of Collateral.  Borrower shall not sell, assign, lease, dispose or otherwise transfer any of the Collateral to any other person or entity without the Lender’s prior written permission.

 

8.     Events of Default.  The following shall constitute Events of Default hereunder and under each of the Loan Documents: (i) default in payment when due of any principal or interest due and owing on any Note after five (5) days written notice thereof; (ii) default in payment when due of any other amount payable to the Lender under the terms of this Agreement or the Loan Documents; (iii) default by the Borrower in the performance or observance of any covenant or agreement contained in this Agreement, the Loan Documents, or any agreement made in connection therewith, or under the terms of any other instrument delivered to the Lender in connection with this Agreement, and the continuance of such default without cure for a period of thirty (30) calendar days after the occurrence of such default; (iv) any representation or warranty herein or under any Loan Document, or any representation, statement, certificate, schedule or report made or furnished to the Lender on behalf of the Borrower or any Guarantor proves to be false or erroneous in any material respect at the time of making thereof or any warranty ceases to be complied with in any material respect; (v) Borrower or any Guarantor shall:  (a) apply for or consent to the appointment of a receiver, trustee or liquidator of their respective properties; (b) admit in writing their inability to pay debts as they mature; (c) make a general assignment for the benefit of creditors; or (d) any material part of their assets or properties shall be placed in the hands of a receiver, trustee or other officers or representatives of a court or of creditors; (vi) Borrower or any Guarantor shall be adjudged bankrupt or any voluntary proceeding shall be instituted by Borrower or any Guarantor in insolvency or bankruptcy or for readjustment, extension or composition of debts or for any other relief of debtors; (vii) any involuntary proceeding shall be instituted against Borrower or any Guarantor in insolvency or for readjustment, extension, or composition of debts, which proceeding is not dismissed within thirty (30) days after the filing of the commencement of the same; (viii) entry by any court of a final judgment against Borrower or any Guarantor, or the institution of any levy, attachment, garnishment or charging order against the Borrower or any Guarantor which has a material adverse effect as determined by Lender on the financial condition of the Borrower or any Guarantor; or (ix) a Lien other than that of this Lender appears on the Collateral.

  

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9.     Remedies.  Upon the occurrence of any Event of Default, which has not been timely cured, the Lender may, at its option: (i) declare the Note and all sums outstanding under the Loan Documents to be immediately due and payable, and the Lender will be entitled to proceed to selectively and successively enforce the Lender’s rights under the Note and all Loan Documents; (ii) terminate any of the Lender’s obligations hereunder, (iii) exercise any right of offset, (iv) without notice of default or demand, pursue and enforce any of the Lender’s rights and remedies under the Loan Documents, or otherwise provided under or pursuant to any applicable law or agreement, or (v) exercise any other remedy at law or in equity.  Lender may waive any Event of Default in writing, and, in such event, the Lender and the Borrower will be restored to their respective former positions, rights and obligations hereunder.  Any Event of Default so waived will for all purposes of this Agreement be deemed to have been cured and not to be continuing; but no such waiver will extend to any subsequent or other Event of Default or impair any consequence of such subsequent or other Event of Default.

 

10.       General Conditions.  The following conditions shall be applicable throughout the term of this Agreement:

 

10.1               Waiver; Modification.  No failure to exercise, and no delay in exercising, on the part of Lender, any right hereunder or under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right.  The rights of Lender hereunder and under the Loan Documents shall be in addition to all other rights provided by law.  No modification or waiver of any provision of this Agreement, any Note or any Loan Document, nor consent to departure therefrom, shall be effective unless in writing signed by Lender and no such consent or waiver shall extend beyond the particular case and purpose involved.  No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand.

 

10.2               Notices.  Any notices or other communications required or permitted to be given by this Agreement or any other Loan Documents must be (i) given in writing, and (ii) personally delivered or mailed by prepaid mail or overnight courier, to the address of such party as provided at the beginning of this Agreement.   Any such notice or other communication shall be deemed to have been given (whether actually received or not) on the day three days after it is mailed by prepaid certified or registered mail, one day after sent by over night courier, or on the day it is personally delivered as aforesaid, and otherwise when actually received.  Any party may, for purposes of the Loan Documents, change its address or the person to whom a notice or other communication is marked to the attention of, by giving notice of such change to the other parties pursuant hereto.

 

10.3               Governing Law; Choice of Forum.  This Agreement has been executed and delivered in the State of Oklahoma, and the substantive laws of Oklahoma and the applicable federal laws of the United States shall govern the validity, construction, enforcement and interpretation of this Agreement and all of the Loan Documents.  Any suit, action or proceeding against Borrower with respect to this Agreement or any Loan Document may be brought in the courts of Oklahoma County, Oklahoma, or in the United States courts located in Oklahoma County, Oklahoma as Lender in its sole discretion may elect and Borrower hereby submits to the non-exclusive jurisdiction of such courts for the purpose of any such suit, action or proceeding.  Borrower hereby irrevocably waives any objections which Borrower may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any Loan Document brought in the courts located in Oklahoma County, Oklahoma, and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

  

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10.4               No Oral Agreements; Invalid Provisions; Multiple Counterparts.  THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.  If any provision of any Loan Document is held to be illegal, invalid or unenforceable under present or future laws during the term of this Agreement, such provision shall be fully severable; such Loan Document shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of such Loan Document; and the remaining provisions of such Loan Document shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provisions or by its severance from such Loan Document. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart.

 

10.5               Binding Effect; No Third-Party Beneficiary.  The Loan Documents shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors, assigns and legal representatives; provided, however, that Borrower may not, without the prior written consent of Lender, assign any rights, powers, duties or obligations thereunder.   Nothing contained in the Loan Documents, nor any conduct or course of conduct by any or all of the parties hereto, before or after signing this Agreement or any other Loan Document, shall be construed as creating any right, claim or cause of action against Lender, or any of its officers, directors, agents or employees, in favor of any materialman, supplier, contractor, subcontractor, purchaser or lessee of any property owned by Borrower, nor to any other person or entity.

 

11.       Definitions.  As used in this Agreement, the following terms with their initial letters capitalized shall have the following meanings except where the context otherwise requires:

 

“Agreement” shall mean this Amended and Restated Business Loan Agreement, as amended, supplemented or modified from time to time.

 

“Collateral” means:   i) all of Borrower’s right, title and interest in and to all of the Oil and Gas Properties,   ii) Borrower’s 5% stock ownership interest in Geohedral, Inc. and, and such other property as may be described in any other Loan Document made and delivered as security for the Loan.

 

“GAAP” means the generally accepted accounting principles, practices and procedures, set forth by the Accounting Principles Board and the American Institute of Certified Public Accountants and the Financial Accounting Standards Board, which are applicable as of the date of the end of the fiscal quarter immediately preceding such date of determination.

 

“Guarantor” shall mean any guarantor of the Loan who may hereafter execute a Guaranty.

 

“Guaranty” shall mean any unconditional and absolute guaranty of the Loan by a Guarantor pursuant to a guaranty agreement in form satisfactory to the Lender.

 

 “Lien” means any lien, mortgage, deed of trust, security interest, tax lien, pledge, encumbrance, conditional sale or title retention arrangement, or any other interest in property designed to secure the repayment of debt, whether arising by agreement or under any statute or law, or otherwise.

  

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 “Loan” means any loan or credit extensions contemplated by this Agreement or that may be evidenced by a Note or any other Loan Document.

 

“Loan Documents” collectively means this Agreement, any Note, any Guaranty, all mortgages, deeds of trust, security agreements, assignments, and financing statements securing the Loan, and all other promissory notes, guaranties, agreements and all other documents, agreements, certificates and instruments executed and delivered in connection with the Loan described herein and any renewals, amendments, supplements or modifications thereof or thereto.

 

“Note” means any Promissory Note from the Borrower payable to the order of the Lender, whether now or hereafter made and delivered to Lender, together with all renewals, extensions, modifications and substitutions thereto and therefor.

 

“Oil and Gas Properties” means the oil, gas and mineral interests and properties described on Exhibit “A” attached hereto and made a part hereof.

 

“Permitted Liens” means any Lien designated as a Permitted Lien under any Loan Document and any other Lien approved in writing by Lender.

 

“Reducing Commitment Amount” shall mean (i) the initial principal amount of $1,000,000.00, and (ii) on January 31, 2009, and on the last day of each month thereafter, the principal amount resulting from the reduction of $50,000.00 per month throughout the term of the Note.

 

 “Uniform Commercial Code” means the Uniform Commercial Code of the State of Oklahoma (12A O.S. §1-101 et. seq.), inclusive of Uniform Commercial Code – Secured Transactions of the State of Oklahoma (12A O.S. §1-9-101 et. seq.), as amended from time to time.

 

12.       Conflicts.  In the event of a conflict between the terms and conditions of this Agreement and any other Loan Document, this Agreement shall prevail.

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of day and year first above written.

“BORROWER”                         THE BEARD COMPANY,

an Oklahoma corporation

By:     /s/ Herb Mee, Jr.

Herb Mee, Jr., President

         “LENDER”                                   FIRST FIDELITY BANK, N.A.,

a national banking association

By:     /s/ Danny Lawson

Danny Lawson, Executive Vice President

  

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Exhibit A                                                                Page 1 of 5

Attached to that certain Amended and Restated Deed of Trust, Assignment of Production, Security Agreement and Financing Statement given on December 8, 2008, by The Beard Company as Borrower to First Fidelity Bank, N.A. as beneficiary.

The Properties defined herein are subject to a subordinate lien conveyed by Amended and Restated Deed of Trust, Assignment of Production, Security Agreement and Financing Statement given on March 25, 2008, by Borrower to McElmo Dome L.L.C., as beneficiary.

The following lands are located in Montezuma and Dolores Counties, Colorado:

T39N-R18W, NMPM

Section 18:  Lots 5-9, 16, 17, 18, SE/4

Section 29:  N/2NE/4

Containing 554.68 acres, more or less (Tr. 2-67, Federal Lease C-18415)

The following lands are located in Montezuma County, Colorado:

T38N-R18W, NMPM

Section 15:  E/2NW/4, W/2NE/4

Containing 160 acres, more or less (Tr. 2-65, Fee)

T37N-R17W, NMPM

Section 5:  Lots 5, 6

Containing 15.59 acres, more or less (Tr. 2-68, Federal Lease C-18847)

T38N-R18W, NMPM

Section 3:  S/2

Section 4:  W/2SW/4

Containing 400 acres, more or less (Tr. 2-71A, Federal Lease C-21440A)

T38N-R18W, NMPM

Section 4:  Lot 5, S/2NE/4

Containing 126.46 acres, more or less (Tr. 2-71B, Federal Lease C-21440A)

T38N-R18W, NMPM

Section 10:  NE/4

Containing 160 acres, more or less (Tr. 2-103, Fee)

T38N-R18W, NMPM

Section 10:  W/2

Containing 320 acres, more or less (Tr. 2-110, Fee)

T38N-R18W, NMPM

Section 4:  Lots 7, 8, S/2NW/4

Containing 172.72 acres, more or less (Tr. 2-119, Fee)

(

  

  

  

Page 2 of 5

T38N-R18W, NMPM

Section 3:  Lot 5, SE/4NE/4

Containing 86.30 acres, more or less (Tr. 2-122, Fee)

T37N-R17W, NMPM

Section 3:  Lots 16, 17

Containing 79.99 acres, more or less (Tr. 2-146, Fee)

T39N-R18W, NMPM

Section 28:  S/2NW/4, SW/4

Containing 240 acres, more or less (Tr. 2-153, Fee)

T39N-R18W, NMPM

Section 33:  E/2NW/4, S/2NE/4

Containing 160 acres, more or less (Tr. 2-154, Fee)

T39N-R18W, NMPM

Section 33:  SW/4

Containing 160 acres, more or less (Tr. 2-155, Fee)

T39N-R18W, NMPM

Section 30:  Lots 5, 6, 9, 10 (NW/4)

Containing 160 acres, more or less (Tr. 2-157, Fee)

T39N-R18W, NMPM

Section 30:  SE/4

Containing 160 acres, more or less (Tr. 2-158, Fee)

T39N-R18W, NMPM

Section 29:  N/2NW/4, SE/4NW/4, S/2NE/4

Containing 200 acres, more or less (Tr. 2-159, Fee)

T39N-R18W, NMPM

Section 32:  SW/4

Containing 160 acres, more or less (Tr. 2-161, Fee)

T39N-R19W, NMPM

Section 34:  SW/4, W/2SE/4

Containing 240 acres, more or less (Tr. 3-36, Federal Lease C-19666)

T37N-R20W, NMPM

Section 11:  NE/4NE/4, W/2NE/4, NW/4, N/2SW/4, SW/4SW/4, NW/4SE/4

Containing 440 acres, more or less (Tr. 4-6, Federal Lease C-30617)

 

  

  

  

Page 3 of 5

T38N-R19W, NMPM

Section 31:  NE/4

Containing 160 acres, more or less (Tr. 4-44, Federal Lease C-24214)

T37N-R19W, NMPM

Section 9:  Tract 57

Section 16:  Tract 57, Lots 2, 3, 4, N/2NW/4, SW/4NW/4

Containing 373.94 acres, more or less (Tr. 4-59A, Federal Lease C-33303)

T37N-R19W, NMPM

Section 16:  Lots 6, 7, 8, W/2SW/4, SE/4SW/4, S/2SE/4

Containing 265.48 acres, more or less (Tr. 4-59B, Federal Lease C-33302)

T37N-R19W, NMPM

Section 14:  W/2

Containing 320 acres, more or less (Tr. 4-60, Federal Lease C-33301)

T37N-R19W, NMPM

Section 13:  Lots 1, 2, 3, NW/4, W/2SW/4

Containing 274.30 acres, more or less (Tr. 4-61A, Federal Lease C-33300)

T37N-R19W, NMPM

Section 14:  E/2

Containing 320 acres, more or less (Tr. 4-61B, Federal Lease C-33301)

T37N-R19W, NMPM

Section 24:  NW/4NW/4

Containing 40 acres, more or less (Tr. 4-61C, Federal Lease C-37436)

T37N-R19W, NMPM

Section 25:  S/2SW/4

Containing 80 acres, more or less (Tr. 4-62, Federal Lease C-37437)

T37N-R19W, NMPM

Section 26:  NE/4

Containing 160 acres, more or less (Tr. 4-63, Federal Lease C-37438)

T38N-R19W, NMPM

Section 32:  N/2SE/4

Containing 80 acres, more or less (Tr. 4-80, Fee)

T37N-R19W, NMPM

Section 1:  Tract 54

Section 11:  Tract 54

Section 12:  Tract 54

Containing 320 acres, more or less (Tr. 4-84, Fee)

 

  

  

  

Page 4 of 5

T37N-R17W, NMPM

Section 10:  Lot 4

Containing 34.99 acres, more or less (Tr. 5-55, Fee)

T37N-R17W, NMPM

Section 14:  Lots 1, 2 & 3 (E/2NE/4)

Containing 80 acres, more or less (Tr. 5-69, Fee)

T37N-R17W, NMPM

Section 14:  A tract of land in the W/2SE/4 more fully described in Book 317 Page 297 of said county records

Containing 6.11 acres, more or less (Tr. 5-71, Fee)

T37N-R17W, NMPM

Section 14:  E/2SE/4, except a tract of land more fully described in Book 391 Page 87 of said county records and except a tract of land in Sec. 14 described as follows: beginning at a point on the West right-of-way line of county land; whence the southeast corner of Sec. 14 bears S 1 deg. 58 min. E a distance of 652.4 ft.; thence S 89 deg. 09 min. W 145 ft. to a point; thence N 34 deg. 38 min. W 85.9 ft. to a point; thence N 43 deg. 56 min. E 156.7 ft. to a point; thence N 89 deg. 44 min. E 86.7 ft. to a point; thence S 00 deg. 30 min. W 181.8 ft. to the point of beginning

Containing 72.80 acres, more or less (Tr. 5-72A, Fee)

T37N-R17W, NMPM

Section 14:  A  tract of land described as follows: beginning at a point on the west right-of-way line of county land; whence the southeast corner of Sec. 14 bears S 1 deg. 58 min. E a distance of 652.4 ft.; thence S 89 deg. 09 min. W 145 ft. to a point; thence N 34 deg. 38 min. W 85.9 ft. to a point; thence N 43 deg. 56 min. E 156.7 ft to a point; thence N 89 deg. 44 min. E 86.7 ft. to a point; thence S 00 deg. 30 min. W 181.8 ft. to the point of beginning.

Containing .64 acres, more or less (Tr. 5-72B, Fee)

T37N-R17W, NMPM

Section 14:  A tract of land in the E/2SE/4 more fully described in Book 391 Page 87 of said county records

Containing 6.56 acres, more or less (Tr. 5-73, Fee)

T37N-R20W, NMPM

Section 34:  Lots 1-4, E/2E/2

Containing 374.88 acres, more or less (Tr. 6-62, Federal Lease C-21445)

T36N-R18W, NMPM

Section 12:  N/2

Section 22:  W/2W/2, NE/4NW/4, SE/4SW/4

Section 27:  W/2W/2, NE/4NW/4, E/2SW/4

Containing 840 acres, more or less (Tr. 7-12, Federal Lease C-18396)

 

  

  

  

Page 5 of 5

T36N-R18W, NMPM

Section 14:  S/2SW/4

Containing 80 acres, more or less (Tr. 7-13, Federal Lease C-18701)

T36N-R18W, NMPM

Section 8:  All

Section 9:  W/2

Section 20:  NW/4, SE/4

Section 29:  NW/4, W/2SE/4, NE/4SE/4

Containing 1560 acres, more or less (Tr. 7-16, Federal Lease C-19347)

T36N-R18W, NMPM

Section 15:  E/2SW/4

Containing 80 acres, more or less (Tr. 7-20, Federal Lease C-22446)beardkexh1014-041510.htm

Exhibit 10.13

 

WHEN RECORDED RETURN TO:

 

First Fidelity Bank, N.A.

5100 N. Classen Blvd., Suite 500

Oklahoma City, OK  73118

Attn:  Danny Lawson

AMENDED AND RESTATED DEED OF TRUST, ASSIGNMENT OF PRODUCTION,

SECURITY AGREEMENT AND FINANCING STATEMENT

 

STATE OF COLORADO                      §

                                                                 §

COUNTY OF DOLORES                      §

 

AMENDED AND RESTATED DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT AND FINANCING STATEMENT dated as of December 8, 2008 (the “Deed of Trust”), between THE BEARD COMPANY (“Borrower”), an Oklahoma corporation having its principal place of business at Harvey Parkway, 301 N.W. 63rd St., Suite 400, Oklahoma City, Oklahoma  73116, and the PUBLIC TRUSTEE OF DOLORES COUNTY, COLORADO (“Trustee”) for the benefit of FIRST FIDELITY BANK, N.A., a national banking association, 5100 North Classen Boulevard, Suite 500, Oklahoma City, Oklahoma 73118 (the “Beneficiary”).

 

A POWER OF SALE HAS BEEN GRANTED IN THIS DEED OF TRUST.  A POWER OF SALE MAY ALLOW THE TRUSTEE TO TAKE THE PROPERTIES IN TRUST AND SELL THEM WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE BORROWER UNDER THIS DEED OF TRUST.

 

THIS INSTRUMENT CONTAINS AFTER ACQUIRED PROPERTY PROVISIONS, SECURES THE PAYMENT OF FUTURE ADVANCES, AND COVERS PROCEEDS OF COLLATERAL.

 

R E C I T A L S

 

A.           The Borrower executed and delivered to Beneficiary that certain promissory note dated June 8, 2007, in the original principal amount of $1,500,000 (the “2007 Lender Note”).  As security for the 2007 Lender Note, Borrower executed an Amended and Restated Deed of Trust, Assignment of Production, Security Agreement and Financing Statement dated June 8, 2007, and which was recorded in Dolores County on August 15, 2008 in Book 363 beginning at Page 390, the (“2007 Lender Deed of Trust”).

 

B.           The Borrower and Beneficiary have executed that certain Change in Terms Agreement by and between Borrower and Beneficiary dated March 25, 2008, making certain modifications in the 2007 Lender Note (as so modified, the “2008 Lender Note”).  As security for the 2008 Lender Note, Borrower executed an Amended and Restated Deed of Trust, Assignment of Production, Security Agreement and Financing Statement dated March 25, 2008, and which was recorded in Dolores County on August 15, 2008 in Book 375 beginning at Page 388, the (“2008 Lender Deed of Trust”).

 

  

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C.           The Borrower executed and delivered to Beneficiary that certain promissory note dated December 8, 2008, in the original principal amount of $1,000,000 (the “Note”), in renewal and extension of the unpaid balance of the indebtedness evidenced by the 2008 Lender Note.  Borrower has agreed to enter into this Deed of Trust to secure payment of the Note.

 

D.            For purposes of this Deed of Trust, the term “Properties” shall refer to the properties described in paragraphs 1. through  9. of the Granting Clause of this Deed of Trust.  Pursuant to Assignment and Bill of Sale of Borrower to Charles R. Wiggins and Ken Kamon, dated effective February 1, 2008 (the “Assignment”), and recorded at Book 372 Page 28 of the real estate records of Dolores County, Colorado, Borrower has sold, assigned and transferred an undivided 35% interest in and to Borrower’s interest, as of February 1, 2008, in the Properties (the “Assigned Interests”) and has retained an undivided 65% interest in and to Borrower’s interest, as of February 1, 2008, in the Properties (the “Retained Interests”).

 

G R A N T I N G  C L A U S E

 

NOW, THEREFORE, the Borrower, in order to secure the Indebtedness (as herein defined) and obligations hereinafter described, does hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN, and SET OVER to Trustee in trust, and specifically grant to and confirm upon the Trustee in trust, the power to sell, the following described property:

 

All of Borrower’s rights, title, interests, in and to the (a) the properties described in the 2007 Lender Deed of Trust (less and except the Assigned Interests), (b) the properties described in the following paragraphs 1. through 9. below, and the corresponding rights, estates, powers and privileges appurtenant to those rights, interests, and properties, less and except the Assigned Interests previously conveyed pursuant to the Assignment.  The rights, title, and interests hereby conveyed constitute the Retained Interests, as defined above, with respect to the following:

 

1.           The lands specifically described on Exhibit A (the "Lands"), even though the interests of Borrower and the Lands may be incorrectly described, or a description of an interest is omitted from Exhibit A; and, all rights, title, and interests in, to, under, or derived from all oil, gas, carbon dioxide and mineral leases and leasehold fee or mineral interests and all other interests of whatever character, insofar as the same covers or relates to the Lands described in Exhibit A even though an interest may be incorrectly described or omitted from Exhibit A. It is expressly understood that the interests hereby described include all rights, title, and interests to all depth intervals, from the surface down to and including the basement rock, in lands included within the boundaries of the McElmo Dome (Leadville) Unit, whether or not said lands are described on Exhibit A.  Exhibit A is attached to and made a part of this Deed of Trust for all purposes.

 

2.           All rights, title, and interests in, to, and under oil, gas, carbon dioxide and mineral leases (the "Leases") covering the Lands, including any renewals, extensions, or ratifications, and the oil and gas and carbon dioxide leasehold estates and other interests in the Lands.

 

3.           All rights, title, and interests in all rights, privileges, benefits, and powers conferred on the holder of the Leases and Lands with respect to the use and occupation of the surface and the subsurface depths under the Lands and Leases.

 

4.           All rights, title, and interests in any pooled or unitized acreage or rights included, in whole or in part, within the Lands, including all oil and gas and carbon dioxide production from the pool or unit allocated to such properties (including, without limitation, units formed under orders, rules, regulations, or other official acts of any state or other authority having jurisdiction and so called "working interest units" created under operating agreements or otherwise) and interests in any wells within the unit or pool associated with such properties, whether the unitized or pooled oil and gas and carbon dioxide production comes from wells located within or without the areas covered by the Lands, and all tenements, hereditaments, and appurtenances belonging to the properties.

 

  

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5.           All rights, title, and interests in all of the permits, licenses, servitudes, easements, rights of way, orders, gas and carbon dioxide purchase and sale contracts, crude oil purchase and sale contracts or agreements, surface leases, farmin and farmout agreements, acreage contribution agreements, operating agreements, unit agreements, processing agreements, options, leases of equipment or facilities, and other contracts, agreements, and rights, and any amendments to any of the foregoing, whether or not the same appear of record in the county where the Lands are located, and which are appurtenant to, affect, are used or held for use in connection with either the ownership, operation, production, treatment or marketing of oil and gas and carbon dioxide, or any or all of them, and the sale or disposal of water, hydrocarbons, carbon dioxide or associated substances from the Lands and Leases; It is expressly understood, however, that Borrower has, pursuant to the Assignment, previously conveyed all of Borrower’s interest in the Trinity Rights, defined and described in the Assignment, and such interest is hereby expressly excluded from this Deed of Trust.

 

6.           All rights, title, and interests in the personal and/or real property located in or on the Lands and Leases or used in their operation, in whole or in part, including, without limitation, crude oil, condensate, or products (in storage or in pipelines), wells, well equipment, casing, tanks, boilers, buildings, tubing, pumps, motors, valves, fixtures, machinery and other equipment, pipelines, gathering systems, power lines, telephone lines, roads, field processing plants, and all other improvements used in operations.  IT IS AGREED THAT THE PERSONAL PROPERTY, AND ANY PERSONAL PROPERTY THAT BECAME CLASSIFIED OTHERWISE BY VIRTUE OF BEING PERMANENTLY ATTACHED TO REAL PROPERTY, IS BEING CONVEYED UNDER THIS DEED OF TRUST AS IS AND WHERE IS, WITHOUT WARRANTY OF MERCHANTABILITY, CONDITION OR FITNESS FOR A PARTICULAR PURPOSE, EITHER EXPRESS OR IMPLIED.

 

7.           To the extent transferable, the benefit of and the right to enforce the rights, covenants, and warranties, if any, under the terms and conditions of any of the agreements and contracts described in paragraph 5. above, which Borrower is entitled to enforce, with respect to the Properties, against Borrower’s predecessors in title to the Properties and against any other party to such agreements and contracts.

 

8.           To the extent necessary to allow Beneficiary to have full use of and access to the Lands, Borrower grants such right of ingress and egress, rights of way and easements, and their full and uninterrupted use, across any lands which Borrower may own or where Borrower may be the lessee under an oil, gas, carbon dioxide and mineral lease(s), over or through which Beneficiary crosses or has the right to cross for use and access to the Lands described in Exhibit A.  This grant is limited to the rights of Borrower to grant such rights of ingress and egress, rights of way, and easements under agreements, deeds, or leases through which Borrower claims title.

 

9.           All other rights and obligations arising under contract or otherwise by law, or by the occurrence of conditions precedents, which may or may not yet have occurred, owned in whole or in part by Borrower, which rights and obligations are incidental to the Properties described in paragraphs 1. through 8. above, including the right, if any, to operate the Properties.

 

TO HAVE AND TO HOLD all of Borrower’s right, title and interest in and to the Properties unto the Trustee and his successors or substitutes and to his or their successors and assigns, IN TRUST, however, upon the terms, provisions and conditions herein set forth.

 

ARTICLE 1

 

INDEBTEDNESS

 

This Deed of Trust is given to secure and enforce the payment and performance of the following indebtedness and obligations, to-wit:

 

  

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(a)  All indebtedness arising pursuant to the provisions of this Deed of Trust, and any and all renewals or extensions of such indebtedness, or any part thereof;

 

(b)  All loans, principal, interest, fees, expenses, obligations, and liabilities of the Borrower arising pursuant to the Note, and all obligations and liabilities of Borrower, absolute or contingent, due or to become due, which are now or may at any time hereafter be owing by  Borrower with respect to the Note, and all renewals, extensions or modifications thereof or substitutions therefore, and all other documents executed in connection therewith;

 

(c)  The performance of all obligations and liabilities of the Borrower under this Deed of Trust as well as all renewals, extensions, modifications and amendments of the foregoing.

 

The words “Indebtedness,” as used herein, shall mean all the indebtedness, obligations, and liabilities described or referred to immediately above in sub-paragraphs (a) through (c), inclusive.

 

ARTICLE 2

 

REPRESENTATIONS AND WARRANTIES

 

Borrower represents, warrants, and covenants that this Deed of Trust is the legal, valid, and binding obligations of the Borrower enforceable in accordance with its respective terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights; that Borrower is the lawful owner of undivided interests or rights in and to the Properties as set forth in Exhibit ”A” and the properties assigned in Article 5 hereof and that Borrower has good right and authority to grant, bargain, sell, transfer, assign, affect, pledge, and hypothecate the same; that in light of the Amended and Restated Nominee and Subordination Agreement executed concurrently herewith, this Deed of Trust is a first and prior lien upon the Properties, superior to the interests of Borrower and all others; that Borrower warrants and will forever defend the title to the Properties against the lawful claims of all persons whomsoever and shall not convey, lease, transfer, encumber or assign any interest in the Properties; that all the Leases are valid and subsisting and are in full force, and the Properties are not subject to any burdens or charges except as reflected in Exhibit ”A”; that the Properties and the properties assigned in Article 5 hereof are free and clear from all  liens, burdens, and encumbrances except the lien evidenced by this Deed of Trust and such liens as may be set forth on Exhibit ”A;” that, to Borrower’s actual knowledge, all producing wells in which Borrower has any right or interest located on the Properties or property unitized therewith have been drilled, operated, and produced in conformity with all applicable laws and rules, regulations, and orders of all regulatory authorities having jurisdiction and are subject to no penalties on account of past production; that, to Borrower’s actual knowledge, none of such wells are deviated from the vertical more than the maximum permitted by applicable laws, rules, regulations, and orders; that such wells are in fact bottomed under and are producing from, and the well bores are wholly within, the lands covered by the Properties or properties unitized therewith.  The acquisition and ownership by Borrower of the Properties and the properties assigned in Article 5, and the execution and delivery of this Deed of Trust and compliance with the provisions hereof, were and are within its corporate powers and did not and will not contravene any provision of any applicable laws, rules, regulations, or orders, or of its governing documents or constitute a default under, or result in the creation of any lien, charge, encumbrance, or security interest (other than the lien of the security interest created by this Deed of Trust) upon any of its property or assets pursuant to any indenture or other agreement or instrument to which it is a party or by which it or its property may be bound or affected.  These warranties and representations shall at all times be construed to be for the benefit of the Beneficiary, and they shall remain in full force and effect, notwithstanding the assignment hereof, or the partial release of the lien hereof, or any foreclosure thereof.

 

  

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ARTICLE 3

 

COVENANTS

 

3.1 The Borrower, for Borrower and Borrower’s successors covenants to use its commercially reasonable efforts (a) properly to operate, or cause to be operated properly, and to keep, or cause to be kept, in full force and effect the Leases and to perform, or cause to be performed, all covenants, terms and conditions whether express or implied imposed upon the original lessee, or his assigns, whether continued in any such Lease, or in any assignment thereof, and continuously to operate or cause to be operated in a good and workmanlike manner the well or wells now or hereafter located on the land covered by the Leases; (b) to comply with all applicable laws, and all rules, regulations and orders of all regulatory authorities having jurisdiction to regulate the operation of the Properties and production and sale of carbon dioxide, oil, gas and other minerals produced thereupon; (c) to carry, in standard insurance companies satisfactory to the Beneficiary, in respect of all activities in which Borrower might incur personal liability for the death or injury of an employee or third person, or damage to or destruction of another’s property, worker’s compensation insurance, and public liability and property-damage insurance, in such amounts as may, in the Beneficiary’s opinion, be adequate, and, in respect of all personal property and fixtures constituting a part of the Properties, to carry, in standard insurance companies satisfactory to the Beneficiary, insurance against loss or damage by fire, lightning, hail, tornado, explosion and such other risks as are usually insured against in similar businesses, in amounts satisfactory to the Beneficiary, and with loss payable to the Beneficiary as its interest may appear, and upon request of the Beneficiary promptly to deliver the policies to the Beneficiary; (d) to pay, or cause to be paid, before delinquent, all lawful taxes of every character in respect of all of the Properties, and all taxes in respect of the carbon dioxide, oil, gas and other minerals produced and to be produced from the Properties, or incident to and in connection with the operation or development thereof and the production of carbon dioxide, oil, gas and other minerals therefrom, as well as all Federal or State income taxes payable generally by Borrower, regardless of  their relation to the Properties, and to pay, as and when due, all State and Federal Social Security taxes, payments and contributions for which Borrower may be liable; (e) at all times to maintain, preserve, and keep all said property, and all appurtenances thereto, and all buildings, improvements, machinery, equipment, pipe lines, fixtures, and other personal property of every kind and character, in respect of the Properties, in thorough repair, working order and condition, and from time to time make all necessary and proper repairs, renewals, replacements and substitutions; (f) in respect of all the Properties, promptly to pay all bills for labor and material, and never to permit to be created or to exist, in respect of any of the Properties, any other or additional lien, on a parity with or superior to the lien hereof; (g) at any time and from time to time, upon request by the Beneficiary, forthwith at Borrower’s expense to execute and deliver to the Beneficiary, any and all additional instruments and further assurances as may be necessary or proper, in the Beneficiary’s opinion, to effect the intent of these presents; (h) to keep accurate books and records in accordance with generally accepted accounting principles consistently applied in which full, true and correct entries shall be promptly made as to all operations on the Properties, all such books and records to be subject at all times during reasonable business hours to inspection by the Beneficiary, or its duly authorized agent or agents; (i) from time to time, upon request of the Beneficiary, promptly to furnish to the Beneficiary such financial statements and reports relating to Borrower, and Borrower’s business affairs, and the operation of the Properties as the Beneficiary may reasonably request (j) to maintain Borrower’s right to do business in Oklahoma and in Colorado; (k) to pay all Indebtedness in accordance with the terms  thereof and hereof, or when the maturity thereof may be accelerated in accordance with the terms thereof or hereof; and (l) to notify the Beneficiary immediately if it becomes aware of the occurrence of any Event of Default or of any fact, condition or event that only with the giving of notice or passage of time or both, could become an Event of Default, or the failure of the Borrower to observe any of its undertakings hereunder; and (m) not to transfer, sell, assign, hypothecate, pledge or encumber any of the Properties.

 

  

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3.2 With respect to any part of the Properties which is not a leasehold or working interest, Borrower agrees to take all such action and to exercise all rights and remedies as are available to Borrower to cause the owner or owners of the working interest in such Properties to comply with the covenants and agreements contained herein.  With respect to any part of the Properties which is a working interest but which is operated by a party other than Borrower, Borrower agrees to take all such action and to exercise all rights and remedies as are available to Borrower (including, but not limited to, all rights under any operating agreements) to cause the party who is the operator of such Property to comply with the covenants and agreements contained herein.  Borrower will immediately notify the Beneficiary of any failure of the operator of any of the Properties to perform any such obligation, and in cooperation with the Beneficiary, will take such steps as may be expedient to secure compliance therewith, or obtain appointment of a different operator.

 

3.3 Any and all covenants in this Deed of Trust may from time to time, by instrument in writing signed by Beneficiary and Borrower, and delivered to Borrower, be waived to such extent and in such manner as the Beneficiary may desire, but no such waiver shall ever affect or impair the Beneficiary’s rights or liens hereunder, except to the extent so specifically stated in such written instrument.

 

 

ARTICLE 4

 

DEFAULTS AND REMEDIES

 

4.1 Any of the following shall constitute Events of Default (each herein called an “Event of Default”):

 

(a)  Nonpayment.  (i) Default in the due and punctual payment of any principal of the Indebtedness, or (ii) default in the due and punctual payment of any interest on the Indebtedness or any fee or expense payable hereunder or under the Note.

 

(b)  Covenant Default.  The Borrower shall default in the due performance or observance by it of any term, covenant or agreement contained in this Deed of Trust, and such failure shall continue for thirty (30) days after the earlier of:  (i) notice of such default from the Beneficiary; or (ii) the Beneficiary is notified of such default or should have been so notified pursuant to the provisions of Section 3.1(n) hereof.

 

(c)  Representations and Warranties.  Any representation, warranty or statement made by the Borrower herein or otherwise in writing in connection herewith or in connection with the Note and the agreements referred to herein or therein or in any financial statement, certificate or statement signed by any officer or employee of the Borrower and furnished pursuant to any provision hereof or of the Note shall be breached, or shall be materially false, incorrect or incomplete when made.

 

(d)  Other Debt.  The Borrower shall fail to make any payment of principal or interest on any other indebtedness of Borrower.

 

(e)  Default in Note.  Any event of default shall occur under the Note and the default shall continue unremedied beyond any grace or cure period.

 

  

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(f)  Judgments and Decrees.  The Borrower shall suffer a final judgment for the payment of money and shall not discharge the same within a period of thirty (30) days.  Any order, judgment or decree shall be entered in any proceeding against the Borrower decreeing the split up of the Borrower and such order shall remain undischarged or unstayed for a period in excess of thirty (30) days.

 

(g)  Bankruptcy.  (i) The Borrower pursuant to or within the meaning of any Bankruptcy Law (as herein defined) (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in any involuntary case, (c) consents to the appointment of a Custodian (as herein defined) of it for all or substantially all of its property, or (d) makes a general assignment for the benefit of its creditors; or (ii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that remains unstayed and in effect for thirty (30) days that (a) is for relief against the Borrower in an involuntary case, (b) appoints a Custodian of the Borrower for all or substantially all of its property, or (c) orders the liquidation of the Borrower.  The term “Bankruptcy Law” means Title 11, U. S. Code or any similar federal or state law for the relief of debtors.  The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

 

(h)     Validity of Note.  The Note shall cease to be a legal, valid and binding agreement enforceable against any party executing the same in accordance with the respective terms thereof, or shall in any way be terminated, or become or be declared ineffective or inoperative, or shall in any way whatsoever cease to give or provide the respective rights, remedies, powers and privileges intended to be created thereby.

 

4.2 Upon the occurrence of an Event of Default:

 

(a)  The Beneficiary may declare the entire balance of principal of the Indebtedness or any portion thereof, along with all accrued interest thereon, immediately due and payable, whereupon the same shall forthwith become due and payable, without notice or demand, presentment for payment, notice of non-payment, protest, notice of protest, notice of intent to accelerate, notice of acceleration, and all other notices, all of which the Borrower hereby expressly waives to the full extent permitted by applicable law; and

 

(b)  The Beneficiary shall have the right to declare a violation of any of the covenants herein contained and elect to advertise the Properties for sale and demand such sale, then, upon filing notice of such election and demand for sale with the Trustee, who shall upon receipt of such notice of election and demand for sale cause a copy of the same to be recorded in the office of the Clerk and Recorder of the county in which the Properties are situated, it shall and may be lawful for the Trustee to sell and dispose of the same (en masse or in separate parcels, as Beneficiary may designate), and all the right, title and interest of said Borrower, their successors or assigns therein, at public auction [*at the main front door of the Courthouse] in the county in which the Properties are located or on the Properties or any part thereof, or such other place as may be authorized or permitted by law, as may be specified in the notice of said sale, for the highest and best price the same will bring in cash, [*four weeks’ public notice having been previously given of the time and place of such sale, by advertisement weekly, in some newspaper of general circulation at that time published in said county, a copy of which notice shall be mailed within ten (10) days from the date of the first publication thereof to the Borrower at the address herein given and to such person or persons appearing to have acquired a subsequent record interest in the Properties at the address given in the recorded instrument evidencing such interest, and where only the county and state are given as the address, then such notice shall be mailed to the county seat, and to make and give to the purchaser or purchasers of the Properties at such sale, a certificate or certificates in writing describing such Properties purchased, and the sum or sums paid therefor, and the time when the purchaser or purchasers (or other person entitled thereto) shall be entitled to a deed or deeds therefor, unless the same shall be redeemed as is provided by law; and the Trustee shall, upon demand by the person or persons holding the said certificate or certificates of purchase, when said demand is made, or upon demand by the person entitled to a deed to and for the Properties purchased, at the time such demand is made the time for redemption having expired,] make and execute to such person or persons a deed or deeds to the Properties

 

  

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purchased, which said deed or deeds shall be in the ordinary form of a conveyance, and shall be signed, acknowledged and delivered by the Trustee, as Borrower, and shall convey and quit claim to such person or persons entitled to such deed, as grantee, the Properties purchased as aforesaid and all the right, title, interest, benefit and equity of redemption of the Borrower its heirs, successors and assigns therein, and shall recite the sum or sums for which the Properties were sold and shall refer to the [*power of sale] herein contained, and to the sale or sales made by virtue hereof; and in case of an assignment of such certificate or certificates of purchase, or in the case of the redemption of the Properties by a subsequent encumbrancer, such assignment or redemption shall also be referred to in such deed or deeds; but the notice of sale need not be set out in such deed or deeds and the Trustee shall, out of the proceeds or avails of such sale, after first paying and retaining all fees, charges and costs of making said sale, pay to Beneficiary the principal and interest due on the Note according to the tenor and effect thereof, and all monies advanced by Noteholders as applicable with interest thereon at the default rate set forth in the Note, rendering the overplus, if any, unto Borrower, its legal representatives or assigns; which sale or sales and said deed or deeds so made shall be a perpetual bar, both in law and equity, against Borrower, its heirs, successors and assigns, and all other persons claiming the Properties, or any part thereof, by, from, through or under the Borrower.  The holder or holders of the Note may purchase the Properties or any part thereof; and it shall not be obligatory upon the purchaser or purchasers at any such sale to see to the application of the purchase money.  No provision to the contrary herein withstanding, nothing herein pertaining to foreclosure proceedings or specifying particular actions to be taken by Beneficiary shall be deemed to contradict or add to the requirements and procedures (now or hereafter existing) of Colorado law and any such conflict or inconsistency shall be resolved in favor of the Colorado law applicable at the time of foreclosure; and

 

(c)  The Beneficiary may, at its election, proceed by suit or suits, at law or in equity, to enforce the payment of the Indebtedness, and of the notes evidencing it.  On or at any time after the filing of judicial proceedings to protect or enforce the rights of the Beneficiary, the Beneficiary, as a matter of right and without regard to the sufficiency of the security, and without any showing of insolvency, fraud, or mismanagement on the part of Borrower, shall be entitled to the appointment of a receiver or receivers of all or any portion of the Properties, and of the income, rents, issues, and profits thereof, and Borrower does hereby consent to the appointment of such receiver or receivers and agrees not to oppose any application therefor.  It is agreed that the Beneficiary may be the purchaser of the Properties, or any part thereof, at any sale thereof, or upon any other foreclosure of the lien hereof or otherwise, and the Beneficiary so purchasing shall, upon any such purchase, acquire title to the Properties so purchased, free of the lien of these presents; and

 

(d)  The Beneficiary may institute suit to foreclose the lien of this Deed of Trust in any court having jurisdiction whether or not Beneficiary has begun to exercise its rights under Section 5.2(b) hereof.  In any such suit the Beneficiary may, at its option, apply for and shall be entitled, as a matter of right, to the appointment of a receiver to take possession and control of, operate, maintain, and preserve the Properties or any part thereof, including the production and sale of all carbon dioxide and other minerals therefrom and to disburse the proceeds from the sale of such products for application upon the Indebtedness and other sums then due the Beneficiary hereunder until the same and all costs are fully paid.  The Borrower hereby waives all notice of the filing and hearing of any such application for the appointment of a receiver and irrevocably consents to every appointment made pursuant thereof; and

 

(e)  The Beneficiary may exercise its rights under Article 6 hereof.

 

  

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4.3 Borrower further agrees that in the event of any foreclosure sale, the Properties or any part thereof may be sold with or without appraisement as the Beneficiary may elect, and such election may be exercised at any time prior to the entry of the decree of foreclosure; that should Beneficiary elect to have the property sold without appraisement, then Borrower hereby expressly waive appraisement; that the Beneficiary may further elect to have said property sold together, or in separate parcels; that the proceeds from such sale, after paying therefrom the costs advanced or incurred by the Beneficiary in the foreclosure suit, including the costs of sale and any costs and expenses incurred in the operation of said property by a receiver appointed upon the application of the Beneficiary, shall be applied, FIRST, to the payment of all costs and expenses incurred by the Beneficiary in its operation of said property, if the same be so operated, and any and all sums advanced by the Beneficiary for the purpose of enforcing its rights hereunder or protecting the security, with interest on such amounts at the highest legal rate, and SECOND, to the payment of all other Indebtedness and other sums then secured hereby, including interest and attorneys’ fees, in such order of application as the Beneficiary may elect.

 

4.4 In the event of any default upon the part of Borrower, the Beneficiary is authorized to cause to be made whatever abstracts of title and/or title opinions are deemed necessary by Beneficiary’s attorneys.  The cost of said abstracts shall be added to the Indebtedness.

 

4.5 To the full extent Borrower may do so, Borrower agrees that Borrower will not at any time insist upon, plead, claim, or take the benefit or advantage of any law now or hereafter in force providing for any appraisement, valuation, stay, extension, or redemption, and Borrower, for Borrower, Borrower’s successors and assigns, and for any and all persons or entities ever claiming any interest in the Properties, to the extent permitted by law, hereby waives and releases all rights of redemption, valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of the Indebtedness and all rights to a marshaling of the assets of Borrower, including the Properties, or to a sale in inverse order of alienation in the event of foreclosure of the  liens hereby created.  Borrower shall not have or assert any right under any statute or rule of law pertaining to the marshaling of assets, sale in inverse order of alienation, the exemption of homestead, or other matters whatever to defeat, reduce, or affect the right of Beneficiary under the terms of this Deed of Trust to a sale of the Properties for the collection of the Indebtedness without any prior or different resort for collection, or the right of Beneficiary under the terms of this Deed of Trust to the payment of such indebtedness out of the proceeds of sale or the Properties in preference to every other claimant whatever.  If any law referred to in this paragraph and now in force, of which Borrower or Borrower’s successors and assigns might take advantage despite this paragraph, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to preclude the application of this paragraph.

 

4.6 The Beneficiary shall have the right to become the purchaser at any sale of the Properties, and the Beneficiary shall have the right to credit against the amount of the bid made therefor, the amount of Indebtedness then due and owing.  The Beneficiary upon any such purchase shall acquire good title to the Properties so purchased, free from the lien of this Deed of Trust, and free of all rights of redemption in the Borrower.  Recitals contained in any conveyance made to any purchaser at any sale made hereunder shall presumptively establish the truth and accuracy of the matters therein stated, including, without limiting the generality of the foregoing, non-payment of the unpaid principal sum of, and the interest accrued on, the Note after the same has become due and payable, and the conduct of the sale in the manner provided for herein; and the Borrower does hereby ratify and confirm any and all acts that the Beneficiary or its successors may lawfully do in the premises by virtue of the terms and conditions hereof to the full extent permitted by applicable law.

 

4.7 Any sale or sales of the Properties shall operate to divest all right, title, interest, claim, and demand whatsoever either at law or in equity, of the Borrower of, in, and to the premises and the property sold, and shall be a perpetual bar, both at law and in equity, against the Borrower, and the Borrower’s successors and against any and all persons claiming or who shall thereafter claim all or any part of the properties sold from, through, or under the Borrower, or the Borrower’s successors and assigns.  Nevertheless, the Borrower, if requested by the Beneficiary to do so, shall join in the execution and delivery of all proper conveyances, assignments, and transfers of the properties sold.

 

  

9

  

 

4.8 Upon the occurrence of an Event of Default, and in addition to all other rights herein conferred upon the Beneficiary, the Beneficiary (or any person, firm, or corporation designated by the Beneficiary) shall have the right and power to the full extent permitted by applicable law, but shall not be obligated, to enter upon and take possession of any of the Properties, and to exclude the Borrower and the Borrower’s agents, or servants, wholly therefrom, and to hold, use, administer, manage, and operate the same to the extent that the Borrower shall be at the time entitled and in its place and stead.  The Beneficiary, or any person, firm, or corporation designated by the Beneficiary, may operate the same without any liability to the Borrower in connection with such operations, except to use ordinary care in the operation of said Properties, and the Beneficiary or any person, firm, or corporation designated by it, shall have the right to collect, receive, and receipt for all oil, gas, minerals, and carbon dioxide produced and sold from said Properties, to make repairs, purchase machinery and equipment, conduct work-over operations, drill additional wells, and to execute every power, right, and privilege of the Borrower with respect to the Properties.  All costs, expenses, and liabilities of every character incurred by the Beneficiary in managing, operating, maintaining, protecting, or preserving such Properties, respectively, shall constitute a demand obligation owing by the Borrower to the Beneficiary and shall bear interest from the date of expenditure until paid at the same rate as is provided for in the Note for interest on past due principal, all of which shall constitute a portion of the Indebtedness, and shall be secured by this Deed of Trust and by any other instrument securing the Indebtedness.

 

4.9 If any statute now applicable to the Properties shall hereafter be amended to provide a different procedure for the sale of real property under a Deed of Trust, the Trustee may, in its sole discretion, if same be permitted by applicable law, follow the procedure set forth herein or that prescribed in such statute, as amended.

 

4.10 The rights and remedies hereinabove expressly conferred are cumulative of all other rights and remedies herein, or by law or in equity provided, and shall not be deemed to deprive Beneficiary of any other legal or equitable rights or remedies, by judicial proceedings or otherwise, appropriate to enforce the conditions, covenants, and terms of this Deed of Trust and of the Indebtedness and the employment of any remedy hereunder, or otherwise, shall not prevent the concurrent or subsequent employment of any other appropriate remedy or remedies.

 

ARTICLE 5

 

ASSIGNMENT OF PRODUCTION

 

5.1 In order further to secure the payment of the Indebtedness, Borrower does hereby GRANT, BARGAIN, SELL, TRANSFER, ASSIGN, SET OVER and CONVEY unto and in favor of the Trustee, in trust, all of the interest of the Borrower in the oil, gas, minerals, and carbon dioxide which may be produced from the Properties, or allocated thereto pursuant to pooling or unitization of the Leases or otherwise, together with all proceeds derived from the sale of such oil, gas, minerals, and carbon dioxide on and after the date of the execution and delivery of this Deed of Trust.

 

        5.2 The foregoing assignment is made upon the following terms and provisions:

 

(a) The Beneficiary shall have the right, exercisable only at any time after the occurrence of an Event of Default, to give written or telegraphic notice to all of the parties producing, purchasing, taking, possessing, or receiving any oil, gas, minerals, or carbon dioxide produced or to be produced from or allocated to the Properties, or having in their possession any such oil, gas, minerals or carbon dioxide belonging to Borrower or such proceeds for which they or others are accountable to the Beneficiary by virtue of the provisions hereof, to hold and dispose of such carbon dioxide for the account of the Beneficiary and to make payment of such proceeds direct to the Beneficiary at its principal office, and the Beneficiary shall thereafter receive, collect, and retain, as part of the Properties, all such oil, gas, minerals, and carbon dioxide, all for the benefit and further security of the Indebtedness.

 

  

10

  

 

(b) All parties producing, purchasing, taking, possessing, processing, or receiving any such oil, gas, minerals, or carbon dioxide, or having in their possession any such oil, gas, minerals, or carbon dioxide or such proceeds for which they or others are accountable to the Beneficiary by virtue of the provisions hereof, are authorized and directed by the Borrower, upon receipt of notice by the Beneficiary given pursuant to the above paragraph 6.2(a) to treat and regard the Beneficiary as the assignee and transferee of the Borrower and entitled in its place and stead to receive such oil, gas, minerals and carbon dioxide and proceeds; and such parties and each of them shall be fully protected in so treating and regarding the Beneficiary and shall be under no obligation to see to the application by the Beneficiary of any such proceeds received by it.  Without in any way limiting the effectiveness of the authorization and direction in the next preceding sentence, if the Borrower shall receive any such proceeds under which this Section 6.2(b) are receivable by the Beneficiary, Borrower will hold the same in trust and will remit such proceeds, or cause such proceeds to be remitted, immediately, to the Beneficiary.

 

(c) Without limiting the foregoing provisions of this Assignment of Production, the Borrower stipulates that this Assignment of Production is intended to grant to the Beneficiary a security interest in Borrower’s interest in the oil, gas, minerals, and carbon dioxide to be extracted from or attributable to the Properties, and in and to the proceeds resulting from the sale thereof.

 

5.3 The Borrower covenants and agrees and undertakes hereby, after the Beneficiary shall have so requested in accordance with this Deed of Trust, to cause all pipeline companies or other purchasers of the oil, gas, minerals or carbon dioxide produced from the Properties to pay promptly to the Beneficiary at its principal office, the Borrower’s interest in the proceeds derived from the sale thereof, in accordance with the terms of this assignment, and forthwith to execute, acknowledge, and deliver to said pipeline companies and other purchasers such further and proper division orders, transfer orders, certificates, and other documents as may be necessary or proper to effect the intent of these presents; and the Beneficiary shall not be required at any time, as a condition to its right to obtain the proceeds of such oil, gas, minerals and carbon dioxide, to warrant its title thereto, or to make any guaranty whatsoever.  In addition, and without limitation, the Borrower covenants and agrees, and undertakes hereby, to provide to the Beneficiary the name and address of every pipeline company or other purchaser of the oil, gas, minerals or carbon dioxide and other minerals produced from the Properties when determined, together with a copy of the applicable sales contracts.  All expenses incurred by the Beneficiary in the collection of said proceeds shall be repaid promptly by the Borrower; and prior to such repayment, such expenses shall be a part of the indebtedness secured hereby.

 

5.4 Without limitation upon any of the foregoing, the Borrower hereby designates and appoints the Beneficiary as the Borrower’s true and lawful agent and attorney-in-fact (with full power of substitution, either generally or for such periods or purposes as the Beneficiary may from time to time prescribe), with full power and authority, for and on behalf of and in the name of the Borrower, to execute, acknowledge, and deliver all such division orders, transfer orders, certificates, and other documents of every nature, with such provisions as may from time to time, in the opinion of the Beneficiary, be necessary or proper to effect the intent and purposes of the assignment contained in this Section 5 and the Borrower shall be bound thereby as fully and effectively as if the Borrower had personally executed, acknowledged, and delivered any of the foregoing certificates or documents.  The powers and authorities herein conferred on the Beneficiary may be exercised by the Beneficiary through any person who, at the time of exercise, is the president or a vice president of the Beneficiary, or who holds a similar position with Beneficiary or with Beneficiary’s authorized representative.  The power of attorney conferred by this paragraph is granted for valuable consideration and coupled with an interest and is irrevocable so long as the Indebtedness, or any portion thereof, shall remain unpaid.  All persons dealing with the Beneficiary, or any substitute, shall be fully protected in treating the powers and authorities conferred herein as continuing in full force and effect until advised by the Beneficiary that the Indebtedness is fully and finally paid.

 

  

11

  

 

5.5 The Beneficiary 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.

 

5.6 Should any pipeline company or other purchaser now or hereafter purchasing said production fail to make payment promptly to Beneficiary of the proceeds derived from the sale thereof, Beneficiary shall have the right to change the connection of any such pipeline company, or other purchaser, to purchase and take such production, without liability on Beneficiary in making such selection, so long as ordinary care is used in respect thereof; and should Borrower, its heirs, personal representatives, and assigns fail to consent to such connection, Beneficiary may accelerate the maturity of the Indebtedness.

 

5.7 The proceeds accruing to the Properties, received by Beneficiary, shall be applied by it when so received toward payment of the Indebtedness, as the Beneficiary in its sole discretion deems appropriate.

 

5.8 Notwithstanding such provision for application of proceeds, it is agreed that Beneficiary shall have the right, at its election, from time to time, to apply any portion or all of said proceeds to the payment of any of the taxes levied and assessed against the Properties, insurance premiums, liens, bills for labor and material furnished for use upon the Properties, costs, and expenses, including attorneys’ fees incurred by Beneficiary in the defense of any action affecting the title to the Properties, or the production therefrom, or any judgment rendered against  Beneficiary upon any claim arising out of the receipt, or application in accordance herewith, of any such proceeds in the event Borrower should fail to make such payments, or any of them, promptly after demand made by Beneficiary upon Borrower so to do.  Beneficiary shall have the right, at its election, to release or deliver to Borrower all or any portion of such proceeds, received by it, to the end that Borrower may receive funds with which to pay for the operating, equipping, and developing of the Properties, or any well or wells thereon.  No funds so released or paid to Borrower shall, in any event, be considered to have been applied upon the Indebtedness.

 

5.9 The rights of the Beneficiary with respect to this assignment of production are cumulative of, and shall not limit, any other titles, rights, or remedies of the Beneficiary created by this instrument, or by law, and no action taken by the Beneficiary to enforce this assignment of production shall affect or be affected by any other action the Beneficiary may take under this instrument or pursuant to any law or judgment.

 

ARTICLE 6

 

SECURITY AGREEMENT AND FINANCING STATEMENT

 

6.1 This Deed of Trust shall constitute a security agreement and shall also constitute and may be filed as a financing statement under applicable codifications of the Uniform Commercial Code (Colorado and Oklahoma).  In addition to all other rights and remedies available to the Beneficiary upon any default of the Borrower, the Beneficiary shall, upon any default, be entitled to exercise any one or more remedies granted to a secured party on default under the Uniform Commercial Code (Colorado and Oklahoma).  This security agreement (and financing statement, if applicable) covers and extends to all proceeds of collateral.

 

6.2 Borrower hereby grant to Beneficiary a security interest in all personal property and fixtures constituting a part of the Properties (whether same are now located thereon or subsequently acquired and used or obtained in connection therewith), and all proceeds and products thereof and therefrom.

 

       6.3 The fact that the proceeds from the sale of production attributable to the Properties are included as part of the collateral under this security agreement is not intended to limit, supersede, or negate, in any manner, the Assignment of Production set forth above.

 

  

12

  

 

6.4 Borrower represents and warrants that no financing statement covering the Properties, or any part thereof, has been filed with any filing officer, and no other security interest has attached or been perfected in the said Properties, or any part thereof except with regard to the Deed of Trust dated March 25, 2008 given by Borrower to McElmo Dome Nominee, LLC covering the Retained Interests.

 

6.5 Certain of the Properties are or are to become, fixtures on the Lands and/or Leases.

 

6.6 The oil, gas, minerals and carbon dioxide and the like or all proceeds, products and accounts produced from the Properties will be financed at the wellhead of the wells located on the Lands and/or Leases.  This Deed of Trust shall be effective as a financing statement covering minerals or the like (including oil and gas and carbon dioxide) and all accounts from the Properties are subject to Subsection (5) of Section 9.103.1 of the Uniform Commercial Code.

 

6.7 This instrument may be presented to a filing officer under the Uniform Commercial Code (Colorado) to be filed of record as a non-standard financing statement covering all personal property of any kind or character defined in and subject to the Uniform Commercial Code (Colorado), including carbon dioxide and other minerals and fixtures.  This instrument is to be filed of record as a financing statement in the real estate records.  The Beneficiary shall have the right at any time to file a manually executed counterpart or a carbon, photographic or other reproduction of this Deed of Trust as a financing statement in either the central or the local UCC records of any jurisdiction wherein the Properties are located, but the failure of the Beneficiary to do so shall not impair (i) the effectiveness of this Deed of Trust as both a financing statement covering carbon dioxide and accounts and as a fixture filing as permitted by Section 9.402 of the Uniform Commercial Code, or (ii) the validity and enforceability of this Deed of Trust in any respect.  For purposes of filing this Deed of Trust as a financing statement, the addresses for Borrower and Beneficiary (Secured Party) are as follows:

 

Debtor

   (Borrower):                                  The Beard Company

         Harvey Parkway

         301 N. W. 63rd St.

         Suite 400

         Oklahoma City, OK  73116

 

Secured Party

   (Beneficiary):                                First Fidelity Bank, N.A.

          5100 N. Classen Boulevard

          Suite 500

          Oklahoma City, OK  73118

 

ARTICLE 7

 

MISCELLANEOUS PROVISIONS

 

7.1 In the event that any one or more of the provisions contained in this instrument shall be invalid, illegal, or unenforceable in any respect under any law, the validity, legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

 

7.2 This instrument shall be governed by and construed in accordance with the laws of the State of Colorado.

 

  

13

  

 

7.3 This Deed of Trust is executed in multiple original counterparts, all of which are identical and constitute but one and the same instrument.

 

7.4 All terms, conditions, covenants, warranties and agreements contained herein shall be binding upon and inure to the benefit of the successors and assigns of Borrower, and shall be deemed and construed to be covenants running with the estate or interest in the land, and all said provisions shall likewise inure to the benefit of and be binding upon Beneficiary, its successors and assigns.

 

7.5 No failure of the Beneficiary to declare any default or to exercise any right or remedy herein provided in any one or more instances or for any period of time, and no acquiescence in or acceptance by the Beneficiary of any later defective notice or performance hereunder, shall be deemed a waiver or agreement to modify any provision hereof.  The Beneficiary shall at all times have the right, notwithstanding any such prior acquiescence or forbearance, without any prior notice or demand, to require strict performance of each and every term and provision hereof.  At any time when any Event of Default is continuing hereafter, the Beneficiary may, without any prior notice to the Borrower except such notice as may be herein otherwise required, exercise any right or remedy of the Beneficiary arising by reason of such default, notwithstanding the length of time such Event of Default has been continuing, or the occurrence in the past of similar events, or other Events of Default for which no remedy has been invoked.

 

7.6 The liens provided for herein shall not affect or be affected by any other security or guaranty now or hereafter existing with respect to the Indebtedness, nor shall they be affected by the release of any such other security or guaranty.

 

7.7 Each and every covenant herein contained shall be performed and kept by the Borrower solely at the Borrower’s expense.  If the Borrower shall fail to perform or keep any of the covenants of whatsoever kind or nature contained in this instrument, the Beneficiary or any receiver appointed hereunder may, but shall not be obligated to, make advances to perform the same on the Borrower’s behalf, and the Borrower hereby agree to repay such sum upon demand plus interest at the rate of interest set forth in the Note or, in the event any other note evidencing such indebtedness exists, at the interest rate set forth therein.  No such advance shall be deemed to relieve the Borrower from any default hereunder.

 

7.8 Renewals, extensions, modifications, and amendments of the Indebtedness may be given at any time, and amendments may be made to agreements relating to any part of such Indebtedness or the Properties, provided all such renewals, extensions, modifications and amendments are evidenced by a prior writing signed by all parties, and the Beneficiary may take or may now hold other security for the Indebtedness without notice to or consent of the Borrower.  No grant of any extension as to any part of the Indebtedness shall be deemed a waiver, extension or relinquishment of any future rights in respect to the Indebtedness.

 

7.9 This instrument shall be deemed to be and may be enforced from time to time as an assignment, real estate deed of trust, security agreement, or financing statement, and from time to time as any one or more thereof.

 

7.10 The Note secured by this Deed of Trust is given in renewal and extension of the indebtedness previously evidenced by the 2008 Lender Note and secured by that the 2008 Lender Deed of Trust.  The lien created by the 2008 Lender Deed of Trust is hereby renewed and extended to secure payment of the obligations secured by this Deed of Trust.

 

  

14

  

 

IN WITNESS WHEREOF, the Borrower and the Beneficiary have executed this Deed of Trust as of the day and year first above written.

 

BORROWER:

 

THE BEARD COMPANY, an Oklahoma corporation

 

	
  

	
ATTEST:

 

By   /s/ Hue Green                                                                      By   /s/ Herb Mee, Jr.

	
       Hue Green, Secretary

	
Herb Mee, Jr., President

 

BENEFICIARY:

 

	
  

	
FIRST FIDELITY BANK, N.A.,

	
  

	
a national banking association

 

	
  

	
                By   /s/ Danny B. Lawson

	
  

	
Name: Danny B. Lawson

	
  

	
Title: Executive Vice President

STATE OF OKLAHOMA                            §

  §

COUNTY OF OKLAHOMA                        §

 

BEFORE ME, a notary public in and for said county and state on this 8th day of December, 2008, personally appeared Herb Mee, Jr., known to me to be the identical person who subscribed his name to the foregoing instrument as President of The Beard Company, and acknowledged to me that he executed the same as his free and voluntary act and deed, and as the free and voluntary act and deed of such corporation, for the uses and purposes therein set forth.

 

IN WITNESS WHEREOF, I have hereunto set my official signature and affixed my notary seal the day and year first above written.

 

	
My Commission Expires:

	 	 

	
  

	
Notary Public, State of Oklahoma

	
Commission No.

	 

(Seal)

 

  

15

  

STATE OF OKLAHOMA                            §

  §

COUNTY OF OKLAHOMA                        §

 

BEFORE ME, a notary public in and for said county and state on this 8th day of December, 2008, personally appeared Danny B. Lawson, known to me to be the identical person who subscribed his name to the foregoing instrument as Executive Vice President of First Fidelity Bank, N.A., and acknowledged to me that he executed the same as his free and voluntary act and deed, and as the free and voluntary act and deed of such national banking association for the uses and purposes therein set forth.

 

IN WITNESS WHEREOF, I have hereunto set my official signature and affixed my notary seal the day and year first above written.

 

	
My Commission Expires:

	 	 

	
  

	
Notary Public, State of Oklahoma

	
Commission No.

	 

(Seal)

 

  

16

  

Exhibit A                                                                Page 1 of 5

Attached to that certain Amended and Restated Deed of Trust, Assignment of Production, Security Agreement and Financing Statement given on December 8, 2008, by The Beard Company as Borrower to First Fidelity Bank, N.A. as beneficiary.

The Properties defined herein are subject to a subordinate lien conveyed by Amended and Restated Deed of Trust, Assignment of Production, Security Agreement and Financing Statement given on March 25, 2008, by Borrower to McElmo Dome L.L.C., as beneficiary.

The following lands are located in Montezuma and Dolores Counties, Colorado:

T39N-R18W, NMPM

Section 18:  Lots 5-9, 16, 17, 18, SE/4

Section 29:  N/2NE/4

Containing 554.68 acres, more or less (Tr. 2-67, Federal Lease C-18415)

The following lands are located in Montezuma County, Colorado:

T38N-R18W, NMPM

Section 15:  E/2NW/4, W/2NE/4

Containing 160 acres, more or less (Tr. 2-65, Fee)

T37N-R17W, NMPM

Section 5:  Lots 5, 6

Containing 15.59 acres, more or less (Tr. 2-68, Federal Lease C-18847)

T38N-R18W, NMPM

Section 3:  S/2

Section 4:  W/2SW/4

Containing 400 acres, more or less (Tr. 2-71A, Federal Lease C-21440A)

T38N-R18W, NMPM

Section 4:  Lot 5, S/2NE/4

Containing 126.46 acres, more or less (Tr. 2-71B, Federal Lease C-21440A)

T38N-R18W, NMPM

Section 10:  NE/4

Containing 160 acres, more or less (Tr. 2-103, Fee)

T38N-R18W, NMPM

Section 10:  W/2

Containing 320 acres, more or less (Tr. 2-110, Fee)

T38N-R18W, NMPM

Section 4:  Lots 7, 8, S/2NW/4

Containing 172.72 acres, more or less (Tr. 2-119, Fee)

(

  

  

  

Page 2 of 5

T38N-R18W, NMPM

Section 3:  Lot 5, SE/4NE/4

Containing 86.30 acres, more or less (Tr. 2-122, Fee)

T37N-R17W, NMPM

Section 3:  Lots 16, 17

Containing 79.99 acres, more or less (Tr. 2-146, Fee)

T39N-R18W, NMPM

Section 28:  S/2NW/4, SW/4

Containing 240 acres, more or less (Tr. 2-153, Fee)

T39N-R18W, NMPM

Section 33:  E/2NW/4, S/2NE/4

Containing 160 acres, more or less (Tr. 2-154, Fee)

T39N-R18W, NMPM

Section 33:  SW/4

Containing 160 acres, more or less (Tr. 2-155, Fee)

T39N-R18W, NMPM

Section 30:  Lots 5, 6, 9, 10 (NW/4)

Containing 160 acres, more or less (Tr. 2-157, Fee)

T39N-R18W, NMPM

Section 30:  SE/4

Containing 160 acres, more or less (Tr. 2-158, Fee)

T39N-R18W, NMPM

Section 29:  N/2NW/4, SE/4NW/4, S/2NE/4

Containing 200 acres, more or less (Tr. 2-159, Fee)

T39N-R18W, NMPM

Section 32:  SW/4

Containing 160 acres, more or less (Tr. 2-161, Fee)

T39N-R19W, NMPM

Section 34:  SW/4, W/2SE/4

Containing 240 acres, more or less (Tr. 3-36, Federal Lease C-19666)

T37N-R20W, NMPM

Section 11:  NE/4NE/4, W/2NE/4, NW/4, N/2SW/4, SW/4SW/4, NW/4SE/4

Containing 440 acres, more or less (Tr. 4-6, Federal Lease C-30617)

 

  

  

  

Page 3 of 5

T38N-R19W, NMPM

Section 31:  NE/4

Containing 160 acres, more or less (Tr. 4-44, Federal Lease C-24214)

T37N-R19W, NMPM

Section 9:  Tract 57

Section 16:  Tract 57, Lots 2, 3, 4, N/2NW/4, SW/4NW/4

Containing 373.94 acres, more or less (Tr. 4-59A, Federal Lease C-33303)

T37N-R19W, NMPM

Section 16:  Lots 6, 7, 8, W/2SW/4, SE/4SW/4, S/2SE/4

Containing 265.48 acres, more or less (Tr. 4-59B, Federal Lease C-33302)

T37N-R19W, NMPM

Section 14:  W/2

Containing 320 acres, more or less (Tr. 4-60, Federal Lease C-33301)

T37N-R19W, NMPM

Section 13:  Lots 1, 2, 3, NW/4, W/2SW/4

Containing 274.30 acres, more or less (Tr. 4-61A, Federal Lease C-33300)

T37N-R19W, NMPM

Section 14:  E/2

Containing 320 acres, more or less (Tr. 4-61B, Federal Lease C-33301)

T37N-R19W, NMPM

Section 24:  NW/4NW/4

Containing 40 acres, more or less (Tr. 4-61C, Federal Lease C-37436)

T37N-R19W, NMPM

Section 25:  S/2SW/4

Containing 80 acres, more or less (Tr. 4-62, Federal Lease C-37437)

T37N-R19W, NMPM

Section 26:  NE/4

Containing 160 acres, more or less (Tr. 4-63, Federal Lease C-37438)

T38N-R19W, NMPM

Section 32:  N/2SE/4

Containing 80 acres, more or less (Tr. 4-80, Fee)

T37N-R19W, NMPM

Section 1:  Tract 54

Section 11:  Tract 54

Section 12:  Tract 54

Containing 320 acres, more or less (Tr. 4-84, Fee)

 

  

  

  

Page 4 of 5

T37N-R17W, NMPM

Section 10:  Lot 4

Containing 34.99 acres, more or less (Tr. 5-55, Fee)

T37N-R17W, NMPM

Section 14:  Lots 1, 2 & 3 (E/2NE/4)

Containing 80 acres, more or less (Tr. 5-69, Fee)

T37N-R17W, NMPM

Section 14:  A tract of land in the W/2SE/4 more fully described in Book 317 Page 297 of said county records

Containing 6.11 acres, more or less (Tr. 5-71, Fee)

T37N-R17W, NMPM

Section 14:  E/2SE/4, except a tract of land more fully described in Book 391 Page 87 of said county records and except a tract of land in Sec. 14 described as follows: beginning at a point on the West right-of-way line of county land; whence the southeast corner of Sec. 14 bears S 1 deg. 58 min. E a distance of 652.4 ft.; thence S 89 deg. 09 min. W 145 ft. to a point; thence N 34 deg. 38 min. W 85.9 ft. to a point; thence N 43 deg. 56 min. E 156.7 ft. to a point; thence N 89 deg. 44 min. E 86.7 ft. to a point; thence S 00 deg. 30 min. W 181.8 ft. to the point of beginning

Containing 72.80 acres, more or less (Tr. 5-72A, Fee)

T37N-R17W, NMPM

Section 14:  A  tract of land described as follows: beginning at a point on the west right-of-way line of county land; whence the southeast corner of Sec. 14 bears S 1 deg. 58 min. E a distance of 652.4 ft.; thence S 89 deg. 09 min. W 145 ft. to a point; thence N 34 deg. 38 min. W 85.9 ft. to a point; thence N 43 deg. 56 min. E 156.7 ft to a point; thence N 89 deg. 44 min. E 86.7 ft. to a point; thence S 00 deg. 30 min. W 181.8 ft. to the point of beginning.

Containing .64 acres, more or less (Tr. 5-72B, Fee)

T37N-R17W, NMPM

Section 14:  A tract of land in the E/2SE/4 more fully described in Book 391 Page 87 of said county records

Containing 6.56 acres, more or less (Tr. 5-73, Fee)

T37N-R20W, NMPM

Section 34:  Lots 1-4, E/2E/2

Containing 374.88 acres, more or less (Tr. 6-62, Federal Lease C-21445)

T36N-R18W, NMPM

Section 12:  N/2

Section 22:  W/2W/2, NE/4NW/4, SE/4SW/4

Section 27:  W/2W/2, NE/4NW/4, E/2SW/4

Containing 840 acres, more or less (Tr. 7-12, Federal Lease C-18396)

 

  

  

  

Page 5 of 5

T36N-R18W, NMPM

Section 14:  S/2SW/4

Containing 80 acres, more or less (Tr. 7-13, Federal Lease C-18701)

T36N-R18W, NMPM

Section 8:  All

Section 9:  W/2

Section 20:  NW/4, SE/4

Section 29:  NW/4, W/2SE/4, NE/4SE/4

Containing 1560 acres, more or less (Tr. 7-16, Federal Lease C-19347)

T36N-R18W, NMPM

Section 15:  E/2SW/4

Containing 80 acres, more or less (Tr. 7-20, Federal Lease C-22446)

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