Common use of Title and Permitted Encumbrances Clause in Contracts

Title and Permitted Encumbrances. Mortgagor has, and Mortgagor covenants to maintain, good and marketable title to the Property, free and clear of all liens, security interests, and encumbrances except for (i) the contracts, agreements, burdens, encumbrances and other matters set forth in the descriptions of certain of the Mortgaged Properties on Exhibit "A" hereto, (ii) the liens and security interests evidenced by this Mortgage, (iii) statutory liens for taxes which are not yet delinquent, or which are being contested in good faith by appropriate proceedings and for which Mortgagor has established reserves as required by generally accepted accounting principles, (iv) liens securing lessors' royalties arising by statute or under the terms of a lease, liens under operating agreements, pooling orders and unitization agreements, and mechanics' and materialmen's liens, with respect to obligations which are not yet due or the enforceability of which is being contested in good faith by appropriate proceedings, (v) other liens and security interests (if any) in favor of Mortgagee, (vi) minor defects and irregularities in title to any Property, so long as such defects and irregularities neither (A) are liens which secure other indebtedness or obligations nor (B) materially impair the value of such Property or the use thereof for the purposes for which such Property is held (the matters described in the foregoing clauses (i), (ii), (iii), (iv), (v) and (vi) being herein called the "Permitted Encumbrances"); Mortgagor will warrant and defend title to the Property, subject as aforesaid, against the claims and demands (including claims which would be a Permitted Encumbrance under item (vi) above) of all persons claiming or to claim the same or any part thereof. With respect to each Mortgaged Property, the ownership of Mortgagor in such Mortgaged Property does and will (after giving effect to all Permitted Encumbrances, but prior to giving effect to the Conveyance of Net Profits Overriding Royalty Interest given by Mortgagor to Mortgagee immediately prior to the grant of this Mortgage): (i) with respect to each tract of land described in Exhibit "A" hereto (whether described directly in such Exhibit "A" or described by reference to another instrument) in connection with such Mortgaged Property, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal or percentage share of the oil, gas and other hydrocarbons produced from, or allocated to, such tract equal to not less than the decimal or percentage share set forth in Exhibit "A" in connection with such tract opposite the words "Net Revenue Interest" (or words of similar import), (B) cause Mortgagor to be obligated to bear a decimal or percentage share of the cost of exploration, development and operation of such tract of land not greater than the decimal or percentage share set forth in Exhibit "A" in connection with such tract opposite the words "Working Interest" (or words of similar import) and (ii) if such Mortgaged Property is shown on Exhibit "A" to be subject to a unit or units, with respect to each such unit, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal or percentage share of all substances covered by such unit which are produced from, or allocated to, such unit equal to not less than the decimal or percentage share set forth in Exhibit "A" in connection with such Mortgaged Property opposite the words "Unit Net Revenue Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit), and (B) obligate Mortgagor to bear a decimal or percentage share of the cost of exploration, development and operation of such unit not greater than the decimal or percentage share set forth in Exhibit "A" in connection with such Mortgaged Property opposite the words "Unit Working Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit). With respect to each Property described in Exhibit "A" hereto which is subject to a voluntary or involuntary pooling, unitization or communitization agreement and/or order, the term "tract of land" as used in this Section 2.1(a) shall mean the pooled, unitized or communitized area as an entirety and shall not be deemed to refer to any individual tract committed to said pooled, unitized or communitized area. The above-described shares of production which Mortgagor is entitled to receive, and shares of expenses which Mortgagor is obligated to bear, are not and will not be subject to change (other than changes which arise pursuant to non-consent provisions of operating agreements described in Exhibit "A" in connection with operations hereafter proposed), except, and only to the extent that, such changes are expressly set out in Exhibit "A". There is not and will not be any unexpired financing statement covering any part of the Property on file in any public office naming any party other than Mortgagee as secured party. Upon request by Mortgagee, Mortgagor will deliver to Mortgagee schedules of all internal and third party information identifying the Mortgaged Properties (such as, for example, lease names and numbers assigned by Mortgagor or the operator of any Mortgaged Property, well and/or unit and/or property names and numbers assigned by purchasers of Production, and internal identification names and numbers used by Mortgagor in accounting for revenues, costs, and joint interest transactions attributable to the Mortgaged Properties). The listing of Permitted Encumbrances above is made for the purpose of limiting certain warranties and covenants made by Mortgagor herein; such listing is not intended to affect the description herein of the Mortgaged Properties nor to subordinate the liens and security interests hereunder to any Permitted Encumbrances.

Title and Permitted Encumbrances. Mortgagor has, in Mortgagor’s own right, and Mortgagor covenants to maintain, lawful, good and marketable title to its interest in the PropertyOil and Gas Lease and the leasehold estate created thereby together with all other Property subject to this Mortgage. Mortgagor is lawfully seized and possessed of the Property and every part thereof, and has the right to convey its interest in the same, free and clear of all liens, charges, claims, security interests, and encumbrances except for (i) a senior collateral assignment and mortgage securing $1.0 million in indebtedness of Mortgagor to a third party, (ii) the contractsmatters, agreementsif any, burdensencumbering the Property on the date hereof, encumbrances and other matters including those set forth in any title commitment of Mortgagor, which are Permitted Encumbrances (as hereinafter defined) only to the descriptions of certain of extent the Mortgaged Properties on Exhibit "A" heretosame are valid and subsisting and affect the Property, (iiiii) the liens and security interests evidenced by this Mortgage, (iiiiv) statutory liens for real estate taxes which are not yet delinquent, or which are being contested in good faith by appropriate proceedings and for which Mortgagor has established reserves as required by generally accepted accounting principles, (iv) liens securing lessors' royalties arising by statute or under assessments on the terms of a lease, liens under operating agreements, pooling orders and unitization agreements, and mechanics' and materialmen's liens, with respect to obligations Property which are not yet due and payable without premium or the enforceability of which is being contested in good faith by appropriate proceedings, penalty; (v) other liens and security interests (if any) in favor of Mortgagee, Mortgagee and (vi) minor defects and irregularities the current fee owner’s fee interest in title to any Property, so long as such defects and irregularities neither (A) are liens which secure other indebtedness or obligations nor (B) materially impair the value of such Property or the use thereof for the purposes for which such Property is held Premises (the matters described in the foregoing clauses (i), (ii), (iii), (iv), (v) and through (vi) being herein called the "“Permitted Encumbrances"”); Mortgagor . Mortgagor, and Mortgagor’s successors and assigns, will warrant specially and forever defend title to the Property, subject as aforesaid, to Mortgagee and its successors and assigns, against the claims and demands (including claims which would be a Permitted Encumbrance under item (vi) above) of all persons claiming or to claim the same or any part thereofthereof by, through or under Mortgagor. With Mortgagor will punctually pay, perform, observe and keep all covenants, obligations and conditions in or pursuant to any Permitted Encumbrance and will not modify or permit modification of any Permitted Encumbrance without the prior written consent of Mortgagee. Inclusion of any matter as a Permitted Encumbrance does not constitute approval or waiver by Mortgagee of any existing or future violation or other breach thereof by Mortgagor, by the Property or otherwise. If any right or interest of Mortgagee in the Property or any part thereof shall be endangered or questioned or shall be attacked directly or indirectly, Mortgagee (whether or not named as a party to legal proceedings with respect thereto), is hereby authorized and empowered to each Mortgaged Propertytake such steps as in its discretion may be proper for the defense of any such legal proceedings or the protection of such right or interest of Mortgagee, including but not limited to the employment of independent counsel, the ownership prosecution or defense of litigation, and the compromise or discharge of adverse claims. All expenditures so made of every kind and character shall be a demand obligation (which obligation Mortgagor in such Mortgaged Property does and will (after giving effect hereby promises to all Permitted Encumbrances, but prior to giving effect to the Conveyance of Net Profits Overriding Royalty Interest given pay) owing by Mortgagor to Mortgagee, and Mortgagee immediately prior shall be subrogated to the grant of this Mortgage): (i) with respect to each tract of land described in Exhibit "A" hereto (whether described directly in such Exhibit "A" or described by reference to another instrument) in connection with such Mortgaged Property, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal or percentage share all rights of the oil, gas and other hydrocarbons produced from, or allocated to, person receiving such tract equal to not less than the decimal or percentage share set forth in Exhibit "A" in connection with such tract opposite the words "Net Revenue Interest" (or words of similar import), (B) cause Mortgagor to be obligated to bear a decimal or percentage share of the cost of exploration, development and operation of such tract of land not greater than the decimal or percentage share set forth in Exhibit "A" in connection with such tract opposite the words "Working Interest" (or words of similar import) and (ii) if such Mortgaged Property is shown on Exhibit "A" to be subject to a unit or units, with respect to each such unit, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal or percentage share of all substances covered by such unit which are produced from, or allocated to, such unit equal to not less than the decimal or percentage share set forth in Exhibit "A" in connection with such Mortgaged Property opposite the words "Unit Net Revenue Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit), and (B) obligate Mortgagor to bear a decimal or percentage share of the cost of exploration, development and operation of such unit not greater than the decimal or percentage share set forth in Exhibit "A" in connection with such Mortgaged Property opposite the words "Unit Working Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit). With respect to each Property described in Exhibit "A" hereto which is subject to a voluntary or involuntary pooling, unitization or communitization agreement and/or order, the term "tract of land" as used in this Section 2.1(a) shall mean the pooled, unitized or communitized area as an entirety and shall not be deemed to refer to any individual tract committed to said pooled, unitized or communitized area. The above-described shares of production which Mortgagor is entitled to receive, and shares of expenses which Mortgagor is obligated to bear, are not and will not be subject to change (other than changes which arise pursuant to non-consent provisions of operating agreements described in Exhibit "A" in connection with operations hereafter proposed), except, and only to the extent that, such changes are expressly set out in Exhibit "A". There is not and will not be any unexpired financing statement covering any part of the Property on file in any public office naming any party other than Mortgagee as secured party. Upon request by Mortgagee, Mortgagor will deliver to Mortgagee schedules of all internal and third party information identifying the Mortgaged Properties (such as, for example, lease names and numbers assigned by Mortgagor or the operator of any Mortgaged Property, well and/or unit and/or property names and numbers assigned by purchasers of Production, and internal identification names and numbers used by Mortgagor in accounting for revenues, costs, and joint interest transactions attributable to the Mortgaged Properties). The listing of Permitted Encumbrances above is made for the purpose of limiting certain warranties and covenants made by Mortgagor herein; such listing is not intended to affect the description herein of the Mortgaged Properties nor to subordinate the liens and security interests hereunder to any Permitted Encumbrancespayment.

Title and Permitted Encumbrances. Mortgagor has, in Mortgagor’s own right, and Mortgagor covenants to maintain, lawful, good and marketable title to the Property, is lawfully seized and possessed of the Property and every part thereof, and has the right to convey the same, free and clear of all liens, charges, claims, security interests, and encumbrances except for (i) the contractsmatters, agreementsif any, burdens, encumbrances and other matters set forth under the heading “Permitted Encumbrances” in Exhibit B hereto, which are Permitted Encumbrances only to the descriptions of certain of extent the Mortgaged Properties on Exhibit "A" heretosame are valid and subsisting and affect the Property, (ii) the liens and security interests evidenced by this Mortgage, (iii) statutory liens for real estate taxes and assessments on the Property which are not yet delinquent, or which are being contested in good faith by appropriate proceedings and for which Mortgagor has established reserves as required by generally accepted accounting principles, (iv) liens securing lessors' royalties arising by statute or under the terms of a lease, liens under operating agreements, pooling orders and unitization agreements, and mechanics' and materialmen's liens, with respect to obligations which are not yet due or the enforceability of which is being contested in good faith by appropriate proceedings, (v) other liens and security interests (if any) in favor of Mortgagee, (vi) minor defects and irregularities in title to any Property, so long as such defects and irregularities neither (A) are liens which secure other indebtedness or obligations nor (B) materially impair the value of such Property or the use thereof for the purposes for which such Property is held Mortgagee (the matters described in the foregoing clauses (i), (ii), (iii), (iv), (v) and (viiv) being herein called the "“Permitted Encumbrances"”); . Mortgagor owns and holds the Fee Parcel in fee simple absolute. Mortgagor is the owner of a valid and subsisting interest as tenant under the Ground Lease, that the Ground Lease is in full force and effect, there are no defaults thereunder and no event has occurred or is occurring which after notice or passage of time or both will result in such a default, that the Ground Lease is subject to no lien, charge or encumbrance of any kind and is prior to all liens, charges and encumbrances whatsoever on the fee interest of the lessor thereunder except such as are listed as exceptions to title in the title policy insuring the lien hereof. Mortgagor, and Mortgagor’s successors and assigns, will warrant generally and forever defend title to the Property, subject as aforesaid, to Mortgagee and his successors or substitutes and assigns, against the claims and demands (including claims which would be a Permitted Encumbrance under item (vi) above) of all persons claiming or to claim the same or any part thereof. With Mortgagor will preserve the leasehold estate created in it by the Ground Lease, and will forever warrant and defend the same to Mortgagee and will forever warrant and defend the validity and priority of the lien hereof against the claims of all persons and parties whomsoever. Mortgagor will perform or cause to be performed all of the covenants and conditions required to be performed by it under the Ground Lease, will do all things necessary to preserve unimpaired its rights thereunder, and will not enter into any agreement modifying or amending the Ground Lease or releasing the lessor thereunder from any obligations imposed upon it thereby. If Mortgagor receives a notice of default under the Ground Lease, it shall immediately cause a copy of such notice to be sent by registered United States mail to Mortgagee. Mortgagor will punctually pay, perform, observe and keep all covenants, obligations and conditions in or pursuant to any Permitted Encumbrance and will not modify or permit modification of any Permitted Encumbrance without the prior written consent of Mortgagee. Inclusion of any matter as a Permitted Encumbrance does not constitute approval or waiver by Mortgagee of any existing or future violation or other breach thereof by Mortgagor, by the Property or otherwise. No part of the Property constitutes all or any part of the principal residence of Mortgagor if Mortgagor is an individual. If any right or interest of Mortgagee in the Property or any part thereof shall be endangered or questioned or shall be attacked directly or indirectly, Mortgagee and Mortgagee, or either of them (whether or not named as parties to legal proceedings with respect thereto), are hereby authorized and empowered to each Mortgaged Propertytake such steps as in their discretion may be proper for the defense of any such legal proceedings or the protection of such right or interest of Mortgagee, including but not limited to the employment of independent counsel, the ownership prosecution or defense of litigation, and the compromise or discharge of adverse claims. All expenditures so made of every kind and character shall be a demand obligation (which obligation Mortgagor in such Mortgaged Property does and will (after giving effect hereby promises to all Permitted Encumbrances, but prior to giving effect to the Conveyance of Net Profits Overriding Royalty Interest given pay) owing by Mortgagor to Mortgagee immediately prior to or Mortgagee (as the grant of this Mortgage): (i) with respect to each tract of land described in Exhibit "A" hereto (whether described directly in such Exhibit "A" or described by reference to another instrument) in connection with such Mortgaged Property, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal or percentage share of the oil, gas and other hydrocarbons produced from, or allocated to, such tract equal to not less than the decimal or percentage share set forth in Exhibit "A" in connection with such tract opposite the words "Net Revenue Interest" (or words of similar import), (B) cause Mortgagor to be obligated to bear a decimal or percentage share of the cost of exploration, development and operation of such tract of land not greater than the decimal or percentage share set forth in Exhibit "A" in connection with such tract opposite the words "Working Interest" (or words of similar import) and (ii) if such Mortgaged Property is shown on Exhibit "A" to be subject to a unit or units, with respect to each such unit, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal or percentage share of all substances covered by such unit which are produced from, or allocated to, such unit equal to not less than the decimal or percentage share set forth in Exhibit "A" in connection with such Mortgaged Property opposite the words "Unit Net Revenue Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unitcase may be), and the party (BMortgagee or Mortgagee, as the case may be) obligate Mortgagor making such expenditures shall be subrogated to bear a decimal or percentage share all rights of the cost of exploration, development and operation of person receiving such unit not greater than the decimal or percentage share set forth in Exhibit "A" in connection with such Mortgaged Property opposite the words "Unit Working Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit). With respect to each Property described in Exhibit "A" hereto which is subject to a voluntary or involuntary pooling, unitization or communitization agreement and/or order, the term "tract of land" as used in this Section 2.1(a) shall mean the pooled, unitized or communitized area as an entirety and shall not be deemed to refer to any individual tract committed to said pooled, unitized or communitized area. The above-described shares of production which Mortgagor is entitled to receive, and shares of expenses which Mortgagor is obligated to bear, are not and will not be subject to change (other than changes which arise pursuant to non-consent provisions of operating agreements described in Exhibit "A" in connection with operations hereafter proposed), except, and only to the extent that, such changes are expressly set out in Exhibit "A". There is not and will not be any unexpired financing statement covering any part of the Property on file in any public office naming any party other than Mortgagee as secured party. Upon request by Mortgagee, Mortgagor will deliver to Mortgagee schedules of all internal and third party information identifying the Mortgaged Properties (such as, for example, lease names and numbers assigned by Mortgagor or the operator of any Mortgaged Property, well and/or unit and/or property names and numbers assigned by purchasers of Production, and internal identification names and numbers used by Mortgagor in accounting for revenues, costs, and joint interest transactions attributable to the Mortgaged Properties). The listing of Permitted Encumbrances above is made for the purpose of limiting certain warranties and covenants made by Mortgagor herein; such listing is not intended to affect the description herein of the Mortgaged Properties nor to subordinate the liens and security interests hereunder to any Permitted Encumbrancespayment.

Title and Permitted Encumbrances. Mortgagor Grantor has, in Grantor's own right, and Mortgagor Grantor covenants to maintain, lawful good and marketable title to the Mortgaged Property, free and clear of all liens, charges, claims, security interests, and encumbrances except for (i) the contractsmatters, agreementsif any, burdens, encumbrances and other matters set forth under the heading "Permitted Encumbrances" in EXHIBIT R hereto, which are Permitted Encumbrances only to the descriptions of certain of extent the same are valid and subsisting and affect the Mortgaged Properties on Exhibit "A" heretoProperty, (ii) the liens and security interests evidenced by this Mortgage, (iii) statutory liens for ad valorem taxes and standby fees on the Mortgaged Property which are not yet delinquent, or which are being contested in good faith by appropriate proceedings and for which Mortgagor has established reserves as required by generally accepted accounting principles, (iv) liens securing lessors' royalties arising by statute or under the terms of a lease, liens under operating agreements, pooling orders and unitization agreements, and mechanics' and materialmen's liens, with respect to obligations which are not yet due or the enforceability of which is being contested in good faith by appropriate proceedings, (v) other liens and security interests (if any) in favor of MortgageeLender, (v) liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that, at Lender's option, either (A) appropriate bonds are posted in amounts satisfactory to Lender, or (b) reserves with respect thereto are maintained on the books of Grantor, or its subsidiaries, as the case may be in such amounts as are satisfactory to Lender, and (vi) minor defects and irregularities carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like liens arising in title to any Propertythe ordinary course of business which are not overdue for a period of more than sixty (60) days or which are being contested in good faith by appropriate proceedings, so long as such defects and irregularities neither provided that, at Xxxxxx's option, either (A) appropriate bonds are liens which secure other indebtedness posted by Grantor in amounts satisfactory to Lender or obligations nor (B) materially impair reserves with respect thereto are maintained on the value books of Grantor or its subsidiaries, as the case may be, in such Property or the use thereof for the purposes for which such Property is held amounts as are satisfactory to Lender (the matters described in the foregoing clauses CLAUSES (i), (ii), (iii), (iv), (v) and (vii)-(vi) being herein collectively called the "Permitted EncumbrancesPERMITTED ENCUMBRANCES"); Mortgagor . Xxxxxxx, and Xxxxxxx's successors and assigns, will warrant and forever defend title to the Mortgaged Property, subject as aforesaid, to Trustee and his successors or substitutes and assigns, against the claims and demands (including claims which would be a Permitted Encumbrance under item (vi) above) of all persons claiming or to claim the same or any part thereof. With respect to each Mortgaged PropertyGrantor will punctually pay, the ownership of Mortgagor perform, observe and keep all covenants, obligations and conditions in such Mortgaged Property does and will (after giving effect to all Permitted Encumbrances, but prior to giving effect to the Conveyance of Net Profits Overriding Royalty Interest given by Mortgagor to Mortgagee immediately prior to the grant of this Mortgage): (i) with respect to each tract of land described in Exhibit "A" hereto (whether described directly in such Exhibit "A" or described by reference to another instrument) in connection with such Mortgaged Property, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal or percentage share of the oil, gas and other hydrocarbons produced from, or allocated to, such tract equal to not less than the decimal or percentage share set forth in Exhibit "A" in connection with such tract opposite the words "Net Revenue Interest" (or words of similar import), (B) cause Mortgagor to be obligated to bear a decimal or percentage share of the cost of exploration, development and operation of such tract of land not greater than the decimal or percentage share set forth in Exhibit "A" in connection with such tract opposite the words "Working Interest" (or words of similar import) and (ii) if such Mortgaged Property is shown on Exhibit "A" to be subject to a unit or units, with respect to each such unit, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal or percentage share of all substances covered by such unit which are produced from, or allocated to, such unit equal to not less than the decimal or percentage share set forth in Exhibit "A" in connection with such Mortgaged Property opposite the words "Unit Net Revenue Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit), and (B) obligate Mortgagor to bear a decimal or percentage share of the cost of exploration, development and operation of such unit not greater than the decimal or percentage share set forth in Exhibit "A" in connection with such Mortgaged Property opposite the words "Unit Working Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit). With respect to each Property described in Exhibit "A" hereto which is subject to a voluntary or involuntary pooling, unitization or communitization agreement and/or order, the term "tract of land" as used in this Section 2.1(a) shall mean the pooled, unitized or communitized area as an entirety and shall not be deemed to refer pursuant to any individual tract committed to said pooled, unitized or communitized area. The above-described shares of production which Mortgagor is entitled to receive, and shares of expenses which Mortgagor is obligated to bear, are not Permitted Encumbrance and will not be subject to change (modify or permit modification of any Permitted Encumbrance without the prior written consent of Holder. Inclusion of any matter as a Permitted Encumbrance does not constitute approval or waiver by Holder of any existing or future violation or other than changes which arise pursuant to non-consent provisions breach thereof by Grantor, by the Mortgaged Property or otherwise. No part of operating agreements described in Exhibit "A" in connection with operations hereafter proposed), except, and only to the extent that, such changes are expressly set out in Exhibit "A". There is not and will not be any unexpired financing statement covering Mortgaged Property constitutes all or any part of the Property homestead of Grantor. To the extent required by applicable law, Grantor has filed all necessary tax returns and reports and has paid all taxes and governmental charges thereby shown to be owing except any such taxes or charges that are being contested in good faith by appropriate proceedings which have been disclosed to Lender in writing and for which adequate reserves have been set aside on file its books in any public office naming any party other than Mortgagee as secured party. Upon request by Mortgagee, Mortgagor will deliver to Mortgagee schedules of all internal and third party information identifying the Mortgaged Properties (such as, for example, lease names and numbers assigned by Mortgagor or the operator of any Mortgaged Property, well and/or unit and/or property names and numbers assigned by purchasers of Production, and internal identification names and numbers used by Mortgagor in accordance with generally accepted accounting for revenues, costs, and joint interest transactions attributable to the Mortgaged Properties). The listing of Permitted Encumbrances above is made for the purpose of limiting certain warranties and covenants made by Mortgagor herein; such listing is not intended to affect the description herein of the Mortgaged Properties nor to subordinate the liens and security interests hereunder to any Permitted Encumbrancesprinciples.

Title and Permitted Encumbrances. Mortgagor has, and Mortgagor covenants to maintain, good and marketable merchantable title to the PropertyMortgaged Properties, free and clear of all liens, security interests, and encumbrances except for (i) the contracts, agreements, burdens, encumbrances and other matters set forth in the descriptions of certain of preliminary title opinions delivered by Mortgagor to Lender, and other routine operational agreements directly related to the Mortgaged Properties on Exhibit "A" heretowhich do not provide for material future commitments, which do not alter the share of revenues which Mortgagor is entitled to receive (or share of expenses that Mortgagor is obligated to bear) with respect to the lands covered thereby and which are of a type normally employed by prudent parties with respect to oil and gas properties, (ii) the liens and security interests evidenced by this Mortgage, (iii) statutory liens for taxes which are not yet delinquent, delinquent (or which are being contested by Mortgagor in good faith by appropriate proceedings and for which Mortgagor has established reserves as required by generally accepted accounting principlesadequate reserves, (iv) liens securing lessors' royalties arising by statute or under the terms of a lease, liens under operating agreements, pooling orders and unitization agreementsagreements with respect to obligations which are not yet due (or which are being contested by Mortgagor in good faith and for which Mortgagor has established adequate reserves), and (v) mechanics' and materialmen's liens, with respect to obligations which are not yet due (or the enforceability of which is are being contested by Mortgagor in good faith by appropriate proceedingsand for which Mortgagor has established adequate reserves or has secured adequate indemnification from the effects thereof), (vvi) other liens and security interests (if any) in favor of Mortgagee, (vi) minor defects and irregularities in title to any Property, so long as such defects and irregularities neither (A) are liens which secure other indebtedness or obligations nor (B) materially impair the value of such Property or the use thereof for the purposes for which such Property is held Lender (the matters described in the foregoing clauses (i), (ii), (iii), (iv), (v) and (vi) being herein called the "Permitted Encumbrances"); Mortgagor will warrant and defend title to the Property, subject as aforesaid, against the claims and demands (including claims which would be a Permitted Encumbrance under item (vi) above) of all persons claiming or to claim the same or any part thereof. With respect to each Mortgaged Property, the ownership of Mortgagor in such Mortgaged Property does and will (after giving effect to all Permitted Encumbrances, but prior to giving effect to the Conveyance of Net Profits Overriding Royalty Interest given by Mortgagor to Mortgagee immediately prior to the grant of this Mortgage): (i) with respect to each tract of land described in Exhibit "A" hereto (whether described directly in such Exhibit "A" or described by reference to another instrument) in connection with such Mortgaged Property, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal or percentage share of the oil, gas and other hydrocarbons produced from, or allocated to, such tract equal to not less than the decimal or percentage share set forth in Exhibit "A" in connection with such tract opposite the words "Net Revenue Interest" (or words of similar import), (B) cause Mortgagor to be obligated to bear a decimal or percentage share of the cost of exploration, development and operation of such tract of land not greater than the decimal or percentage share set forth in Exhibit "A" in connection with such tract opposite the words "Working Interest" (or words of similar import) and (ii) if such Mortgaged Property is shown on Exhibit "A" to be subject to a unit or units, with respect to each such unit, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal or percentage share of all substances covered by such unit which are produced from, or allocated to, such unit equal to not less than the decimal or percentage share set forth in Exhibit "A" in connection with such Mortgaged Property opposite the words "Unit Net Revenue Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit), and (B) obligate Mortgagor to bear a decimal or percentage share of the cost of exploration, development and operation of such unit not greater than the decimal or percentage share set forth in Exhibit "A" in connection with such Mortgaged Property opposite the words "Unit Working Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit). With respect to each Property described in Exhibit "A" hereto which is subject to a voluntary or involuntary pooling, unitization or communitization agreement and/or order, the term "tract of land" as used in this Section 2.1(a) shall mean the pooled, unitized or communitized area as an entirety and shall not be deemed to refer to any individual tract committed to said pooled, unitized or communitized area. The above-described shares of production which Mortgagor is entitled to receive, and shares of expenses which Mortgagor is obligated to bear, are not and will not be subject to change (other than changes which arise pursuant to non-consent provisions of operating agreements described in Exhibit "A" in connection with operations hereafter proposed), except, and only to the extent that, such changes are expressly set out in Exhibit "A". There is not and will not be any unexpired financing statement covering any part of the Property on file in any public office naming any party other than Mortgagee as secured party. Upon request by Mortgagee, Mortgagor will deliver to Mortgagee schedules of all internal and third party information identifying the Mortgaged Properties (such as, for example, lease names and numbers assigned by Mortgagor or the operator of any Mortgaged Property, well and/or unit and/or property names and numbers assigned by purchasers of Production, and internal identification names and numbers used by Mortgagor in accounting for revenues, costs, and joint interest transactions attributable to the Mortgaged Properties). The listing of Permitted Encumbrances above is made for the purpose of limiting certain warranties and covenants made by Mortgagor herein; such listing is not intended to affect the description herein of the Mortgaged Properties nor to subordinate the liens and security interests hereunder to any Permitted Encumbrances.

Title and Permitted Encumbrances. Except for any title defects created by, through or under Mortgagee, Mortgagor has, and Mortgagor covenants to maintain, good and marketable defensible title to the Property, free and clear of all liens, security interests, and encumbrances except for (i) the contracts, agreements, burdens, encumbrances and other matters set forth in the descriptions of certain of known to Mortgagee and affecting the Mortgaged Properties on Exhibit "A" heretoProperties, (ii) the liens and security interests evidenced by this Mortgage, (iii) statutory liens for taxes which are not yet delinquent, or which are being contested in good faith by appropriate proceedings and for which Mortgagor has established reserves as required by generally accepted accounting principles, (iv) liens securing lessors' royalties arising by statute or under the terms of a lease, liens under operating agreements, pooling orders and unitization agreements, and mechanics' and materialmen's liens, with respect to obligations which are not yet due or the enforceability of which is being contested in good faith by appropriate proceedingsdue, and (v) other liens and security interests (if any) in favor of Mortgagee, (vi) minor defects and irregularities in title to any Property, so long as such defects and irregularities neither (A) are liens which secure other indebtedness or obligations nor (B) materially impair the value of such Property or the use thereof for the purposes for which such Property is held Mortgagee (the matters described in the foregoing clauses (i), (ii), (iii), (iv), (v) and (viv) being herein called the "Permitted Encumbrances"); Mortgagor will warrant and defend title to the Property, subject as aforesaid, against the claims and demands (including claims which would be a Permitted Encumbrance under item (vi) above) of all persons claiming by through or to claim the same or any part thereofunder Mortgagor, but not otherwise. With respect to each Mortgaged Property, the ownership of Mortgagor in such Mortgaged Property does and will (after giving effect to all Permitted Encumbrances, but prior to giving effect to the Conveyance of Net Profits Overriding Royalty Interest given by Mortgagor to Mortgagee immediately prior to the grant of this Mortgage): (i) with respect to each tract of land described in Exhibit "A" hereto (whether described directly in such Exhibit "A" or described by reference to another instrument) in connection with such Mortgaged Property, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal or percentage share of the oil, gas and other hydrocarbons produced from, or allocated to, such tract equal to not less than the decimal or percentage share set forth in Exhibit "A" in connection with such tract opposite the words "Net Revenue Interest" (or words of similar import)conveyed from Mortgagee to Mortgagor, (B) cause Mortgagor to be obligated to bear a decimal or percentage share of the cost of exploration, development and operation of such tract of land not greater than the decimal or percentage share set forth in Exhibit "A" in connection with such tract opposite the words "Working Interest" (or words of similar import) and (ii) if such Mortgaged Property is shown on Exhibit "A" conveyed from Mortgagee to be subject to a unit or units, with respect to each such unit, (A) entitle Mortgagor to receive (subject to the terms and provisions of this Mortgage) a decimal or percentage share of all substances covered by such unit which are produced from, or allocated to, such unit equal to not less than the decimal or percentage share set forth in Exhibit "A" in connection with such Mortgaged Property opposite the words "Unit Net Revenue Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit), and (B) obligate Mortgagor to bear a decimal or percentage share of the cost of exploration, development and operation of such unit not greater than the decimal or percentage share set forth in Exhibit "A" in connection with such Mortgaged Property opposite the words "Unit Working Interest" or words of similar import (and if such Mortgaged Property is subject to more than one unit, words identifying such interest with such unit). With respect to each Property described in Exhibit "A" hereto which is subject to a voluntary or involuntary pooling, unitization or communitization agreement and/or order, the term "tract of land" as used in this Section 2.1(a) shall mean the pooled, unitized or communitized area as an entirety and shall not be deemed to refer to any individual tract committed to said pooled, unitized or communitized area. The above-described shares of production which Mortgagor is entitled to receive, and shares of expenses which Mortgagor is obligated to bear, are not and will not be subject to change (other than changes which arise pursuant to non-consent provisions of operating agreements described in Exhibit "A" in connection with operations hereafter proposed), except, and only to the extent that, such changes are expressly set out in Exhibit "A". Mortgagee There is not and will not be any unexpired financing statement covering any part of the Property on file in any public office naming any party other than Mortgagee as secured party. Upon request by Mortgagee, Mortgagor will deliver to Mortgagee schedules of all internal and third party information identifying the Mortgaged Properties (such as, for example, lease names and numbers assigned by Mortgagor or the operator of any Mortgaged Property, well and/or unit and/or property names and numbers assigned by purchasers of Production, and internal identification names and numbers used by Mortgagor in accounting for revenues, costs, and joint interest transactions attributable to the Mortgaged Properties). The listing of Permitted Encumbrances above is made for the purpose of limiting certain warranties and covenants made by Mortgagor herein; such listing is not intended to affect the description herein of the Mortgaged Properties nor to subordinate the liens and security interests hereunder to any Permitted Encumbrances.