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Assignment, Novation, And Assumption Agreement

Assignment and Assumption Agreement

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 This Assignment and Assumption Agreement involves

LUCAS ENERGY, INC. | CATI Operating, LLC | Lucas Energy, Inc

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Title: ASSIGNMENT, NOVATION, AND ASSUMPTION AGREEMENT
Governing Law: United States Of America     Date: 12/18/2015
Industry: Oil and Gas Operations     Sector: Energy

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Exhibit 10.3

 

ASSIGNMENT, NOVATION, AND ASSUMPTION AGREEMENT

 

This Assignment, Novation, and Assumption Agreement (this “ Agreement ”), dated as of December 16, 2015, is by and between Lucas Energy, Inc., a Nevada corporation (“ Lucas ”), CATI Operating, LLC, a Texas limited liability company (“ CATI ”), and Louise H. Rogers, an individual as her separate property (“ Rogers ”), each a “ Party ” and collectively, the “ Parties ”.

 

Recitals:

 

Lucas and Rogers are party to that certain Second Amended Letter Loan Agreement (as amended, modified, and supplemented to date, the “ 2d LLA ”) and the Second Amended Promissory Note (as amended, modified, and supplemented to date, the “ 2d Note ”), each dated on or around November 18, 2014; that certain Security Agreement dated on or around August 13, 2013 (the “ Security Agreement ”); and that certain Mortgage, Deed of Trust, Assignment, Security Agreement, Financing Statement, and Fixture Filing, dated on or around August 13, 2013 (the “ Mortgage ”).  The 2d LLA, 2d Note, Security Agreement, and Mortgage are collectively referred to as the “ Loan Documents .”

 

Lucas and Rogers are party to that certain Amendment Dated December 14, 2015, to the Second Amended Letter Loan Agreement and the Second Amended Promissory Note, Both Dated November 13, 2014, which requires, among other things, that Lucas assign all of its oil and gas properties and related rights to CATI, and that all rights and obligations of Lucas under the Loan Documents be transferred to CATI as a special purpose entity, remote from Lucas, and freeing Lucas from any obligations or rights under the Loan Documents.

 

The Parties desire to enter into this Agreement, to make CATI a party to the Loan Documents, for Lucas to novate and transfer to CATI all of its rights and obligations under the Loan Documents, and for Rogers to release Lucas from all of its obligations and liabilities under the Loan Documents.  This Agreement implements the transition from Lucas to CATI as party (borrower, maker, mortgagor, and obligor) under the Loan Documents.

 

In consideration of the mutual promises and covenants contained in this Agreement and for other valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:

 

1.             Definitions .  Terms defined in the Loan Documents and not otherwise defined in this Agreement shall have the meanings given to them in the Definitions in the 2d LLA.

 

2.             Joinder .

 

2.1           Effective as of the date of this Agreement (the “ Effective Date ”), CATI (i) joins in and becomes a party (as fully as if CATI had been an original signatory to them) to the Loan Documents as the borrower, maker, obligor and mortgagor thereunder, as applicable, for all purposes of the Loan Documents, and the Loan Documents shall be construed and treated in all respects as if CATI was (and had at all times been) named in them as a party instead of Lucas and (ii) without limiting any other provision of the Loan Documents, agrees that it shall take all steps that are necessary, including, without limitation, pursuant to Section III(D) of the Security Agreement, to grant to Rogers, a perfected first priority security interest, subject to the terms of the Loan Documents and to the extent set forth in the Security Agreement and Mortgage, on all of CATI’s (formerly Lucas’) assets constituting Collateral and/or Mortgaged Property.

 

 

 

 

Assignment, Novation, and Assumption Agreement

 

Rogers-Lucas-CATI/December 16, 2015

Page 1 of 7

 

 


 

2.2           CATI unconditionally assumes and shall promptly, fully, and completely keep, fulfill, observe, perform, and discharge each and every covenant and obligation that may accrue and become performable, due, or owing under the Loan Documents from and after the Effective Date, and CATI shall be bound by all of the terms and conditions of the Loan Documents in every way as if CATI were originally a party to the Loan Documents instead of Lucas.

 

3.             Novation and Assumption; Release . Effective as of the Effective Date:

 

3.1.            Novation and Assumption .  Lucas irrevocably novates and transfers to CATI all of Lucas’ rights, title, and all of Lucas’ interests and duties, liabilities, and obligations under the Loan Documents, and CATI irrevocably accepts all of those rights, titles, and interests and assumes all of those duties, liabilities, and obligations from Lucas from the Effective Date on the terms and conditions contained in this Agreement, including, without limitation, (i) any claims, liabilities, or obligations arising from any failure of Lucas to perform any of its covenants, agreements, commitments, and/or obligations to be performed prior to the date of this Agreement under the Loan Documents, and (ii) all claims or liabilities of Lucas regarding the Loan under the Loan Documents.

 

3.2.            CATI’s Performance Obligation .  CATI shall duly perform and discharge all of its liabilities and obligations arising out of or related to the Loan Documents as if CATI was (and had at all times been) named in them as a party instead of Lucas.

 

3.3.            CATI’s Release of Lucas . CATI shall assume liability for any breach, non-observance, or failure by Lucas to perform any obligations expressed to be undertaken by Lucas under the Loan Documents before the Effective Date or for which Lucas is liable, regardless of whether the breach, non-observance, or failure was known or should have been known by any of the Parties.

 

3.4.            Lender’s Release of Lucas .  Rogers releases and forever discharges Lucas and its officers, directors, shareholders, employees, agents, and representatives (collectively, the “ Lucas Parties ”), from all covenants, agreements, obligations, claims and demands of any kind, whether in law or at equity, which Rogers now has, or which any successor or assign of Rogers shall subsequently have, against any Lucas Party, arising out of or related to the Loan Documents or any officer’s certificates delivered in connection with the Loan Documents; provided, however, that this provision shall not release in any respect any liability of Lucas for breach of the representations, warranties, and covenants contained in this Agreement or in the December 2015 Amendment, and this liability shall remain and shall be a joint and several obligation of Lucas and CATI from and after the Effective Date, nor shall the release above result in the release of CATI as wholly-owned subsidiary of Lucas.

 

 

 

 

 

 

 

Assignment, Novation, and Assumption Agreement

 

Rogers-Lucas-CATI/December 16, 2015

Page 2 of 7

 

 


 

3.5.            Rogers’ Acceptance of Novation and Assumption by CATI .  Rogers consents to the novation and assumption set forth in Section 3.1 above, and accepts the liability of CATI in place of the liability of Lucas arising out of or related to the Loan Documents and grants to CATI the same rights under or arising out of or related to the Loan Documents as were granted to Lucas in every way as if CATI was and had been a party to the Loan Documents instead of and in place of Lucas.

 

3.6            Cross Indemnity .  Lucas indemnifies CATI and shall hold CATI harmless for any pre-Effective Date liability, claim, action, or demand that arises from or relates to the Loan Documents, except as otherwise provided in this Agreement, and CATI indemnifies Lucas and shall hold Lucas harmless for any post-Effective Date liability, claim, action, or demand that arises from or relates to the Loan Documents.

 

3.7            Confirmation of Rights post-Effective Date .  Following the Effective Date, Rogers shall have no right to foreclose upon or to take any other actions whatsoever against Lucas (at the Nevada parent company level), in connection with the occurrence of an event of default, events of defaults, or other breaches or failures to comply with the terms of the Loan Documents (each a “ Default ”), Rogers shall refrain from taking any actions against Lucas (at the Nevada parent company level), and instead Rogers shall take any and all actions in connection with a Default or in connection with Rogers’ security interests or mortgages under the Loan Documents, solely against CATI and its assets.

 

4.             Mutual Representations, Covenants, and Warranties .  Each of the Parties, for themselves and for the benefit of each of the other Parties to this Agreement, represents, covenants, and warrants that:

 

4.1           Each Party has all requisite power and authority, corporate or otherwise, to execute and deliver this Agreement and to consummate the transactions contemplated by this Agreement.  This Agreement constitutes the legal, valid, and binding obligation of each Party enforceable against each other Party in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors’ rights generally and general equitable principles.

 

4.2     &n


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