Exhibit 99.3
WHEN RECORDED RETURN TO:
James W. Sharrock
McAfee & Taft
Two Leadership Square, 10 th
Floor
211 N. Robinson
Oklahoma City, OK 73102
DEED OF TRUST, ASSIGNMENT OF
PRODUCTION,
SECURITY AGREEMENT AND FINANCING
STATEMENT
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COUNTY OF ______________
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DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY
AGREEMENT AND FINANCING STATEMENT dated as of June 8, 2007 (the
“Deed of Trust”), between THE
BEARD COMPANY (“Borrower”),
an Oklahoma corporation having its principal place of business at
5600 N. May Avenue, Oklahoma City, Oklahoma 73112, and the
PUBLIC TRUSTEE OF _______ COUNTY,
COLORADO (“Trustee”) for the
benefit of FIRST FIDELITY BANK,
N.A. , a national banking association,
5101 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 has executed and delivered to
Beneficiary that certain promissory note dated June 8 th
, 2007, in the original principal amount of $1,500,000 (the
“Note”).
B.
Borrower has agreed to enter into this Deed of Trust
in order to secure the payment and performance of the Note and all
obligations of Borrower to Beneficiary.
C.
The Borrower is the owner of undivided interests in
and to the oil, gas and mineral leases described on Exhibit
“A” attached hereto and made a part hereof for all
purposes to this Deed of Trust.
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:
(a)
Carbon Dioxide Producing
Properties . All Borrower’s
right, title, and interest, now owned or hereafter acquired, in and
to (i) the oil, gas and mineral leases set forth on Exhibit
“A” (the “Leases”), and the rights derived
therefrom, and any instrument executed in amendment, correction,
modification, confirmation, renewal, or extension of any one or
more of those leases; (ii) the carbon dioxide in and under the
lands covered by the Leases described on Exhibit “A;”
(iii) lands spaced, pooled or unitized with the lands described in
Exhibit “A;” (iv) any and all units (including, without
limitation, the McElmo Dome Unit) covering, in whole or in part,
the lands covered by the leases described on Exhibit
“A;” and (v) all oil, gas and mineral leases in which
Borrower now has or hereafter acquires an interest due to the
pooling or unitization of the oil and gas Leases described on
Exhibit “A” or the land covered by such leases or
portions of such lands or leases. It is expressly understood and
agreed that (1) neither the Trustee nor the Beneficiary shall
be liable in respect of the performance of any covenant or
obligation of the Borrower concerning such leases, and (2) any
decimal fractional interests set out on Exhibit “A”
pertaining to such oil, gas and mineral Leases have been appended
for informational purposes only, and shall not limit in any way
whatsoever the interest of the Trustee in the leases which are
subject to this Deed of Trust.
(b)
Wells and Equipment . All interest of Borrower which is attributable to the oil,
gas, mineral, or carbon dioxide producing properties assigned under
and described in subparagraph (a) immediately above in and to all
Leases, oil, gas, mineral or carbon dioxide wells, other wells,
equipment, tanks, derricks, fixtures, houses, pumps, jacks, casing,
tubing, rods, cable lines, machinery, pipe lines, flow lines, and,
without being limited by the particularity of the foregoing, all
other and additional personal property and fixtures of every kind
and character now or at any time hereafter located on any of the
lands described or referred to in Exhibit “A,” or which
may now or hereafter be used or obtained in connection
therewith.
(c)
Contract Rights . All interest of Borrower which is attributable to the Leases
and oil, gas, minerals, and carbon dioxide producing properties
conveyed under and described in (a) above in and to all valid and
subsisting operating agreements, production sales contracts,
unitization and pooling agreements and orders, farmout contracts,
assignments, rights-of-way, easements, surface leases, licenses,
permits, and other contracts pertaining to or affecting the lands,
Leases, or wells described or referred to in Exhibit
“A.”
(d)
Accounts, General Intangibles
. All rights now owned or hereafter acquired by
Borrower in all (i) accounts and general intangibles arising in
connection with the sale or other disposition of the property
described in (a) through (c) above, and (ii) any and all contract
rights and general intangibles arising from or in connection with
the property described in (a) through (c) above.
(e)
Products, Proceeds . All of Borrower’s interest in and to the products and
proceeds of the property described in (a) through (d) above,
whether presently existing or hereafter created or
arising.
The interests and estates described in (a) through
(e) above are all hereinafter sometimes collectively referred to as
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 I.
INDEBTEDNESS
This Deed of Trust is given to secure and enforce
the payment and performance of the following indebtedness and
obligations, to-wit:
(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 II.
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; in light of the Subordination
Agreement and Release executed concurrently herewith with respect
to this Deed of Trust, that 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 arefree 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.
ARTICLE III.
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 described
at Exhibit “A” 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 described in
Exhibit ”A;” (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 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.
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 IV.
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.
(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.
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4.2
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Upon the occurrence of an Event of
Default:
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(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 plac
