Form Of Mortgage, Security Agreement Dated 4/1/96

EXHIBIT 10.12.3


A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR UNDER THIS MORTGAGE.


ATTENTION ____________ COUNTY CLERK: Recording requested by and when recorded mail to:


BANK ONE, TEXAS, N.A. c/o Robert N. Rule, Jr., Esq. Locke Purnell Rain Harrell 2200 Ross Avenue, Suite 2200 Dallas, Texas 75201


MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT
OF PRODUCTION AND FINANCING STATEMENT


THE STATE OF OKLAHOMA )
) KNOW ALL MEN BY THESE PRESENTS: COUNTIES OF CANADIAN, GRADY ) and JACKSON )


WHEREAS, Brigham Oil & Gas L.P., a Delaware limited partnership, whose address is 5949 Sherry Lane, Suite 1616, Dallas, Texas 75225 (hereinafter referred to as "Mortgagor"), does hereby execute and deliver this Mortgage, Security Agreement, Assignment of Production and Financing Statement (hereinafter referred to as the "Mortgage"), for the use and benefit of BANK ONE, TEXAS, N.A., a national banking association (hereinafter referred to as "Bank"), with its address at P. O. Box 655415, Dallas, Texas 75265-5415; covering oil and gas properties and interests, and related personal properties, therein described located on land situated in the Counties of Canadian, Grady, and Jackson, State of Oklahoma;


NOW, THEREFORE, for and in consideration of the sum of $10.00 and other good and valuable consideration, in hand paid by Bank to Mortgagor, the receipt and sufficiency of which is hereby acknowledged and confessed, Mortgagor does hereby GRANT, MORTGAGE, WARRANT, BARGAIN, SELL, TRANSFER, ASSIGN and CONVEY unto Bank, with power of sale, all right, title and interest now or at any time hereafter vested in Mortgagor in and to the following described properties and interests, to wit:


(a) All oil, gas and mineral interests and other
interests and property of every kind and character located on or
attributable to the real property described on Exhibit "A"
(hereinafter collectively referred to as the "Lands"), attached hereto
and made a part hereof by reference for all purposes as if copied
herein in full;


(b) Any and all operating agreements, communitization
agreements, unitization agreements, pooling agreements, declarations
of pooled units, all units created under orders, regulations, rules or
other official acts of any federal, state or other governmental body
or regulatory agencies providing for pooling and unitization, spacing
orders or other well permits and other instruments, whether now or
hereafter made, and the units created thereby, which relate to any of
the properties and interests described or referred to in Exhibit "A",
whether or not such agreements, orders or instruments are described in
Exhibit "A";


(c) All real property described or referred to in Exhibit
"A", even though Mortgagor's rights, titles and interests be
incorrectly or insufficiently described or referred to therein, or a
description of a part or all of such rights, titles and interests be
omitted from Exhibit "A";


(d) Any and all oil, gas and mineral leases described or
referred to in Exhibit "A" (herein collectively referred to as the
"Leases"), and any and all other oil, gas and mineral leases insofar
as they cover all or any part of the Lands together with all right,
title and interest now or at any time hereafter vested in Mortgagor in
and to any and all overriding royalty interests, mineral interests,
royalty interests, net profit interests, oil payments, production
payments and all other interests and properties of every kind and
character insofar as they cover any of the Lands or the Leases,
insofar as the Leases cover the Lands, even 2
though such rights, titles and interests be incorrectly or
insufficiently described or referred to therein, or a description of a
part or all of such rights, titles and interests be omitted from
Exhibit "A", together with any and all renewals, extensions,
substitutions, ratifications, supplements, amendments and replacements
of and for any of the Leases or other interests described or referred
to herein, insofar as the same cover the Lands;


(e) All personal property, fixtures, hereditaments,
improvements, easements, permits, licenses, servitudes, surface leases
and rights-of-way situated upon or used or useful or held for use in
connection with the exploration, development or operation of the
foregoing properties and interests, or the production, treating,
storing or transportation of oil, gas and other hydrocarbons
therefrom, including, without limitation, liquid extraction plants,
plant compressors, field gathering systems, valves, fittings, engines,
boilers, meters, cables, wires, towers, tubing and rods, casing,
connections, tanks and tank batteries, separators, lines, pumps,
pipes, pipelines, structures, buildings, sheds, oil wells, gas wells,
injection wells, other wells, fixtures, tools, machinery and other
equipment, power lines, telephone and telegraph lines, and other
appurtenances, apparatus, appliances and property of every kind and
character, movable or immovable, now or at any time hereafter located
on the Lands, or which may now or hereafter be used or obtained in
connection therewith, whether or not the same are described or
referred to in Exhibit "A", together with all additions,
substitutions, replacements, accessions and attachments to any and all
of the foregoing properties;


(f) All oil, casinghead gas and gas sales, purchase,
exchange and processing contracts and agreements, and all other
contracts, agreements and instruments, whether now in existence or
hereafter made, which relate to (but only to the extent the same
relate to) any of the properties and interests described or referred
to in Exhibit "A", whether or not such contracts and agreements are
described or referred to in Exhibit "A", together with any and all
renewals, extensions, substitutions, ratifications, supplements,
amendments and replacements of or for any such contracts, agreements
and instruments to the extent such relate to such properties and
interests;


(g) All oil, gas and other hydrocarbons, including,
without limitation, casinghead gas, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons, and all products separated,
settled and dehydrated therefrom, and all products refined therefrom,
including, without limitation, kerosene, liquified petroleum gas,
refined lubricating oils, diesel fuel, drip gasoline and natural
gasoline, and all other minerals, and the proceeds thereof, produced
and to be produced from and which accrue or are attributable to any of
the above described or referenced properties and interests, by virtue
of the above described or referenced contracts, agreements and
instruments; and


(h) Any and all proceeds, rents, issues, profits,
products, revenues and other income arising from or by virtue of the
sale, lease or other disposition of, or from any insurance payable
with respect to damage, loss or destruction of, the collateral
described in Subparagraphs (a) through (g) above.


It is expressly understood and agreed by the parties hereto that any and all decimal fractional interests and/or well names set out in Exhibit A pertaining to any of the properties and interests described or referred to in Exhibit A have been appended for informational purposes only and shall not limit in any way whatsoever the interest of Mortgagor in such properties and interests, or interests derived thereunder, which are subject to this Mortgage, Security Agreement, Assignment of Production and Financing Statement (hereinafter referred to as this "Mortgage").


Mortgagor's interests in the properties and interests described in Subparagraphs (a) through (h) above are all hereinafter sometimes collectively referred to as the "Mortgaged Properties".


TO HAVE AND TO HOLD the Mortgaged Properties, together with all the rights, hereditaments and appurtenances in anywise appertaining or belonging thereto, unto Bank and its successors and assigns for the uses and purposes hereinafter set forth forever.


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The term "Mortgagor's Successors", as used herein, shall mean Mortgagor's heirs, executors, legal representatives, successors and assigns. Mortgagor hereby binds Mortgagor and Mortgagor's Successors to warrant and forever defend all and singular, the Mortgaged Properties, subject to the Permitted Liens (as defined in the Loan Agreement), unto Bank and its successors or substitutes in this trust, and its and their assigns, forever, against every person whomsoever lawfully claiming or to claim the same or any part thereof.


This conveyance is intended as a mortgage, however, against the Mortgaged Properties, and the same is executed and delivered to secure and enforce the payment by Mortgagor of all amounts provided to be paid by the terms of the Note (as hereinafter defined), as well as all other indebtedness from Mortgagor to Bank, hereinafter mentioned, as well as for other purposes, as hereinafter set forth.


As used herein, the term "Loan Agreement" shall mean that certain Loan Agreement of even date herewith between Mortgagor and Bank.


ARTICLE 1
REPRESENTATIONS AND WARRANTIES


1.1 Mortgagor hereby expressly represents and warrants to Bank that (a) the Leases are in full force and effect; (b) Mortgagor's interests in the Leases are valid and subsisting on the Lands and entitle Mortgagor to receive that proportion (indicated as "NRI") of the total production from the Mortgaged Properties indicated in connection with the descriptions thereof in Exhibit "A", subject to matters disclosed in Exhibit A and to Permitted Liens, which altogether do not cause the working interests of Grantor to be greater than or the net revenue interests of Grantor to be less than indicated on Exhibit A; (c) Mortgagor has good, valid and indefeasible title to Mortgagor's interest in the Leases and to Mortgagor's interest in the personal property and fixtures comprising a part of the Mortgaged Properties or used or obtained in connection therewith except for Permitted Liens (as that term is defined in the Loan Agreement) and except as provided in Exhibit "A", and the right, power and authority to execute and deliver this Mortgage and convey the Mortgaged Properties; (d) the Mortgaged Properties are free and clear of all claims, liens, encumbrances, security interests, contracts, agreements, options or other restrictions or limitations of any nature or kind, except for Permitted Liens (as defined in the Loan Agreement) and except as expressly provided herein; (e) all rentals, royalties and other amounts due and payable under the Leases have been duly paid or provision made for the payment of same, and obligations to be performed under the Leases as to the Lands have been duly performed; (f) the holder shall quietly enjoy and possess the Mortgaged Properties; (g) Mortgagor is not a party to, and none of the hydrocarbons produced from any of the wells located on the Leases are the subject of, any Advance Payment Contract affecting or relating to any of the Mortgaged Properties. As used herein, the term "Advance Payment Contract" means any contract whereby Mortgagor either (1) receives or becomes entitled to receive (either directly or indirectly to a third party for Mortgagor's account or benefit) any payment (an "Advance Payment") to be applied toward payment of the purchase price of hydrocarbons produced or to be produced from any of the Mortgaged Properties and which Advance Payment is paid in advance of actual delivery of such production to or for the account of the purchaser regardless of such production, or (2) grants an option or right of refusal to the purchaser to take delivery of such production in lieu of payment, and, in either of the foregoing instances, the Advance Payment is, or is to be, applied as payment in full for such production when sold and delivered or is, or is to be, applied as payment for a portion only of the purchase price thereof or of a percentage or share of such production; provided that (A) inclusion of the standard "take or pay" provision in any gas sales or purchase contract shall not, in and of itself, constitute such contract as an Advance Payment Contract for the purposes hereof, and (B) neither a hedging, swap or other similar arrangement, nor a gas balancing agreement shall constitute an Advance Payment Contract; (h) Mortgagor and any guarantor of the Secured Indebtedness (hereinafter defined) are now in a solvent condition; (i) no bankruptcy or insolvency proceedings are pending contemplated or threatened by or against Mortgagor and any guarantor of the Secured Indebtedness; and (j) no other judicial or administrative actions, suits or proceedings are pending, contemplated or threatened by or against Mortgagor and any guarantor of the Secured Indebtedness.


ARTICLE 2
SECURED INDEBTEDNESS


2.1 This Mortgage is given to secure payment and performance of the following indebtedness, obligations and liabilities, to wit:


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(a) That certain Revolving Note dated of even date in the
original principal amount of Twenty-Five Million Dollars
($25,000,000), executed by Mortgagor, as maker, payable to the order
of Bank, bearing interest as provided therein and containing usual and
customary provisions for collection and attorneys' fees (hereinafter
referred to as the "Note"); and any and all renewals, increases,
refundings, substitutions, replacements, consolidations and/or
extensions of or for the Note, or any part thereof;


(b) All indebtedness, obligations and liabilities of
Mortgagor arising pursuant to the provisions of any loan agreement,
whether now existing or hereafter arising, executed or to be executed
by and between Mortgagor and Bank, including, without limitation, the
Loan Agreement, and all supplements, amendments, restatements,
modifications and replacements thereof or therefor, together with any
and all renewals, increases, refundings, substitutions, replacements,
consolidations and/or extensions of or for any such indebtedness,
obligations and liabilities, or any part thereof;


(c) All indebtedness, obligations and liabilities arising
pursuant to the provisions of this Mortgage, and any and all other
deeds of trust, mortgages, indentures, security agreements, pledge
agreements, collateral mortgages, collateral chattel mortgages,
assignments, or other conveyances, whether now existing or hereafter
arising, and all supplements, amendments, restatements, modifications
and replacements thereof or therefor, executed or to be executed by
Mortgagor or any guarantor of the Secured Indebtedness to secure the
Secured Indebtedness or for the use and benefit of Bank, together with
any and all renewals, increases, refundings, substitutions,
replacements, consolidations and/or extensions of or for any such
indebtedness, obligations and liabilities, or any part thereof
(hereinafter collectively referred to as the "Security Instruments");


(d) All loans and advances which Bank may hereafter make
to Mortgagor, and any and all renewals, increases, refundings,
substitutions, replacements, consolidations and/or extensions of any
and all such loans and advances, or any part thereof; and


(e) All other and additional debts, obligations and
liabilities of every kind and character of Mortgagor, now existing or
hereafter arising in favor of Bank, regardless of whether such debts,
obligations and liabilities are direct or indirect, primary or
secondary, joint, several or joint and several, fixed or contingent,
and regardless of whether such present or future debts, obligations
and liabilities may, prior to their acquisition by Bank, be or have
been payable to, or be or have been in favor of, some other persons or
have been acquired by Bank in a transaction with one other than
Mortgagor, together with any and all renewals, increases, refundings,
substitutions, replacements, consolidations and/or extensions of or
for any and all such debts, obligations, and liabilities, or any part
thereof (it being contemplated that Bank may lend additional sums of
money to Mortgagor from time to time, but shall not be obligated to do
so, and that all such additional sums and loans shall be part of the
"Secured Indebtedness" as hereinafter defined).


The term "Secured Indebtedness", as used herein, shall mean all of the indebtedness, obligations and liabilities described or referred to above in Subsections (a) through (e), inclusive, of this Section 2.1. The term "holder", as used herein, shall mean the holder or holders of the Secured Indebtedness or any part thereof.


ARTICLE 3
COVENANTS


3.1 The covenants, agreements and undertakings of Mortgagor contained in this Mortgage, whether in this Article 3 or elsewhere, are made by Mortgagor for Mortgagor and Mortgagor's Successors.


3.2 Mortgagor hereby covenants, agrees and specifically undertakes hereby:


(a) In all material respects, to maintain, preserve and
keep or cause to be maintained, preserved and kept Mortgagor's
interests in the Mortgaged Properties and all appurtenances thereto,
including, without limitation, all buildings, improvements, machinery,


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equipment, pipelines, fixtures and other personal property of every
kind and character, in respect of the Leases, in thorough repair,
working order and condition, and from time to time, at Mortgagor's own
expense, do or cause to be done all necessary and proper repairs,
renewals, replacements and substitutions of the Mortgaged Properties
and all appurtenances thereto, so that at all times the state and
condition of the Mortgaged Properties and all appurtenances thereto
will be fully preserved and maintained;


(b) To the extent Mortgagor has the right to do so,
permit or cause to be permitted the holder, its agents, employees and
representatives, at their own risk, to go upon, examine, inspect and
remain on the Mortgaged Properties, and to go upon the derrick floor
of any well or wells at any time drilled or being drilled thereon, and
to strap, gauge, measure and inspect any and all tanks at any time on
the Mortgaged Properties or holding oil, gasoline or casinghead
gasoline therefrom; and Mortgagor shall do or cause to be done all
things necessary and/or proper to enable the holder to exercise said
rights whenever it so desires information so obtained shall be subject
to the Bank's obligations to maintain confidentiality as provided in
Section 12(i) of the Loan Agreement;


(c) To promptly notify the holder in writing if the
validity or priority of this Mortgage or any of the rights, titles,
liens or security interests created or evidenced hereby with respect
to the Mortgaged Properties, or any part thereof, shall be questioned,
attacked or endangered, directly or indirectly, and do or cause to be
done all things necessary and/or proper to protect, warrant and defend
title to the Mortgaged Properties unto the holder and its successors
and assigns at Mortgagor's sole expense against all persons whomsoever
claiming an interest therein or a lien or security interest thereon,
but the holder shall have the right, at any time, to intervene in any
suit affecting such title and to employ independent counsel in
connection with any such suit to which it may be a party by
intervention or otherwise; and upon demand Mortgagor agrees to pay the
holder all reasonable expenses paid or incurred by it in respect of
any such suit affecting title to any such property or affecting the
holder's rights, titles, liens or security interests hereunder,
including, without limitation, reasonable fees to the holder's
attorneys, and Mortgagor will indemnify and hold the holder harmless
from and against any and all costs and expenses, including, without
limitation, a ...