ATTENTION ____________________ COUNTY CLERK:
Recording requested by and when recorded mail to:
BANK ONE, TEXAS, N.A.
c/o Xxxxxx X. Xxxx, Xx., Esq.
Xxxxx Xxxxxxx Rain Xxxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT
(Line of Credit Mortgage)
THE STATE OF NEW MEXICO -
- KNOW ALL MEN BY THESE PRESENTS:
COUNTIES OF XXXX, XXX -
and RIO ARRIBA -
WHEREAS, XXXXXX OIL COMPANY, a Colorado corporation, the
address of which is 000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx
00000 (hereinafter referred to as "Grantor"), 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. 0. 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 State
of New Mexico;
NOW, THEREFORE, for and in consideration of the sum of $10.00
and other good and valuable consideration, in hand paid by Bank to
Grantor, the receipt and sufficiency of which is xxxxxx
acknowledged and confessed, Grantor does xxxxxx XXXXX, MORTGAGE,
BARGAIN, SELL, TRANSFER, ASSIGN and CONVEY unto Bank, all right,
title and interest now or at any time hereafter vested in Grantor
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 described and
referred to in Exhibit "A" attached hereto and made a part hereof
by reference for all purposes as if copied herein in full;
(b) Any and all operating agreements (including so-
called "working interest units" created under operating agreements
or otherwise), 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 covered by any and all of the
oil, gas and mineral leases described or referred to in Exhibit "A"
and the real property described or referred to in Exhibit "A"
(hereinafter collectively referred to as the "Lands"), even 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";
(d) Any and all oil, gas and mineral leases described
or referred to in Exhibit "A" and any and all oil, gas and mineral
leases covering all or any part of the Lands (herein collectively
referred to as the "Leases"), together with all right, title and
interest now or at any time hereafter vested in Grantor 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 which relate to any of the Lands or the Leases, even
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;
(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 xxxxx, gas xxxxx, injection xxxxx, other xxxxx,
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, accession 5 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 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;
(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 a rising from or by virtue of
the sale, lease or other disposition or, 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 Grantor in such properties and
interests, or interests derived thereunder, which are subject to
this Mortgage. It is also expressly understood and agreed by the
parties hereto that any and all references to township and range
included in the descriptions set out in Exhibit "A" attached hereto
are based upon reference to the New Mexico Prime Meridian.
Xxxxxxx'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 or
substitutes in this trust, and its and their assigns, in trust and
for the uses and purposes hereinafter set forth, forever.
The term "Grantor's Successors", as used herein, shall mean
Grantor's heirs, executors, legal representatives, successors and
assigns. Grantor hereby binds Grantor and Xxxxxxx's Successors to
warrant and forever defend, all and singular, the Mortgaged
Properties, 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.
As used herein, the term "Loan Agreement" shall mean that
certain Loan Agreement of even date herewith between Grantor and
Bank.
ARTICLE 1
REPRESENTATIONS AND WARRANTIES
1.1 Grantor hereby expressly represents and warrants to
Bank that (a) the Leases are in full force and effect; (b)
Grantor's interests in the Leases are valid and subsisting on the
Lands and entitle Grantor to receive that proportion of the total
production from the Mortgaged Properties indicated in connection
with the descriptions thereof in Exhibit "A"; (c) Grantor has good,
valid and indefeasible title to Grantor's interest in the Leases
and to Grantor'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 defined in
the Loan Agreement) and except as expressly 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, preferential
purchase rights or other restrictions or limitations of any nature
or kind, except as expressly provided herein; (e) all rentals,
royalties and other amounts due and payable under the Leases have
been duly paid, 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) Grantor is not a
party to, and none of the hydrocarbons produced from any of the
xxxxx 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 Grantor either (1) receives or becomes entitled to
receive (either directly or indirectly to a third party for
Grantor'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 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; (h) Grantor and any
guarantor of the Secured Indebtedness (hereinafter defined) are now
in a solvent condition; (i) all financial statements, schedules,
certificates, reports and other documents furnished by Grantor and
any guarantor of the Secured Indebtedness to the holder in
connection with the Secured Indebtedness are true and correct in
all respects and do not omit to state any fact or circumstance
necessary to make the statements contained therein not misleading;
(j) no bankruptcy or insolvency proceedings are pending
contemplated or threatened by or against Grantor and any guarantor
of the Secured Indebtedness; and (k) no other judicial or
administrative actions, suits or proceedings are pending,
contemplated or threatened by or against Grantor 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:
(a) That certain Revolving Note, dated March 20,
1996, in the original principal amount of THIRTY-FIVE MILLION AND
NO/100 Dollars ($35,000,000.00), executed by Grantor, 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 "Revolving Note"),
and any and all renewals, increases, refundings, substitutions,
replacements, consolidations and/or extensions of or for the Note,
or any part thereof;
(b) That certain Advance Note, dated March 20, 1996,
in the original principal amount of TWO MILLION AND NO/100 Dollars
($2,000,000.00), executed by Grantor, 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 "Advance Note"), and any and all
renewals, increases, refundings, substitutions, replacements,
consolidations and/or extensions of or for the Note, or any part
thereof (the Revolving Note and the Advance Note shall hereinafter
be collectively referred to as the "Note");
(c) All indebtedness, obligations and liabilities of
Grantor arising pursuant to the provisions of any loan agreement,
whether now existing or hereafter arising, executed or to be
executed by and between Grantor 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;
(d) All indebtedness, obligations and liabilities
arising pursuant to the provisions of this Mortgage, and any and
all other 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 Grantor or any guarantor of the Secured Indebtedness
to 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");
(e) All loans and advances which Bank may hereafter
make to Grantor, 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
(f) All other and additional debts, obligations and
liabilities of every kind and character of Grantor, 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 Grantor, 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 Grantor 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 (f), 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.
2.2 The Secured Indebtedness shall not exceed
$37,000,000.00, which shall be the maximum amount secured at any
one time hereby.
ARTICLE 3
COVENANTS
3.1 The covenants, agreements and undertakings of Grantor
contained in this Mortgage, whether in this Article 3 or elsewhere,
are made by Grantor for Grantor and Xxxxxxx's Successors.
3.2 Grantor hereby covenants, agrees and specifically
undertakes hereby:
(a) To maintain, preserve and keep or cause to be
maintained, preserved and kept Grantor's interests in the Mortgaged
Properties and all appurtenances thereto, including, without
limitation, all buildings, improvements, machinery, 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 Grantor'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 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 xxxxxxx floor of any well or xxxxx 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
Grantor 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;
(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 Grantor'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 Grantor 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 Grantor
will indemnify and hold the holder harmless from and against any
and all costs and expenses, including, without limitation, any and
all costs, loss, damage or liability which the holder may suffer or
incur by reason of the failure of the title to all or any part of
the Mortgaged Properties, or by reason of the failure or inability
of Grantor, for any reason, to convey the rights, titles, liens and
security interests which this Mortgage purports to mortgage, create
or assign, and all amounts at any time so payable by Grantor shall
be secured by the lien and security interest hereof and by the
assignment of production herein contained;
(d) At any time and from time to time, upon request
by the holder and at Xxxxxxx's sole expense, forthwith to execute
and deliver or cause to be executed and delivered to the holder and
to record, file or register, any and all additional instruments and
further assurances as may be necessary or proper, in the holder's
opinion, to effect the intent of these presents;
(e) To promptly furnish the holder with the financial
information, statements, and reports required to be furnished under
the Loan Agreement;
(f) To pay all Secured Indebtedness in accordance
with the terms thereof or hereof, or when the maturity thereof be
accelerated in accordance with the terms thereof or hereof;
(g) To promptly pay and discharge or cause to
promptly paid and discharged all rentals, delay rentals, royalties
and indebtedness accruing under, and to perform or cause to be
performed each and every act, matter or thing required by each and
all of the assignments, deeds, Leases, subleases, contracts and
agreements comprising a part of or affecting Grantor's interests in
the Mortgaged Properties, and to do or cause to be done all other
things necessary to keep unimpaired Grantor's rights with respect
thereto and to prevent any forfeiture thereof or default
thereunder;
(h) To do or cause to be done such development work
as may be reasonably necessary to the prudent and economical
operation of the Mortgaged Properties in accordance with the
generally accepted practices of prudent operators in the industry,
including all actions that may be appropriate to protect from
diminution the productive capacity of the Mortgaged Properties and
each producing well thereon, including, without limitation,
cleaning out and a reconditioning each well from time to time,
plugging and completing at a different level or formation each such
well, drilling a substitute or replacement well to conform to
changed spacing regulations or to remedy any mechanical,
engineering or operational difficulty encountered during the life
of each such well, and to protect the Mortgaged Properties against
drainage whenever, and as often as, is necessary;
(i) To promptly correct and cure any defect, error or
omission which may be discovered in the contents of this Mortgage
or in any other Security Instrument or in the execution or
acknowledgement hereof or thereof and in connection therewith,
promptly execute, acknowledge and deliver to the holder any and all
such corrective or curative instruments as the holder may in its
sole and absolute discretion deem necessary or appropriate, and pay
all costs and expenses, including, without limitation, the
reasonable attorneys' fees of the holder, in connection with any of
the foregoing; and
(j) To comply in all respects with the affirmative
and negative covenants set forth in the Loan Agreement.
3.3 Any and all covenants contained in this Mortgage may
from time to time, by instrument in writing signed by the holder
and delivered to Grantor, be waived to such extent and in such
manner as the holder may consider appropriate; but no such waiver
shall at any time affect or impair the holder's rights or liens
hereunder, except to the extent so specifically stated in such
written instrument.
3.4 As to any part of the Mortgaged Properties which may
be comprised of interests in the Leases which are other than
working interests or which may be operated by a party or parties
other than Grantor, Grantor's covenants as expressed in this
Article 3 are modified to require that Grantor use its best efforts
to obtain compliance with such covenants by the working interest
owners or the operator or operators of such Leases or properties,
including, without limitation, the exercise by Grantor of all
rights under any operating agreements to which Grantor is a party.
ARTICLE 4
DEFAULTS AND REMEDIES
4.1 The term "Event of Default", as used herein, shall
mean the occurrence of any one or more of the following events:
(a) The occurrence of any Event of Default, as that
term is defined in the Loan Agreement;
(b) The failure or refusal of Mortgagor to pay all or
any part of the Note as and when due in accordance with its terms;
(c) The failure or refusal of Mortgagor punctually
and properly to observe, keep and perform any covenant, agreement
or undertaking contained in this Mortgage or any of the Security
Instruments;
(d) The title of Mortgagor or Bank to the Mortgaged
Properties, or a substantial part thereof, becomes in any manner
affected or impaired or becomes the subject matter of litigation
which, in the good faith opinion of Bank, would likely result in
substantial impairment or loss of the lien and security interest
intended to be created by this Mortgage; or
(e) Any representation or warranty set forth in this
Mortgage or in any of the Security Instruments shall be determined
to be false or misleading in any respect.
then upon the occurrence of any such Event of Default, Xxxxxxxxx
shall be in default hereunder and the Bank may declare all of the
Secured Indebtedness to be forthwith due and payable whereupon the
same shall forthwith become due without presentment, demand,
protest, notice of intent to accelerate and notice of acceleration
or other notice of any kind, all of which mortgagor hereby
expressly waives. The Bank may thereupon avail itself of any of
its legal and equitable rights and remedies, either by the
institution of a suit or suits, in equity or at law, or in
bankruptcy, in any court or courts of competent jurisdiction,
whether for the specific performance of any covenant, undertaking
or agreement contained herein or in the aid of any execution of any
powers granted herein, or for any foreclosure hereof or hereunder,
or for any sale of the Mortgaged Properties, or any part thereof,
so far as may be authorized by law, or for the enforcement of such
other or additional appropriate legal or equitable remedies as the
Bank may deem most effectual to protect and enforce the aforesaid
rights.
4.2 If Grantor should fail, refuse or be unable to pay any
sum of money herein covenanted to be paid by Grantor, or fail,
refuse or be unable to observe, keep or perform any additional
covenant, agreement or undertaking whatsoever contained in this
Mortgage, the holder may, but shall not be obligated to, pay said
sums of money, or perform or attempt to perform any such covenant,
agreement or undertaking and any such payment so made or expense
reasonably incurred in the performance or attempted performance of
any such covenant, agreement or undertaking shall be, and is hereby
declared by Grantor to be, a part of the Secured Indebtedness, and
Grantor promises, upon demand, to pay to the holder at the office
of Bank set forth hereinabove all sums so advanced or paid by the
holder, with interest at the highest lawful rate per annum from the
date paid or incurred by the holder. No such payment by the holder
shall in any way be considered or constitute a waiver of any such
default or of the holder's right to declare the Secured
Indebtedness at once due and payable. In addition to the lien and
security interest hereof, the holder shall be subrogated to all
rights and liens securing the payment of any debt, claim, tax or
assessment for the payment of which it shall have made such
advance.
4.3 Upon the occurrence of an Event of Default, (i)
Grantor shall be in default hereunder and the entire principal
amount of and all interest then accrued on the Note, and any other
obligations, indebtedness and liabilities hereunder, shall become
immediately due and payable, all without notice and without
presentment, demand, protest, notice of protest or dishonor, notice
of intent to accelerate and notice of acceleration, or any other
notice of default of any kind, all of which are hereby expressly
waived by Grantor, and (ii) in any other such event, Grantor shall
be in default hereunder, and Bank may, at its option, declare the
principal of and all interest then accrued on the Note, and any
other obligations, indebtedness and liabilities hereunder to be
forthwith due and payable whereupon the same shall forthwith become
due without presentment, demand, protest, notice of intent to
accelerate and notice of acceleration or other notice of any kind,
all of which Grantor hereby expressly waives, anything contained
herein or in the Note to the contrary notwithstanding. Nothing
contained in this Article 4 shall be construed to limit or amend in
any way the Events of Default enumerated in any other document
executed in connection with the transaction contemplated herein or
hereby. Bank may thereupon avail itself of any of its legal and
equitable rights and remedies, either by the institution of a suit
or suits, in equity or at law, or in bankruptcy, in any court or
courts of competent jurisdiction, whether for the specific
performance of any covenant, undertaking or agreement contained
herein or in the aid of any execution of any powers granted herein,
or for any foreclosure hereof or hereunder, or for any sale of the
Mortgaged Properties, or any part thereof, so far as may be
authorized by law, or for the enforcement of such other or
additional appropriate legal or equitable remedies as Bank may deem
most effectual to protect and enforce the aforesaid rights.
4.4 Upon the occurrence of an Event of Default, the holder
may, at its option, and is hereby authorized, prior or subsequent
to the exercise of any remedies under Section 4.3 hereof, to enter
upon the Mortgaged Properties, or any part thereof, and to take
possession of the Mortgaged Properties in the possession of Grantor
or Grantor's Successors, and may exclude Grantor or Grantor's
Successors, and all persons claiming under Grantor, wholly or
partly therefrom; and, holding the same, the holder may exercise
without interference from Grantor or Grantor's Successors, any and
all rights which Grantor has with respect to the management,
possession, operation, protection or preservation of the Mortgaged
Properties, and the holder may use, administer, manage, operate and
control the Mortgaged Properties and conduct the business thereof
to the same extent as Grantor or Grantor's Successors might at the
time do and may exercise all rights and powers of Grantor, in the
name, place and stead of Grantor, or otherwise as the holder shall
deem best. All costs, expenses and liabilities of every character
incurred by the holder shall be a demand obligation owed by Grantor
to holder and shall bear interest at the highest lawful rate per
annum and shall constitute a portion of the Secured Indebtedness
and shall be secured by this Mortgage and all of the Security
Instruments. If necessary to obtain the possession provided for
hereinabove, the holder, as the case may be, may invoke any one or
more actions for forcible entry and detainer, trespass to try title
and restitution. In connection with any action taken by the holder
pursuant to this Section 4.4, the holder shall not be liable for
any loss sustained by Grantor resulting from any act or omission of
the holder in managing the Mortgaged Properties, unless such loss
is caused by the willful misconduct or bad faith of the holder.
Xxxxxxx hereby agrees to indemnify and hold harmless the holder
from and against any and all liability, loss or damage which may be
incurred by reason of the exercise of rights or remedies hereunder.
Should the holder incur any such liability by reason of this
Mortgage or the exercise of rights or remedies hereunder or in
defense of any such claims or demands, the amount thereof,
including without limitation, costs, expenses and reasonable
attorneys' fees, shall be a demand obligation owing by Grantor to
the holder and shall bear interest each day from the date incurred
until paid at the highest lawful rate per annum and shall be a part
of the Secured Indebtedness and shall be secured by this Mortgage
and all of the Security Instruments. Grantor hereby consents to,
ratifies and conforms any and all actions of the holder with
respect to the Mortgaged Properties taken under this Section 4.4.
4.5 The Bank may institute suit to foreclose this Mortgage
in any court having jurisdiction. In any such suit the Bank may,
at its option, apply for and be entitled to, as a matter or right
and without proof of insolvency, fraud, insecurity, or
mismanagement on the part of the Grantor, the appointment of a
receiver to take possession of, operate, and preserve the Mortgaged
Properties. Xxxxxxx agrees that such receiver may be appointed to
take possession of, hold, maintain, operate and preserve said
property, including the production and sale of all oil, gas and
other minerals therefrom, and apply the proceeds of the sale
thereof to the payment of the Secured Indebtedness due the Bank
until such Secured Indebtedness and costs are fully paid; and said
receiver may be authorized to sell and dispose of said property
under orders of the court appointing him such receiver.
4.6 Bank is authorized to receive the proceeds of said
sale or sales made pursuant to Section 4.3 or Section 4.5 hereof
and apply the same as follows: First, to the payment of all
necessary costs and expenses incident to the execution of said
trust, including but not limited to all court costs and changes of
every character in the event foreclosure is by suit; Second, to the
payment of the Secured Indebtedness in such order as the holder
shall elect; and Third, the balance, if any, remaining after the
full and final payment of the Secured Indebtedness, to Grantor or
Xxxxxxx's Successors.
4.7 It is agreed that in any deed or deeds given pursuant
to the exercise of a power of sale, any and all statements of fact
or other recitals therein made as to the identity of the holder or
as to the occurrence or existence of any default, or as to the
acceleration of the maturity of the Secured Indebtedness, or as to
the request to sell, notice of sale, time, place, terms and manner
of sale, and receipt, distribution and application of the money
realized therefrom, and, without being limited by the foregoing, as
to any act or thing having been duly done by the holder, or any of
them if there be more than one, shall be taken by all courts of law
and equity as prima facie evidence that the said statements of
recitals state facts and are without further question to be so
accepted, and Grantor does hereby ratify and confirm any and all
acts that Bank may lawfully do in the premises by virtue hereof.
4.8 In case the lien and security interest hereof shall be
foreclosed by judicial action, the purchaser at any sale shall
receive, as an incident to its ownership, immediate possession of
the property purchased, and Grantor agrees for Grantor and for all
persons claiming under Grantor, that if Grantor or any such person
shall hold possession of said property, or any part thereof,
subsequent to foreclosure, Grantor or the parties so holding
possession shall be considered as tenants at sufferance of the
purchaser at foreclosure sale, and anyone occupying the property
after demand for possession thereof shall be guilty of forcible
detainer and shall be subject to eviction and removal, forcible or
otherwise, with or without process of law, and all damages by
reason thereof are hereby expressly waived.
4.9 Upon the occurrence of an Event of Default, the holder
may, at its election, proceed by suit or suits, at law or in
equity, to enforce the payment of the Secured Indebtedness in
accordance with the terms hereof and of the notes or other
instruments evidencing it, to foreclose the lien and security
interest of this Mortgage as against all or any portion of the
Mortgaged Properties, and to have said properties sold under the
judgment or decree of a court of competent jurisdiction Pursuant to
Section 39-5-19 N.M. S.A. 1978 Comp., Grantor agrees that the
redemption period shall be limited to one (1) month. To the full
extent Grantor may do so, Grantor agrees that Grantor will not at
any time insist upon, plead, claim or take the benefit or advantage
of any law now or hereafter in force providing for any
appraisement, valuation, stay, extension or redemption, and
Grantor, for Grantor and Grantor's Successors, and for any and all
persons ever claiming any interest in the Mortgaged Properties, or
any part thereof, to the extent permitted by law, hereby waives and
releases all rights or redemption, valuation, appraisement, stay of
execution, notice of intention to mature or declare due the whole
of the Secured Indebtedness, and all rights to a marshalling of the
assets of Grantor, including the Mortgaged Properties, or to a sale
in inverse order of alienation in the event of foreclosure of the
liens and security interests hereby created. On or at any time
after the filing of judicial proceedings to protect or enforce the
rights of the holder, the holder, as a matter of right and without
regard to the sufficiency of the security, and without any showing
of insolvency, fraud or mismanagement on the part of Grantor, shall
be entitled to the appointment of a receiver or receivers of the
Mortgaged Properties, and of the income, rents, issues, products,
profits and proceeds thereof.
4.10 It is agreed that Bank or any other holder may be the
purchaser of the Mortgaged Properties, or of any part thereof, at
any sale thereof, whether such sale be under the power of sale or
upon any other foreclosure of the lien and security interest hereof
or otherwise, and Bank or other holder so purchasing shall, upon
any such purchase, acquire good title to the Mortgaged Properties
so purchased, free of the lien and security interest of these
presents.
4.11 To the full extent permitted by applicable law,
Xxxxxxx agrees that it will not at any time insist upon, plead,
claim or take the benefit or advantage of any law now or hereafter
in force providing for any appraisement, valuation, stay, extension
or redemption, and Grantor, for Grantor and Xxxxxxx's Successors,
and for any and all persons claiming any interest in the Mortgaged
Properties, hereby waives and releases, except as expressly
provided herein, all rights of redemption, valuation, stay of
execution, notice of intention or the election to accelerate the
Secured Indebtedness and all rights to a marshalling of assets of
Grantor, including the Mortgaged Properties, or to a sale in the
inverse order of alienation in the event of foreclosure of the
liens and/or security interests hereby created.
4.12 The rights and remedies hereinabove expressly
conferred are cumulative of all other rights and remedies herein,
or by law or in equity provided, and shall not be deemed to deprive
the holder of any such other legal or equitable rights or remedies,
by judicial proceedings or otherwise, appropriate to enforce the
conditions, covenants and terms of this Mortgage and of the notes
or other instruments evidencing the Secured Indebtedness, and the
employment of any remedy hereunder, or otherwise, shall not prevent
the concurrent or subsequent employment of any other appropriate
remedy or remedies.
4.13 The procedures for foreclosure and all other
provisions of this Article 4 relating to remedies upon default and
related matters shall be modified to the extent necessary to comply
with the laws of the state where the Mortgaged Properties are
located. It is the intent of Grantor that this Mortgage shall be
legal and enforceable in any state where the Mortgaged Properties,
or any part thereof, are located and that the provisions hereof
shall be modified only to the extent necessary to comply with the
laws of such state, and that all other provisions contained herein
shall be in no way affected or impaired by the necessity to so
modify some or all of the provisions of this Article 4.
ARTICLE 5
ASSIGNMENT OF PRODUCTION
5.1 In order further to secure the payment of the Secured
Indebtedness, Grantor does hereby TRANSFER, ASSIGN and CONVEY unto
and in favor of the holder all of the interest of Grantor in the
oil, gas, casinghead gas, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons and other minerals (herein
collectively referred to as the "Hydrocarbons"), in and under, or
which may be produced from, the Mortgaged Properties, or allocated
thereto pursuant to pooling or unitization of the Leases or
otherwise, together with all accounts, contract rights, general
intangibles, products and proceeds arising from or derived from the
sale, transfer or other disposition of such Hydrocarbons on and
after the date of the execution of this Mortgage.
5.2 The foregoing assignment is made upon, and subject to,
the following terms:
(a) The holder may give written or telegraphic notice
to all of the parties producing, purchasing, taking, possessing or
receiving any such Hydrocarbons, or having in their possession any
such Hydrocarbons belonging to Grantor or such proceeds for which
they or others are accountable to the holder by virtue of the
provisions of this Section 5.2, to hold and dispose of such
Hydrocarbons for the account of the holder and to make payment of
such proceeds direct to the holder at its principal office, and the
holder shall thereafter receive, collect and retain, subject to the
provisions of Section 5.5, as part of the Mortgaged Properties, all
such Hydrocarbons, all for the benefit and further security of the
Secured Indebtedness.
(b) All parties producing, purchasing, taking,
possessing, processing or receiving any such Hydrocarbons, or
having in their possession any such Hydrocarbons or such proceeds
for which they or others are accountable to the holder by virtue of
the provisions of this Section 5.2, are authorized and directed by
Xxxxxxx, upon receipt of notice by the holder given pursuant to
Subsection 5. 2(a) above, to treat and regard the holder as the
assignee and transferee of Grantor and entitled in its place and
stead to receive such Hydrocarbons and proceeds; and such parties
and each of them shall be fully protected in so treating and
regarding the holder and shall be under an obligation to see to the
application by the holder of any such proceeds received by it.
Until such notice is received by such parties, payment of all
proceeds attributable to such Hydrocarbons shall be payable
directly to Grantor. Without in any way limiting the effectiveness
of the authorization and direction in the next preceding sentence,
if Grantor shall hold such proceeds which under this Section 5.2
are receivable by the holder, Grantor will hold the same in trust
and will remit such proceeds, or cause such proceeds to be
remitted, immediately, to the holder.
(c) Without limiting the foregoing provisions of this
Article 5, Grantor stipulates that this Article 5 is intended to
grant to the holder a security interest in Xxxxxxx's interest in
the Hydrocarbons to be extracted from or attributable to the
Mortgaged Properties, and in and to the proceeds resulting from the
sale thereof at the well head.
5.3 Grantor covenants, agrees and specifically undertakes
hereby, to cause, after Bank shall have so requested, all pipeline
companies or other purchasers of the Hydrocarbons to pay promptly
to the holder at its principal office, Grantor's interest in the
proceeds derived from the sale thereof, in accordance with the
terms of this assignment, and forthwith to execute, acknowledge and
deliver to such pipeline companies and other purchasers such
further and proper division orders, transfer orders, certificates
and other documents as may be necessary or proper to effect the
intent of these presents; and the holder shall not be required at
any time, as a condition to its right to obtain the proceeds of the
Hydrocarbons, to warrant its title thereto or to make any guaranty
whatsoever. In addition, and without limitation, Grantor
covenants, agrees and specifically undertakes hereby, to provide to
the holder the name and address of every pipeline company or other
purchaser of the oil, gas and other minerals produced from or
allocated to the Mortgaged Properties when determined, together
with a copy of the applicable purchase and sales contracts. All
expenses incurred by the holder in the collection of such proceeds
shall be repaid promptly by Grantor; and prior to such repayment,
such expenses shall be a part of the Secured Indebtedness.
5.4 Without limitation upon any of the foregoing, Grantor
hereby designates and appoints the holder as Grantor's true and
lawful agent and attorney-in-fact (with full power of substitution,
either generally or for such periods or purposes as the holder may
from time to time prescribe), with full power and authority, for
and on behalf of and in the name of Grantor and only upon an Event
of Default, to execute, acknowledge and deliver all such division
orders, transfer orders, certificates and other documents of every
nature, with such provisions as may from time to time, in the
opinion of the holder, be necessary or proper to effect the intent
and purpose of the assignment contained in this Article 5; and to
demand, collect, receive and sue for, in the holder's own name or
in the name of Grantor, all cash, other distributions or proceeds
due or which may become due to Grantor by virtue of the Mortgaged
Properties or any part thereof or interest therein, with the
absolute right in the holder to rehypothecate, pledge, compromise,
settle or discharge the same and to do all acts and things
necessary or convenient for any such purpose, including, without
limitation, the right to give good and sufficient receipts and
releases; to endorse the name of Grantor upon any and all checks,
drafts, money orders and other instruments for the payment of
monies which are payable to Grantor and constitute collections on
the Mortgaged Properties; and to perform such other and further
acts and deeds in the name of Grantor which the holder may deem
necessary and appropriate; and Grantor shall be bound thereby as
fully and effectively as if Grantor had personally executed,
acknowledged and delivered any of the foregoing certificates or
documents; as if Grantor had personally demanded, collected,
received and/or sued for any and all cash, other distributions or
proceeds; as if Grantor had personally done any and all acts and
things necessary or convenient for any such purpose; as if Grantor
had personally endorsed Xxxxxxx's own name upon any and all checks,
drafts, money orders and other instruments; and as if Grantor
personally performed such other and further acts and deeds in
Grantor's own name which the holder deemed necessary and
appropriate; PROVIDED, HOWEVER, notwithstanding anything contained
herein to the contrary, the Assignment of Production contained in
Section 5.1 hereof, and the holders rights thereunder, shall be
absolute and shall not be conditioned upon the occurrence of an
Event of Default. The powers and authorities herein conferred on
the holder may be exercised by the holder through any person who,
at the time of exercise, is an officer of the holder. The power of
attorney conferred by this Section 5.4 is granted for valuable
consideration and coupled with an interest and is irrevocable so
long as the Secured Indebtedness, or any part thereof, shall remain
unpaid. All persons dealing with the holder, or any substitute,
shall be fully protected in treating the powers and authorities
conferred by this Section 5.4 as continuing in full force and
effect until advised by the holder that the Secured Indebtedness is
fully and finally paid.
5.5 All proceeds received by the holder in collected funds
pursuant to this Article 5 shall be placed in a collateral
collection account at Bank, and the holder is hereby authorized to
apply all such proceeds as follows: First, to the payment of all
necessary costs and expenses incident to the receipt and collection
of such proceeds; Second, to the payment of the Secured
Indebtedness in such order as the holder shall elect; and Third,
the balance, if any, remaining after the full and final payment of
the Secured Indebtedness, to Grantor or Grantor's Successors.
5.6 Should any person or entity now or hereafter
purchasing or taking any part of the Hydrocarbons fail to make
payment promptly to the holder for the purchase price of such
Hydrocarbons, after notice pursuant to this Article 5, the holder
shall have the right to make or to require Grantor to make, a
change of connection and the right to designate or approve the
purchaser with whose facilities a new connection shall be made, and
the holder shall be without liability or responsibility in
connection therewith so long as ordinary care is used in making
such designation.
5.7 The holder shall never be under any obligation to
enforce the collection of the funds assigned to it hereunder, nor
shall it ever be liable for failure to exercise diligence in the
collection of such funds, but it shall only be accountable for the
sums that it shall actually receive.
ARTICLE 6
SECURITY AGREEMENT
6.1 With respect to all personal property and fixtures
comprising a part of the Mortgaged Properties, together with all
proceeds and products thereof (hereinafter collectively referred to
as the "Collateral"), this Mortgage shall likewise be a security
agreement, and for a valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and for the purpose
of further securing payment and performance of the Secured
Indebtedness, Grantor hereby grants to Bank a security interest in
the Collateral including, without limitation, all rights now owned
and at any time hereafter acquired by Grantor in all (a) oil, gas
and other minerals produced from or allocated to the Mortgaged
Properties, (b) accounts, chattel paper and general intangibles
arising in connection with the sale or other disposition of such
production, or otherwise associated with the Mortgaged Properties,
(c) equipment, materials, other personal property, and fixtures at
any time used on or in connection with the Mortgaged Properties or
in connection with such production, and (d) geological,
geophysical, engineering, accounting, title, legal and other
technical or business data concerning the Mortgaged Properties, and
the Hydrocarbons which are in the possession of Grantor or in which
Grantor can otherwise grant a security interest, and all books,
files, records, seismic, magnetic media and other forms of
recording or obtaining access to such data, together with all
access ions, additions, proceeds, products, replacements,
substitutions, and modifications to or for any of the foregoing.
6.2 Grantor hereby assigns to Bank Grantor's security
interests and liens and all other interests of Grantor arising
pursuant to or perfected by any instrument to which Grantor is a
party affecting real property in which Grantor is an interest
owner, as provided in the New Mexico Products Lien Act, Sections
48-9-1 et seq. N.M.S.A. 1978 Comp., by virtue of the first sale of
Hydrocarbons produced from the Mortgaged Properties.
6.3 Grantor represents and warrants that, except for any
financing statement now in force filed by Bank, or as shown on
Exhibit "A", no financing statement covering the Collateral, or any
part thereof, has been filed with any filing officer, and no other
security interest now in force has attached or been perfected in
the Collateral, or any part thereof.
6.4 This Mortgage shall be effective as a financing
statement filed as a fixture filing with respect to all of the
Collateral which is or will become fixtures related to the Lands
and Leases and is to be filed for record as a financing statement
in the real estate records of each county where any part of the
Mortgaged Properties (including such fixtures) is situated. Such
of the Mortgaged Properties which constitute minerals or the like
(including oil and gas) or accounts subject to subsection (5) of
Section 55-9-103 of the New Mexico Uniform Commercial Code are or
will be financed at the wellhead or minehead of the well or mine
located on the Lands described in Exhibit "A". This Mortgage shall
also be effective as a financing statement covering such minerals
or the like (including oil and gas) and such accounts, and, where
so permitted or required, is to be filed for record as such a
financing statement in the real estate records for each county
where a mortgage on the Mortgaged Properties would be filed or
recorded. The above goods are or are to become fixtures on the
Lands. The record owner of the real estate interest covered by
this Mortgage is Grantor.
ARTICLE 7
MISCELLANEOUS
7.1 Upon the full and final payment of the Secured
Indebtedness, this Mortgage shall be extinguished and be of no
further force and effect; and the Mortgaged Properties shall become
wholly free and clear hereof and all of the property as assigned
hereby shall be automatically reassigned to Grantor without any
further act being required; and the holder, upon the request and at
the expense of Grantor, shall promptly deliver to Grantor such
instruments evidencing the Secured Indebtedness, marked "Paid", and
execute and deliver to Grantor and others a release of this
Mortgage and such other instruments of satisfaction as may be
appropriate.
7.2 The rights, titles, interests, liens and powers
hereunder are cumulative of each other and of all other rights,
titles, interests, liens and powers which may now or hereafter
exist to secure the payment of the Secured Indebtedness to the
holder, or any part thereof. The security herein and hereby
provided shall not affect or be affected by any other Security
Instrument or by any other or further security heretofore or
hereafter taken for the Secured Indebtedness or any part thereof.
Grantor, for Grantor and Xxxxxxx's Successors, and for any and all
persons ever claiming any interest in the Mortgaged Properties,
hereby waives all rights of marshalling in event of foreclosure of
the lien hereby created. No failure to exercise and no delay in
exercising on the part of the holder any - right, power or
privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege
preclude any other or further exercise thereof, or the exercise of
any other right, power or privilege.
7.3 For all purposes of this instrument, the post office
address of Bank shall be: P.O. Box 665415, Dallas, Texas 75265-
5415, Attention: Xxxx X. Xxxxxxxx, Vice President, and the post
office address of Grantor shall be: 000 00xx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx, 00000, Attention: Xxxxxx X. Xxxxxx, Xx.,
President.
7.4 No provision herein or in any promissory note,
instrument, or any other loan document executed by Grantor
evidencing the Secured Indebtedness shall require the payment or
permit the collection of interest in excess of the maximum
permitted by law. If any excess of interest in such respect is
provided for herein or in any such promissory note, instrument, or
any other loan document, the provisions of this Section 7.4 shall
govern, and Grantor shall not be obligated to pay the amount of
such interest to the extent that it is in excess of the amount
permitted by law. The intention of the parties being to conform
strictly to the usury laws now in force, all promissory notes,
instruments and other loan documents executed by Grantor evidencing
the Secured Indebtedness shall be held subject to reduction to the
amount allowed under said usury laws as now or hereafter construed
by the courts having jurisdiction.
7.5 Grantor hereby grants, assigns and conveys unto Bank
all of Grantor's rights to payments and liens and security
interests in the Mortgaged Properties provided for in the New
Mexico Oil and Gas Proceeds Payment Act, Sections 70-10-1 et seq.
N.M.S.A. 1978 Comp.
7.6 These presents shall be binding upon the Grantor and
Grantor's Successors, and shall inure to the benefit of the holder,
its successors and assigns, and shall be covenants running with the
Lands.
7.7 In the event that any one or more of the provisions
contained in this Mortgage shall be invalid, illegal or
unenforceable in any respect under any law, the validity, legality
and enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
7.8 THIS MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW MEXICO.
7.9 This Mortgage has simultaneously been executed in a
number of identical counterparts, each of which, for all purposes,
shall be deemed an original, and all of which are identical except
that, to facilitate recordation, in any particular counterpart,
portions of Exhibit "A" which describe properties and interests
situated in counties other than the county in which such particular
counterpart is to be recorded may have been omitted.
7.10 The use of any particular pronoun herein shall mean
and be construed to include the plural and singular number of such
pronoun, whenever and wherever appropriate and applicable, and
shall mean and be construed to include the masculine, feminine or
neuter gender of such pronoun, whenever and wherever appropriate
and applicable.
7.11 The effective date of the assignment contained in
Article 5 is the date of execution of this Mortgage at 7:00 o'clock
am.
THE PARTIES HAVE EXECUTED this Mortgage in multiple
counterparts on the date of their respective acknowledgments set
out below, the Mortgage to be effective as of the 20th day of
March, 1996.
MORTGAGOR-DEBTOR:
XXXXXX OIL COMPANY,
a Colorado corporation
By: /s/ Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx,
President
MORTGAGEE-SECURED PARTY:
BANK ONE, TEXAS, N A.,
a national banking association
By: /s/ Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx,
Vice President
THE STATE OF TEXAS
COUNTY OF DALLAS
THIS INSTRUMENT was acknowledged before me on the 19th day of
March, 1996, by Xxxxx X. Xxxxxxxxxx, President of Xxxxxx Oil
Company, a Colorado corporation, on behalf of said corporation.
__/s/ Xxxxx X. Xxxxxxx___________
Notary Public, State of Texas
My Commission Expires: 6/14/97
________________________ __________________________________
(Printed or Typed Name of Notary)
THE STATE OF TEXAS
COUNTY OF DALLAS
THIS INSTRUMENT was acknowledged before me on the 19th day of
March, 1996, by Xxxx X. Xxxxxxxx, Vice President of BANK ONE,
TEXAS, N.A., a national banking association, on behalf of said
association.
__/s/ Xxxxx X. Xxxxxxx_______________
Notary Public, State of Texas
My Commission Expires: 6/14/97
________________________ ___________________________________
(Printed or Typed Name of Notary)
