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EXHIBIT 10.12.4
ATTENTION ___________________ COUNTY CLERK, TEXAS:
Recording requested by and when recorded mail to:
BANK ONE, TEXAS, N.A.
c/o Xxxxxx X. Xxxx, Xx.,
Xxxxx Xxxxxxx Rain Xxxxxxx
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF PRODUCTION
AND FINANCING STATEMENT
THE STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTIES OF XXXXXX, )
DAWSON, HARDEMAN, )
XXXXXX, JONES, XXXXXX )
XXXXXXX, SCURRY, )
XXXXXXXXXXX, STEPHENS, )
STONEWALL and XXXXXXXXXXXX )
WHEREAS, XXXXXXX OIL & GAS, L.P., a Delaware limited partnership, the
address of which is 0000 Xxxxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000
(hereinafter referred to as "Grantor"), does hereby execute this Deed of Trust,
Security Agreement, Assignment of Production and Financing Statement
(hereinafter referred to as the "Deed of Trust"), for the use and benefit BANK
ONE, TEXAS, N.A., national banking association (hereinafter referred to as the
"Bank"), the address of which is 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000;
covering oil and gas properties herein described located on lands situated in
the Counties of Borden, Dawson, Xxxxxxxx, Xxxxxx, Jones, Xxxxxx, Xxxxxxx,
Xxxxxx, Xxxxxxxxxxx, Stephens, Stonewall and Throckmorton, Texas.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, in hand paid by Bank to
Grantor, the receipt and sufficiency of which are hereby acknowledged and
confessed, Grantor does hereby GRANT, BARGAIN, SELL, TRANSFER, ASSIGN and
CONVEY unto Xxxxx X. Xxxxxxx, as Trustee (hereinafter referred to as the
"Trustee"), for the use and benefit of Bank all right, title and interest now
or at any time hereafter vested in Grantor, or either of them, 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, 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" (hereinafter collectively referred to as the "Lands"), even though
Xxxxxxx'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
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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
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 insofar as they cover any of the Lands or the
Leases insofar as the Leases cover 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" 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;
servitudes, surface leases and rights-of-way situated upon or used
orixtures, 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, accessions and attachments to any and all
of the foregoing properties;
(e) 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;
(f) 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
(g) 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 Grantor in such properties and
interests, or interests derived thereunder, which are subject to this Deed of
Trust, Security Agreement, Assignment of Production and Financing Statement
(hereinafter referred to as this "Deed of Trust").
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".
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TO HAVE AND TO HOLD the Mortgaged Properties, together with all the
rights, hereditaments and appurtenances in anywise appertaining or belonging
thereto, unto Trustee and his successors or substitutes in this trust, and his
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, subject to the Permitted Liens (as
defined in the Loan Agreement), unto Trustee and his successors or substitutes
in this trust, and his and their assigns, forever, against every person
whomsoever lawfully claiming or to claim the same or any part thereof.
The term "Loan Agreement", as used herein, means that certain Loan
Agreement of even date herewith, executed 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 (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) 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 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 Deed of Trust 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 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, 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 (A) inclusion of the standard "take or
pay" provision in any gas sales or purchase contract shall not, in and of
itself, constitute such a 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)
Grantor 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 Grantor 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
Grantor and any guarantor of the Secured Indebtedness.
ARTICLE 2
SECURED INDEBTEDNESS
2.1 This Deed of Trust is given to secure payment and performance
of the following indebtedness, obligations and liabilities, to wit:
(a) That certain Revolving Note dated as of even date
herewith in the original principal amount of Twenty-Five Million and
No/100 Dollars ($25,000,000.00), executed by Grantor, as Maker,
payable to the order of Bank, bearing interest as provided therein and
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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;
(b) 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;
(c) All indebtedness, obligations and liabilities arising
pursuant to the provisions of this Deed of Trust, 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
Grantor or any guarantor of the Secured Indebtedness to secured 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 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
(e) 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 (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 Grantor
contained in this Deed of Trust, 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) In all material respects, 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
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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 Grantor 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 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; 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 Deed of Trust 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 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 Deed of Trust 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 to Bank
in accordance with 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 be promptly
paid and discharged all rentals, delay rentals, royalties and
indebtedness accruing under, and to perform or cause to be performed
in all material respects 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 in all material respects
Grantor's rights with respect thereto and to prevent any forfeiture
thereof or default thereunder; provided, however, that nothing in
this Deed of Trust shall be deemed to (1) require the Grantor to
perpetuate or renew any oil and gas lease or other lease by payment of
rental or delay rental or by commencement or continuation of
operations, or (2) prevent the Grantor from abandoning or releasing
any oil and gas lease or other lease or well thereon, when in any such
events, in the opinion of Grantor, exercised in good faith, it is not
in the best interest of Grantor to perpetuate the same;
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(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 each producing well on the Mortgaged Properties (including,
without limitation, cleaning out and a reconditioning xxxxx), 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 Deed of Trust
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 contained in the Loan Agreement, as the same may be
supplemented, amended, modified and replaced from time to time.
3.3 Any and all covenants contained in this Deed of Trust 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 holders
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 reasonable 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) Any Event of Default specified in the Loan Agreement,
any of the Security Instruments or any other agreement or contract
existing at the date hereof or hereinafter entered into between
Grantor and Bank shall have occurred or any supplement, amendment
modification or replacement for any such agreement; and/or
(b) The title of Grantor or Bank to the Mortgaged
Properties, or a substantial part thereof, becomes the subject matter
of litigation or other judicial proceeding 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 Deed
of Trust;
then, upon the occurrence of any such Event of Default the Bank shall have all
of the rights and remedies provided for in the Loan Agreement.
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 Deed of Trust, 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
above all sums so advanced or paid by the holder, with interest at the Default
Rate (as defined in the Loan Agreement) 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
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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 xxxxx 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, and if such Event
of Default is continuing, the holder may, at its option, in addition to any and
every other remedy, request Trustee to proceed with foreclosure, and in such
event, Trustee is hereby authorized and empowered, and it shall be its special
duty, upon such request of holder, to sell the Mortgaged Properties, as a whole
or in lots or parcels, as Trustee may deem proper, to the highest bidder or
bidders, for cash, at the courthouse door of the county in the State of Texas
wherein the Mortgaged Properties, then subject to the lien hereof, are
situated, provided that if any of the Mortgaged Properties be situated in more
than one county, such sale shall be made in any county in the State of Texas
wherein any part of such Mortgaged Properties subject to the lien hereof is
situated. Any such sale shall be made at public outcry, between the hours of
ten o'clock (10:00) a.m. and four o'clock (4:00) p.m. and at a time not later
than three (3) hours from the time set forth in the notice hereinafter
described, on the first Tuesday in any month after advertising the time, place
and terms of the sale of the Mortgaged Properties, then subject to the lien
hereof, for at least twenty-one (21) days preceding the date of sale by posting
written or printed notice thereof at the courthouse door of the county where
said Mortgaged Properties are situated and by filing such notice with the
County Clerk of such county (provided that where any of the Mortgaged
Properties are situated in more than one county the notice to be posted and
filed for record as herein provided shall be posted at the courthouse door of
each of such counties where said Mortgaged Properties are situated, and filed
for record in each of such counties, and the notices so posted and filed for
record shall designate the county where the Mortgaged Properties will be sold),
which notice may be posted and filed for record by Trustee acting, or by any
person acting for him, and the holder has, at least twenty-one (21) days
preceding the date of sale, served written or printed notice of the proposed
sale by certified mail on each debtor obligated to pay the Secured Indebtedness
according to the records of holder, by the deposit of such notice, enclosed in
a post-paid wrapper, properly addressed to such debtor at debtor's most recent
address as shown by the records of holder, in a post office or official
depository under the care and custody of the United States Postal Service, and
after such sale to make to the purchaser or purchasers thereunder good and
sufficient deeds and assignments, in the name of Grantor, conveying said
property so sold to the purchaser or purchasers with general warranty of title
by Grantor. The sale of any part of the Mortgaged Properties shall not exhaust
the power of sale, but sales may be made from time to time until all property
is sold or the Secured Indebtedness is paid in full. It shall not be necessary
to have present or to exhibit at any such sale any of the personal property
subject to the lien hereof. To the extent permitted by applicable law, any
sale hereunder may be adjourned by announcement at the time and place appointed
for such sale, without further notice except as may be required by applicable
law.
Trustee and/or the holder may, at their option, and are 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 Trustee and/or the holder may exercise without interference from
Grantor or Grantor's Successartly therefrom; and, holding the same, the Trustee
and/or 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 Trustee and/or the holder may use, administer, manage,
operate and control the Mortgaged Properties andconduct the business thereof to
the same stead of Grantor, or otherwise as the Trustee and/or the holder shall
deem best. All reasonable costs, expenses and liabilities of every character
incurred by the Trustee and/or the holder shall be a demand obligation owed by
Grantor to holder and shall bear interest at the rate specified (as defined in
the Loan Agreement) and shall constitute a portion of the Secured Indebtedness
and shall be secured by this Deed of Trust and all of the Security Instruments.
If necessary to obtain the possession provided for hereinabove, the Trustee
and/or 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 Trustee and/or the holder pursuant to
this Section 4.4, neither the Trustee nor the holder shall be liable for any
loss sustained by Grantor resulting from any act or omission ofthe Trustee or
the holder in managing the Mortgaged Properties, unless such loss is caused by
the willful misconduct or bad faith of the holder or the Trustee. Xxxxxxx
hereby agrees to indemnify and hold harmless the Trustee and 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 or
Trustee incur any such liability by reason of this Deed of Trust or the
exercise of rights or remedies hereunder or in
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defense of any such claims or demands, the amount thereof, including without
limitation, costs, expenses and reasonable attorneys' fees, shall be 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 or the Trustee, as the case may be, and shall bear
interest each day from the date incurred until paid at the rate specified in
Section 4.2 hereof, and shall be a part of the Secured Indebtedness and shall
be secured by this Deed of Trust and all of the Security Instruments. Grantor
hereby consents to, ratifies and confirms any and all actions of the holder or
the Trustee with respect to the Mortgaged Properties taken under this Section
4.4.
4.4 Trustee is authorized to receive the proceeds of said sale or
sales made pursuant to Section 4.3 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 a reasonable fee to Trustee, not to
exceed five percent (5%) to be calculated upon the amount realized at said
sale; 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.
4.5 It is agreed that in any deed or deeds given by Trustee or any
substitute Trustee duly appointed hereunder, 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, or as to the due and proper
appointment of a substitute Trustee, 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, or by the Trustee or any substitute Trustee,
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
Trustee, or any substitute Trustee, may lawfully do in the premises by virtue
hereof.
4.6 In case the lien and security interest thereof shall be
foreclosed by Trustee's sale or by judicial action, the purchaser at any such
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.
4.7 Upon the occurrence of an Event of Default, and if such Event
of Default is continuing, the holder may, at its election, or Trustee may upon
written request of the holder, 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 Deed of Trust 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. 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 Property, and of the income, rents,
issues, products, profits and proceeds thereof.
4.8 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 hereinabove vested in
Trustee 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.
4.9 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
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the Mortgaged Properties, or to a sale on inverse order of alienation in the
event of foreclosure of the liens and/or security interests hereby created.
4.10 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 or the Trustee 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
Deed of Trust 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.
4.11 In the event the Mortgaged Properties, or any part thereof,
shall be located in any state other than the State of Texas, 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 such properties are located. It is the
intent of Grantor that this Deed of Trust 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 Deed of Trust.
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 no 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 receive any such proceeds
which under this Section 5.2 are receivable by the holder, after such
notice, 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
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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, and while such Event of Default is continuing, 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 to effect the intent and purpose of the assignment
contained in this Article 5; 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 Xxxxxxx personally performed such other
and further acts and deeds in Grantor's own name which the holder deemed
necessary and appropriate to effect the intent and purpose of the Assignment
contained in this Article 5; 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 Grantors 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, subject to the existing contractual
obligations, to make or to
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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 Deed of
Trust 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, and (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, (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
data, magnetic media or other forms of recording or obtaining access to such
data, together with all accessions, 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 Section 9.319 of the Texas
Business and Commerce Code (and as provided in any similar provisions, if any,
of the Uniform Commercial Code as enacted in any other state where the
Mortgaged Properties, or any part thereof, are situated), 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 Bank's predecessor-in-interest in and
to the Original Deed of Trust, 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 Deed of Trust 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 (e) of Section 9.103
of the Texas Business and Commerce Code (and to similar provisions, if any, of
the Uniform Commercial Code as enacted in any other state where the Mortgaged
Properties are situated) are or will be financed at the wellhead or minehead of
the well or mine located on the Lands described in Exhibit "A". This Deed of
Trust 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 Deed of Trust is Grantor.
ARTICLE 7
MISCELLANEOUS
7.1 Upon the full and final payment of the Secured Indebtedness,
this Deed of Trust 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
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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 Deed of Trust 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 655415, Dallas, Texas 75265-5415, Attention: Xxxxx
X. Xxxxxxx, Vice President, and the post office address of Grantor shall be:
0000 Xxxxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000.
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 as
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 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.
7.6 In the event that any one or more of the provisions contained
in this Deed of Trust 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. In case any term or provision hereof is inconsistent with any term or
provision contained in the Loan Agreement, the term or provision contained in
the Loan Agreement shall be controlling.
7.7 THIS DEED OF TRUST SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT IN THOSE INSTANCES WHERE
THE MORTGAGED PROPERTIES COVERED HEREBY ARE LOCATED IN STATES OTHER THAN THE
STATE OF TEXAS. IN SUCH EVENT, THE LAW IN FORCE IN THE STATE WHERE THE
MORTGAGED PROPERTIES ARE LOCATED SHALL GOVERN THE CONSTRUCTION OF THIS DEED OF
TRUST.
7.8 This Deed of Trust 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.
7.9 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.
7.10 In reaching any opinion, making any determination or
requirement, or issuing any request, Bank shall act in good faith and in a
reasonable manner.
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7.11 The effective date of the assignment contained in Article 5 is
the date of execution of this Deed of Trust at 7:00 o'clock a.m.
IN TESTIMONY WHEREOF, Grantor has caused this instrument to be
executed by its duly authorized trustee, effective as of the first day of
April, 1996.
XXXXXXX OIL & GAS, L.P.,
(#%
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