EXHIBIT 10.23
This instrument was prepared by
and after recording return to:
Xxxxx X. Xxxxxxxx, Esq.
Xxxx & Xxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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SPACE ABOVE THIS LINE FOR RECORDER'S USE.
DEED OF TRUST, SECURITY AGREEMENT,
FINANCING STATEMENT AND ASSIGNMENT OF PRODUCTION
MADE BY
GOTLAND OIL, INC.
a Texas corporation
as "Mortgagor"
to
CHICAGO TITLE COMPANY
as "Trustee"
for the benefit of
LAURUS MASTER FUND, LTD.
a Cayman Islands company
as "Mortgagee"
DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT OF
PRODUCTION FROM GOTLAND OIL, INC., AS MORTGAGOR (THE "MORTGAGOR") TO LAURUS
MASTER FUND, LTD. AS MORTGAGEE
DATED: June 12th, 2006
THIS DEED OF TRUST IS, AMONG OTHER THINGS, A FINANCING STATEMENT UNDER THE
UNIFORM COMMERCIAL CODE COVERING MINERALS, AS-EXTRACTED COLLATERAL AND THE LIKE
(INCLUDING OIL AND GAS), ACCOUNTS RESULTING FROM THE SALE OF MINERALS, AS
EXTRACTED COLLATERAL AND THE LIKE (INCLUDING OIL AND GAS), AND GOODS WHICH ARE,
OR ARE TO BECOME, FIXTURES ON THE REAL/UNMOVABLE PROPERTY HEREIN DESCRIBED. THE
OIL AND GAS INTERESTS OR ACCOUNTS INCLUDED IN THE MORTGAGED PROPERTY WILL BE
FINANCED AT THE WELLHEADS LOCATED ON THE REAL/UNMOVABLE PROPERTY DESCRIBED IN
EXHIBIT A ATTACHED HERETO. THIS DEED OF TRUST IS TO BE RECORDED IN THE REAL
ESTATE OR COMPARABLE RECORDS OF THE COUNTY OR PARISH RECORDER OF EACH COUNTY OR
PARISH IN EACH STATE IN WHICH IS SITUATED ANY OF THE COLLATERAL COVERED HEREBY.
THE REAL/UNMOVABLE PROPERTY SUBJECT HERETO IS DESCRIBED IN EXHIBIT A ATTACHED
HERETO.
THIS DEED OF TRUST CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.
MORTGAGOR OWNS A RECORD INTEREST IN THE MORTGAGED PROPERTY.
A POWER OF SALE HAS BEEN GRANTED IN THIS DEED OF TRUST. A POWER OF SALE, WHERE
PERMITTED BY LAW, MAY ALLOW MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT
WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY MORTGAGOR UNDER
THIS DEED OF TRUST.
EMPLOYER IDENTIFICATION NUMBER OF MORTGAGOR: 00-0000000
ORGANIZATIONAL IDENTIFICATION NUMBER OF MORTGAGOR: 3389076
DEED OF TRUST, SECURITY AGREEMENT,
FINANCING STATEMENT AND ASSIGNMENT OF PRODUCTION
THIS DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND
ASSIGNMENT OF PRODUCTION (this "Deed of Trust") is from GOTLAND OIL, INC., a
Texas corporation, as Mortgagor ("Mortgagor"), to CHICAGO TITLE COMPANY, as
Trustee ("Trustee") for the benefit of LAURUS MASTER FUND, LTD., a Cayman
Islands company ("Mortgagee"). The addresses of Mortgagor and Mortgagee are set
forth in Section 7.14 hereof.
RECITALS.:
WHEREAS, in order to secure the Secured Indebtedness (defined below),
Mortgagor has agreed to execute and deliver this Deed of Trust pursuant to
which, among other things, the Mortgaged Property (defined below) is granted and
assigned by Mortgagor to Trustee for the benefit of Mortgagee to further secure
the Secured Indebtedness (defined below).
NOW, THEREFORE, in consideration of the sum of $10.00 and other good
and valuable consideration, in hand paid by Mortgagee, the receipt and adequacy
of which are hereby acknowledged and confessed by Mortgagor, Mortgagor hereby
agrees as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. For all purposes of this Deed of Trust,
unless the context otherwise requires:
"Accounts and Contract Rights" shall mean all accounts (including
accounts in the form of joint interest xxxxxxxx under applicable operating
agreements), contract rights and general intangibles of Mortgagor now or
hereafter existing, or hereafter acquired by, or on behalf of, Mortgagor, or
Mortgagor's successors in interest, relating to or arising from the ownership,
operation and development of the Mortgaged Property and to the production,
processing, treating, sale, purchase, exchange or transportation of Hydrocarbons
(defined below) produced or to be produced from or attributable to the Mortgaged
Property or any units or pooled interest units in which all or a portion of the
Mortgaged Property forms a part, together with all accounts and proceeds
accruing to Mortgagor attributable to the sale of Hydrocarbons produced from the
Mortgaged Property or any units or pooled interest units in which all or a
portion of the Mortgaged Property forms a part.
"Article" shall mean and refer to an Article of this Deed of Trust,
unless specifically indicated otherwise.
"Carneros" shall mean Carneros Energy, Inc., a Delaware corporation.
"Code" shall mean the Uniform Commercial Code in effect in each of the
jurisdictions where the Mortgaged Property or a portion thereof is situated.
"Credit Agreements" shall mean, collectively, the Securities Purchase
Agreement and the other Related Agreements as defined therein, and "Credit
Agreement" shall mean any one of the foregoing.
"Effective Date" shall mean June __, 2006.
"Event of Default" shall mean the occurrence of any breach by Mortgagor
of any term or provision of this Deed of Trust or the occurrence of any Event of
Default under and as defined in the Credit Agreement.
"Exhibit A" shall mean, unless specifically indicated otherwise,
Exhibit A attached hereto and incorporated herein by reference for all purposes.
"Gas Balancing Agreement" shall mean any agreement or arrangement
whereby Mortgagor, or any other party having an interest in any Hydrocarbons to
be produced from Mineral Interests in which Mortgagor owns an interest, has a
right or an obligation to take more or less than its proportionate share of
production therefrom.
"Holdings" shall mean Carneros Acquisition Corp., a Delaware
corporation.
"Hydrocarbons" shall mean oil, gas, coalbed methane gas, casinghead
gas, drip gasolines, natural gasoline, condensate, distillate, as-extracted
collateral and all other liquid or gaseous hydrocarbons produced or to be
produced in conjunction therewith, and all products, byproducts and all other
substances derived therefrom or the processing thereof, and all other minerals
and substances, including, but not limited to, sulphur, lignite, coal, uranium,
thorium, iron, geothermal steam, water, carbon dioxide, helium and any and all
other minerals, ores, or substances of value and the products and proceeds
therefrom, including, without limitation, all gas resulting from the in-situ
combustion of coal or lignite.
"Lands" shall mean the lands described in Exhibit A and shall include
any lands, the description of which is contained in Exhibit A or incorporated in
Exhibit A by reference to another instrument or document, including, without
limitation, all lands described in the Oil and Gas Leases listed on Exhibit A
hereto, and shall also include any lands now or hereafter unitized, pooled,
spaced or otherwise combined, whether by statute, order, agreement, declaration
or otherwise, with lands the description of which is contained in Exhibit A or
is incorporated in Exhibit A by reference.
"Lien" shall mean any mortgage, deed of trust, collateral assignment,
lien, pledge, charge, security interest or other encumbrance.
"Loans" shall mean collectively, all amounts advanced by the Mortgagee
to Mortgagor under the Note and the Credit Agreements.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the assets, liabilities, financial condition, results of operations or prospects
of Mortgagor, (b) the right or ability of Mortgagor to fully, completely and
timely perform its obligations under the Credit Agreements, or (c) the validity
or enforceability of any Credit Agreement against Mortgagor, or the rights or
remedies of Mortgagee thereunder.
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"Mortgaged Property" shall have the meaning stated in Article II of
this Deed of Trust.
"Net Revenue Interest" shall mean Mortgagor's share of all Hydrocarbons
produced from the Lands, after deducting the appropriate proportionate part of
all lessors' royalties, overriding royalties, production payments and other
payments out of or measured by production which burden Mortgagor's share of all
such production, subject to non-consent provisions contained in joint operating
agreements.
"Note" shall have the meaning set forth in the Credit Agreements.
"Obligations" shall mean all present and future indebtedness,
obligations and liabilities, and all renewals, refinancings and extensions
thereof, or any part thereof, of Mortgagor and/or Holdings, to Mortgagee arising
pursuant to the Credit Agreement, or arising pursuant to any commodity, interest
rate, currency or other swap, option, collar, futures contract or other contract
pursuant to which a Person xxxxxx risks related to commodity prices, interest
rates, currency exchange rates, securities prices or financial market conditions
and any other commodity price hedging agreements by and between Mortgagor and/or
Holdings and Mortgagee and all interest accrued on any of the foregoing, and
reasonable costs, expenses, and attorneys' fees incurred in the enforcement or
collection thereof, regardless of whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, liquidated, unliquidated,
joint, several or joint and several.
"Oil and Gas Leases" shall mean oil, gas and mineral leases, oil and
gas leases, oil leases, gas leases, other mineral leases, subleases, top leases,
any rights resulting in an ownership interest in Hydrocarbons and all operating
rights relating to any of the foregoing (whether operated by virtue of such
leases, or assignments or applicable operating agreements), and all other
interests pertaining to any of the foregoing, including, without limitation, all
royalty and overriding royalty interests, production payments and net profit
interests, production payments and net profit interests, mineral fee interests,
and all reversionary, remainder, carried and contingent interests relating to
any of the foregoing and all other rights therein which are described and/or to
which reference may be made on Exhibit A.
"Operating Equipment" shall mean all Personal Property and fixtures
affixed or situated upon all or any part of the Mortgaged Property, including,
without limitation, all surface or subsurface machinery, equipment, facilities
or other property of whatsoever kind or nature now or hereafter located on any
of the Lands which are useful for the production, treatment, storage or
transportation of oil or gas, including, but not by way of limitation, all oil
xxxxx, gas xxxxx, water xxxxx, injection xxxxx, casing, tubing, rods, pumping
units and engines, Christmas trees, derricks, separators, gun barrels, flow
lines, tanks, gas systems (for gathering, treating and compression), water
systems (for treating, disposal and injection), power plants, poles, lines,
transformers, starters and controllers, machine shops, tools, storage yards and
equipment stored therein, buildings and camps, telegraph, telephone and other
communication systems, roads, loading racks and shipping facilities.
"Permitted Encumbrances" shall mean with respect to the Mortgaged
Property:
(a) Liens securing the Obligations;
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(b) minor defects in title which do not secure the payment of money
and otherwise have no material adverse effect on the value or operation of the
subject property, including, without limitation, easements, rights-of-way,
servitudes, permits, surface leases, and other similar rights in respect of
surface operations, and easements for pipelines, streets, alleys, highways,
telephone lines, power lines, railways and other easements and rights-of-way,
on, over or in respect of any of the properties of Mortgagor that are
customarily granted in the oil and gas industry;
(c) inchoate statutory or operators' Liens securing obligations for
labor, services, materials and supplies furnished to Mineral Interests, which
are not more than 60 days delinquent;
(d) mechanic's, materialman's, warehouseman's, journeyman's and
carrier's Liens, and other similar Liens arising by operation of law in the
ordinary course of business, securing obligations which are not more than 60
days delinquent;
(e) Liens for taxes or assessments not yet due or not yet
delinquent, or, if delinquent, that are being contested in good faith in the
normal course of business by appropriate action;
(f) lease burdens payable to third parties which are deducted in
the calculation of discounted present value in any reserve report delivered by
Mortgagor pursuant to the Credit Agreements including, without limitation, any
royalty, overriding royalty, net profits interest, production payment, carried
interest or reversionary working interest;
(g) Liens, charges and encumbrances upon Mortgagor's assets, other
than Proved Mineral Interests, which in the aggregate do not have a value in
excess of $100,000; and
(h) Liens described in Section 4(e) of the Master Security
Agreement dated the date hereof made by Mortgagor in favor of Mortgagee (as the
same may be amended, modified and supplemented from time to time).
"Person" shall mean any individual, corporation, partnership, limited
liability company, association, trust, other entity or organization, or any
court or governmental department, commission, board, bureau, agency, or
instrumentality of any nation or of any province, state, commonwealth, nation,
territory, possession, county, parish, or municipality, whether now or hereafter
constituted or existing.
"Personal Property" shall mean that portion of the Mortgaged Property
that is personal property.
"Proved Mineral Interests" shall mean, collectively, Proved Producing
Mineral Interests, Proved Nonproducing Mineral Interests, and Proved Undeveloped
Mineral Interests.
"Proved Nonproducing Mineral Interests" shall mean all Subject
Interests which constitute proved developed nonproducing reserves.
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"Proved Producing Mineral Interests" shall mean all Subject Interests
which constitute proved developed producing reserves.
"Proved Undeveloped Mineral Interests" shall mean all Subject Interests
which constitute proved undeveloped reserves.
"Section" shall mean and refer to a section of this Deed of Trust,
unless specifically indicated otherwise.
"Secured Indebtedness" shall have the meaning stated in Article III of
this Deed of Trust.
"Securities Purchase Agreements" means the Securities Purchase
Agreement dated as of May 31, 2006 among Holdings, Mortgagor (which joined as a
party thereto pursuant to the terms of a Joinder and Amendment Agreement dated
as of the date hereof among Mortgagor, Carneros, Holdings and Mortgagee, as
amended, modified and supplemented from time to time, the "Joinder Agreement")
and Carneros (which joined as a party thereto pursuant to the terms of the
Joinder Agreement), as may be amended, modified and supplemented from time to
time.
"Subject Interests" shall have the meaning stated in Article II of this
Deed of Trust.
"Subsidiary" shall mean, for any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions (including that of a general partner) are at the time directly
or indirectly owned, collectively, by such Person and any Subsidiaries of such
Person. "Subsidiary" shall include Subsidiaries of Subsidiaries (and so on).
"Well Data" shall mean all logs, drilling reports, division orders,
transfer orders, operating agreements, contracts and other agreements,
abstracts, title opinions, files, records, seismic data, memoranda and other
information in the possession or control of Mortgagor or to which Mortgagor has
access relating to the Lands and/or any xxxxx located thereon.
1.2 Other Terms. Unless otherwise defined or indicated herein, all
terms with their initial letter capitalized shall have the meaning given such
terms in the Credit Agreement.
ARTICLE II
GRANTING CLAUSE: MORTGAGED PROPERTY
Mortgagor, for and in consideration of the sum of $10.00 and other good
and valuable consideration, in hand paid by Mortgagee, the receipt and adequacy
of which are hereby acknowledged and confessed by Mortgagor, and for and in
consideration of the debt and purposes hereinafter set forth, to secure the full
and complete payment and performance of the Secured Indebtedness and to secure
the performance of the covenants, obligations, agreements and undertakings of
Mortgagor hereinafter described, hereby acknowledges, confirms and agrees that
Mortgagor has GRANTED, BARGAINED, WARRANTED, MORTGAGED, ASSIGNED, TRANSFERRED
and CONVEYED, and by these presents does GRANT, BARGAIN, WARRANT, MORTGAGE,
ASSIGN, TRANSFER and CONVEY unto the Trustee, in trust, its substitutes or
successors, and its and their assigns, with power of sale, for the benefit of
Mortgagee, as herein provided, for the uses and purposes herein set forth, with
warranties and covenants of title only to the extent provided herein and in the
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Credit Agreements, all of Mortgagor's right, title and interest, whether now
owned or hereafter acquired, in all of the hereinafter described properties,
rights and interests; and, insofar as such properties, rights and interests
consist of equipment, general intangibles, accounts, contract rights, inventory,
goods, chattel paper, instruments, documents, money, fixtures, asextracted
collateral, proceeds and products of collateral or any other Personal Property
of a kind or character defined in or subject to the applicable provisions of the
Code, Mortgagor hereby grants to Trustee, in trust, for the benefit of
Mortgagee, a security interest therein, whether now owned or hereafter acquired,
namely:
(a) all of those certain Oil and Gas Leases and Lands (all such Oil
and Gas Leases and Lands being herein called the "Subject Interests," as
hereinafter further defined) which are described in Exhibit A and/or to which
reference may be made in Exhibit A and/or which are covered by any of the leases
described on Exhibit A, which Exhibit A is made a part of this Deed of Trust for
all purposes, and is incorporated herein by reference as fully as if copied at
length in the body of this Deed of Trust at this point;
(b) all rights, titles, interests and estates now owned or
hereafter acquired by Mortgagor in and to (i) any and all properties now or
hereafter pooled or unitized with any of the Subject Interests, and (ii) all
presently existing or future operating agreements and unitization,
communitization and pooling agreements and the units operated thereby to the
extent the same relate to all or any part of the Subject Interests, including,
without limitation, all units formed under or pursuant to any applicable laws
(the rights, titles, interests and estates described in this clause (b) also
being included within the term "Subject Interests" as used herein);
(c) all presently existing and future agreements entered into
between Mortgagor and any third party that provide for the acquisition by
Mortgagor of any interest in any of the properties or interests specifically
described in Exhibit A or which relate to any of the properties and interests
specifically described in Exhibit A;
(d) the Hydrocarbons (including inventory) which are in, under,
upon, produced or to be produced from or attributable to the Lands from and
after the Effective Date;
(e) the Accounts and Contract Rights;
(f) the Operating Equipment;
(g) the Well Data;
(h) the rights and security interests of Mortgagor held by
Mortgagor to secure the obligation of the first purchaser to pay the purchase
price of the Hydrocarbons;
(i) all surface leases, rights-of-way, franchises, easements,
servitudes, licenses, .privileges, tenements, hereditaments and appurtenances
now existing or in the future obtained in connection with any of the aforesaid,
and all other items of value and incident thereto which Mortgagor may, at any
time, have or be entitled; and
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(j) all and any different and additional rights of any nature, of
value or convenience in the enjoyment, development, operation or production, in
any way, of any property or interest included in any of the foregoing clauses,
and in all revenues, income, rents, issues, profits and other benefits arising
therefrom or from any contract now in existence or hereafter entered into
pertaining thereto, and in all rights and claims accrued or to accrue for the
removal by anyone of Hydrocarbons from, or other act causing damage to, any of
such properties or interests.
All the aforesaid properties, rights and interests, together with any
and all substitutions, replacements, corrections or amendments thereto, or
renewals, extensions or ratifications thereof, or of any instrument relating
thereto, and together with any additions thereto which may be subjected to the
Lien of this Deed of Trust by means of supplements hereto, being hereinafter
called the "Mortgaged Property".
Subject, however, to (i) Permitted Encumbrances, and (ii) the condition
that Mortgagee shall not be liable in any respect for the performance of any
covenant or obligation of Mortgagor with respect to the Mortgaged Property.
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee and its
successors, legal representatives and assigns, forever, subject to Section 7.3
hereof, to secure, in each such instance, the payment and performance of the
Secured Indebtedness and the Obligations.
ARTICLE III
SECURED INDEBTEDNESS
This Deed of Trust is given to secure the Loans and all of the
Obligations under and as described in the Credit Agreements, including, without
limitation:
(a) interest on all credit outstanding under the Credit Agreements
at the rates provided in the Credit Agreements;
(b) the Obligations, including, without limitation, the
indebtedness evidenced by the Note;
(c) payment and performance of any and all present and future
obligations of Mortgagor, Carneros and/or Holdings according to the terms of any
present or future hedge transaction, in each case relating to the transactions
contemplated by the Credit Agreement, including, without limitation, any present
or future swap agreements, cap, floor, collar, exchange transaction, forward
agreement or other exchange or protection agreements relating to any such
transaction now existing or hereafter entered into between Mortgagor, Carneros
and/or Holdings, on the one hand and Mortgagee on the other hand;
(d) any sums advanced as expenses or costs incurred by, or on
behalf of, Mortgagee which are made or incurred pursuant to the terms of this
Deed of Trust or any Credit Agreement, plus interest thereon at the rate set
forth in the Note from the date of advance or expenditure until reimbursed; and
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(e) all other and additional debts, obligations and liabilities of
every kind and character of Mortgagor, Carneros and/or Holdings now existing or
hereafter arising in connection with any of the Credit Agreements (all of the
obligations and indebtedness referred to in this Article III, and all renewals,
refinancings, extensions and modifications thereof, and all substitutions
therefor, in whole or in part, are herein sometimes referred to as the "Secured
Indebtedness").
ARTICLE IV
COVENANTS, REPRESENTATIONS,
WARRANTIES AND AGREEMENTS OF MORTGAGOR
Mortgagor hereby covenants, represents, warrants and agrees that:
4.1 Payment of Indebtedness. Mortgagor will duly and punctually pay or
cause to be paid when due all of the Secured Indebtedness.
4.2 Warranties. (a) Mortgagor, to the extent of the interests specified
in Exhibit A, has good and defensible title, subject to Permitted Encumbrances,
to each property right or interest constituting the Mortgaged Property, and has
a good and legal right to make the grant and conveyance made in this Deed of
Trust; (b) Mortgagor's present Net Revenue Interest in the Mortgaged Property is
not less than that specified in Exhibit A and if no interest is specified,
includes all its interests however specified in and to the Oil and Gas Leases
and Lands described on Exhibit A; and (c) the Mortgaged Property is free from
all Liens other than Permitted Encumbrances. Mortgagor will warrant and forever
defend (subject to those Permitted Encumbrances described in clauses (b) and (f)
of the definition of "Permitted Encumbrances" set forth above) the Mortgaged
Property unto Mortgagee and Mortgagee's successors, legal representatives and
assigns, and Mortgagee and Mortgagee's successors, legal representatives and
assigns, against every Person whomsoever lawfully claiming the same or any part
thereof, and Mortgagor will maintain and preserve the Lien hereby created so
long as any of the Secured Indebtedness remains unpaid, except where such
failure to comply would not have a Material Adverse Effect.
4.3 Further Assurances. Mortgagor will execute and deliver such other
and further instruments and will do such other and further acts as in the
reasonable discretion of Mortgagee may be necessary or desirable to carry out
more effectively the purposes of this Deed of Trust, including, without limiting
the generality of the foregoing, (a) prompt correction of any material defect
which may hereafter be discovered in the title to the Mortgaged Property or in
the execution and acknowledgment of this Deed of Trust, any Note, or any other
document used in connection herewith or at any time delivered to Mortgagee in
connection with any Obligations, and (b) if required by Section 8.1 hereof,
prompt execution and delivery of all division or transfer orders that in the
reasonable discretion of Mortgagee are needed to transfer effectively the
assigned proceeds of production from the Mortgaged Property to Mortgagee.
4.4 Taxes. To the extent and in the manner required by the Credit
Agreements, and to the extent not prohibited by applicable law, Mortgagor will
promptly pay, or cause to be paid, all taxes legally imposed upon this Deed of
Trust or upon the Mortgaged Property or upon the interest of Mortgagee therein,
or upon the income, profits, proceeds and other revenues thereof.
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4.5 Operation of the Mortgaged Property. So long as the Secured
Indebtedness or any part thereof remains unpaid:
(a) Mortgagor shall maintain and operate the Subject Interests in a
good and workmanlike manner and will observe and comply with all of the terms
and provisions, express or implied, of all Oil and Gas Leases relating to the
Subject Interests so long as such Oil and Gas Leases are capable of producing
Hydrocarbons in paying quantities, except where such failure to comply would not
have a Material Adverse Effect;
(b) Mortgagor shall comply with all contracts and agreements
applicable to or relating to the Mortgaged Property or the production and sale
of Hydrocarbons therefrom, except to the extent a failure to so comply would not
have a Material Adverse Effect;
(c) Mortgagor shall, at all times, maintain, preserve and keep all
Operating Equipment used with respect to the Mortgaged Property in proper
repair, working order and condition, and make all necessary or appropriate
repairs, renewals, replacements, additions and improvements thereto so that the
efficiency of such Operating Equipment shall at all times be properly preserved
and maintained, except where such failure to comply would not have a Material
Adverse Effect; provided that no item of Operating Equipment need be so
repaired, renewed, replaced, added to or improved, if Mortgagor shall in good
faith determine that such action is not necessary or desirable for the continued
efficient and profitable operation of the Subject Interests;
(d) Mortgagor shall cause the Mortgaged Property to be kept free
and clear of all Liens other than Permitted Encumbrances;
(e) Mortgagor shall comply with the terms of the Credit Agreements
with respect to maintenance of insurance. All loss payable clauses or provisions
in said policy or policies shall be endorsed in favor of and made payable to
Mortgagee, as its interest may appear. Mortgagee shall have the right to
collect, and Mortgagor hereby assigns to Mortgagee, any and all monies that may
become payable under any such policies of insurance by reason of damage, loss or
destruction of any of the Mortgaged Property, and Mortgagee may, at its
election, either apply all or any part of the sums so collected toward payment
of the Secured Indebtedness, whether or not such Secured Indebtedness, or any
portion thereof, is then due and payable, in such manner as Mortgagee may elect,
or release same to Mortgagor; and
(f) Mortgagor shall not sell, lease, transfer, abandon or otherwise
dispose of any portion of the Mortgaged Property or any of Mortgagor's rights,
titles or interests therein or thereto, except as specifically permitted in the
Credit Agreements.
4.6 Recording. Mortgagor will promptly and at Mortgagor's sole cost and
expense, record, register, deposit and file this Deed of Trust and every other
instrument in addition or supplemental hereto in such offices and places and at
such times and as often as may be necessary to preserve, protect and renew the
Lien hereof as a perfected Lien on real or personal property, as the case may
be, subject only to Permitted Encumbrances, and the rights and remedies of
Mortgagee, and otherwise will do and perform all matters or things necessary or
expedient to be done or observed by reason of any law or regulation of any state
or of the United States or of any other competent authority, for the purpose of
effectively operating, maintaining and preserving the Lien hereof on the
Mortgaged Property.
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4.7 Records. Statements and Reports. Mortgagor will keep proper books
of record and account in which complete and correct entries will be made of
Mortgagor's transactions in accordance with sound accounting principles
consistently applied and will, to the extent required by the Credit Agreements,
furnish or cause to be furnished to Mortgagee (a) all reports required under the
Credit Agreements, and (b) such other information concerning the business and
affairs and financial condition of Mortgagor as Mortgagee may, from time to time
reasonably request.
4.8 No Government Approvals. Mortgagor warrants that no approval or
consent of any Person is necessary to authorize the execution and delivery of
this Deed of Trust, or any of the other Credit Agreements or the Note, or to
authorize the observance or performance by Mortgagor of the covenants herein or
therein contained.
4.9 Right of Entry. Mortgagor will permit Mortgagee, or the agents or
designated representatives of Mortgagee, to enter upon the Mortgaged Property,
and all parts thereof at reasonable times during normal business hours and with
advance notice to Mortgagor's President, for the purposes of investigating and
inspecting the condition and operation thereof, provided that no such notice
shall be required to be given in the event Mortgagee believes such access is
necessary to preserve or protect the Mortgaged Property or following the
occurrence and during the continuance of an Event of Default.
The representations and warranties set forth in the Credit Agreements
are incorporated herein by reference as if set forth herein, and each such
representation and warranty is true and correct.
ARTICLE V
ADDITIONS TO MORTGAGED PROPERTY
It is understood and agreed that Mortgagor may periodically subject
additional properties to the Lien of this Deed of Trust. In the event that
additional properties are to be subjected to the Lien hereof, the parties hereto
agree to execute a supplemental deed of trust, satisfactory in form and
substance to Mortgagee, together with any security agreement, financing
statement or other security instrument required by Mortgagee, all in form and
substance satisfactory to Mortgagee and in a sufficient number of executed (and,
where necessary or appropriate, acknowledged) counterparts for recording
purposes. Upon execution of such supplemental deed of trust, all additional
properties thereby subjected to the Lien of this deed of trust shall become part
of the Mortgaged Property for all purposes.
ARTICLE VI
ENFORCEMENT OF THE SECURITY
6.1 General Remedies. Upon the occurrence and during the continuance of
an Event of Default, Mortgagee may direct Trustee to do, any one or more of the
following, subject to and in accordance with any applicable provision of the
Credit Agreements, and to any mandatory requirements or limitations of
applicable law then in force:
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(a) exercise all of the rights, remedies, powers and privileges of
Mortgagor with respect to the Mortgaged Property or any part thereof, give or
withhold all consents required therein which, with respect to the Mortgaged
Property or any part thereof, Mortgagor would otherwise be entitled to give or
withhold, and perform or attempt to perform any covenants in this Deed of Trust
which Mortgagor is obligated to perform; provided that, no payment or
performance by Mortgagee shall constitute a waiver of any Event of Default, and
Mortgagee shall be subrogated to all rights and Liens securing the payment of
any debt, claim, tax or assessment for the payment of which Mortgagee may make
an advance, or which Mortgagee may pay.
(b) execute and deliver to such Person or Persons as may be
designated by Mortgagee appropriate powers of attorney to act for and on behalf
of Mortgagor in all transactions with any federal, state or local agency with
respect to any of the Mortgaged Property.
(c) exercise any and all other rights or remedies granted to
Mortgagee pursuant to the provisions of any of the Credit Agreements and
applicable law.
(d) if Mortgagor has failed to keep or perform any covenant
whatsoever contained in any Credit Agreement or this Deed of Trust, Mortgagee
may, at its option, perform or attempt to perform such covenant. Any payment
made or expense incurred in the performance or attempted performance of any such
covenant shall be a part of the Secured Indebtedness, and Mortgagor promises,
upon demand, to pay to Mortgagee, at the place where the Note is payable, or at
such other place as Mortgagee may direct by written notice, all sums so advanced
or paid by Mortgagee, with interest at the default rates set forth in the Notes
from the date when paid or incurred by Mortgagee. No such payment by Mortgagee
shall constitute a waiver of any Event of Default.
(e) Mortgagee may, at its option, without notice, demand,
presentment, notice of intent to accelerate or of acceleration, or notice of
protest, all of which are hereby expressly waived by Mortgagor, declare the
entire unpaid balance of the Secured Indebtedness, or any part thereof,
immediately due and payable, and upon such declaration, it shall be immediately
due and payable, and the Liens hereof shall then be subject to foreclosure in
accordance with applicable law.
(f) Upon the occurrence of an Event of Default, this Deed of Trust
may be foreclosed as to the Mortgaged Properties, or any part thereof, in any
manner permitted by applicable law.
A POWER OF SALE HAS BEEN GRANTED IN THIS DEED OF TRUST. A POWER OF SALE
MAY ALLOW MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO
COURT IN A FORECLOSURE ACTION UPON DEFAULT BY MORTGAGOR UNDER THIS DEED OF
TRUST.
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Mortgagee may, and where permitted by law, request Trustee to, and in
such event Trustee is hereby authorized and empowered, and it shall be his or
her special duty, upon such request of Mortgagee, and to the extent permitted by
applicable law, proceed with foreclosure and sell all or any part of the
Mortgaged Property at one or more sales, as an entirety or in parcels, at such
place or places and otherwise in such manner and upon such notice as may be
required by applicable law, or, in the absence of any such requirement, as
Trustee or Mortgagee may deem appropriate, and to make conveyance to the
purchaser or purchasers thereof. Any such sale shall be made to the highest
bidder or bidders for cash, at the courthouse door of the county wherein the
Mortgaged Property is situated; provided that, if the Mortgaged Property is
situated in more than one county, such sale of the Mortgaged Property, or part
thereof, may be made in any county wherein any part of the Mortgaged Property is
situated. Such sale shall be made at public outcry, on the day of any month,
during the hours of such day, and after written notices thereof have been
publicly posted in such places and for such time periods and all Persons
entitled to notice thereof have been sent such notice, all as required by
applicable law. If the applicable law in force as of the Effective Date hereof
should hereafter be amended to require a different notice of sale applicable to
sales of property of the nature of the Mortgaged Property under powers of sale
conferred by mortgages or deeds of trust, Mortgagee may, in its sole discretion,
to the extent permitted by applicable law, give either the notice of sale
required by applicable law in effect on the Effective Date or the notice of sale
prescribed by the amended law; and nothing herein shall be deemed to require
Mortgagee to do, and Mortgagee shall not be required to do, any act other than
as required by applicable law in effect at the time of any such sale. After such
sale, Mortgagee shall make to the purchaser or purchasers thereunder good and
sufficient deeds, assignments or bills of sale in the name of Mortgagor,
conveying or transferring the Mortgaged Property, or any part thereof, so sold
to the purchaser or purchasers containing such warranties of title as are
customarily given, which warranties shall be binding upon Mortgagor.
Sale of a part of the Mortgaged Property shall not exhaust the power of
sale granted hereby, but sales may be made from time to time until the Secured
Indebtedness is paid and performed in full. It shall not be necessary to have
present or to exhibit at any such sale any of the Personal Property. In addition
to the rights and other powers of sale granted under the preceding provisions of
this Section 6.1(f), if default is made in the payment of any installment of the
Secured Indebtedness, Mortgagee may, at its option, at once or at any time
thereafter while any matured installment remains unpaid, without declaring the
entire Secured Indebtedness to be due and payable, orally or in writing,
enforce, or direct Trustee to enforce (as provided by applicable law), the Liens
created by this Deed of Trust and sell the Mortgaged Property subject to such
matured indebtedness and the Liens securing its payment, in the same manner, on
the same terms, at the same place and time and after having given notice in the
same manner, all as provided in the preceding provisions of this Section 6.1(f).
After such sale, Mortgagee or Trustee (as provided by applicable law) shall make
due conveyance to the purchaser or purchasers. Sales made without maturing the
Secured Indebtedness may be made hereunder whenever there is a default in the
payment of any installment of the Secured Indebtedness without exhausting the
power of sale granted hereby and without affecting in any way the power of sale
granted under this Section 6.1(f), the unmatured balance of the Secured
Indebtedness (except as to any proceeds of any sale which Mortgagee may apply as
prepayment of the Secured Indebtedness), or the Liens securing payment of the
Secured Indebtedness. The sale or sales of less than the whole of the Mortgaged
Property shall not exhaust the power of sale herein granted, and Mortgagee or
Trustee (as provided by applicable law) is specifically empowered to make
successive sale or sales under such power until the whole of the Mortgaged
Property shall be sold. It is intended by each of the foregoing provisions of
this Section 6.1(f) that Mortgagee may, and if applicable, Trustee may, after
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any request or direction by Mortgagee, sell not only the Subject Interests but
also all other items constituting a part of the Mortgaged Property along with
the Subject Interests, or any part thereof, all as a unit and as a part of a
single sale, or may sell any part of the Mortgaged Property separately from the
remainder of the Mortgaged Property. If the proceeds of such sale or sales of
less than the whole of such Mortgaged Property shall be less than the aggregate
of the Secured Indebtedness and the expense of enforcing the trust created by
this Deed of Trust, the Liens of this Deed of Trust shall remain in full force
and effect as to the unsold portion of the Mortgaged Property just as though no
sale or sale of less than the whole of the Mortgaged Property had occurred, but
Mortgagee shall have the right, at its sole election, to sell, or as applicable
request Trustee to sell, less than the whole of the Mortgaged Property. In the
event any questions should be raised as to the regularity or validity of any
sale hereunder, Mortgagee or Trustee (as provided by applicable law) shall have
the right and is hereby authorized to make resale of said property so as to
remove any questions or doubt as to the regularity or validity of the previous
sale, and as many resales may be made as may be appropriate. It is agreed that,
in any deed or deeds given by Mortgagee or Trustee (as provided by applicable
law), any and all statements of fact or other recitals therein made as to the
identity of Mortgagee, or as to the occurrence or existence of any Event of
Default, 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 other act or thing having been
duly done by Mortgagee or by Trustee, shall be taken by any Governmental
Authority as prima facie evidence that the said statements or recitals are true
and correct and are without further question to be so accepted, and Mortgagor
does hereby ratify and confirm any and all acts that Trustee or Mortgagee may
lawfully do in the premises by virtue hereof. In the event of the resignation or
death of Trustee, or his or her removal from his or her county of residence
stated on the second page hereof, or his or her failure, refusal, or inability,
for any reason, to make any such sale or to perform any of the trusts herein
declared, or, at the option of Mortgagee, without cause, Mortgagee may appoint,
in writing, a substitute trustee, who shall thereupon succeed to all the
estates, titles, rights, powers, and trusts herein granted to and vested in
Trustee. If Mortgagee is a national banking association or a corporation, such
appointment may be made on behalf of such Mortgagee by any Person who is then
the president, or any vice-president, or the cashier or secretary, or any other
authorized officer or agent of Mortgagee. In the event of the resignation or
death of any such substitute trustee, or his or her failure, refusal, or
inability to make such sale or perform such trusts, or, at the option of
Mortgagee, without cause, Mortgagee may appoint successive substitute trustees
from time to time in the same manner. Wherever herein the word "Trustee" is
used, the same shall mean the Person who is the duly appointed Trustee or
substitute trustee hereunder at the time in question.
(g) Mortgagee may, or Trustee may upon written request of
Mortgagee, in lieu of or in addition to exercising the power of sale provided
for in Section 6.1(f) hereof, proceed by suit or suits, at law or in equity, to
enforce the payment and performance of the Secured Indebtedness in accordance
with the terms hereof, and of the Credit Agreements evidencing it, to foreclose
the Liens of this Deed of Trust as against all or any part of the Mortgaged
Property, and to have all or any part of the Mortgaged Property sold under the
judgment or decree of a court of competent jurisdiction.
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(h) To the extent permitted by law, upon the acceleration of the
Secured Indebtedness, Mortgagee, as a matter of right and without regard to the
sufficiency of the Mortgaged Property, and without any showing of insolvency,
fraud or mismanagement on the part of Mortgagor, and without the necessity of
filing any judicial or other proceeding other than the proceeding for
appointment of a receiver, shall be entitled to the appointment of a receiver or
receivers of the Mortgaged Property, or any part thereof, and of the income,
royalties, revenues, bonuses, production payments, delay rentals, benefits,
rents, issues and profits thereof. Mortgagor hereby consents to the appointment
of such receiver or receivers and agrees not to oppose any application therefor
by Trustee or Mortgagee.
(i) Upon the acceleration of the Secured Indebtedness, Mortgagee
may (without notification, if permitted by applicable law) enter upon the
Mortgaged Property, take possession of the Mortgaged Property, and remove the
Personal Property, or any part thereof, with or without judicial process, and,
in connection therewith, without any responsibility or liability on the part of
Mortgagee, take possession of any property located on or in the Mortgaged
Property which is not a part of the Mortgaged Property and hold or store such
property at Mortgagor's expense. If necessary to obtain the possession provided
for in this Section 6.1(i), Mortgagee or Trustee may undertake any and all
remedies to dispossess Mortgagor, including, specifically, one or more actions
for forcible entry and detainer, trespass to try title and restitution.
(j) Mortgagee may require Mortgagor to assemble any Personal
Property and any other items of the Mortgaged Property, or any part thereof, and
make it available to Mortgagee at a place to be designated by Mortgagee which is
reasonably convenient to Mortgagor and Mortgagee.
(k) Mortgagee may surrender the insurance policies maintained
pursuant to the Credit Agreements, or any part thereof, and receive and apply
the unearned premiums as a credit on the Secured Indebtedness, and, in
connection therewith, Mortgagor hereby appoints Mortgagee as the agent and
attorney-in-fact for Mortgagor (with full powers of substitution) to collect
such premiums, which power of attorney shall be deemed to be a power coupled
with an interest and therefore irrevocable until the release of the Liens
evidenced by this Deed of Trust.
(l) Mortgagee may retain the Personal Property and any other items
of the Mortgaged Property, or any part thereof, in satisfaction or partial
satisfaction of the Secured Indebtedness whenever the circumstances are such
that Mortgagee is entitled to do so under the Code.
(m) Mortgagee shall have the right to become the purchaser at any
sale of the Mortgaged Property held by Mortgagee, Trustee or by any court,
receiver or public officer, and Mortgagee shall have the right to credit upon
the amount of the bid made therefor, the amount payable out of the net proceeds
of such sale to Mortgagee. Recitals contained in any conveyance made to any
purchaser at any sale made hereunder shall conclusively establish the truth and
accuracy of the matters therein stated, including, without limiting the
generality of the foregoing, nonpayment of the unpaid principal sum of, interest
accrued on, and fees payable in respect of, the Secured Indebtedness after the
same have become due and payable, and advertisement and conduct of such sale in
the manner provided herein or appointment of any successor Trustee hereunder.
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(n) Mortgagee may buy any Personal Property and any other items of
the Mortgaged Property, or any part thereof, at any private disposition if the
Mortgaged Property or the part thereof being disposed of, is a type customarily
sold in a recognized market or a type which is the subject of widely distributed
standard price quotations.
(o) Mortgagee shall have and may exercise any and all other rights
which Mortgagee may have under the Code, by virtue of the Credit Agreements,
this Deed of Trust, at law, in equity or otherwise.
Mortgagee shall have no obligation to do, or refrain from doing, any of the
acts, or to make or refrain from making any payment, referred to in this Section
6.1.
6.2 Foreclosure by Judicial Proceedings. Upon the occurrence of an
Event of Default, Mortgagee may proceed, where permitted by law, by a suit or
suits in equity or at law, whether for a foreclosure hereunder, or for the sale
of the Mortgaged Property, or for the specific performance of any covenant or
agreement herein contained or in aid of the execution of any power herein
granted, or for the appointment of a receiver pending any foreclosure hereunder
or the sale of the Mortgaged Property, or for the enforcement of any other
appropriate legal or equitable remedy.
6.3 Receipt to Purchaser. Upon any sale by virtue of judicial
proceedings, the receipt of the officer making such sale under judicial
proceedings shall be sufficient discharge to the purchaser or purchasers at any
sale for his or their purchase money, and such purchaser or purchasers, or his
or their assigns or personal representatives, shall not, after paying such
purchase money and receiving such receipt of such officer therefor, be obligated
to see to the application of such purchase money, or be in any way answerable
for any loss, misapplication or non-application thereof.
6.4 Effect of Sale. Any sale or sales of the Mortgaged Property or
portions thereof where permitted by law shall operate to divest all right,
title, interest, claim and demand whatsoever either at law or in equity, of
Mortgagor of, in and to the premises and the property sold, and shall be a
perpetual bar, both at law and in equity, against Mortgagor, and Mortgagor's
successors, legal representatives or assigns, and against any and all Persons
claiming or who shall thereafter claim all or any of the property sold by,
through or under Mortgagor, or Mortgagor's successors, legal representatives and
assigns. Nevertheless, Mortgagor, if requested by Mortgagee to do so, shall join
in the execution and delivery of all proper conveyances, assignments and
transfers of the properties so sold.
6.5 Application of Proceeds. The proceeds of any sale of or other
realization on the Mortgaged Property, or any part thereof, shall be applied by
Mortgagee to the Secured Indebtedness in such order as Mortgagee shall elect.
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6.6 Mortgagor's Waiver of Appraisement, Marshaling, etc.; Rights.
Mortgagor agrees, to the full extent that Mortgagor may lawfully so agree, that
Mortgagor will not at any time, insist upon or plead or, in any manner
whatsoever, claim the benefit of any stay, extension or redemption law now or
hereafter in force, in order to prevent or hinder the enforcement or foreclosure
of this Deed of Trust or the absolute sale of the Mortgaged Property or any
portion thereof or the possession thereof by any purchaser at any sale made
pursuant to any provision hereof, or pursuant to the decree of any court of
competent jurisdiction; but Mortgagor, and all who may claim through or under
Mortgagor, so far as Mortgagor or those claiming through or under Mortgagor now
or hereafter lawfully may, hereby waives the benefit of all such laws. Mortgagor
and all who may claim through or under Mortgagor, waives, to the extent that
Mortgagor or those claiming through or under Mortgagor may lawfully do so, any
and all rights of appraisement and any and all right to have the Mortgaged
Property marshaled upon any foreclosure of the Lien hereof, or sold in inverse
order of alienation, and agrees that any court having jurisdiction to foreclose
such Lien may sell the Mortgaged Property as an entirety. If any law in this
Section 6.6 referred to and now in force, of which Mortgagor or Mortgagor's
successor or successors might take advantage despite the provisions hereof,
shall hereafter be repealed or cease to be in force, such law shall not
thereafter be deemed to constitute any part of the contract herein contained or
to preclude the operation or application of the provisions of this Section 6.6.
6.7 Mineral Leasing Act. Notwithstanding any other provisions of this
Deed of Trust, any Oil and Gas Leases covered by this Deed of Trust which are
subject to the Mineral Leasing Act of 1920, as amended, and the regulations
promulgated thereunder, shall not be sold or otherwise disposed of to any party
other than citizens of the United States, or to associations of such citizens or
to any corporation organized under the laws of the United States, or any state
or territory thereof that are qualified to own or control interests in such Oil
and Gas Leases under the provisions of such Mineral Leasing Act and regulations,
or to Persons who may acquire ownership or interest in such Oil and Gas Leases
under the provisions of 30 U.S.C. ss. 184(g), if applicable, as such Mineral
Leasing Act or regulations are now or may be from time to time in effect.
6.8 Costs and Expenses. All reasonable costs, expenses (including
attorneys' fees) and payments incurred or made by Mortgagee in protecting and
enforcing its rights hereunder, shall constitute a demand obligation owing by
Mortgagor to the party incurring such or making such costs, expenses or payments
and shall bear interest at a rate per annum equal to the default rates set forth
in the Note, all of which shall constitute a portion of the Secured
Indebtedness.
6.9 Operation of the Mortgaged Property by Mortgagee. Upon the
occurrence of an Event of Default that is continuing and the acceleration of the
Secured Indebtedness under any Credit Agreement, and in addition to all other
rights herein conferred on Mortgagee, Mortgagee (or any Person designated by
Mortgagee) shall, to the extent permitted by applicable law, have the right and
power, but not the obligation, to enter upon and take possession of any of the
Mortgaged Property, and to exclude Mortgagor, and Mortgagor's agents or
servants, wholly therefrom, and to hold, use, administer, manage and operate the
same to the extent that Mortgagor shall be at the time entitled to do any of
such things and in Mortgagor's place and stead. Mortgagee (or any Person
designated by Mortgagee) may operate the same without any liability or duty to
Mortgagor in connection with such operations, except to use ordinary care in the
operation of such Mortgaged Property, and Mortgagee or any Person designated by
Mortgagee shall have the right to collect and receive all Hydrocarbons produced
and sold from the Mortgaged Property, the proceeds of which shall be applied to
16
the Secured Indebtedness in such order as Mortgagee shall elect, to make
repairs, purchase machinery and equipment, conduct workover operations, drill
additional xxxxx and to exercise every power, right and privilege of Mortgagor
with respect to the Mortgaged Property. When and if such expenses of such
operation and development (including costs of unsuccessful workover operations
or additional xxxxx) have been paid and the Secured Indebtedness paid and
performed in full, such Mortgaged Property shall, if there has been no sale or
foreclosure thereof, be returned to Mortgagor.
6.10 Additional Waivers. In order to enforce this Deed of Trust,
Mortgagee or Trustee shall not be obligated (a) to foreclose any other mortgage
or deed of trust covering Mortgaged Property located in another State, seek a
deficiency after any such foreclosure, or otherwise enforce Mortgagee's rights
in any of the other Mortgaged Property; or (b) to seek an injunction
(prohibitive or mandatory), the appointment of a receiver, an order modifying
any stay in any federal or state bankruptcy, reorganization or other insolvency
proceedings relating to any of the Mortgaged Property or any portion thereof, or
any other extraordinary relief. Mortgagor waives, to the fullest extent
permitted by law, any defense Mortgagor may have to any liability hereunder
based on Mortgagee's failure or refusal to prosecute, or any lack of diligence
or delay in prosecuting, any action or proceeding to enforce any other mortgage
or deed of trust. If Mortgagee elects to enforce this Deed of Trust before, or
without, enforcing its rights with respect to any Mortgaged Property covered by
any other Deed of Trust, Mortgagor waives, to the fullest extent permitted by
law, any right Mortgagor may have, whether statutory or otherwise, to set off
the value of any other Mortgaged Property, or any portion thereof, against the
Secured Indebtedness. If Mortgagee elects to enforce its mortgages or deeds of
trust covering all or any portion of the Mortgaged Property located in other
States, or in conjunction with the enforcement of this Deed of Trust, Mortgagee
is authorized to purchase all or any part of such other Mortgaged Property at
public or private sale or as otherwise provided by applicable law, and to credit
the purchase price against the Secured Indebtedness in such order or manner as
Mortgagee determines in its sole discretion and to preserve Mortgagee's rights
and Liens under this Deed of Trust for any portion of the Secured Indebtedness
that remains unpaid. Mortgagor waives to the fullest extent permitted by
applicable law any right to claim or seek any credit against the Secured
Indebtedness in excess of the actual amount bid or received by Mortgagee in
connection with the foreclosure of Mortgagee's Liens on any of the Mortgaged
Property located in such other States. Mortgagor further agrees that Mortgagee
shall not be required (a) to seek or obtain a deficiency judgment in or pursuant
to any action or proceeding to foreclose this Deed of Trust as a condition of
later enforcing any mortgage or deed of trust covering Mortgaged Property
located in another State, or (b) to seek or obtain a deficiency judgment in or
pursuant to any action or proceeding to foreclose any such other mortgage or
deed of trust as a condition of later enforcing this Deed of Trust.
Notwithstanding the foregoing, if Mortgagee in good faith believes that it may
be required either to obtain a deficiency judgment to enforce this Deed of Trust
after enforcement of a mortgage or deed of trust covering Mortgaged Property
located in another State, or to enforce another mortgage or deed of trust after
enforcement of this Deed of Trust, then Mortgagor agrees that Mortgagee shall be
entitled to seek and obtain such a deficiency judgment notwithstanding any
contrary or inconsistent provision contained in any Credit Agreement.
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ARTICLE VII
MISCELLANEOUS
7.1 Advances by Mortgagee. Each and every covenant herein contained
shall be performed and kept by Mortgagor solely at Mortgagor's expense. If
Mortgagor shall fail to perform or keep any of the covenants of whatsoever kind
or nature contained in this Deed of Trust, Mortgagee or any receiver appointed
hereunder, may, but shall not be obligated to, make advances to perform the same
on Mortgagor's behalf, and Mortgagor hereby agrees to repay such sums upon
demand plus interest at a rate per annum equal to the default rate of interest
set forth in the applicable Note. No such advance shall be deemed to relieve
Mortgagor from any Event of Default hereunder.
7.2 Defense of Claims. Mortgagor will notify Mortgagee, in writing,
promptly of the commencement of any legal proceedings of which Mortgagor has
notice affecting or which could adversely effect the Lien hereof or the status
of or title to the Mortgaged Property, or any material part thereof, and will
take such action, employing attorneys agreeable to Mortgagee, as may be
necessary to preserve Mortgagor's or Mortgagee's rights affected thereby; and
should Mortgagor fail or refuse to take any such action, Mortgagee may take such
action on behalf and in the name of Mortgagor and at Mortgagor's sole cost and
expense. Moreover, Mortgagee may take such independent action in connection
therewith as it may, in its sole discretion, deem proper without any liability
or duty to Mortgagor except to use ordinary care, Mortgagor hereby agreeing that
all sums advanced or all expenses incurred in such actions plus interest at a
rate per annum equal to the default rate of interest set forth in the Note,
will, on demand, be reimbursed to Mortgagee or any receiver appointed hereunder.
7.3 Defeasance. If the Secured Indebtedness shall be paid and
discharged in full, then, and in that case only, this Deed of Trust shall be
null and void and the interests of Mortgagor in the Mortgaged Property shall
become wholly clear of the Lien created hereby, and such Lien shall be released
in due course at the cost of Mortgagor. Mortgagee will, at Mortgagor's sole
expense, execute and deliver to Mortgagor all releases and other instruments
reasonably requested of the Lien created hereunder. Otherwise, this Deed of
Trust shall remain and continue in full force and effect.
7.4 Renewals, Amendments and Other Security. Renewals, refinancings and
extensions of the Secured Indebtedness may be given at any time and amendments
may be made to this Deed of Trust, the Credit Agreements and any other
agreements relating to any part of the Secured Indebtedness, and Mortgagee may
take or may hold other security for the Secured Indebtedness. Any amendment of
this Deed of Trust shall be by written instrument and need be executed only by
the party against whom enforcement of such amendment is asserted. Mortgagee may
resort first to such other security or any part thereof or first to the security
herein given or any part thereof, or from time to time to either or both, even
to the partial or complete abandonment of either security, and such action shall
not be a waiver of any rights conferred by this Deed of Trust, which shall
continue as a first Lien upon the Mortgaged Property not expressly released
until all Secured Indebtedness secured hereby is fully paid and discharged.
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7.5 Instrument and Assignment, etc. This Deed of Trust shall be deemed
to be and may be, enforced from time to time as an assignment, chattel mortgage,
contract, financing statement, real estate mortgage, pledge or security
agreement, and from time to time as anyone or more thereof; and to the extent
that any particular jurisdiction wherein a portion of the Mortgaged Property is
situated does not recognize or permit Mortgagor to grant, bargain, sell,
warrant, mortgage, assign, transfer or convey Mortgagor's rights, titles and
interests to Mortgagee in the manner herein adopted, then, with respect to the
Mortgaged Property located in such jurisdiction, Mortgagor does hereby grant,
bargain, sell, warrant, mortgage, assign, transfer and convey unto Mortgagee,
the Mortgaged Property to secure the Secured Indebtedness and the Obligations.
7.6 Limitation on Interest. Regardless of any provision contained in
this Deed of Trust or any of the Credit Agreements, Mortgagee shall never be
entitled to receive, collect, or apply, as interest on the Loans, any amount in
excess of the Maximum Lawful Rate, and in the event Mortgagee ever receives,
collects or applies as interest any such excess, such amount which would be
deemed excessive interest shall be deemed a partial prepayment of principal and
treated hereunder as such; and if the Loans are paid in full, any remaining
excess shall promptly be paid to Mortgagor. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Lawful Rate, Mortgagor shall, to the extent permitted under applicable law, (a)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (b) exclude voluntary prepayments and the effect thereof, and (c)
amortize, prorate, allocate and spread, in equal parts, the total amount of the
interest throughout the entire contemplated term of the Note, so that the
interest rate is the Maximum Lawful Rate throughout the entire term of the Note;
provided, however, that if the unpaid principal balance thereof is paid and
performed in full prior to the end of the full contemplated term thereof, and if
the interest received for the actual period of existence thereof exceeds the
Maximum Lawful Rate, Mortgagee shall refund to Mortgagor the amount of such
excess and, in such event, Mortgagee shall not be subject to any penalties
provided by any laws for contracting for, charging, taking, reserving or
receiving interest in excess of the Maximum Lawful Rate.
7.7 Unenforceable or Inapplicable Provisions. If any provision of this
Deed of Trust or in any of the Credit Agreements is invalid or unenforceable in
any jurisdiction, the other provisions hereof or of any of the Credit Agreements
shall remain in full force and effect in such jurisdiction, and the remaining
provisions hereof shall be liberally construed in favor of Mortgagee in order to
effectuate the provisions hereof, and the invalidity of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of any such
provision in any other jurisdiction. Any reference herein contained to statutes
or laws of a state in which no part of the Mortgaged Property is situated shall
be deemed inapplicable to, and not used in, the interpretation hereof.
7.8 Rights Cumulative. Each and every right, power and remedy herein
given to Mortgagee shall be cumulative and not exclusive; and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time and so often and in such order as may be
deemed expedient by Mortgagee and the exercise, or the beginning of the
exercise, of any such right, power or remedy shall not be deemed a waiver of the
right to exercise, at the same time and thereafter, any other right, power or
remedy. No delay or omission by Mortgagee in the exercise of any right, power or
remedy shall impair any such right, power or remedy or operate as a waiver
thereof or of any other right, power or remedy then or thereafter existing.
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7.9 Waiver by Mortgagee. Any and all covenants in this Deed of Trust
may, from time to time, by instrument in writing signed by Mortgagee be waived
to such extent and in such manner as Mortgagee may desire, but no such waiver
shall ever affect or impair Mortgagee's rights and remedies or Liens hereunder,
except to the extent specifically stated in such written instrument.
7.10 Successors and Assigns. This Deed of Trust is binding upon
Mortgagor, and Mortgagor's heirs, devisees, successors, personal and legal
representatives and assigns, and shall inure to the benefit of Mortgagee and
Trustee, and their successors, legal representatives and assigns, and the
provisions hereof shall likewise be covenants running with the Lands.
7.11 Article and Section Headings. The article and section headings in
this Deed of Trust are inserted for convenience and shall not be considered a
part of this Deed of Trust or used in its interpretation.
7.12 Counterparts. This Deed of Trust may be executed in any number of
counterparts, each of which shall for all purposes be deemed to be an original,
and all of which are identical except that, to facilitate recordation in any
particular county or parish, counterpart portions of Exhibit A which describe
properties situated in counties or parishes other than the county or parish in
which such counterpart is to be recorded may be omitted.
7.13 Special Filing as Financing Statements. This Deed of Trust shall
likewise be a security agreement and a financing statement by virtue of
Mortgagor, as debtor, granting to Mortgagee, its successors, legal
representatives and assigns, as secured party, a security interest in all
personal property, as-extracted collateral, fixtures, accounts, contract rights,
general intangibles, inventory, goods, chattel paper, instruments, documents and
money described or referred to in granting clauses (a) through (j) of Article II
hereof and all proceeds and products from the sale, lease or other disposition
of the Mortgaged Property or any part thereof. The addresses shown in Section
7.14 hereof are the addresses of Mortgagor and Mortgagee and information
concerning the security interest may be obtained from Mortgagee at its address.
Without in any manner limiting the generality of any of the foregoing provisions
hereof: (a) some portion of the goods described or to which reference is made
herein are or are to become fixtures on the Lands described or to which
reference is made herein; (b) the minerals and the like (including oil and gas)
included in the Mortgaged Property and the accounts resulting from the sale
thereof will be financed at the wellhead(s) or minehead(s) of the well(s) or
mine(s) located on the Lands described or to which reference is made herein; and
(c) this Deed of Trust is to be filed of record, among other places, in the real
estate records of each county or parish in which the Lands, or any part thereof,
are situated, as a financing statement, but the failure to do so will not
otherwise affect the validity or enforceability of this Deed of Trust. Mortgagor
authorizes Mortgagee to file such amendments to this Deed of Trust, financing
statements and amendments thereto, and continuation statements, as Mortgagee
deems reasonable or necessary to perfect and maintain the perfection of the
Liens granted herein, including such Liens with respect to any additions to the
Mortgaged Property as provided in Article V.
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7.14 Notices. Whenever this Deed of Trust requires or permits any
consent, approval, notice, request or demand from one party to another, such
consent, approval, notice or demand shall, unless otherwise required under
applicable law, be given in accordance with the provisions of the Credit
Agreements, addressed to the party to be notified at the address stated below
(or such other address as may have been designated in accordance with the
provisions of the Credit Agreements):
MORTGAGOR-DEBTOR MORTGAGEE-SECURED PARTY
Gotland Oil, Inc. Laurus Master Fund, Ltd.
0000 Xxxx Xxxx X Street c/o M&C Corporate Services Limited
Xxxx Xxxxx, Xxxxxxxxxx 00000-0000 XX Xxx 000 G.T.
Attention: ________________, President Xxxxxx Xxxxx, Xxxxx Xxxxxx Xxxxxx, Xxxxxx Xxxx
Facsimile: 000-000-0000 Grand Cayman, Cayman Islands
Facsimile: 000-000-0000
WITH A COPY TO: WITH COPIES TO:
Xxxxx & Xxxxxx, LLP Xxxx X. Xxxxxx, Esq.
000 Xxxxx Xxxxxxxxx, 00xx Xxxxx 000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, Esq. Facsimile: 000-000-0000
Facsimile: 000-000-0000
Loeb & Loeb, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile 000-000-0000
7.15 GOVERNING LAW. THIS DEED OF TRUST SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA AND THE LAWS OF THE
UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE LAWS OF ANY STATE IN
WHICH THE MORTGAGED PROPERTY IS LOCATED NECESSARILY GOVERNS THE VALIDITY,
PERFECTION, PRIORITY AND ENFORCEABILITY OF, AND THE EXERCISE OF ANY REMEDIES
WITH RESPECT TO, ANY LIEN INTENDED TO BE CREATED HEREBY ON THE MORTGAGED
PROPERTY LOCATED IN SUCH STATE.
7.16 Future Advances. This Deed of Trust covers not only the proceeds
of the Loan, but all advances hereafter made by any Mortgagee to or for the
benefit of Mortgagor (the "Future Advances"), including, without limitation, any
amounts advanced by Mortgagee in satisfying, on Mortgagor's behalf, any of
Mortgagor's Obligations, and any advances made in accordance herewith by
Mortgagee to protect its security, and any other advances by Mortgagee. The
maximum amount secured hereby may be advanced and repaid, and again advanced and
repaid from time to time, in Mortgagee' sole and absolute discretion, and this
Deed of Trust shall become enforceable upon recording and shall have priority
over all other parties whose rights arose after the recording hereof, with
respect to all funds advanced by Mortgagee to Mortgagor, regardless of whether
such funds were advanced before or after the arising of such other party's
rights.
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7.17 Recording. Executed original counterparts of this Deed of Trust
are to be filed for record in the records of the jurisdictions wherein the
Mortgaged Property is situated, and shall have annexed thereto as Exhibit A,
only the portions or divisions containing specific descriptions of the Mortgaged
Property relating to the Lands located in such jurisdictions. Whenever a
recorded counterpart of this Deed of Trust contains specific descriptions which
are less than all of the descriptions contained in any full counterpart lodged
with Mortgagee, the omitted descriptions are hereby included by reference in
such recorded counterpart as if each recorded counterpart conformed to any full
counterpart lodged with Mortgagee.
7.18 No Paraphed Notes. Mortgagor acknowledges that no promissory note
or other instrument has been presented to the undersigned notary public(s) to be
paraphed for identification herewith.
ARTICLE VIII
ASSIGNMENT OF PRODUCTION
8.1 Assignment. For the purpose of further securing the Secured
Indebtedness and the performance of Mortgagor's covenants hereunder, Mortgagor
does hereby TRANSFER, ASSIGN, AND CONVEY unto Mortgagee any and all of the
interests of Mortgagor in and to the Hydrocarbons that may be produced from, or
attributable to, the Mortgaged Property on and after the Effective Date,
together with the proceeds of the sale thereof and attributable thereto. This
assignment is made upon the following terms and conditions: (a) pipeline
companies and others purchasing the oil, gas, minerals and other substances
listed above produced and to be produced from said property are hereby
authorized and directed to pay directly to Mortgagee the interests of Mortgagor
in and to the proceeds of the sale of the oil, gas, minerals and other
substances listed above produced, to be produced and attributable to said
property, and to continue such payments until they have been furnished with a
release hereof executed in writing by Mortgagee, and the receipt of Mortgagee
for monies so paid to it shall be a full and complete release, discharge and
acquittance to any such pipeline company or other purchaser, to the extent of
all amounts so paid, (b) Mortgagee is hereby authorized to receive and collect
the proceeds of the sale of the oil, gas, minerals and other substances listed
above assigned to it hereunder, and to apply the funds so received first toward
the payment of the expenses, if any, incurred in the collection thereof, then in
such order as Mortgagee shall determine toward the payment of the Secured
Indebtedness, any balance remaining after the full and final payment of the
Secured Indebtedness to be held subject to the order of Mortgagor, (c) Mortgagee
shall have the right, at its sole option, at any time, and from time to time, to
release to, or on the order of, Mortgagor all or any portion of the funds
assigned to Mortgagee hereunder, and no such releases shall affect or impair the
Lien of this Deed of Trust or the validity and effect of the assignment
contained in this Article VIII, (d) Mortgagee 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, (e) Mortgagor covenants to cause all pipeline companies or other
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purchasers of the oil, gas, minerals and other substances listed above produced
from and attributable to said property, to pay promptly to Mortgagee, at the
office of Mortgagee at the address of Mortgagee stated above or such other
address as Mortgagee shall designate in writing, the interests of Mortgagor in
and to the proceeds of the sale thereof, and (f) upon the full and final payment
of the Secured Indebtedness, Mortgagee, at the request of Mortgagor, and at
Mortgagor's sole cost and expense, shall execute and deliver to Mortgagor a
reassignment hereof, without recourse, representations or warranties.
8.2 Power of Attorney. In consideration of the Loans evidenced by the
Note, Mortgagor hereby designates and appoints Mortgagee as Mortgagor's true and
lawful agent and attorney-in-fact (with full power of substitution, either
generally or for such limited periods or purposes as Mortgagee may, from time to
time, prescribe), with full power and authority, for and on behalf and in the
name of Mortgagor, upon the occurrence of an Event of Default that is
continuing, to execute, acknowledge and deliver all such division orders,
transfer orders, certificates and any and all other documents of every nature as
may, from time to time, be necessary or proper to effectuate the intent and
purpose of the assignment contained in Section 8.1 hereof. Mortgagor shall be
bound thereby as fully and effectively as if Mortgagor had personally executed,
acknowledged and delivered any such division order, transfer order, certificate
or other documents. The powers and authorities herein conferred on Mortgagee may
be exercised by any authorized officer or director of Mortgagee. The power of
attorney conferred by this Section 8.2 is granted for a valuable consideration
and hence is coupled with an interest and is irrevocable so long as the Secured.
Indebtedness, or any part thereof, shall remain unpaid. All Persons dealing with
Mortgagee, any officer or director thereof above designated or any substitute
thereof, shall be fully protected in treating the powers and authorizations
conferred by this Section 8.2 as continuing in full force and effect until
advised by Mortgagee that all of the Secured Indebtedness is fully and finally
paid.
[Signature Page to Follow]
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IN WITNESS WHEREOF, Mortgagor, acting by and through its duly
authorized officer has executed this Deed of Trust on the date of its
acknowledgment.
GOTLAND OIL, INC.
By: /s/ Xxxx Xxxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxxx
Title: CEO
The address of Gotland Oil, Inc. is:
0000 Xxxx Xxxx X Xxxxxx
Xxxx Xxxxx, XX 00000-0000
This Deed of Trust was prepared by, and
recorded counterparts should be returned
to:
Xxxxx Xxxxxxxx, Esq.
Loeb & Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
