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EXHIBIT 10.12.2
ATTENTION ____________________ COUNTY CLERK:
Recording requested by and when recorded mail to:
BANK ONE, TEXAS, N.A.
c/o Xxxxxx X. Rule, Jr., Esq.
Xxxxx Xxxxxxx Rain Xxxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT
(Line of Credit Mortgage)
THE STATE OF NEW MEXICO )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF LEA )
WHEREAS, Xxxxxxx Oil & Gas, L.P., a Delaware limited partnership, the
address of which is 0000 Xxxxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx
75225(hereinafter referred to as "Grantor"), does hereby execute and deliver
this Mortgage, Security Agreement, Assignment of Production and Financing
Statement (hereinafter referred to as the "Mortgage"), for the use and benefit
of BANK ONE, TEXAS, N. A., a national banking association (hereinafter referred
to as "Bank"), with its address at P. 0. Xxx 000000, Xxxxxx, Xxxxx 00000-0000;
covering oil and gas properties and interests, and related personal properties,
therein described located on land situated in the State of New Mexico;
NOW, THEREFORE, for and in consideration of the sum of $10.00 and
other good and valuable consideration, in hand paid by Bank to Grantor, the
receipt and sufficiency of which is hereby acknowledged and confessed, Grantor
does hereby GRANT, MORTGAGE, BARGAIN, SELL, TRANSFER, ASSIGN and CONVEY unto
Bank, all right, title and interest now or at any time hereafter vested in
Grantor in and to the following described properties and interests, to wit:
(a) All oil, gas and mineral interests and other
interests and property of every kind and character described and
referred to in Exhibit "A" attached hereto and made a part hereof by
reference for all purposes as if copied herein in full;
(b) Any and all operating agreements (including so-called
"working interest units" created under operating agreements or
otherwise), communitization agreements, unitization agreements,
pooling agreements, declarations of pooled units, all units created
under orders, regulations, rules or other official acts of any
federal, state or other governmental body or regulatory agencies
providing for pooling and unitization, spacing orders or other well
permits and other instruments, whether now or hereafter made, and the
units created thereby, which relate to any of the properties and
interests described or referred to in Exhibit "A", whether or not such
agreements, orders or instruments are described in Exhibit "A";
(c) All real property described or referred to in Exhibit
"A" and the real property described or referred to in Exhibit "A"
(hereinafter collectively referred to as the "Lands"), even though
Grantor's rights, titles and interests in such Lands be incorrectly or
insufficiently described or referred to therein, or a description of a
part or all of such rights, titles and interests be omitted from
Exhibit "A";
(d) Any and all oil, gas and mineral leases described or
referred to in Exhibit "A" (herein collectively referred to as the
"Leases") and any and all other oil, gas and mineral leases insofar as
they cover all or any part of the Lands together with all right, title
and interest now or at any time hereafter vested in 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
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Exhibit "A", together with any and all renewals, extensions,
substitutions, ratifications, supplements, amendments and replacements
of and for any of the Leases or other interests described or referred
to herein insofar as the same cover the Lands;
(e) All personal property, fixtures, hereditaments,
improvements, easements, permits, licenses, servitudes, surface leases
and rights-of-way situated upon or used or useful or held for use in
connection with the exploration, development or operation of the
foregoing properties and interests, or the production, treating,
storing or transportation of oil, gas and other hydrocarbons
therefrom, including, without limitation, liquid extraction plants,
plant compressors, field gathering systems, valves, fittings, engines,
boilers, meters, cables, wires, towers tubing and rods, casing,
connections, tanks and tank batteries, separators, lines, pumps,
pipes, pipelines, structures, buildings, sheds, oil 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;
(f) All oil, casinghead gas and gas sales, purchase,
exchange and processing contracts and agreements, and all other
contracts, agreements and instruments, whether now in existence or
hereafter made, which relate to (but only to the extent the same
relate to) any of the properties and interests described or referred
to in Exhibit "A", whether or not such contracts and agreements are
described or referred to in Exhibit "A", together with any and all
renewals, extensions, substitutions, ratifications, supplements,
amendments and replacements of or for any such contracts, agreements
and instruments to the extent such relate to such properties and
interests;
(g) All oil, gas and other hydrocarbons, including,
without limitation, casinghead gas, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons, and all products separated,
settled and dehydrated therefrom, and all products refined therefrom,
including, without limitation, kerosene, liquified petroleum gas,
refined lubricating oils, diesel fuel, drip gasoline and natural
gasoline, and all other minerals, and the proceeds thereof, produced
and to be produced from and which accrue or are attributable to any of
the above described or referenced properties and interests, by virtue
of the above described or referenced contracts, agreements and
instruments; and
(h) Any and all proceeds, rents, issues, profits,
products, revenues and other income arising from or by virtue of the
sale, lease or other disposition or, or from any insurance payable
with respect to damage, loss or destruction of, the collateral
described in Subparagraphs (a) through (g) above.
It is expressly understood and agreed by the parties hereto that any
and all decimal fractional interests and/or well names set out in Exhibit "A"
pertaining to any of the properties and interests described or referred to in
Exhibit "A" have been appended for informational purposes only and shall not
limit in any way whatsoever the interest of Grantor in such properties and
interests, or interests derived thereunder, which are subject to this Mortgage.
It is also expressly understood and agreed by the parties hereto that any and
all references to township and range included in the descriptions set out in
Exhibit "A" attached hereto are based upon reference to the New Mexico Prime
Meridian.
Grantor's interests in the properties and interests described in
Subparagraphs (a) through (h) above are all hereinafter sometimes collectively
referred to as the "Mortgaged Properties
TO HAVE AND TO HOLD the Mortgaged Properties, together with all the
rights, hereditaments and appurtenances in anywise appertaining or belonging
thereto, unto Bank and its successors or substitutes in this trust, and its and
their assigns, in trust and for the uses and purposes hereinafter set forth,
forever.
The term "Grantor's Successors", as used herein, shall mean Grantor's
heirs, executors, legal representatives, successors and assigns. Grantor
hereby binds Grantor and Grantor's Successors to warrant and forever defend,
all and singular, the Mortgaged Properties, subject to the Permitted Liens (as
defined in the Loan Agreement), unto Bank and its successors or substitutes in
this trust, and its and their assigns, forever, against every person whomsoever
lawfully claiming or to claim the same or any part thereof.
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As used herein, the term "Loan Agreement" shall mean that certain Loan
Agreement of even date herewith between Grantor and Bank.
ARTICLE 1
REPRESENTATIONS AND WARRANTIES
1.1 Grantor hereby expressly represents and warrants to Bank that
(a) the Leases are in full force and effect; (b) Grantor's interests in the
Leases are valid and subsisting on the Lands and entitle Grantor to receive
that proportion (indicated as the "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 defined in the Loan
Agreement) and except as expressly provided in Exhibit "A" and the right, power
and authority to execute and deliver this Mortgage and convey the Mortgaged
Properties; (d) the Mortgaged Properties are free and clear of all claims,
liens, encumbrances, security interests, contracts, agreements, options,
preferential purchase rights or other restrictions or limitations of any nature
or kind, except 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 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, or 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 Mortgage is given to secure payment and performance of
the following indebtedness, obligations and liabilities, to wit:
(a) That certain Revolving Note, dated April 1, 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 containing usual and
customary provisions for collection and attorneys' fees (hereinafter
referred to as the "Note"), and any and all renewals, increases,
refundings, substitutions, replacements, consolidations and/or
extensions of or for the Note, or any part thereof;
(b) All indebtedness, obligations and liabilities of
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;
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(c) All indebtedness, obligations and liabilities arising
pursuant to the provisions of this Mortgage, and any and all other
mortgages, indentures, security agreements, pledge agreements,
collateral mortgages, collateral chattel mortgages, assignments, or
other conveyances, whether now existing or hereafter arising, and all
supplements, amendments, restatements, modifications and replacements
thereof or therefor, executed or to be executed by Grantor or any
guarantor of the Secured Indebtedness to secure the Secured
Indebtedness, or for the use and benefit of Bank, together with any
and all renewals, increases, refundings, substitutions, replacements,
consolidations and/or extensions of or for any such indebtedness,
obligations and liabilities, or any part thereof (hereinafter
collectively referred to as the "Security Instruments");
(d) All loans and advances which Bank may hereafter make
to 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.
2.2 The Secured Indebtedness shall not exceed $25,000,000.00,
which shall be the maximum amount secured at any one time hereby.
ARTICLE 3
COVENANTS
3.1 The covenants, agreements and undertakings of Grantor
contained in this Mortgage, whether in this Article 3 or elsewhere, are made by
Grantor for Grantor and Grantor'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 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;
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(c) To promptly notify the holder in writing if the
validity or priority of this Mortgage or any of the rights, titles,
liens or security interests created or evidenced hereby with respect
to the Mortgaged Properties, or any part thereof, shall be questioned
attacked or endangered, directly or indirectly, and do or cause to be
done all things necessary and/or proper to protect, warrant and defend
title to the Mortgaged Properties unto the holder and its successors
and assigns at Grantor's sole expense against all persons whomsoever
claiming an interest therein or a lien or security interest thereon,
but the holder shall have the right, at any time, to intervene in any
suit affecting such title and to employ independent counsel in
connection with any such suit to which it may be a party by
intervention or otherwise; and upon demand Grantor agrees to pay the
holder all reasonable expenses paid or incurred by it in respect of
any such suit affecting title to any such property or affecting the
holder's rights, titles, liens or security interests hereunder,
including, without limitation, reasonable fees to the holder's
attorneys, and Grantor will indemnify and hold the holder harmless
from and against any and all costs and expenses, including, without
limitation, any and all costs, loss, damage or liability which the
holder may suffer or incur by reason of the failure of the title to
all or any part of the Mortgaged Properties, or by reason of the
failure or inability of Grantor, for any reason, to convey the rights,
titles, liens and security interests which this Mortgage purports to
mortgage, create or assign, and all amounts at any time so payable by
Grantor shall be secured by the lien and security interest hereof and
by the assignment of production herein contained;
(d) At any time and from time to time, upon request by
the holder and at Grantor's sole expense, forthwith to execute and
deliver or cause to be executed and delivered to the holder and to
record, file or register, any and all additional instruments and
further assurances as may be necessary or proper, in the holder's
opinion, to effect the intent of these presents;
(e) To promptly furnish the holder with the financial
information, statements, and reports required to be furnished under
the Loan Agreement;
(f) To pay all Secured Indebtedness in accordance with
the terms thereof or hereof, or when the maturity thereof be
accelerated in accordance with the terms thereof or hereof;
(g) To promptly pay and discharge or cause to promptly
paid and discharged all rentals, delay rentals, royalties and
indebtedness accruing under, and to perform or cause to be performed
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
Mortgage 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, other lease or well thereon, when in any of such events, in the
opinion of Grantor, exercised in good faith, it is not in the best
interest of Grantor to perpetuate same;
(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 Mortgage 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 Mortgage or
in any other Security Instrument or in the execution or
acknowledgement hereof or thereof and in connection therewith,
promptly execute, acknowledge and deliver to the holder any and all
such corrective or curative instruments as the holder may in its sole
and absolute discretion deem necessary or appropriate, and pay all
costs and expenses, including, without limitation, the reasonable
attorneys' fees of the holder, in connection with any of the
foregoing; and
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(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 Mortgage may from time
to time, by instrument in writing signed by the holder and delivered to
Grantor, be waived to such extent and in such manner as the holder may consider
appropriate; but no such waiver shall at any time affect or impair the holder's
rights or liens hereunder, except to the extent so specifically stated in such
written instrument.
3.4 As to any part of the Mortgaged Properties which may be
comprised of interests in the Leases which are other than working interests or
which may be operated by a party or parties other than Grantor, Grantor's
covenants as expressed in this Article 3 are modified to require that Grantor
use 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) The occurrence of any Event of Default, as that term
is defined in the Loan Agreement;
(b) The failure or refusal of Grantor to pay all or any
part of the Note as and when due in accordance with its terms;
(c) The failure or refusal of Grantor punctually and
properly to observe, keep and perform any covenant, agreement or
undertaking contained in this Mortgage or any of the Security
Instruments;
(d) The title of Grantor or Bank to the Mortgaged
Properties, or a substantial part thereof, becomes in any manner
affected or impaired or becomes the subject matter of litigation
which, in the good faith opinion of Bank, would likely result in
substantial impairment or loss of the lien and security interest
intended to be created by this Mortgage; or
(e) Any representation or warranty set forth in this
Mortgage or in any of the Security Instruments shall be determined to
be false or misleading in any respect.
then upon the occurrence of any such Event of Default, Mortgagor shall be in
default hereunder and the Bank may declare all of the Secured Indebtedness to
be forthwith due and payable whereupon the same shall forthwith become due
without presentment, demand, protest, notice of intent to accelerate and notice
of acceleration or other notice of any kind, all of which mortgagor hereby
expressly waives. The Bank may thereupon avail itself of any of its legal and
equitable rights and remedies, either by the institution of a suit or suits, in
equity or at law, or in bankruptcy, in any court or courts of competent
jurisdiction, whether for the specific performance of any covenant, undertaking
or agreement contained herein or in the aid of any execution of any powers
granted herein, or for any foreclosure hereof or hereunder, or for any sale of
the Mortgaged Properties, or any part thereof, so far as may be authorized by
law, or for the enforcement of such other or additional appropriate legal or
equitable remedies as the Bank may deem most effectual to protect and enforce
the aforesaid rights.
4.2 If Grantor should fail, refuse or be unable to pay any sum of
money herein covenanted to be paid by Grantor, or fail, refuse or be unable to
observe, keep or perform any additional covenant, agreement or undertaking
whatsoever contained in this Mortgage, the holder may, but shall not be
obligated to, pay said sums of money, or perform or attempt to perform any such
covenant, agreement or undertaking and any such payment so made or expense
reasonably incurred in the performance or attempted performance of any such
covenant, agreement or undertaking shall be, and is hereby declared by Grantor
to be, a part of the Secured Indebtedness, and Grantor promises, upon demand,
to pay to the holder at the office of Bank set forth hereinabove all sums so
advanced or paid by the holder, with interest at the 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 of
any such default or of the holder's right to declare the Secured Indebtedness
at once due
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and payable. In addition to the lien and security interest hereof, the holder
shall be subrogated to all rights and liens securing the payment of any debt,
claim, tax or assessment for the payment of which it shall have made such
advance.
4.3 Upon the occurrence of an Event of Default, and if each Event
of Default is continuing, (i) Grantor shall be in default hereunder and the
entire principal amount of and all interest then accrued on the Note, and any
other obligations, indebtedness and liabilities hereunder, shall become
immediately due and payable, all without notice and without presentment,
demand, protest, notice of protest or dishonor, notice of intent to accelerate
and notice of acceleration, or any other notice of default of any kind, all of
which are hereby expressly waived by Grantor, and (ii) in any other such event,
Grantor shall be in default hereunder, and Bank may, at its option, declare the
principal of and all interest then accrued on the Note, and any other
obligations, indebtedness and liabilities hereunder to be forthwith due and
payable whereupon the same shall forthwith become due without presentment,
demand, protest, notice of intent to accelerate and notice of acceleration or
other notice of any kind, all of which Grantor hereby expressly waives,
anything contained herein or in the Note to the contrary notwithstanding.
Nothing contained in this Article 4 shall be construed to limit or amend in any
way the Events of Default enumerated in any other document executed in
connection with the transaction contemplated herein or hereby. Bank may
thereupon avail itself of any of its legal and equitable rights and remedies,
either by the institution of a suit or suits, in equity or at law, or in
bankruptcy, in any court or courts of competent jurisdiction, whether for the
specific performance of any covenant, undertaking or agreement contained herein
or in the aid of any execution of any powers granted herein, or for any
foreclosure hereof or hereunder, or for any sale of the Mortgaged Properties,
or any part thereof, so far as may be authorized by law, or for the enforcement
of such other or additional appropriate legal or equitable remedies as Bank may
deem most effectual to protect and enforce the aforesaid rights.
4.4 Upon the occurrence of an Event of Default, and if such Event
of Default is continuing, the holder may, at its option, and is hereby
authorized, prior or subsequent to the exercise of any remedies under Section
4.4 hereof, to enter upon the Mortgaged Properties, or any part thereof, and to
take possession of the Mortgaged Properties in the possession of Grantor or
Grantor's Successors, and may exclude Grantor or Grantor's Successors, and all
persons claiming under Grantor, wholly or partly therefrom; and, holding the
same, the holder may exercise without interference from Grantor or Grantor's
Successors, any and all rights which Grantor has with respect to the
management, possession, operation, protection or preservation of the Mortgaged
Properties, and the holder may use, administer, manage, operate and control the
Mortgaged Properties and conduct the business thereof to the same extent as
Grantor or Grantor's Successors might at the time do and may exercise all
rights and powers of Grantor, in the name, place and stead of Grantor, or
otherwise as the holder shall deem best. All reasonable costs, expenses and
liabilities of every character incurred by the holder shall be a demand
obligation owed by Grantor to holder and shall bear interest at the rate
specified in Section 4.2 hereof and shall constitute a portion of the Secured
Indebtedness and shall be secured by this Mortgage and all of the Security
Instruments. If necessary to obtain the possession provided for hereinabove,
the holder, as the case may be, may invoke any one or more actions for forcible
entry and detainer, trespass to try title and restitution. In connection with
any action taken by the holder pursuant to this Section 4.4, the holder shall
not be liable for any loss sustained by Grantor resulting from any act or
omission of the holder in managing the Mortgaged Properties, unless such loss
is caused by the willful misconduct or bad faith of the holder. Grantor hereby
agrees to indemnify and hold harmless the holder from and against any and all
liability, loss or damage which may be incurred by reason of the exercise of
rights or remedies hereunder. Should the holder incur any such liability by
reason of this Mortgage or the exercise of rights or remedies hereunder or in
defense of any such claims or demands, the amount thereof, including without
limitation, costs, expenses and reasonable attorneys' fees, shall be a demand
obligation owing by Grantor to the holder and shall bear interest each day from
the date incurred until paid at the rate specified in Section 4.2 hereof and
shall be a part of the Secured Indebtedness and shall be secured by this
Mortgage and all of the Security Instruments. Grantor hereby consents to,
ratifies and confirms any and all actions of the holder with respect to the
Mortgaged Properties taken under this Section 4.4.
4.5 The Bank may institute suit to foreclose this Mortgage in any
court having jurisdiction. In any such suit the Bank may, at its option, apply
for and be entitled to, as a matter or right and without proof of insolvency,
fraud, insecurity, or mismanagement on the part of the Grantor, the appointment
of a receiver to take possession of, operate, and preserve the Mortgaged
Properties. Grantor agrees that such receiver may be appointed to take
possession of, hold, maintain, operate and preserve said property, including
the production and sale of all oil, gas and other minerals therefrom, and apply
the proceeds of the sale thereof to the payment of the Secured Indebtedness due
the Bank until such Secured Indebtedness and costs are fully paid; and said
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receiver may be authorized to sell and dispose of said property under orders of
the court appointing him such receiver.
4.6 Bank is authorized to receive the proceeds of said sale or
sales made pursuant to Section 4.3 or Section 4.5 hereof and apply the same as
follows: First, to the payment of all necessary costs and expenses incident to
the execution of said trust, including but not limited to all court costs and
charges of every character in the event foreclosure is by suit; Second, to the
payment of the Secured Indebtedness in such order as the holder shall elect;
and Third, the balance, if any, remaining after the full and final payment of
the Secured Indebtedness, to Grantor or Grantor's Successors.
4.7 It is agreed that in any deed or deeds given pursuant to the
exercise of a power of sale, any and all statements of fact or other recitals
therein made as to the identity of the holder or as to the occurrence or
existence of any default, or as to the acceleration of the maturity of the
Secured Indebtedness, or as to the request to sell, notice of sale, time,
place, terms and manner of sale, and receipt, distribution and application of
the money realized therefrom, and, without being limited by the foregoing, as
to any act or thing having been duly done by the holder, or any of them if
there be more than one, shall be taken by all courts of law and equity as prima
facie evidence that the said statements of recitals state facts and are without
further question to be so accepted, and Grantor does hereby ratify and confirm
any and all acts that Bank may lawfully do in the premises by virtue hereof.
4.8 In case the lien and security interest hereof shall be
foreclosed by judicial action, the purchaser at any sale shall receive, as an
incident to its ownership, immediate possession of the property purchased, and
Grantor agrees for Grantor and for all persons claiming under Grantor, that if
Grantor or any such person shall hold possession of said property, or any part
thereof, subsequent to foreclosure, Grantor or the parties so holding
possession shall be considered as tenants at sufferance of the purchaser at
foreclosure sale, and anyone occupying the property after demand for possession
thereof shall be guilty of forcible detainer and shall be subject to eviction
and removal, forcible or otherwise, with or without process of law, and all
damages by reason thereof are hereby expressly waived.
4.9 Upon the occurrence of an Event of Default, and if such Event
of Default is continuing, the holder may, at its election, proceed by suit or
suits, at law or in equity, to enforce the payment of the Secured Indebtedness
in accordance with the terms hereof and of the notes or other instruments
evidencing it, to foreclose the lien and security interest of this Mortgage as
against all or any portion of the Mortgaged Properties, and to have said
properties sold under the judgment or decree of a court of competent
jurisdiction Pursuant to Section 39-5-19 N.M. S.A. 1978 Comp., Grantor agrees
that the redemption period shall be limited to one (1) month. To the full
extent Grantor may do so, Grantor agrees that Grantor will not at any time
insist upon, plead, claim or take the benefit or advantage of any law now or
hereafter in force providing for any appraisement, valuation, stay, extension
or redemption, and Grantor, for Grantor and Grantor's Successors, and for any
and all persons ever claiming any interest in the Mortgaged Properties, or any
part thereof, to the extent permitted by law, hereby waives and releases all
rights of redemption, valuation, appraisement, stay of execution, notice of
intention to mature or declare due the whole of the Secured Indebtedness, and
all rights to a marshalling of the assets of Grantor, including the Mortgaged
Properties, or to a sale in inverse order of alienation in the event of
foreclosure of the liens and security interests hereby created. On or at any
time after the filing of judicial proceedings to protect or enforce the rights
of the holder, the holder, as a matter of right and without regard to the
sufficiency of the security, and without any showing of insolvency, fraud or
mismanagement on the part of Grantor, shall be entitled to the appointment of a
receiver or receivers of the Mortgaged Properties, and of the income, rents,
issues, products, profits and proceeds thereof.
4.10 It is agreed that Bank or any other holder may be the
purchaser of the Mortgaged Properties, or of any part thereof, at any sale
thereof, whether such sale be under the power of sale or upon any other
foreclosure of the lien and security interest hereof or otherwise, and Bank or
other holder so purchasing shall, upon any such purchase, acquire good title to
the Mortgaged Properties so purchased, free of the lien and security interest
of these presents.
4.11 To the full extent permitted by applicable law, Grantor 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
Grantor'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
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election to accelerate the Secured Indebtedness and all rights to a marshalling
of assets of Grantor, including the Mortgaged Properties, or to a sale in the
inverse order of alienation in the event of foreclosure of the liens and/or
security interests hereby created.
4.12 The rights and remedies hereinabove expressly conferred are
cumulative of all other rights and remedies herein, or by law or in equity
provided, and shall not be deemed to deprive the holder of any such other legal
or equitable rights or remedies, by judicial proceedings or otherwise,
appropriate to enforce the conditions, covenants and terms of this Mortgage and
of the notes or other instruments evidencing the Secured Indebtedness, and the
employment of any remedy hereunder, or otherwise, shall not prevent the
concurrent or subsequent employment of any other appropriate remedy or
remedies.
4.13 The procedures for foreclosure and all other provisions of
this Article 4 relating to remedies upon default and related matters shall be
modified to the extent necessary to comply with the laws of the state where the
Mortgaged Properties are located. It is the intent of Grantor that this
Mortgage shall be legal and enforceable in any state where the Mortgaged
Properties, or any part thereof, are located and that the provisions hereof
shall be modified only to the extent necessary to comply with the laws of such
state, and that all other provisions contained herein shall be in no way
affected or impaired by the necessity to so modify some or all of the
provisions of this Article 4.
ARTICLE 5
ASSIGNMENT OF PRODUCTION
5.1 In order further to secure the payment of the Secured
Indebtedness, Grantor does hereby TRANSFER, ASSIGN and CONVEY unto and in favor
of the holder all of the interest of Grantor in the oil, gas, casinghead gas,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and other
minerals (herein collectively referred to as the "Hydrocarbons"), in and under,
or which may be produced from, the Mortgaged Properties, or allocated thereto
pursuant to pooling or unitization of the Leases or otherwise, together with
all accounts, contract rights, general intangibles, products and proceeds
arising from or derived from the sale, transfer or other disposition of such
Hydrocarbons on and after the date of the execution of this Mortgage.
5.2 The foregoing assignment is made upon, and subject to, the
following terms:
(a) The holder may give written or telegraphic notice to
all of the parties producing, purchasing, taking, possessing or
receiving any such Hydrocarbons, or having in their possession any
such Hydrocarbons belonging to Grantor or such proceeds for which they
or others are accountable to the holder by virtue of the provisions of
this Section 5.2, to hold and dispose of such Hydrocarbons for the
account of the holder and to make payment of such proceeds direct to
the holder at its principal office, and the holder shall thereafter
receive, collect and retain, subject to the provisions of Section 5.5,
as part of the Mortgaged Properties, all such Hydrocarbons, all for
the benefit and further security of the Secured Indebtedness.
(b) All parties producing, purchasing, taking,
possessing, processing or receiving any such Hydrocarbons, or having
in their possession any such Hydrocarbons or such proceeds for which
they or others are accountable to the holder by virtue of the
provisions of this Section 5.2, are authorized and directed by
Grantor, upon receipt of notice by the holder given pursuant to
Subsection 5. 2(a) above, to treat and regard the holder as the
assignee and transferee of Grantor and entitled in its place and stead
to receive such Hydrocarbons and proceeds; and such parties and each
of them shall be fully protected in so treating and regarding the
holder and shall be under an obligation to see to the application by
the holder of any such proceeds received by it. Until such notice is
received by such parties, payment of all proceeds attributable to such
Hydrocarbons shall be payable directly to Grantor. Without in any way
limiting the effectiveness of the authorization and direction in the
next preceding sentence, if Grantor shall hold such proceeds which
under this Section 5.2 are receivable by the holder 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 Grantor's interest in the
Hydrocarbons to be extracted from or attributable to the Mortgaged
Properties, and in and to the proceeds resulting from the sale thereof
at the well head.
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10
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 xxx 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 Grantor's own name upon any and all checks, drafts, money
orders and other instruments; and as if Grantor personally performed such other
and further acts and deeds in Grantor's own name which the holder deemed
necessary and appropriate 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 Grantor's Successors.
5.6 Should any person or entity now or hereafter purchasing or
taking any part of the Hydrocarbons fail to make payment promptly to the holder
for the purchase price of such Hydrocarbons, after notice pursuant to this
Article 5, the holder shall have the right, subject to then existing
contractual obligations, to make or to require Grantor to make, a change of
connection and the right to designate or approve the purchaser with whose
facilities a new connection shall be made, and the holder shall be without
liability or responsibility in connection therewith so long as ordinary care is
used in making such designation.
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5.7 The holder shall never be under any obligation to enforce the
collection of the funds assigned to it hereunder, nor shall it ever be liable
for failure to exercise diligence in the collection of such funds, but it shall
only be accountable for the sums that it shall actually receive.
ARTICLE 6
SECURITY AGREEMENT
6.1 With respect to all personal property and fixtures comprising
a part of the Mortgaged Properties, together with all proceeds and products
thereof (hereinafter collectively referred to as the "Collateral"), this
Mortgage shall likewise be a security agreement, and for a valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and for the purpose of further securing payment and performance of the Secured
Indebtedness, Grantor hereby grants to Bank a security interest in the
Collateral including, without limitation, all rights now owned and at any time
hereafter acquired by Grantor in all (a) oil, gas and other minerals produced
from or allocated to the Mortgaged Properties, (b) accounts, chattel paper and
general intangibles arising in connection with the sale or other disposition of
such production, or otherwise associated with the Mortgaged Properties, (c)
equipment, materials, other personal property, and fixtures at any time used on
or in connection with the Mortgaged Properties or in connection with such
production, and (d) geological, geophysical, engineering, accounting, title,
legal and other technical or business data concerning the Mortgaged Properties,
and the Hydrocarbons which are in the possession of Grantor or in which Grantor
can otherwise grant a security interest, and all books, files, records,
seismic, magnetic media and other forms of recording or obtaining access to
such data, together with all 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 the New Mexico Products Lien Act,
Sections 48-9-1 et seq. N.M.S.A. 1978 Comp., by virtue of the first sale of
Hydrocarbons produced from the Mortgaged Properties.
6.3 Grantor represents and warrants that, except for any financing
statement now in force filed by Bank, or as shown on Exhibit "A", no financing
statement covering the Collateral, or any part thereof, has been filed with any
filing officer, and no other security interest now in force has attached or
been perfected in the Collateral, or any part thereof.
6.4 This Mortgage shall be effective as a financing statement
filed as a fixture filing with respect to all of the Collateral which is or
will become fixtures related to the Lands and Leases and is to be filed for
record as a financing statement in the real estate records of each county where
any part of the Mortgaged Properties (including such fixtures) is situated.
Such of the Mortgaged Properties which constitute minerals or the like
(including oil and gas) or accounts subject to subsection (5) of Section
55-9-103 of the New Mexico Uniform Commercial Code are or will be financed at
the wellhead or minehead of the well or mine located on the Lands described in
Exhibit "A". This Mortgage shall also be effective as a financing statement
covering such minerals or the like (including oil and gas) and such accounts,
and, where so permitted or required, is to be filed for record as such a
financing statement in the real estate records for each county where a mortgage
on the Mortgaged Properties would be filed or recorded. The above goods are or
are to become fixtures on the Lands. The record owner of the real estate
interest covered by this Mortgage is Grantor.
ARTICLE 7
MISCELLANEOUS
7.1 Upon the full and final payment of the Secured Indebtedness,
this Mortgage shall be extinguished and be of no further force and effect; and
the Mortgaged Properties shall become wholly free and clear hereof and all of
the property as assigned hereby shall be automatically reassigned to Grantor
without any further act being required; and the holder, upon the request and at
the expense of Grantor, shall promptly deliver to Grantor such instruments
evidencing the Secured Indebtedness, marked "Paid", and execute and deliver to
Grantor and others a release of this Mortgage and such other instruments of
satisfaction as may be appropriate.
7.2 The rights, titles, interests, liens and powers hereunder are
cumulative of each other and of all other rights, titles, interests, liens and
powers which may now or hereafter exist to secure the payment of the Secured
Indebtedness to the holder, or any part thereof. The security herein and
hereby provided shall not affect or be affected by any other Security
Instrument or by any other or further security heretofore or hereafter taken
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for the Secured Indebtedness or any part thereof. Grantor, for Grantor and
Grantor'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: X.X. Xxx 000000, Xxxxxx, Xxxxx 00000-0000, 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 is
provided for herein or in any such promissory note, instrument, or any other
loan document, the provisions of this Section 7.4 shall govern, and Grantor
shall not be obligated to pay the amount of such interest to the extent that it
is in excess of the amount permitted by law. The intention of the parties
being to conform strictly to the usury laws now in force, all promissory notes,
instruments and other loan documents executed by Grantor evidencing the Secured
Indebtedness shall be held subject to reduction to the amount allowed under
said usury laws as now or hereafter construed by the courts having
jurisdiction.
7.5 Grantor hereby grants, assigns and conveys unto Bank all of
Grantor's rights to payments and liens and security interests in the Mortgaged
Properties provided for in the New Mexico Oil and Gas Proceeds Payment Act,
Sections 70-10-1 et seq. N.M.S.A. 1978 Comp.
7.6 These presents shall be binding upon the Grantor and Grantor's
Successors, and shall inure to the benefit of the holder, its successors and
assigns, and shall be covenants running with the Lands.
7.7 In the event that any one or more of the provisions contained
in this Mortgage shall be invalid, illegal or unenforceable in any respect
under any law, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. In case any term or provision hereof is inconsistent with any term or
provision of the Loan Agreement, the term or provision contained in the Loan
Agreement shall be controlling.
7.8 THIS MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW MEXICO.
7.9 This Mortgage has simultaneously been executed in a number of
identical counterparts, each of which, for all purposes, shall be deemed an
original, and all of which are identical except that, to facilitate
recordation, in any particular counterpart, portions of Exhibit "A" which
describe properties and interests situated in counties other than the county in
which such particular counterpart is to be recorded may have been omitted.
7.10 The use of any particular pronoun herein shall mean and be
construed to include the plural and singular number of such pronoun, whenever
and wherever appropriate and applicable, and shall mean and be construed to
include the masculine, feminine or neuter gender of such pronoun, whenever and
wherever appropriate and applicable.
7.11 In reaching any opinion, making any determination or
requirement, or issuing any request, Bank and each holder shall act in good
faith and in a reasonable manner.
7.12 The effective date of the assignment contained in Article 5 is
the date of execution of this Mortgage at 7:00 o'clock am.
EXECUTED as of the first day of April, 1996, in multiple counterparts.
MORTGAGOR-DEBTOR:
XXXXXXX OIL & GAS, L.P.
a Delaware limited partnership
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13
By: Xxxxxxx Exploration Company
Managing General Partner
By:_____________________________________
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
of Xxxxxxx Exploration Company
MORTGAGEE-SECURED PARTY:
BANK ONE, TEXAS, N A.,
a national banking association
By:_____________________________________
Name: Xxxxx X. Xxxxxxx
Title: Vice President
THE STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on April 1, 1996 by Xxxx X.
Xxxxxxx, Executive Vice President of Xxxxxxx Exploration Company, a Texas
corporation, Managing General Partner of Xxxxxxx Oil & Gas, L.P., a Delaware
limited partnership, on behalf of such limited partnership.
__________________________________
Notary Public, State of Texas
My Commission Expires:
________________________ __________________________________
(Printed or Typed Name of Notary)
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14
THE STATE OF TEXAS
COUNTY OF DALLAS
THIS INSTRUMENT was acknowledged before me on April 1, 1996, by Xxxxx
X. Xxxxxxx, Vice President of BANK ONE, TEXAS, N.A., a national banking
association, on behalf of said association.
__________________________________
Notary Public, State of Texas
My Commission Expires:
________________________ __________________________________
(Printed or Typed Name of Notary)
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