DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT
OF PRODUCTION, AND FINANCING STATEMENT OF OIL AND GAS PROPERTIES (Including After-Acquired Title)
State: County:
Grantor: (Name and Address)
Trustee: (Name and Address)
Beneficiary: (Name and Address)
Effective Date: Grantor, named above, to secure payment and performance of the Obligation, defined in
Article One below, and in consideration of the other valuable consideration paid to Grantor, the
receipt and adequacy of which are acknowledged, and in consideration of the debt and trust s set
out below, grants, bargains, sells, assigns, transfers, and conveys to Trustee, named above, and to
the Trustee's successor or successors or substitutes, with power of sale, the real and personal
properties, rights, title, interests and estates described or to which reference is made in
paragraphs I through VI below, inclusive, whether now owned or later acquired by Grantor
(collectively the "Mortgaged Property"):
I. Oil and Gas Leases and Other Properties. All of the oil and/or gas and mineral
leases, lands, interests and other properties (all leases being the "Leases," and all t he leases,
lands, interests and other properties being called the "Interests") which are described and/or to
which reference may be made on Exhibit "A."
II. Pooled Interests. All rights, title, interests and estates now owned or later
acquired by Grantor in and to (i) any and all properties now or later pooled or unitized wit h any
of the Interests, and (ii) all presently existing or future unitization, communitizati on and pooling
agreements, and the resulting units created, which include all or any part of the Inte rests,
including, without limitation, all units formed under or pursuant to any Laws. The rights, titles,
interests and estates described in this paragraph II shall also be included within the term
"Interests."
III. Hydrocarbons. All oil, gas, casinghead gas, drip gasoline, natural gasoline and
condensate, distillate, all other liquid and gaseous hydrocarbons, and all other minerals, a nd all
their products and byproducts (collectively the "Hydrocarbons"), now or later accruing to or
produced from the Interests and/or to which Grantor now or later may be entitled as a resul t of or
by virtue of its record and/or beneficial ownership of any one or more of the Interests.
IV. Contracts. All present and future rights of Grantor (including, without limitation,
all rights to receive payments) under or by virtue of all present and future operating agree ments,
contracts for the purchase, exchange, processing, transportation or sale of Hydrocarbons, and
other contracts and agreements relating in any way to all or any part of the Mortgage d Property,
as the contracts may be amended or supplemented from time to time (the "Contracts").
V. Other Property. All tenements, hereditaments, appurtenances and properties in
anywise appertaining, belonging, affixed or incidental to the Leases, in which Grantor now owns
or later acquires an interest, including, without limitation, any and all property, real or personal,
in which Grantor now owns or acquires an interest which is situated upon and/or used or useful
in connection with all or any part of the Leases. All pipelines, gathering lines, t runk lines, lateral
lines, pipeline easements and rights-of-way, compressor, dehydration and pumping equipment,
sites and leases, pumps, compressors, dehydration units, separators, heater treaters, valves, flow
lines, gauge meters, alarms, supplies, machinery, derricks, buildings, tanks, casings, Christmas
trees, tubing, rods, liquid extractors, engines, boilers, tools, appliances, cables, wires, surface
leases, rights-of-way, easements, servitudes, and franchises, and all accessions, additions,
substitutes and replacements to or for, and all accessories and attachments to any of the
foregoing. All surface leases, easements, licenses, rights-of-way and franchises are collective ly
referred to as the "Easements," and all tangible property described in this paragraph V a re
collectively the "Personal Property").
VI. Other Rights to Hydrocarbons. Any and all other rights, titles, estates, royalties
and interests (whether or not presently included within the Interests) now owned or subsequently
acquired by Grantor: (a) in and to all Hydrocarbons in and under and that may be produced and
saved from the lands described or to which reference is made in Exhibit "A" (the "Lands"); a nd,
(b) in and to all reversions, remainders, tolls, rents, revenues, issues, proceeds, earnings, income
and profits from the Lands.
TO HAVE AND TO HOLD the Mortgaged Property, together with all and singular the
rights, privileges, contracts and appurtenances now, later, or at any time before the forecl osure or
release of this Deed of Trust in anywise pertaining or belonging, to the Trustee and to hi s succes-
sors or substitutes and to their successors and assigns, forever. Grantor expressly binds and
obligates Grantor and Grantor's successors to warrant and forever defend, all and singular, the
Mortgaged Property to the Trustee and to his successors or substitutes and to their successors and
assigns, against the lawful claims of any and all persons whomsoever claiming or to clai m all, or
any part of the Mortgaged Property, SUBJECT, HOWEVER, ONLY to Permitted Liens, as
defined in Section 5.13.
This conveyance is made in trust, however, upon the terms and provisions set out below
to secure the full and final payment and performance of the Obligation, described in Art icle One
below.
To further secure the Obligation, Grantor grants to Beneficiary, named above, a securit y
interest in the Mortgaged Property, to the extent the Mortgaged Property consists of equipment,
general intangibles, accounts, inventory, fixtures and any and all other personal property of any
kind or character defined in and subject to the provisions of the applicable Uniform Comme rcial
Code of each state where any of the Mortgaged Property is situated (the "Code"), including the
proceeds and products from any and all of the Mortgaged Property (all of the Mortgaged
Property and its proceeds and products referred to as the "Collateral"). Upon the happening of
any Default, Beneficiary is and shall be entitled to all of the Rights afforded a secured party by
the applicable Code with reference to the Collateral, or Trustee or Beneficia ry may proceed as to
both the real and personal property in accordance with the Rights granted under this Deed of
Trust in respect to the real property covered. These Rights shall be cumulative and in addition to
those granted to Trustee or Beneficiary under any other provision of this Deed of Trust or unde r
any other instrument executed in connection with or as security for all or any part of the
Obligation.
REFERENCE IS MADE TO SECTION 5.13 FOR THE DEFINITIONS OF
SEVERAL OF THE TERMS USED IN THIS DEED OF TRUST.
ARTICLE ONE
Secured Obligation
This Deed of Trust, Mortgage, Security Agreement, Assignment of Production and
Financing Statement (the "Deed of Trust") is made to secure and enforce the following note or
notes, obligations, indebtedness, covenants, conditions, agreements, loans, advances, debts and
liabilities (the "Obligation"):
1.1 Note. Those certain promissory notes dated ____ and ____, executed by Grantor,
payable to the order of Beneficiary in the original principal amounts of ____ and ____,
respectively, bearing interest at the fluctuating rate specified in each not e, being payable at
Beneficiary's office or at such other office as Beneficiary shall direct in writing. If not sooner
matured (by acceleration or otherwise) the final maturing of the notes is on ____ and ____ ,
respectively (collectively, the "Note"). Reference is made to the Note for al l of its terms and
provisions.
1.2 Other Indebtedness. Any and all other or additional indebtedness or liabilities for
which Grantor is now or may subsequently become liable to Beneficiary at any time and from
time to time, in any manner, either primarily or secondarily, absolutely or conti ngently, directly
or indirectly, jointly, severally, or jointly and severally, and whether matured or unmature d,
including all indebtedness and liabilities now or subsequently arising directly out of transac tions
between Grantor and Beneficiary or acquired by Beneficiary outright, conditionally or as
collateral security from another Person, whether or not created after payment in full of the Note
if this Deed of Trust has not been released of record by Beneficiary.
1.3 Indebtedness Arising Under Security Instruments. All indebtedness, obligations,
covenants, conditions, agreements, and liabilities arising under the provisions of this De ed of
Trust and/or any other security agreement, mortgage, deed of trust, collateral pledge a greement,
contract, assignment, or loan agreement of any kind now or hereafter existing as security for,
executed in connection with, or related to the Obligation and/or any part of the Obligat ion (each
being referred to as "other security instrument").
1.4 Future Advances. All loans and advances which Beneficiary may later make to
Grantor up to a maximum amount of $____. It is contemplated Beneficiary may lend additi onal
sums to Grantor from time to time, and Grantor agrees all additional loans shall be secured by
this Deed of Trust. Nothing contained in this Deed of Trust shall be construed to obligate
Beneficiary to make any further advances.
1.5 Costs and Expenses. All sums advanced and costs and expenses incurred by
Beneficiary, including without limitation, all legal, accounting, engineering, management,
consulting or like fees, made and incurred in connection with all or any part of Secti ons 1.1, 1.2,
1.3 and 1.4, or in connection with the acquisition, perfection, realization, maintenance or
preservation of the security therefor, or in connection with all or part of the following Sec tion
1.6, whether the advances, costs or expenses were made and incurred at the request of Grantor or
Beneficiary.
1.6. Renewals, Extensions, and Rearrangements. Any and all renewals, extensions,
and/or rearrangements of all or any part of the Note, indebtedness, obligations, debts, loans,
advances, covenants, agreements and liabilities described or to which reference is ma de in
Sections 1.1., 1.2., 1.3., 1.4. and 1.5.
ARTICLE TWO
Representations, Warranties, and Covenants Of Grantor
2.1 Representations and Warranties. Grantor represents and warrants to Beneficiary
that: (a) Authority. Grantor has authority to execute this Deed of Trust, to grant,
bargain, sell, mortgage, assign, transfer, and convey the Mortgaged Property to the Trustee and
to make the covenants, representations, warranties, and assignments contained in this De ed of
Trust.
(b) Title. Grantor: (i) has good and indefeasible title to; (ii) is the lawful owner
and holder of; and, (iii) is possessed of the Mortgaged Property free and clear of any and all
Liens except Permitted Liens.(c) Percentage Interests. The percentage interests of Grantor's participation in
the total production of Hydrocarbons produced and saved from the Mortgaged Property
described in Exhibit "A" are at least and in no event will ever be less than as re presented in
Exhibit "A," and the representations and warranties of Grantor set forth in Exhibit "A" are
incorporated into this Deed of Trust by reference as if copied verbatim in the body of this Deed
of Trust at this point.
(d) Advance Payment Contract. Grantor is not a party to any advance payment
contract affecting or relating to any of the Interests which has not been disclosed to Beneficiary
in writing.
2.2 Covenants of Grantor. Grantor, for Grantor and Grantor's Successors, covenants
and agrees to: (a) Additional Documents. At any time, and from time to time, upon request by
Beneficiary, execute and deliver to Beneficiary any and all additional instrume nts and further
assurances, and do all other acts and things, necessary or proper, in Beneficiary's opinion, to
effect the intent of this Deed of Trust and to evidence and perfect the Rights and L iens created or
intended to be created by this Deed of Trust and protect the Rights of Beneficiary.(b) Cure of Defects. If the validity or priority of this Deed of Trust or any
Rights or Liens it creates or evidences with respect to all or any material pa rt of the Mortgaged
Property shall be endangered, questioned, attacked, directly or indirectly, or if any legal
proceedings are instituted against Grantor with respect to the Deed of Trust Rights or Li ens,
Grantor will promptly give written notice to Beneficiary. At Grantor's own cost and expense, it
will diligently endeavor to cure any defect that may be developed or claimed, a nd take all
necessary and proper steps for the defense of any legal proceedings, including, but not limited to,
the employment of counsel acceptable to Beneficiary, the prosecution or defense of lit igation and
the release or discharge of all adverse claims. Trustee and Beneficiary, or either of them
(whether or not named as parties to legal proceedings) are authorized and empowered to ta ke
such additional steps as in their judgment and discretion may be necessary or proper for the
defense of any legal proceedings, including, but not limited to, the prosecution or defense of
litigation, and the compromise or discharge of any adverse claims made with respect t o the
Mortgaged Property. All expense, of every kind and character, incurred by Beneficiary or
Trustee, shall be a demand obligation owing by Grantor to Beneficiary.
(c) Payment of Taxes. Pay, or cause to be paid, before delinquent, all lawful
Taxes attributable to all or any part of the Mortgaged Property, and from time to t ime, upon
request of Beneficiary, furnish evidence satisfactory to Beneficiary of the timely payment of
such Taxes.
(d) Compliance with Leases, Interests, Contracts, and Easements. Timely
perform all obligations under, and not violate any of the Leases, Interests, Contracts, or
Easements.(e) Maintenance of Mortgaged Property. At all times maintain, preserve, and
keep the Mortgaged Property in good repair and condition, and from time to time to make all
necessary and proper repairs, replacements, and renewals; and, not commit or permit any waste
on or of the Mortgaged Property, or do anything to the Mortgaged Property that may impair its
value.
(f) Payment for Labor and Materials. Promptly pay all bills for labor and
materials incurred in connection with the Mortgaged Property and never permit to be fi xed,
against all or any part of the Mortgaged Property, any Lien even though inferior to the Lie n
created by this Deed of Trust, for any bill which may be legally due and payable, exc ept a
Permitted Lien.
(g) Performance of Obligation. Pay and perform all of the Obligation.
(h) Mortgage Taxes. At any time any Law is enacted imposing or authorizing
the imposition of any Tax on this Deed of Trust, or on any Lien created, immediate ly pay all
such Taxes. In the alternative, Grantor may, in the event of the enactment of suc h a Law, and
must, if it is unlawful for Grantor to pay Taxes, prepay that portion of the Obligation whi ch
Beneficiary in good faith determines is secured by property covered by such Law within 60 days
after demand by Beneficiary.(i) Performance of Covenants. Punctually and properly perform all of
Grantor's covenants, duties, and liabilities under this Deed of Trust and any other sec urity
instrument.
(j) Inspection of Mortgaged Property. Allow Beneficiary or its designated
agents to inspect the Mortgaged Property and all related records, and to make and reta in copies
of the records.
(k) Operation of Mortgaged Property. Operate the Mortgaged Property, or
cause it to be operated, in a careful and efficient manner in compliance wi th the practices of the
industry and all Leases, Contracts, Easements, and Laws.
(l) Development Work. Do, or cause to be done, development and other work
as may be reasonably necessary to protect from diminution the production capacity of the
Mortgaged Property and each producing well on the Mortgaged Property.
(m) Maintenance of Leases, Contracts, and Easements. Maintain all Leases,
Contracts, and Easements in full force and effect and not permit to occur the surre nder,
abandonment, release, or termination of any Leases, Contracts, or Easements, as long as the
Interests are capable of producing Hydrocarbons in paying quantities.
(n) Insurance. Carry insurance on the Mortgaged Property with such insurers,
in such amounts, and covering such risks as are customary in the industry, including, but not
limited to, workmen's compensation insurance and insurance against loss or damage by fire,
lightning, hail, windstorm, explosion, hazards, casualties and other contingencies. Grantor shall
cause all insurance to be payable to Beneficiary as its interest may appear, de liver the policies of
insurance to Beneficiary, pay or cause to be paid all premiums for the insurance at least 15 days
before the premiums become due, furnish Beneficiary satisfactory proof of the timely making of
the payments, and deliver all renewal policies to Beneficiary at least 15 days before the
expiration date of each expiring policy.
(o) Compliance with Laws. Comply with all Laws applicable to the Mortgaged
Property and its ownership, use and operation.(p) Sales of Mortgaged Property. Grantor shall not, without the prior written
consent of Beneficiary, sell, trade, transfer, convey, assign, exchange, pledge, encumber, creat e
any lien (except a Permitted Lien) with respect to or otherwise dispose of all or part of the
Mortgaged Property, or any interest in the Mortgaged Property, except items of Personal
Property which have become obsolete or worn beyond practical use and which have been
replaced by adequate substitutes having a value equal to or greater than the repla ced items when
new.
(q) Title Opinions. Furnish Beneficiary copies of any title opinions and
abstracts of title requested from time to time by Beneficiary which Grantor has or may obtain on
any part of the Mortgaged Property.(r) Principal Office. Maintain the principal office and place of business of
Grantor with all of Grantor's records and files relating to the Mortgaged Property at Grantor's
address set out on page 1, except for those customarily maintained at the Mortgaged Property.
(s) Advance Payment Contract. Grantor shall not enter into or agree to any
Advance Payment Contract with any Person affecting any of the Mortgaged Property prior to
obtaining the written consent and approval to do so from Beneficiary. It is expressly stipula ted
as a condition of granting approval of any Advance Payment Contract that Beneficiary ma y, in
its discretion, require all or part of any Advance Payment be paid to Beneficiary for application
toward payment of the Obligation or require any portion of an Advance Payment not applied on
the Obligation be placed in escrow with Beneficiary to insure its use as Benefici ary may direct or
determine. Beneficiary, in its sole discretion, may impose other conditions upon its conse nt or
may refuse to consent to the making of an Advance Payment Contract. Whether or not
Beneficiary's consent to an Advance Payment Contract previously and later made by Grantor ha s
been obtained, and regardless of whether the existence or making of an Advance Payment
Contract constitutes a breach of Grantor's representations or covenants, it is expressly stipula ted
that unless otherwise agreed to in writing by Beneficiary, all Advance Payments due to Gra ntor
under any Advance Payment Contract shall be deemed proceeds of the sale of Hydrocarbons
from the Mortgaged Property which are assigned to and are to be paid over to Beneficiary.
Beneficiary's receipt or acceptance of any Advance Payment or its application towa rd payment
of the Obligation shall not constitute a waiver of any Default resulting from the existence of
making of the Advance Payment Contract by which an Advance Payment is made, or a
ratification, approval, or consent by Beneficiary of an Advance Payment Contract.
(t) Properties Not Operated by Grantor. Notwithstanding anything in this
Section 2.2 to the contrary, Grantor, as to Interests which are not operated by Grantor, shall not
be obligated to perform undertakings performable only by other operators which are beyond the
control of Grantor. However, in each case, Grantor will promptly take all actions availa ble to it,
under applicable operating arrangements or otherwise, to bring about the performance of any
undertakings required to be performed by operators.
ARTICLE THREE
Defaults and Remedies
3.1 Defaults. The term "Default" shall mean: (i) the failure of Grantor to observe or
perform any covenant or agreement contained in this Deed of Trust or in any Loan Agreement
between Beneficiary and Grantor; (ii) the failure of Grantor to pay when due all or any part of
any installment of principal of or interest on the Obligation, as and when the same is due and
payable (whether at stated maturity, by acceleration, or otherwise); or (iii) the death or incapacity
of any guarantor of any part of the Obligation.
3.2 Remedies. If a Default shall occur and continue, Beneficiary may, at its opti on, do
any one or more of the following, to the extent permitted by applicable Law:
(a) Payment or Performance by Beneficiary. If Grantor has failed to keep or
perform any covenant contained in this Deed of Trust or any other security instrument,
Beneficiary may, but shall not be obligated to any Person to do so, perform or attempt to perform
the covenant, and any payments made or expenses incurred in the performance or attempte d
performance of the covenant shall be a part of the Obligation, and Grantor promises, upon
demand, to pay to Beneficiary, at the place where the Note is payable, or at suc h other place as
Beneficiary may direct by written notice, all sums advanced or paid by Beneficiary, with interest
at the Highest Lawful Rate, from the date when paid or incurred by Beneficiary until paid by
Grantor. No payments by Beneficiary shall constitute a waiver of any Default. In addition to the
Liens granted by this Deed of Trust, Beneficiary shall be subrogated to all Rights and Liens
securing the payment of any debt, claim, tax, or assessment for the payments of which
Beneficiary may make an advance.
(b) Acceleration. Beneficiary may, at its option, declare the aggregate unpaid
principal amount of and interest on the Note and all other parts of the Obligation t o be, and the
same shall then become, immediately due and payable without presentment, demand, protest,
notice of acceleration, notice of intent to accelerate, notice of protest or not ice of dishonor, or
any other notice of any kind, all of which are expressly waived by Grantor.
(c) Foreclosure. Beneficiary may request Trustee to proceed with foreclosure. In
that event Trustee is expressly authorized and empowered, and it shall be the Trustee 's duty, on
request by Beneficiary, and to the extent permitted by applicable Law, to sell all or any part of
the Mortgaged Property at one or more sales, as an entirety or in parcels, at the pl ace or places
and otherwise in the manner and on such notice as may be required by applicable Law, or in the
absence of any requirement, as Trustee and/or Beneficiary may deem appropriate, and to make
conveyance(s) to the purchaser or purchasers at the sale(s). Any sale of any part of the
Mortgaged Property shall be made to the highest bidder or bidders for cash, at the courthouse
door of, or at such other place as may be required or permitted by applicable Law, in the county
(or judicial district) in the state where the Lands included within the Mortgaged Prope rty to be
sold is located. However, if the Lands are located in more than one county (or judicial district)
of any state, the sale of all or part of the Mortgaged Property may be made in any county (or
judicial district) in the state where any part of the Lands included within the Mortgaged Property
to be sold is located. Any sale(s) shall be made at public auction, on the day of a ny month,
during the hours of the day and after written notices of the state have been publicly posted in the
places and for the time periods and after all Persons entitled to notice have be en sent such notice,
all as required by applicable Law in effect at the time of a sale.
Nothing in this Article shall be deemed to require Beneficiary or Trustee to do, and
Beneficiary and Trustee shall not be required to do, any act other than as required by appl icable
Law in effect at the time of a sale. Any sale may be as a whole or in parc els as Trustee may
select. After a sale, Trustee shall make and deliver to the purchaser or purchasers at the sale,
good and sufficient deeds and assignments, in the name of Grantor, conveying the sold
Mortgaged Property to the purchaser or purchasers with limited warranty of title (subject to
Permitted Liens) by Grantor. Sale of a part of the Mortgaged Property shall not exhaust the
power of sale, but sales may be made from time to time until the Obligati on is paid and
performed in full.
It shall not be necessary to have present or to exhibit at any sale any of the Collateral. In
addition to the Rights and powers of sale granted under the provisions of this Subsection 3.2(c),
if default is made in the payment of any installment of the Obligation, Benefici ary, at its option,
at once or at any later time while any matured installment remains unpai d, without declaring the
entire Obligation to be due and payable, orally or in writing direct the Trustee to enforce this
trust and to sell the Mortgaged Property subject to the unmatured Obligation and the L iens
securing its payment, in the same manner, on the same terms, at the same pla ce and time, and
after having given notice in the same manner, all as provided in the proceeding provisi ons of this
Subsection 3.2(c).
After a sale, Trustee shall make conveyance to the purchaser or purchasers. Sales made
without maturing the Obligation may be made whenever there is a default in the paym ent of any
installment of the Obligation without exhausting the granted power of sale and without affec ting
in any way the power of sale granted under this Subsection 3.2(c) on the unmatured balance of
the Obligation (except as to any proceeds of any sale which Beneficiary may apply as a
prepayment on the Obligation) or the Liens securing payment of the Obligation.
It is intended by each of the foregoing provisions of this Subsection 3.2(c) that Trustee
may, after any request or direction by Beneficiary, sell, not only the Interests incl uded within,
but also all other items constituting a part of, the Mortgaged Property, or any part, along wi th all
or any part of the Lands included within the Mortgaged Property 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. It is agreed that in any assignments, bills of sale, or deeds given by
Trustee, any and all statements of fact or other recitals made as to the identity of Beneficiary, the
occurrence or existence of any Default, the acceleration of the maturity of the Obligation, the
request to sell, notice of sale, time, place, terms and manner of sale, and t he receipt, distribution
and application of the money realized from a sale, or as to the due and proper appoint ment of a
substitute trustee, and, without being limited by the foregoing, as to any other act or thi ng having
been done by Beneficiary or Trustee, shall be taken by all courts of law and equity a s prima facie
evidence that the statements or recitals state facts to be accepted without further question, and
Grantor expressly ratifies and confirms any and all acts Trustee may lawfully do by virtue of the
authority and powers granted in this Deed of Trust. In the event of the resignation (which is
authorized for any reason) or death of Trustee, his removal from his county of residence, his
failure, refusal or inability, for any reason, to make any sale or to perform any of the trust s
declared in this Deed of Trust, or, at the option of Beneficiary, without cause, the Be neficiary
may appoint, in writing, a substitute trustee, who shall then succeed to all the e states, titles,
rights, powers and trusts granted to and vested in Trustee. An appointment may be made on
behalf of Beneficiary by any person who is then the president, any vice president, cashie r or
secretary, branch manager, a senior representative, or any other authorized officer or agent of
Beneficiary. In the event of the resignation (which is authorized for any reason) or death of any
substitute Trustee, his failure, refusal or inability to make a sale or perform the trust s, or, at the
option of Beneficiary, without cause, successive substitute Trustees may, from time to time, be
appointed by Beneficiary in the same manner. Wherever the word "Trustee" is used, it shal l
mean the Person who is the duly appointed Trustee or substitute Trustee in this Deed of Trust at
the time in question.
(d) Suit. Beneficiary or Trustee may, upon written request of Beneficiary,
proceed by suit or suits, at law or in equity, to enforce the payment and performance of the
Obligation in accordance with the terms of this Deed of Trust, of the Note, the other security
instruments, or other documents and/or writings securing and/or evidencing it, to foreclose the
Liens and this Deed of Trust against all or any part of the Mortgaged Property and to have a ll or
any part of the Mortgaged Property sold under the judgment or decree of a court of competent
jurisdiction.
(e) Appointment of Receiver. Beneficiary, as a matter or right and without regard
to the sufficiency of the security, or any showing of insolvency, fraud, or mismanagement on the
part of Beneficiary, and without the necessity of filing any judicial or other procee ding other than
the proceeding for appointment of a receiver, shall be entitled to the appointment of a receiver or
receivers of all or any part of the Mortgaged Property, and of the income, rents, issues, and
profits from or attributable to the Mortgaged Property.
(f) Possession of Mortgaged Property. Beneficiary may enter on the Lands
included within the Mortgaged Property, take possession of the Mortgaged Property, and remove
the Personal Property included within the Mortgaged Property, or any part of the Personal
Property, with or without judicial process, without any responsibility or liability on the part of
Beneficiary. Beneficiary may 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 that property at
Grantor's expense.
(g) Assemble Collateral. Beneficiary may require Grantor to assemble the
Collateral included within all or part of the Mortgaged Property, and make it availa ble to
Beneficiary at a place to be designated by Beneficiary which is reasonably conveni ent to Grantor
and Beneficiary.
(h) Disposition of Collateral. After notification, if any, as provided in this
Subsection 3.2(h), Beneficiary may sell, lease, or otherwise dispose of, at the office of
Beneficiary, on the Lands, or elsewhere, as chosen by Beneficiary, all or any part of the
Collateral included within the Mortgaged Property, in its then condition, or following any
commercially reasonable preparation or processing. Each Sale (as used in this Subsection 3.2(h),
the term "Sale" means any sale, lease, or other disposition made pursuant to this Subsect ion
3.2(h)) may be as a unit or in parcels, by public or in private proceedings, and by one or more
contracts. At any Sale it shall not be necessary to exhibit all or any part of the C ollateral being
sold, leased or otherwise disposed of. The Sale of any part of the Collateral shall not e xhaust
Beneficiary's power of Sale, but Sales may be made from time to time until the Obligation is
paid and performed in full. Reasonable notification of the time and place of any public Sale
pursuant to this Subsection 3.2(h), or reasonable notification of the time after which any private
Sale is to be made pursuant to this Subsection 3.2(h), shall be sent to Grantor and to any ot her
person entitled to notice under the applicable Code. Grantor agrees that notice sent or given not
less than 21 calendar days prior to the taking of the action to which the notice rel ates, is
reasonable notification and notice for purposes of this Subsection 3.2(h).
3.3 Purchase of Mortgaged Property by Beneficiary. If Beneficiary is the purchaser of
all or any part of the Mortgaged Property (it being specifically agreed Beneficiary may be the
purchaser of all or any part of the Mortgaged Property, if permitted by applicable Law), at any
sale, whether the sale is made under the power of sale vested in Trustee, upon any other
foreclosure of the Liens, or otherwise, Beneficiary shall, upon any purchase, acquire good titl e to
the Mortgaged Property purchased, free of the Liens provided in this Deed of Trust.
3.4 Operation of Properties by Beneficiary. Should any part of the Mortgaged Property
come into its possession, Beneficiary may use or operate the Mortgaged Property for the purpose
of preserving it or its value, pursuant to the order of a court of appropriate jurisdiction, or in
compliance with any other Rights held by Beneficiary relating to the Mortgaged Prope rty.
Grantor covenants to promptly reimburse and pay Beneficiary, at the place where the Note is
payable or at such other place as may be designated by Beneficiary in writing, t he amount of all
reasonable expenses (including the cost of any insurance, Taxes, attorney's fees of the
Beneficiary, and other charges) incurred by Beneficiary in connection with its custody,
preservation, use or operation of the Mortgaged Property, together with interest on those sums
from the date incurred by Beneficiary at the Highest Lawful Rate. All these expe nses, costs,
Taxes, interest, and other charges shall be a part of the Obligation. However, the risk of loss or
damage to the Mortgaged Property is on Grantor. Beneficiary shall have no liability whate ver
for any decline or diminution in value of the Mortgaged Property, for failure to obtain or
maintain insurance, or for failure to determine whether any insurance ever in force is adequate as
to amount or the risks insured.
3.5 Possession of Property After Foreclosure. If the Liens are foreclosed by Trustee's
sale, or other judicial or non-judicial action, the purchaser at any sale shall rec eive, as an incident
to ownership, immediate possession of the Mortgaged Property, or any part conveyed, and,
subsequent to foreclosure, Grantor and Grantor's Successors shall be considered tenants at
sufferance of the purchaser at foreclosure sale. Anyone occupying the property, after demand is
made for possession, 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 of any
eviction or removal are expressly waived.
3.6 Application of Proceeds. The proceeds from any sale, lease or other disposition
made under this Article Three, any proceeds of Hydrocarbons collected by Beneficiary pursuant
to Article Four, and sums received pursuant to Section 5.5 shall be applied by Trustee, or by
Beneficiary, as the case may be, to the payment or prepayment of the Obligation, whether or not
matured, as may be determined by the Beneficiary in its sole discretion, until t he Obligation is
paid in full.
3.7 Abandonment of Sale. If a foreclosure is commenced by Trustee as provided in
Subsection 3.2(c), Beneficiary may, at any time before the sale, direct Trustee to abandon the
sale, and institute suit for the collection of the Obligation, and/or for the foreclosure of the Liens.
If Beneficiary should institute a suit for the collection of the Obligation, and/or for a foreclosure
of the Liens, it may, at any time before the entry of a final judgment in t he suit, dismiss it and
sell and/or require Trustee to sell (and the Trustee is expressly authorized to sell) all or any part
of the Mortgaged Property, in the manner provided by the terms of this Deed of Trust.
3.8 Waiver of Appraisement and Redemption. To the full extent Grantor may lawfully
do so, Grantor agrees it will not at any time insist upon, plead, claim or take the benefit or
advantage of any appraisement, valuation, stay, extension or redemption Laws, now or later in
force, in order to prevent or hinder the enforcement of this Deed of Trust or the absolute sale of
all or any part of the Mortgaged Property, or the possession of the Mortgaged Property by any
purchaser at any sale. Insofar as Grantor may now or later lawfully do so, Grantor expressly
waives the benefit of all such Laws. The appraisement of any of the Mortgaged Property ma y be
waived at the option of Trustee and/or Beneficiary. This waiver option is to be exerc ised prior to
or at the time a judgment is rendered in any foreclosure of this Deed of Trust. Grantor a lso
expressly waives, to the extent it may lawfully do so, all rights to have the Mortga ged Property
marshaled upon any foreclosure of this Deed of Trust.
ARTICLE FOUR
Assignment of Production
4.1 Additional Security. To additionally secure the Obligation, Grantor, effective local
time, on the Effective Date, at the site of each of the Interests, ASSIGNS, TRANSFERS, AND
CONVEYS to Beneficiary all of the following:
(a) All Hydrocarbons, and their proceeds and products obtained or processed
from the Hydrocarbons (the proceeds and products being called "Proceeds"), produced and to be
produced from the Mortgaged Property. Grantor authorizes and empowers Beneficiary to
demand, collect and receive the Hydrocarbons and Proceeds, to endorse and cash any chec ks and
drafts payable to Grantor or Beneficiary for the account of Grantor received from or in
connection with the Hydrocarbons and Proceeds, and to execute any release, receipt, division
order, transfer order, and relinquishment or other instrument that may be required or necessary t o
collect and receive the Hydrocarbons and Proceeds. Grantor expressly authorizes and directs all
pipeline companies, gathering companies, and others purchasing the Hydrocarbons or having in
their possession any of the Hydrocarbons or Proceeds, to pay and deliver all Hydrocarbons and
Proceeds to Beneficiary. Grantor agrees that all division orders, transfer orders, receipts and
other instruments which Beneficiary may execute from time to time and delive r for the purpose
of collecting or receipting for Hydrocarbons or Proceeds, may be relied upon in all respects and
they shall be binding on Grantor and Grantor's Successors. Grantor agrees to execute and deliver
all necessary, convenient and appropriate instruments, including transfer and division orders,
which may be required by Beneficiary, in connection with the receipt by Beneficiary of
Hydrocarbons or Proceeds, and Grantor agrees to indemnify, keep and hold Beneficiary free and
harmless from all parties having or claiming an adverse interest in the Hydrocarbons a nd
Proceeds. In this respect Grantor agrees to pay all expenses, costs, charges and attorney's fees
that may be incurred by Beneficiary as to any of these matters.
(b) All Proceeds payable to or to become payable to Grantor or to which Grantor
is entitled under all gas sales or exchange contracts, all oil, distillate, or condensate sales or
exchange contracts, all gas transportation contracts, and all gas processing contracts now or later
to become a part of the Mortgaged Property.
(c) All amounts, sums, revenues, and income which become payable to Grantor
from any of the Mortgaged Property (including any after-acquired properties) or under any
contract, present or future, relating to any gas pipeline system and processing plant or unit now
or later constituting a part of the Mortgaged Property.
4.2 Transfer Orders. Grantor agrees to execute any transfer orders, payment orders,
division orders and other instruments as may be needed or requested by Beneficiary incident to
Grantor having all assigned payments made direct to it at its address. Grantor expressly
authorizes and directs all pipeline companies, purchasers, transporters and other parties owi ng
monies to Grantor under contracts assigned to Beneficiary, to pay such amounts direct to
Beneficiary as follows:
Name and Address of Beneficiary
This authorization shall continue until this Deed of Trust is released. Beneficiary is
authorized to collect and receive all amounts, and no party making payment shall have any
responsibility to see to the application of any funds paid to the Beneficiary, but shal l be fully
protected in making payment to Beneficiary under the assignments contained in this Article
Four. Should Beneficiary bring suit against any third party for collection of any amounts or
sums included within this assignment (and Beneficiary shall have the Right to bring a ny suit), it
may sue either in its own name or in the name of Grantor.
4.3. Payment of Proceeds. If, for its convenience, Beneficiary elects, with respect to
particular properties or contracts, not to immediately exercise its Right to rec eive Hydrocarbons
or Proceeds, the purchasers or other persons obligated to make payments shall continue to make
payment to Grantor until such time as written demand has been made upon them by B eneficiary
or Trustee that payment be made direct to Beneficiary. At that time, Benefi ciary or Trustee shall
also notify Grantor that Beneficiary or Trustee has made written demand. A failure to notify
Grantor shall in no way waive the Right of Beneficiary to receive any payments pre viously paid
to Grantor before the giving of written notice. In the event payments are made direct ly to
Beneficiary, and then, at the request of Beneficiary payments are, for a period or peri ods of time,
paid to Grantor, Beneficiary shall nevertheless have the Right, effective on written notice, to
require future payments be again made to Beneficiary.
4.4 Limitation of Liability of Beneficiary and Trustee. Beneficiary is expressly
absolved from all liability for failure to enforce collection of the Proceeds and a mounts assigned
under Section 4.1 above and from all other responsibility in connection with the failure t o
enforce collection, except the responsibility to account to the Person legally e ntitled to the
Proceeds (by application on the Obligation or otherwise) for funds actually received. Grantor
agrees to indemnify and hold Trustee and Beneficiary harmless against any and all l iabilities,
actions, claims, judgments, costs, charges, and attorney's fees by reason of the assertion tha t they
or either of them have received, either before or after payment and performance in ful l of the
Obligation, funds from the production of Hydrocarbons claimed by third persons. Trustee and
Beneficiary shall each have the Right to compromise and adjust any such claim s, actions, and
judgments. In addition to the Rights to be indemnified, all amounts paid by Trustee or by
Beneficiary in compromise, satisfaction, or discharge of any claim, action or judgme nt, and all
court costs, attorney's fees, and other expenses of every character incurred by Trustee or
Beneficiary pursuant to the provisions of this Section shall be demand obligations owing by
Grantor and shall bear interest at the Highest Lawful Rate from date of expenditure until paid
and shall be secured by the Liens created and granted by this Deed of Trust.
ARTICLE FIVEMiscellaneous
5.1 Release. If the Obligation is paid and performed in full according to the terms of
this Deed of Trust, the Note, other security instruments and documents and writings evidencing
or securing all or any part of the Obligation, and if Grantor performs all of Grantor's covenants,
this conveyance shall be released at Grantor's request and expense; otherwise, it shall remain in
full force and effect. However, no release shall impair Grantor's warranties and indemnitie s as
contained in this Deed of Trust.
5.2 Rights Cumulative. All Rights and Liens expressly conferred by this Deed of Trust
are cumulative of all other Rights and Liens provided by law or in equity or in any other security
instrument, and shall not be deemed to deprive Beneficiary or Trustee of any other l egal or equi-
table Rights and Liens by judicial proceedings, or otherwise, appropriate to enforce t he
conditions, covenants and terms of this Deed of Trust and other security instruments. The
employment or enforcement of any Rights granted in this Deed of Trust, or otherwise, shall not
prevent the concurrent or subsequent employment or enforcement of any other Rights.
5.3 Waivers. Any and all covenants in this Deed of Trust may from time to time, by
instrument in writing signed by Beneficiary and delivered to Grantor, be waived to the e xtent and
in the manner as Beneficiary may desire. However, no such waiver shall ever affect or impair
Beneficiary's Rights or Liens under this Deed of Trust, except to the extent specific ally stated in
the written instruments.
5.4 Sale of Mortgaged Property. If Grantor or any of Grantor's Successors conveys any
interest in all or part of the Mortgaged Property to any other party, Beneficiary may, without
notice to Grantor or Grantor's Successors, deal with any owner of any part of the Mortgaged
Property, with reference to this Deed of Trust and the Obligation, either by way of forbearance
on the part of Beneficiary, extension of time of payment of the Obligation, release of all or any
part of the Mortgaged Property, or any other property securing payment and performance of the
Obligation, without in any way modifying or affecting Beneficiary's Rights and Liens or the
liability of Grantor or any other party liable for payment and performance of the Obligati on, in
whole or in part. However, no action taken or omitted to be taken by Beneficiary unde r this
Section 5.4 shall be deemed a waiver of any Default occurring by reason of any such
conveyance.
5.5 Condemnation Sale. Beneficiary shall be entitled to receive any and all sums which
may be awarded or become payable to Grantor for the condemnation of all or part of the
Mortgaged Property, for public or quasi-public use, or by virtue of private sale and any sums
which may be awarded or become payable to Grantor for damages caused by public works or
construction on or near the Mortgaged Property. All these sums are assigned to Beneficiary, and
Grantor shall, upon request of Beneficiary, make, execute, acknowledge and deliver any and all
additional assignments and documents as may be necessary from time to time to e nable
Beneficiary to collect and receipt any of these sums. Beneficiary shall not be, unde r any
circumstances, liable or responsible for failure to collect or exercise diligence i n the collection of
any of these sums.
5.6 Renewals of Indebtedness. The proceeds of the Note or of any further loans or
advances, to the extent utilized to renew or extend any indebtedness or take up any outst anding
Liens against all or part of the Mortgaged Property, have been advanced by Beneficiary at
Grantor's request and upon Grantor's representation that the amounts are due and payable.
Beneficiary is subrogated to any and all Rights and Liens owned or claimed by any owner or
holder of any outstanding Rights and Liens, however remote, regardless of whether the Rights
and Liens are acquired by assignment or are released by the holder of the Rights and L iens upon
payment.
5.7 Waiver of Marshalling. Grantor waives all rights of marshalling in event of any
foreclosure of the Liens created by this Deed of Trust.5.8 Number and Gender of Words, Etc. Whenever the singular number is used, the
same shall include the plural where appropriate, and vice versa. Words of any gender shall
include each other gender where appropriate.
5.9 Headings and Exhibits. The captions, headings, and arrangements used in this Deed
of Trust are for convenience only and do not in any way affect, limit, amplify, or modify t he
terms and provisions of this Deed of Trust. All Exhibits to this Deed of Trust are incorporat ed
into this Deed of Trust for all purposes as if the terms were set out in this instrument.
5.10 Notices. Whenever this Deed of Trust requires or permits any consent, approval,
notice, request, or demand from one party to another, the consent, approval, notice, request, or
demand must be in writing to be effective and shall be deemed to have been give n on the day
personally delivered or, if mailed, on the day it is enclosed in an envelope, properl y stamped,
sealed and deposited in a post office or official depository maintained by the United Sta tes Postal
Service, certified mail, return receipt requested, addressed to the party to be notified at the
address below (or at such other address as may have been designated by written notice):
If to Grantor:
If to Beneficiary:
5.11 Governing Law. This Deed of Trust is intended to be performed in the State named
on the first page of this Deed of Trust. The substantive Laws of that State and the Unite d States
of America shall govern the validity, construction, enforcement, and interpretation of t his Deed
of Trust. However, despite anything in this Deed of Trust to the contrary, the substantive laws of
the State of ____ relating to the validity, construction and interpretation of the Obl igation and to
usury and permissible interest and similar charges and amounts shall govern all aspects of this
Deed of Trust.
5.12 Invalid Provisions. If any provision of this Deed of Trust is invalid or
unenforceable in any jurisdiction applicable to this Deed of Trust, then, to the e xtent permitted
by Law: (a) all other provisions shall remain in full force and effect in such jurisdic tion and shall
be liberally construed in favor of Beneficiary in order to carry out the intentions of t he parties as
nearly as possible; and (b) the invalidity or unenforceability of a provision in any jurisdic tion
shall not affect its validity or enforceability in any other jurisdiction. If the Rights and Liens
created by this Deed of Trust shall be invalid or unenforceable as to any part of the Obligation,
the unsecured portion of the Obligation shall be completely paid prior to the payment of the
remaining and secured portion of the Obligation, and all payments made on the Obligati on shall
be considered to have been paid on and applied first to the complete payment of t he unsecured
portion of the Obligation.
5.13 Definitions. The following terms shall have the meanings indicated:
"Advance Payment Contract" means any contract with another Person or party (the
"Other Party") where Grantor either (i) receives or becomes entitled to receive (eit her directly or
to a third party for Grantor's account or benefit) any payment (an "Advance Payment") which the
Other Party may require to be applied toward payment of the purchase price of Hydrocarbons
produced or to be produced from any of the Mortgaged Property and which Advance Payment is
paid or to be paid in advance of actual delivery of the production to or for the acc ount of the
Other Party regardless of the production, or (ii) grants an option or right of refusal to the Other
Party to purchase and take delivery of production, and, in either of the foregoing instances,
regardless of whether the Advance Payment may be applied as payment for only a portion of the
purchase Price or of a percentage or share of the production. Inclusion of a "take or pay"
provision in any gas sales or purchase contract shall not, in and of itself, constitut e a contract as
an "Advance Payment Contract" for the purposes of this Deed of Trust.
"Code" means the applicable Uniform Commercial Code, if any, of each state where any
of the Mortgaged Property is situated.
"Contracts" has the meaning given to that term in paragraph IV.
"Deed of Trust" has the meaning given this term in Article One.
"Default" has the meaning given this term in Section 3.1.
"Easements" has the meaning given to that term in paragraph V.
"Grantor" means ____________________.
"Grantor's Successors" means each and all of the immediate and remote successors,
assigns, heirs, executors, administrators, and legal representatives of Grantor."Highest Lawful Rate" means the maximum rate of interest which Beneficiary is allowed
from time to time to contract for, charge, take, reserve, or receive under applicable Laws after
taking into account, to the extent required by applicable Laws, any and all rele vant payments or
charges under the Note and, for purposes of that determination, the "Highest Lawful Rate" sha ll
mean the greater of: (a) the maximum rate of interest from time to time permitted under the
Laws of the United States of America; and, (b) the maximum rate of interest permi tted to be
charged under the Laws of the State of ____.
"Holder" means any present or future holder of all or any part of the Obligation.
"Hydrocarbons" has the meaning given that term in paragraph III.
"Interests" has the meaning given to that term in paragraphs I and II.
"Lands" has the meaning given that term in paragraph VI.
"Laws" means all applicable constitutions, treaties, statutes, laws, ordinances,
regulations, orders, writs, injunctions or decrees of the United States or of any state,
commonwealth, county, parish, municipality or Tribunal."Leases" has the meaning given to that term in paragraph I.
"Lien" means any lien, mechanic's lien, materialman's lien, pledge, conditional sale
agreement, title retention agreement, financing lien, production payment, securit y interest,
mortgage, deed of trust or other encumbrance, whether arising by agreement or under Law.
"Mortgaged Property" has the meaning given to that term on page 1.
"Note" has the meaning given to that term in Section 1.1.
"Obligation" has the meaning given to that term in Article One.
"Other Security Instrument" has the meaning given to that term in Section 1.3.
"Permitted Liens" shall mean: (i) Liens for taxes, assessments or other governmental
charges or levies not yet due or which are being contested in good faith by appropriate ac tion by
or on behalf of the Borrower; (ii) Liens in connection with workmen's compensation,
unemployment insurance or other social security, old age pension or public liability obli gations;
(iii) vendor's, carrier's, warehousemen's, repairmen's, mechanic's, workmen's, materialmen's,
construction, or other like Liens arising by operating of law in the ordinary course of business or
incident to the construction or improvement of any property in respect of obligations which a re
not yet due; (iv) operators' Liens incurred pursuant to an operating or joint operating agreeme nt
entered into in the ordinary course of business and securing the payment of obligations which are
not yet due; and, (v) a production payment or overriding royalty interest in favor of ____, on the
Leases, pursuant to the Assignment of Production Payment and Agreement effective ____, and
that certain Assignment of Overriding Royalty Interest executed by Borrower in favor of ____."Person" means any individual, firm, corporation, association, partnership, joint venture,
company, trust, tribunal or other entity."Personal Property" has the mean given to that term in paragraph V.
"Proceeds" has the meaning given to that term in Section 4.1(a).
"Rights" means rights, remedies, powers, and privileges.
"Sale" has the meaning given to that term in Subsection 3.2(h).
"Section" means a Section of this Deed of Trust, unless specifically indicated otherwise.
"Taxes" means all taxes, assessments, fees, levies, imposts, duties, deductions,
withholdings or other similar charges from time to time or at any time imposed by any Law or
any Tribunal.
"Tribunal" means any court or any governmental department, commission, board, bureau,
agency or instrumentality of the United States or of any state, commonwealth, nat ion, territory,
possession, county, parish or municipality, whether now or later constituted and/or existing.
"Trustee" means the Person who is at the time the duly appointed trustee or successor or
substitute trustee under this Deed of Trust at the time in question.5.14 Form of Deed of Trust. This instrument may be construed and enforced from time
to time as a mortgage, deed of trust, chattel mortgage, conveyance, assignment, securi ty
agreement, pledge, financing statement, hypothecation, or contract, or any one or more of them
appropriate under applicable Laws, in order to fully effectuate the Lien of this De ed of Trust and
its purposes and agreements. Insofar as this instrument is a security agreement and financing
statement, Grantor is the debtor and Beneficiary is the secured party. The addresses shown i n
Section 5.10 are the addresses of the debtor and secured party and information concerning the
security interest granted may be obtained from the secured party at that address. Wi thout in any
manner limiting the generality of any of the foregoing provisions: (a) some portions of the goods
described or to which reference is made are or are to become fixtures on the Lands de scribed or
to which reference is made; (b) the minerals and the like (including oil and gas) i ncluded in the
Mortgaged Property and the accounts resulting from their sale 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 referenc e is
made; and, (c) this instrument is to be filed of record in the real estate records in the counties in
which any portion of the Mortgaged Property is situated as a financing statement but the fai lure
to do so will not otherwise affect the validity or enforceability of this instrument.
5.15 Multiple Counterparts. This Deed of Trust may be executed simultaneously in a
number of identical counterparts, each of which shall be deemed an original, and all of which are
identical; provided, however, that in order to facilitate recordation, portions of Exhibit "A" which
describe Mortgaged Property situated in counties other than the particular county in whic h a
counterpart is being recorded may be omitted from such counterpart.
5.16 Assignment of Beneficiary's Interest. Beneficiary shall have the right to assign all
or a portion of its interest in this Deed of Trust to any subsequent holder of any portion of the
Obligation.
5.17 Binding Effect. This Deed of Trust is binding upon Grantor and Grantor's
Successors and shall inure to the benefit of Beneficiary and its successors and assigns. The
provisions of this Deed of Trust shall be covenants running with the Lands. The duties,
covenants, conditions, obligations, and warranties of Grantor in this Deed of Trust shall be joi nt
and several obligations of Grantor and Grantor's Successors. Each and every party who signs
this Deed of Trust, other than Beneficiary, and each and every subsequent owner of all or
