HomeMy WebLinkAbout875243 Ll[r~0()[,.[".J C0[I[',ITY 0LERK
DEEP OF ·TRUST, MORTGAGE, SECURITY AGREEMENT,
A PHOTOCOPY OF THIS INSTRUMENT MAY BE
RECORDED AS A FINANCING STATEMENT BOOK_.~._O_PR PAGF_, 5 ¢O
'Fha undersigned, Kismet Properties, Inc., a Texas corporation, whose federal tax identification number is 75-2388276, - .......
with a mailing address of P. O. Box 146, Amarillo, Texas 7910§, and Stelaron, lnc., a Texas corporation, whose federal tax
identification number is 7§-2261976, w~th a mailing address of P. O. Box 7787, Amarillo, Texas 79114 (collectively "Grantor"),
R. Wesley Savage es Trustee, whose mailing address is Post Office Box 1, Amarillo, Potter County, Texas, ("Trustee"), and
Amarillo National Bank, whose mailing address is P. O. Box 1, Amarillo, Texas 79105, ("Bank"), agree as follows;
ARTICLE 1 - DEFINITIONS
Section 1.01. Defined Terms. For the purposes of this Instrument:
{a) "Collater~P' includes Fixture Collateral, Personalty Collateral and Realty Collateral.
(b) "Effective Date means the date of execution of this instrument.
(c) "Fixture Collateral" means all of Grunter's interest in and to all Operating Equipment which is or becomes so
related to the Oil and Gas Property or any part thereof that an interest in the equipment arises under the real property Jaw of
the state in which situated.
{d) "Hydrocarbons" mean oil, gas and other liquid or gaseous hydrocarbons.
{e) "Obligations*' means the aggregate of:
(ii A promissory note dated June 25, 2001., in the original principal amount of $6,000,000,00
executed by Grantor and payable to tim order of Bank as set forth therein;
(ii) All obligations of Grantor (as "Borro.war") tjnder a Loan Agreement, dated effective June 25,
2001 between Borrower and Bank; ;' " " '.'
{iii) Any and ail other or additional indebtedness or liabilities for which Grantor is now or may
become liable to Bank in any manner (including without limitation overdrafts in a bank account),
whether under this instrument or otherwise, either primarily or secondarily, absolutely or
contingently, directly or indirectly, and whether matured or unmaturod, regardless of how the
indebtedness or liability may have been or may be acquired by Bank, it being contemplated by
the parties hereto that future and additional loans and advances may be made by Bank, at its
sole discretion, to Grantor and such future and additional loans and advances will be secured by
this instrument; and
(iv) Any and all extensions and renewals of or substitutes for any of the foregoing indebtedness,
obligations and liabilities or any part thereof.
(fi "Oil and Gas Property" means the land described in Exhibit A attached hereto and made a part hereof, together
with all of Grantor's interests of any nature whatsoever therein, now owned or hereafter acquired, including, but not limited
to, all unsevered and unextracted Hydrocarbons in, under or attributable to the land, oil and gas (or oil, gas and mineral)
leases, subleases, farmouts, royalties, overriding royalties, net profits interests, production payments and similar mineral
interests...
(gl "Operating Equipment" means ell surface or subsurface machinery; equipment, facilities, supplies or other
property of whatsoever kind br r~ature now or hereafter located on any of the Oil and Gas Property which are useful for the
production, treatment, storage or transportation of Hydrocarbons.
(hi "Personalty Collateral" means ali of Grantor'a interest in and to all Operating Equipment, all. Hydrocarbons
extracted from or attributable to the 0il and Gas Property, and all Production Sale Contracts.
(ii "Proceeds" includes whatever is received upon the sale, exchange, collection or other disposition of the
Collateral and insurance payable by reason of loss or damage to the Collateral.
(j) "Production Sale Contract" means a contract now in effect or hereafter entered into by Grantor or Grantor's
predecessors in title far the sa[e, purchase, exchange or processing of Hydrocarbons extracted from or attributable to the Oil
and Gas Property.
, ; (k) "Realty Collateral" means all of Gramor's Interest in and to the Oil end Gas Property.
(I) "Loan Agreement" means the Loan Agreement dated effective June 25, 2001 between Grantor (as Borrower)
and Bank.
ARTICLE 2 - CREATION OF SECURITY
_Sectign 2=01_. Gran~t. In consideration of Bank's advancing or extending the funds or credit constituting the Obligations, and
in consideration of the mutual covenants contained herein, and for the purpose of sec(Lring payment of the Obligations,
Grantor grants, bargains, sells and conveys the Realty Collateral unto Trustee for the benefit of Bank.
· DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT AND FINANCING STATEMENT
Page 1
171088
Section 2,02. Creation of Security Interest. In addition to the grant contained in' Section 2.01, and for the same
consideration, Grantor grants to Bank a security interest in all Personalty Collateral and Fixture Collateral now owned or
hereafter acquired by Grantor and all Proceeds,
Section 2.03, Proceeds, The claim of Proceeds shall not be construed to mean that Bank consents to the sale or other
disposition of any part of the Collateral other than Hydrocarbons extracted from or attributable to the Oil and Gas Property
and sold in the ordinary course of business.
ARTICLE 3 - COLLECTION OF PRODUCTION PROCEEDS
Section 3.01, Ba_nk'e Receipt of Production Proceeds. Bank will be entitled to receive all Hydrocarbons (and the Proceeds
therefrom) which are extracted from or attributable to the Oil end Gas Property beginning at 12:O1 A.M. on the Effective
Date. All parties producing,, purchasing and receiving Hydrocarbons or the proceeds therefrom are authorized and directed to
treat Bank as the person entitled in Grantor's place and stead to receive the same; and further those parties will be fully
protected in so treating Bank and will be under no obligation to see to the application by Bank of any Proceeds received by it.
Section 3.02, Application of Proceeds. All'payments received by Bank pursuant to Section 3,01 above shall be placed in a
collateral collection account at Bank and on the 25th day of, each month applied as follows:
la) First, toward satisfac(ion of all costs and expenses incurred in connection with the collection of Proceeds.
lb) Second, to the payment of all accrued interest on the Obligations.
lc) Third, to the payment of any than due and owing principal constituting part of the Obligations.
(d) The balance, if any, may either be applied against any unmstured principal constituting part of the Obligations
(the method of application being wholly in Bank's disc.ret on or, at Bank's option, may be released to Grantor.
Section 3.03. Grantor',s Payment Duties. Nothing Contained herein will limit the absolute duty of Grantor to make payment
on the Obligations when the Proceeds received by Bank pursuant to this Article 3 are insufficient to pay the interest and
principal then owing, and the receipt of Proceeds by Bank shall be in addition to ali other security now or hereafter existing to
secure payment of the Obligations.'
Section 3,04. Liability. of Bank, Bank has no obligation to enforce collection of any Proceeds and is I~ereby released from all
responsibility in connection therewith exce.pt the responsibility to account for Prodeeds actually received,
Section 3.05, Indemnification. Grantor agrees to indemnify Bank against all claims, actions, liabilities, losses, judgments (all
of which are hereafter referred to in this Section 3.05 as "Claims"), and all costs and expenses and other charges of any
description whatever, including (without limitation) all costs and expenses including attorney's fees incurred in investigating
into or defending against any Claims,. made against or sustained or incurred by Bank ss a consequence of the assertion,
either before or after the payment in fuji of 'the Obligations, that Bank received Hydrocarbons attributable to the Collateral or
Proceeds pursuant to this instrument, Bank will have the right to employ attorneys and to defend against Claims, and unless
furnished with reasonable indemnity, Bank: will have the right to pay or compromise and adjust ali Claims. Grantor shall
indemnify and pay to Bank all amounts as may be paid by Bank in compromise or adjustment of any Claim or es may be
adjudged against Bank in respect of any C,laim. The liabilities of Grantor as set forth in this Section 3.05 will survive the
termination of this instrument.
ARTICLE 4 - GRANTOR'S WARRANTIES AND COVENANTS
Section 4,01. .Payment of Ob 9atone. G~antor covenants that all Obligations shall be paid when due. If any part of the
Obligations is not evidenced by a writing specify!ng a due date, the same shalt be paid upon demand. All Obligations are
payable to Bank at the address shpwn abov,~. ' '
Section 4.02. Warranties.
la) Grantor warrants that;
(i) Grantor, to the extent of tbs interests specified in Exhibit A, has good title to each property right or
interest constituting the ColJaterai free anti.clear of any claims created by, through or under Grantor, but not otherwise, and
has a good and legal right to grant and convey same to the Trustee and Bank; and
(ii) To the best of Grantor's knowledge, the oil and gas (or oil, gas and mineral) leases included in Oil and
Gas Property are valid and subsisting and ail rentals and royalties due under each of them have been properly and timely paid;
and '
(iii) No approval or con...'ent of any regulatory or administrative commission or authority or of any other
governmental body is necessary to authoriz~ the execution and delivery of this instrument or of any other written instruments
constituting or evidencing the Obligations.. or to authorize the observance or performance by Grantor of the covenants
contained in this instrument or in the other written instrbments; and
(iv) To the best know':edge of Grantor, ail information contained in statements furnished or to be
furnished Bank by or on behalf of Grantor in connection with any cf the Obligations or any request made pursuant to this
instrument is or will be complete and accurate; and
DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT AND FINANCING STATEMENT
Page 2
171088
(v) Grantor is not obligated, by virtue of a prepayment arrangement under any Production Sale Contract .
containing a "take or pay" clause or similar arrangement, to deliver Hydrocarbons at some future time without then or
thereafter receiving full payment therefor,
(b) To the best knowledge cf Grantor, ali ef the warranties and representations of Grantor contained in this
instrument are and will 'be in all respects true and correct both as of the date of execution of this instrument and the
Effective Date and as of the date of each extension of credit by Bank to Grantor, and the warranties contained in Section
4.02(a)(4) also shall be in all respects true and correct when any item such as referred to therein is furnished to Bank.
(c) Grantor shall warrant and forever defend the Collateral against every person whomsoever lawfully claiming the
same or any part thereof, by, through or under Grantor, but not otherwise, and Grantor shall maintain and preserve the lien
and security Interest herein created as long as any of the Obligations remains unpaid.
Section 4.03, Further Assurances. Grantor agrees to execute and deliver such other and further instruments and do such
other and further acts as in the opinion of Bank may be necessary or desirable to carry out more effectively the purposes of
this instrumenl:, including, without limiting the generality of the foregoing:
(al Prompt correction of any defect which may hereafter be discovered in the title to the Collateral if said defect
would reasonably be e~pected to'have a' m~terial adverse effect on Borrower's business or financial condition, or in the
execution and acknowledgment of this instrument, any written instrument constituting or evidencing any of the ObJigations,
or any other document used in connection herewith; and
(b) Prompt execution and delivery of all division or transfer orders which in Bank's opinion are required to transfer
to Bank the proceeds from the sale of all Hydrocarbons severed and extracted from or attributable to the Oil and Gas
Property,
Section 4.04. Operation of Mortgaged Property. As long as any of the Obligations remain unpaid, and whether or not
Grantor is the operator of the Oil and Gas Property, Grantor shall (at Grantor's own expense):
(al Do all things necessary to keep Grantor's rights in the Col'lateral unimpaired; and
(b) Not abandon any well or forfeit, surrender or release .any lease, sublease or farmout or any operating agreement
without the Bank's prior written consent; and
(c} Cause the Collateral to be maintained, developed and protected against drainage and continuously operated for
the production of Hydrocarbons in a good and workmanlike manner as a prudent, operator would in accordance with generally
accepted practices, applicable operating agreements, end all applicable federal, state and local laws, rules and regulations;
'and
(d) Promptly pay or cause to be paid when due and owing all rentals and royalties payable in respect of the
Collateral; all expenses incurred in or arising, from the operation or development of the Collateral; and alt taxes, assessments
and governmental charges legally imposed upon this instrument, upon the Collateral, and upon the interest of Bank or of the
Trustee; and
(el Cause the Operating Equipment to be kept in good and effective operating condition and cause to be made all
repairs, renewals, replacements, additions and improvements thereof or thereto needful to the production, of Hydrocarbons
from the Oil and Gas Property; and permit the Trustee and Sank (through its agents and employees) to enter upon the Oil and
Gas Property for the purpose of investigating and inspecting the conditions and operations of the Collateral; and
(fl Cause the Collateral to be kept free and clear of liens, charges, sequrity interests, and encumbrances of every
character other than the lien and security interest created by this instrument; taxes constituting a lien but not due and
payable; defects or irregularities in title which are not such as to interfere materially with the development, operation or value'
of the Collateral and not such as to materially affect title thereto; those being contested in good faith by Grantor and which
do not, in the judgment of Sank, jeopardize the Trustee's and Bank's rights in and to the Collateral; and those consented to in
writing by the Sank; and
(gl Carry liability insurance on the Properties covered by the Deed of Trust for such amount and in the form and with
such insurance company or companies as may be approved by the Bank. Grantor shall deliver the insurance policy to Bank with a
mortgage indemnity clause as directed by Bank and shall deliver renewals of the policy to Bank at least thirty (30) days before the
expiration of the policy.
Section 4.05. Recording .a.nd Filin,q. Grantor shatI pay all costs of filing, registering and recording this and every other
instrument in addition or supplemental thereto, and all financing statements Bank may require, in such offices and places and
at such times and as often as may be,' in the judgment of Sank, necessary to preserve, protect and renew the lien and
security, interest herein created as a first lien and prior security interest on and in the Collateral and otherwise do and perform
all matters or things necessary or expedient to be done or observed by reason of any law or regulation of any State or of the
United States or of any other competent authority for the purpose of effectively creating, maintaining and preserving the lien
and security interest created herein and on the Collateral. Grantor shall also pay the costs of obtaining reports from
appropriate filing officers concerning financing statement filings in respect of any of the Collateral in which a secUrity interest
is granted herein,
Section 4.06. Records, Statements and Reports. Grantor shall at all times timely deliver the financial and engineering
records, statements and reports required by the Loan Agreement.
DEED OF TRUST, MORTGAGE, SECURITY AGREEM'I=NT AND F NANC NG STATEMENT
Page 3
171088
569
Section 4.07. Provision Applicable t.o Corporate Grantor. If Grantor is a corporation, it is, and will continua to be, duly
organized and existing under the laws of the state in which it is incorporated, duly qualified to transact business in each state
where the coqduct of its business requires it to be qualified (except where the failure to so qualify would not rea~'onabty be
expected to have a material adverse effect on Grantor's business or financial condition), and duly authorized to execute and
deliver the written instruments comprising the Obligations and this instrument and to observe and perform its duties
thereunder and hereunder. It will not, without the prior written consent of Bank, reorganize or Consolidate or merge with any
other corporation.
ARTICLE 5 - DEFAULT
.S. ectiop §~O1. Event of Default. The term "Event of Default" means the occurrence of an Event of Default as defined in the
Loan Agreement.
Section 5.02. Acceleration upon Default. Upon the occurrence of any Event of Default, or at any time thereafter, Bank may,
at its option, declare the entire unpaid principal of and the interest accrued on the Obligations to be forthwith due and
payable, without any notice, presentment or demand of any kind, all of which are hereby expressly waived.
Section 5.03. Operation of Property. Upon the occurrence of an Event of Default, or at any time thereafter, and in addition
to all other rights herein conferred on the Trustee, the Trustee (or any person, firm or corporation designated by Bank) will
have the right and power, but will not be obligated, to ente~ upon and take possession of alt or any part of the Collateral, to
exclude Grantbr ~herefrom, and to hold, use, administer, manage and operate the same to the extent that Grantor could do
so, The Trustee, or any person, firm or corporation designated by Bank, may operate the property without any liability to
Grantor in connection with the operations except for bad faith; and the Trustee or any person, firm or corporation designated
by Bank, will have the right to collect, receive and receipt for all Hydrocarbons produced and soid from the properties, to
make repairs, to purchase machinery and equipment, to conduct work-over operations, to drill additional wells, and to
exercise every power, right and privilege of Grantor with respect to the Collateral. Providing there has been no foreclosure
sale, when and if the expenses of the operation and development (including cosl~s of unsuccessful work-over operations or
additional wells) have been paid and the Obligations paid, the properties shall be returned to the Grantor.
.Section 5.04 Ancillary Rights. Upon the occurrence of an Event of Default, or at any time thereafter, and in addition to all
other rights, Bank may proceed by a suit or suits in equity or 'at law for the specfic performanc~ of any covenant or
agreement.herein contained or in aid of the execution of any power herein granted, for the appointment of a receiver pending
any foreclosure or sale hereunder, or for the enforcement of any other appropriate legal or equitable remedy.
ARTICLE 6 - BANK'S RIGHTS
AS TO REALTY COLLATERAL UPON DEFAULT
Sect[on 6.01. Judicial Foreclosure. Upon the occurrence of an Event of Default, or at any time thereafter, Jn lieu of the
exercise of the non-judicial power of sale hereafter given, Bank may proceed by suit for foreclosure of its lien and for a sale
of the Realty Collateral,
Section 6.02. Non-Judicial Foreclosure. Upon the occurrence of an Event of Default, or at any time thereafter, the Trustee
shall, in response to Bank's request '(which Grantor agrees will be presumed to have been given), enforce this trust by selling
the Realty Collateral situated in Texas in its entirety or in parcels, as the Trustee ma, y elect, to the highest bidder for cash at
public auction in the following manner: Where the Realty Collateral is situated in more than one county, it may be sold in any
county in which any part is situated, Notice shall be given in each such county and shall designate the county where the sale
is to be made. Notice of the proposed sale shall be- given by .posting written notice thereof at least twenty-one days
preceding ~he date of the s,~le at the place designated by the county commissioners of the county in which the sale is to be
made for the posting of foreclosure notices and by filing a copy of such notice in the office of the county clerk of such
county. If the Realty Collateral is in more than one county, one notice shall be posted in each county in which the Realty
Collateral is situated and a copy of such notice shall be filed in the office of the county clerk of each county in Which the
Realty Collateral is situated. The notice shall state the earliest time at which the sale will occur and the sale shall be
commenced within three hours of such time. In eddition, at least twenty-one days'preceding the date of sale Bank shall serve
written notice of the proposed sale by certified mail upon each debtor obligated to pay the Obligations according to Bank's
records. Service of the latter notice shall be completed upon deposit of the notice, enclosed in a postpaid wrapper, properly
addressed to each debtor at the most recent' address as shown by Bank's records, in a post office or official depository under
the care and custody of the United States Postal Service. The affidavit of any person having knowledge of the facts to the
effect tha~ the service was completed shall be prima facie evidence of the fact of service. The sale shall be made at public
auction Between the hours of 10;00 A.M. and 4:00 P.M. on the first Tuesday in any month. Such sale shall be in the area
designated by the county commissioners for foreclosure sales or, if no area has been designated, at the location at the
courthouse designated in the notice of sale. Sale of e part of the Realty Collateral witI not exhaust the power of sale, and
sales may be made from time to time until all the property is Sold or the Obligations are paid in full. The Trustee will have the
authority to appoint an attorney-in-fact to act as trustee in conducting the foreclosure sale and executing a deed to the
purchasers.
Section 6.03. Foreclosure in States Other Than Texas. Upon the occurrence of an event of default, or at any time
thereafter, Bank may proceed by non-judicial foreclosure (if allowed under the law of the state in which the Realty Collateral
DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT AND FINANCING STATEMENT '
Page 4
171088
is located) or by judicial foreclosure, or may proceed in any other manner for foreclosure upon and sate of the Realty
Collateral as allowed by law in the state in which the Realty Collateral is located.
ARTICLE 7 - BANK'S RIGHTS
AS TO PERSONALTY AND FIXTURE COLLATERAL UPON DEFAULT
Section 7.01. Personalty Collateral. Upon the occurrence of an Event of Default, or at any time thereafter, Bank may,
without notice to Grantor, exercise its right to declare all Obligations secured by the security interest created herein to be
immediately due and payable in which case Bank will have all rights and remedies granted by law and particularly by the
Uniform Commercial Code in each state in which the Personalty Collateral is located, including but not timited to, the right to
take possession of the Personalty Collateral, and for this purpose Bank may enter upon anv premises on which any or all of
the Personalty Collateral is situated and take possession of and operate Personalty Collateral or remove it therefrom. Bank
may require Grantor to assemble the Personalty Collateral and make it available to Bank at a place to be designated by Bank
which is reasonably convenient to both parties. Unless the Personalty Collateral is pedshabie or threatens to decline speedily
in value or is of a type customarily sold on a recognize~J market, Bank will give Grantor reasonable notice of the time and
place of any public sale or of the time after which any private sale or other dispbsition of the Personalty Collateral is to be
made. This requirement of sending reasonable notice will be met if the notice is mailed, postage prepaid, to Grantor at the
address designated abov,e at least tan days b.efore the time of the sale or disposition.
Section 7.02. Sale with Realty Collateral. in the event of foreclosure, whether judicial or non-judicial, at Bank's option it
rnay proceed under the Uniform Commercial Code as to the Personalty Collateral or it may proceed as to both Realty
Collateral and Personalty Collateral in accordance with its rights and remedies in respect of the Realty Collateral.
Section 7.03. Fixture Collateral. Upon the occurrence of an Event of Default, or at any time thereafter, Bank may elect to
treat the Fixture Collateral as either Realty Collateral or as Personalty Collateral and proceed to exercise such rights as apply
to the type of Collateral selected.
ARTICLE 8 - OTHER PROVISIONS CONCERNING FORECLOSURE
Section 8.01. Bank as Purchaser. Bank will have the right to become the purchas'er at any' foreclosure sale, and it will have
the right to credit upon the amount of the bid the amount payable to it out of the net proceeds of sale.
Section 8,02. Certain Aspects of Non-Judicial Foreclosure. Recitals contained in any conveyance to any purchaser at any
sale made hereunder will conclusively establish the truth and accuracy of the matters therein stated, including, without
limiting the generality of the foregoing, nonpayment of the unpaid principal sum of, and the interest accrued on, the written
instruments constituting part or all of the Obligations after the same have become due and payable, advertisement and
conduct of the sale in the manner provided herein, and appointment of any successor Trustee hereunder. Any purchaser or
purchasers will be provided with a general warranty deed binding Grantor. Grantor ratifies and confirms all legal acts that the
Trust'ee may do in carrying out the Trustee's duties and obligations under this instrument.
Section 8.03. Effect of Sale. Any sale or sales of the Collateral or any part thereof will operate to divest all right, title,
interest, claim and demand whatsoever either at law or in equity, of Grantor in and to the premise~' and the property sold,
and will be a perpetual bar, both at law and in equity, against Grantor, Grantor's heirs, personal representatives, successors
or assigns, and against any and all persons claiming or who shall thereafter claim all or any of the property sold from, through
or under Grantor, or Grantor's heirs, personal representatives, 'successors or assigns. The purchaser or purchasers at the
foreclosure sale will receive, immediate possession of the property purchased; and if Grantor retains possession of the Realty
Collateral, or any part thereof, subsequent to sale, Grantor will be considered a tenant at sufferance of the purchaser or
purchasers,
ARTICLE 9 - MISCELLANEOUS
Section 9.01. _Application of Proceeds. The proceeds of any sale of the Collateral or any part thereof, whether judicial or
non-judicial, wilt be applied as follows:
(a) First, to the payment of all expenses incurred by Bank and the Trustee in conhection therewith, including,
without limiting the generality of the foregoing, court costs, legal fees end expenses, and expenses of any entry or taking of
possession, holding, preparing for sale, advertising, selling and conveying; (bi Second, to the payment of the Obligations; and
(c) Third, any surplus thereafter remaining will be paid to Grantor or Grantor's successors or assigns, as their
interest may appear.
Section 9.02. Deficiency. Grantor will remain liable for any deficiency owing on the Obligations after application of the net
proceeds of any foreclosure sale.
Section 9.03. Grantor's W.aiver of Appraisement, Marshalling, etc. To the fultest extent allowed by applicable law, Grantor
agrees that Grantor will not at any time insist upon or plead or in any manner whatever claim the benefit of any
appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the
DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT AND FINANCING STATEMENT
Page 5
171088
57!
enforcement or foreclosure of this instrument, the abso ute sale of the Collateral, or the possession thereof by any purchaser
at any sale made pursuant to this instrument or pursuant to the decree of any court of competent jurisdiction. Grantor, for
Grantor and all who may claim through or under Grantor, hereby waives the benefit of all such laws and to the extent that
Grantor may lawfully do so under applicable state Jaw, waives any and all right to have the Realty Collateral 'marshaled upon
any foreclosure of the lien hereof or so d in inverse order of alienation, and Grantor agrees that the Trustee may sell the
Realty Collateral ss an entirety. .
Section 9.04. Successor Trustees. The Trustee may resign in writing addressed to Bank or be removed at any time with or
without cause by an instrument in writing duly executed by Bank. In case of the death, resignation or removal of the Trustee,
a successor Trustee may be appointed by Bank by instrument of substitution complying with any applicable requirements of
law, and in the absence of any such requirement, without other formality than an appointment and designation in writing.
Any appointment and designation will be full evidence of the right and authority to make the same and of all facts therein
recited, Upon the making Of any appointment and designation, all the estate and title of the Trustee in all of the Realty
Collateral will vest in the named successor Trustee, and the successor will thereupon succeed to all the rights, powers,
privileges, immunities and duties hereby conferred upon the Trustee. All references herein to the Trustee will be deemed to
rsfer to the Trustee from time to time acting hereunder.
Section 9.05. Advances by Bank or the Trustee. If Granto'r fails to perform or keep any of its covenants of whatsoever kind
or nature contained in this instrument, Bank, dr the Trustee or any receiver appointed hereunder, may, but will not be obliged
to, make advances to p~rform the same in Grantor's bel~alf, and Grantor hereby agrees to repay the advanced sums and any
attorney fees incurred in connection therewith upon demand plus interest at the maximum lawful rate. No advance will be
deemed to relieve Grantor from any default hereunder,
Section 9,06. Defense of Claims. Grantor shall promptly notify the Trustee and Bank in writing of the commencement of
any legal proceedings affecting Bank's interest in the Collateral, or any part thereof, and shall take such action, employing
attorneys acceptable to the Trustee and Bank, as may be necessary to preserve Grantor's, the Trustee's and Bank's rights
affected thereby; and should Grantor fail or refuse to take any such action, the Trustee or Bank may take the action in behalf
of and in the name of Grantor and at Grantcr's expense. Moreover, Bank or the Tri~stee on behalf of Bank, may take
independent action in connection therewith as they ma~, in their discretion deem proper, and Grantor'hereby agrees to make
reimbursement for' all sums advanced and all expenses incurred in such actions I~lus interest at the maximum lawful rate.
.Section 9.07. Termination. if all the Obligations are paid in full and the covenants herein Contained are well and truly
performed, then all of the Collateral will revert to Grantor and the entire estate, right, title and interest of the Trustee and
Bank will thereupon cease. In such case Bank shall, upon the request of Grantor and at Grantor's cost and expense, deliver to
Grantor proper instruments acknowledging the release of this instrument.
Section 9,08. Renewalsr Amendments and Other Security. Renewals and extensions of the Obligations may be given at any
time, amendments may be made to agreements relating to any part of the Obligations or the Collateral, and Bank may take or
hold other security for the Obligations without notice to or consent of Grantor. The T~ustee or Bank may resort first to other
security or any part thereof, or first to the security herein given or any part thereof, or from time to time to either or both,
even to the partial or complete abandonment of either security, and such action Will not be a waiver of any rights conferred
by this instrument.
Section 9.09. Effect of Instrument. This instrument shall be deemed and construed to be, and may be enforced as, an
assignment, chattel mortgage or security agreement, contract, deed of trust, financing statement, financing statement filed
as a fixture filing, and real estate mortgage, and as any one or more of them if appropriate under applicable state law. This
instrument is to be filed in the real estate records of the appropriate jurisdictions and in such other records as the Bank may
decide. A photocopy of this instrument may be filed as a financing statement.
Section 9.10. Limitations on Interest. No provision of any note or other instrument constituting or evidencing any of the
Obligations or any other agreement between the parties shall require the payment or permit the collection of interest in
excess of the maximum lawful rate at which Grantor may stipulate and agree to pay as determined by a court of competent
jurisdiction, if it be so determined that any excess interest is provided for by any note, instrument or other agreement, then
this Section 9.10 shall govern, and Grantor shall not be obligated to pay the atnount of interest to the extent that it is in
excess of the amount permitted by law, and any excess interest paid shall be credited to Grantor.
Section'9.11. Unenforceable or inapplicable Provisions. If any provision hereof or of any of the written instruments
constituti,ng part or all of the Obligations is invalid or unenforceable in any jurisdiction, the other provisions hereof and of the
written instruments will remain in full force and affect in that jurisdiction, and the remaining provisions hereof will be liberally
construed in favor of the Trustee and Bank in order to carry out the provisions hereof. The invalidity of any provision of this
instrument in any jurisdiction will not effect the validity or enforceability of any provision in any other jurisdiction. Any
reference herein contained to a statute or law of a state in which no part of the Collateral is situated will be deemed
inapplicable to, and not used in, the interpretation hereof.
Secti(~n 9.12. ~ights Cumulative.' Each and every right, power and remedy herein given to the Trustee and Bank, or either of
them, herein or in any other written instrument relating to the Obligations will be cumulative and not exclusive; and each and
every right, power and remedy whether specifically herein given or otherwise existing may be exercisedfrom time to time
DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT AND FINANCING STATEMENT
Page 6
171088
13875 ,3 57
and as often and in such order as may be deemed expedient by the Trustee, or Bank, as the case may be, and the exercise,
or the beginning of the exercise, of any such right, power or remedy will not be deemed a waiver of the right to exercise, at
the same time or thereafter, any other right, power or remedy, A waiver by Bank or the Trustee of any right or remedy on
any occasion will not be a bar to the exercise of any right or remedy on any subsequent occasion.
Section 9.13. Non-Waiver. No act, delay, omission or course of dealing between Bank or Trustee and Grantor will be a
waiver of any of Bank's or Trustee's rights or remedies. No waiver, change or modification in whole or in Part of this
instrument or any other written instrument will be effective unless in writing signed by Bank.
.S_~ction 9.14. Bank's Exp.e.p.$es. Borrower agrees to pay in full all reasonable expenses and attorneys' fees of Bank which
may have been or may be incurred by Bank in connection with the preparation of this instrument and other related
documents, the lending hereunder, the collection of the Obligations, and the enforcement of any of Borrower's obligations
hereunder and under any documents executed in connection with the Obligations.
.S..ection 9.1,5. Iqt.~rpretation.
(a) Article and section headings .used in this instrument are intended ior convenience only and shall be given no
significance whatever in interpreting and construing the pro'~isions of this instrument.
(b) As used in this instrument, "Bank," "Trustee," and "Grantor" include their respective heirs, personal
representatives, successors and assigns, Unless context otherwise requires, words, in the singular number include the plural
and in the plural number include the singular. Words of the masculine gender include the feminine and neuter gender, and
words of the neuter gender may refer to any gender.
(c) Tile term ."Grantor" includes all persons who execute this instrument as Grantor. If more. than one person
executes this instrument as Grantor, their duties and liabilities under this instrument will be joint and several.
(d) In the event of any conflict between the instrument and the Loan Agreement, the Loan Agreement shall
control.
Section 9.16. Counterparts. This instrument may be executed in any number of counterparts, each of which will for all
purposes be deemed to be an original, and all of which are ident.ical except th,.at,.to faci{i!ate recor~l'ation, in any particular
counterpart portions of Exhibit A hereto which describe properties situated in counties {or parishes) ol~her than the county (or
parish) in which the counterpart is to be recorded may have been omitted.
Section 9~1, 7. Entire A.qresment The terms and conditions of this document together with all other documents referred to in
the Loan Agreement ("Loan Documents") constitute the entire understanding and agreement between Grantor and Bank with
respect to the transactions arising in connection with the indebtedness secured hereby and supersede all prior written or oral
understandings and agreements between Grantor and Bank with respect to the matters addressed in the Loan Documents.
Grantor hereby acknowledges that, except as incorporated in writing in the Loan Documents, there are not, and were not,
and no persons are or were authorized by Bank to make, any representations, understandings, stipulations, agreements or
promises, oral or written, with respect to the matters addressed in the Loan Documents. For purposes of this Section, the
term "Loan Documents" shall mean this Deed of Trust, Mortgage, Security Agreement, and Financing Statement (Oil and
Gas); the note or notes described in Section 1.01 hereof; one or more Financing Statements (UCC-I's); one or more Letters
in Lieu of Transfer Order; one or more Guaranty Agreements, if any; and the Loan Agreement and ,~il documents referred to
in the Loan Agreement.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BF
CONTRADICTED BY EVIDENCE OF PRIOR. CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN 'THE PARTIES.
EXECUTED effective.as of the 25th day af June, 2001.
GRANTOR:
KISMET P R.~RT;~ ~~
STATE OF TEXt'S. , ,
COUNTy o.
'. -~: ;,~erue~ into . t' , of said corporation.
DEED OF TRUST, M~RyG~~~E~T'~'D' FiNANCiNG STATEMENT ,
Page 7
171088
STELARON, INC.
Printed
Title: _~'f'~ ~'.~-~-
STATE OF TEX~ ,
COUNTY OF
% . ~l'his ,r~strumant was acknowledged before ma on tha~_~T"'~J""~ay o~k~_~fdJ~[~_ ,2001, by
~e~lO~ ~p~'"" of Ste arch, Inc.; a Texas corporation, on behalf of said corporation.
Notary Public, Statdo~ Texa~
BANK: ~. -- ~ RILLO NATIONAL _BANK .
',:., . ... . .,... .,.., .,,,, ~.~.,~'¢~.'~NW '' ° Title: ./¢~'¢,~. ~. ~__- ~/..~-~.~.~/~..~
STATE OF TE"~S, I "
COUNTY oF
~_~. T)~ instrument was acknowledged befora me on the ~day ~ ¢~ , 2001, by
, ~, of Amarillo National Bank, a national banking association, on b~lf of said national ba~ing~Sociation.
Notary Public, State ~f'Ta~ -
DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT AND FINANCING STATEMENT
Page 8
171088
EXHIBIT A
STATE OF WYOMING
All of the right, tit.!e and interest of STELARON, .INC, in and to the following wells an.d leases
in the State of Wyoming, to-wit:
LINCOLN COUNTY
~Blackiack 30-12:
~Black!ac. k UTI; ,
Blackjack UT3:
(Owner: Stelaron, ,Inc.)
The following properties in Blackjack Unit (ID No. WY-063) located in Lincoln County, Wyoming:
No.: 414
Lessor: USA-W-0320339-A
Lessee: George P. Walter, Jr.
Date: 12/01/65 (recorded in Book 502, page 78)
Description: Township 22 North, Range 113 West "
Section 11: NE/4 NE/4, containing 40 acres, more or less
No.: 415
Lessor: USA-W-0321448
Lessee: Melvin Wolf
Date: 01/01/66 (not recorded)
Description: Township 22 North, Range 113 West
Section 2:E/2 SE/4, containing 80.00 acres, more or less
No.: 416
Lessor: USA-2-0310572
Lessee: Balta Corporation
Date: 10/01/65 (not recorded)
Description: Township 22' North, Range 113 West
Section 1:W/2 SE/4, SW/4, Lot 7
Section 12: NW/4, NE/4 SW/4, W/2 E/2, and Lots 1, 2 and 3, cont. 719.44 acres m/1.
~NSOFAR AND ONLY INSOFAR as the above Leases cover rights from the surface of the earth down to the
stratigraphic equivalent of 12,033 feet subsurface, as encountered in the Davis Oil #1 Blackjack Unit well, located in
the SW/4 SW/4 of Sec. 1, Township 22 North, Range 113 West, 6th Prime Meridian, Lincoln County, Wyoming.
Wyoming Leases - Lincoln County Page 1