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EXHIBIT 4.39
MORTGAGE, DEED OF TRUST, ASSIGNMENT OF
PRODUCTION, SECURITY AGREEMENT AND FINANCING STATEMENT
DATED AS OF MARCH 15, 2000
BETWEEN
TRANSTEXAS GAS CORPORATION
(MORTGAGOR AND DEBTOR)
TO
JACK MACGOWAN, TRUSTEE
FOR THE BENEFIT OF
GMAC COMMERCIAL CREDIT LLC, AS AGENT
(MORTGAGEE AND SECURED PARTY)
"THE OIL AND GAS INTERESTS INCLUDED IN THE MORTGAGED PROPERTY WILL BE FINANCED
AT THE WELLHEADS OF THE WELLS LOCATED ON THE PROPERTIES DESCRIBED HEREIN, AND
THIS FINANCING STATEMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE
REAL ESTATE RECORDS."
"SOME OF THE PERSONAL PROPERTY CONSTITUTING A PORTION OF THE MORTGAGED PROPERTY
IS OR IS TO BE AFFIXED TO THE PROPERTIES DESCRIBED HEREIN AND THIS FINANCING
STATEMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE
RECORDS."
The mailing address of the above-named Mortgagee and Secured Party is 1290
Avenue of the Americas, New York, New York 10104, Attn: Thomas W. Strachan; the
mailing address of the above-named Mortgagor and Debtor is 1300 North Sam
Houston Parkway East, Suite 310, Houston, Texas 77032, Attn: Ed Donahue; and the
mailing address of the Trustee is c/o GMAC Commercial Credit LLC, 1290 Avenue of
the Americas, New York, New York 10104.
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.
THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.
ATTENTION OF RECORDING OFFICERS: This instrument is a Mortgage of both
real and personal property and is, among other things, a Security Agreement and
Financing Statement under the Uniform Commercial Code. This instrument creates a
lien on rights in or relating to lands of Mortgagor which are described in
SCHEDULE 1, together with its accompanying EXHIBITS, all of which are attached
hereto.
Recorded counterparts should be returned to:
Haynes and Boone, LLP
901 Main Street, Suite 3100
Dallas, Texas 75202
Attention: Jeffrey L. Curtis
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MORTGAGE, DEED OF TRUST, ASSIGNMENT OF
PRODUCTION, SECURITY AGREEMENT AND FINANCING STATEMENT
This Mortgage, Deed of Trust, Assignment of Production, Security
Agreement and Financing Statement, from TRANSTEXAS GAS CORPORATION, a Delaware
corporation ("MORTGAGOR"), to JACK MACGOWAN, as Trustee ("TRUSTEE") for the
benefit of GMAC COMMERCIAL CREDIT LLC, as a Lender and as Agent (in its capacity
as Agent for the benefit of the Lenders now or in the future party to the Credit
Agreement, together with its successors or assigns, "MORTGAGEE"), is made and
entered into as of this 15th day of March, 2000.
RECITALS
Mortgagor is a debtor in bankruptcy in the proceedings styled In re:
TransTexas Gas Corporation, TransAmerican Energy Corporation, TransAmerican
Refining Corporation, Case No. 99-21550-C-11 (Jointly Administered) in the
United States Bankruptcy Court for the Southern District of Texas, Corpus
Christi Division (the "COURT").
Mortgagor has filed with the Court that certain Second Amended Modified
and Restated Plan of Reorganization under Chapter 11 of the Bankruptcy Code
Proposed by Debtor (the "PLAN"). On February 7, 2000, the Court entered its
Order Confirming Debtor's Second Amended, Modified and Restated Plan of
Reorganization confirming the Plan. Additionally, the Court has issued its Order
in Furtherance of Order Dated February 7, 2000 Confirming Debtor's Chapter 11
Plan, a copy of which is attached hereto as SCHEDULE 1 (the "IMPLEMENTATION
ORDER") (except that, in accordance with the provisions of the Implementation
Order, there are attached as Exhibits to the copy of the Implementation Order
attached hereto the legal descriptions of the real properties, and estates and
interest therein, situated in the county and state in which a counterpart of
this Mortgage is filed of record).
Pursuant to the Plan, Mortgagor and Mortgagee are entering into that
certain Oil & Gas Revolving Credit and Term Loan Agreement, dated as of March
15, 2000 (as amended or modified and in effect from time to time, the "CREDIT
AGREEMENT").
Pursuant to and on the terms and conditions set forth in the Credit
Agreement, Mortgagee, and the Lenders referred to therein, have granted to
Mortgagor the following credit facilities, all as more particularly defined and
described in the Credit Agreement: (i) certain "Revolving Advances" and a
"Swingline Loan" which, collectively, are in the in the maximum principal amount
outstanding not to exceed at any time $30,000,000; and (ii) a "Term Loan" in the
maximum principal amount of $22,500,000.
Accordingly, Mortgagor has executed and delivered to Mortgagee, and the
Lenders, certain promissory notes (collectively, and as defined in the Credit
Agreement, the "NOTES") to evidence Mortgagor's repayment obligations under the
credit facilities provided in the Credit Agreement.
Under the terms of the Credit Agreement, Mortgagee is acting as the
Agent for, and for the benefit of, the Lenders, and the holders of the Notes.
Mortgagor is entering into this Mortgage pursuant to its obligations
under the Credit Agreement and for the purpose, among other things, of securing
and providing for the repayment of the Notes.
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ARTICLE I
DEFINITIONS
1.1. CERTAIN DEFINED TERMS. Unless the context otherwise requires, as
used in this Mortgage and all amendments, extensions, modifications, renewals,
supplements or waivers hereof or hereto, the following terms shall have the
following meanings, which meanings shall be equally applicable to both the
singular and plural form of such terms.
"AGENT" shall have the meaning assigned to that term in the
Credit Agreement.
"BUSINESS DAY" shall have the meaning assigned to that term in
the Credit Agreement.
"COLLATERAL" shall have the meaning set out in ARTICLE VIII of
this Mortgage.
"CONTRACT RIGHTS" shall mean all contracts, operating
agreements, mineral purchase agreements, rights of way, easements, surface
leases, permits, licenses, pooling or unitization agreements, pooling
designations and pooling orders and all other contracts or agreements pertaining
to or affecting the Mortgaged Properties or which were executed in connection
with the drilling for, producing, processing, treating, handling, storing,
transporting or marketing oil, gas or other minerals from the Mortgaged
Properties or from any properties unitized or pooled therewith, including - but
not limited to - the contracts listed on SCHEDULE 1, EXHIBIT D attached hereto.
"CREDIT AGREEMENT" shall have the meaning assigned to that
term in the introduction to this Mortgage.
"DEBTOR" shall have the meaning set out in ARTICLE VIII of
this Mortgage.
"DOCUMENTS" shall have the meaning assigned to that term in
the Credit Agreement.
"DTPA" shall mean the Texas Deceptive Trade Practices Consumer
Protection Act, Subchapter E of Chapter 17 of the Texas Business and Commerce
Code.
"EQUIPMENT" shall mean and include all of Mortgagor's now
owned or hereafter acquired, "equipment" as such term is defined in Article 9 of
the New York UCC, including without limitation, vehicles -- including, but not
limited to, all trucks, automobiles, trailers, and other vehicles, whether or
not covered by a certificate of title -- drilling rigs, workover rigs, fracture
stimulation equipment, well site compressors, rolling stock, related equipment,
and other assets accounted for as equipment by Mortgagor on its financial
statements, all proceeds thereof (from insurance or otherwise), together with
all documents of title, books, records, ledger cards, files, correspondence and
computer files, tapes, disks and related data processing software that at any
time evidence or contain information relating to the foregoing.
"EVENT OF DEFAULT" shall have the meaning assigned to that
term in SECTION 6.1.
"HIGHEST LAWFUL RATE" shall mean the maximum non-usurious
amount and the maximum non-usurious rate of interest that, under applicable law,
is permitted to be contracted for, charged, reserved, or received on the
Indebtedness.
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"HYDROCARBONS" shall mean oil, natural gas, condensate and
natural gas liquids, including any held as "inventory" (as such term is defined
in Article 9 of the New York UCC).
"INDEBTEDNESS" shall mean the following indebtedness and
liabilities of Mortgagor (and any extensions, renewals, refundings, increases,
substitutions, replacements, consolidations, modifications or rearrangements of
such indebtedness and liabilities, whether or not Mortgagor executes any
extension agreement or renewal instrument):
(a) all principal, premiums, accrued interest and any other
sums now or hereafter owing on the Notes;
(b) all amounts advanced or expended by Mortgagee under or in
connection with the Credit Agreement or this Mortgage, all reasonable costs and
out-of-pocket expenses (excluding expenses representing administrative overhead)
at any time and from time to time incurred by the Trustee or Mortgagee in
connection with the administration and/or enforcement of this Mortgage, the
Notes or the Credit Agreement (including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel employed by the Trustee or Mortgagee
in connection therewith), and all sums due or to become due at any time and from
time to time hereunder or under the Credit Agreement to the Trustee or
Mortgagee, it being contemplated that Mortgagor may hereafter become indebted to
Trustee or Mortgagee in such further sum or sums; and
(c) all other amounts payable by Mortgagor under the Credit
Agreement.
"INVENTORY" shall mean all of Mortgagor's now owned or
hereafter acquired, "inventory" as such term is defined in Article 9 of the New
York UCC, including (without limitation), casing, drill pipe and other supplies
accounted for as inventory by the Mortgagor on its consolidated financial
statements (excluding Hydrocarbons), all proceeds thereof (from insurance or
otherwise), together with all documents of title, books, records, ledger cards,
files, correspondence and computer files, tapes, disks and related data
processing software that at any time evidence or contain information relating to
the foregoing.
"LANDS" shall mean that real property in AUSTIN, BRAZORIA,
CALHOUN, CHAMBERS, COLORADO, GALVESTON, HARRIS, HIDALGO, JIM HOGG, KENT, LIVE
OAK, POLK, SAN JACINTO, STARR, TRINITY, TYLER, VAL VERDE, WALKER, WEBB, WHARTON
AND ZAPATA Counties described, referred to or covered by the Leases described in
SCHEDULE 1, EXHIBITS A and C hereto, and the Pipelines and the real property
included and described in SCHEDULE 1, EXHIBIT B hereto, or the description of
which is incorporated in any such exhibit by reference to any other instrument
or document, together with any and all other land in any state or the
Outer-Continental Shelf in which Mortgagor has any interest, legal or
beneficial, recorded or unrecorded, now owned or hereafter acquired in
overriding royalty interests, mineral interests, leasehold interests, mineral
rights, royalty interests, net profits interests, oil payments, production
payments, carried interests, or otherwise.
"LEASES" shall mean those Oil and Gas Leases covering Lands in
AUSTIN, BRAZORIA, CALHOUN, CHAMBERS, COLORADO, GALVESTON, HARRIS, HIDALGO, JIM
HOGG, KENT, LIVE OAK, POLK, SAN JACINTO, STARR, TRINITY, TYLER, VAL VERDE,
WALKER, WEBB, WHARTON AND ZAPATA Counties described in SCHEDULE 1, EXHIBIT A
hereto, or the description of which is incorporated in SCHEDULE 1, EXHIBIT A by
reference to any other instrument or document, together with any and all other
Oil and Gas Leases or leasehold estates covering Lands in any state or the
Outer-Continental Shelf, including any lands pooled or
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unitized therewith, in which, or in any portion of which, Mortgagor has an
interest, now owned or hereafter acquired, as well as any extensions, renewals
or replacements of or for any of the foregoing.
"LENDERS" shall mean those Lenders from time to time parties
to the Credit Agreement, and holders of the Notes, from time to time.
"MORTGAGE" shall mean this Mortgage, Deed of Trust, Assignment
of Production, Security Agreement and Financing Statement, as same may from time
to time be amended or modified and in effect.
"MORTGAGED PROPERTY" shall have the meaning set out in ARTICLE
II to this Mortgage.
"MORTGAGEE" shall have the meaning assigned to that term in
the introduction to this Mortgage.
"MORTGAGOR" shall have the meaning assigned to that term in
the introduction to this Mortgage.
"NEW YORK UCC" shall mean the Uniform Commercial Code as in
effect in the State of New York.
"NOTES" shall have the meaning assigned to that term in the
introduction to this Mortgage.
"OIL AND GAS LEASES" shall include oil, gas and mineral leases
and shall also include subleases and assignments of operating rights.
"OPERATING EQUIPMENT" shall mean Mortgagor's interest in all
personal property, surface or subsurface machinery, equipment, facilities,
supplies or other property of whatsoever kind or nature, now or hereafter
located on or under any of the Lands or Leases or on a unit, including all or
part of the Lands or Leases or now or hereafter used, held for use or useful in
connection with the exploration, development, operation, production, treatment,
storage, processing or transportation of Hydrocarbons, helium and/or other
minerals produced or to be produced from or attributable to the Lands or Leases,
including, but not by way of limitation, all oil wells, gas wells, water wells,
injection wells, casing, tubing, rods, pumps, pumping units and engines,
christmas trees, derricks, separators, gun barrels, flow lines, tanks, tank
batteries, gas systems (for gathering, treating, compression, disposal or
injection), chemicals, solutions, water systems (for treating, disposal and
injection), pipe, pipelines, boilers, meters, apparatus, compressors, liquid
extractors, connectors, valves, fittings, power plants, poles, lines, cables,
wires, transformers, starters and controllers, machine shops, tools, machinery
and parts, storage yards and equipment stored therein, buildings and camps,
telegraph, telephone and other communication systems, roads, loading docks,
loading racks and shipping facilities, computer equipment and software, fixtures
and other appurtenances, appliances and property of every kind and character,
movable or immovable, together with all improvements, betterments and additions,
accessories and attachments thereto and replacements thereof.
"PERMITTED PRIOR LIENS" shall have the meaning assigned to
that term in the Credit Agreement.
"PIPELINES" shall mean the Pipeline Assets and all pipelines
owned and/or operated by Mortgagor for the gathering, transmission or
distribution of Hydrocarbons including, without limitation,
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those pipelines described in SCHEDULE 1, EXHIBIT B attached hereto, and any
interests in real property relating thereto.
"PIPELINE ASSETS" shall mean all parts or aspects of the gas
pipeline system of Mortgagor now or hereafter situated on any of the Lands, and
the Rights-of-Way and Franchises, including, without limitation, the pipeline
system described in SCHEDULE 1, EXHIBIT B, and all fixtures, improvements,
equipment, surface or subsurface machinery, facilities, supplies, replacement
parts, vehicles of every description, all process control computer systems and
equipment or other property of whatsoever kind or nature, including, without
limitation, all buildings, structures, machinery, gas processing plants,
Pipelines, stations, substations, compression or dehydration equipment, pumps,
pumping stations, meter houses, metering stations, regulator houses, ponds,
tanks, scrapers and scraper traps, fittings, valves, connections, cathodic or
electrical protection by-passes, regulators, drips, meters, pumps, pumping
units, pumping stations, storage or tankage facilities, engines, pipes, gates,
telephone and telegraph lines, electric power lines, poles, wires, casings,
radio towers, fixtures, mechanical equipment, electrical equipment, computer
equipment and software, machine shops and other equipment, used or useful in
connection therewith; together with all of Mortgagor's liquid hydrocarbons,
carbon dioxide, natural gas liquids, refined petroleum products and other
inventory fuels, carbon, chemicals, electric energy and other consumable
materials or products manufactured, processed, generated, produced, transmitted,
stored (whether above or below ground) or purchased by Mortgagor for sale,
exchange, distribution, consumption or transmission by Mortgagor, including,
without limitation, all system gas, drip gas and line fill.
"PRODUCTION SALE CONTRACTS" shall mean, all contracts now or
hereafter in effect, including, without limitation, any gas sales contracts,
entered into by Mortgagor, or Mortgagor's predecessors in interest, for the
production, sale, purchase, exchange or processing of Subject Minerals,
including - but not limited to -- any of the foregoing contracts listed on
SCHEDULE 1, EXHIBIT D, and the Contract Rights related thereto.
"RECEIVABLES" shall mean any and all of Mortgagor's now owned
or hereafter acquired "accounts" as such term is defined in Article 9 of the New
York UCC, together with the proceeds and products thereof, and all books,
records, ledger cards, files, correspondence and computer files, tapes, disks or
software that at any time evidence or contain information relating to the
foregoing.
"RIGHTS-OF-WAY AND FRANCHISES" shall mean all leases,
leaseholds, easements, rights-of-way, licenses, franchises, privileges, permits,
ordinances, grants, rights, consents, servitudes, surfaces leases or rights,
amendatory grants and interests in land for the installation, maintenance and
operation of the Subject Interests or the Pipelines, or any portion thereof, now
owned or held by Mortgagor, including, without limitation, those leases,
leaseholds, easements, rights-of-way, licenses, franchises, privileges, permits,
ordinances, grants, rights, consents, servitudes, surface leases or rights,
amendatory grants and interests in land applicable to the Subject Interests or
the Pipelines owned or held by Mortgagor and those leases, leaseholds,
easements, rights-of-way, licenses, franchises, privileges, permits, ordinances,
grants, rights, consents, servitudes, surfaces leases or rights, amendatory
grants and interests in land owned or held by Mortgagor, including without
limitation any described in SCHEDULE 1, EXHIBIT B attached hereto or arising by
virtue of the documents described in SCHEDULE 1, EXHIBIT B attached hereto,
which descriptions of real property set forth in SCHEDULE 1, EXHIBIT B or
incorporated by reference to the documents described on SCHEDULE 1, EXHIBIT B
are hereby made a part so that all of the property rights, other rights and
other assets described therein shall be subject to this Mortgage to the same
extent as if they were described herein.
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"SECURED PARTY" shall have the meaning set out in ARTICLE VIII
of this Mortgage.
"SUBJECT INTERESTS" shall mean each kind and character of
right, title, interest or estate, whether now owned or hereafter acquired, which
Mortgagor has in, under or to the Leases and all right, title, interest or
estate, whether now owned or hereafter acquired, which Mortgagor has in and to
the Lands, together with each kind and character of right, title, interest or
estate now or hereafter vested in Mortgagor in and to any and all overriding
royalty interests, mineral interests, leasehold interests, mineral rights,
royalty interests, net profits interests, oil payments, production payments,
carried interests and all other properties or interests of every kind or
character which relate to any of the Lands or Leases, whether such right, title,
interest or estate be under and by virtue of a Lease, a unitization or pooling
agreement, a unitization or pooling order, a mineral deed, a royalty deed, an
operating agreement, a revenue sharing agreement, a division order, a transfer
order, a farmout agreement, a fee simple conveyance or any other type of
contract, conveyance or instrument or under any other type of claim or title,
legal or equitable, recorded or unrecorded, all as the same shall be enlarged by
the discharge of any payments out of production or by the removal of any charges
or encumbrances to which any of same are subject.
"SUBJECT MINERALS" shall mean all Hydrocarbons, helium and/or
other minerals in, under, upon, produced or to be produced or which may be
produced, saved and sold from and which shall accrue and be attributable to the
Subject Interests, including, without limitation, all oil in tanks and all
rents, royalties, issues, profits, proceeds, products, revenues, and other
income arising from or attributable to the Subject Interests and Mortgagor's
interest therein.
"TRUSTEE" shall have the meaning assigned to that term in the
introduction to this Mortgage.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect in the State of Texas.
ARTICLE II
MORTGAGE, DEED OF TRUST
2.1. GRANT OF DEED OF TRUST ON REAL PROPERTY AND SECURITY INTEREST IN
PERSONAL PROPERTY. To secure the payment of the Indebtedness and to secure the
performance of the covenants, agreements and obligations of Mortgagor contained
herein, in the Credit Agreement and in all other security documents executed in
accordance therewith, Mortgagor, for and in consideration of the premises and of
the debts and trusts hereinafter mentioned, has granted, bargained, sold,
warranted, mortgaged, assigned, transferred and conveyed a security interest,
and by these presents does grant, bargain, sell, warrant, mortgage, assign,
transfer and convey and grant a security interest, unto the Trustee, for the use
and benefit of Mortgagee with power of sale, all of Mortgagor's rights, titles,
interests and estates, if any, in, to, under, derived from or with respect to
all of the assets of Mortgagor, including without limitation the following
described real and personal property, whether now owned or hereafter acquired:
(a) the Subject Interests, the Subject Minerals and the
Hydrocarbons;
(b) the Contract Rights and the Production Sale Contracts;
(c) the Equipment, Inventory and Receivables;
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(d) the Operating Equipment;
(e) the Leases and the Lands;
(f) the Pipelines;
(g) the Pipeline Assets;
(h) the Rights-of-Way and Franchises;
(i) all unitization, communitization, operating agreements,
pooling agreements and declarations of pooled units and the properties covered
and the units created thereby (including all units formed under orders,
regulations, rules or other official acts of any federal, state or other
governmental agency providing for pooling or unitization, spacing orders or
other well permits and other instruments) which relate to or affect all or any
portion of the Subject Interests;
(j) all contract rights, operating rights, general
intangibles, chattel paper, documents and instruments arising under any of the
foregoing, including without limitation, the Production Sale Contracts and all
transmission contracts or other contracts now or hereafter in effect with
respect to the Pipelines or the Pipeline Assets;
(k) all subleases, farmout agreements, assignments of
interests, assignments of operating rights, contracts, operating agreements,
bidding agreements, advance payment agreements, rights-of-way, surface leases,
franchises, servitudes, privileges, permits, licenses, easements, tenements,
hereditaments, improvements, appurtenances and benefits now existing or in the
future obtained and incident and appurtenant to any of the foregoing;
(l) all lease records, well records, production records and
accounting and other records and files which relate to any of the foregoing, and
all maps, data bases, manuals, information and data which relate to any of the
foregoing, including without limitation engineering, geological and geophysical
data;
(m) all income, revenues, rents, profits and proceeds arising
out of the gathering, transportation, processing or sale of Hydrocarbons through
the Pipelines and other accounts, contract rights, operating rights, general
intangibles, chattel paper, documents, investment property and instruments
arising under any of the foregoing;
(n) any liens and security interests in the Subject Interests
in favor of Mortgagor securing payment of proceeds from the sale of the Subject
Minerals including, but not limited to, those liens and security interests
provided for in Tex. Bus. & Com. Code Ann. Section 9.319 (Tex. UCC), as amended;
(o) all other rights, titles and interests of Mortgagor in, to
and under or derived from the Lands, the Leases, the Rights-of-Way and
Franchises, the Production Sale Contracts and/or other properties described in
SCHEDULE 1, EXHIBITS A, B or C hereto;
(p) any property that may from time to time hereafter, by
delivery or by writing of any kind executed by or on behalf of Mortgagor, be
subjected to the lien and security interest hereof by
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Mortgagor or by anyone authorized on Mortgagor's behalf, and Mortgagee and
Trustee are hereby authorized to receive the same as additional security;
(q) all other property of every nature and kind and
wheresoever situated, now owned or hereafter acquired by Mortgagor or to which
Mortgagor is now or may hereafter be entitled at law or in equity;
(r) any and all proceeds, returns, rents, royalties, issues,
profits, products, revenues and other income arising from or by virtue of the
sale, lease or other disposition of, or from any condemnation, eminent domain or
insurance payable with respect to damage, loss or destruction of, the items
described in subparagraphs (a) through (q) above;
together with any and all proceeds, products, increases, profits, substitutions,
replacements, renewals, additions, amendments and accessions of, to and for all
of the foregoing property. All the aforesaid properties, rights and interests
which are hereby subjected to the lien and/or security interest of this
instrument, together with any additions thereto which may be subjected to the
lien and/or security interest of this instrument by means of supplements hereto
or otherwise, shall hereinafter be referred to as the "MORTGAGED PROPERTY."
TO HAVE AND TO HOLD the Mortgaged Property unto the Trustee and to his
successors and assigns forever.
2.2 LIMITED LICENSE. Without limiting the security interest granted
hereby, Mortgagor hereby grants to Mortgagee a limited license in Mortgagor's
trade names, trademarks and service marks, together with Mortgagor's goodwill
associated with such trade names, trademarks and service marks, for purposes of
allowing Mortgagee to use the same in connection with any foreclosure sale or
any other disposition pursuant to the Uniform Commercial Code or this Mortgage.
ARTICLE III
WARRANTIES AND REPRESENTATIONS OF MORTGAGOR
Mortgagor represents and warrants that each of the representations and
warranties set forth in SCHEDULE 2 attached hereto is true and correct.
Additionally, each representation and warranty in the Credit Agreement is true
and correct (each of which representation and warranty is incorporated herein by
reference together with related definitions and ancillary provisions) as if set
forth herein verbatim.
ARTICLE IV
COVENANTS AND AGREEMENTS OF MORTGAGOR
Mortgagor will, for Mortgagee's benefit, timely and properly observe,
perform, and otherwise comply with each covenant and agreement in the Credit
Agreement (each of which is incorporated herein by reference together with
related definitions and ancillary provisions) as if set forth herein verbatim.
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ARTICLE V
ASSIGNMENT OF PRODUCTION
5.1. ASSIGNMENT. As further security for the payment of the
Indebtedness, subject however to the rights of the holder of any Permitted Prior
Liens, Mortgagor has transferred, assigned, warranted and conveyed and does
hereby transfer, warrant and convey to Mortgagee, effective as of the date
hereof at 9:00 a.m., local time, all of Mortgagor's rights, titles, interests
and estates in and to the following property: all Hydrocarbons, helium and/or
other minerals which are thereafter produced and which accrue to the Subject
Interests, all products obtained or processed therefrom and all revenues and
proceeds now or hereafter attributable to said Hydrocarbons, helium and/or other
minerals and said products as well as any liens and security interests securing
any sales of said Hydrocarbons, helium and/or other minerals, including, but not
limited to, those liens and security interests provided for in Tex. Bus. & Com.
Code Ann. ss. 9.319 (Tex. UCC) (Vernon 1968), as amended. All parties producing,
purchasing or receiving any such Hydrocarbons, helium and/or other minerals or
products, or having such Hydrocarbons, helium and/or other minerals, products,
or proceeds therefrom, in their possession for which they or others are
accountable to Mortgagee by virtue of the provisions of this Article, are
authorized and directed to treat and regard Mortgagee as the assignee and
transferee of Mortgagor and entitled in Mortgagor's place and stead to receive
such Hydrocarbons, helium and/or other minerals and all proceeds therefrom,
subject to the rights of the holder of any Permitted Prior Liens, and said
parties and each of them shall be fully protected in so treating and regarding
Mortgagee and shall be under no obligation to see to the application by
Mortgagee of any such proceeds or payments received by it; provided, however;
that, until Mortgagee or Mortgagor shall have instructed such parties to deliver
such Hydrocarbons, helium and/or other minerals and all products, revenues
and/or proceeds therefrom directly to Mortgagee (which such instructions may be
given only after the occurrence and during the continuance of an Event of
Default, as herein defined, but the giving of such instructions shall as to all
such parties be conclusive as to the occurrence of an Event of Default), such
parties shall be entitled to deliver such Hydrocarbons, helium and/or other
minerals and all products, revenues and/or proceeds therefrom to Mortgagor.
Mortgagor agrees, subject to the rights of the holder of any Permitted Prior
Liens, to perform all such acts, and to execute all such further assignments,
transfers and division orders and other instruments as may be required or
desired by Mortgagee or any party in order to have said revenues and proceeds so
paid to Mortgagee and/or to have such Hydrocarbons, helium and/or other minerals
delivered to Mortgagee. Mortgagee is fully authorized to receive and issue a
receipt for said revenue and proceeds, to endorse and cash any and all checks
and drafts payable to the order of Mortgagor or Mortgagee for the account of
Mortgagor received from or in connection with said revenues or proceeds and
apply the proceeds thereof in accordance with SECTION 5.2 hereof, and to execute
transfer and division orders in the name of Mortgagor, or otherwise, with
warranties binding Mortgagor. In the event that Mortgagee elects to take
delivery of any such Hydrocarbons, helium or other minerals in kind, Mortgagee
shall have the right to sell such Hydrocarbons, helium or minerals upon such
terms as Mortgagee may desire, and to apply the proceeds of such sale as
provided in SECTION 5.2 below.
5.2. APPLICATION OF PROCEEDS. Any and all payments and sale proceeds
received by Mortgagee pursuant to SECTION 5.1 hereof shall be placed in a cash
collateral account with Mortgagee and on the first day of each month applied as
follows:
First: to the payment and satisfaction of all costs and expenses
incurred in connection with the collection of such proceeds
(and in the event Mortgagee shall have taken delivery in kind,
to the costs and expenses of the sale of such Hydrocarbons,
helium or other minerals); and
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Second: then in accordance with the provisions of SECTION 7.9 below.
5.3. NO LIABILITY OF MORTGAGEE IN COLLECTING. Mortgagee is hereby
absolved from all liability for failure to enforce collection of any proceeds so
assigned and from all other responsibility in connection therewith, except the
responsibility to account to Mortgagor for funds actually received. Mortgagee
shall have the right, at its election, to prosecute and defend any and all
actions or legal proceedings deemed advisable by Mortgagee in order to collect
such funds and to protect the interests of Mortgagee and/or Mortgagor, with all
reasonable costs, expenses and attorneys' fees incurred in connection therewith
being paid by Mortgagor.
5.4. ASSIGNMENT NOT A RESTRICTION ON MORTGAGEE'S RIGHTS. Nothing herein
contained shall detract from or limit the absolute obligation of Mortgagor to
make payment in full of the Indebtedness, regardless of whether the proceeds
assigned by this Article are sufficient to pay the same, and the rights under
this ARTICLE V shall be in addition to all other security now or hereafter
existing to secure the payment of the Indebtedness.
5.5. STATUS OF ASSIGNMENT. Notwithstanding the other provisions of this
ARTICLE V, the Trustee or any receiver appointed in judicial proceedings for the
enforcement of this instrument shall have the right to receive all of the
Hydrocarbons, helium, and/or other minerals herein assigned and, subject to the
rights of the holder of any Permitted Prior Liens, the proceeds therefrom after
the Notes have been declared due and payable in accordance with the provisions
of SECTION 6.2 hereof and to apply all of said proceeds as set forth in SECTION
5.2 hereof. Upon any sale of the Subject Interests or any part thereof pursuant
to ARTICLE VII hereof, the Hydrocarbons, helium, and/or other minerals
thereafter produced from the Subject Interests so sold, and the proceeds
therefrom, shall be included in such sale and shall pass to the purchaser free
and clear of the assignment contained in this ARTICLE V.
5.6. INDEMNITY. MORTGAGOR AGREES TO INDEMNIFY, DEFEND AND HOLD THE
TRUSTEE, MORTGAGEE AND LENDERS HARMLESS AGAINST ALL CLAIMS, ACTIONS,
LIABILITIES, JUDGMENTS, COSTS, ATTORNEYS' FEES OR OTHER CHARGES OF WHATSOEVER
KIND OR NATURE (INCLUDING WITHOUT LIMITATION AMOUNTS PAID IN SETTLEMENT, COURT
COSTS AND THE FEES AND DISBURSEMENTS OF COUNSEL INCURRED IN CONNECTION WITH ANY
INVESTIGATION, LITIGATION OR OTHER PROCEEDING) (ALL HEREINAFTER IN THIS SECTION
5.6 CALLED "CLAIMS"), OTHER THAN CLAIMS ARISING FROM MORTGAGEE'S OWN GROSS
NEGLIGENCE, WILLFUL MISCONDUCT OR BAD FAITH, MADE AGAINST OR INCURRED BY THEM OR
ANY OF THEM AS A CONSEQUENCE, EITHER BEFORE OR AFTER THE PAYMENT IN FULL OF THE
INDEBTEDNESS, OF (I) THE BREACH BY MORTGAGOR OF ANY COVENANT, REPRESENTATION OR
WARRANTY CONTAINED IN THIS MORTGAGE OR TO WHICH IT REFERS, (II) ANY VIOLATION OF
LAW BY MORTGAGOR, OR (III) THE ASSERTION THAT MORTGAGOR AND/OR TRUSTEE RECEIVED
HYDROCARBONS, HELIUM AND/OR OTHER MINERALS HEREIN ASSIGNED OR THE PROCEEDS
THEREOF CLAIMED BY THIRD PERSONS. THE TRUSTEE AND MORTGAGEE SHALL HAVE THE RIGHT
TO DEFEND AGAINST ANY SUCH CLAIMS, EMPLOYING ATTORNEYS THEREFOR, AND UNLESS
FURNISHED WITH REASONABLE INDEMNITY, THEY OR EITHER OF THEM SHALL HAVE THE RIGHT
TO PAY OR COMPROMISE AND ADJUST ALL SUCH CLAIMS. MORTGAGOR WILL INDEMNIFY AND
PAY TO THE TRUSTEE, MORTGAGEE OR LENDERS ANY AND ALL SUCH AMOUNTS AS MAY BE PAID
IN RESPECT OF SUCH CLAIMS OR AS MAY BE
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SUCCESSFULLY ADJUDGED AGAINST MORTGAGEE, THE TRUSTEE AND LENDERS OR ANY OF THEM.
THE OBLIGATIONS OF MORTGAGOR AS HEREINABOVE SET FORTH IN THIS SECTION 5.6 SHALL
SURVIVE THE RELEASE OF THIS INSTRUMENT.
ARTICLE VI
EVENTS OF DEFAULT
6.1. EVENTS OF DEFAULT. It shall constitute an "EVENT OF DEFAULT"
hereunder if an "Event of Default" occurs under the terms and provisions of the
Credit Agreement.
6.2. EFFECT OF EVENT OF DEFAULT. If an Event of Default shall occur and
be continuing:
(a) Mortgagee may, subject to and in accordance with the terms
of the Credit Agreement, by notice in writing to Mortgagor declare the principal
of and accrued interest on the Notes and all other outstanding Indebtedness
secured hereby to be immediately due and payable whereupon the Notes and all
other outstanding Indebtedness shall become and be immediately due and payable,
in each instance without (except for any grace and notice expressly provided for
in the Credit Agreement) grace, demand, presentment for payment, protest or
notice of any kind to Mortgagor or any other person (including, but not limited
to, notice of intent to accelerate and notice of acceleration), all of which are
hereby expressly waived; and
(b) Mortgagee may proceed to enforce its rights hereunder.
ARTICLE VII
ENFORCEMENT OF REMEDIES
7.1. POWER OF SALE OF REAL PROPERTY CONSTITUTING A PART OF THE
MORTGAGED PROPERTY. Upon the occurrence and during the continuance of an Event
of Default, the Trustee is hereby authorized and empowered to sell or offer for
sale any part of the Mortgaged Property, with or without having first taken
possession of same, to the highest bidder for cash at public auction. Such sale
shall be made at the courthouse of the county in which the Mortgaged Property or
any part thereof is situated, as herein described, between the hours of 10:00
a.m. and 4:00 p.m. on the first Tuesday of any month, beginning within three (3)
hours of the time provided in the notices described herein, after posting a
written or printed notice or notices of the place, the earliest time at which
the sale will begin and the terms of the sale, and the portion of the Mortgaged
Property to be sold, by posting (or having some person or persons acting for the
Trustee post) for at least twenty-one (21) days preceding the date of the sale,
written or printed notice of the proposed sale at the courthouse door of said
county in which the sale is to be made, and if such portion of the Mortgaged
Property lies in more than one county, one such notice of sale shall be posted
at the courthouse door of each county in which such part of the Mortgaged
Property is situated and such part of the Mortgaged Property may be sold at the
courthouse door of any one of such counties, and the notice so posted shall
designate in which county such property shall be sold. In addition to such
posting of notice, Mortgagee, the Trustee or other holder of the Indebtedness
hereby secured (or some person or persons acting for the Trustee, Mortgagee or
other such holder) shall, at least twenty-one (21) days preceding the date of
sale, file a copy of such notice(s) in the office of the county clerk in each of
such counties and serve or cause to be served written notice of the proposed
sale by certified mail on Mortgagor and on each other debtor, if any, obligated
to pay the Indebtedness hereby secured according to the records of Mortgagee.
Service of such notice shall be completed upon deposit of the notice, enclosed
in a postpaid wrapper properly addressed to Mortgagor and
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such other debtors at their most recent address or addresses as shown by the
records of Mortgagee 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 that such a service was completed shall be
prima facie evidence of the fact of service. Mortgagor agrees that no notice of
any sale, other than as set out in this paragraph, need be given by the Trustee,
Mortgagee or any other person. Mortgagor hereby designates as its address for
the purpose of such notice, the address set out on the signature page hereof and
agrees that such address shall be changed only by depositing notice of such
change enclosed in a postpaid wrapper in post office or official depository
under the care and custody of the United States Postal Service, certified mail,
postage prepaid, return receipt requested, addressed to Mortgagee or other
holder of the Indebtedness secured hereby at the address for Mortgagee set out
herein (or to such other address as Mortgagee or other holder of the
Indebtedness secured hereby may have designated by notice given as above
provided to Mortgagor and such other debtors). Any such notice of change of
address of Mortgagor or other debtors or of Mortgagee or other holders of the
Indebtedness secured hereby shall be effective three (3) business days after
such deposit if such post office official depository is located in the State of
Texas, otherwise to be effective upon receipt. Mortgagor authorizes and empowers
the Trustee to sell the Mortgaged Property in lots or parcels or in its entirety
as the Trustee shall deem expedient and to execute and deliver to the purchaser
or purchasers thereof good and sufficient deeds of conveyance thereto by fee
simple title, with evidence of warranty by Mortgagor, subject only to Permitted
Prior Liens, and Mortgagor binds itself to warrant and forever defend the title
of such purchaser or purchasers when so made by the Trustee. Where portions of
the Mortgaged Property lie in different counties, sales in such counties may be
conducted in any order that the Trustee may deem expedient and one or more such
sales may be conducted in the same month or in successive or different months as
the Trustee may deem expedient.
As to Mortgaged Property located in the State of Texas or the Outer-Continental
Shelf adjacent to the State of Texas, such sales of all or any part of such
Mortgaged Property shall be conducted at the courthouse of any county (whether
or not the counties in which the Mortgaged Property is located are contiguous)
in the State of Texas in which any part of the Mortgaged Property is situated
(or if all of the Mortgaged Property are in the Outer-Continental Shelf, then
any county adjacent to any of the Mortgaged Property). This instrument, insofar
as it covers Mortgaged Property located in the State of Texas or the
Outer-Continental Shelf adjacent to the State of Texas, is a single instrument,
but has been executed in multiple counterparts. Attached to each such
counterpart are descriptions of Mortgaged Property located only in the
particular county in which such counterpart is to be recorded, except that a
full and complete copy of this instrument with the entire exhibits attached is
to be of record in Galveston County, Texas.
7.2. RIGHTS OF THE TRUSTEE WITH RESPECT TO PERSONAL PROPERTY
CONSTITUTING A PART OF THE MORTGAGED PROPERTY. Upon the occurrence and during
the continuance of an Event of Default, the Trustee will have all rights and
remedies granted by law, and particularly by the Uniform Commercial Code,
including but not limited to, (i) the right to proceed as to both the real and
the personal property covered hereby in accordance with the Trustee's rights and
remedies in respect of the real property covered hereby and (ii) the right to
take possession of all personal property constituting a part of the Mortgaged
Property, and for this purpose the Trustee may enter upon any premises on which
any or all of such personal property is situated and take possession of and
operate such personal property (or any portion thereof) or remove it therefrom.
The Trustee may require Mortgagor to assemble such personal property and make it
available to the Trustee at a place to be designated by the Trustee which is
reasonably convenient to all parties. If the Trustee elects to foreclose under
the Uniform Commercial Code and unless such personal property is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Trustee will give Mortgagor reasonable notice of the time
and place of any public sale or of the time after
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which any private sale or other disposition of such personal property is to be
made. This requirement of sending reasonable notice will be met if the notice is
mailed by first class mail, postage prepaid, to Mortgagor at the address shown
below the signatures at the end of this instrument at least five (5) Business
Days before the time of the sale or disposition.
7.3. RIGHTS OF THE TRUSTEE WITH RESPECT TO FIXTURES CONSTITUTING A PART
OF THE MORTGAGED PROPERTY. Upon the occurrence and during the continuance of an
Event of Default, the Trustee may elect to treat the fixtures constituting a
part of the Mortgaged Property as either real property collateral or personal
property collateral and proceed to exercise such rights as apply to such type of
collateral.
7.4. JUDICIAL PROCEEDINGS. Upon the occurrence and during the
continuance of an Event of Default, the Trustee, in lieu of or in addition to
exercising any power of sale hereinabove given, may proceed by a suit or suits
in equity or at law, whether for a foreclosure hereunder, or for the sale of the
Mortgaged Property, or for the specific performance of any covenant or agreement
herein contained or in aid of the execution of any power herein granted, or for
the appointment of a receiver pending any foreclosure hereunder or the sale of
the Mortgaged Property, or for the enforcement of any other appropriate legal or
equitable remedy.
7.5. POSSESSION OF THE MORTGAGED PROPERTY. It shall not be necessary
for the Trustee to have physically present or constructively in his possession
at any sale held by the Trustee or by any court, receiver or public officer any
or all of the Mortgaged Property, and Mortgagor shall deliver to the purchaser
at such sale on the date of sale the Mortgaged Property purchased by such
purchasers at such sale, and, if it should be impossible or impracticable for
any of such purchasers to take actual delivery of the Mortgaged Property, then
the title and right of possession to the Mortgaged Property shall pass to the
purchaser at such sale as completely as if the same had been actually present
and delivered.
7.6. CERTAIN ASPECTS OF A SALE. Mortgagee shall have the right to
become the purchaser at any sale held by the Trustee or by any court, receiver
or public officer, and Mortgagee shall have the right to credit upon the amount
of the bid made therefor the amount payable out of the net proceeds of such sale
to it. Recitals contained in any conveyance made to any purchaser at any sale
made hereunder shall conclusively establish the truth and accuracy of the
matters therein stated, including, without limiting the generality of the
foregoing, nonpayment of the unpaid principal sum of, and the interest accrued
on, the Notes after the same have become due and payable, advertisement and
conduct of such sale in the manner provided herein or appointment of any
successor Trustee hereunder.
7.7. RECEIPT OF PURCHASER. Upon any sale, whether made under the
Uniform Commercial Code, the power of sale herein granted and conferred or by
virtue of judicial proceedings, the receipt of the Trustee, or of the officer
making sale under judicial proceedings, shall be sufficient discharge to the
purchaser or purchasers at any sale for his or their purchase money, and such
purchaser or purchasers, his or their assigns or personal representatives shall
not, after paying such purchase money and receiving such receipt of the Trustee
or of such officer therefor, be obliged to see to the application of such
purchase money or be in anywise answerable for any loss, misapplication or
non-application thereof.
7.8. EFFECT OF SALE. Any sale or sales of the Mortgaged Property or any
part thereof, whether under the Uniform Commercial Code, the power of sale
herein granted and conferred or by virtue of judicial proceedings, shall operate
to divest all right, title, interest, claim and demand whatsoever either at law
or in equity, of Mortgagor of, in and to the Mortgaged Property sold, and shall
be a perpetual bar, both at law and
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in equity, against Mortgagor, and Mortgagor's 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 Mortgagor, or Mortgagor's successors or
assigns. Nevertheless, Mortgagor, if requested by the Trustee or Mortgagee so to
do, shall join in the execution and delivery of all proper conveyances,
assignments and transfers of the properties so sold.
7.9. APPLICATION OF PROCEEDS. The proceeds of any sale of the Mortgaged
Property, or any part thereof, whether under the Uniform Commercial Code, the
power of sale herein granted and conferred or by virtue of judicial proceedings,
whose application has not elsewhere herein been specifically provided for, shall
be applied as follows:
First: to the payment of all expenses incurred by the Trustee or
Mortgagee incident to the enforcement of this Mortgage, the
Notes or any of the Indebtedness including, without limiting
the generality of the foregoing, all expenses of any entry or
taking of possession, of any sale, of advertisement thereof,
and of conveyances, and as well, court costs, compensation of
agents and employees and legal fees and expenses and a
reasonable fee to the Trustee;
Second: to the payment of all other costs, charges, expenses,
liabilities and advances incurred or made by the Trustee or
Mortgagee under this Mortgage or in executing any trust or
power hereunder;
Third: to the payment of the Notes and any other Indebtedness (other
than Indebtedness described in "First" and "Second" above),
with interest to the date of such payment, in such order and
manner as set forth in the Credit Agreement; and
Fourth: any surplus thereafter remaining shall be paid to Mortgagor or
Mortgagor's successors or assigns, as their interests shall
appear.
7.10. MORTGAGOR'S WAIVER OF RIGHTS OF MARSHALING, ETC. Mortgagor
agrees, to the full extent that Mortgagor may lawfully so agree, that Mortgagor
will not at any time insist upon or plead or in any manner whatever claim the
benefit of any stay, extension or redemption law now or hereafter in force, in
order to prevent or hinder the enforcement or foreclosure of this Mortgage or
the absolute sale of the Mortgaged Property or the possession thereof by any
purchaser at any sale made pursuant to any provision hereof, or pursuant to the
decree of any court of competent jurisdiction; but Mortgagor, for Mortgagor and
all who may claim by, through or under Mortgagor, to the maximum extent that
Mortgagor or those claiming by, through or under Mortgagor now or hereafter
lawfully may, hereby waives the benefit of all such laws. Mortgagor, for
Mortgagor and all who may claim through or under Mortgagor, waives, to the
maximum extent that Mortgagor or those claiming by, through or under Mortgagor
now or hereafter lawfully may do so, any and all right to have any of the
Mortgaged Property marshaled upon any foreclosure of the lien hereof, or sold in
inverse order of alienation, and agrees that the Trustee or any court having
jurisdiction to foreclose such lien may sell the Mortgaged Property as an
entirety. If any law in this SECTION 7.10 referred to and now in force, of which
Mortgagor or Mortgagor's successor or successors might take advantage despite
the provisions hereof, shall hereafter be repealed or cease to be in force, such
law shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the operation or application of the provisions of this
SECTION 7.10.
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7.11. COSTS AND EXPENSES. All reasonable costs and out-of-pocket
expenses (excluding expenses representing Mortgagee's administrative overhead
and including, without limitation, reasonable attorneys' fees) incurred by the
Trustee or Mortgagee in protecting and enforcing their rights hereunder shall
constitute a demand obligation owing by Mortgagor to the party incurring such
costs and expenses and shall draw interest at an annual rate equal to the
highest rate of interest accruing among the Notes until paid, all of which shall
constitute a portion of the Indebtedness, provided, however, that in no event
shall such interest rate ever exceed the Highest Lawful Rate.
7.12. OPERATION OF PROPERTY BY THE TRUSTEE. Upon the occurrence and
during the continuance of an Event of Default and in addition to all other
rights herein conferred on the Trustee or Mortgagee, the Trustee (or any person,
firm or corporation designated by the Trustee) shall have the right and power,
but shall not be obligated, to enter upon and take possession of any of the
Mortgaged Property, and to exclude Mortgagor, and Mortgagor's agents or
servants, wholly therefrom, and to hold, use, administer, manage and operate the
same to the extent that Mortgagor shall be at the time entitled and in its place
and stead. The Trustee or Mortgagee, or any person, firm or corporation
designated by the Trustee or Mortgagee, may operate the same without any
liability to Mortgagor in connection with such operations, except for its gross
negligence or willful misconduct in the operation of such properties, and the
Trustee or any person, firm or corporation designated by the Trustee, shall have
the right and power, but shall not be obligated, to collect, receive and issue a
receipt for all Hydrocarbons produced and sold from said properties, to make
repairs, purchase machinery and equipment, conduit and power, to enter work over
operations, drill additional wells and to exercise every power, right and
privilege of Mortgagor with respect to the Mortgaged Property. When and if the
expenses of such operation and development (including costs of unsuccessful work
over operations or additional wells) have been paid and the Indebtedness paid,
said properties shall, if there has been no sale or foreclosure, be returned to
Mortgagor.
ARTICLE VIII
SECURITY AGREEMENT
8.1. Without limiting any of the provisions of this instrument, to
secure the Indebtedness, Mortgagor, as Debtor (referred to in this ARTICLE VIII
as "DEBTOR"), hereby expressly GRANTS, ASSIGNS, TRANSFERS and SETS OVER unto
Mortgagee, as Secured Party (referred to in this ARTICLE VIII as "SECURED
PARTY," whether one or more), a lien upon and a security interest in all the
Mortgaged Property, together with any and all proceeds, products, increases,
profits, substitutions, replacements, renewals, additions, amendments and
accessions of, to and for the Mortgaged Property, insofar as such property
consists of Equipment, Inventory, Receivables, contract rights, instruments,
general intangibles, chattel paper, documents, investment property,
Hydrocarbons, helium and/or other minerals, fixtures and any and all other
personal property of any kind or character (including both those now and those
hereafter existing and the following types of property as defined in S.B.1058,
76th Texas Legislature, Regular Session, 1999: commercial tort claims, letter of
credit rights, payment intangibles and software) to the full extent that such
property may be subject to the Uniform Commercial Code of the state or states
where such property is located, (said Mortgaged Property, Equipment, Inventory,
Receivables, contract rights, instruments, general intangibles, chattel paper,
documents, investment property, Hydrocarbons, helium and/or other minerals, and
all other personal property of any kind or character [including both those now
and those hereafter existing and the following types of property as defined in
S.B.1058, 76th Texas Legislature, Regular Session, 1999: commercial tort claims,
letter of credit rights, payment intangibles and software] together with any and
all proceeds, products, increases, profits, substitutions, replacements,
renewals, additions, amendments and accessions of, to and for the foregoing
property, being hereinafter collectively referred to as the "COLLATERAL"
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for the purposes of this ARTICLE VIII.) The lien and security interest created
by this Mortgage attaches upon the delivery hereof. Debtor covenants and agrees
with Secured Party that:
(a) In addition to and cumulative of any other remedies
granted in this instrument to Secured Party or to the Trustee, Secured Party
may, upon the occurrence and during the continuance of an Event of Default,
proceed under said Uniform Commercial Code as to all or any part of the
Collateral and shall have and may exercise with respect to the Collateral all
the rights, remedies and powers of a secured party after default under said
Uniform Commercial Code, including, without limitation, the right and power to
sell, at public or private sale or sales, or otherwise dispose of, lease or
utilize the Collateral and any part or parts thereof in any manner authorized or
permitted under said Uniform Commercial Code after default by a debtor, and to
apply the proceeds thereof toward payment of any costs and expenses and
attorneys' fees and legal expenses thereby incurred by Secured Party, and toward
payment of the Indebtedness in accordance with SECTION 7.9 hereof.
(b) Upon the occurrence and during the continuance of any
Event of Default, Secured Party shall have the right (without limitation) to
take possession of the Collateral and to enter upon any premises where same may
be situated for such purpose without being deemed guilty of trespass and without
liability for damages thereby occasioned (other than damages arising from the
gross negligence, willful misconduct or bad faith of Secured Party) and to take
any action deemed necessary or appropriate or desirable by Secured Party, at its
option and in its discretion, to repair, refurbish or otherwise prepare the
Collateral for sale, lease or other use or disposition as herein authorized.
Debtor waives, to the maximum extent permitted by law, any and all rights that
it may have to a judicial hearing in advance of the enforcement of any of the
Secured Party's rights hereunder, including without limitation, its rights
following an Event of Default to take immediate possession of the Collateral and
to exercise its rights with respect thereto. To the extent that any of the
Indebtedness is to be paid or performed by a person other than Debtor, Debtor
waives and agrees not to assert any rights or privileges which it may have under
Section 9-112 of the Uniform Commercial Code.
(c) To the maximum extent permitted by law, Debtor expressly
waives any notice of sale or other disposition of the Collateral and any other
right or remedies of a debtor or formalities prescribed by law relative to sale
or disposition of the Collateral or exercise of any other right or remedy of
Secured Party existing after default hereunder; and to the extent any such
notice is mailed, postage prepaid, to Debtor at the address shown with Debtor's
signature hereinbelow at least five (5) Business Days before the time of the
sale or disposition, such notice shall be deemed reasonable and shall fully
satisfy any requirement for giving of said notice. Such notice, in case of a
public sale or disposition, shall state the time and place fixed for such sale
or disposition and, in case of a private sale or disposition, shall state the
date after which such sale or disposition is to be made.
(d) Any public sale of the Collateral shall be held at such
time or times within ordinary business hours at such places as Secured Party may
fix in the notice of such sale. At any such sale, the Collateral may be sold in
one lot as an entirety or in separate parcels, as Secured Party may determine.
(e) Secured Party shall not be obligated to make any sale
pursuant to any such notice. Secured Party may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same shall be so adjourned.
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(f) In case of any sale of all or any part of the Collateral
on credit or for future delivery, the Collateral so sold may be retained by
Secured Party until the selling price is paid by the purchaser thereof, but
Secured Party shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in case of any such
failure, such Collateral may again be sold upon like notice.
(g) Upon the occurrence and during the continuance of an Event
of Default, Secured Party is expressly granted the right, at its option, to
transfer at any time to itself or to its nominee the Collateral, or any part
thereof and to hold the same as security for the Indebtedness, and to receive
the monies, income, proceeds or benefits attributable or accruing thereto and to
apply the same toward payment of the Indebtedness, whether or not then due, in
accordance with SECTION 7.9 hereof. All rights to marshaling of assets of
Debtor, including any such right with respect to the Collateral, are hereby
waived to the maximum extent permitted by law.
(h) All recitals in any instrument of assignment or any other
instrument executed by Secured Party incident to sale, transfer, assignment,
lease or other disposition or utilization of the Collateral or any part thereof
hereunder shall be full proof of the matter stated therein, no other proof shall
be required to establish full legal propriety of the sale or other action or of
any fact, condition or thing incident thereto, and all prerequisites of such
sale or other action and of any fact, condition or thing incident thereto shall
be presumed conclusively to have been performed or to have occurred.
(i) Upon the occurrence and during the continuance of an Event
of Default, Secured Party may require Debtor to assemble the Collateral and make
it available to Secured Party at a place to be designated by Secured Party that
is reasonably convenient to both parties. All expenses of retaking, holding,
preparing for sale, lease or other use or disposition, selling, leasing or
otherwise using or disposing of the Collateral and the like which are incurred
or paid by Secured Party as authorized or permitted hereunder, including also
all attorneys' fees, legal expenses and costs, shall be added to the
Indebtedness.
(j) Should Secured Party elect to exercise its rights under
said Uniform Commercial Code as to part of the personal property and fixtures
described herein, this election shall not preclude Secured Party, Mortgagee or
the Trustee from exercising the rights and remedies granted by the preceding
paragraphs of this instrument as to the remaining personal property and
fixtures.
(k) Secured Party may, at its election, at any time after
delivery of this instrument, sign one or more photocopies hereof in order that
such photocopies may be used as a financing statement under said Uniform
Commercial Code. Such signature by Secured Party may be placed between the last
sentence of this instrument and Debtor's acknowledgment or may follow Debtor's
acknowledgment. Secured Party's signature need not be acknowledged and is not
necessary to the effectiveness hereof as a deed of trust, mortgage, assignment,
pledge or security agreement.
(l) Except as permitted by the Credit Agreement, so long as
any amount remains unpaid on the Indebtedness, Debtor will not execute nor file
in any public office any financing statement or statements affecting the
Collateral other than financing statements in favor of Secured Party hereunder,
unless the prior written specific consent and approval of Secured Party shall
have first been obtained.
(m) Secured Party is authorized to file, in any jurisdiction
where Secured Party deems it necessary, a financing statement or statements, and
at the request of Secured Party, Debtor will join
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Secured Party in executing one or more financing statements pursuant to said
Uniform Commercial Code in form satisfactory to Secured Party, and will pay the
cost of filing or recording this or any other instrument, as a financing
statement, in all public offices at any time and from time to time whenever
filing or recording of any financing statement or of this instrument is deemed
by Secured Party to be necessary or desirable. The addresses of Debtor and
Secured Party are those addresses set forth for Mortgagor and Mortgagee,
respectively, on the cover page of this Mortgage.
(n) Without in any manner limiting the generality of any of
the other provisions of this Mortgage: (i) some portions of the goods described
or to which reference is made herein are or are to become fixtures on the Lands;
(ii) the security interests created hereby under applicable provisions of the
Uniform Commercial Code of one or more of the jurisdictions in which the
Mortgaged Property is situated will attach to Hydrocarbons or the accounts
resulting from the sale thereof at the wellhead or minehead located on the
Lands; and (iii) this instrument is to be filed of record in the real estate
records as a financing statement.
(o) Debtor hereby irrevocably designates and appoints Secured
Party as its attorney-in-fact, with full power of substitution, for the purposes
of carrying out the provisions of this Mortgage and taking any action and
executing any instrument that Secured Party may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
effective without further action of Mortgagor or Mortgagee upon the occurrence
and during the continuance of an Event of Default (but the determination of an
Event of Default by Secured Party shall as to all parties for the purposes
hereof be conclusive as to the occurrence of an Event of Default) and is
irrevocable and coupled with an interest.
(p) Without limiting the generality of the foregoing, Debtor
hereby irrevocably authorizes and empowers Secured Party, upon the occurrence
and during the continuance of an Event of Default, at the expense of Debtor, at
any time and from time to time, but subject to the rights of the holders of any
Permitted Prior Liens, (a) to ask, demand, receive, receipt, give acquittance
for, settle and compromise any and all monies which may be or become due or
payable or remain unpaid at any time or times to Debtor under or with respect to
the Collateral; (b) to endorse any drafts, checks, orders or other instruments
for the payment of money payable to Debtor on account of the Collateral
(including any such draft, check, order or instrument issued by an insurance
company payable jointly to Debtor and Secured Party); and (c) in the discretion
of Secured Party, to settle, compromise, prosecute or defend any action, claim
or proceeding, or take any other action, all either in its own name or in the
name of Debtor or otherwise, which Secured Party may deem to be necessary or
advisable for the purpose of exercising and enforcing its powers and rights
under this Mortgage or in furtherance of the purposes hereof, including any
action which by the terms of this Mortgage is to be taken by Debtor. Nothing in
this Mortgage shall be construed as requiring or obligating Secured Party to
make any demand or to make any inquiry as to the nature or sufficiency of any
payment received by it or to present or file any claim or notice, or to take any
action with respect to any of the Collateral or the amounts due or to become due
under any thereof, or to collect or enforce the payment of any amounts assigned
to it or to which it may otherwise be entitled hereunder at any time or times,
other than to account for amounts or Collateral received.
(q) Secured Party shall incur no liability as a result of the
sale of Collateral, or any part thereof, at any private sale. Debtor hereby
waives, to the extent permitted by applicable law, any claims against Secured
Party arising by reason of the fact that the price at which the Collateral may
have been sold at such a private sale was less than the price which might have
been obtained at a public sale or was less than the aggregate amount of the
Indebtedness, even if Secured Party accepts the first offer received and does
not offer such Collateral to more than one offeree.
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(r) Without precluding any other methods of sale, Debtor
acknowledges that the sale of the Collateral shall have been made in a
commercially reasonable manner if conducted in conformity with reasonable
commercial practices of banks disposing of similar property. Secured Party shall
not be liable for any depreciation in the value of the Collateral.
ARTICLE IX
OTHER AGREEMENTS
9.1. CREDIT AGREEMENT PREVAILS. In the event of any conflict or
inconsistency between the terms, covenants, conditions and provisions set forth
in this Mortgage and the terms, covenants, conditions and provisions set forth
in the Credit Agreement, the terms, covenants, conditions and provisions of the
Credit Agreement shall prevail.
9.2 PRODUCTION PAYMENT CONVEYANCE. This Mortgage has been executed and
delivered after Mortgagor's execution and delivery of that certain Production
Payment Conveyance (the "PRODUCTION PAYMENT CONVEYANCE"), made effective as of
9:00 a.m. Houston, Texas time, on March 1, 2000, from Mortgagor to Southern
Producer Services, L.P. ("SPS"), TCW Portfolio No. 1555 DR V Sub-Custody
Partnership, L.P. ("FUND V") and TCW DR VI Investment Partnership, L.P. ("FUND
VI"), counterparts of which are being filed for record concurrently herewith in
Chambers, Galveston, Jim Hogg, Live Oak, Wharton and Zapata Counties, Texas.
Reference to the Production Payment Conveyance is herein made for all purposes.
Pursuant to the Production Payment Conveyance, Mortgagor has conveyed
and assigned to SPS, Fund V and Fund VI the "PRODUCTION PAYMENT" (as defined in
the Production Payment Conveyance and herein so called). As provided in the
Order of the United States Bankruptcy Court attached to the Production Payment
Conveyance, the Production Payment is conveyed free and clear of any liens,
claims or other rights of Mortgagee, whether under this Mortgage or otherwise,
and the Mortgaged Property does not include the rights, titles and interests
granted under the Production Payment Conveyance as the Production Payment,
including without limitation the proceeds of the Production Payment.
The Mortgaged Property does, however, include (among other things) the
rights, titles and interests retained by Mortgagor after the conveyance of the
Production Payment which are referred to in the Production Payment Conveyance as
the "Retained Interests" (herein so called). By its acceptance of the benefits
of this Mortgage, Mortgagee and each other beneficiary hereof hereby agrees,
with and for the benefit of Mortgagor, SPS, Fund V and Fund VI and their
respective successors and assigns: (a) not to enforce any rights with respect to
the possession or use of such Retained Interests or the Equipment and fixtures
thereon (under this Mortgage or otherwise) in any way which prevents any owner
or any Person (hereafter defined) in possession of the Retained Interests
(whether Mortgagor or its successors and assigns, or any Person taking upon
foreclosure, or any receiver, it being understood that this SECTION 9.2 in no
way prevents foreclosure of this Mortgage) from honoring its duties with respect
to the Production Payment Conveyance, (b) that any Person acquiring the Retained
Interests by foreclosure or other sale pursuant to this Mortgage will take the
same subject to the obligation to perform, from and after the date of such
acquisition, the duties of Mortgagor with respect to the Production Payment
Conveyance (other than any duties of Mortgagor to pay damages for breach of any
title warranty or to pay damages for any other breach of the Production Payment
Conveyance by Mortgagor prior to the date of such acquisition), and (c) that to
the extent that Mortgagor or any other beneficiary hereof might have any lien,
claim or other right to the Production Payment (or the proceeds thereof) that
arises other than under this Mortgage, such lien or claim
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is hereby released and discharged. The term "PERSON" shall have the meaning
assigned to such term in the Credit Agreement.
9.3. INTERCREDITOR AGREEMENT. Reference is made herein for all purposes
to that certain Intercreditor Agreement (herein so called) dated the date
hereof, executed among Mortgagee, on its behalf and as agent, and Firstar Bank,
N.A., as Trustee ("SUBORDINATE LENDER"), acknowledged by Mortgagor. Under the
terms of the Intercreditor Agreement, Mortgagee and Subordinate Lender have
agreed (among other things) that the interests of Subordinate Lender in and to
the Mortgaged Property shall be inferior, and subject to, the interests of
Mortgagee in accordance with the Intercreditor Agreement.
ARTICLE X
MISCELLANEOUS
10.1. SUCCESSOR TRUSTEES. The Trustee may resign in writing addressed
to Mortgagee or be removed at any time with or without cause by an instrument in
writing duly executed by Mortgagee. In case of the death, resignation or removal
of a Trustee, a successor Trustee or Trustees may be appointed by Mortgagee from
time to time by instrument of substitution complying with any applicable
requirements of law and, in the absence of any such requirement, without other
formality than appointment and designation in writing. Such appointment and
designation shall be full evidence of the right and authority to make the same
and of all facts therein recited, and, upon the making of any such appointment
and designation, this conveyance shall vest in the named successor Trustee or
Trustees all the estate and title of the prior Trustee or Trustees in all of the
Mortgaged Property, and such successor Trustee or Trustees shall thereupon
succeed to all the rights, powers, privileges, immunities and duties hereby
conferred upon the Trustee named herein. All references herein to the Trustee
shall be deemed to refer to the Trustees from time to time acting hereunder.
10.2. LEGAL PROCEEDINGS BY AND AGAINST TRUSTEE. The Trustee shall not
be required to take any action for the enforcement of this instrument or the
exercise of any rights or remedies hereunder or to appear in or defend any
action, suit or other proceeding in connection therewith, where, in the opinion
of the Trustee, such action will be likely to involve him in expense or
liability, unless the Trustee be tendered security and indemnity satisfactory to
him against cost, expense or liability in connection therewith.
10.3. RESPONSIBILITIES OF TRUSTEE. It shall be no part of the duty of
the Trustee to see to any recording, filing or registration of this instrument
or of any instrument supplemental hereto or to see to the payment of or be under
any duty in respect to any tax or assessment or other governmental charge which
may be levied or assessed on the Mortgaged Property or against Mortgagor or to
see to the performance or observance by Mortgagor of any of the covenants or
agreements herein contained. The Trustee shall not be responsible for the
execution, acknowledgment or validity of this instrument or of any instrument
supplemental hereto or of the Notes or for the sufficiency of the security
purported to be created hereby, and the Trustee makes no representation in
respect thereof or in respect of those rights of the holders of any of the
Notes. The Trustee shall have the right to consult with counsel upon any matters
arising hereunder and shall be fully protected in relying as to legal matters on
the advice of such counsel. The Trustee shall not incur any personal liability
hereunder except for his own gross negligence, willful misconduct or bad faith,
and the Trustee shall have the right to rely on any instrument, document or
signature authorizing or supporting any action taken or proposed to be taken by
him hereunder which is believed by him in good faith to be genuine.
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10.4. ADVANCES BY MORTGAGEE OR TRUSTEE. Each and every covenant herein
contained shall be performed and kept by Mortgagor solely at Mortgagor's
expense. If Mortgagor shall fail to perform or keep any of the covenants of
whatsoever kind or nature contained in this instrument, then, if such failure is
not remedied by Mortgagor within 30 days following notice thereof by Mortgagee,
the Trustee or any receiver appointed hereunder may, but shall not be obligated
to, make advances to perform the same in Mortgagor's behalf, and Mortgagor
hereby agrees to repay such sums upon demand plus interest at an annual rate
equal to the highest rate of interest from time to time accruing on the Notes
until paid or, in the event any promissory note evidences such indebtedness,
upon the terms and conditions thereof; provided, however, that in no event shall
such interest rate ever exceed the Highest Lawful Rate. No such advance shall be
deemed to relieve Mortgagor from any default hereunder. All such advances shall
be included in the Indebtedness.
10.5. DEFENSE OF CLAIMS. Mortgagor will notify the Trustee and
Mortgagee, in writing, promptly of the commencement of any legal proceedings
affecting the lien hereof or the Mortgaged Property, or any part thereof, and
will take such action as may be necessary to preserve Mortgagor's, the Trustee's
and Mortgagee's rights affected thereby, and should Mortgagor fail or refuse to
take any such action, the Trustee or Mortgagee may, upon giving prior written
notice thereof to Mortgagor, take such action on behalf of and in the name of
Mortgagor and at Mortgagor's expense. Moreover, Mortgagee, or the Trustee on
behalf of Mortgagee, may take such independent action in connection therewith as
they may in their reasonable discretion deem proper, Mortgagor hereby agreeing
that all sums advanced or all expenses incurred in such actions plus interest at
an annual rate equal to the highest rate of interest from time to time accruing
on the Notes will, on demand, be reimbursed to Mortgagee, the Trustee or any
receiver appointed hereunder; provided, however, that in no event shall such
interest rate ever exceed the Highest Lawful Rate.
10.6. SURVIVAL OF COVENANTS AND LIENS. All of the covenants and
agreements of Mortgagor set forth herein shall survive the execution and
delivery of this Mortgage and shall continue in force until the Indebtedness is
paid in full. Accordingly, if Mortgagor shall perform faithfully each and all of
the covenants and agreements herein contained, then, and then only, this
conveyance shall become null and void and shall be released in due form, upon
Mortgagor's written request and at Mortgagor's expense; otherwise, it shall
remain in full force and effect. No release of this conveyance or the lien
thereof shall be valid unless executed by Mortgagee.
10.7. RENEWALS AND OTHER SECURITY. Renewals and extensions of the
Indebtedness may be given at any time, and Mortgagee may take or may now hold
other security for the Indebtedness without notice to or consent of Mortgagor.
The Trustee or Mortgagee may resort first to such other security or any part
thereof or first to the security herein given or any part thereof, or from time
to time to either or both, even to the partial or complete abandonment of either
security, and such action shall not be a waiver of any rights conferred by this
instrument, which shall continue as a perfected lien upon the Mortgaged Property
not expressly released until the Indebtedness secured hereby is fully paid.
10.8. INSTRUMENT AN ASSIGNMENT, ETC. This instrument shall be deemed to
be and may be enforced from time to time as an assignment, chattel mortgage,
hypothecation, contract, deed of trust, mortgage, conveyance, financing
statement, real estate mortgage, pledge or security agreement, and from time to
time as any one or more thereof.
10.9. NO USURY INTENDED. It is the intention of the parties hereto to
comply strictly with applicable usury laws; accordingly, notwithstanding any
provision to the contrary contained herein, in the Notes, or in any of the
documents securing or relating to any Indebtedness, in no event shall this
instrument,
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the Notes, or such documents require or permit the payment, charging, taking,
reserving, or receiving of any sums constituting interest under applicable laws
which exceed the maximum amount permitted by such laws. If any such excess
interest is contracted for, charged, taken, reserved, or received in connection
with this instrument or the Notes or in any of the documents securing or
relating to any Indebtedness, or in any communication by Mortgagee or any other
person to Mortgagor or any other person, or in the event all or part of the
Indebtedness shall be prepaid or accelerated, so that under any of such
circumstances or under any other circumstance whatsoever the amount of interest
contracted for, charged, taken, reserved, or received on the amount of principal
actually outstanding from time to time under this instrument or the Notes shall
exceed the maximum amount of interest permitted by applicable usury laws, then
in any such event it is agreed as follows: (i) the provisions of this Section
shall govern and control, (ii) any such excess shall be deemed an accidental and
bona fide error and canceled automatically to the extent of such excess, and
shall not be collected or collectible, (iii) any such excess which is or has
been paid or received notwithstanding this Section shall be credited against the
then unpaid principal balance hereof with the excess, if any, refunded to
Mortgagor, and (iv) the effective rate of interest shall be automatically
reduced to the maximum lawful rate allowed under applicable laws as construed by
courts having jurisdiction hereof or thereof. Without limiting the foregoing,
all calculations of the rate of interest contracted for, charged, taken,
reserved, or received in connection herewith which are made for the purpose of
determining whether such rate exceeds the maximum lawful rate shall be made to
the extent permitted by applicable laws by amortizing, prorating, allocating and
spreading during the period of the full term of the Notes, including all prior
and subsequent renewals and extensions, all interest at any time contracted for,
charged, taken, reserved, or received. The terms of this Section shall be deemed
to be incorporated in every document, security instrument, and communication
relating to this instrument and the Notes. The term "applicable usury laws"
shall mean such laws of the State of Texas or the laws of the United States,
whichever laws allow the higher rate of interest, as such laws now exist;
provided, however, that if such laws shall hereafter allow higher rates of
interest, then the applicable usury laws shall be the laws allowing the higher
rates to be effective as of the effective date of such laws. Mortgagor hereby
waives its rights under Texas Finance Code Section 305.006(d) and will, in
connection with any counterclaim alleging usurious interest, give Trustee and
Mortgagee the notice required in Texas Finance Code Section 305.006(b) prior to
filing such counterclaim and Trustee and Mortgagee shall have the right to
correct any violation as provided by Texas Finance Code Section 305.103.
10.10. SEPARABILITY. If any provision hereof or of the Notes is invalid
or unenforceable in any jurisdiction, the other provisions hereof or of the
Notes shall remain in full force and effect in such jurisdiction, and the
remaining provisions hereof shall be liberally construed in favor of the Trustee
and Mortgagee in order to effectuate the provisions hereof, and the invalidity
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of any such provision in any other jurisdiction.
10.11. RIGHTS CUMULATIVE. Each and every right, power and remedy herein
given to the Trustee or Mortgagee shall be cumulative and not exclusive, and
every right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time and so often and in such order as
may be deemed expedient by the Trustee or Mortgagee, as the case may be, and the
exercise, or the beginning of the exercise, of any such right, power or remedy
shall not be deemed a waiver of the right to exercise, at the same time or
thereafter, any other right, power or remedy. No delay or omission by the
Trustee or Mortgagee in the exercise of any right, power or remedy shall impair
any such right, power or remedy or operate as a waiver thereof or of any other
right, power or remedy then or thereafter existing.
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10.12. BINDING EFFECT. This instrument is binding upon Mortgagor,
Mortgagor's successors and assigns, and shall inure to the benefit of the
Trustee, his successors and assigns and Mortgagee and its successors and
assigns, and the provisions hereof shall likewise constitute covenants running
with the land.
10.13. ARTICLE AND SECTION HEADINGS. The article and section headings
in this instrument are inserted for convenience and shall not be considered a
part of this instrument or used in its interpretation.
10.14. COUNTERPARTS. This instrument may be executed in any number of
counterparts, each of which shall for all purposes be deemed to be an original
and all of which are identical except that, to facilitate recordation, the
Schedules and Exhibits in any particular counterpart may omit the description of
properties situated in counties other than the county in which such counterpart
is to be recorded.
10.15. NOTICES. Except as otherwise provided in the Credit Agreement or
herein, any notice, request, demand or other instrument which may be required or
permitted to be given or served upon Mortgagor shall be sufficiently given when
made by hand delivery, by telex, by telecopier or registered or certified mail,
postage prepaid, return receipt requested and addressed to Mortgagor at the
address shown below the signatures at the end of this Mortgage or to such
different address as Mortgagor shall have designated by written notice received
by Mortgagee or the Trustee.
10.16. AMENDMENTS, MODIFICATIONS AND WAIVERS, ETC. Except as provided
in SECTION 10.1, this instrument may be amended, modified, revised, discharged,
released or terminated only by a written instrument or instruments executed by
Mortgagor and Mortgagee. Any alleged amendment, revision, discharge, release or
termination which is not so documented shall not be effective as to any party.
No waiver of any provision of this Mortgage nor consent to any departure by
Mortgagor therefrom shall in any event be effective unless the same shall be in
writing, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.
10.17. SURVIVAL OF AGREEMENTS. All representations and warranties of
Mortgagor herein and all covenants and agreements herein not fully and finally
performed before the effective date or dates of this Mortgage shall survive such
date or dates. All covenants and obligations in this Mortgage are intended by
the parties to be, and shall be construed as, covenants running with the Lands.
10.18. GOVERNING LAW. This Mortgage and the Indebtedness arising in
connection herewith shall be governed by, and construed in accordance with, the
laws of the State of New York applicable to contracts made and performed in such
State (without regard to principles of conflict of laws except Section 5-1401 of
the New York General Obligations Law) and any applicable law of the United
States of America, including, without limiting the generality of the foregoing,
matters of construction, validity and performance, except that at all times the
provisions for the creation, perfection, and enforcement of the liens and
security interests created pursuant hereto shall be governed by and construed
according to the law of Texas.
10.19. SUBROGATION. To the extent the Indebtedness represents funds
utilized to satisfy certain outstanding indebtedness and obligations secured by
liens, rights and/or claims against the Mortgaged Property or any part thereof,
Mortgagee shall be subrogated to any and all liens, rights, superior titles and
equities owned or claimed by the holder of any such outstanding indebtedness or
obligation so satisfied, regardless of whether said liens, rights, superior
titles and equities are assigned to the Mortgagee by the holder(s) thereof or
released. Mortgagee shall be subrogated to all covenants and warranties
heretofore given or made with respect to the Mortgaged Property.
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10.20. DTPA WAIVER. Mortgagor acknowledges and agrees, on Mortgagor's
own behalf and on behalf of any permitted assigns and successors hereafter, that
the DTPA is not applicable to this transaction. Accordingly, Mortgagor's rights
and remedies with respect to the transaction contemplated under this Mortgage
and the Credit Agreement and with respect to all acts or practices of Mortgagee
and Trustee, past, present or future, in connection with such transaction, shall
be governed by legal principles other than the DTPA. In furtherance thereof,
Mortgagor agrees as follows:
(a) Mortgagor represents that Mortgagor has the knowledge and
experience in financial and business matters that enable Mortgagor to
evaluate the merits and risks of the business transaction that is the
subject of this Mortgage and the Credit Agreement. Mortgagor also
represents that Mortgagor is not in a significantly disparate
bargaining position in relation to Mortgagee and Trustee. Mortgagor has
negotiated the documents with Mortgagee and Trustee at arm's length and
have willingly entered into the documents.
(b) Mortgagor represents that (i) Mortgagor has been
represented by the firm of Gardere & Wynne, L.L.P. as legal counsel in
the transaction contemplated by this Mortgage and the Credit Agreement
and (ii) such legal counsel was not directly or indirectly identified,
suggested or selected by Mortgagee and Trustee or an agent of Mortgagee
and Trustee.
(c) This Mortgage and the Credit Agreement relate to a
transaction involving total consideration by Mortgagor of more than
$100,000.00 and does not involve the Mortgagor's residence.
Mortgagor agrees, on Mortgagor's own behalf and on behalf of Mortgagor's
permitted assigns and successors, that all of the Mortgagor's rights and
remedies under the DTPA are WAIVED AND RELEASED, including specifically, without
limitation, all rights and remedies under the DTPA resulting from or arising out
of any and all acts or practices of Mortgagee and Trustee in connection with
this transaction, whether such acts or practices occur before or after the
execution of this Mortgage.
In furtherance thereof, Mortgagor agrees that by signing this Mortgage,
Mortgagor and any permitted assigns and successors are bound by the following
waiver:
WAIVER OF CONSUMER RIGHTS. MORTGAGOR WAIVES ITS RIGHTS UNDER THE
DECEPTIVE TRADE PRACTICES--CONSUMER PROTECTION ACT, SECTION 17.41 ET
SEQ., BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL
RIGHTS AND PROTECTION. AFTER CONSULTATION WITH AN ATTORNEY OF
MORTGAGOR'S OWN SELECTION, MORTGAGOR VOLUNTARILY CONSENTS TO THIS
WAIVER.
10.21 FINAL EXPRESSION. THIS MORTGAGE, THE CREDIT AGREEMENT, AND THE
OTHER DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
[Remainder of page intentionally blank; Signature page follows]
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IN WITNESS WHEREOF, Mortgagor has executed or caused to be executed
this Mortgage, Deed of Trust, Assignment of Production, Security Agreement and
Financing Statement on the date and year first set forth above.
The address of the MORTGAGOR:
Mortgagor/Debtor is:
TRANSTEXAS GAS CORPORATION,
1300 North Sam Houston a Delaware corporation
Parkway East, Suite 310
Houston, Texas 77032
By
--------------------------------
Ed Donahue, Vice President and
Chief Financial Officer
STATE OF TEXAS )
)
COUNTY OF DALLAS )
Before me, a Notary Public, on this day personally appeared Ed Donahue,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of
TRANSTEXAS GAS CORPORATION, and that he has executed the same on behalf of said
corporation for the purposes and consideration therein expressed, and in the
capacity therein stated.
Given under my hand and seal of office this ____ day of March, 2000.
-----------------------------------------------
Notary Public in and for the State of Texas
(PERSONALIZED SEAL)
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