THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS
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DEED OF TRUST, ASSIGNMENT OF PROCEEDS
OF PRODUCTION, SECURITY AGREEMENT AND FINANCING STATEMENT
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THIS DEED OF TRUST, ASSIGNMENT OF PROCEEDS OF PRODUCTION, SECURITY
AGREEMENT AND FINANCING STATEMENT, dated as of August 29, 2007, is from Enexco,
Inc., a Texas corporation having its principal place of business at 3131 Turtle
Creek Blvd, Suite 1210, Dallas, Texas 75219 (referred to herein as the
"Grantor"), to Randall W. Heinrich, as Trustee (referred to herein as the
"Trustee"), for the use and benefit of and to secure the payment of all
indebtedness and the performance of all obligations as hereinafter described of
Grantor owing to Colony Energy, Inc., a Delaware corporation having its
principal place of business at 2100 West Loop South, Suite 900, Houston, Texas
77027 (referred to herein as the "Holder"), under the Promissory Note
hereinafter defined.
WHEREAS, the Holder has loaned to the Grantor the sum of $337,094.00, and
the Grantor has executed and delivered to the Holder its Promissory Note (the
"Promissory Note") dated of even date herewith made payable to the order of the
Holder in the original principal sum of $337,094.00 bearing interest and
containing provisions with respect to the payment of interest, default,
acceleration and liability for costs and attorneys' fees, as therein provided;
NOW THEREFORE, the Grantor, 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, and by these presents
does GRANT, BARGAIN, SELL, WARRANT, MORTGAGE, ASSIGN, TRANSFER AND) CONVEY unto
the Trustee, for the use and benefit of the Holder, all of the actual right,
title and interest of the Grantor, whether now owned or hereafter acquired, in
all of the Mortgaged Properties (as defined in Article II hereof), and all of
its rights and interests in connections therewith, subject, however, to the
rights of any and all other persons in the Mortgaged Properties pursuant to any
agreement existing as of the date of this instrument;
Subject, however, to (i) the restrictions, exceptions, reservations,
conditions, limitations, interests and other matters, if any, set forth or
referred to in the specific descriptions of such properties and interests in
Exhibit A (including all presently existing royalties, overriding royalties,
payments out of production and other burdens and which are taken into
consideration in computing any decimal or fractional interest as set forth in
Exhibit A), and (ii) the condition that neither the Trustee, nor the Holder
shall be liable in any respect for the performance of any covenant or obligation
of the Grantor in respect of the Mortgaged Properties.
TO HAVE AND TO HOLD the Mortgaged Properties unto the Trustee, his
successors and substitutes in trust, and assigns forever, in trust to secure the
payment of the Secured Indebtedness and to secure the performance of the
obligations of the Grantor herein contained.
The Grantor, in consideration of the premises and to induce the Holder to
make the loan described above, hereby covenants and agrees with the Trustee and
the Holder as follows:
ARTICLE I
Definitions
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1.1 Definitions. When used in this instrument, the following terms shall
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have the respective meanings specified herein or in the section or recital
referred to:
"Collateral" means all rights, titles and interest now owned or hereafter
acquired by the Grantor in all Hydrocarbons, accounts, contract rights, fixtures
and personal property of any kind and character defined in or subject to the
applicable provisions of the Uniform Commercial Code constituting a part of the
Mortgaged Properties, including but not limited to, all rights now owned and at
any time hereafter acquired by the Grantor in the following:
(a) All Hydrocarbons and other minerals produced from the
Mortgaged Properties;
(b) All accounts, general intangibles, chattel paper, instruments
and all other properties and interests arising in connection with the sale or
other disposition of such Hydrocarbons;
(c) All inventory arising in connection with the operation of the
Mortgaged Properties;
(d) All rights under all Product Sale Contracts, contracts,
operating agreements, mineral purchase agreements, division orders, contracts
for drilling of wells, gas processing agreements, transportation agreements,
surface use agreements, rights-of-way, easements, surface leases, permits,
licenses, pooling or unitization agreements, pooling designations and pooling
orders now or hereafter affecting any of the interests now or hereafter covered
hereby or which are necessary or convenient in exploring or drilling for, or in
the producing, treating, handling, storing, processing, transporting or
marketing of, Hydrocarbons from and of the Lands Described in Exhibit A;
(e) All Operating Equipment, other personal property, and fixtures
at any time used on the Mortgaged Properties or in connection with production
therefrom or in connection with the leases, wells, and/or units described or
referred to on Exhibit A, together with all additions, replacements and
substitutions thereof; and
(f) All proceeds and products of the foregoing.
"Deed of Trust" means this Deed of Trust, Assignment of Proceeds of
Production, Security Agreement and Financing Statement.
"Grantor": The opening paragraph. If more than one, the word "Grantor"
shall mean all grantors and each of them jointly and severally.
"Grantor's Successors" means the heirs, executors, administrators, personal
representatives, successors and assigns of the Grantor.
"Holder": The opening paragraph.
"Hydrocarbons" means oil, gas, casinghead gas, condensate and all other
liquid or gaseous hydrocarbons.
"Lands Described in Exhibit A" shall include the Oil and Gas Leases and the
lands described in Exhibit A, as the same shall be amended from time to time
hereafter, and any Oil and Gas Leases or lands, the description of which is
incorporated in Exhibit A by reference to another instrument or document, and
shall also include any Oil and Gas Leases or lands now or hereafter unitized or
pooled with Oil and Gas Leases or lands which are either described in Exhibit A
or the description of which is incorporated in Exhibit A by reference.
"Mortgaged Properties": Article II hereof.
"Oil and Gas Leases" shall mean all of the Grantor's right, title and
interest in and to all oil, gas and mineral leases and subleases and assignment
of operating rights now owned or hereafter acquired by Grantor, including,
without limitation, those oil, gas and mineral leases and subleases and
assignment of operating rights set forth on Exhibit A attached hereto and made a
part hereof for all purposes, as the same shall be amended from time to time
hereafter, and any instrument executed in amendment, correction, modification,
confirmation, renewal or extension of any of the leases, agreements or
instruments.
"Operating Equipment" means all oil wells, gas wells, water wells,
injection wells, other wells and operating equipment including all surface or
subsurface machinery, equipment, oil field supplies and materials, facilities or
other properties of whatsoever kind or nature now or hereafter located on any of
the Lands Described in Exhibit A which are useful for the production, treatment,
storage, processing, marketing or transportation of Hydrocarbons, and all other
materials used in the drilling, operating, completing, maintaining or repairing
any type of wells or pipelines, including, but not by way of limitation, all
casing, tubing, rods, pumping units and engines, houses, jacks, Christmas trees,
derricks, separators, gun barrels, flow lines, pipelines, cable lines, tanks,
gas systems, (for gathering, treating and compression) water systems (for
creating, disposal and injection), power plants, poles, lines, transformers,
starters and controllers, machine shops, machinery, tools, storage yards and
equipment stored therein, buildings and camps, telegraph, telephone and other
communication systems, roads, loading racks and shipping facilities, other
personal property and fixtures at any time used on the Lands Described in
Exhibit A or in connection with production therefrom or in connection with the
Oil and Gas Leases, wells, and/or units described or referred to on Exhibit A.
"Product Sale Contracts" means contracts now in effect, or here-after
entered into by the Grantor, or the Grantor's predecessors in interest, for the
sale, purchase, exchange or processing of Hydro-carbons produced from the Lands
Described in Exhibit A.
"Promissory Note": The first recital.
"Secured Indebtedness" means the following obligations of the Grantor:
(a) The payment of all indebtedness is evidenced in part by the
Promissory Note; any future advances under the Promissory Note; and all
renewals, extensions or amendments of such indebtedness or any part thereof or
any such future advances.
(b) The payment of all sums advanced or expenses or costs incurred
by the Holder that are made or incurred pursuant to, or permitted by, the terms
of this Deed of Trust, plus interest thereon at the rate specified in the
Promissory Note for past due payments, from the date of the advances or
incurring of such expenses or cost until reimbursed, such costs including, but
not limited to, all costs incurred by the Holder to obtain, administer, preserve
and enforce this Deed of Trust, collect the Secured Indebtedness, and maintain
and preserve the Collateral, including without limitation all taxes,
assessments, reasonable attorneys fees and legal expenses of sale.
(c) Any and all other indebtedness or liability of the Grantor to
the Holder of every kind, nature and description, direct or indirect, primary or
secondary, secured or unsecured (including overdrafts), joint or several,
absolute or contingent, due or to become due, now existing or hereafter arising,
regardless of how it may be evidenced, and whether originally payable to Holder
or to a third party and subsequently acquired by the Holder, including without
limitation all future advances, whether or not presently contemplated by the
parties hereto. It is contemplated that the Holder may lend additional sums to
the Grantor from time to time, but shall not be obligated to do so, and the
Grantor agrees that this Deed of Trust shall secure such additional loans.
(d) The performance by the Grantor of all obligations under-taken
by it in accordance with the particular terms and provisions of the Promissory
Note.
(e) Any extensions or renewals of all of such indebtedness
described in Subparagraphs (a) through (d) above whether or not the Grantor
executes any extension agreement or renewal instrument.
"Trustee" means the Trustee at the time serving as such under this Deed of
Trust.
"Uniform Commercial Code" means the Uniform Commercial Code in effect in
the State of Texas on the date hereof.
ARTICLE II
Mortgaged Properties
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The property conveyed hereby (the "Mortgaged Properties") consists of all
right, title and interest of the Grantor (whether now owned or hereafter
acquired) in and to each of the following items of real and personal property:
(a) The Lands Described in Exhibit A, and the Oil and Gas Leases,
and the fee, mineral, working, overriding royalty, royalty and other interests
which are specifically described in Exhibit A;
(b) All rights under all Product Sale Contracts, contracts,
operating agreements, mineral purchase agreements, division orders, contracts
for drilling of wells, gas processing agreements, transportation agreements,
surface use agreements, rights-of-way, easements, surface leases, permits,
licenses, unitization and pooling agreements 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
having jurisdiction), pooling designations and pooling orders and all other
titles, rights and options whatsoever now or hereafter affecting any of the
Lands Described in Exhibit A, or which are useful or appropriate in drilling
for, producing, treating, handling, storing, processing, transporting or
marketing Hydrocarbons or other minerals from any of the Lands Described in
Exhibit A;
(c) All Hydrocarbons and other minerals which are in, under, upon,
produced or to be produced from the Lands Described in Exhibit A and the Oil and
Gas Leases, and all proceeds, including receivables, now owned by Grantor or
hereafter generated from the sale thereof;
(d) All information concerning the lands Described in Exhibit A
including, without limitation, abstracts of title, title opinions, geological
and geophysical information, reserve or reservoir studies and well logs;
(e) All contract rights and general intangibles heretofore or
hereafter generated or acquired in connection with, or which are necessary or
convenient for, the exploration for or production, storage, transportation,
processing or marketing of Hydrocarbons or other minerals produced from the
Lands Described in Exhibit A, including, without limitation, all rights under
Product Sale Contracts, division orders, contracts for drilling of wells, gas
processing agreements, transportation agreements, right of way agreements,
surface use agreements and any and all other agreements in any way whatsoever
related to any of such activities;
(f) All Operating Equipment and Collateral, including all
additions, replacements or substitutions thereto or thereof hereafter acquired,
and proceeds from the sale thereof;
together with any and all corrections or amendments to, or renewals, extensions
or ratification of, any of the same, or of any instrument relating thereto, and
all rights-of-way, franchises, easements, tenements, hereditaments and
appurtenances now existing or in the future obtained in connection with any of
the aforesaid, with all reversions, remainders, rents, revenues, issues,
proceeds, earnings, incomes, products and profits thereof, and all the estate,
title, interests, rights and claims whatsoever, at law as well as in equity,
which the Grantor now has or may hereafter acquire in and to the aforesaid, and
all other interest of every kind and character in all of the real and personal
properties respectively above described or referred to which Grantor may now own
or at any time hereafter acquire (including, without limitation, all interests
which Grantor may now or at any time hereafter own in the Hydrocarbons and other
minerals in and under the Oil and Gas Leases and leasehold estates covering the
Lands Described in Exhibit A), and all other things of value and incident
thereto which the Grantor might at any time have or be entitled to, all the
aforesaid properties, rights and interests, together with any additions thereto
which may be subjected to the lien of this instrument by means of supplements
hereto.
ARTICLE III
Representations and Warranties
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In order to induce the Holder to enter into the loan represented by the
Promissory Note, the Grantor, for Grantor and Grantor's Successors, hereby makes
the following representations and warranties to, and covenants with, the Trustee
and the Holder, which representations, warranties and covenants shall survive
the execution and delivery hereof, and shall be deemed made for the benefit of
any substitute or successor trustee or any successor or assignee of the Holder:
3.1 Title. Grantor is the lawful owner of all of, and has good and
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marketable title to, the Mortgaged Properties to the extent of the interests
specified in Exhibit A, and has the full complete right and authority to
mortgage and convey the same.
3.2 No Liens. The Mortgaged Properties are free from all encumbrances
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or liens whatsoever, except as may be specifically set forth on Exhibit A or as
permitted by the provisions of Section 4.2(f) hereof.
3.3 Validity of Oil and Gas Leases. The Oil and Gas Leases described
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in Exhibit A attached hereto are valid and subsisting leases and are superior
and paramount to all other oil and gas leases respecting the properties to which
they pertain. The Oil and Gas Leases are in full force and effect, and all
payments, rents, royalties, covenants and conditions necessary to maintain the
same in full force and effect, and necessary to maintain the interest of Grantor
therein, have been timely paid to and accepted by the parties to whom same are
due and have otherwise been fully performed. No party in interest has asserted
that any of such Oil and Gas Leases has terminated.
3.4 Grantor Entitled to Receive Revenues. The Grantor, by virtue of
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its ownership of the Mortgaged Properties, is entitled to receive from each of
the Oil and Gas Leases, after deducting any and all royalties, overriding
royalties and similar burdens on the Grantor's interest, at least that fraction
of revenues derived from the sale of Hydrocarbons and other minerals produced
therefrom as is set forth on Exhibit A for such Oil and Gas Lease.
3.5 No "Take or Pay" Clause. The Grantor is not obligated under, nor
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are the Mortgaged Properties subject to, any agreement providing for the sale of
Hydrocarbons produced from the Oil and Gas Leases, which agreement contains a
"take or pay" clause or a "market-out" clause or a "FERC-out" clause or any
similar term providing for the delivery of Hydrocarbons produced from the
Mortgaged Properties at some future time without Grantor then or thereafter
receiving full payment therefor.
3.6 Covenants. All covenants, express or implied, binding upon the
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Grantor with respect to the Oil and Gas Leases have been performed, except in
those circumstances where (a) a reasonably prudent operator under similar
circumstances and in accordance with customary industry practice would deem it
prudent not to so perform such covenants, and (b) such non-performance
individually or in the aggregate is not such as to interfere materially with the
development, operation or value of the Mortgaged Properties.
3.7 Location of Operating Equipment. The Operating Equipment forming a
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part of the Mortgaged Properties is and will be located on the Lands Described
in Exhibit A.
3.8 Wells Drilled and Operated in Compliance with Laws. All producing
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wells located on the Mortgaged Properties or properties unitized therewith (a)
have been drilled and completed and have been operated in compliance and in
conformity with all applicable laws, rules, regulations and orders of all
regulatory authorities having jurisdiction, (b) are subject to no penalties on
account of past production, and (c) are bottomed under and are producing from,
and the well bores are wholly within, the Mortgaged Properties or properties
unitized therewith.
3.9 Producing Wells. Each of the producing wells located on the
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Mortgaged Properties is actually producing oil and/or gas in paying quantities,
is not shut-in, and is suitably equipped, in accordance with reasonable industry
standards, to continue such production. No event known to the Grantor has
occurred which would adversely affect the anticipated future production of any
of such wells that has not been previously disclosed to the Holder in writing.
3.10 Production Being Sold in Compliance With Law. All production from
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the Mortgaged Properties has been sold and is being sold to purchasers entitled
to purchase the same at lawful prices in accordance with applicable laws and
administrative rules and orders, and no substantial obligation exists or is
claimed to exist to refund to any purchaser, or otherwise, any part of the
amounts heretofore received or now being received for oil and gas produced from
any of the Mortgaged Properties.
3.11 Filings, Licenses and Approvals. All reports, petitions and other
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matters required to be filed with any governmental agency and certificates and
notices required to be served on private parties have been filed or served as
required, and all necessary permits, licenses and other regulatory approvals
have been obtained, to conduct all operations which have been or are being
conducted on the Mortgaged Properties and to collect any prices which have been
or are being collected for production marketed therefrom.
3.12 No Rights of Reversion, Etc. Except as indicated on Exhibit A, or
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as may have been otherwise previously disclosed to the Holder in writing, no
party has any right of reversion, hack-in interest, or other right which will
terminate or reduce the interest of the Grantor warranted in any of the Oil and
Gas Leases or other Mortgaged Properties so long as Hydrocarbons are produced in
paying quantities from the wells presently located on the Mortgaged Properties.
3.13 Taxes and Liabilities. All taxes assessed against the Mortgaged
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Properties or any production therefrom, including, without limitation, ad
valorem, severance, windfall profit, production and similar taxes based upon or
measured by the ownership of the Mortgaged Properties, and all liabilities
incurred by Grantor or any predecessor in title of Grantor to the operator or
otherwise for services rendered or material furnished on or in connection with
the Mortgaged Properties, or for repairs to any Operating Equipment, have been
paid to the extent that the same have become due unless such payment is being
contested as otherwise permitted by this Deed of Trust.
3.14 No Litigation Concerning Title or Liens. No litigation is pending
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or, to the knowledge of Grantor, threatened, wherein a claim of title is
asserted to any of the Mortgaged Properties adverse to the Grantor's title, or
wherein any lien or encumbrance is claimed against Grantor's interest in the
Mortgaged Properties, which lien or encumbrance is or could become superior to
the lien created by this instrument.
ARTICLE IV
Affirmative Covenants
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The Grantor covenants and agrees that, so long as this Deed of Trust is in
effect and until all Secured Indebtedness of the Grantor to the Holder is paid
in full, unless compliance shall have been waived in writing by the Holder, the
Grantor, for Grantor and Grantor's Successors, will do the following:
4.1 Payment of Secured Indebtedness. The Grantor shall duly and
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punctually pay the Secured Indebtedness as the same becomes due, and shall
faithfully and punctually perform all of the obligations and liabilities of the
Secured Indebtedness.
4.2 Operation of Mortgaged Properties. Whether or not the Grantor is
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the operator of the Mortgaged Properties, the Grantor shall, at the Grantor's
sole expense:
(a) Perform, or cause to be performed, all covenants, terms and
conditions imposed upon the Grantor or its predecessors in interest and
expressly contained in such Oil and Gas Leases (including without limitation the
payment of all delay rentals and other amounts necessary to keep the Oil and Gas
Leases in full force and effect), or expressly contained in any assignments or
farmouts, under or through which such Oil and Gas Leases or undivided interest
therein are now held, and perform or cause to be performed all implied covenants
and obligations imposed upon the Grantor or its predecessors in interest in
connection with such Oil and Gas Leases, insofar as such Oil and Gas Leases
cover the properties mortgaged hereby, except in those circumstances where (1) a
reasonably prudent operator under similar circumstances and in accordance with
customary industry practice would deem it prudent not to so perform such
covenants or conditions, and (2) such non-performance individually or in the
aggregate is not such as to interfere materially with the development, operation
or value of the Mortgaged Properties;
(b) Keep, or cause to be kept, in full force and effect throughout
their respective terms as provided therein, the Oil and Gas Leases, insofar as
they cover properties mortgaged hereby, and not abandon any well or forfeit,
surrender, release or permit to expire any Oil and Gas Lease or any rights in
the Mortgaged Properties, or any part thereof, or permit any of the foregoing to
occur, except in those circumstances where (1) a reasonably' prudent operator
under similar circumstances in accordance with customary industry practice would
deem it prudent to do so, arid (2) such actions individually or in the aggregate
are not such as to interfere materially with the development, operation or value
of the Mortgaged Properties; provided that the foregoing exception shall not
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apply to any Oil and Gas Lease or part thereof that may be maintained in force
by production of Hydrocarbons from existing wells capable of producing in paying
quantities, or by payment of delay rentals or shut-in royalties, and provided
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further that Grantor shall under no circumstances be obligated to drill any well
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to keep any Oil and Gas Lease in full force and effect;
(c) Operate, or cause to be operated, in a good workmanlike manner
as would a prudent operator under similar circumstances and in accordance with
all applicable federal, state and local laws, rules and regulations, the
Mortgaged Properties, and continuously operate or cause to be operated for the
production of Hydrocarbons in a good workmanlike manner as would a prudent
operator under similar circumstances the wells now or hereafter drilled on the
Mortgaged Properties;
(d) Pay, or cause to be paid, promptly as and when due and
payable, all rentals and royalties payable in respect of the Mortgaged
Properties and Grantor's share of all costs and expenses incurred under any
joint operating agreement affecting the Mortgaged Properties, or any portion
thereof, and in connection therewith furnish to the Holder, as and when
requested, full information as to the status of any joint account maintained
with others under any such operating agreement or other agreement constituting a
part of the Mortgaged Properties;
(e) Cause the Operating Equipment to be maintained, preserved and
kept in good and effective operating condition, and from time to time make or
cause to be made all necessary and proper repairs, renewals, replacements,
substitutions and improvements thereof or thereto necessary for the production
of Hydrocarbons from the Mortgaged Properties to be promptly made;
(f) Cause the Mortgaged Properties to be kept free and clear of
liens, charges and encumbrances of every character, other than (1) the lien
hereof, (2) defects and irregularities in title, and liens, charges or
encumbrances, which are not such as to interfere materially with the
development, operation or value of the Mortgaged Properties and not such as to
affect materially title thereto, (3) liens arising under standard operating
agreements which are usual and customary in accordance with routine industry
practice, (4) taxes constituting a lien but not due and payable, (5) those set
forth or referred to in Exhibit A, (6) those arising from obligations being
contested by the Grantor in good faith as permitted by Section 4.2(k) hereof,
(7) those consented to in writing by the Holder, and (8) those arising in
connection with workmen's compensation insurance, unemployment insurance or old
age pension, or of mechanics and materialmen or operators for sums not due;
(g) Not agree to any amendment to the terms of any Oil and Gas
Lease constituting part of the Mortgaged Properties, or of any assignment,
farm-out, or other instrument that affects Grantor's title to the Mortgaged
Properties;
(h) Not take any action to incur any liability or lien under any
operating agreement, or enter into any new operating agreement or amend any
existing operating agreement affecting the Mortgaged Properties;
(i) Not enter into, become bound by, or subject the Mortgaged
Properties to, any contract or agreement, including without limitation contracts
containing a "take or pay", "market-out' or "FERC-out" clause, which is
burdensome on the Grantor or materially adversely affects the operation of the
Mortgaged Properties;
(j) Use the Operating Equipment in the business or Grantor, and,
except where under the control of an operator other than the Grantor, keep same
in Grantor's possession or control at all times at Grantor's risk of loss and
keep same on the Mortgaged Properties, except for its temporary removal in
connection with its ordinary use in the ordinary course of business unless
Grantor notifies the Holder in writing and the Holder consents in writing in
advance of its removal to another location;
(k) Duly pay and discharge, or cause to be duly paid and
dis-charged, (1) before delinquent all gross ad valorem taxes, production taxes,
severance taxes, occupation taxes, windfall profit taxes, or other charges of
every kind and character whatsoever in respect of the Mortgaged Properties, or
any portion thereof, or incident to or in connection with the operation or
development of the Grantor's interests in the Mortgaged Properties or the
production of Hydrocarbons and other minerals therefrom, as well as all federal
and state income taxes payable generally by the Grantor regardless of their
relation to the Mortgaged Properties; (2) all lawful claims in respect of the
Mortgaged Properties, whether for labor, materials, supplies, services or
anything else, which might or could, if unpaid, become a lien or charge upon the
Mortgaged Properties; and (3) all trade bills when due in accordance with
customary industry practice and in such manner so that the Mortgaged Properties,
business, assets, condition (financial or otherwise) and the credit standing of
the Grantor are not materially and adversely affected; provided that the Grantor
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shall not be required to pay or cause to be paid such taxes, charges,
assessments, claims or trade bills if the payment thereof is being contested in
good faith by appropriate proceedings with adequate reserves with respect
thereto, determined in accordance with generally accepted accounting principles,
having been set aside on the Grantor's books. In the event the Grantor shall
fail or neglect to pay or cause to be paid any charges of any nature, except
with respect to charges not then due, which may or might become superior or pari
passu to the lien created by this Deed of Trust, the Holder at its option may
pay or cause to be paid such charges or any part thereof, and the Grantor will
promptly reimburse the Holder therefor, and any and all sums so paid hereunder
shall be reimbursed by the Grantor to the Holder upon demand and stall
constitute a part of the Secured Indebtedness. In the event the payment of any
charges of any nature herein described is contested for any reason whatsoever,
the Grantor will, if requested by the Holder, provide the Holder with a bond in
an amount and with surety satisfactory to the Holder to protect the Holder
against any and all coats, losses, damages or liabilities in connection with
contesting such charge;
(l) File and deliver, or cause to be filed and delivered, all
necessary reports, notices, petitions and certificates and obtain all necessary
regulatory approvals to authorize any operation conducted on the Mortgaged
Properties, the sale of production therefrom, and the collection of prices
charged therefor;
(m) Permit the Holder and its agents, representatives, independent
accountants, attorneys and employees, at all times, to go upon, examine,
inspect, test and remain on the Mortgaged Properties and any parts thereof,
including its books of account and other hooks and records, and to strap, gauge,
measure and inspect any and all tanks at any time on the Mortgaged Properties or
holding Hydrocarbons or other minerals therefrom, and Grantor will furnish the
Holder, upon request, all pertinent information in regard to the development and
operation and value of the Mortgaged Properties as well as any other information
which the Holder may from time to time request concerning any matter in
connection with the Grantor's business or operations; and
(n) Comply with and perform, or cause to be complied with and
performed, all applicable laws, rules and regulations of the United States and
every other governmental body having jurisdiction with respect to the operation
and development of the Mortgaged Properties and the production and sale of
Hydrocarbons or other minerals therefrom.
As to any part of the Mortgaged Properties which is not a working interest,
Grantor agrees to take all such reasonable action and to exercise all rights and
remedies as are available to Grantor to cause the owner or owners of the working
interest in such properties to comply with the covenants and agreements
contained herein; and as to any part of the Mortgaged Properties which is a
working interest but which is operated by a party other than Grantor, Grantor
agrees to take all such reasonable action and to exercise all rights and
remedies as are available to Grantor (including, but not limited to, all rights
under any operating agreement) to cause the party who is the operator of such
property to comply with the covenants and agreements contained herein. Grantor
will immediately notify the Holder of any failure of the operator of any of the
Mortgaged Properties to perform any such obligation, and in cooperation with the
Holder, will take such steps as may be expedient to secure compliance therewith,
or obtain appointment of a different operator.
4.3 Records, Statements and Reports. The Grantor will keep proper books
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of record and account in which complete and correct entries will be made of the
Grantor's transactions in accordance with generally accepted accounting
principles and will furnish or cause to be furnished to the Holder such reports
and financial information that the Holder may reasonably request from time to
time. The office where the records of Grantor with respect to the accounts,
contract rights and other general intangibles concerning the Mortgaged
Properties are kept is located at the address shown opposite the signature of
Grantor to this Deed of Trust, and Grantor agrees that the place at which such
records are kept will not be changed without the prior written consent of the
Holder.
4.4 Monthly Production Reports. Grantor shall deliver monthly
----------------------------
production reports to Holder, in form acceptable to Holder, as soon as available
and in any event not later than the 20th day of each month. Such reports shall
show for each of the Mortgaged Properties all production of oil, gas and other
Hydrocarbons therefrom during the preceding month, all proceeds received during
the preceding month from sale of production from such Mortgaged Properties, all
expenses incurred during the preceding month attributable to such Mortgaged
Properties, a description of all material operations conducted on such Mortgaged
Properties since the last monthly report and such other information as the
Holder may reasonably request.
4.5 Notice of Default. Forthwith upon the Grantor's obtaining knowledge
-----------------
of the existence of an Event of Default, or of any fact, condition or event that
only with the giving of notice or the passage of time or both, could become an
Event of Default, the Grantor shall deliver to the Holder a certificate
specifying the nature thereof, the period of existence, and what action the
Grantor proposes to take with respect thereto.
4.6 Pending Claims and Litigation. Grantor shall promptly notify the
--------------------------------
Holder of
(i) the filing or threatened filing of any suit, claim or
complaint in any court or administrative agency, or in any public record, or
(ii) the commencement of any investigation by any governmental
agency or officer, or
(iii) the existence of any potential claim of any nature
whatsoever, whether or not there is any reason to believe that the person owning
such claim has asserted or will assert the same, or has knowledge thereof,
which affects or might affect title to the Mortgaged Properties or any part
thereof, the validity or priority of the lien created by this instrument, the
right of Grantor or Grantor's predecessors or successors to sell production from
the Mortgaged Properties or any part thereof to the persons who have received or
are receiving it, or to collect and retain the prices charged or being charged
therefor, or which asserts any liability of Grantor or of the operator of any
Mortgaged Properties with respect to Grantor's interest therein, for any expense
incurred in connection with such property, any tax imposed or threatened to be
imposed thereon or on production therefrom, any refund alleged to be due on
account of past production, or any penalty for violation of any law, rule or
order, or which relates in any material respect to Grantor's business. The
Grantor shall take all necessary and proper steps for the defense of any such
claim or legal or administrative proceedings, including but not limited to the
employment of counsel, the prosecution or defense of litigation and the release
or discharge of all adverse claims. If the Holder shall receive any such
information or notice with respect to any of the foregoing, whether from the
Grantor pursuant hereto or otherwise, then:
(a) The Holder may intervene or participate in any negotiations or
proceedings resulting from any such claim, suit or investigation to any extent
that the Holder may deem necessary for the protection of its interest, and the
Grantor shall reimburse the Holder for all costs incurred by the Holder in doing
so, including reasonable attorneys fees of Holder's independent counsel; and
upon demand Grantor agrees to pay to Holder all reasonable expenses paid or
incurred by it in respect of any such claim, suit or investigation, and Grantor
will indemnify and hold Holder harmless from and against any and all costs and
expenses, including, but not limited to, any and all cost, loss, damage or
liability which the Holder may suffer or incur by reason of the failure of the
title to all or any part of the Mortgaged Properties, or by reason of any of the
other matters specified in the first sentence hereof, or by reason of the
failure or inability of the Grantor, for any reason, to convey the rights,
titles and interests which this Deed of Trust purports to mortgage or assign,
and all amounts at any time so payable by the Grantor hereunder shall constitute
a part of the Secured Indebtedness for all purposes hereof.
(b) The Holder may demand that Grantor furnish evidence of title
thereto satisfactory to the Holder, including but not limited to an opinion of
an attorney acceptable to the Holder that the title of Grantor to any property
affected thereby is good and indefeasible and that the lien of the Holder
thereon is valid, first and superior.
(c) If requested by the Holder, the Grantor shall provide the
Holder with a bond in an amount and with sureties reasonably satisfactory to the
Holder to secure the Holder against any cost, loss or damage in connection
therewith.
(d) The Holder may defend any such suit or proceeding in the
Grantor's name or compromise the same, as the Holder may, in its sole judgment
exercised in good faith, determine, and the Grantor shall reimburse the Holder
for all expenses, including reasonable attorneys fees, incurred in doing so, and
for any amount paid or agreed to be paid by the Holder in settlement thereof or
of any final order or judgment against Grantor, and all of such payments or
expenses shall constitute Secured Indebtedness for all purposes hereof.
4.7 Title. Grantor covenants and agrees and undertakes to protect,
-----
warrant and defend title to the Mortgaged Properties unto the Holder, and its
successors and assigns, at the Grantor's expense against all persons whomsoever
lawfully having or claiming an interest therein or a lien thereon or any part
thereof. Grantor further grants to the Holder, and its successors and assigns,
full power and right of substitution and subrogation in and to all covenants and
warranties made by others heretofore given or made in respect to the Mortgaged
Properties. If requested by the Holder, the Grantor will cure to the
satisfaction of the Holder any material defect in title to any of the Mortgaged
Properties that comes to the attention of either party at any time while any of
the Secured Indebtedness is outstanding and unpaid hereunder.
4.8 Costs and Expenses. The Grantor shall pay all appraisal fees,
--------------------
recording fees, taxes, abstract fees, attorneys' fees, and other costs and
expenses of every character incurred by Grantor or the Holder:
(a) In connection with the closing of the transactions evidenced
by the Promissory Note, including the preparation, execution and recording and
keeping current of this instrument, whether at the original closing or
thereafter;
(b) In supervising, and upon the occurrence of an Event of
Default, enforcing compliance with all warranties, covenants and conditions
herein provided, including, but not limited to, enforcement by judicial
proceedings;
(c) In collecting and accounting for the proceeds of runs paid to
the Holder pursuant to Article VI hereof;
(d) In taking possession of, operating, preparing for the sale or
selling the Mortgaged Properties or any part thereof; and
(e) In releasing the liens created by this instrument or any other
lien given by the Grantor in connection herewith upon final payment of the
Secured Indebtedness.
The Grantor will reimburse the Holder for all expenses incurred by it, and the
Grantor hereby agrees to indemnify and hold harmless the Trustee and the Holder
from and against all claims, demands, liabilities and causes of action asserted
against either of them on account of any act performed or omitted to be
performed hereunder or on account of any transaction arising out of or in any
way connected with the Mortgaged Properties or with this Deed of Trust or any of
the Secured Indebtedness, save and except for their willful misconduct.
4.9 Further Assurances. The Grantor will execute and deliver such other and
------------------
further instruments and will do such other and further acts as in the opinion of
the Trustee or the Holder may be necessary or desirable to carry out more
effectually the purposes of this instrument and to do all things necessary or
proper to assure more fully to the Holder all of its respective rights intended
to be conveyed and granted by this Deed of Trust, including, without limiting
the generality of the foregoing, (a) prompt correction of any defect which may
hereafter be discovered in the title to any of the Mortgaged Properties or in
the execution and acknowledgment of this instrument or the Promissory Note, and
(b) prompt execution and delivery of all division or transfer orders which in
the opinion of the Holder are needed to transfer effectually the assigned
proceeds of production from the Mortgaged Properties to the Holder.
4.10 Additional Collateral. Promptly after the Grantor enters any
----------------------
additional Oil and Gas Lease at any time or from time to time after the date
hereof, Grantor will execute and deliver such amendments to this Deed of Trust
(including amendments to Exhibit A hereto) and such other and further
instruments and will do such other and further acts as in the opinion of the
Trustee or the Holder may be necessary or desirable to cause such additional Oil
and Gas Lease to become part of the Mortgaged Properties hereunder to the extent
that such additional Oil and Gas Lease have not already done so.
ARTICLE V
Negative Covenants
------------------
The Grantor covenants and agrees that, so long as this Deed of Trust is in
effect and until all Secured Indebtedness of the Grantor to the Holder is paid
in full, unless compliance shall have been waived in writing by the Holder, the
Grantor, for Grantor and Grantor's Successors, will not:
5.1 No Sales or Options. Sell or farm-out the interest of Grantor in
----------------------
the Mortgaged Properties or any part thereof, or grant any option or right of
first refusal with respect thereto unless the net sales proceeds therefrom are
paid to the Holder, except for sales of (i) the current production of
Hydrocarbons under the terms of Article VI hereof, and (ii) Operating Equipment
in the ordinary course of business provided that simultaneously with or prior to
such removal, any such Operating Equipment shall be replaced with other
Operating Equipment of a value at least equal to that of the replaced or sold
Operating Equipment and free from any security interest or other encumbrance or
from any reservation of title.
5.2 Reduction of Prices. Agree, either in settlement of any asserted
---------------------
violation of law, rule or order, or otherwise, to any reduction, direct or
indirect, of the price to be received for the sale of Grantor's interest in
Hydrocarbons produced from the Mortgaged Properties.
5.3 Claims. Settle or abandon any claim which Grantor may have or come
------
to have for damages to the Mortgaged Properties or part thereof, where the value
of the property damaged exceeds $25,000 or acknowledge, in settlement or
otherwise, the validity of any adverse claim of title to any of the Mortgaged
Properties or the existence or priority of any lien or encumbrance thereon
superior or which could become superior to the lien of this instrument, or the
existence with respect to the Mortgaged Properties or operations thereon, or
sales of production therefrom, of any violation of any law or administrative
rule or order.
5.4 No Change of Name. If Grantor is a "Utility" as defined in Section
------------------
35.01 of the Texas Business and Commerce Code, change its name, merge or
consolidate with another Person.
ARTICLE VI
Assignment of Proceeds of Production
------------------------------------
6.1 Assignment. As further security for the payment of the Secured
----------
Indebtedness, Grantor hereby TRANSFERS, ASSIGNS, WARRANTS and CONVEYS to the
Holder, effective as of 7:00 o'clock AM on the date following the first date
written above, all of the interest of the Grantor in all Hydrocarbons which are
thereafter produced from the Mortgaged Properties, or allocated thereto pursuant
to pooling or unitization of the Oil and Gas Leases or otherwise, all proceeds
from the sale thereof (such proceeds being hereinafter sometimes referred to as
the "proceeds of runs") and all accounts, contract rights, and other general
intangibles under which such proceeds may arise. The foregoing assignment of
proceeds of runs is made upon, and subject to, the following terms and
conditions, which shall be effective and available after, but only after, the
occurrence of any Event of Default (as defined hereinafter):
(a) The Holder shall have the right, exercisable at any time at
its sole option, to give written or telegraphic notice to all of the parties
producing, purchasing, taking, processing or receiving any Hydrocarbons produced
or to be produced from or allocated to the Mortgaged Properties, or having in
their possession any such Hydrocarbons belonging to Grantor or such proceeds for
which they or others are accountable to the Holder by virtue of the provisions
of this Section 6.1, to hold and dispose of such Hydrocarbons for the account of
the Holder and to make payment of such proceeds directly to the Holder at its
principal office, and the Holder shall thereafter receive, collect and retain,
as part of the Mortgaged Properties, all such Hydrocarbons, all for the benefit
and further security of the Secured Indebtedness.
(b) In the event that, for its convenience, the Holder should
elect, with respect to particular properties or contracts constituting the
Mortgaged Properties, not to exercise immediately its right to receive payment
to it directly of all or any portion of the assigned proceeds of runs, then the
oil or gas purchasers, or other persons obligated to make such payment shall
continue to make payment of such proceeds of runs to the Grantor until such time
as they are notified by the Holder that payment be thereafter made directly to
the Holder. Such failure to notify shall not in any way waive the right of the
Holder to place such assignment into effect as to payments not theretofore paid
out to the Grantor before the giving of such notice. In this regard, in the
event payments are made directly to the Holder and then, at the request of the
Holder, payments are, for a period or periods of time, paid to the Grantor, the
Holder shall nevertheless have the right, effective upon notice, to require that
future payments be again made to it.
(c) All parties producing, purchasing or receiving any such
Hydrocarbons, or having such, or proceeds therefrom, in their possession for
which they or others are accountable to the Holder by virtue of the provisions
of this Article, are authorized and directed to treat and regard the Holder as
the assignee and transferee of the Grantor and entitled in the Grantor's place
and stead to receive such Hydrocarbons and all proceeds therefrom; and said
parties and each of them shall be fully protected in so treating and regarding
the Holder, and shall be under no obligation to see to the application by the
Holder of any such proceeds or payments received by it.
6.2 Additional Duties and Obligations. The Grantor agrees (i) to cause
----------------------------------
all pipeline companies and other purchasers of the Hydrocarbons produced from
the Mortgaged Properties to pay promptly to the Holder at its principal office,
the Grantor's interest in the proceeds derived from the sale thereof in
accordance with the terms of this assignment, and (ii) forthwith to execute and
deliver any and all transfer orders, division orders and other instruments that
may be requested by the Holder or that may be required by any purchaser of the
production from any of the Mortgaged Properties for the purpose of effectuating
payment of the proceeds of runs to the Holder; and the Holder shall not be
required at any time, as a condition to its right to obtain the proceeds of
runs, to warrant its title thereto or to make any guaranty whatsoever. In
addition, and without limitation, the Grantor covenants and agrees, and
undertakes hereby, to provide to the Holder the name and address of every
pipeline company or other purchaser of Hydrocarbons and other minerals produced
from the Mortgaged Properties when determined, together with a copy of
applicable Product Sales Contracts. Grantor shall promptly pay all expenses
incurred by the Holder in the collection of the said proceeds of runs. If under
any Product Sales Contracts, other than division orders or transfer orders, any
proceeds of runs are required to be paid by the purchaser to Grantor so that
under such existing agreements payment cannot be made of such proceeds of runs
to the Holder, Grantor's interest in all proceeds of runs under such sales
agreements and in all other proceeds of runs which for any reason may be paid to
Grantor shall, when received by Grantor, constitute trust funds in Grantor's
hands and shall be immediately paid over to the Holder.
6.3 Application of Proceeds. All payments received by the Holder
-------------------------
pursuant to Section 6.1 shall be applied to the outstanding balance on the
Promissory Note.
6.4 Failure to Make Payment. Should any person now or hereafter
--------------------------
purchasing or taking oil, gas, other Hydrocarbons or other minerals attri-buted
to the Mortgaged Properties fail to make payment promptly to the Holder of the
hereby assigned proceeds of runs after being notified to do so, the Holder shall
have the right to make, or to require Grantor to make, a change of connection
and the right to designate or approve the purchaser with whose facilities a new
connection shall be male, without liability or responsibility in connection
therewith so long as ordinary care is used in making such designation.
6.5 No Liability of the Holder in Collecting. The Holder is hereby
---------------------------------------------
absolved from all liability for failure to enforce collection of any proceeds so
assigned and for failure to exercise diligence in the collection of such
proceeds and from all other responsibility in connection therewith, except for
responsibility to account to the Grantor for funds actually received.
6.6 No Effect on Obligation to Pay Secured Indebtedness. Nothing herein
---------------------------------------------------
contained shall detract from or limit the absolute obligation of the Grantor to
make payment of the Secured Indebtedness regardless of whether the proceeds
assigned by this Article are sufficient to pay the same, and the rights under
this Article shall be in addition to all other security now or hereafter
existing to secure the payment of the Secured Indebtedness.
6.7 Status of Assignment. Notwithstanding the other provisions of this
--------------------
Article, the Holder, 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 herein assigned and the proceeds therefrom after
the Promissory Note has been declared due and payable in accordance with the
provisions of Section 7.2 hereof and to apply all of said proceeds as provided
in Section 6.3 hereof. Upon any sale of the Mortgaged Properties or any part
thereof pursuant to Article VIII, the Hydrocarbons thereafter produced from the
property 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.
6.8 Indemnity. The Grantor agrees to indemnify the Trustee and the
---------
Holder against all claims, actions, liabilities, judgments, costs, attorneys'
fees or other charges of whatsoever kind or nature (all hereinafter in this
Section 6.8 called "claims") made against or incurred by either or both of them
as a consequence of the assertion, either before or after the payment in full of
the Secured Indebtedness, that either or both of them received Hydrocarbons
herein assigned or the proceeds thereof claimed by third persons, and the
Trustee and the Holder shall have the right to defend against any such claims,
employing attorneys therefor, and unless furnished with reasonable indemnity
upon request therefor, they or either of them shall have the right to pay or
compromise and adjust all such claims. The Grantor will indemnify and pay to the
Trustee and the Holder any and all such amounts as may be paid in respect
thereof as may be successfully adjudged against the Trustee and the Holder or
either of them; and in addition. to the rights to be indem-nified as herein
provided, all amounts paid by the Holder in compromise, satisfaction or
discharge of any such claim, action or judgment, and all court costs, attorneys'
fees or other expenses of every character incurred by Holder pursuant to the
provisions of this Article shall be a demand obligation owing by Grantor to
Holder and shall bear interest from date of expenditure until paid at the
interest rate provided for in the Promissory Note and shall be part of the
Secured Indebtedness. The obligations of the Grantor as hereinabove set forth in
this Section 6.8 shall survive the release of this instrument.
6.9 Special Power of Attorney. Without limitation upon any of the
----------------------------
foregoing, the Grantor hereby constitutes and appoints Holder as its special
attorney in fact with full power of substitution, either generally or for such
periods or purposes as the Holder may from time to time proscribe) in the name,
place and stead of the Grantor to do any and every act and exercise any and
every power that the Grantor might or could do or exercise personally with
respect to all Hydrocarbons which are produced from or allocated to the
Mortgaged Properties including proceeds of runs (the same having been assigned
by the Grantor to the holder pursuant to Section 6.1 hereof), expressly
inclusive, but not limited to, the right, power and authority to:
(a) Execute and deliver any and all, transfer orders, division
orders, certificates and other instruments of every nature that may be requested
or required by any purchaser of production from any of the Mortgaged Properties
for the purpose of effectuating payment of the proceeds of runs to the holder or
which the Holder may otherwise deem necessary or appropriate to effect the
intent and purpose of the assignment contained in this Article VI; and
(b) If under any Product Sales Agreements other than division
orders or transfer orders, any proceeds of runs are required to be paid by the
purchaser to the Grantor so that under such existing agreements payment cannot
be made of such proceeds of runs to the Holder, to make, execute and enter into
such sales agreements or other agreements as are necessary to direct proceeds of
runs to be payable to the Holder;
giving and granting unto the said attorney in fact full power and authority to
do and perform any and every act and thing whatsoever necessary and requisite to
be done as fully and to all intents and purposes, as the Grantor might or could
do if personally present; and the Grantor shall be bound thereby as fully and
effectively as if the Grantor had personally executed, acknowledged and
delivered any of the foregoing certificates or documents. Holder may exercise
the powers and authorities herein conferred upon the Holder through any person
who, at the time of the execution of the particular instrument, is an officer of
the Holder. The power of attorney herein conferred is granted for valuable
consideration and hence is coupled with an interest and is irrevocable so long
as the Secured Indebtedness, or any part thereof, shall remain unpaid. All
persons dealing with the Holder or any substitute, shall be fully protected in
treating the powers and authorities conferred by this paragraph as continuing in
full force and effect until advised by the Holder that all the Secured
Indebtedness is fully and finally paid.
ARTICLE VII
Default
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7.1 Events of Default. The occurrence of any of the following shall
-------------------
constitute an event of default (each herein called an "Event of Default"):
(a) If any amount of the Secured Indebtedness is not paid when the
same becomes due, as originally provided, or pursuant to any provision for
demand or acceleration.
(b) If any warranty or representation of Grantor to Holder either
herein or otherwise made in connection with this transaction is untrue in any
material respect.
(c) If Grantor fails to timely and properly observe, keep or
perform any covenant, agreement or condition herein required to be observed,
kept or performed.
7.2 Acceleration. Upon the occurrence of an Event of Default, Holder
------------
may, without any prior notice to Granter or to any other person, and without
making any demand upon Grantor or upon any other person to cure such Event of
Default, all rights to any such prior notice or demand being hereby expressly
waived, exercise any rights or remedies permitted by this Deed of Trust, and/or
declare the entire amount of the Secured Indebtedness then outstanding,
including oil interest accrued thereon, to be immediately due and payable,
whereupon the same shall become immediately due and payable without demand,
presentment for payment, notice of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all other notices,
all of which the Grantor expressly waives. Whether or not Holder elects to
accel-erate as herein provided, holder may simultaneously, or thereafter,
without any further notice to Grantor, exercise any other right or remedy
provided in this instrument.
7.3 Remedies When Secured Indebtedness Due and Unpaid. When any Event
---------------------------------------------------
of Default has occurred hereunder and any amount of the Secured Indebtedness is
due, by reason of acceleration or otherwise and is unpaid, Holder may take any
one or more of the following actions:
(a) Direct the Trustee to sell the Mortgaged Properties or any
part thereof as provided in Article VIII hereof.
(b) File and prosecute suit against any person liable therefor to
collect any balance of the Secured Indebtedness due and unpaid.
(c) File and prosecute suit for judicial foreclosure of any lien
or security interest created hereby.
(d) File and prosecute suit for appointment of a receiver pursuant
to Section 8.8.
(e) Proceed with non-judicial foreclosure upon any part of the
Mortgaged Properties that is personal property by any means authorized by the
applicable provisions of the Uniform Commercial Code.
(f) If the same has not already been done as permitted by other
provisions hereof, notify purchasers to pay proceeds of runs directly to Holder
pursuant to Section 6.1.
(g) Proceed with any other remedy for the collection of the amount
due of Secured Indebtedness, or for the enforcement of any lien given to secure
the same, which may be provided in any other agreement between Grantor and
Holder, or between Holder and any other party to the loan transaction secured
hereby, or by law.
(h) Take any other legal action, whether at law or in equity,
which it may deem necessary or appropriate.
Each of the foregoing remedies shall be cumulative of all the others, and no
resort to any one remedy shall preclude simultaneous or subsequent pursuit of
any other remedy, nor shall any resort to any remedy exhaust the same or
preclude Holder from again pursuing the same remedy so long as any amount of the
Secured Indebtedness remains due and unpaid.
ARTICLE VIII
Remedies and Enforcement
------------------------
8.1 Power of Sale. Upon the occurrence of an Event of Default the
---------------
Trustee, or his successor or substitute, is authorized and empowered and it
shall be his special duty at the request of the Holder to sell the Mortgaged
Properties or any part thereof situated within the State of Texas at the
courthouse door of any county in the State of Texas in which any part of the
Mortgaged Properties is situated, at public venue to the highest bidder for cash
between the hours of ten o clock AM, and four o'clock PM on the first Tuesday in
any month after having given notice of such sale in accordance with the statutes
of the State of Texas then in force governing sales of real estate under powers
conferred by deed of trust. Any sale made by the Trustee hereunder may be as an
entirety or in such parcels as the Holder may request, and any sale may be
adjourned by announcement at the time and place appointed for such sale without
further notice except as may be required by law. The sale by the Trustee of less
than the whole of the Mortgaged Properties shall not exhaust the power of the
sale herein granted, and the Trustee is specifically empowered to make
successive sale or sales under such power until the whole of the Mortgaged
Properties shall be sold; and if the proceeds of such sale of less than the
whole of the Mortgaged Properties shall be less than the aggregate of the
indebtedness secured hereby and the expense of executing this trust as provided
herein, this Deed of Trust and the lien hereof shall remain in full force and
effect as to the unsold portion of the Mortgaged Properties just as though no
sale had been made; provided, however, that Grantor shall never have any right
to require the sale of less than the whole of the Mortgaged Properties but the
Holder shall have the right, at its sole election, to request the Trustee to
sell less than the whole of the Mortgaged Properties. After each sale, the
Trustee shall make to the purchaser or purchasers at such sale good and
sufficient conveyances in the name of Grantor, conveying the property so sold to
the purchaser or purchasers in fee simple with general warranty of title, and
shall receive the proceeds of said sale or sales and apply the same as herein
provided. The power of sale granted herein shall not be exhausted by any sale
held hereunder by the Trustee or his substitute or successor, and such power of
sale may be exercised from time to time and as many times as the Holder may deem
necessary until all of the Mortgaged Properties have been duly sold and all
Secured Indebtedness has been fully paid. In the event any sale hereunder is not
completed or is defective in the opinion of the Holder, such sale shall not
exhaust the power of sale hereunder and the Holder shall have the right to cause
a subsequent sale or sales to be made hereunder. Any and all statements of fact
or other recitals made in any deed or deeds given by the Trustee or any
successor or substitute appointed hereunder as to nonpayment of the Secured
Indebtedness or having declared all of said indebtedness to be due and payable,
or as to the request to sell, or as to notice of time, place and terms of sale
and the properties to be sold having been duly given, or as to the refusal,
failure or inability to act of the Trustee, substitute or successor, shall be
taken as prima facie evidence of the truth of the facts so stated and recited.
The Trustee or his successor or substitute may appoint or delegate to the extent
permitted by law any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by the Trustee, including the posting of
notices and the conduct of sale, but in the name and on behalf of the Trustee,
his successor or substitute. If the Trustee or his successor or substitute shall
have given notice of sale hereunder, any successor or substitute Trustee
thereafter appointed may complete the sale and the conveyance of the property
pursuant thereto as if such notice had been given by the successor or substitute
Trustee conducting the sale.
8.2 Judicial Proceedings. Upon the occurrence of an Event of De-fault
---------------------
and if such event shall be continuing, the Trustee, in lieu of or in addition to
exercising the power of sale hereinabove given, may pro-ceed by a suit or suits
in equity or at law, whether for a foreclosure hereunder, or for the sale of the
Mortgaged Properties, or for the spe-cific 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 Properties, or for the enforcement of any other
appropriate legal or equitable remedy. In the event a foreclosure hereunder
shall be commenced by the Trustee, or his substitute or successor, the Holder
may at any time before the sale of the Mortgaged Properties direct the said
Trustee to abandon the sale, and may then institute suit for the collection of
the Promissory Note and/or any other Secured Indebtedness, and for the
foreclosure of the lien of this Deed of Trust. It is agreed that if the Holder
should institute a suit for the collection of the Promissory Note and the other
Secured Indebtedness and for the foreclosure of the lien of this Deed of Trust,
the Holder may at any time before the entry of a final judgment in said suit
dismiss the same, and require the Trustee, his substitute or successor to sell
the property in accordance with the provisions of this Deed of Trust.
8.3 Holder as Purchaser. The Holder shall have the right to become the
--------------------
purchaser at any sale held by the Trustee or by any court, receiver or public
officer, and the Holder shall have the right to credit upon the amount of the
bid made therefor, the amount of Secured Indebtedness payable to it out of the
net proceeds of such sale. The Holder, upon any such purchase, shall acquire
good title to the Mortgaged Properties so purchased, free from the lien of this
Deed of Trust and free of all rights of redemption in Grantor. Recitals
contained in any conveyance made to any purchaser at any sale made hereunder
shall presumptively 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 Promissory Note
after the same have become due and payable, advertise-ment and conduct of such
sale in the manner provided herein or appointment of any successor Trustee
hereunder; and Grantor does hereby ratify and confirm any and all acts that said
Holder or its successors may lawfully do in the premises by virtue of the terms
and conditions of this instrument.
8.4 Receipt to Purchaser. Upon any sale, whether made under 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 much 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 nonapplication thereof.
8.5 Effect of Sale. Any sale or sales of the Mortgaged Properties,
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whether under 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 the Grantor of, in and to
the premises and the property sold, and shall be a perpetual bar, both at law
and in equity, against the Grantor, the Grantor'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 the Grantor, or the Grantor's
successors or assigns; nevertheless, the Grantor, if requested by the Trustee so
to do, shall join in the execution and delivery of all proper conveyances,
assignments and transfers of the properties so sold.
8.6 Application of Proceeds. The Trustee shall receive the proceeds of
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any sale under this Article, and shall apply the same as follows: first to the
expenses of sale, including a commission not to exceed five percent (5%) of such
proceeds to himself; then to the payment of the Secured Indebtedness in the
manner as provided for in Section 6.3 hereof. Thereafter, any remaining balance
shall be paid to the Grantor or its successors in title.
8.7 Remedies Under UCC. Upon the occurrence of an Event of Default, the
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Holder may exercise its rights of enforcement with respect to the Collateral
under the Uniform Commercial Code and in conjunction with, in addition to or in
substitution for those rights and remedies:
(a) The Holder may enter upon Grantor's premises to take
possession of, assemble and collect the Collateral; and
(b) The Holder may require Grantor to assemble the Collateral and
make it available at a place the Holder designates which is mutually convenient
to allow the Holder to take possession or dispose of the Collateral; and
(c) Written notice mailed to Grantor as provided herein at least
five (5) days prior to the date of public sale of the Collateral or prior to the
date after which private sale of the Collateral will be made shall constitute
reasonable notice; and
(d) Any sale made pursuant to the provisions of this section shall
be deemed to have been a public sale conducted in a commercially reasonable
manner if held contemporaneously with and upon the same notice as required for
the sale of the Collateral under power of sale as provided in Section 8.1 of
this Deed of Trust; and
(e) In the event of a foreclosure sale, whether made by the
Trustee under the terms hereof, or under judgment of a court, the Collateral
may, at the option of the Holder, be sold as a whole; and
(f) It shall not be necessary that the Holder take posses-sion of
the Collateral or any part thereof prior to the time that any sale pursuant to
the provisions of this section is conducted and it shall not be necessary that
the Collateral or any part thereof be present at the location of such sale; and
(g) Prior to application of proceeds of disposition of the
Collateral to the Secured Indebtedness, such proceeds shall be applied to the
reasonable expenses of retaking, holding, preparing for sale or lease, selling,
leasing and the like and the reasonable attorneys' fees and legal expenses
incurred by the Holder; and
(h) Any and all statements of fact or other recitals made in any
bill of sale or assignment or other instrument evidencing any foreclosure sale
hereunder as to nonpayment of the Secured Indebtedness or as to the occurrence
of any Event of Default, or to the Holder having declared all of such Secured
Indebtedness to be due and payable, or as to notice of time, place and terms of
sale and of the properties to be sold having been duly done by the Holder, shall
be taken as prima facie evidence of the truth of the facts so stated and
recited; and
(i) The Holder may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by the
Holder, including the sending of notices and the conduct of the sale, but in the
name and on behalf of the Holder.
8.8 Appointment of Receiver. In addition to all other remedies herein
-------------------------
provided for, Grantor agrees that upon the occurrence of an Event of Default the
Holder shall as a matter of right be entitled to the appointment of a receiver
or receivers for all or any part of the Mortgaged Properties and/or the
Collateral, whether such receivership be incident to a proposed sale (or sales)
of such property or otherwise, and without regard to the value of the Mortgaged
Properties and/or the Collateral or the solvency of any person or persons liable
for the payment of the indebtedness secured hereby, and Grantor does hereby
consent to the appointment of such receiver or receivers, to the extent
permitted by law waives any and all defenses to such appointment, and agrees not
to oppose any application therefor by the Holder and agrees that such
appointment shall in no manner affect the rights of the Holder under Article VI
hereof. Nothing herein is to be construed to deprive the Holder of any other
right, remedy or privilege it may now have under the laws to have a receiver
appointed. Any money advanced by the Holder in connection with any such
receivership shall be a demand obligation owing by Grantor to the Holder and
shall bear interest from the date of making such advancement by the Holder until
paid at the same rate as is provided in the Promissory Note for interest on past
due principal and shall be a part of the Secured Indebtedness and shall be
secured by this Deed of Trust and by any other instrument securing the Secured
Indebtedness.
8.9 Grantor's Waiver of Appraisement, Marshalling, Other Rights. The
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Grantor agrees, to the full extent that the Grantor may lawfully so agree, that
Grantor will not at any time insist upon or plead or in any manner whatever
claim the benefit of any appraisement, valuation, stay, extension or redemption
law now or hereafter in force, in order to prevent or hinder the enforcement or
foreclosure of this instrument or the absolute sale of the Mortgaged Properties
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 the Grantor, for the Grantor and all who may claim through or
under the Grantor, so far as the Grantor or those claiming through or under the
Grantor now or hereafter lawfully may, hereby waives the benefit of all such
laws. The Grantor, for the Grantor and all who may claim through or under the
Grantor, waives, to the extent that the Grantor may lawfully do so, any and all
right to have the Mortgaged Properties marshalled 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
Properties as an entirety. If any law in this section referred to and now in
force, of which the Grantor or the Grantor'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.
8.10 Costs and Expenses. All costs and expenses (including attorneys
--------------------
fees) incurred by the Trustee, the Holder or the Holders in protecting and
enforcing their rights hereunder, shall constitute a demand obligation owing by
the Grantor to the party incurring such costs and expenses and shall draw
interest at the rate set forth in the Promissory Note, all of which shall
constitute a portion of the Secured Indebtedness.
8.11 Operation of Property by the Trustee. Upon the occurrence of an
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Event of Default and in addition to all other rights herein conferred on the
Trustee, 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 Properties, and to exclude the
Grantor, and the Grantor's agents or servants, wholly therefrom, and to hold,
use, administer, manage and operate the same to the extent that the Grantor
shall be at the time entitled and in his place and stead. The Trustee, or any
person, firm or corporation designated by the Trustee, may operate the same
without any liability to the Grantor in connection with such operations, except
to use ordinary care in the operation of said properties, and the Trustee or any
person, firm or corporation designated by them, shall have the right to collect,
receive and receipt for all Hydrocarbons produced and sold from said properties,
to make repairs, purchase machinery and equipment, conduct work-over operations,
drill additional wells and to exercise every power, right and privilege of the
Grantor with respect to the Mortgaged Properties. All costs, expenses and
liabilities of every character incurred by the Trustee or the Holder in
managing, operating, maintaining, protecting or preserving such properties,
respectively, shall constitute a demand obligation owing by Grantor to the
Holder and shall bear interest from date of expenditure until paid at the same
rate as is provided in the Promissory Note for interest on past due principal,
all of which shall constitute a portion of the Secured Indebtedness and shall be
secured by this Deed of Trust and by any other instrument securing the Secured
Indebtedness. If necessary to obtain the possession provided for above, the
Trustee or the Holder, as the case may be, may invoke any and all remedies to
dispossess Grantor including specifically one or more actions for forcible entry
and detainer, trespass to try title and restitution. 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 Secured Indebtedness
paid, the Mortgaged Properties shall, if there has been no sale or foreclosure,
be returned to the Grantor.
8.12 Remedies Regardless of Secured Indebtedness Due and Unpaid. Upon
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the occurrence of any Event of Default hereunder, Holder shall hive the right,
but not the obligation, regardless of whether or not any amount of the Secured
Indebtedness is then due and unpaid, and without the necessity of resorting to,
but without to any extent waiving, any right of acceleration which may exist by
reason of such Event of Default, to:
(a) perform any act required to be performed hereunder or any
party to the loan transaction and which Grantor or such party has failed to
perform, and in so doing, Holder shall have the right to enter upon and to take
possession of the Mortgaged Properties or any part thereof, to such extent as
may be expedient. Grantor shall reimburse Holder for all expenses incurred by
Holder in exercising any such remedy and Grantor's obligation to so reimburse
Holder shall be a part of the Secured Indebtedness.
(b) File and prosecute suit against Grantor or any other person
responsible for or on account of such default to recover any actual damages
sustained as a result of any breach of this instrument or to enforce compliance
herewith.
8.13 Change in Laws. If any statute now applicable in any state in
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which any of the Mortgaged Properties is now located provides, or shall
hereafter be amended to provide, a different procedure for the sale of real
property under a power of sale in a deed of trust or mortgage, the Holder may,
in its sole discretion, if same be permitted by applicable law, follow the sale
procedure set forth in this Article VIII or that prescribed in such statute, as
amended.
ARTICLE IX
Miscellaneous
-------------
9.1 Concerning the Trustee. The Trustee may resign by instrument in
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writing delivered to the Holder, or Holder may remove the Trustee at any time,
for any reason deemed sufficient by Holder. In the event of the death,
resignation or removal of the Trustee, Holder may appoint a substitute or
successor Trustee by instrument in writing or by an amendment or supplement to
this Deed of Trust. Such substitute or successor Trustee shall succeed to all of
the interests, titles, rights and powers of the Trustee hereunder, and wherever
in this instrument, including this section, the term "Trustee" or "the Trustee"
is used, such term includes any substitute or successor Trustee as well as the
original Trustee. The Trustee may designate an agent or agents who may perform
on behalf of, and in the name of, the Trustee any function required or permitted
to be performed by the Trustee hereunder. The Trustee shall not be liable for
any error of judgment or act done by the Trustee in good faith, or be otherwise
responsible or accountable under any circumstances whatsoever, except for
Trustee's gross negligence or willful misconduct. 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, believed by him in
good faith to be genuine. All moneys received by the Trustee shall, until used
or applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated in any manner from any other moneys
(except to the extent required by law), and the Trustee shall be under no
liability for interest on any moneys received by him hereunder. Grantor hereby
ratifies and confirms any and all acts which the herein named Trustee or his
successor or successors, substitute or substitutes, in this trust, shall do
lawfully by virtue hereof. Grantor will reimburse Trustee for, and save him
harmless against, any and all liability and expense that may be incurred by him
in the performance of his duties.
9.2 Security Agreement and Special Filing as Financing Statement. With
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respect to all Collateral constituting a part of the Mortgaged Properties, this
Deed of Trust shall likewise be a security agreement, and for valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
for the purpose of further securing payment and performance of the Secured
Indebtedness, Grantor hereby grants to Holder a security interest and lien in
all rights, titles and interest now owned or hereafter acquired by Grantor in
all Collateral. Grantor represents and warrants that, except for any financing
statement filed by Holder, no presently effective financing statement covering
the Collateral or any part thereof, has been filed with any filing officer, and
no other security interest has attached or has been perfected in the Collateral
or any part thereof. This Deed of Trust shall be effective as a financing
statement filed as a fixture filing with respect to all fixtures included within
the definitions of Mortgaged Properties and Collateral. This Deed of Trust shall
also be effective as a financing statement covering minerals or the like
(including oil and gas) and accounts subject to Subsection (e) of Section 9.103
of the Uniform Commercial Code. A carbon, photographic or other reproduction of
this Deed of Trust shall be suffi-cient as a financing statement. The following
information is included for purposes of meeting the requirements of a financing
statement:
(a) The name of the debtor is: Enexco, Inc
(b) The name of the secured party is: Colony Energy, Inc.
(c) The address of the secured party is: 2100 West Loop South,
Suite 900, Houston, Texas 77027
(d) The mailing address of the debtor is: 3131 Turtle Creek Blvd,
Suite 1210, Dallas, Texas 75219.
(e) This financing statement covers all rights, titles and
interests now owned and at any time hereafter acquired by the debtor in all of
the Collateral. The Collateral includes (i) goods which are or are to become
fixtures on the Lands Described in Exhibit A (or the Oil and Gas Leases), and
(ii) minerals or the like (including oil and gas) or the accounts which are to
be financed at the wellhead or minehead of the wells or mines located on the
Lands Described in Exhibit A (or the Oil and Gas Leases). This financing
statement is to be filed for record in the real estate records. Debtor does have
an interest of record in the Lands Described in Exhibit A, and the names of the
additional record owners of the Lands Described in Exhibit A are listed thereon.
(f) Proceeds and products of Collateral are also covered.
9.3 No Implied Waiver. No failure of Holder to declare any default or
-------------------
to exercise any right or remedy herein provided in any one or more instances or
for any period of time, and no acquiescence in or acceptance by Holder of any
late or defective notice or performance hereunder, shall be deemed a waiver or
an agreement to modify of any provision hereof. Holder shall at all times have
the right, notwithstanding any such prior acquiescence or forbearance, without
any prior notice or demand, to require strict performance of each and every term
and provision hereof. At any time when any Event of Default is continuing
hereunder, Holder may, without any prior notice to Grantor except such notice as
may be herein otherwise required, exercise any right or remedy of Holder arising
by reason of such default, notwithstanding the length of time such Event of
Default has been continuing, or the occurrence in the past of similar events or
other Events of Default for which no remedy has been invoked.
9.4 Notices. All notices, requests, demands or other communications to
-------
or upon the respective parties hereto shall be deemed to have been given or made
when deposited in the mails, postage prepaid, certified mail, return receipt
requested, or, in the case of telex, telegraphic or cable notice, when delivered
to the telex, telegraph or cable company or in the case of telex or telecopy
notice sent to a telex or telecopier owned or operated by a party hereto when so
sent, addressed to its address shown opposite its respective signature hereto.
Notwithstanding the foregoing, notices of change of address shall become
effective only upon receipt. Any such notice, request, demand or other
communication (other than any notice of change of address) may be given or made
by telephone (with prompt written confirmation thereof) and any such telephonic
notice, request, demand or other communication shall be deemed to have been
given or made when received.
9.5 Property to Revert. If the Secured Indebtedness shall be fully paid
------------------
and the covenants herein contained shall be well and truly performed, then all
of the Mortgaged Properties shall revert to the Grantor and the entire estate,
right, title and interest of the Trustee and the Holder shall thereupon cease;
and the Trustee in such case shall, upon the request of the Grantor and at
Grantor a cost and expense, deliver to the Grantor, proper instruments
acknowledging satisfaction of this instrument.
9.6 Renewals; Resort to Other Security. Renewals and extensions of the
-----------------------------------
Secured Indebtedness may be given at any time, and amendments may be made to
agreements relating to any part of such Secured Indebtedness or the Mortgaged
Properties, and the Holder may take or may hold other security for the Secured
Indebtedness without notice to or consent of the Grantor. The Trustee or the
Holder 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 first lien upon the Mortgaged Properties not expressly
released until all of the Secured Indebtedness is fully paid.
9.7 Instrument and Assignment, Etc. This instrument shall be deemed to
-------------------------------
be and may be enforced from time to time as an assignment, chattel mortgage,
contract, deed of trust, financing statement, real estate mortgage, or security
agreement, and from time to time as any one or more thereof. Should Grantor be
deemed a "utility" as in the meaning of Section 35.01 of the Texas Business and
Commerce Code, then this instrument shall also constitute a security instrument
executed by a utility.
9.8 Unenforceable or Inapplicable Provisions. If any provision hereof
------------------------------------------
or of the Promissory Note is invalid or unenforceable in any jurisdiction, the
other provisions hereof or of the Promissory Note 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 the Holder 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.
9.9 Rights Cumulative. Each and every right, power and remedy herein
------------------
given to the Trustee, or the Holder shall be cumulative and not exclusive; and
the Trustee and the Holder shall, in addition to the remedies herein provided,
be entitled to avail themselves of all such other remedies as may now or
hereafter exist at law or in equity for the collection of said indebtedness and
the enforcement of the covenants herein and the foreclosure of the liens
evidenced hereby and/or the security interests evidenced hereby; and each and
every right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time and so often and in such order as
may be deemed expedient by the Trustee or the Holder, as the case may be, and
the exercise, at the same time or thereafter any other right power or remedy. No
delay or omission by the Trustee, or by the Holder 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.
9.10 Texas Law Controls. This instrument shall be governed by and
--------------------
construed in accordance with the law of the State of Texas. All obligations
hereunder shall, unless a different place is specified herein, be performed in
Houston, Texas. Venue of any suit arising out of the transaction represented by
this instrument shall lie in Houston, Texas, except as otherwise required by
law.
9.11 Integration. This instrument and the other documents exchanged
-----------
between the parties of even date herewith constitute the entire agreement of the
parties with respect to the subject matter hereof to the exclusion of any prior
agreement, oral or written.
9.12 Rules of Construction; Partial Invalidity. Wherever used in this
-------------------------------------------
instrument the singular number shall include the plural and vice versa, and all
pronouns shall include masculine, feminine and neuter genders regardless of
gender used. Any specific enumeration shall be deemed to be by way of example
and not exclusive unless otherwise stated. Titles of articles, sections and
paragraphs are for convenience and shall not limit the application of any
provision. If any provision of this instrument is invalid for any reason, such
invalidity shall not affect the remainder of the instrument, which shall be
enforced as nearly as may be in accordance with its terms.
9.13 Benefit. This Deed of Trust shall be binding upon and shall inure
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to the benefit of the heirs, administrators, successors and assigns of each
party, except that the Grantor may not transfer or assign any or all of its
rights or obligations hereunder without the prior written consent of the Holder.
All agreements, representations and warranties made herein shall survive the
execution and delivery of the Promissory Note and this Deed of Trust, and the
extension of any credit in connection therewith.
[SIGNATURE TO FOLLOW]
IN WITNESS WHEREOF, the undersigned have executed this instrument in
multiple counterpart originals to facilitate recordation on the day, month and
year first above written.
"GRANTOR"
ENEXCO, INC.,
a Texas corporation
By:_________________________________
Name:______________________________
Title:_______________________________
The Trustee and Holder join herein for the limited purposes of accepting
their respective obligations, rights, remedies and benefits under this Deed of
Trust.
"TRUSTEE
__________________________________________
Randall W. Heinrich
"BENEFICIARY"
COLONY ENERGY, INC.,
a Delaware corporation
By:_________________________________
Name:______________________________
Title:_______________________________
THE STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on the ____day of
_________________, 2007, by ________________________, in the capacity stated
above.
_____________________________________________
Notary Public in and for
the State of T E X A S
Printed Name:________________________________
My Commission Expires:_______________________
EXHIBIT A