05 02 Assignment Of Deed

Exhibit 10.12

Recording Requested By:

Scott R. Smith, Blank Rome LLP

405 Lexington Avenue

New York, NY  10174-0208

When Recorded Mail to:

Scott R. Smith, Blank Rome LLP

405 Lexington Avenue

New York, NY  10174-0208

DEED OF TRUST, SECURITY AGREEMENT,

ASSIGNMENT OF PRODUCTION,

FINANCING STATEMENT AND FIXTURE FILING

FROM

 

RED HAWK PETROLEUM, LLC, as Grantor

 

TO

 

THE PUBLIC TRUSTEE OF MORGAN COUNTY, COLORADO, as Trustee

 

AND

 

 BAM ADMINISTRATIVE SERVICES LLC, as Beneficiary

 

DATED AS OF March 7, 2014

 

 

THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS AND COVERS PROCEEDS OF MORTGAGED PROPERTY.

 

THIS INSTRUMENT COVERS MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION OIL AND GAS). THIS DEED OF TRUST IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE OR COMPARABLE RECORDS OF THE COUNTIES REFERENCED IN EXHIBIT A HERETO.

 

A POWER OF SALE HAS BEEN GRANTED IN THIS DEED OF TRUST.  A POWER OF SALE ALLOWS THE TRUSTEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A JUDICIAL FORECLOSURE ACTION UPON DEFAULT BY THE GRANTOR UNDER THIS DEED OF TRUST.

 

DEED OF TRUST, SECURITY AGREEMENT,

ASSIGNMENT OF PRODUCTION,

FINANCING STATEMENT AND FIXTURE FILING

 

THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF PRODUCTION, FINANCING STATEMENT AND FIXTURE FILING (this “Deed of Trust”), dated effective as of March 7, 2014 (the “Effective Date”), by RED HAWK PETROLEUM, LLC, a Nevada limited liability company (“Grantor”), with an address at 4125 Blackhawk Plaza Circle, Suite 201A, Danville, California 94506, to the PUBLIC TRUSTEE OF MORGAN COUNTY, COLORADO (“Trustee”), and BAM ADMINISTRATIVE SERVICES LLC, a Delaware limited liability company (“Beneficiary”), with an address at 1370 Avenue of the Americas, 32nd Floor, New York, New York 10019.  Grantor, Trustee and Beneficiary may be referred to herein, individually, as a “Party,” and, collectively, as the “Parties.”

 

RECITALS:

 

A.           PEDEVCO Corp., a Texas corporation (the “Company”) is party to that certain Note Purchase Agreement dated as of the date hereof (as amended, amended and restated, supplemented, or otherwise modified from time to time, the “Purchase Agreement”) by and between the Company, the investor parties thereto (collectively, the “Investors” and each, individually, an “Investor”) and Beneficiary, as agent for the Investors, pursuant to which the Investors agreed to extend loans to the Company in the principal amount of up to $50,000,000 (the “Loans”), repayment of which is evidenced by certain Senior Secured Promissory Notes dated the date hereof issued to each Investor (the “Notes”).  Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Purchase Agreement, unless this Deed of Trust specifies another document in which a capitalized term is defined.

 

B.           In order to induce Beneficiary and the Investors to enter into the Purchase Agreement and other Transaction Documents and to induce the Investors to extend the Loans pursuant to the Purchase Agreement, Grantor has agreed to guaranty the obligations of Company to Beneficiary and the Investors pursuant to that certain Guaranty dated as of the date hereof (as amended, amended and restated, supplemented, or otherwise modified from time to time, the “Guaranty”) executed by Grantor and the other guarantors thereto in favor of Beneficiary and the Investors.

 

C.           In order to secure Grantor’s obligations under the Guaranty and to induce Beneficiary and the Investors to enter into the Purchase Agreement and other Transaction Documents and to induce the Investors to extend the Loans pursuant to the Purchase Agreement, Grantor has agreed to execute and deliver to the Beneficiary this Deed of Trust.

 

D.           Grantor is a subsidiary of the Company and will derive benefit from the extension of the Loans to the Company.

 

AGREEMENT:

 

NOW, THEREFORE, in order to comply with the terms and conditions of the Purchase Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

GRANTING CLAUSE

 

1.1           Grantor does hereby irrevocably GRANT, BARGAIN, SELL, ASSIGN, TRANSFER and CONVEY WITH POWER OF SALE unto Trustee for the proposes, uses and benefits hereinafter set out, IN TRUST, the following described real and personal property, rights, titles, interests and estates (collectively, the “Mortgaged Property”):

 

(a)           All rights, titles, interests and estates now owned or hereafter acquired by Grantor in, to and under the leases described in Exhibit A attached hereto, and to the oil and gas leases and/or oil, gas and other mineral leases and other interests and estates and the lands and premises covered or affected thereby (the “Leases”), insofar as the Leases cover the land described on Exhibit A attached hereto (collectively, the “Hydrocarbon Property”), even though Grantor’s interests therein may be incorrectly described or a description of a part or all of such Hydrocarbon Property or Grantor’s interests therein be omitted; it being intended by Grantor and Beneficiary herein to cover and affect hereby all interests which Grantor may now own or may hereafter acquire in and to the Hydrocarbon Property notwithstanding that the interests as specified on Exhibit A may be limited to particular lands, specified depths or particular types of property interests.

 

(b)           All rights, titles, interests and estates now owned or hereafter acquired by Grantor in, to and under:  (i) the properties now or hereafter pooled or unitized with the Hydrocarbon Property; (ii) all presently existing or future unitization, communitization, pooling agreements and declarations of pooled units and the units created thereby (including, without limitation, all units created under orders, regulations, rules or other official acts of any Federal, State or other governmental body or agency having jurisdiction and any units created solely among working interest owners pursuant to operating agreements or otherwise) which may affect all or any portion of the Hydrocarbon Property, including, without limitation, those units which may be described or referred to on attached Exhibit A; (iii) all operating agreements, production sales or other contracts, farmout agreements, farm-in agreements, area of mutual interest agreements, equipment leases and other agreements described or referred to in this Deed of Trust or which relate to any of the Hydrocarbon Property or interests in the Hydrocarbon Property described or referred to herein or on attached Exhibit A or to the production, sale, purchase, exchange, processing, handling, storage, transporting or marketing of the Hydrocarbons (as hereinafter defined) from or attributable to such Hydrocarbon Property; and (iv) all geological, geophysical, seismic, engineering, accounting, title and other technical or business data concerning the Mortgaged Property, the Hydrocarbons, or any other item of property which are in the possession of Grantor or in which Grantor can otherwise grant a security interest with respect to the Hydrocarbon Property, and all books, files, records, magnetic media, computer records, and other forms of recording or obtaining access to such data.

 

(c)           All rights, titles, interests and estates now owned or hereafter acquired by Grantor in and to all oil, gas, casinghead gas, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined therefrom and all other minerals (collectively called either the “Hydrocarbons”) in and under and which may be produced and saved from or attributable to the Hydrocarbon Property, the lands pooled or unitized therewith and Grantor’s interests therein, including all oil in tanks and all rents, issues, profits, proceeds, products, revenues and other income from or attributable to the Hydrocarbon Property, the lands pooled or unitized therewith and Grantor’s interests therein which are subjected or required to be subjected to the liens and security interests of this Deed of Trust.

 

(d)           All tenements, hereditaments, appurtenances and properties relating, belonging, affixed or incidental to the Hydrocarbon Property, rights, titles, interests and estates described or referred to in paragraphs (a) and (b) above, which are now owned or which may hereafter be acquired by Grantor, including, without limitation, any and all property, real or personal, now owned or hereafter acquired and situated upon, used, held for use, or useful in connection with the operating, working or development of any of such Hydrocarbon Property or the lands pooled or unitized therewith (excluding drilling rigs, trucks, automotive equipment or other personal property which may be taken to the premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, including, without limitation, those described on Exhibit A, structures, field separators, liquid extraction plants, plant compressors, pumps, pumping units, pipelines, sales and flow lines, gathering systems, field gathering systems, salt water disposal facilities, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements, servitudes, licenses and other surface and subsurface rights together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing properties.

 

(e)           All of the rights, titles and interests of every nature whatsoever now owned or hereafter acquired by Grantor in and to the Hydrocarbon Property rights, titles, interests and estates and every part and parcel thereof.

 

(f)           All rights and interests whatsoever now owned or hereafter acquired by Grantor in and to future contracts, forward contracts, swap, cap or collar contracts, option contracts, hedging contracts or other derivative contracts or similar agreements covering oil and gas commodities or prices or financial, monetary or interest rate instruments.

 

(g)           All accounts, contract rights, inventory, general intangibles, insurance contracts and insurance proceeds and any other personable/movable property of any kind or character constituting a part of, relating to or arising out of those portions of the Mortgaged Property which are described in paragraphs (a) through (f) above and all proceeds and products of all such portions of the Mortgaged Property and payments in lieu of production (such as “take or pay” payments), whether such proceeds or payments are goods, money, documents, instruments, chattel paper, securities, accounts, general intangibles, fixtures, real property, or other assets.

 

TO HAVE AND TO HOLD the Mortgaged Property unto Trustee, and it’s successors and assigns or substitutes, IN TRUST, for the benefit of Beneficiary, in accordance with the terms and provisions hereof.

 

ARTICLE II

INDEBTEDNESS SECURED

 

2.1           This Deed of Trust is executed and delivered by Grantor to secure and enforce the following (the “Obligations”):  all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing, of Grantor to Beneficiary under this Deed of Trust, the Guaranty, the other Transaction Documents, and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from the Beneficiary as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.  Without limiting the generality of the foregoing, the term “Obligations” shall include, without limitation:  (i) principal of, and interest on, the Notes and the Loans (including any interest that accrues after the commencement of any proceeding commenced by or against any Person under any provision of title 11 of the United States Code, as in effect from time to time, or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement or other similar relief (an “Insolvency Proceeding”) regardless of whether allowed or allowable in whole or in part as a claim in such Insolvency Proceeding); (ii) any and all other fees, legal fees and other expenses, indemnities, costs, obligations and liabilities of Grantor from time to time under or in connection with this Deed of Trust, the Notes, the Purchase Agreement, the Guaranty, the other Transaction Documents, and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; (iii) payment of the Major Transaction Prepayment Price (as defined in the Notes), and (iv) all amounts in respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving Grantor.  Any reference in this Deed of Trust or in the Transaction Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

 

ARTICLE III

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Grantor hereby represents, warrants and covenants as follows:

 

3.1           This Deed of Trust is, and always will be kept, a direct first lien and security interest (subject to Permitted Encumbrances and all burdens recorded in the real property records of the county in which the Mortgaged Property is located) upon the Mortgaged Property and Grantor will not create or suffer to be created or permit to exist any lien, security interest or charge prior to or on a parity with the lien and security interest of this Deed of Trust upon the Mortgaged Property or any part thereof or upon the rents, issues, revenues, profits and other income therefrom without Beneficiary’s consent.  Except for Permitted Encumbrances and all burdens recorded in the real property records of the county in which the Mortgaged Property is located, Grantor will warrant and defend the “good, valid, and marketable title” (as such phrase is defined in the Purchase Agreement) to the Mortgaged Property against the claims and demands of all other persons whomsoever and will maintain and preserve the lien created hereby so long as any of the Indebtedness secured hereby remains unpaid.  If an adverse claim is made against the “good, valid, and marketable title” to any part of the Mortgaged Property, subject to Permitted Encumbrances and all burdens recorded in the real property records of the county in which the Mortgaged Property is located, Grantor agrees it will promptly defend against such adverse claim at Grantor’s cost and expense, and Grantor further agrees that the Trustee and/or Beneficiary may take such other action as they reasonably deem advisable to protect and preserve their interests in the Mortgaged Property, and in such event Grantor will indemnify the Trustee and Beneficiary against any and all cost, reasonable attorney’s fees, and other expenses which the Trustee may incur in defending against any such adverse claim.

 

3.2           Grantor is not a “foreign person” within the meaning of the Internal Revenue Code of 1986, as amended (hereinafter called the “Code”), Sections 1445 and 7701 (i.e., Grantor is not a non-resident alien, foreign corporation, foreign partnership, foreign trust or foreign estate as those terms are defined in the Code and any regulations promulgated thereunder).

 

3.3           All or portions of the Mortgaged Property may be comprised of interests in the Hydrocarbon Property which are other than working interests or which may be operated by a party or parties other than Grantor and with respect to all or any such interests and properties as may be comprised of interests other than working interests or which may be operated by parties other than Grantor, Grantor’s covenants as expressed in this Article III are modified to require that Grantor use its commercially reasonable efforts to obtain compliance with such covenants by the working interest owners or the operator or operators of such leases or properties.

 

3.4           The Grantor agrees that if the Grantor fails to perform any act or to take any action which the Grantor is required to perform or take hereunder or pay any money which the Grantor is required to pay hereunder, Beneficiary in the Grantor’s name or its or their own name may, but shall not be obligated to, perform or cause to perform such act or take such action or pay such money, and any expenses so incurred by either of them and any money so paid by either of them shall be a demand obligation owing by the Grantor to the Beneficiary and Beneficiary, upon making such payment, shall be subrogated to all of the rights of the Person receiving such payment.  Each amount due and owing by Grantor to Beneficiary pursuant to this Deed of Trust shall bear interest from the date of such expenditure or payment or other occurrence which gives rise to such amount being owed to such Person until paid at the rate of interest stipulated in the Notes following the occurrence and during the continuance of an Event of Default, and all such amounts together with such interest thereon shall be a part of the Obligations.

 

ARTICLE IV

ASSIGNMENT OF PRODUCTION, ACCOUNTS,

CONTRACT RIGHTS AND PROCEEDS

 

4.1           For the purpose of securing the payment and performance of, and to facilitate the discharge of, the Obligations, Grantor hereby bargains, sells, transfers, assigns, sets over and delivers to the Trustee, in trust, and grants and assigns to Beneficiary a security interest in and assignment of, all of Grantor’s right, title and interest in the Hydrocarbons produced from or allocated to the Mortgaged Property after 7:00 o’clock a.m. on the date hereof, and all proceeds thereof, all accounts and contract rights of Grantor under which such proceeds may arise and all proceeds of Hydrocarbons produced from or allocated to the Mortgaged Property prior to such date and with respect to which payment has not yet been made (all such production, proceeds and amounts, including such accounts, being herein called the “Proceeds of Runs”); provided, however, Grantor shall, prior to an Event of Default, have the right to collect and retain such Proceeds of Runs as they become due and payable.

 

4.2           Beneficiary is hereby authorized, at any time after the occurrence and during the continuance of an Event of Default, to give notice to Grantor and the operator or operators of the Mortgaged Property directing and instructing the operator or operators of the Mortgaged Property and any and all purchasers of Hydrocarbons produced from or allocated to the Mortgaged Property to pay, all of the Proceeds of Runs to Beneficiary until such time as such operators or purchasers have been furnished with written notice from Beneficiary that payment should again be made to Grantor.  At any time after Beneficiary or Grantor gives notice that Proceeds of Runs shall be paid to Beneficiary, Beneficiary may (but need not), in its own name or in Grantor’s name, demand, sue for, collect or receive any and all Proceeds of Runs and may (but need not) make any compromise or settlement or otherwise agree to waive, modify, amend or change any obligations with respect thereto.  All Proceeds of Runs received by Beneficiary pursuant to this Deed of Trust shall be applied by Beneficiary as provided herein.  No purchaser of the production attributed to the Mortgaged Property shall have any responsibility for the application of any funds paid to Beneficiary after delivery of notice from Beneficiary to Grantor that Proceeds of Runs are to be paid to Beneficiary.

 

4.3           Grantor agrees to execute and deliver any and all transfer orders, division orders and other instruments that may be required by the operator of any of the Mortgaged Property or by any purchaser of the production from any of the Mortgaged Property for the purpose of effectuating payment of the Proceeds of Runs to Beneficiary.

 

4.4           Grantor hereby appoints Beneficiary as its true and lawful attorney-in-fact for Grantor, with full authority in the place and stead of Grantor and from time to time in the discretion of Beneficiary, to pursue, after the occurrence and during the continuance of an Event of Default, any and all rights of Grantor to liens on and security interests in the Hydrocarbons securing payment of Proceeds of Runs.  Beneficiary is fully authorized to receive said revenues and proceeds; to endorse and cash any and all checks and drafts payable to the order of Grantor or Beneficiary for the account of Grantor received from or in connection with said revenues or proceeds and to hold the proceeds thereof in a bank account as additional collateral securing the Obligations; and to execute transfer and division orders in the name of Grantor, or otherwise, with warranties binding Grantor.  All proceeds received by the Beneficiary shall be applied as provided in this Deed of Trust.  Beneficiary shall not be liable for any delay, neglect, or failure to effect collection of any proceeds or to take any other action in connection therewith or hereunder.  The power of attorney granted to Beneficiary in this section, being coupled with an interest, shall be irrevocable so long as the Obligations or any part thereof remains unpaid.

 

4.5           Nothing herein contained shall modify or otherwise alter the obligation of Grantor to make prompt payment of all principal and interest owing on the Obligations regardless of whether the Proceeds of Runs are sufficient to pay the same and the rights provided in accordance with the foregoing assignment provision shall be cumulative of all other security of any and every character now or hereafter existing to secure payment of the Indebtedness.

 

ARTICLE V

DEFEASANCE

 

5.1           Upon indefeasible payment in full in cash of the Obligations in accordance with the provisions of the Notes and the other Transaction Documents and the termination of the Purchase Agreement, then and in that case only, this Deed of Trust shall have no force and effect, this conveyance shall become null and void, the Mortgaged Property hereby conveyed shall become wholly clear of the liens, conveyances, assignments and security interests evidenced hereby, and all such liens, conveyances, assignments and security interests shall be released, and Beneficiary shall execute, acknowledge and deliver to Grantor, as Grantor’s sole expense, a recordable release, in form and substance reasonably satisfactory to Beneficiary, of the same within thirty (30) days after Grantor delivers such release to Beneficiary.

 

ARTICLE VI

DEFAULT AND REMEDIES

 

6.1           An “Event of Default” under the Notes shall be an Event of Default under this Deed of Trust.

 

6.2           Upon the occurrence and during the continuation of an Event of Default, Grantor hereby authorizes and empowers the Beneficiary, by or through the Trustee, or otherwise, to foreclose this Deed of Trust by advertisement and sale of the Mortgaged Property pursuant to the laws of the State of Colorado (the power of sale provided for by the laws of the State of Colorado being hereby expressly granted to Beneficiary and Trustee by Grantor) and shall thereupon have the right and power to sell, at one or more sales, as an entirety or in parcels, as provided by law, the Mortgaged Property at such place or places and otherwise in such manner and upon such notice as may be required by law, or in the absence of any such requirement, as Trustee may deem appropriate.  Nothing contained in this section shall be construed so as to limit in any way Beneficiary’s rights to sell the Mortgaged Property, or any portion thereof, by private sale if, and to the extent that, such private sale is permitted under the laws of the State of Colorado or by public or private sale after entry of a judgment by any court of competent jurisdiction so ordering.  If Beneficiary invokes the power of sale, Beneficiary shall give written notice to the Trustee of such election.  Trustee shall give such notice to Grantor of Grantor’s rights as required by law and proceed to sell the Mortgaged Property pursuant to the laws of the State of Colorado.  Beneficiary may postpone the sale of all or any portion of such real property by public announcement made at the time of sale fixed by the preceding postponement.  To the extent permitted by applicable law, the right of sale hereunder shall not be exhausted by one or any sale, and Beneficiary may make other and successive sales until all of such Mortgaged Property be legally sold.  The recitals in any deed, assignment or other conveyance given by Beneficiary of an Event of Default, publication of notice of sale, demand that such sale should be made, postponement of sale, terms of sale, name of purchaser, payment of purchase money and any other facts affecting the regularity or validity of such sale shall be conclusive proof of the truthfulness thereof, and such deed or deeds shall be conclusive against all persons as to all matters or facts therein recited.  It is expressly understood that Beneficiary or any holder of all or any part of the Obligations may be a purchaser of the Mortgaged Property hereby mortgaged and sold pursuant hereto, or any part thereof, at any sale thereof, whether such sale be under the power of sale hereinabove vested in Trustee or upon any other foreclosure of the lien or security interest herein, or otherwise; and Beneficiary or such holder so purchasing or redeeming shall, upon any such purchase or redemption, acquire good title to the Mortgaged Property so purchased, free of the lien or security interest created hereby and free of all rights of redemption in Grantor.  Grantor hereby irrevocably appoints Beneficiary to be the attorney-in-fact of Grantor and in the name and on behalf of Grantor to do and perform any and all such acts and things which Grantor ought to do and perform under the covenants herein contained and generally, to use the name of Grantor in the exercise of all or any of the powers hereby conferred on Beneficiary.  Title to any such property shall vest in the holder of the certificate of purchase or in the holder of the last certificate of redemption as provided for under Section 38-38-501 of the Colorado Revised Statutes.  Any instrument of conveyance executed by the Trustee and made to any holder of the certificate of purchase or holder of the last certificate of redemption shall be in substantially the form provided for under Section 38-38-502 of the Colorado Revised Statutes.  To the extent and under such circumstances as are permitted by law, Beneficiary or any Investor may be a purchaser at any such sale, and shall have the right, after paying or accounting for all costs of said sale or sales, to credit the amount of the bid upon the amount of the Obligations.

 

6.3           Upon the occurrence and during the continuation of an Event of Default, Beneficiary shall have all rights, powers, and remedies granted by law, including, without limitation, as a secured party under the Colorado Uniform Commercial Code, including, without limitation, the right to take possession of all personal property constituting a part of the Mortgaged Property, and for this purpose may, to the extent permitted by law, enter upon any premises on which any or all of such personal property is situated and take possession of and operate such personal property (or any portion thereof) or remove it therefrom.  Beneficiary may require Grantor to assemble such personal property and make it available to Beneficiary at a place to be designated by the Beneficiary.  Unless such personal property is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Beneficiary shall, to the extent notice of sale is required by applicable law, deliver to Grantor notice of the time and place of any public sale or of the time after which any private sale or other disposition of such personal property is to be made, it being agreed by Grantor that ten (10) days notice shall constitute reasonable notification thereof.

 

6.4           Beneficiary may, at its election, proceed by suit or suits, at law or in equity, to enforce the payment of the Indebtedness, and of the notes evidencing it. On or at any time after the filing of judicial proceedings to protect or enforce the rights of Beneficiary, Beneficiary, as a matter of right and without regard to the sufficiency of the security, and without any showing of insolvency, fraud, or mismanagement on the part of Grantor, shall be entitled to the appointment of a receiver or receivers of all or any portion of the Properties, and of the income, rents, issues, and profits thereof, and Grantor does hereby consent to the appointment of such receiver or receivers and agrees not to oppose any application therefor.

 

6.5           In addition to all rights and remedies under this Deed of Trust, at law and in equity, if any Event of Default shall occur and Trustee or the Beneficiary shall exercise any remedies under this Deed of Trust with respect to any portion of the Mortgaged Property (or Grantor shall transfer any Mortgaged Property in lieu of foreclosure), the Beneficiary or the Trustee shall have the right to request that any operator of any Mortgaged Property which is either Grantor or any Affiliate of Grantor to resign as operator pursuant to any A.A.P.L Model Form Operating Agreement applicable thereto, and such resignation shall not become effective until 7:00 a.m. on the first day of the calendar month following the expiration of ninety (90) days after the giving of notice of resignation by Grantor or such Affiliate, unless a successor operator has been selected and assumes the duties of Grantor or such Affiliate as operator of such Mortgaged Property at an earlier date.

 

6.6           The proceeds of any sale of the Mortgaged Property, or any part thereof, whether under the Colorado Uniform Commercial Code or the power of sale herein granted and conferred, whose application has not elsewhere herein been specifically provided for, shall be applied to the Obligations as follows:

 

(a)           First:  To the payment of all expenses incurred by Trustee or Beneficiary incident to the enforcement of the Obligations, this Deed of Trust or any other Transaction Documents.

 

(b)           Second:  To the payment of the Obligations, including the Notes, with accrued interest thereon to the date of such payment, if any, in such order and manner as determined by Beneficiary; and

 

(c)           Third:  To Grantor or other third persons as a court of competent jurisdiction may direct.

 

6.7           Beneficiary at all times shall have the right to release any part of the Mortgaged Property now or hereafter subject to the lien or security interests created hereby or any other lien or security interest it now has or may hereafter have, without releasing any other part of said Mortgaged Property, and without affecting the lien or security interest created hereby, as to the part or parts thereof not so released.

 

6.8           To the extent permitted by applicable law, the obligations of Grantor hereunder shall survive the non-assumption of and the commencement of any insolvency proceeding and shall remain binding upon Grantor, or a trustee, receiver, custodian or liquidator of Grantor appointed in any such case.

 

ARTICLE VII

SECURITY AGREEMENT

 

7.1           To further secure the Obligations, Grantor hereby grants to Beneficiary, a security interest in all of Grantor’s rights, titles and interests in and to the Mortgaged Property insofar as such Mortgaged Property consist of the goods, equipment, accounts, contract rights, general intangibles, insurance contracts, insurance proceeds, inventory, hydrocarbons, fixtures and any and all other personal property of any kind or character defined in and subject to the provisions of the Colorado Uniform Commercial Code, including the proceeds and products from any and all of such personal property.  Upon the occurrence of any Event of Default, Beneficiary is and shall be entitled to all of the rights, powers and remedies afforded a secured party by the Colorado Uniform Commercial Code with reference to the personal property and fixtures in which Beneficiary has been granted a security interest herein, Beneficiary may proceed as to both the real and personal property covered hereby in accordance with the rights and remedies granted under this Deed of Trust in respect of the real property covered hereby.  Such rights, powers and remedies shall be cumulative and in addition to those granted Beneficiary under any other provision of this Deed of Trust or under any other instrument executed in connection with or as security for the Obligations.  Grantor covenants and agrees with Beneficiary that:

 

(a)           To the extent permitted by law, Grantor expressly waives any notice of sale or other dispos­ition of the personal property constituting a part of the ­Mortgaged Property ­and any other right or remedies of a ­Grantor ­or formalities prescribed by law relative to sale or disposition of the ­ personal property constituting a part of the Mortgaged Property or ­exercise of any other right or remedy of Beneficiary existing after default hereunder; and to the extent any such notice is required and cannot be waived, Grantor agrees that if such notice is delivered to it at least ten (10) days before the time of the sale or disposition, such notice shall be deemed reasonable and shall fully satisfy any requirement for giving of said notice.

 

(b)           Following an Event of Default, Beneficiary is expressly granted the right at its option, to transfer at any time to itself or to its nominee the personal property constituting a part of the Mortgaged Property, or any part thereof, and to receive the monies, income, proceeds, or benefits attributable or accruing thereto and to hold the same as security for the indebtedness or to apply it on the principal and interest or other amounts owing on any of the Obligations, whether or not then due, in such order or manner as Beneficiary may elect.  All rights to marshalling of assets of Grantor, including any such right with respect to the personal property constituting a part of the Mortgaged Property, are hereby waived.

 

(c)            All expenses of preparing for sale, or other use or disposition, selling or otherwise using or disposing of the Mortgaged Property and the like which are incurred or paid by Beneficiary as authorized or permitted hereunder, including also all reasonable attorneys’ fees, legal expenses and costs, shall be added to the Obligations and the Grantor shall be liable therefor.

 

(d)           If Beneficiary elects to exercise its rights under the Colorado Uniform Commercial Code as to the personal property constituting a part of the Mortgaged Property, this election shall not preclude Beneficiary or the Trustee from exercising any other rights and remedies granted by this instrument as to the remainder of the Mortgaged Property.

 

(e)           Any copy of this instrument may also serve as a financing statement and, when filed under the real estate records of Morgan County, a fixture filing of some portions of the goods described herein, that are or are to become fixtures as part of the Mortgaged Property, under the Colorado Uniform Commercial Code between the Grantor, whose present address is listed on the first page of this Deed of Trust, and Beneficiary, whose present address is listed on the first page of this Deed of Trust.

 

(f)           So long as any amount remains unpaid on any of the Obligations, Grantor will not execute and there will not be filed in any public office any financing statement or statements affecting the collateral other than financing statements in favor of Beneficiary hereunder, unless the prior written specific consent and approval of Beneficiary shall have first been obtained.

 

(g)           Beneficiary is authorized to file, in any jurisdiction where Beneficiary deems it necessary, a financing statement or statements covering the Mortgaged Property, and at the reasonable request of Beneficiary, Grantor will join Beneficiary in executing one or more such financing statements pursuant to the Colorado Uniform Commercial Code in form satisfactory to Beneficiary, and will pay the cost of filing or recording this Deed of Trust, as a financing statement, in all public offices at any time and from time to time whenever filing or recording of any financing statement or of this Deed of Trust is deemed by Beneficiary to be necessary or desirable.

 

7.2           Portions of the Mortgaged Property consist of (i) oil, gas and other minerals produced or to be produced from the lands described in the Leases and to the accounts resulting from the sale thereof at the wellhead, or (ii) goods which are or will become fixtures attached to the real estate constituting a portion of the Mortgaged Property, and Grantor hereby agrees that this instrument shall be filed in the real property records and the Uniform Commercial Code records of the counties in which the Mortgaged Property are located as a financing statement to perfect the security interest of Beneficiary in said portions of the Mortgaged Property.  Nothing herein contained shall impair or limit the effectiveness of this Deed of Trust as a security agreement or financing statement for other purposes.

 

ARTICLE VIII

MISCELLANEOUS PROVISIONS

 

8.1           All notices, requests, consents, demands and other communications required or permitted hereunder shall be given or furnished in the manner set forth in Section 8.4 of the Purchase Agreement.

 

8.2           All exhibits attached hereto are hereby incorporated herein and made a part hereof for all purposes, as if set forth in full herein. References in such exhibits to instruments on file in the public records are hereby incorporated by reference herein for all purposes.

 

8.3           The terms, provisions, covenants and conditions hereof shall be binding upon Grantor, Grantor’s successors, legal representatives, and assigns, and shall inure to the benefit of Beneficiary, its successors and assigns, provided that Grantor shall not assign its rights and/or obligations under this Deed of Trust without the prior written consent of Beneficiary, which consent Beneficiary may withhold in its sole discretion.

 

8.4           In the event of a conflict between the terms and conditions of this Deed of Trust and the Purchase Agreement, the terms and conditions of this Deed of Trust shall control and govern the point in conflict.

 

8.5           IN CONNECTION WITH ANY ACTION TAKEN BY THE TRUSTEE AND/OR BENEFICIARY PURSUANT TO THIS DEED OF TRUST, THE TRUSTEE AND/OR BENEFICIARY AND THEIR OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, AGENTS, ATTORNEYS, ACCOUNTANTS AND EXPERTS (“INDEMNIFIED PARTIES”) SHALL NOT BE LIABLE FOR ANY LOSS SUSTAINED BY GRANTOR RESULTING FROM AN ASSERTION THAT BENEFICIARY HAS RECEIVED FUNDS FROM THE PRODUCTION OF HYDROCARBONS CLAIMED BY THIRD PERSONS OR ANY ACT OR OMISSION OF ANY INDEMNIFIED PARTY IN ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE MORTGAGED PROPERTY INCLUDING SUCH LOSS WHICH MAY RESULT FROM THE ORDINARY NEGLIGENCE OF AN INDEMNIFIED PARTY UNLESS SUCH LOSS IS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AN INDEMNIFIED PARTY AS DETERMINED BY A FINAL DECISION OF A COURT OF COMPETENT JURISDICTION, NOR SHALL THE TRUSTEE AND/OR BENEFICIARY BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY OF GRANTOR. GRANTOR SHALL AND DOES HEREBY AGREE TO INDEMNIFY EACH INDEMNIFIED PARTY FOR, AND TO HOLD EACH INDEMNIFIED PARTY HARMLESS FROM, ANY AND ALL LIABILITY, LOSS OR DAMAGE INCURRED BY ANY INDEMNIFIED PARTY BY REASON OF THIS DEED OF TRUST OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER; IF THE TRUSTEE AND/OR BENEFICIARY MAKES ANY EXPENDITURE ON ACCOUNT OF ANY SUCH LIABILITY, LOSS OR DAMAGE, THE AMOUNT THEREOF, INCLUDING COSTS, EXPENSES AND REASONABLE ATTORNEYS’ FEES, SHALL BE A DEMAND OBLIGATION (WHICH OBLIGATION GRANTOR HEREBY EXPRESSLY PROMISES TO PAY) OWING BY GRANTOR TO THE TRUSTEE AND/OR BENEFICIARY AND SHALL BEAR INTEREST FROM THE DATE EXPENDED UNTIL PAID AT THE POST-DEFAULT RATE, SHALL BE A PART OF THE OBLIGATIONS AND SHALL BE SECURED BY THIS DEED OF TRUST AND ANY OTHER SECURITY INSTRUMENT.  THE LIABILITIES OF THE GRANTOR AS SET FORTH IN THIS SECTION SHALL SURVIVE THE TERMINATION OF THIS DEED OF TRUST.

 

8.6           To the fullest extent permitted by law, Grantor hereby irrevocably and unconditionally waives and releases (a) all benefits that might accrue to Grantor by virtue of any present or future moratorium law or other law exempting the Mortgaged Property from attachment, levy or sale on execution or providing for any appraisement, valuation, stay of execution, exemption from civil process, redemption or extension of time for payment; and (b) all notices of any Event of Default or of Beneficiary’s or the Investors’ intention to accelerate maturity of the Obligations or of Beneficiary’s election to exercise or its actual exercise of any right, remedy or recourse provided for under this Deed of Trust or any other Transaction Document.

 

8.7           If any provision hereof is invalid or unenforceable in any jurisdiction, the other provisions hereof 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 Beneficiary in order to effectuate the provisions hereof, and the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of any such provision in any other jurisdiction.

 

8.8           This instrument shall be governed by, and construed in accordance with the laws of the State of Colorado without regard to conflicts of laws principles that would cause the application of law from another jurisdiction, except to the extent that the laws of another jurisdiction govern the attachment, creation validity, priority, perfection or manner or procedure for enforcement of the liens or security interests created by this Deed of Trust.

 

8.9           THIS DEED OF TRUST, THE NOTES, THE PURCHASE AGREEMENT, AND THE OTHER TRANSACTION DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

8.10           The Parties agree to take all action and to execute, acknowledge and deliver all such instruments necessary or advisable to consummate the transactions contemplated by this Deed of Trust.

 

8.11           This Deed of Trust may be executed in any number of counterparts, each of which shall be deemed valid and binding with respect to the signatories thereto, and all of which together shall constitute one and the same instrument.

 

 

[signature page follows]

 

 

 

Executed as of March 7, 2014.

GRANTOR: Red Hawk Petroleum, LLC By:  __Name: __Title:   ____

BENEFICIARY: BAM Administrative Services LLC By:  __Name:   __Title:   _______

ACKNOWLEDGEMENT STATE OF _COUNTY OF The foregoing instrument was acknowledged before me this day of _, 2014, by_, as of Red Hawk Petroleum, LLC, a Nevada limited liability company, for and on behalf of said limited liability company. My Commission Expires:  Witness My Hand and Seal: ACKNOWLEDGEMENT STATE OF COUNTY OF The foregoing instrument was acknowledged before me this  day of , 2014, by , the Authorized Signatory of BAM Administrative Services LLC, on behalf of said limited liability company. My Commission Expires:  Witness My Hand and Seal: Notary Public

 

 

 

 

 

 

 

 

 

EXHIBIT “A”

 

 

Lessor

Lessee

Effective
Date

Expiration Date

Option
Term

Royalty

County

Book/Page
/Desc

Company
Net

Lease
Status

TWN

RNG

SEC

Description

Их компьютер через Интерпол засек имя Танкадо в регистратуре полиции Севильи. - От разрыва сердца? - усомнилась Сьюзан.  - Ему ведь всего тридцать лет. - Тридцать два, - уточнил Стратмор.

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