Exhibit 10.27.2
MORTGAGE, DEED OF TRUST, SECURITY
AGREEMENT,
FINANCING STATEMENT AND ASSIGNMENT OF
PRODUCTION
(THIS INSTRUMENT CONTAINS
AFTER-ACQUIRED PROPERTY PROVISIONS)
FROM
PRIME OFFSHORE
L.L.C.
Taxpayer Identification Number:
76-0688905
(Mortgagor and Debtor)
TO
John A. Clark, Trustee
for the benefit of
GUARANTY BANK, FSB
, Agent
(Mortgagee and Secured Party)
Effective June 30,
2009
For purposes of filing this Deed of
Trust as a financing statement, the mailing address of Mortgagor is
9821 Katy Freeway, Suite 1050, Houston, Texas 77024; the mailing
address of Mortgagee is 8333 Douglas Avenue, Dallas, Texas
75225.
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This instrument, prepared by David
G. Dunlap, Jackson Walker L.L.P., 1401 McKinney, Suite 1900,
Houston, Texas 77010, 713-752-4200, contains after-acquired
property provisions and covers future advances and proceeds to the
fullest extent allowed by applicable law.
ATTENTION OF RECORDING
OFFICER : This instrument
is a mortgage of both real and personal property and is, among
other things, a Security Agreement and Financing Statement under
the Uniform Commercial Code. This instrument creates a lien on
rights in or relating to lands of Mortgagor which are described in
Exhibit A hereto or in documents described in Exhibit A.
RECORDED DOCUMENT SHOULD BE RETURNED
TO:
JACKSON WALKER L.L.P.
1401 McKinney, Suite 1900
Houston, Texas 77010
Attn.: Donna Gatliff
MORTGAGE, DEED OF TRUST,
SECURITY AGREEMENT,
FINANCING STATEMENT AND
ASSIGNMENT OF PRODUCTION
(THIS INSTRUMENT CONTAINS
AFTER-ACQUIRED PROPERTY PROVISIONS)
This Mortgage, Deed of Trust,
Security Agreement, Financing Statement, and Assignment of
Production (this “ Deed of Trust ”) is executed
pursuant to the Amended and Restated Credit Agreement dated
effective March 31, 2008, as amended on the effective date
hereof, by and among PRIME OFFSHORE L.L.C. , a Delaware
limited liability company (“ Mortgagor ”), the
lenders party thereto from time to time (the “ Lenders
”) and GUARANTY BANK , FSB , a federal savings
bank, as Agent for the Lenders (as amended, supplemented, restated
or otherwise modified from time to time, the “ Credit
Agreement ”). Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Credit
Agreement.
Mortgagor, acting herein by and
through its proper officer who has heretofore been duly authorized,
the mailing address for which, for purposes hereof, is 9821 Katy
Freeway, Suite 1050, Houston, Texas 77024, hereby agrees as
follows:
ARTICLE 1
GRANT
1.1 Lien . Mortgagor, for
valuable consideration, the receipt of which is hereby
acknowledged, and in consideration of the debt and trust
hereinafter mentioned, has granted, bargained, sold, conveyed,
transferred and assigned, and by these presents does grant,
bargain, sell, convey, transfer and assign to John A. Clark,
Trustee, whose address is c/o Guaranty Bank, FSB, 8333 Douglas
Avenue, Dallas, Texas 75225, and his successors and substitutes in
trust, as hereinafter provided (the “ Trustee
”), for the benefit of Guaranty Bank, FSB, as Agent for the
Lenders, with banking quarters in Dallas County, Texas, the mailing
address for which, for purposes hereof, is 8333 Douglas Avenue,
Dallas, Texas 75225 (“ Mortgagee ”), the
following described Property:
(a) all right, title, and interest,
whether now owned and existing or hereafter acquired or arising, of
Mortgagor in and to the leases, rights of way, easements, or other
documents described in Exhibit A attached hereto and
incorporated herein for all purposes or described or referred to in
the documents described in Exhibit A , without regard to any
surface acreage and/or depth limitations set forth in Exhibit
A , and all renewals and extensions thereof and all new leases,
rights of way, easements, or other documents (i) in which an
interest is acquired by Mortgagor after the termination or
expiration of any lease, right of way, easement, or other document
described or referred to in Exhibit A , and (ii) that
covers all or any part of the Property described in and covered by
such terminated or expired lease, right of way, easement, or other
document, to the extent, and only to the extent, such new leases,
rights of way, easements, or other documents may cover such
Property (all of the foregoing in this subsection (a) being
the “ Leases ”);
(b) all right, title, and interest,
whether now owned and existing or hereafter acquired or arising, of
Mortgagor in and to the lands subject to the Leases or otherwise
described or referred to in Exhibit A , without regard to
any surface acreage and/or depth limitations set forth in
Exhibit A (the “ Lands ”), including,
without limitation, the oil, gas, mineral, and leasehold estates in
and to the Lands;
(c) all right, title, and interest,
whether now owned and existing or hereafter acquired or arising, of
Mortgagor in and to any of the oil, gas, and minerals in, on, or
under the Lands, including, without limitation, all contractual
rights, fee interests, leasehold interests, overriding royalty
interests, non-participating royalty interests, mineral interests,
production payments, net profits interests, or any other interest
measured by or payable out of production of oil, gas, or other
minerals from the Leases and/or Lands;
(d) all of the foregoing interests
of Mortgagor as such interests may be enlarged by the discharge of
any payments out of production or by the removal of any charges or
encumbrances;
(e) all right, title, and interest,
whether now owned and existing or hereafter acquired or arising, of
Mortgagor in, to, and under or derived from any present or future
operating, farmout, bidding, pooling, unitization, and
communitization agreements, assignments, and subleases, whether or
not described in Exhibit A , to the extent, and only to the
extent, that such agreements, assignments, and subleases cover or
include any right, title, and interest, whether now owned and
existing or hereafter acquired or arising, of Mortgagor in and to
all or any portion of the Leases and/or the Lands, and all units
created by any such pooling, unitization, and communitization
agreements and all units formed under orders, regulations, rules,
or other official acts of any Governmental Authority having
jurisdiction, to the extent and only to the extent that such units
cover or include all or any portion of the Leases and/or the
Lands;
(f) all right, title, and interest,
whether now owned and existing or hereafter acquired or arising, of
Mortgagor in, to, and under or derived from all presently existing
and future advance payment agreements, oil, casinghead gas, and gas
sales, exchange, and processing contracts and agreements,
including, without limitation, those contracts and agreements that
are described or referred to in Exhibit A , to the
extent, and only to the extent, those contracts and agreements
cover or include all or any portion of the Leases and/or the Lands;
and
(g) all right, title, and interest,
whether now owned and existing or hereafter acquired or arising, of
Mortgagor in, to, and under or derived from all existing and future
permits, licenses, easements, and similar rights and privileges
that relate to or are appurtenant to any of the Leases and/or the
Lands.
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1.2 Security Interest .
Mortgagor, for the same consideration, hereby grants to Mortgagee a
continuing security interest in all improvements and all personal
Property of any kind or character defined in and subject to the
provisions of the Uniform Commercial Code (“ UCC
”), including, but not limited to, substitutions and
replacements for, accessions to, and the proceeds and products from
any and all of such improvements and personal Property, as well as
any and all “as-extracted collateral” as such term is
defined in the UCC, whether now owned and existing or hereafter
acquired or arising, and situated on any of the Lands, including,
but not limited to, pipe, casing, tubing, rods, storage tanks,
boilers, loading racks, pumps, foundations, warehouses, and all
other personal Property and equipment of every kind and character
upon, incident, appurtenant, or belonging to and used in connection
with the interest of Mortgagor, whether now owned and existing or
hereafter acquired or arising, in the Lands and/or the Leases,
including all oil, gas, and other minerals produced or to be
produced to the account of Mortgagor from the Lands and all
accounts receivable, general intangibles, and contract rights of
Mortgagor in connection with the Lands and/or the Leases and all
proceeds, products, substitutions, and exchanges thereof (the
Lands, the Leases, and the real and personal Property interests
described in this Section being the “ Mortgaged
Property ”).
1.3 Assignment of Security .
Mortgagor, for the same consideration, hereby grants to Mortgagee
any and all rights of Mortgagor to Liens securing payment of
proceeds from the sale of production from the Mortgaged
Property.
1.4 After-Acquired Property .
Mortgagor, for the same consideration, hereby grants, bargains,
sells, conveys, transfers, and assigns to the Trustee or grants to
Mortgagee a continuing security interest in, as the case may be,
all additional right, title, or interest which Mortgagor may
hereafter acquire or become entitled to in the interests,
Properties, Lands, Leases, and premises aforesaid, and in the oil,
gas, or other minerals in and under or produced from or
attributable to any of the Lands or Leases, which additional right,
title, and interest, when acquired, shall constitute
“Mortgaged Property,” the same as if expressly
described and conveyed herein.
1.5 Habendum . TO HAVE AND TO
HOLD all and singular the Mortgaged Property and all other Property
which, by the terms hereof, has or may hereafter become subject to
the Liens of this Deed of Trust, together with all rights,
hereditaments, and appurtenances in anywise belonging thereto, to
the Trustee or Mortgagee, as the case may be, or the successors or
assigns of either of them forever.
ARTICLE 2
INDEBTEDNESS
SECURED
This conveyance is made, IN TRUST,
HOWEVER, to secure and enforce the payment of the following
indebtedness, obligations, and liabilities:
2.1 Specific Obligations .
The Obligations, including, without limitation, the indebtedness
evidenced by (a) the Credit Agreement, and (b) the
Promissory Notes executed by Mortgagor to the order of the Lenders
pursuant to the Credit Agreement in the aggregate face amount of up
to $200,000,000, bearing interest and being payable as provided
therein or as provided in the Credit Agreement.
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2.2 Additional Indebtedness
.
(a) Payment of and performance of
any and all present or future obligations of Mortgagor under
Commodity Hedge Agreements, as defined in the Credit
Agreement.
(b) Payment of and performance of
any and all present or future obligations of Mortgagor under any
Rate Management Transaction, as defined in the Credit Agreement,
entered into by and between Mortgagor and a Lender.
(c) Payment of and performance of
any and all present or future obligations of Mortgagor under any
guaranty in favor of Lenders of any of the Mortgagor’s
subsidiary’s obligations under Commodity Hedge Agreements and
Rate Management Transactions and all present or future obligations
of Mortgagor or Mortgagor’s subsidiaries under Commodity
Hedge Agreements and Rate Management Transactions.
2.3 Other and Further
Indebtedness . This Deed of Trust is intended to secure a
revolving credit line as set forth in the Credit Agreement. If
intermediate paydowns by Mortgagor reduce the outstanding
Indebtedness to zero, it is intended that the Liens created under
this Deed of Trust shall remain in full force and effect as long as
any Commitment exists. In addition, it is contemplated that
Mortgagor may from time to time borrow additional sums of money
from or otherwise be or become obligated to Lenders. This Deed of
Trust is given to secure any and all indebtedness of Mortgagor,
present or future, either direct or indirect, primary or secondary,
fixed or contingent, which Mortgagor may now or hereafter owe, or
as to which Mortgagor may in any manner become obligated to Lenders
for payment, including, without limitation, indebtedness arising by
way of guaranty as to obligations of another to Lenders and
indebtedness originally owed to a party other than Lenders but
which becomes owing to Lenders as the result of Lenders having
acquired the right to payment thereof. This Deed of Trust shall
likewise secure not only the above described indebtedness, but any
and all renewals for any period, extensions, and rearrangements of
all or any portion thereof; and the Liens under this Deed of Trust
shall be cumulative of all other Liens and security of any and
every other kind or character whatsoever securing the
above-described indebtedness. Notwithstanding the foregoing, it is
not the intention of the parties hereto to extend the Liens of this
Deed of Trust so as to violate, or give rise to an allegation of
violation of, any provision of any statute, regulation, rule,
ordinance or order of any applicable jurisdiction, or any agency or
subdivision of any of such jurisdictions. In this connection, this
Deed of Trust shall not, solely as to the relevant indebtedness,
serve as security for any indebtedness when for it to do so would
violate any provision of any statute, regulation, rule, ordinance
or order of any applicable jurisdiction, or any agency or
subdivision of any of such jurisdictions.
2.4 Indebtedness . The word
“ Indebtedness ” wherever used in this Deed of
Trust shall refer to all present and future debts, obligations, and
liabilities described or referred to in this Article 2, subject,
however, to the limitations provided hereinabove in this Article
2.
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ARTICLE 3
WARRANTIES
3.1 Warranty of Title .
Mortgagor hereby binds itself, its legal representatives,
successors, and assigns, to warrant and forever defend all and
singular the Mortgaged Property to the Trustee and the successors
and assigns of the Trustee forever against every Person whomsoever
lawfully claiming or to claim the same or any part thereof.
Notwithstanding that this Deed of Trust covers all of the right,
title, and interest, whether now owned and existing or hereafter
acquired or arising, of Mortgagor in and to the Mortgaged Property,
Mortgagor, for itself, its legal representatives, successors, and
assigns, further covenants, represents, and warrants that Mortgagor
has good and indefeasible title to the Mortgaged Property and that
the interests of Mortgagor in and to the Leases and/or Lands
described in Exhibit A are not greater than the working
interest nor less than the net revenue interest, overriding royalty
interest, net profit interest, production payment interest, royalty
interest, or other interest payable out of or measured by
production set forth in connection with each oil and gas well
described in Exhibit A . In the event Mortgagor owns any
other or greater interest, such additional interest is nonetheless
included in, covered by, and subject to the liens and security
interests created by this Deed of Trust.
3.2 Additional Warranties .
In consideration of the Indebtedness, Mortgagor, for itself, its
legal representatives, successors, and assigns, covenants,
represents, and warrants that:
(a) Leases in Effect . All of
the Leases specifically described or referred to in Exhibit
A are in full force and effect. All covenants, express or
implied, in respect of the Leases specifically described or
referred to in Exhibit A , or of any assignment of any of
such Leases, which may affect the validity of any of such Leases,
have been performed insofar as such Leases pertain to the
Lands.
(b) Interests Free of Liens .
The interests of Mortgagor in the Mortgaged Property are free and
clear of all Liens except for Permitted Liens. All gross production
taxes and all taxes as to which non-payment could result in a Lien
against any of the Mortgaged Property have been paid.
(c) Representations and
Warranties . As of the date hereof, all representations and
warranties of Mortgagor set forth in the Credit Agreement are true
and correct in all material respects, except to the extent such
representations and warranties relate solely to an earlier date,
and all such representations and warranties are hereby remade by
Mortgagor to Mortgagee.
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ARTICLE 4
COVENANTS OF
MORTGAGOR
In consideration of the
Indebtedness, Mortgagor, for itself, its legal representatives,
successors, and assigns, covenants and agrees as
follows:
4.1 Maintenance of Leases .
Mortgagor will keep and continue all Leases, estates, and interests
herein described and all contracts and agreements relating thereto
in full force and effect in accordance with the terms thereof and
will not permit the same to lapse or otherwise become impaired for
failure to comply with the obligations thereof, whether express or
implied. In this connection, Mortgagor shall not release any of the
Leases without the prior written consent of Mortgagee.
4.2 Maintenance of Property .
Mortgagor will keep and maintain all improvements, personal
Property, and equipment now or hereafter situated on the Lands and
constituting a portion of the Mortgaged Property and used or
obtained in connection therewith in good repair and condition,
ordinary wear and tear excepted, and will not tear down or remove
the same or permit the same to be torn down or removed without the
prior consent of Mortgagee, except in the usual course of
operations as may be required for replacement when otherwise in
compliance with the provisions of this Deed of Trust and the Credit
Agreement.
4.3 Pooling or Unitization .
Mortgagor will not, without the prior written consent of Mortgagee,
pool or unitize all or any part of the Mortgaged Property where the
pooling or unitization would result in the diminution of the net
revenue interest of Mortgagor in production from the pooled or
unitized lands attributable to the Mortgaged Property constituting
a portion of such pooled or unitized lands. Immediately after the
formation of any pool or unit in accordance herewith, Mortgagor
will furnish to Mortgagee a conformed copy of the pooling
agreement, declaration of pooling, or other instrument creating the
pool or unit. The interest of Mortgagor included in any pool or
unit attributable to the Mortgaged Property or any part thereof
shall become a part of the Mortgaged Property and shall be subject
to the Liens hereof in the same manner and with the same effect as
though the pool or unit and the interest of Mortgagor therein were
specifically described in Exhibit A . In the event any
proceedings of any Governmental Authority which could result in
pooling or unitizing all or any part of the Mortgaged Property are
commenced, Mortgagor shall give immediate written notice thereof to
Mortgagee. Any pooling or unitization of all or any part of the
Mortgaged Property in violation of this Section shall be of no
force or effect against the Trustee or Mortgagee.
4.4 Operation of Mortgaged
Property . Mortgagor will operate or, to the extent that the
right of operation is vested in others, will exercise its best
efforts to require the operator to operate the Mortgaged Property
and all wells now or hereafter located thereon continuously and in
a prudent and workmanlike manner in accordance with the best usage
of the field and in accordance with all applicable Requirements of
Law. Mortgagor will comply with all terms and conditions of the
Leases and each assignment or contract obligating Mortgagor in any
way with respect to the Mortgaged Property; but nothing herein
shall be construed to empower Mortgagor to bind the Trustee or
Mortgagee to any contract or obligation or render the Trustee or
Mortgagee in any way responsible or liable for bills or obligations
incurred by Mortgagor.
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4.5 Compliance with Operating
Agreements . Mortgagor agrees to promptly pay all bills for
labor and materials incurred in the operation of the Mortgaged
Property and will promptly pay its share of all costs and expenses
incurred under any joint operating agreement affecting the
Mortgaged Property or any portion thereof; will furnish Mortgagee,
as and when requested, full information as to the status of any
joint account maintained with others under any such operating
agreement; will not take any action to incur any liability or Lien
thereunder; and will not enter into any new operating agreement or
any amendment of any existing operating agreement affecting the
Mortgaged Property without the prior written consent of Mortgagee.
To the extent that Mortgagor is unable to consent to any proposed
operation with respect to any of the Mortgaged Property, prior to
electing not to participate in the proposed operation, Mortgagor
will use its best efforts, to the extent practicable and to the
extent allowed to do so under the relevant operating agreement or
other applicable contract, to farmout to others acceptable to
Mortgagee, on the best terms obtainable and acceptable to
Mortgagee, the interest or relevant portion of the interest of
Mortgagor in the proposed operation.
4.6 Access to Mortgaged
Property . Mortgagor will permit Mortgagee and its accredited
agents, representatives, attorneys and employees, at the expense of
Mortgagor, at all times to go upon, examine, inspect, conduct
environmental audits and other testing of, and remain on, the
Mortgaged Property, and to go upon the derrick floor of any well at
any time drilled or being drilled thereon, and will furnish
Mortgagee, upon request, all pertinent information regarding the
development and operation of the Mortgaged Property.
4.7 Waivers . Mortgagor
hereby expressly waives, to the full extent permitted by applicable
law, any and all rights or privileges of marshalling of assets,
sale in inverse order of alienation, notices, appraisements,
redemption, and any prerequisite in the event of foreclosure of the
Liens created herein. Mortgagee at all times shall have the right
to release any part of the Mortgaged Property now or hereafter
subject to the Liens of this Deed of Trust, any part of the
proceeds of production or other income herein or hereafter assigned
or pledged, or any other security it now has or may hereafter have
securing the Indebtedness, without releasing any other part of the
Mortgaged Property, proceeds, or income, and without affecting the
Liens hereof as to the part or parts of the Mortgaged Property,
proceeds, or income not so released or the right to receive future
proceeds and income.
4.8 Compliance with Laws .
Mortgagor will comply with all Requirements of Law applicable to
the Mortgaged Property and the operations conducted thereon,
including, without limitation, the Natural Gas Policy Act of 1978,
as amended, and Environmental Laws; and cause all employees, crew
members, agents, contractors, sub-contractors, and future lessees
(pursuant to appropriate lease provisions) of Mortgagor, while such
Persons are acting within the scope of their relationship with
Mortgagor, to comply with all such Requirements of Law as may be
necessary or appropriate to enable Mortgagor to so
comply.
4.9 Hazardous Substances
Indemnification . M ORTGAGOR HEREBY INDEMNIFIES AND HOLDS M ORTGAGEE AND THE L ENDERS AND THEIR RESPECTIVE SHAREHOLDERS , OFFICERS , DIRECTORS , EMPLOYEES , AGENTS , ATTORNEYS - IN - FACT , AND AFFILIATES AND THE T RUSTEE HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS , LOSSES , DAMAGES , LIABILITIES , FINES , PENALTIES , CHARGES , ADMINISTRATIVE AND JUDICIAL PROCEEDINGS AND ORDERS , JUDGMENTS , REMEDIAL ACTIONS , REQUIREMENTS AND
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ENFORCEMENT ACTIONS OF ANY KIND , AND ALL COSTS AND EXPENSES INCURRED IN CONNECTION THEREWITH ( INCLUDING , WITHOUT LIMITATION , ATTORNEYS ’ FEES AND EXPENSES ), ARISING DIRECTLY OR INDIRECTLY , IN WHOLE OR IN PART , FROM ( A ) THE PRESENCE OF ANY H AZARDOUS S UBSTANCES ON , UNDER , OR FROM ANY M ORTGAGED P ROPERTY , WHETHER PRIOR TO OR DURING THE TERM HEREOF , ( B ) ANY ACTIVITY CARRIED ON OR UNDERTAKEN ON OR OFF ANY M ORTGAGED P ROPERTY , WHETHER PRIOR TO OR DURING THE TERM HEREOF , AND WHETHER BY M ORTGAGOR OR ANY PREDECESSOR IN TITLE , EMPLOYEE , AGENT , CONTRACTOR , OR SUBCONTRACTOR OF M ORTGAGOR OR ANY OTHER P ERSON AT ANY TIME OCCUPYING OR PRESENT ON ANY M ORTGAGED P ROPERTY , IN CONNECTION WITH THE HANDLING , TREATMENT , REMOVAL , STORAGE , DECONTAMINATION , CLEANUP , TRANSPORTATION , OR DISPOSAL OF ANY H AZARDOUS S UBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR UNDER SUCH P ROPERTY , ( C ) ANY RESIDUAL CONTAMINATION ON OR UNDER ANY M ORTGAGED P ROPERTY , ( D ) ANY CONTAMINATION OF ANY M ORTGAGED P ROPERTY OR NATURAL RESOURCES ARISING IN CONNECTION WITH THE GENERATION , USE , HANDLING , STORAGE , TRANSPORTATION , OR DISPOSAL OF ANY H AZARDOUS S UBSTANCE BY M ORTGAGOR OR ANY EMPLOYEE , AGENT , CONTRACTOR , OR SUBCONTRACTOR OF M ORTGAGOR WHILE SUCH P ERSONS ARE ACTING WITHIN THE SCOPE OF THEIR RELATIONSHIP WITH M ORTGAGOR , IRRESPECTIVE OF WHETHER ANY OF SUCH ACTIVITIES WERE OR WILL BE UNDERTAKEN IN ACCORDANCE WITH APPLICABLE R EQUIREMENTS OF L AW , OR ( E ) THE PERFORMANCE AND ENFORCEMENT OF THIS D EED OF T RUST OR ANY OTHER ACT OR OMISSION IN CONNECTION WITH OR RELATED TO THIS D EED OF T RUST OR THE TRANSACTIONS CONT
