DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT, AND ASSIGNMENT OF RENTS AND LEASES
Exhibit
10.11
DEED
OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT,
AND
ASSIGNMENT OF RENTS AND LEASES
NOTICE
OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE
ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR
RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S
LICENSE NUMBER.
1.
PARTIES AND PROPERTY CONVEYED
1.1 Quest
Oil
Corporation, a Nevada corporation (“Quest”),
and
its wholly owned subsidiary, and Wallstin Petroleum, LLC, a Texas limited
liability company (“Wallstin”),
hereafter called Grantors (whether one or more), for the purpose of securing
the
indebtedness described on Exhibit “A” attached hereto, have granted, sold and
conveyed to _________________, Trustee, whose address is
______________________________, and to his or her substitutes or successors,
for
and on behalf of the persons and entities described in Exhibit “A” attached
hereto (hereafter collectively referred to as "Beneficiary"), all of the
property described in Exhibit "B" attached to this agreement, and situated
in
Eastland and ▇▇▇▇▇▇▇▇▇▇ Counties, Texas (hereafter designated as the
"Property").
1.2 Grantors
hereby also convey to the Trustee named above the following described Property
and a security interest in that Property as follows:
(a)
The
Property, described in Exhibit "B," together with any and all improvements,
fixtures, equipment, property, and proceeds from the use or sale of these items
on the Property or hereafter placed on that property, including, but not limited
to all engines, motors, pumps, pump-jacks, tanks, heating equipment, pipelines,
flow lines, separators, gauges, meters, machinery and other personal property
used or furnished in connection with the operation, use and enjoyment of such
real Property and the improvements on it, and all renewals, replacements,
substitutions, and additions thereto, all of which property and fixtures shall
be deemed to be a part of and affixed to the Property; and
(b)
All
rents, royalties and proceeds from the Property, including all profits and
income from the oil, gas, and other hydrocarbons produced from the Property,
and/or received from the improvements described above; and
(c)
All
rights and privileges incident or pertaining to the Property.
1.3 The
expression “Grantors’ successors" as used in this agreement shall mean each,
every and all of the Grantors’ heirs, executors, administrators, personal
representatives, successors and assigns.
2.
PURPOSE
2.1 In
order
to permit the Trustee and his or her assigns or successors to hold the Property
together with all of the rights and privileges that go with the Property,
Grantors bind themselves, their heirs, executors, administrators, and assigns
to
warrant and forever defend the Property unto the Trustee, his or her substitutes
or successors and assigns forever, against the claim, or claims, of all persons
who claim the Property or any part of it.
2.2 In
addition to the Lien created above, Grantors grant to the Beneficiary, and
all
successors and assigns, a security interest in:
(a)
each
and every part of the Property, including, but not limited to, fixtures or
personal property; and
(b)
all
rents, revenues, royalties and other proceeds from the Property, including,
but
not limited to, the use, rent, sale, lease or other disposition of the Property;
and
(c)
any
and all sums, proceeds, funds and reserves described or referred to in this
agreement, providing that this grant of a security interest in proceeds shall
not be deemed to authorize any action otherwise prohibited by this
agreement.
3.
DEBT SECURED
3.1 This
conveyance and Deed of Trust are made in Trust to secure payment of the
indebtedness (hereinafter the “Debt”) executed by Grantors and payable to the
persons and entities described in Exhibit “A” attached hereto,
plus:
(a)
any
and all renewals or extensions of the Exhibit “A” indebtedness or any part
thereof;
(b)
all
loans and advances that Beneficiary may hereafter make to the Grantors, and
any
and all renewals or extensions of these amounts; and
(c)
all
other debts, obligations, and liabilities owed by Grantors to Beneficiary,
regardless of whether such debts, obligations and liabilities are direct or
indirect, primary or secondary, joint, several, joint and several, fixed, or
contingent, and regardless of whether such present or future debt, obligations
and liabilities may, prior to their acquisition by Beneficiary, be or have
been
payable to, or be or have been in favor of, some other person, or have been
acquired by Beneficiary in a transaction with one other than Grantors, together
with any and all renewals and extensions of such debts, obligations, and
liabilities, or any part thereof.
(d)
The
words "Secured Indebtedness", “Debt” or “indebtedness” shall mean all of the
indebtedness, obligations and liabilities described or referred to in this
instrument. The word "Holder" shall also mean the holder of the Secured
Indebtedness, Debt or indebtedness.
3.2 The
Debt
secured in this Agreement is payable as set forth in the individual instruments
which together constitute the Debt.
3.3 This
conveyance is also made in trust to secure and enforce the payment of all other
indebtedness of Grantors to Beneficiary presently existing or which may in
any
manner or means hereafter be incurred by Grantors.
3.4 It
is also
expressly agreed and understood that any and all sums now owed to or advanced
in
the future by the Beneficiary to Grantors shall be payable as set forth in
the
instruments which together constitute the Debt, and shall bear interest as
provided therein.
3.5 Default
under any Security Agreement signed by Grantors in favor of the Beneficiary
shall be an event of default under this agreement, and the breach of any
covenant under such Security Agreement shall give Beneficiary the right to
accelerate the payment under each and all instruments constituting the Debt,
and
to invoke all of the rights under those instruments, Security Agreements, and
accompanying Deeds of Trust, including this Deed of Trust.
3.6 The
Liens
created by this agreement shall continue in full force and effect until
expressly released by the Beneficiary, regardless of whether the debt secured
hereby may from time to time be paid in part or in full.
3.7 Should
Grantors do and perform all of the covenants and agreements in this instrument
contained, and make prompt payment of all indebtedness as it shall become due
and payable, then subject to any "future advances" or "other indebtedness"
clauses contained in this agreement, this conveyance shall become null and
void
and of no further force and effect, and may be released, at the expense of
Grantors, by the Beneficiary, Secured Party, or Lender interchangeably (whether
one or more).
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4.
ASSIGNMENT OF RENTS AND REVENUE
4.1 As
further security for the payment of the above-described indebtedness, Grantors
hereby transfer, assign, and convey unto Beneficiary all rents, royalties,
and
revenues that may issue from the Property and from the oil, gas and other
hydrocarbons that may be produced therefrom in accordance with the following
terms and provisions.
(a)
In
the event of any default in respect of the Debt, Beneficiary, its agent or
representative, is hereby authorized, at its option, to collect rents, revenues,
royalties and other proceeds, and apply them, less the reasonable costs and
expenses of collection, to the payment of the indebtedness, whether then matured
or to mature in the future, and in such manner as Beneficiary may elect.
(b)
The
collection of rents, royalties and revenues by Beneficiary shall not constitute
a waiver of his or her right to accelerate the maturity of the indebtedness,
nor
of his or her right to proceed with the enforcement of this Deed of
Trust.
4.2 The
transfer of rents, royalties, revenues, profits and income from the Property
is
specific in nature and irrevocable.
(a)
So
long as no default exists in the punctual payment of the indebtedness or in
the
keeping and performance of Grantors' covenants and obligations as stated in
this
document, Grantors may collect and retain the currently accruing rents,
royalties, revenues, profits and income from the Property.
(b)
In
the event, however, any of the indebtedness is not paid at its maturity,
regardless of how such maturity may be brought about, or if default is made
in
the keeping or performance of any of Grantor's covenants and obligations, then
at such time or at any time thereafter, while such or any subsequent default
continues, any Holder of the Debt may, personally or through an agent selected
by the Holder, take, or have the Trustee take, possession and control of the
Property, and receive and collect all rents, royalties, revenues, profits and
income accrued or accruing, as long as any of the indebtedness remains unpaid
or
until foreclosure of the Lien.
(c)
Any
amount collected prior to the sale of the Property shall be applied first to
the
expenses incident to such possession, control and collection, and second to
the
payment of the indebtedness.
(d)
The
Holder of the indebtedness, its agent, or the Trustee may use against Grantors
or any other persons, such lawful or peaceable means as they may see fit to
enforce the collection of any such rents, royalties, revenues, profits and
income, and to secure possession of the Property, and may settle or compromise
on any terms the Holder or the Trustee sees fit.
(e)
The
Holder or the Trustee may institute and prosecute to final conclusion actions
of
forcible entry and detainer, or actions of trespass to try title, or actions
for
damages, or any other appropriate actions in the name of the Holder or in the
name of Grantors or the Trustee, and may settle, compromise, or abandon any
such
actions as the Holder or the Trustee may see fit.
(f)
The
Grantors bind themselves to take whatever lawful or peaceful steps the Holder
or
the Trustee may ask them to take for such purposes; provided, however, neither
the Trustee nor the Holder of said indebtedness shall be required to collect
any
such rents, royalties, or income or be liable or chargeable for failure so
to
do.
5. CREATION OF SECURITY INTEREST
5.1 It
is
understood and agreed that by this document Grantors, in addition to fixing
and
creating a Deed of Trust Lien upon and against the Property, have also created
and granted to the Beneficiary, pursuant to the Uniform Commercial Code of
Texas, a Security Interest in the Property.
5.2 Without
limiting any of the provisions of this document, the Grantors, as Debtors,
and
referred to in this paragraph as "Debtors" (whether one or more), expressly
grant to the Holders of the Debt described in this agreement, as Secured Party
(and in this paragraph called "Secured Party," whether one or more), a secured
interest in all the Property to the full extent that such Property may be
subject to the Uniform Commercial Code (specifically, Chapter 9, Business and
Commerce Code of Texas, as amended) (hereinafter called the "Uniform Commercial
Code"), and covenant and agree with the Secured Party that:
(a)
In
addition to any other remedies granted in this document to the Secured Party
or
Trustee, the Secured Party may, in event of any default, proceed under the
Uniform Commercial Code as to all or any part of the personal property (tangible
or intangible) and fixtures included in or on the Property (such Property and
fixtures being herein referred to as the "Collateral"), and shall have and
may
exercise with respect to the Collateral all the rights, remedies, and powers
of
a Secured Party under the Uniform Commercial Code, including, without
limitation, the right and power to sell, at public or private sale or sales,
or
otherwise dispose of, lease, or utilize the Collateral, and any part or parts
thereof, in any manner authorized or permitted under the Uniform Commercial
Code
after default by a debtor, and to apply the proceeds first towards payment
of
any costs, expenses, attorney's fees, and legal expenses thereby incurred by
Secured Party, and second towards payment of the indebtedness described in
this
agreement.
(b)
Secured Party shall, in the event of default, have the right to take possession
of the Collateral, and to enter upon the premises where it is located, without
being deemed guilty of trespass and without liability for damages, and to take
any action deemed necessary or appropriate or desirable by Secured Party, at
its
option and in its discretion, to repair, refurbish or otherwise prepare the
Collateral for sale, lease, or other use or disposition as authorized in this
agreement.
(c)
To
the extent permitted by law, Debtors expressly waive any notice of sale or
other
disposition of the Collateral, and any other rights or remedies of a debtor,
or
formalities prescribed by law, relative to sale or disposition of the Collateral
or exercise of any other right or remedy of Secured Party existing after
default. To the extent any such notice is required and cannot be waived, Debtors
agree that if such notice is mailed postage prepaid to the Debtors at the
address shown opposite their signatures at least five days before the time
of
the sale of disposition, such notice shall be deemed reasonable and shall fully
satisfy any notice requirement.
(d)
The
Secured Party is also expressly granted the right, at its option, to transfer
at
any time to itself or to its nominee, the Collateral, or any part of it, or
to
receive the monies, income, proceeds or benefits attributable or accruing to
it,
and to hold the Collateral as security for the indebtedness or to apply it
to
the principal and interest or other amounts owing on any of the indebtedness,
whether or not then due, in such order or manner as Secured Party may elect.
All
rights to marshaling of assets of Debtors, including any such right with respect
to the Collateral are hereby waived.
(e)
No
other proof than this document is necessary to establish the full legal
propriety of the sale or other action, or of any fact, condition, or thing
incident thereto, and all prerequisites of such sale or other action, and of
the
fact, condition, or thing incident thereto, shall be presumed conclusively
to
have been performed or to have occurred.
(f)
Secured Party may require Debtors to assemble the Collateral and make it
available to Secured Party at a place to be designated by Secured Party that
is
reasonably convenient to both parties. All expenses of retaking, holding,
preparing for sale, selling, leasing or otherwise using or disposing of the
Collateral, that are incurred or paid by Secured Party as authorized or
permitted under this agreement, including all attorney's fees, legal expenses,
and costs, shall be added to the indebtedness secured by this document and
the
Debtors shall be liable for them.
(g)
This
Deed of Trust and Security Agreement, upon being filed for record in the real
estate records, shall operate also as a financing statement upon item of
Collateral that are, or may become, fixtures.
(h)
Any
copy of this document that is signed by Debtors may also serve as a Financing
Statement under the Uniform Commercial Code between the Debtors, whose addresses
are set forth opposite their respective signatures, and the Secured Party,
whose
address is set forth.
(i)
So
long as any amount remains unpaid on any indebtedness described in this
agreement, Debtors 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 Secured Party, unless the prior written
specific consent and approval of Secured Party shall have first been
obtained.
(j)
Secured Party is authorized to file a Financing Statement signed only by Secured
Party covering the Collateral. At the request of Secured Party, Debtors agree
to
join Secured Party in executing one or more Financing Statements, pursuant
to
the Uniform Commercial Code, in a form satisfactory to Secured Party, and will
pay the cost of filing and recording these documents 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 document is deemed by Secured
Party to be necessary or desirable.
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6.
GRANTORS' COVENANTS
Grantors
covenant and agree as follows:
6.1 Grantors
are lawfully seized of the Property, and have the right to convey it; that
the
Property is free from all Liens and encumbrances, recorded or unrecorded, except
as provided for by this agreement.
6.2 Grantors
will protect the title and possession of the Property and will pay, when due,
all taxes and assessments now existing or hereafter levied or assessed on the
Property, and will preserve and maintain the Lien created by this agreement
as a
first and prior Lien on the Property, including any improvements made to or
on
the Property.
6.3 Grantors
will keep the improvements on the Property in good repair and condition, and
not
permit or commit any waste on it.
6.4 Grantors
will insure and keep the Property, and all improvements now or hereafter created
upon it, insured against loss or damage by fire and windstorm, and any other
hazard or hazards, as may be reasonably required from time to time by
Beneficiary during the term of the indebtedness secured by this agreement,
and
name the Trustee of this Deed of Trust as the policy beneficiary to the extent
of the original amount of indebtedness secured, or to the extent of the full
insurable value of the improvements, whichever is the lesser, in such form
and
with such insurance company or companies as may be approved by the Beneficiary,
and deliver to the Beneficiary the policies of such insurance, having attached
to the policies such mortgage indemnity clauses as Beneficiary shall direct,
and
deliver renewals of such policies to Beneficiary at least ten days before any
such insurance policies shall expire.
(a)
Any
proceeds that Beneficiary may receive under any such policy, or policies, may
be
applied by Beneficiary, at its option, to reduce the indebtedness secured by
this agreement, whether then matured or to mature in the future, and in such
manner as Beneficiary may elect.
(b)
Beneficiary may at its sole option permit Grantors to use the proceeds of any
policy to repair or replace all improvements damaged or destroyed and covered
by
the policy.
6.5 In
the
event Grantors fail to keep the improvements on the Property hereby conveyed
in
good repair and condition, or to pay promptly, when due, all taxes and
assessments, or to preserve the prior Lien of this Deed of Trust on the
Property, or to keep the building and improvements insured as required by this
agreement, or to deliver the policy, or policies, of insurance, or their
renewal, to Beneficiary, as required, then Beneficiary may, at its option,
but
without being required to do so, make such repairs, pay such taxes and
assessments, remove any prior Liens, and prosecute or defend any suits in
relation to the preservation of the prior Lien of this Deed of Trust on the
Property, or insure and keep insured the improvements on the Property in an
amount not to exceed that above-stipulated.
Any
sums
that may be so paid out by Beneficiary, and all sums paid for insurance
premiums, including the costs, expenses and attorney's fees paid in any suit
affecting the Property when necessary to protect the Lien, shall bear interest
from the dates of such payments at the rate of 12% per annum, or such higher
sum
as may be deemed reasonable by a court of law, and shall be paid by Grantors
to
Beneficiary upon demand, at the same place at which the Note is payable, and
shall be deemed a part of the debt secured by this agreement and recoverable
as
such in all respects.
6.6 Grantors
shall comply with all restrictive covenants and all laws, ordinances,
regulations and rules, whether state, federal, or municipal, applicable to
the
Property and its ownership, use and occupancy.
(a)
Grantors have obtained all approvals, licenses, and permits necessary for the
ownership, use, and occupancy of the Property.
(b)
The
Property does not lie within any area designated by any governmental authority
as having flood hazard or flood prone characteristics.
6.7 Grantors
shall not sell, transfer, mortgage, encumber, convey or otherwise alienate
the
Property or any part thereof, or any interest therein, by means of any
instrument of conveyance, security or contract of any kind or character, without
of the prior written consent of the Holder.
6.8 Upon
breach of any of the covenants contained in this agreement, the Holder may,
at
its option, accelerate the maturity of all monies owed by Maker to
Beneficiary.
6.9 If
Grantors sell or transfer all or part of the Property without the Beneficiary's
prior written consent, the Beneficiary may declare the entire indebtedness
due
and payable.
6.10 The
Beneficiary may return at any time all payments tendered by Grantors or its
successors in interest without waiving any rights given to it by this
document.
6.11 The
Beneficiary shall not be deemed to have waived its option to accelerate maturity
of any or all sums secured by this Deed of Trust by accepting one or more
payments from Grantor or its successor in interest.
6.12 Beneficiary
may, at its option, require the payment of a processing fee for its services
in
processing a request for Beneficiary's consent to the transfer or assumption
of
the indebtedness secured by this Deed of Trust.
6.13 In
the
event the Beneficiary approves a future conveyance or encumbrance of the
Property, or any part thereof, and title becomes vested in a person or entity
other than Grantors, the Beneficiary may, without notice to Grantors, deal
with
such successor or successors in interest, legal or equitable, with reference
to
this Deed of Trust and the indebtedness secured hereby in the same manner as
with Grantors, without in any way vitiating or discharging Grantors' liability
under this agreement or on the Property.
6.14 No
sale
or mortgage of the Property, no forbearance on the part of the Beneficiary,
and
no extension of the time for the payment of indebtedness given by the
Beneficiary shall operate to release, modify, change, or affect the original
liability of Grantors, either in whole or in part.
7.
GRANTORS’ REPRESENTATIONS
Grantors
hereby further represent, agree, covenant and stipulate to the
following:
7.1 They
have
executed on the date of this agreement a Warrant or other loan and security
documents governing and controlling the indebtedness secured by this agreement,
the use of the proceeds of the loan, and the performance of Grantors in regard
to the indebtedness.
7.2 Each
term, condition, right, and duty of such documents, if any, are incorporated
into this agreement, and made a part of it as if expressly set forth in
it.
7.3 Violation
of any such document shall constitute material default under this
agreement.
7.4 If
any
term or condition of any such document be determined illegal or unenforceable
by
a Court of competent jurisdiction, the balance of all remaining terms,
conditions, rights, duties, and documents shall remain in full force and effect
as if such illegal or unenforceable item had been omitted
initially.
7.5 The
rights and remedies of Beneficiary, its successors or assigns, created under
this agreement and under the other said loan documents, are cumulative of,
and
in addition to, and not in lieu of, each other. Beneficiary, its successors
or
assigns, may exercise any or all of such rights and remedies as it may elect.
7.6 If
any of
the terms, covenants or conditions contained in any Security Agreement securing
the indebtedness described by this agreement appear inconsistent, contradictory,
or ambiguous, Grantors shall be bound by the decision of Beneficiary, its
successors or assigns, as to whether such conflict does in fact exist;
and
(a)
if
so, which term, covenant, or condition shall control; and
(b)
no
such inconsistency, ambiguity or contradiction, if the same shall be determined
to exist by Beneficiary, its successors or assigns, shall render all or any
part
of any such document void, voidable, ineffective or in any way impair
Beneficiary's rights and remedies thereunder.
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8.
DEFAULT AND REMEDIES
8.1 In
the
event of default in the payment of any installment, principal, or interest
of
the Debt secured by this agreement, or any other indebtedness that may be
cross-collateralized in the agreements that evidence the Debt or this Agreement,
in accordance with the terms of such agreement or agreements, or of a breach
of
any of the covenants contained herein or in the agreements evidencing the Debt
to be performed by Grantors, Beneficiary may elect to declare the entire
principal indebtedness, with all interest accrued thereon and all other sums
secured by this agreement, immediately due and payable, and Grantors hereby
expressly waive presentment and demand for payment.
(a)
In
the event of default in the payment of the indebtedness when due or declared
due, it shall be the duty of the Trustee, or his or successor or substitute,
at
the request of the Beneficiary (which request is hereby conclusively presumed),
to enforce this Trust by selling the Property secured by this Deed of Trust.
(b)
Trustee shall advertise the time, place, and terms of the sale of the Property
for at least 21 days preceding the date of sale by posting written or printed
notice of the sale at the Courthouse door and filing the Notice in the County
Clerk's office of the county where the Property is situated.
(c)
The
notice may be posted by the Trustee or by any person acting for him or her.
(d)
Beneficiary (the holder of the indebtedness secured hereby), or Trustee shall,
at least 21 days preceding the date of sale, serve written or printed notice
of
the proposed sale by certified mail on each debtor obligated to pay the
indebtedness secured by this Deed of Trust according to the records of
Beneficiary.
(e)
Such
notice shall be enclosed in a postpaid envelope, properly addressed to such
debtor at debtor's most recent address as shown by the records of Beneficiary,
in a post office or official depository under the care and custody of the United
States Postal Service.
8.2 The
Trustee shall thereafter also send Grantors any other notice required by
law.
8.3 The
Trustee shall sell the Property then subject to the Lien at public auction,
in
accordance with the laws of this state and in accordance with the terms of
the
notice which states the time period that the property shall be
sold.
(a)
The
property shall be sold at the Courthouse door of said county where such Property
is situated, on the first Tuesday in any month between the hours of ten o'clock
a.m. and four o'clock p.m., to the highest bidder for cash, cashier’s check or
any other equivalent which is acceptable to the holder of the Note or the
beneficiary, selling all of the Property as an entirety or in such parcels
as
the Trustee acting may elect, and make due conveyance to the Purchaser or
Purchasers, binding Grantors, their heirs and assigns.
(b)
If
the Property is situated in more than one county, the notice shall be posted
as
provided at the Courthouse door of each of such counties where the Property
is
situated, and the Property may then be sold at the Courthouse door of any one
of
such counties, and the notices so posted shall designate the county where the
Property will be sold.
(c)
Out
of the money arising from such sale, the Trustee shall first pay all the
expenses of advertising the sale and making the conveyance, including a
commission of five percent to himself or herself, which commission shall be
due
and owing in addition to the attorney's fees provided for in the Debt, and
then
pay to Beneficiary the full amount of principal, interest, attorney's fees
and
other charges due and unpaid on the Debt, and all other indebtedness secured
hereby, giving the balance of the sales price, if any, to Grantors, their heirs
or assigns.
(d)
The
recitals in the conveyance to the Purchase or Purchasers shall be full and
conclusive evidence of the truth of the matters therein stated, and all
prerequisites to the sale shall be presumed to have been performed, and such
sale and conveyance shall be conclusive against Grantors, their heirs and
assigns.
8.4 The
affidavit of any person having knowledge that service of notice of such proposed
sale was completed shall be prima facie evidence of the fact of service. In
this
respect and to the full extent they may legally do so, Grantors also expressly
covenant, stipulate and agree that:
(a)
The
address of Grantors set out opposite their signature hereto shall conclusively
be deemed and considered to be, and remain at all times, the most recent address
of Grantors obligated to pay such indebtedness as shown by the records of the
Holder of such indebtedness.
(b)
Such
address may be changed from time to time by express written notice of the change
signed by all debtors obligated to pay such indebtedness and actually delivered
to and received by the Holder of such indebtedness, setting forth a new address
which shall conclusively be deemed and considered to be, and remain at all
time
thereafter, the most recent address of all debtors obligated to pay such
indebtedness as shown by the records of the Holder of such indebtedness until
such address is changed in the manner provided for.
(c)
The
records of the Holder of such indebtedness will not be deemed to reflect any
change in the name or identity of the debtors obligated to pay the indebtedness
(to whom notice of a proposed sale shall be required to be mailed as provided
for above) unless and until express written notice of such changes by all
debtors obligated to pay such indebtedness is actually delivered to and received
by the Holder of the indebtedness, and no notice of the sale or sales other
than
the notices provided for by this agreement shall be required to be given to
Grantors or any other person, and any other notice is expressly
waived.
8.5 It
is
agreed that in the event a foreclosure under this agreement should be commenced
by the Trustee, or his or her substitute or successor, Beneficiary may at any
time before the sale of the Property direct the Trustee to abandon the sale,
and
may then institute suit for the collection of the Debt, and for the foreclosure
of this Deed of Trust Lien. It is further agreed that if Beneficiary should
institute such a suit it may, at any time before the entry of a final judgment
in the suit, dismiss it and require the Trustee, or his or her substitute or
successor, to sell the Property in accordance with the provisions of this Deed
of Trust.
8.6 Beneficiary
shall have the right to purchase at any sale of the Property if he or she is
the
highest bidder, and to have the amount for which such property is sold credited
on the debt then owing.
8.7 Beneficiary
is hereby authorized to appoint a substitute Trustee or a successor Trustee
to
act instead of the Trustee named in this agreement without other formality
than
the designation in writing of a substitute or successor trustee. The authority
hereby conferred shall extend to the appointment of other successor and
substitute Trustees successively until the indebtedness has been paid in full,
or until the Property is sold. Each substitute and successor Trustee shall
succeed to all of the rights and powers of the original Trustee.
8.8 Grantors
expressly waive and renounce the benefit of all present and future laws
providing for any appraisement before sale of any of the Property covered by
this Deed of Trust, commonly known as "appraisement laws," and all present
and
future laws extending in any manner the time for enforcement of collection
of
the indebtedness secured hereby, commonly known as "stay laws" and "redemption
laws."
8.9 If
any
sale is made of the Property, or any portion thereof, under the terms of this
Deed of Trust, Grantors, their heirs, and assigns, shall upon the making of
such
sale, surrender and deliver possession of the Property to the Purchaser at
such
sale, and in the event of their failure to do so they shall after the making
of
the sale be tenants at will of such Purchaser. In the event of their failure
to
surrender possession of the Property upon demand, the Purchaser, or his or
her
heirs or assigns, shall be entitled to institute and maintain an action for
forcible detainer of the Property in the Justice of the Peace Court in the
Precinct in which such Property, or any part of it, is situated.
8.10 It
is
agreed that the Lien hereby created shall take precedence over, and be a prior
Lien to, any other Lien of any character, whether vendor's, materialmen's,
or
mechanic's Lien created on the Property after the date of this agreement, and
in
the event the proceeds of the indebtedness secured by this agreement are used
to
pay off and satisfy any Liens existing on the Property prior to the date of
this
agreement, then Beneficiary is, and shall be, subrogated to all of the rights,
Liens and remedies of the Holders of the indebtedness so paid.
8.11 It
is
further agreed that if Grantors, their heirs or assigns, while owning the
Property, should commit an act of bankruptcy, or authorize the filing of a
voluntary petition in bankruptcy, or should an act of bankruptcy be committed
and involuntary proceedings instituted or threatened, or should the Property
be
taken over by a Receiver for Grantors, their heirs or assigns, the Exhibit
“A”
Debt shall, at the option of Beneficiary, immediately become due and payable,
and the acting Trustee may then proceed to sell the Property under the
provisions of this Deed of Trust.
8.12 It
is
agreed that if default is made in the payment of any installment of the Debt
secured by this Deed of Trust, or any other indebtedness that is cross
collateralized in this agreement, or if advancements are made under the terms
of
this Deed of Trust, the Holder shall have the option to proceed with foreclosure
in satisfaction of such items, either through the courts or by directing the
Trustee, or his or her successors in trust, to proceed as if under a
foreclosure, conducting the sale as provided, without declaring the whole debt
due.
(a)
If
the sale is made because of such default, such sale may be made subject to
the
un-matured part of the Debt secured by this Deed of Trust. It is agreed that
such sale, if so made, shall not in any manner affect the un-matured part of
the
debt secured by this Deed of Trust, but as to such un-matured part this Deed
of
Trust shall remain in full force and effect, just as though no sale had been
made under the provisions of this paragraph.
(b)
It is
further agreed that several sales may be made without exhausting the right
of
sale for any un-matured part of the debt secured, it being the purpose to
provide for a foreclosure and sale of the security for any matured portion
of
the debt secured without exhausting the power of foreclosure, and to sell the
security for any other part of the debt secured hereby whether matured at the
time or subsequently maturing.
8.13 Without
limiting any of the powers or remedies provided elsewhere herein, Grantors
agree
that in the event the indebtedness is payable in installments or includes,
at
any time, items of matured as well as un-matured indebtedness, the Holder of
the
matured installments or items of indebtedness, as the case may be, shall have
the right to have the Property sold, subject to the part of the secured
indebtedness that is un-matured at the time the Trustee is requested to make
such sale.
(a)
The
Trustee is expressly authorized and empowered to conduct such sale, which is
called an "installment foreclosure."
(b)
Any
such installment foreclosure made under this paragraph shall not affect the
Lien
securing that portion of the indebtedness to which the sale is to be made
subject.
(c)
No
installment foreclosures shall exhaust the power of the Trustee to conduct
future installment foreclosures, nor in any way limit the power of sale provided
elsewhere in this document. The provisions elsewhere in this document relating
to the manner of conducting Trustee's sales, including the advertising thereof,
shall also apply to any installment foreclosure.
8.14 The
filing of a suit to foreclose any Lien, mortgage or security interest hereunder,
either on any matured portions of the indebtedness or for the whole
indebtedness, shall never be considered to be an election so as to preclude
foreclosure, under any power of sale contained in this agreement, after
dismissal of the suit.
4
9.
Trustee Not Liable For Damages
9.1 Trustee
shall not be liable for any error of judgment or act done by Trustee, or be
otherwise responsible or accountable under any circumstances whatever.
9.2 Trustee
shall not be personally liable in case of entry by him or anyone acting by
virtue of the powers granted him upon the mortgaged premises for debts
contracted or liability or damages incurred in the management or operation
of
the mortgaged premises.
9.3 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 or believed by him in good faith to be genuine.
9.4 Trustee
shall be entitled to reimbursement for expenses incurred by him in the
performance of his duties hereunder and to reasonable compensation for such
of
his services hereunder as shall be rendered. Grantor will save and hold him
harmless from and against any and all loss, cost, liability, damage and expense
whatsoever incurred by him in the performance of his duties.
9.5 All
monies received by 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 monies (except to the extent required
by
law) and Trustee shall be under no liability for interest on any monies received
by him hereunder.
9.6 Trustee
may resign by giving of notice of such resignation in writing to Beneficiary.
If
Trustee shall die, resign or become disqualified from acting in the execution
of
this Trust or fail or refuse to exercise the same when requested by Beneficiary
so to do or if for any reason and without cause Beneficiary shall prefer to
appoint a substitute trustee to act instead of the original Trustee named
herein, or any prior successor or substitute trustee, Beneficiary shall have
full power to appoint a substitute trustee and, if preferred, several substitute
trustees in succession who shall succeed to all the estate, rights, powers
and
duties of the Trustee.
9.7 Such
appointment may be executed by an authorized officer, agent or attorney-in-fact
of Beneficiary (whether acting pursuant to a power of attorney or otherwise),
and such appointment shall be conclusively presumed to be executed with
authority and shall be valid and sufficient without proof of any action by
the
Board of Directors or any superior officer of Beneficiary.
9.8 Any
new
Trustee appointed pursuant to any of the provisions hereof shall, without any
further act, Deed of conveyance, become vested with all the estates, properties,
rights, powers and trusts of its or his predecessor in the rights hereunder
with
like effect as if originally named as Trustee herein; but, nevertheless, upon
the written request of Beneficiary or his successor trustee, the Trustee ceasing
to act shall execute and deliver an instrument transferring to such successor
trustee, upon the trust herein expressed, all the estates, properties, rights,
powers and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver any of the property and monies held by the Trustee to
the
successor trustee so appointed in its or his place.
9.9 Trustee
may authorize one or more parties to act on his behalf to perform the
ministerial functions required of him hereunder, including, without limitation,
the transmittal and posting of any notices.
9.10 Trustee
shall not be required to take any action toward the execution and enforcement
of
the trust hereby created or to institute, appear in or defend any action, suit
or other proceeding in connection therewith where in his opinion such action
will be likely to involve him in expense or liability, unless requested to
do so
by a written instrument signed by Beneficiary and, if Trustee so requests,
unless Trustee is tendered security and indemnity satisfactory to him against
any and all costs, expenses and liabilities arising therefrom.
10.
GENERAL PROVISIONS
10.1 In
the
event any item, term, or provision contained in this document is in conflict,
or
may hereafter be held to be in conflict, with the laws of Texas, this document
shall be affected only as to its application to such item, term or provision,
and shall in all other respects remain in full force and effect. In no event
and
upon no contingency shall Grantors be required to pay interest in excess of
the
maximum interest that may be lawfully charged by the Holder of the indebtedness
under the laws of the State of Texas.
10.2 The
execution and delivery of this Deed of Trust shall not impair or affect any
other security (by endorsement or otherwise) for the payment of the secured
indebtedness, and no security taken hereafter as security for payment of any
part, or all, of the obligation shall impair in any manner or affect this Deed
of Trust, all such present and future additional security being considered
as
cumulative security.
(a)
Any
of the property or collateral secured hereby may be released or partially
released from this Deed of Trust without altering, varying, or diminishing
in
any way the force or effect of this Deed of Trust as to the Property or
Collateral not expressly released.
(b)
This
Deed of Trust shall continue as a first Lien, security interest, and charge
on
all of the Property and Collateral not expressly released until all sums and
indebtedness secured by this agreement have been paid in full. Any future
assignment or attempted assignment or transfer of the interest of Grantors
in
and to any of the Property or Collateral described above shall not deprive
the
Beneficiary of the right to sell or otherwise dispose of all or any part of
the
Property.
10.3 It
is
agreed that a time extension, or time extensions, may be made concerning the
payment of all, or any part, of the indebtedness secured by this agreement
without altering or affecting the priority of the Lien created by this Deed
of
Trust.
10.4 In
the
event any portion of the indebtedness cannot be lawfully secured by this Deed
of
Trust Lien on the Property, it is agreed that the first payments made on the
indebtedness shall be applied to the discharge of such portion of the
indebtedness.
10.5 Beneficiary
is entitled to receive any and all sums that may become payable to Grantors
for
the condemnation of the Property, or any part thereof, for public or
quasi-public use, or by virtue of private sale in lieu of condemnation, as
well
as any sums that may be awarded or become payable to Grantors for damages caused
by public works or construction on or near the Property.
(a)
All
such sums are assigned to Beneficiary, who may, after deducting all expenses
actually incurred, including attorney's fees, release the remainder of the
amount to Grantors or apply it to the reduction of the secured indebtedness,
whether then matured or to mature in the future, or on any money obligation
under this agreement, as and in such manner as Beneficiary may elect.
(b)
Beneficiary shall not, in any event or circumstances, be liable or responsible
for failure to collect, or to exercise diligence in the collection of, any
such
sums.
10.6 Nothing
contained herein shall ever entitle Beneficiary, upon the arising of any
contingency whatsoever, to receive or collect interest in excess of the highest
rate allowed by the laws of the State of Texas on the principal indebtedness,
or
on any money obligation under this agreement, and in no event shall Grantors
be
obligated to pay interest in excess of such rate.
10.7 If
this
Deed of Trust is executed by only one person or by a corporation, the plural
reference to Grantors shall be held to include the singular, and all of the
covenants and agreements undertaken to be performed by, and the rights conferred
upon, the respective Grantors shall be binding upon and inure to the benefit
of
not only the parties, but also their heirs, executors, administrators, grantees,
successors, and assigns.
10.8 The
Grantors hereby agree to furnish the Beneficiary with proof that insurance
premiums and property taxes have been paid on the property on a timely basis,
in
order to assure the Beneficiary that the property is insured and that insurance
coverage cannot or has not lapsed and that property taxes shall not become
delinquent. Grantors agree to furnish the Beneficiary with such verification
as
the Beneficiary may reasonably require throughout the duration of the
Debt.
10.11 It
is
agreed that an extension may be made at the time of the payment and that any
part of the above described property may be released from this Lien without
affecting the priority of the Lien which was created by this original dead
of
trust in favor of any junior Lien holder, mortgagee or purchaser or any other
persons acquiring interest in the property that has been conveyed. It is the
intention of the parties in this document to preserve the Lien priority on
the
property which has been described herein on all improvements referred to in
this
Deed of Trust.
Signed
on
September ___, 2005.
Grantors:
Quest
Oil
Corporation, a Nevada corporation
By:
________________________________
Its:
________________________________
Wallstin
Petroleum, LLC, a Texas limited liability company
By:
_________________________________
Its:
_________________________________
5
STATE
OF
TEXAS §
§
COUNTY
OF
§
This
instrument was acknowledged before me on the __
day
of
______________, 2005, by ________________________, _________________ of Quest
Oil Corporation, a Nevada corporation, on behalf of said
corporation.
__________________________
Notary
Public, State
of Texas
Notary’s
commission expires:
STATE
OF
TEXAS §
§
COUNTY
OF
§
This
instrument was acknowledged before me on the _
day
of
______________, 2005, by ________________________, _________________ of Wallstin
Petroleum, LLC, a Texas Limited Liability Company, on behalf of said
company.
Notary
Public, State
of Texas
Notary’s
commission expires:
6
EXHIBIT
“A”
LIST
OF
INVESTORS
7
EXHIBIT
“B”
1.
Oil, Gas and Mineral Leases:
All
of
Grantors’ interest in the following oil, gas and mineral leases:
▇▇▇
Lease
Oil
and
Gas Lease dated June 30, 1981, between ▇▇▇▇▇▇▇ ▇▇▇, as Lessor, and ▇▇▇▇
Zelienski et al., as Lessee, recorded in Volume 760, Page 604, Deed Records
of
Eastland County, Texas, as amended by instrument executed December 28, 1981,
and
recorded in Volume 773, Page 626, Deed Records of Eastland County, Texas, and
as
corrected by instrument executed April 28, 1982, and filed for record under
File
No.82-14323 in the Official Public or Real Property Records of Eastland County,
Texas, covering the NE/4 of Section 76, Block 3, H&TC Ry. Co. Survey,
A-1328, in Eastland County, Texas, SAVE AND EXCEPT 26.3944 acres, more or less,
out of the W/2 of S/3 of such tract, all as more particularly described in
said
Lease, as amended and corrected.
▇▇▇▇▇▇▇
Lease
Oil,
Gas,
and Mineral Lease dated April 13, 1972 between ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Lessor,
and
▇.▇. ▇▇▇▇▇▇▇▇ et al., as Lessee, covering the W/2 of S/3 of NE/4 of Section
76,
Block 3. H&TC Ry. Co. in Eastland County, Texas, containing 26.3944 acres,
more or less, as recorded in Volume 782, Page ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇.
▇▇▇▇▇▇
"B" Lease
Oil,
Gas,
and Mineral Lease granted in Agreed Judgment and Lease dated January 18, 1983
in
Cause No. 30,165, in the 91st Judicial District Court, Eastland County, Texas,
in the lawsuit styled West
Texas Mineral Interests, Inc. vs. ▇▇▇ ▇▇▇▇▇▇▇▇▇, Commissioner of the General
Land Office of the State of Texas
covering
the SE/4 of Section 76 Block 3, H&TC Ry. Co. Survey, ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ as more fully described in instrument dated March 7,
1983, and recorded in Volume 816, Page 222, Official Public Records of Eastland
County, Texas.
▇▇▇▇▇▇
“A” Lease
Oil,
Gas
and Mineral Lease dated October 28, 2004 between, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as Lessor,
and
Wallstin Petroleum, LLC, as Lessee, covering the NW/4 of ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇
▇,
▇&▇▇ ▇▇. Co. Survey, Abstract 245, being 160 acres, more or less, in
Eastland County, Texas, and said Lease being recorded in Volume 02285, pages
83
and 84, Official Public Records of Eastland County, Texas.
▇▇▇▇▇▇
▇▇▇▇▇▇▇ Lease
Being
116.3 acres, more or less, out of the NE corner of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇, ▇▇▇▇▇▇▇▇ 45, Certificate ▇▇. ▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, patented
to
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ by Patent No. 642, Volume II, and described by metes and bounds
as follows:
Beginning
at the NE corner of Survey No. 1055 for NE corner of this tract: THENCE with
the
East line of said Survey No. 1055, South 558.6 varas to a stake; THENCE N 67
W
1,281 varas to a stake for the SW corner of this tract, from which a mesquite.
10” in diameter bears. S 83 ½ E 44 varas; THENCE North 23 E 00 varas to a stake
in the South line of a public road; THENCE with the South line of said public
road S 67 E 1,242 varas to the place of beginning.
2.
Other Interests:
All
right, title and interest of Grantors (including, without limitation, the right
to receive payments due Grantors as the Seller under any of said contract)
under
all gas sales contracts, oil, gas, condensate or other product sales contracts
and division orders now existing or which may, prior to the final release of
this Mortgage, be hereafter made in connection with any of the above described
leases, including all such contracts relating to the oil, gas and mineral
leases, units, lands, pipeline or pipeline gathering systems conveyed and
assigned in this instrument; together with all of Grantors’ title, interest and
rights, including the right to receive oil, gas and mineral production, in
all
oil or gas units in which any of the above Oil, Gas and Mineral Leases are
now
or hereafter pooled or unitized for oil or gas operation or production; provided
that nothing herein shall be construed as authorized Grantors to execute any
future unit declaration or agreement which will affect the lands covered by
the
above Oil, Gas and Mineral Leases without the prior consent of the Beneficiary
named in the foregoing Deed of Trust.
8