Loading...
HomeMy WebLinkAbout967088WHEN RECORDED, RETURN TO: Thompson Knight LLP 333 Clay Street, Suite 3300 Houston, Texas 77002 Attention: Andrew Flint RECEIVED 9/27/2012 at 3:11 PM RECEIVING 967088 BOOK: 795 PAGE: 1 JEANNE WAGNER LINCOLN COUNTY CLERK, KEMMERER, WY SPACE ABOVE THIS LINE FOR RECORDER'S USE MORTGAGE, ASSIGNMENT, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT FROM LINC ENERGY (WYOMING), INC. Grantor, 516181 000006 525084.1 TO FCCD (AUSTRALIA) NOMINEE PTY LTD ACN 134 182 657, Grantee Security Trustee Dated as of: September S 2012 0000.1. THIS INSTRUMENT CONTAINS AFTER- ACQUIRED PROPERTY PROVISIONS, SECURES PAYMENT OF FUTURE ADVANCES, AND COVERS PROCEEDS OF COLLATERAL. THIS INSTRUMENT COVERS, AMONG OTHER THINGS, (A) GOODS WHICH ARE OR ARE TO BECOME FIXTURES RELATED TO THE REAL PROPERTY DESCRIBED HEREIN, AND (B) AS- EXTRACTED COLLATERAL RELATED TO THE REAL PROPERTY DESCRIBED HEREIN (INCLUDING WITHOUT LIMITATION COAL, COALBED METHANE, OIL, GAS, OTHER MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE EXTRACTED FROM THE EARTH AND ACCOUNTS ARISING This Document Prepared By Andrew P. Flint, Esq., Thompson Knight LLP 333 Clay Street, Suite 3300 Houston, Texas 77002 516181 000006 525084.1 00007 OUT OF THE SALE AT THE WELLHEAD OR MINEHEAD THEREOF). THIS INSTRUMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE OR COMPARABLE RECORDS OF THE COUNTIES REFERENCED IN EXHIBIT A HERETO AND SUCH FILING SHALL SERVE, AMONG OTHER PURPOSES, AS A FIXTURE FILING AND AS A FINANCING STATEMENT COVERING AS- EXTRACTED COLLATERAL. THE GRANTOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE CONCERNED, WHICH INTEREST IS DESCRIBED IN SECTION 1.1 OF THIS INSTRUMENT. A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW SECURITY TRUSTEE (AS HEREINAFTER DEFINED) TO TAKE THE MORTGAGED PROPERTTES AND SELL THEM WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON EVENT OF DEFAULT BY THE GRANTOR (AS HEREINAFTER DEFINED) UNDER THIS MORTGAGE. TABLE OF CONTENTS 0 Page ARTICLE 1 WARRANTlFa;S, REPRESENTATIONS AND COVENANTS OF GRANTOR 5 SECTION 1.1. Payment and Performance 5 SECTION 1.2. Good Title. 5 SECTION 1.3. Recording Documentation To Assure Security Interest; Fees and Expenses 6 SECTION 1.4. Payment of Taxes, Insurance Premiums, Assessments; Compliance with Law and Insurance Requirements. 7 SECTION 1.5. Certain Tax Law Changes 8 SECTION 1.6. Required Insurance 8 SECTION 1.7. Failure To Make Certain Payments 9 SECTION 1.8. Grantor's Obligations with Respect to Subleases. 9 SECTION 1.9. Transfer Restrictions 11 SECTION 1.10. Intentionally Omitted. 12 SECTION 1.11. Other Information 12 SECTION 1.12. No Claims Against Security Trustee 12 SECTION 1.13. Mortgaged Leases. 12 ARTICLE 2 ASSIGNMENT OF LEASES AND SUBLEASES; SECURITY AGREEMENT; ASSIGNMENT AGREEMENT 14 SECTION 2.1. Assignment of Leases and Subleases, Rents, Issues and Profits. 14 SECTION 2.2. Security Interest in Personal Property. 16 SECTION 2.3. Fixture and As- Extracted Collateral Filing 16 ARTICLE 3 EVENTS OF DEFAULT AND REMEDIES 17 SECTION 3.1. SECTION 3.2. SECTION 3.3. SECTION 3.4. SECTION 3.5. SECTION 3.6. ARTICLE 4 CERTAIN DEFINITIONS 21 ARTICLE 5 MISCELLANEOUS 22 SECTION 5.1. SECTION 5.2. SECTION 5.3. SECTION 5.4. SECTION 5.5. SECTION 5.6. Events of Default 17 Remedies in Case of an Event of Default 17 Sale of Mortgaged Property if Event of Default Occurs; Proceeds of Sale. 18 Additional Remedies in Case of an Event of Default 19 Legal Proceedings After an Event of Default. 19 Remedies Not Exclusive 20 Severability of Provisions 22 Notices 22 Covenants To Run with the Land 22 Headings 22 Limitation on Interest Payable 22 Indemnity 23 i SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION 5.7. Intentionally Omitted 23 5.8. Intentionally Omitted 23 5.9. Governing Law; Terms 23 5.10. Waiver of Jury Trial 24 5.11. No Merger 24 5.12. Modification in Writing 24 5.13. No Credit for Payment of Taxes or Impositions 24 5.14. Stamp and Other Taxes 25 5.15. Estoppel Certificates 25 5.16. Additional Security 25 5.17. Release 25 5.18. Certain Expenses of Security Trustee 25 5.19. Expenses of Collection 26 5.20. Business Days 26 5.21. Relationship 26 5.22. Intentionally Omitted. 26 5.23. Waiver of Stay. 26 5.24. Continuing Security Interest; Assignment 27 5.25. Obligations Absolute 27 5.26. Security Trustee's Right To Sever Indebtedness. 28 ii 13J 00� MORTGAGE, ASSIGNMENT, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT RECITALS: 0000 THIS MORTGAGE, ASSIGNMENT, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT (this "Mortgage is dated September C 2012 and made by LINC ENERGY (WYOMING), INC., a Delaware corporation, with an address of 1000 Louisiana, Suite 1500, Houston, Texas 77002, as Grantor (in such capacity and together with any successors in such capacity, "Grantor in favor of FCCD (AUSTRALIA) NOMINEE PTY LTD ACN 134 182 657, as Security Trustee, with an address of Level 43, AMP Centre, 50 Bridge Street, Sydney Australia 2000 (in such capacity and together with any successors in such capacity, "Security Trustee A. Line Energy Ltd ABN 60 076 157 045, an Australian corporation ("Borrower"), has been provided certain credit facilities in the maximum aggregate amount of One Hundred Twenty Million Australian Dollars (AUS $120,000,000) (collectively, the "Funding Portions as evidenced by that certain Loan Facility Agreement dated January 24, 2012, as amended and restated pursuant to Amending Deed No. 1 (Loan Facility Agreement) dated September 5, 2012 among Borrower, various subsidiaries, including Grantor, as guarantors, the financiers named therein (the "Financiers FCCD (Australia) Pty Ltd ACN 134 182 380, as Agent "Agent and arranger, and Security Trustee, as security trustee under the security trust created pursuant to that certain Security Trust Deed dated January 24, 2012 between Borrower and others and Security Trustee (as the same may, from time to time, be supplemented, amended or modified, and all other agreements given in substitution therefor or in restatement, renewal or extension thereof, in whole or in part, the "Loan Agreement with the Funding Portions having a maturity date of July 24, 2015. Capitalized terms used in this Mortgage and not defined herein shall have the meanings ascribed to them in the Loan Agreement or in the other Transaction Documents (as hereafter defined), as the case may be. B. Grantor has, by its execution and delivery of the Loan Agreement and pursuant to Section 11 therein, executed and delivered a guaranty for the benefit of Financiers, Agent and Security Trustee (as the same may be amended, restated, renewed, extended, supplemented or otherwise modified from time to time, the "Guaranty pursuant to which the Grantor has guaranteed the prompt payment and performance when due of all obligations and indebtedness of Borrower under the Loan Agreement, including without limitation the obligations of Borrower to make payments thereunder. C. It is a condition precedent to the extension by Financiers of the Funding Portions that Grantor shall have granted (and as security for its obligations under the Guaranty, Grantor does hereby grant) the liens and security interests and undertaken the obligations contemplated by this Mortgage. D. The Loan Agreement, the Guaranty and all other agreements, documents and instruments now or hereafter evidencing, and/or pertaining to the Funding Portions and/or the other Secured Moneys (as defined herein), and as may be further amended, supplemented or 1 otherwise modified from time to time, shall be hereinafter referred to collectively as the "Transaction Documents." GRANTING CLAUSES: 0000) For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor hereby grants, BARGAINS, SELLS, CONVEYS, TRANSFERS, ASSIGNS, and SETS OVER to Security Trustee and grants to Security Trustee a POWER OF SALE (pursuant to this Mortgage and applicable law), and hereby grants to Security Trustee, a lien and security interest, in and upon the following property, whether now owned or held or hereafter acquired from time to time (collectively, the "Mortgaged Property A. All of the interests and estates in, to and under real property described in Schedule A (the "Land together with all easements, rights -of -way, reversions, sidewalks, strips and gores of land, drives, roads, curbs, streets, ways, alleys, passages, passageways, sewer rights, waters, water courses, water rights, minerals (including but not limited to coal), gas and oil rights, and power, air, light and other rights, estates, titles, interests, privileges, liberties, servitudes, licenses, tenements, hereditaments and appurtenances whatsoever, in any way belonging, relating or appertaining to the Land and/or described in Schedule A or any part thereof, or which hereafter shall in any way belong, relate or be appurtenant to the Land; B. The lessee's interests and estates in those certain leases and subleases set forth in Schedule B together with all Grantor's right, title and interests all other leases and subleases of land or real property interests, wherever such interests may be located in the county where this Mortgage is to be recorded (the "Mortgaged Leases and all recorded or unrecorded extensions, amendments, supplements and restatements thereof, together with all right, title and interest of the lessee under the Mortgaged Leases in and to any and all easements, rights -of -way, reversions, sidewalks, strips and gores of land, drives, roads, curbs, streets, ways, alleys, passages, passageways, sewer rights, waters, water courses, water rights, minerals (including but not limited to coal and coalbed methane), gas and oil rights, and power, air, light and other rights, estates, titles, interests, privileges, liberties, servitudes, licenses, tenements, hereditaments and appurtenances whatsoever, in any way demised under the Mortgaged Leases or belonging, relating or appertaining to the real property demised under the Mortgaged Leases and/or described in Schedule B or any part thereof, or which hereafter shall in any way be demised under the Mortgaged Leases or belong, relate or be appurtenant to such real property(collectively, the "Leased Premises C. And all estates or interests of Grantor in as- extracted collateral (as such term is defined in the Uniform Commercial Code as in effect in the State of Wyoming), including but not limited to coal and coal methane, gas and oil, and all other inventory of whatever type, and including without limitation, as extracted collateral and inventory extracted or produced from or otherwise belonging, relating or appurtenant to the Land or the Leases Premises (collectively, the "Inventory D. Any and all estates or interests of Grantor in all tipples, loading and coal washing facilities, conveyors, railroad tracks, buildings, foundations, structures and other fixtures and improvements and all materials now or hereafter intended for construction, reconstruction or 2 0000' repair thereof, in each case now or hereafter located or erected on, in or under the Leased Premises, including, without limitation, attachments, walks and ways (collectively, the "Improvements together with the Land and the Leased Premises, the "Premises E. Any and all interests of Grantor in and to any and all permits, certificates, authorizations, consents, approvals, licenses, franchises, waivers or other instruments now or hereafter required by any Government Agency (as hereinafter defined) to operate or use and occupy the Premises and the Equipment (as hereinafter defined) for its intended uses, including, without limitation, building permits, certificates of occupancy, environmental certificates, industrial permits or licenses and certificates of operation (collectively, the "Permits F. Any and all interests of Grantor in all machinery, apparatus, equipment, fittings, fixtures, improvements, goods and articles of personal property of every kind and nature whatsoever (together with all substitutions and replacements for, and all accessions, additions and attachments to any thereof) now or hereafter located on, in or under the Premises, attached or affixed to the Premises or used or useful in connection with the use and enjoyment of the Premises (or any other lands any production from which, or profits or proceeds from such production, is attributed to any interest in the Land or Leased Premises or to any interest described in Schedule A or Schedule B annexed hereto) or used or useful in connection with mining coal or other minerals or in connection with any Related Activities (as hereinafter defined) or the maintenance or preservation thereof, including, without limitation, all trade fixtures, plants, storage tanks, product transportation equipment, utility systems, fire sprinkler and alarm systems, HVAC equipment, boilers, electronic data processing, telecommunications or computer equipment, refrigeration, electronic monitoring, water or lighting systems, power, sanitation, waste removal, elevators, maintenance or other systems or equipment, and all other articles used or useful in connection with the use or operation of any part of the Premises (collectively, the "Equipment G. Any and all interests of Grantor as lessor, landlord, sublessor, sublandlord, franchisor, licensor or Grantor, in all leases and subleases, land or improvements, leases and subleases of space, coal, coalbed methane, oil, gas and mineral leases, franchise agreements, licenses, occupancy or concession agreements now existing or hereafter entered into relating in any manner to the Premises or the Equipment and any and all amendments, modifications, supplements and renewals of any thereof (each such lease, sublease, license or agreement, together with any such amendment, modification, supplement or renewal, a "Sublease whether now in effect or hereafter coming into effect, including, without limitation, all rents, additional rents, royalties, cash, guaranties, letters of credit, bonds, sureties or securities deposited thereunder to secure performance of the lessee's, sublessee's, franchisee's, licensee's or obligee's onligations thereunder, revenues, earnings, profits and income, advance rental or royalties, payments, payments incident to assignment, sublease or surrender of a Sublease, claims for forfeited deposits and claims for damages, now due or hereafter to become due, with respect to any Sublease, any indemnification against, or reimbursement for, sums paid and costs and expenses incurred by Grantor under any Sublease or otherwise, and any award in the event of the bankruptcy of any tenant or lessee under or guarantor of a Sublease (collectively, the "Rents 3 0000 H. And all interests of Grantor in all general intangibles, accounts and contract rights relating to the Premises, the Inventory, the Sublease or the Equipment and all reserves, deferred payments, deposits, refunds and claims of every kind or character relating thereto (collectively, the "Contract Rights I. Any and all interests of Grantor in all books, records, drawings, plans, specifications, file materials, operating and maintenance records, catalogues, tenant lists, correspondence, advertising materials, operating manuals, warranties, guaranties, appraisals, studies and data relating to the Premises, the Inventory, any Sublease, the Contract Rights or the Equipment or the construction of any Alteration or the maintenance of any Permit; and J. All proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims, including, without limitation, proceeds of insurance and condemnation or other awards or payments and refunds of real estate taxes and assessments, including interest thereon (collectively, "Proceeds provided, however, that Mortgaged Property shall not include any items of property described in the Granting Clauses above to the extent that Grantor is expressly prohibited from granting an Encumbrance (as hereinafter defined) thereon or applicable law provides for involuntary forfeiture of the property in the event that an Encumbrance is granted thereon without the consent of the appropriate Person or Government Agency; provided, however, that in the event of the termination or elimination of any prohibition or requirement for any consent contained in any law, rule, regulation, license, franchise, certificate, consent, approval, authorization or other document, or upon the granting of any consent, the items of property so excluded from the definition of Mortgaged Property by virtue of this proviso shall (without any act or delivery by any Person) constitute Mortgaged Property hereunder. TO HAVE AND TO HOLD the Mortgaged Property unto the Security Trustee, and its successors as substitutes in this trust, and to its or their successors and assigns, in trust, however, upon the terms, provisions and conditions herein set forth, for the purpose of security, on a first priority basis, the prompt payment or performance in full when due, whether at stated maturity, by requested prepayment, declaration, acceleration, demand or otherwise (including without limitation the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code), of all "Secured Moneys," as defined and described in Schedule C, attached hereto and incorporated herein by reference. The beneficial owner of the Secured Moneys secured by this Mortgage is FCCD (Australia) Pty Ltd, Level 43, AMP Centre, 50 Bridge Street, Sydney Australia 2000, as Agent. 4 COVENANTS Grantor warrants, represents and covenants as follows: ARTICLE 1 WARRANTIES, REPRESENTATIONS AND COVENANTS OF GRANTOR 00009 SECTION 1.1. Payment and Performance. Grantor shall pay and perform (or cause to be paid and performed) in full as and when the same shall become due (after giving effect to all applicable grace periods) (whether at stated maturity, by acceleration or otherwise) all of the Secured Moneys. SECTION 1.2. Good Title. 1.2.1. Grantor represents, warrants and covenants that (i)(a) Grantor (1) has good and marketable title to or a valid leasehold interest in the interest and estate of Grantor in the Land and all Improvements located on the Land, owns the lessee's interest in each Mortgaged Lease and that each Mortgaged Lease is a valid subsisting lease, superior and paramount to all other leases respecting the property to which such Mortgaged Lease relates, (2) owns the landlord's or lessor's interest and estate under or in respect of the Subleases and (3) has good and marketable title to all other property constituting Mortgaged Property (including each of the Permits, the Inventory, the Equipment, the Contract Rights and the Improvements) located on, in or under the Lands and the Leased Premises, in each case set forth in clauses (1), (2), and (3) of this clause (i)(a), subject to no mortgage, deed of trust, pledge, security interest, encumbrance, lien, lease, license, easement, assignment, collateral assignment or charge of any kind, including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof, any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute or any subordination arrangement in favor of any party other than Security Trustee (collectively, "Encumbrances each, an "Encumbrance except for Encumbrances permitted by Section 8.11 of the Loan Agreement (collectively "Permitted Encumbrances (b) Grantor is the owner and holder of all property (including, without limitation, property of the type constituting Mortgaged Property herein), rights, titles, interests and estates which are required or necessary for the business and operations of Grantor as presently conducted, (ii) Grantor will keep in effect all rights and appurtenances to or that constitute a part of the Mortgaged Property, (iii) Grantor will protect, preserve and defend its interest in the Mortgaged Property and title thereto, (iv) Grantor will comply in all material respects with each of the terms, conditions and provisions of any obligation of Grantor which is secured by the Mortgaged Property or the noncompliance with which may result in the imposition of a Encumbrance on the Mortgaged Property, (v) Grantor will appear and defend the Encumbrance and security interest created and evidenced hereby and the validity and priority of this Mortgage in any action or proceeding affecting or purporting to affect the Mortgaged Property or any of the rights of Security Trustee hereunder, (vi) this Mortgage creates and constitutes a valid and enforceable lien on the Mortgaged Property, and, to the extent any of the Mortgaged Property shall consist of personalty, the security interest in the Mortgaged Property, which liens and security interests are and will be subject only to (a) Permitted Encumbrances and (b) Encumbrances hereafter created and which, pursuant to the provisions of Section 1.9, are superior to the Encumbrance and security interests created and evidenced hereby, and Grantor 5 and Expenses. 6 000 1 0 does now and will forever warrant and defend to Security Trustee and all its successors and assigns such title and the validity and priority of the Encumbrance and security interests created and evidenced hereby against the claims of all Persons whomsoever, (vii) there has been issued and there remain in effect each and every material certificate of occupancy or use or other Permit currently required for the existing use and occupancy by Grantor and its tenants or lessees of the Premises, (viii) the Premises comply in all material respects with all local zoning, land use, set back or other development and use requirements of Government Agencies, (ix) except as disclosed in writing to the Security Trustee as of the date hereof, each of the Mortgaged Leases is in full force and effect and no default (nor any event, which, with notice or lapse of time or both, would constitute such a default) has occurred and is continuing thereunder, (x) none of the Mortgaged Leases are subject to any defenses, offsets or counterclaims and there have been no renewals or extensions of or supplements, modifications or amendments to any of the Mortgaged Leases not previously disclosed to Security Trustee, (xi) with respect to each Sublease relating to the Mortgaged Property, each such Sublease is in full force and effect and no default (nor any event which, with notice or lapse of time or both, would constitute such a default) has occurred or is continuing thereunder, except as disclosed in writing to the Security Trustee as of the date hereof, (xii) with respect to each Sublease relating to the Mortgaged Property, the existence of such Sublease will not, individually or in the aggregate, have a material adverse effect on the value or utility of the Mortgaged Property or the Encumbrance of this Mortgage, and (xiii) it is in actual possession of the Premises other than such portion of the Premises subject to any Sublease. 1.2.2. Grantor, immediately upon obtaining knowledge of the pendency of any proceedings for the eviction of Grantor from the Mortgaged Property or any part thereof by paramount title or otherwise questioning Grantor's title to the Mortgaged Property as warranted in this Mortgage, or of any condition that might reasonably be expected to give rise to any such proceedings, shall notify Security Trustee thereof. Security Trustee may participate in such proceedings, and Grantor will deliver or cause to be delivered to Security Trustee all instruments requested by Security Trustee to permit such participation. In any such proceedings Security Trustee may be represented by counsel satisfactory to Security Trustee at the expense of Grantor. If, upon the resolution of such proceedings, Grantor shall suffer a loss of the Mortgaged Property or any part thereof or interest therein and title insurance proceeds shall be payable in connection therewith, such proceeds are hereby assigned to and shall be paid to Security Trustee to be applied to the payment of the Secured Moneys in accordance with the provisions of the Loan Agreement. SECTION 1.3. Recording Documentation To Assure Security Interest; Fees 1.3.1. Grantor shall, forthwith after the execution and delivery of this Mortgage and thereafter, from time to time, cause this Mortgage and any financing statement, continuation statement or similar instrument relating to any thereof or to any property intended to be subject to the Encumbrance of this Mortgage to be filed, registered and recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the validity and priority thereof or the Encumbrance hereof purported to be created upon the Mortgaged Property and the interest and rights of Security Trustee therein. Security Trustee may, at Grantor's sole cost and expense, duly and validly record appropriate 7 0 memoranda of the Mortgaged Leases and any material amendments or supplements thereto in each jurisdiction in which any portion of the Leased Premises may be situated. Grantor shall pay or cause to be paid all taxes and fees incident to such filing, registration and recording, and all expenses incident to the preparation, execution and acknowledgment thereof, and of any instrument of further assurance, and all Federal or state stamp taxes or other taxes, duties and charges arising out of or in connection with the execution and delivery of such instruments. 1.3.2. Grantor shall, at the sole cost and expense of Grantor, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, deeds of trust, assignments, notices of assignment, transfers, financing statements, continuation statements and assurances as Security Trustee shall from time to time request, which may be necessary or appropriate in the reasonable judgment of Security Trustee from time to time to assure, perfect, convey, assign, mortgage, transfer and confirm unto Security Trustee, the property and rights hereby conveyed or assigned or which Grantor may be or may hereafter become bound to convey or assign to Security Trustee or for carrying out the intention or facilitating the performance of the terms of this Mortgage or the filing, registering or recording of this Mortgage. In the event Grantor shall fail after demand to execute any instrument required to be executed by Grantor under this subsection 1.3.2, Security Trustee may execute the same as the attorney -in -fact for Grantor, such power of attorney being coupled with an interest and irrevocable. SECTION 1.4. Payment of Taxes, Insurance Premiums, Assessments; Compliance with Law and Insurance Requirements. 1.4.1. From and after the occurrence and during the continuance of an Event of Default (as hereinafter defined), at the option and upon the request of Security Trustee, Grantor shall deposit with Security Trustee, on the first day of each month, an amount estimated by Security Trustee to be equal to one twelfth of the annual taxes and assessments required to be discharged by Grantor. Such amounts shall be held by Security Trustee without interest to Grantor and applied to the payment of the obligations in respect of which such amounts were deposited, in such priority as Security Trustee shall determine, on or before the respective dates on which such obligations or any part thereof would become delinquent. Nothing contained in this Section 1.4 shall (i) affect any right or remedy of Security Trustee under any provision of this Mortgage or of any statute or rule of law to pay any such amount as provided above from its own funds and to add the amount so paid, together with interest at a rate per annum (the "Default Rate equal to the highest rate then payable under the Transaction Documents, or (ii) relieve Grantor of its obligations to make or provide for the payment of the annual taxes, assessments and other charges required to be discharged by Grantor. Grantor hereby grants to Security Trustee a security interest in all sums held pursuant to this subsection 1.4.1 to secure payment and performance of the Secured Moneys. During the continuance of any Event of Default, Security Trustee may, at its option, apply all or any part of the sums held pursuant to this subsection 1.4.1 to payment and performance of the Secured Moneys. Grantor shall redeposit with Security Trustee an amount equal to all amounts so applied as a condition to the cure, if any, of such Event of Default in addition to fulfillment of any other required conditions. Notwithstanding the foregoing provisions of this subsection 1.4.1, no deposit with Security Trustee in respect of any item contemplated by this subsection 1.4.1 shall be required with respect to any Leased Premises if and for so long as deposits in respect of such item are made by 8 000.7 Grantor to the lessor of such Leased Premises pursuant to the terms of the Mortgaged Lease relating to such Leased Premises. 1.4.2. Grantor may at its own expense contest the amount or applicability of Grantor's obligation to pay annual taxes, assessments, and lawful claims and demands of mechanics, materialmen, laborers, government agencies administering worker's compensation insurance, old age pensions and social security benefits by appropriate legal proceedings, prosecution of which operates to prevent the collection or enforcement thereof and the sale or forfeiture of the Mortgaged Property or any part thereof to satisfy such obligations; provided, however, that (i) any such contest shall be conducted in good faith by appropriate proceedings promptly instituted and diligently conducted and (ii) in connection with such contest, Grantor shall have made provision for the payment or performance of such contested obligation on Grantor's books if and to the extent required by GAAP. Notwithstanding the foregoing provisions of this subsection 1.4.2, (i) no contest of any such obligations may be pursued by Grantor if such contest would (a) be prohibited by the provisions of the applicable Mortgaged Lease or (b) expose Security Trustee, Agent or any of the Financiers to any possible criminal liability or, unless Grantor shall have furnished a bond or other security therefor satisfactory to Security Trustee, any additional civil liability for failure to comply with such obligations and (ii) if at any time payment or performance of any obligation contested by Grantor pursuant to this subsection 1.4.2 shall become necessary to prevent the delivery of a tax or similar deed conveying the Mortgaged Property or any portion thereof because of nonpayment or nonperformance, or to prevent the occurrence of a default (or a condition which, with the giving of notice or the lapse of time or both, may become a default) under the Mortgaged Leases, Grantor shall pay or perform the same, in sufficient time to prevent the delivery of such tax or similar deed or such termination or forfeiture. 1.4.3. In the event that the proceeds of any tax claim are paid after Security Trustee has exercised its right to foreclose the Encumbrance of this Mortgage, such proceeds shall be paid to Security Trustee to satisfy any deficiency remaining after such foreclosure. Security Trustee shall retain its interest in the proceeds of any tax claim during any redemption period. The amount of any such proceeds in excess of any deficiency claim of Security Trustee shall reasonably promptly be released to Grantor. SECTION 1.5. Certain Tax Law Changes. In the event of the passage after the date of this Mortgage of any law deducting from the value of real property, for the purpose of taxation, amounts in respect of any Encumbrance thereon or changing in any way the laws for the taxation of mortgages or debts secured by mortgages for state or local purposes or the manner of the collection of any such taxes, and imposing a tax, either directly or indirectly, on this Mortgage or any other Transaction Document, Grantor shall promptly pay to Security Trustee such amount or amounts as may be necessary from time to time to pay such tax. SECTION 1.6. Required Insurance. Grantor shall carry insurance as provided in the Loan Agreement. Without limitation of the foregoing, with respect to the Leased Premises and the Improvements located on, in or under the Leased Premises, Grantor shall comply with all the terms, covenants and conditions of the Mortgaged Leases pertaining to insurance. SECTION 1.8. Grantor's Obligations with Respect to Subleases. 00013 SECTION 1.7. Failure To Make Certain Payments. If Grantor shall fail to perform any of the covenants contained in this Mortgage, including, without limitation, Grantor's covenants to (i) discharge liens and encumbrances or (ii) pay or perform any obligations of Grantor under the Subleases or the Mortgaged Leases, Security Trustee may, but shall not be obligated to, make advances to perform such covenant on Grantor's behalf, and all sums so advanced shall be included in the Secured Moneys and, to the extent permitted by applicable law, shall be secured hereby. Grantor shall repay on demand all sums so advanced by Security Trustee on behalf of Grantor, with interest at the overdue rate of interest set forth in the Loan Agreement from the date of payment by Security Trustee to the date of reimbursement. Neither the provisions of this Section 1.7 nor any action taken by Security Trustee pursuant to the provisions of this Section 1.7 shall prevent any such failure to observe any covenant contained in this Mortgage from constituting an Event of Default. Security Trustee shall not be bound to inquire into the validity of any tax, lien or imposition which Grantor fails to pay as and when required hereby and which Grantor does not contest in accordance with the terms hereof. 1.8.1. Subject to the provisions of subsection 1.8.1 herein, Grantor will manage and operate the Mortgaged Property in a reasonably prudent manner and will not enter into any Sublease of all or any part of the Premises that is inconsistent with the terms of this Mortgage. 1.8.2. Grantor shall not, without the express prior consent of Security Trustee: (i) receive or collect, or permit the receipt or collection of, any royalty rental or other payments under any Sublease more than one period in advance of the respective period in respect of which they are to accrue, except that (a) in connection with the execution and delivery of any Sublease or of any amendment to any Sublease, payments thereunder may be collected and received in advance in an amount not in excess of one period's rent and/or royalty and/or a reasonable security deposit may be required thereunder; (b) Grantor may receive and collect escalation and other charges in accordance with the terms of each Sublease; and (c) Grantor may receive and collect advance minimum royalty or rental payments in accordance with the terms of any Sublease (which Sublease shall have been entered into in the ordinary course of business of Grantor and shall be consistent with past practice and on customary and reasonable business terms) for mining purposes, oil and gas development or timber harvesting; (ii) assign, transfer or hypothecate any rental or other payment under any Sublease whether then due or to accrue in the future, the interest of Grantor as lessor under any Sublease or the Rents of the Mortgaged Property; (iii) enter into any Sublease after the date hereof that does not contain terms to the effect as follows: (a) such Sublease and the rights of the tenant or lessee thereunder (including, without limitation, any options to purchase or rights of first offer or refusal) shall be subject and subordinate to the rights of Security Trustee under and the Encumbrance of this Mortgage; 9 0001 (b) such Sublease has been assigned as collateral security by Grantor as landlord or lessor thereunder to Security Trustee under this Mortgage; (c) in the case of any foreclosure hereunder, the rights and remedies of the tenant or lessee in respect of any obligations of any successor landlord or lessor thereunder shall be limited to the equity interest of such successor landlord or lessor in the Premises and any successor landlord or lessor shall not (1) be liable for any act, omission or default of any prior landlord or lessor under the Sublease, (2) be required to make or complete any tenant or lessee improvements or capital improvements or repair, restore, rebuild or replace the demised premises or any part thereof in the event of damage, casualty or condemnation or (3) be required to pay any amounts to tenant or lessee arising under the Sublease prior to such successor landlord or lessor taking possession; (d) the tenant's or lessee's obligation to pay rent, royalties and/or any additional rent shall not be subject to any abatement, deduction, counterclaim or setoff as against Security Trustee, Agent or any purchaser upon the foreclosure of any of the Premises or the giving or granting of a deed in lieu thereof by reason of a landlord or lessor default occurring prior to such foreclosure or delivery of such deed and Security Trustee, Agent or such purchaser will not be bound by any advance payments of rent or royalties in excess of one rental or royalties period or any security deposits unless such security was actually received by Security Trustee (or in the case of a letter of credit, was properly transferred in negotiable form); (e) the tenant or lessee agrees to attorn, at the option of Security Trustee or any purchaser of the Premises, upon a foreclosure of the Premises or the giving or granting of a deed in lieu thereof; and (f) the tenant or lessee agrees to give notice to Security Trustee of any default by landlord or lessor under the Sublease and Security Trustee shall have a reasonable time to cure, should Security Trustee so elect, any default of landlord prior to tenant or lessee exercising any rights of tenant or lessor to terminate or cancel such Sublease. (iv) enter into any amendment or modification of any Sublease that would change the unexpired term thereof or decrease the amount of the rents or other amounts payable thereunder or impair the value or utility of the Mortgaged Property or the security provided by this Mortgage; (v) enter into any further lease or sublease of the property subject to any Sublease without the prior written consent of Security Trustee, unless such Sublease is not amended in any material respect and the primary obligor under such Sublease is not released in any respect from its responsibilities and liabilities under such Sublease as a result of such lease or sublease; (vi) terminate (whether by exercising any contractual right of Grantor to recapture leased space or otherwise) or permit the termination of any Sublease or accept 10 00015 surrender of all or any portion of the space demised under any Sublease prior to the end of the term thereof or accept assignment of any Sublease to Grantor unless: (a) the tenant or lessee under such Sublease has not paid the equivalent of two periods' worth of rent or royalties and Grantor has made reasonable efforts to collect such amounts; or (b) Grantor shall deliver to Security Trustee written notice in form and substance satisfactory to Security Trustee to the effect that Grantor has entered into a new Sublease (or Subleases) for the premises covered by the teiminated or assigned Sublease with a term (or terms) which expire(s) no earlier than the date on which the terminated or assigned Sublease was to expire (excluding renewal options), and with a tenant(s) or lessee(s) having a creditworthiness (as reasonably determined by Grantor) sufficient to pay the rent and other charges due under the new Sublease (or Subleases), and the tenant(s) or lessee(s) shall have commenced paying rent, including all operating expenses and other amounts payable under the new Sublease (or Subleases) without any abatement or concession; or (vii) waive, excuse, condone or in any manner discharge or release any tenants or lessees of or from the obligations of such tenants or lessees under their respective Subleases or guarantors of tenants or Lessees from obligations under any guarantees of the Subleases except in the ordinary and prudent course of business with due regard for the security afforded Security Trustee thereby; provided that (y) Grantor shall only be required to use commercially reasonable efforts to obtain the terms set forth in clauses (iii)(c) and (iii)(d) above when it enters into a new Sublease, and (z) clauses (iv), (v) and (vi) above shall not apply to a new or existing Sublease when such Sublease will not have a material impact upon Grantor's mine plan. Grantor agrees to provide promptly to Security Trustee copies of all assignments, agreements, modifications, waivers or other documents or instruments subject to this Section 1.8.2. 1.8.3. Grantor shall timely perform and observe in all material respects all the terms, covenants and conditions required to be performed and observed by Grantor under each Sublease and shall at all times do all things necessary to require performance by the lessee, franchisee, licensee or grantee under each Sublease of all obligations, covenants and agreements by such party to be performed thereunder. Grantor shall promptly notify Security Trustee of the receipt of any notice from any lessee under any Sublease claiming that Grantor is in default in the performance or observance of any of the terms, covenants or conditions thereof to be performed or observed by Grantor and will cause a copy of each such notice to be promptly delivered to Security Trustee. SECTION 1.9. Transfer Restrictions. Except as provided in Section 1.8, Grantor may not, without the prior written consent of Security Trustee (and the consent of any lessor of any Leased Premises if such consent shall be required under the provisions of the Mortgaged Lease relating to such Leased Premises), further mortgage, encumber, hypothecate, sell, convey or assign all or any part of the Mortgaged Property or suffer any of the foregoing to occur by operation of law or otherwise. Notwithstanding the provisions of the foregoing 11 sentence, so long as no Event of Default shall have occurred and be continuing, Grantor shall have the right, subject to any provision in any Mortgaged Lease to the contrary, to grant or suffer the following Encumbrances or conveyances, in respect of the Mortgaged Property: (i) Encumbrances permitted under the Loan Agreement; and (ii) any disposition of Mortgaged Property permitted under the Loan Agreement, in accordance with the provisions thereof. Each of the Encumbrances and other transfers permitted by this Section 1.9 shall in all respects be subject and subordinate in priority to the Encumbrance and security interests created and evidenced hereby, except to the extent the law or regulation creating or authorizing such Encumbrance provides that such Encumbrance must be superior to the Encumbrance and security interest created and evidenced hereby. SECTION 1.10. Intentionally Omitted. SECTION 1.11. Other Information. Grantor shall, at any and all times, within a reasonable time after written request by Security Trustee, furnish or cause to be furnished to Security Trustee, in such manner and in such detail as may be reasonably requested by Security Trustee, additional information with respect to the Mortgaged Property. SECTION 1.12. No Claims Against Security Trustee. Nothing contained in this Mortgage shall constitute any consent or request by Security Trustee, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Premises or any part thereof, nor as giving Grantor any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Security Trustee in respect thereof or any claim that any Encumbrance based on the performance of such labor or services or the furnishing of any such materials or other property is prior to the Encumbrance of this Mortgage. SECTION 1.13. Mortgaged Leases. 1.13.1. Grantor shall punctually and properly perform, observe and otherwise comply in all material respects with each and every covenant, agreement, requirement and condition set forth in the Mortgaged Leases and do or cause to be done all things necessary or appropriate to keep the Mortgaged Leases in full force and effect and to preserve and keep unimpaired the rights of Grantor thereunder. Upon request of Security Trustee, Grantor shall, subject to the terms of the Mortgaged Leases, request from the lessor under any Mortgaged Lease an estoppel certificate, addressed to Security Trustee, stating that there is no default under such Mortgaged Lease, or any state of facts which with the passage of time or notice or both would constitute a default thereunder, or if there be any default under such Mortgaged Lease, giving the details thereof. 1.13.2. In the event Grantor acquires the fee simple title in the real property subject to any Mortgaged Lease, such acquisition will not merge with the leasehold estate created by such Mortgaged Lease, but such other estate or interest will remain discrete and 12 ,J016 0001' immediately become subject to the Encumbrance of this Mortgage without the execution or delivery of any further instrument or document and without any further action by, any Person; provided, however, that the Grantor shall execute, acknowledge and deliver any instruments requested by Security Trustee to confirm the coverage of the Encumbrance evidenced hereby upon such other estate or interest. Grantor shall pay any and all conveyance or mortgage taxes and filing or similar fees in connection with the execution, delivery, filing or recording of any such instrument. 1.13.3. Grantor shall promptly notify Security Trustee in writing of the occurrence of any default on the part of or caused by any party to any Mortgaged Lease. If for any reason Grantor cannot timely make any payment under, perform or comply with any of its obligations under any Mortgaged Lease, Grantor shall notify Security Trustee in sufficient time to enable Security Trustee (but Security Trustee shall not be obligated) timely to make such payments and /or to perform or comply with such other obligations. On receipt by Security Trustee from Grantor pursuant to this subsection 1.20.3 of any such notice of default by, or inability to make any payment by, Grantor thereunder, Security Trustee may rely thereon and, after notice to Grantor, take such action as Security Trustee deems necessary or desirable to cure such default, even though the existence of such default or the nature thereof is denied by Grantor or by any other Person. 1.13.4. Except as otherwise permitted by the Loan Agreement or the other Transaction Documents, Grantor shall not surrender the leasehold estate created by any Mortgaged Lease, or terminate or cancel any Mortgaged Lease. Except as otherwise permitted by the Loan Agreement or the other Transaction Documents, Grantor shall not, without the prior written consent of Security Trustee, amend, modify, surrender, impair, forfeit, cancel, or terminate, or permit the amendment, modification, surrender, impairment, forfeiture, cancellation, or termination of any Mortgaged Lease in whole or in part, whether or not a default shall have occurred and shall be continuing under either thereof, except for such amendments or modifications which shall not impair the value or utility of any Mortgaged Lease or the interest of Grantor therein. Any such termination, cancellation, modification, change, supplement, alteration, amendment or extension without the prior written consent contemplated by this subsection 1.13.4 shall be void and of no force and effect. 1.13.5. No release or forbearance of any of the obligations of Grantor under any Mortgaged Lease, pursuant to the terms thereof, by agreement, operation of law or otherwise, shall release Grantor from any of the obligations of Grantor under this Mortgage, including, without limitation, the obligations of Grantor with respect to the payment of rent or royalties as provided in the Mortgaged Leases and the performance of all of the other terms, provisions, covenants, conditions and agreements contained in the Mortgaged Leases to be performed by Grantor thereunder. 1.13.6. The leasehold estate of Grantor created by the Mortgaged Leases and the estate of the lessor under the Mortgaged Leases shall each at all times remain separate and apart and retain their separate identities, and no merger of the leasehold or easement estate of Grantor with the estate of the lessor will result with respect to Security Trustee or with respect to any purchaser acquiring the Mortgaged Property at any sale on foreclosure of the Encumbrance of this Mortgage without the written consent of Security Trustee. 13 Profits. ARTICLE 2 ASSIGNMENT OF LEASES AND SUBLEASES; SECURITY AGREEMENT; ASSIGNMENT AGREEMENT 00018 SECTION 2.1. Assignment of Leases and Subleases, Rents, Issues and 2.1.1. Grantor absolutely, presently and irrevocably assigns, transfers and sets over to Security Trustee, and grants to Security Trustee subject to the terms and conditions hereof, all Grantor's estate, right, title, interest, claim and demand as landlord or lessor to collect royalties, rent, issues, profits, revenues and other sums due under all Subleases whether now existing or hereafter required, including, without limitation, all extensions of the terms of the Subleases (such assigned rights, "Grantor's Interest as follows: (i) the immediate and continuing right to receive and collect Rents payable by all tenants or lessees or other parties pursuant to the Subleases; (ii) all claims, rights, powers, privileges and remedies of Grantor, whether provided for in any Sublease or arising by statute or at law or in equity or otherwise, consequent on any failure on the part of any tenant or lessee to perform or comply with any term of any Sublease; (iii) all rights to take all actions upon the happening of a default under any Sublease as shall be permitted by such Sublease or by law, including, without limitation, the commencement, conduct and consummation of proceedings at law or in equity; and (iv) the full power and authority, in the name of Grantor or otherwise, to enforce, collect, receive and receipt for any and all of the foregoing and to do any and all other acts and things whatsoever which Grantor or any landlord or lessor is or may be entitled to do under the Subleases. 2.1.2. Rents receivable by the Security Trustee hereunder, after payment of all proper costs and charges, shall be applied to amounts due and owing under the terms of the Loan Agreement. The Security Trustee shall be accountable to a lessor only for Rents actually received by Security Trustee pursuant to this Mortgage. The collection of such Rents and the application thereof shall not cure or waive any Event of Default or waive, modify or affect notice of Event of Default or invalidate any act done pursuant to such notice. 2.1.3. So long as no Event of Default shall have occurred and be continuing, each lessor shall have a license to collect Rents and to enforce the obligations of tenants or lessees under the Subleases. Immediately upon the occurrence and during the continuance of any Event of Default, the license granted in the immediately preceding sentence shall cease and terminate, with or without any notice, action or proceeding or the intervention of a receiver appointed by a court. Upon such Event of Default and during the continuance thereof, Security Trustee may, to the fullest extent permitted by the Subleases, (i) exercise any of Grantor's rights under the Subleases, (ii) enforce the Subleases, (iii) demand, collect, sue for, attach, levy, recover, receive, compromise and adjust, and make, execute and deliver receipts and releases for 14 15 00019 all Rents or other payments that may then be or may thereafter become due, owing or payable with respect to the Subleases and (iv) generally, do, execute and perform any other act, deed, matter or thing whatsoever that ought to be done, executed and performed in and about or with respect to the Subleases, as fully as allowed or authorized by Grantor's Interest. 2.1.4. Upon the occurrence and during the continuance of an Event of Default, Grantor shall, at the direction of Security Trustee, further authorize and direct the tenant or lessee under each Sublease to pay directly to, or as directed by, Security Trustee all Rents accruing or due under its Sublease without proof to the tenant or lessee of the occurrence and continuance of such Event of Default. Grantor hereby authorizes the tenant or lessee under each Sublease to rely upon and comply with any notice or demand from Security Trustee for payment of Rents to Security Trustee and Grantor shall have no claim against any tenant or lessee for Rents paid by such tenant or lessee to Security Trustee pursuant to such notice or demand. 2.1.5. Grantor at its sole cost and expense shall use commercially reasonable efforts to enforce the Subleases in accordance with their terms. Neither this Mortgage nor any action or inaction on the part of Security Trustee shall release any tenant or lessee under any Sublease, any guarantor of any Sublease or Grantor from any of their respective obligations under the Subleases or constitute an assumption of any such obligation on the part of Security Trustee. No action or failure to act on the part of Grantor shall adversely affect or limit the rights of Security Trustee under this Mortgage or, through this Mortgage, under the Subleases. 2.1.6. All rights, powers and privileges of Security Trustee herein set forth are coupled with an interest and are irrevocable, subject to the terms and conditions hereof, and Grantor shall not take any action under the Subleases or otherwise which is inconsistent with this Mortgage or any of the terms hereof and any such action inconsistent herewith or therewith shall be void. Grantor shall, from time to time, upon request of Security Trustee, execute all instruments and further assurances and all supplemental instruments and take all such action as Security Trustee from time to time may reasonably request in order to perfect, preserve and protect the interests intended to be assigned to Security Trustee hereby. 2.1.7. Grantor shall not, unilaterally or by agreement, subordinate, amend, modify, extend, discharge, terminate, surrender, waive or otherwise change any term of any of the Subleases in any manner which would violate this Mortgage. If the Subleases shall be amended as permitted hereby, they shall continue to be subject to the provisions hereof without the necessity of any further act by any of the parties hereto. 2.1.8. Nothing contained herein shall operate or be construed to (i) obligate Security Trustee to perform any of the terms, covenants or conditions contained in the Subleases or otherwise to impose any obligation upon Security Trustee with respect to the Subleases or the Mortgaged Leases (including, without limitation, any obligation arising out of any covenant of quiet enjoyment contained in the Subleases or the Mortgaged Leases in the event that any tenant or lessee under a Sublease shall have been joined as a party defendant in any action by which the estate of such tenant or lessee shall be terminated) or (ii) place upon Security Trustee any responsibility for the operation, control, care, management or repair of the Premises. SECTION 2.2. Security Interest in Personal Property. 00020 2.2.1. This Mortgage shall constitute a security agreement and shall create and evidence a security interest or common law Encumbrance in all the Inventory, Permits, Equipment, Rents, Contract Rights, Proceeds and in all the other items of Mortgaged Property in which a security interest may be granted or a common law pledge created pursuant to the Uniform Commercial Code as in effect in the state in which the Premises are located or under the common law in such state (collectively, "Personal Property 2.2.2. Upon the occurrence of any Event of Default, in addition to the remedies set forth in Article 3, Security Trustee shall have the power to sell the Personal Property in accordance with the Uniform Commercial Code as enacted in the state of Wyoming or under other applicable law. It shall not be necessary that any Personal Property offered be physically present at any such sale or constructively in the possession of Security Trustee or the person conducting the sale. 2.2.3. Upon the occurrence and during the continuance of any Event of Default, Security Trustee may sell the Personal Property or any part thereof at public or private sale with notice to Grantor as hereinafter provided. The proceeds of any such sale, after deducting all expenses of Security Trustee in taking, storing, repairing and selling the Personal Property (including, without limitation, reasonable attorneys' fees and legal expenses), shall be applied in the manner set forth in subsection 3.3.3. At any sale, public or private, of the Personal Property or any part thereof, Security Trustee may purchase any or all of the Personal Property offered at such sale. 2.2.4. Security Trustee shall give Grantor reasonable notice of any sale of any of the Personal Property pursuant to the provisions of this Section 2.2. Notwithstanding the provisions of Section 5.2, any such notice shall conclusively be deemed to be reasonable and effective if such notice is mailed at least ten (10) days prior to any sale, by first class or certified mail, postage prepaid, to Grantor at its address determined in accordance with the provisions of Section 5.2. SECTION 2.3. Fixture and As Extracted Collateral Filing. This Mortgage constitutes (i) a financing statement filed as a fixture filing pursuant to the provisions of Article 9 of the Uniform Commercial Code, with respect to those portions of the Mortgaged Property consisting of goods which are or are to become fixtures relating to the Premises, and (ii) a financing statement filed pursuant to the provisions of Article 9 of the Uniform Commercial Code covering as- extracted collateral relating to the Premises. Grantor grants to Security Trustee a security interest in (x) all existing and future goods that are now or in the future become fixtures relating to the Premises, (y) all as- extracted collateral now or hereafter extracted from the Premises, and (z) the respective proceeds thereof. Grantor covenants and agrees that the filing of this Mortgage in the real estate records of the county where the Premises are located will also operate from the date of such filing as a fixture filing and a filing covering as- extracted collateral in accordance with Uniform Commercial Code, Section 9 -502. Grantor agrees to execute and deliver to Security Trustee, upon Security Trustee's request any financing statements, as well as extensions, renewals and amendments thereof, and any reproductions of this Mortgage in such form as Security Trustee may require to perfect a security interest with 16 respect to such items. The name of the debtor is Line Energy (Wyoming), Inc., a Delaware corporation, and the name of the secured party is FCCD (Australia) Nominee Pty Ltd ACN 134 182 657, as Security Trustee. The respective addresses of the debtor and secured party are set forth above. ARTICLE 3 EVENTS OF DEFAULT AND REMEDIES SECTION 3.1. Events of Default. It shall be an Event of Default hereunder if there shall have occurred and be continuing an Event of Default under the Loan Agreement or any of the other Transaction Documents. SECTION 3.2. Remedies in Case of an Event of Default. If any Event of Default shall have occurred and be continuing, Security Trustee may, at its option, in addition to any other action permitted under this Mortgage, the Loan Agreement or any of the other Transaction Documents, or by law, statute or in equity, take one or more of the following actions, to the extent and in the manner permitted under applicable local law: 3.2.1. declare the Funding Portions, including the entire remaining principal balance thereof and all accrued interest thereon, and all other Secured Moneys, to be immediately due and payable in full, without presentment, demand, protest or further notice of any kind, and without relief from valuation or appraisement laws, all of which Grantor hereby expressly waives, and may proceed to collect the same by suit or otherwise, and to foreclose this Mortgage, and any failure to exercise said option shall not constitute a waiver of the right to exercise the same at any other time; 3.2.2. personally, or by its agents or attorneys, to the extent permitted by the Mortgaged Leases, (i) act in all respects as lessee in respect of the Mortgaged Leases and perform on behalf and for account of Grantor any of the obligations of the tenant or lessee thereunder, (ii) enter into and upon and take possession of all or any part of the Premises together with the books, records and accounts of Grantor relating thereto and, exclude Grantor, its agents and servants wholly therefrom, (iii) use, operate, manage and control the Premises and the Equipment and conduct the business thereof, (iv) maintain and restore the Premises and the Equipment, (v) make all necessary or proper repairs, renewals and replacements thereto and thereon as Security Trustee may deem advisable, (vi) manage, lease and operate the Premises and carry on the business thereof and exercise all rights and powers of Grantor with respect thereto either in the name of Grantor or otherwise or (vii) collect and receive all earnings, revenues, royalties, rents, issues, profits and income of the Mortgaged Property and every part thereof. Security Trustee shall be under no liability for or by reason of any such taking of possession, entry, removal or holding, operation or management except that any amounts so received by Security Trustee shall be applied as detailed in Section 6.9 of the Loan Agreement. 3.2.3. with or without entry, personally or by its agents or attorneys, (i) sell the Mortgaged Property and all estate, right, title and interest, claim and demand therein at one or more sales in one or more parcels, in accordance with the provisions of Section 3.3 or (ii) institute and prosecute proceedings for the complete or partial foreclosure of the Encumbrance and security interests created and evidenced hereby; 17 0002.1 18 00027 3.2.4. exercise its rights of enforcement under the Uniform Commercial Code of the State of Wyoming, or any other state to the extent the same is applicable law; or 3.2.5. take steps to protect and enforce its rights whether by action, suit or proceeding at law or in equity for the specific performance of any covenant, condition or agreement in the Loan Agreement or any of the other Transaction Documents, or in aid of the execution of any power granted in this Mortgage, or for any foreclosure hereunder, or for the enforcement of any other appropriate legal or equitable remedy or otherwise as Security Trustee shall elect. SECTION 3.3. Sale of Mortgaged Property if Event of Default Occurs; Proceeds of Sale. 3.3.1. Upon the occurrence and during the continuance of an Event of Default, this Mortgage may be foreclosed as to the Mortgaged Properties, or any part thereof, in any manner permitted by applicable law. Cumulative of the foregoing and the other provisions of this Section 3.1, this Mortgage may be foreclosed as to the Mortgaged Properties, or any part thereof, in any mariner permitted by applicable law and Grantor hereby confers on Security Trustee the power to sell the Mortgaged Properties in accordance with WYO. STAT. §34 -4 -101 et seq., as the same may be amended from time to time. As to any portion of the Mortgaged Properties located in the State of Wyoming, such sales of all or any part of the Mortgaged Properties shall be conducted at the courthouse of the county in which such Mortgaged Properties are situated, unless some other place is designated by a judge having jurisdiction. A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW SECURITY TRUSTEE TO TAKE THE MORTGAGED PROPERTIES AND SELL THEM WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON EVENT OF DEFAULT BY GRANTOR UNDER THIS MORTGAGE. 3.3.2. In the event of any sale made under or by virtue of this Article 3, the entire principal of, and interest in respect of the Secured Moneys, if not previously due and payable, shall, at the option of Security Trustee, immediately become due and payable, anything in this Mortgage to the contrary notwithstanding. 3.3.3. The proceeds of any sale made under or by virtue of this Article 3, together with any other sums which then may be held by Security Trustee under this Mortgage, whether under the provisions of this Article 3 or otherwise, shall be applied as set forth in the Loan Agreement 3.3.4. Security Trustee, Agent, the Financiers or any of their respective Affiliates may bid for and acquire the Mortgaged Property or any part thereof at any sale made under or by virtue of this Article 3 and, in lieu of paying cash therefor, may make settlement for the purchase price by crediting against the purchase price the unpaid amounts (whether or not then due) owing to Security Trustee or the Financiers in respect of the Secured Moneys, after deducting from the sales price the expense of the sale and the reasonable costs of the action or proceedings and any other sums that Security Trustee is authorized to deduct under this Mortgage. 00 3.3.5. Security Trustee may adjourn from time to time any sale by it to be made under or by virtue of this Mortgage by announcement at the time and place appointed for such sale or for such adjourned sale or sales, and Security Trustee, without further notice or publication, may make such sale at the time and place to which the same shall be so adjourned. 3.3.6. If the Premises is comprised of more than one parcel of land, Security Trustee may take any of the actions authorized by this Section 3.3 in respect of any or a number of individual parcels. 3.3.7. The word "sale" as used in this Section 3.3 with respect to the Mortgaged Leases shall mean the sale, transfer, assignment or conveyance for value of the leasehold interest of Grantor in the Mortgaged Leases, together with all Grantor's right, title and interest in and to the other items comprising the Mortgaged Property. SECTION 3.4. Additional Remedies in Case of an Event of Default. 3.4.1. Security Trustee shall be entitled to recover judgment as aforesaid either before, after or during the pendency of any proceedings for the enforcement of the provisions of this Mortgage, and the right of Security Trustee to recover such judgment shall not be affected by any entry or sale hereunder, or by the exercise of any other right, power or remedy for the enforcement of the provisions of this Mortgage, or the foreclosure of, or absolute conveyance pursuant to, this Mortgage. In case of proceedings against Grantor in insolvency or bankruptcy or any proceedings for its reorganization or involving the liquidation of its assets, Security Trustee shall be entitled to prove the whole amount of principal and interest and other payments, charges and costs due in respect of the Secured Moneys to the full amount thereof without deducting therefrom any proceeds obtained from the sale of the whole or any part of the Mortgaged Property; provided, however, that in no case shall Security Trustee receive a greater amount than the aggregate of such principal, interest and such other payments, charges and costs (with interest at the overdue rate of interest set forth in the Loan Agreement) from the proceeds of the sale of the Mortgaged Property and the distribution from the estate of Grantor. 3.4.2. Any recovery of any judgment by Security Trustee and any levy of any execution under any judgment upon the Mortgaged Property shall not affect in any manner or to any extent the Encumbrance and security interests created and evidenced hereby upon the Mortgaged Property or any part thereof, or any conveyances, powers, rights and remedies of Security Trustee hereunder, but such conveyances, powers, rights and remedies shall continue unimpaired as before. 3.4.3. Any moneys collected by Security Trustee under this Section 3.4 shall be applied in accordance with the provisions of subsection 3.3.3. SECTION 3.5. Legal Proceedings After an Event of Default. 3.5.1. After the occurrence of any Event of Default and immediately upon the commencement of any action, suit or legal proceedings to obtain judgment for the Secured Moneys or any part thereof, or of any proceedings to foreclose the Encumbrance and security interest created and evidenced hereby or otherwise enforce the provisions of this Mortgage or of 19 20 0002 any other proceedings in aid of the enforcement of this Mortgage, Grantor shall enter its voluntary appearance in such action, suit or proceeding. 3.5.2. Upon the occurrence and during the continuance of an Event of Default, Security Trustee shall be entitled forthwith as a matter of right, concurrently or independently of any other right or remedy hereunder either before or after declaring the Secured Moneys or any part thereof to be due and payable, to the appointment of a receiver without giving notice to any party and without regard to the adequacy or inadequacy of any security for the Secured Moneys or the solvency or insolvency of any Person then legally or equitably liable for the Secured Moneys or any portion thereof. Grantor hereby consents to the appointment of such receiver. Notwithstanding the appointment of any receiver, Security Trustee shall be entitled as pledgee to the possession and control of any cash, deposits or instruments at the time held by or payable or deliverable to Security Trustee under the terms of the Loan Agreement. 3.5.3. Grantor shall not (i) at any time insist upon, or plead, or in any manner whatsoever claim or take any benefit or advantage of any stay or extension or moratorium law, any exemption from execution or sale of the Mortgaged Property or any part thereof, wherever enacted, now or at any time hereafter in force, which may affect the covenants and terms of performance of this Mortgage, (ii) claim, take or insist on any benefit or advantage of any law now or hereafter in force providing for the valuation or appraisal of the Mortgaged Property, or any part thereof, prior to any sale or sales of the Mortgaged Property which may be made pursuant to this Mortgage, or pursuant to any decree, judgment or order of any court of competent jurisdiction or (iii) after any such sale or sales, claim or exercise any right under any statute heretofore or hereafter enacted to redeem the property so sold or any part thereof. To the extent permitted by applicable law, Grantor hereby expressly (i) waives all benefit or advantage of any such law or laws, including, without limitation, any statute of limitations applicable to this Mortgage, (ii) waives any and all rights to trial by jury in any action or proceeding related to the enforcement of this Mortgage, (iii) waives any objection which it may now or hereafter have to the laying of venue of any action, suit or proceeding brought in connection with this Mortgage and further waives and agrees not to plead that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum and (iv) covenants not to hinder, delay or impede the execution of any power granted or delegated to Security Trustee by this Mortgage but to suffer and permit the execution of every such power as though no such law or laws had been made or enacted. Security Trustee shall not be liable for any incorrect or improper payment made pursuant to this Article 3 in the absence of gross negligence or willful misconduct. SECTION 3.6. Remedies Not Exclusive. No remedy conferred upon or reserved to Security Trustee by this Mortgage is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Mortgage or now or hereafter existing at law or in equity. Any delay or omission of Security Trustee to exercise any right or power accruing on any Event of Default shall not impair any such right or power and shall not be construed to be a waiver of or acquiescence in any such Event of Default. Every power and remedy given by this Mortgage may be exercised from time to time concurrently or independently, when and as often as may be deemed expedient by Security Trustee in such order and manner as Security Trustee, in its sole discretion, may elect. If Security Trustee accepts any moneys required to be paid by Grantor under this Mortgage after the same become due, such acceptance shall not constitute a waiver of 0002'5 the right either to require prompt payment, when due, of all other sums secured by this Mortgage or to declare an Event of Default with regard to subsequent defaults. If Security Trustee accepts any moneys required to be paid by Grantor under this Mortgage in an amount less than the sum then due, such acceptance shall be deemed an acceptance on account only and on the condition that it shall not constitute a waiver of the obligation of Grantor to pay the entire sum then due, and Grantor's failure to pay the entire sum then due shall be and continue to be a default hereunder notwithstanding acceptance of such amount on account. The rights and remedies granted pursuant to this Article 3 shall be in addition to and not in limitation of any rights and remedies granted pursuant to the Loan Agreement or any of the other Transaction Documents. ARTICLE 4 CERTAIN DEFINITIONS The following terms shall have the following respective meanings: "Cost of Construction" means the sum, so far as it relates to the reconstructing, renewing, restoring or replacing of the Improvements, of (i) obligations incurred or assumed by Grantor or undertaken by tenants or lessees pursuant to the terms of the Subleases for labor, materials and other expenses and to contractors, builders and materialmen; (ii) the cost of contract bonds and of insurance of all kinds that may reasonably be deemed by Grantor to be desirable or necessary during the course of construction; (iii) the expenses incurred or assumed by Grantor for test borings, surveys, estimates, any plans and specifications and preliminary investigations therefor, and for supervising construction, as well as for the performance of all other duties required by or reasonably necessary for proper construction; (iv) ad valorem property taxes levied upon the Premises during performance of any reconstruction, restoration or replacement of the Premises (or any part thereof); and (v) any costs or other charges in connection with obtaining title insurance and counsel opinions that may be required or necessary in connection with a reconstruction, restoration or replacement of the Premises (or any part thereof). "Related Activities" shall mean (i) exploration for and evaluation of deposits of coal and other minerals; (ii) development, operation, shutdown, and closure (temporary or permanent) of a mine (whether an underground or a surface mine); (iii) handling, processing, refining and beneficiation of coal or other minerals, including, without limitation, crushing, screening, non- screen classifying, grinding, flotation, washing, gravity separation, magnetic separation, chemical leaching, thickening, filtration, drying, calcimining; (iv) storage of coal or other minerals; (v) transportation of coal or other minerals by any means, including, without limitation, haulage within a mine and from a mine to a mill or to any other handling, processing, beneficiation, storage, or marketing location, haulage between any of the foregoing locations, haulage of mine waste (including, without limitation, waste rock and overburden) and tailings, slag, and other wastes resulting from handling, processing, and beneficiation, and loading in connection with any haulage; (vi) marketing, and readying for market, coal or other minerals; (vii) disposal (temporary or permanent) of mine waste (including, without limitation, waste rock and overburden) and tailings, slag, and other wastes from handling, processing, and beneficiation; (viii) monitoring, maintaining, restoring, and improving environmental quality, 21 OOO2 including, without limitation, elimination, treatment, and mitigation of air and water pollution; and (ix) reclamation of lands and other natural resources affected by any of the foregoing activities. ARTICLE 5 MISCELLANEOUS SECTION 5.1. Severability of Provisions. Any provision of this Mortgage that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 5.2. Notices. Unless otherwise provided herein, any notice or other communication herein required or permitted to be given shall be given in the manner set forth in the Loan Agreement, if to Grantor or Security Trustee, addressed to it at the address set forth in this Mortgage, or as to any party at such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section 5.2. All notices of any other Encumbrances shall be delivered to Security Trustee at the address set forth in this Mortgage in accordance with the terms of this Section 5.2. SECTION 5.3. Covenants To Run with the Land. All of the grants, covenants, terms, provisions and conditions in this Mortgage shall run with the Land and shall apply to, and bind the successors and assigns of, Grantor. If there shall be more than one Grantor, the covenants and warranties hereof shall be joint and several. SECTION 5.4. Headings. The Section headings used in this Mortgage are for convenience of reference only and shall not affect the construction of this Mortgage. SECTION 5.5. Limitation on Interest Payable. It is the intention of the parties to conform strictly to the usury laws, whether state or federal, that are applicable to the transaction of which this Mortgage is a part. All agreements between Grantor and Security Trustee whether now existing or hereafter arising and whether oral or written, are hereby expressly limited so that in no contingency or event whatsoever shall the amount paid or agreed to be paid by Grantor for the use, forbearance or detention of the money to be loaned under the Loan Agreement, or for the payment or performance of any covenant or obligation contained herein or in the Loan Agreement or any of the other Transaction Documents, exceed the maximum amount permissible under applicable federal or state usury laws. If under any circumstances whatsoever fulfillment of any such provision, at the time performance of such provision shall be due, shall involve exceeding the limit of validity prescribed by law, then the obligation to be fulfilled shall be reduced to the limit of such validity. If under any circumstances Grantor shall have paid an amount deemed interest by applicable law, which would exceed the highest lawful rate, such amount that would be excessive interest under applicable usury laws shall be applied to the reduction of the principal amount owing in respect of the Secured Moneys and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal and any other amounts due hereunder, the excess shall be refunded to Grantor. All sums paid or agreed to be paid for the use, forbearance or detention of the principal under any extension of credit by Security Trustee, Agent or Financiers shall, to the 22 extent permitted by applicable law, and to the extent necessary to preclude exceeding the limit of validity prescribed by law, be amortized, prorated, allocated and spread from the date of this Mortgage until payment in full of the Secured Moneys so that the actual rate of interest on account of such principal amounts is uniform throughout the term hereof. 00027 SECTION 5.6. Indemnity. Grantor agrees to indemnify, pay and hold harmless Security Trustee, the Financiers, Agent and the officers, directors, employees, agents and Affiliates of Security Trustee, Financiers or Agent (collectively called the "Indemnitees from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs (including, without limitation, settlement costs), expenses or disbursements of any kind or nature whatsoever (including, without limitation, the fees and disbursements of counsel for such Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not such Indemnitee shall be designated a party thereto), which may be imposed on, incurred by or asserted against that Indemnitee, in any manner relating to or arising out of this Mortgage, the Loan Agreement or any of the other Transaction Documents (including, without limitation, any misrepresentation by Grantor in this Mortgage, the Loan Agreement or any of the other Transaction Documents) (the "Indemnified Liabilities provided, however, that Grantor shall have no obligation to an Indemnitee hereunder with respect to Indemnified Liabilities if it has been determined by a final decision (after all appeals and the expiration of time to appeal) by a court of competent jurisdiction that such Indemnified Liability arose from the gross negligence or willful misconduct of that Indemnitee. To the extent that the undertaking to indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, Grantor shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any of them. The obligations of Grantor contained in this Section 5.6 shall survive the termination of this Mortgage and the discharge of Grantor's other obligations under this Mortgage, the Loan Agreement and the other Transaction Documents. Any amount paid by any Indemnitee as to which such Indemnitee has the right to reimbursement shall constitute Secured Moneys secured by the Mortgaged Property. SECTION 5.7. Intentionally Omitted. SECTION 5.8. Intentionally Omitted. SECTION 5.9. Governing Law; Terms. THIS MORTGAGE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF WYOMING. UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, THE SECURITY TRUSTEE SHALL HAVE THE RIGHT TO DECLARE THE INDEBTEDNESS SECURED HEREBY DUE AND PAYABLE AND TO SELL THE MORTGAGED PROPERTIES, ALL UNDER THE TERMS OF THE WYOMING STATUTES GOVERNING FORECLOSURE BY POWER OF SALE, WYO. STAT. §34 -4 -101 ET SEQ. GRANTOR AGREES THAT SERVICE OF PROCESS IN ANY PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PAID, TO GRANTOR AT ITS ADDRESS PROVIDED FOR IN SECTION 5.2 HEREOF EXCEPT THAT UNLESS OTHERWISE PROVIDED BY 23 00025 APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY GRANTOR REFUSES TO ACCEPT SERVICE, GRANTOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF SECURITY TRUSTEE TO BRING PROCEEDINGS AGAINST GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION. SECTION 5.10. Waiver of Jury Trial. GRANTOR HEREBY AGREES TO WAIVE ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS MORTGAGE. The scope of this waiver is intended to be all- encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. Grantor acknowledges that this waiver is a material inducement for Grantor and Security Trustee to enter into a business relationship, that Grantor and Security Trustee have already relied on this waiver in entering into this Mortgage and that each will continue to rely on this waiver in their related future dealings. Grantor further warrants and represents that it has reviewed this waiver with its legal counsel, and that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 5.10 AND EXECUTED BY GRANTOR AND SECURITY TRUSTEE), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS MORTGAGE. In the event of litigation, this Mortgage may be filed as a written consent to trial by the court. SECTION 5.11. No Merger. The rights and estate created by this Mortgage shall not, under any circumstances, be held to have merged into any other estate or interest now owned or hereafter acquired by Security Trustee unless Security Trustee shall have consented to such merger in writing. SECTION 5.12. Modification in Writing. No amendment, modification, supplement, termination or waiver of or to any provision of this Mortgage, nor consent to any departure by Grantor therefrom, shall be effective unless the same shall be done in accordance with the terms of Loan Agreement and the other Transaction Documents, and unless in writing and signed by Security Trustee. Any amendment, modification or supplement of or to any provision of this Mortgage, any waiver of any provision of this Mortgage and any consent to any departure by Grantor from the terms of any provision of this Mortgage shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Mortgage, no notice to or demand on Grantor in any case shall entitle Grantor to any other or further notice or demand in similar or other circumstances. SECTION 5.13. No Credit for Payment of Taxes or Impositions. Grantor shall not be entitled to any credit against the principal, premium, if any, or interest payable under the Loan Agreement, and Grantor shall not be entitled to any credit against any other sums which 24 25 00029 may become payable under the terms thereof or hereof, by reason of the payment of any tax or other impositions on the Mortgaged Property or any part thereof. SECTION 5.14. Stamp and Other Taxes. Subject to the provisions of subsection 1.5.2 relating to permitted contests, Grantor shall pay any United States documentary stamp taxes, with interest and fines and penalties, and any mortgage recording taxes, with interest and fines and penalties, that may hereafter be levied, imposed or assessed under or upon or by reason of this Mortgage or the Secured Moneys or any instrument or transaction affecting or relating to either thereof and in default thereof Security Trustee may advance the same and the amount so advanced shall be payable by Grantor to Security Trustee within ten (10) days after demand therefor, together with interest thereon at the overdue rate of interest set forth in the Loan Agreement. SECTION 5.15. Estoppel Certificates. Grantor shall, from time to time, upon thirty (30) days' prior written request of Security Trustee, execute, acknowledge and deliver to Security Trustee a certificate signed by an authorized officer or officers stating that this Mortgage, the Loan Agreement and the other Transaction Documents are unmodified and in full force and effect (or, if there have been modifications, that this Mortgage, the Loan Agreement or the other Transaction Documents, as applicable, are in full force and effect as modified and setting forth such modifications) and stating the date to which principal and interest have been paid on the Secured Moneys. SECTION 5.16. Additional Security. Without notice to or consent of Grantor and without impairment of the Encumbrance and rights created by this Mortgage, Security Trustee may accept (but Grantor shall not be obligated to furnish) from Grantor or from any other Person or Persons, additional security for the Secured Moneys. Neither the giving of this Mortgage nor the acceptance of any such additional security shall prevent Security Trustee from resorting, first, to such additional security, and, second, to the security created by this Mortgage without affecting Security Trustee's Encumbrance and rights under this Mortgage. SECTION 5.17. Release. The Mortgaged Property shall be released from the Encumbrance of this Mortgage in accordance with the provisions of the Loan Agreement, or at such time as all Secured Moneys have been paid in full and all commitments to make loans and extend credit under the Loan Agreement have terminated. Security Trustee, on the written request and at the expense of Grantor, will execute and deliver such proper instruments of release and satisfaction or assignment as may reasonably be requested to evidence such release or assignment, and any such instrument, when duly executed by Security Trustee and duly recorded by Grantor in the places where this Mortgage is recorded, shall conclusively evidence the release or assignment of this Mortgage. SECTION 5.18. Certain Expenses of Security Trustee. If any action, suit or other proceeding affecting the Mortgaged Property or any part thereof be commenced, in which action, suit or proceeding Security Trustee is made a party or participates or in which the right to use the Mortgaged Property or any part thereof is threatened, or in which it becomes necessary in the judgment of Security Trustee to defend or uphold the Encumbrance of this Mortgage (including, without limitation, any action, suit or proceeding to establish or uphold the compliance of the Improvements with any Requirements of Law), then all amounts paid or incurred by Security Trustee for the expense of any such action, suit or other proceeding or to protect its rights therein (whether or not it is made or becomes a party thereto) or otherwise to enforce or defend the rights and Encumbrance created by this Mortgage, shall be paid by Grantor upon demand together with interest at the overdue rate of interest set forth in the Loan Agreement from the date of the payment or incurring thereof to the date of repayment, and any such amount and the interest thereon shall be a Encumbrance on the Mortgaged Property, prior to any right, or right to, interest in, or claim upon the Mortgaged Property attaching or accruing subsequent to or otherwise subordinate to the Encumbrance of this Mortgage, and the same shall be deemed to be secured hereby. All other amounts paid, advanced or incurred by Security Trustee in order to secure and protect the Encumbrance of this Mortgage or other security provided hereunder shall be a like Encumbrance on the Mortgaged Property and be deemed to be secured hereby. SECTION 5.19. Expenses of Collection. Grantor will upon demand pay to Security Trustee the amount of any and all expenses, including the reasonable fees and expenses of its counsel and the reasonable fees and expenses of any experts and agents, which Security Trustee may incur in connection with (i) the collection of the Secured Moneys, (ii) the enforcement and administration of this Mortgage, (iii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Mortgaged Property, (iv) the exercise or enforcement of any of the rights of Security Trustee hereunder or (v) the failure by Grantor to perform or observe any of the provisions hereof. All amounts payable by Grantor under this Section 5.19 shall be due upon demand and shall be part of the Secured Moneys. Grantor's obligations under this Section 5.19 shall survive the termination of this Mortgage and the discharge of Grantor's other obligations hereunder. SECTION 5.20. Business Days. In the event any time period or any date provided in this Mortgage ends or falls on a day other than a Business Day, then such time period shall be deemed to end and such date shall be deemed to fall on the next succeeding Business Day, and performance herein may be made on such Business Day, with the same force and effect as if made on such other day. SECTION 5.21. Relationship. The relationship of Security Trustee to Grantor hereunder is strictly and solely that of holder and issuer or guarantor and Grantor and Security Trustee and nothing contained in this Mortgage, the Loan Agreement or any of the other Transaction Documents is intended to create, or shall in any event or under any circumstance be construed as creating a partnership, joint venture, tenancy -in- common, joint tenancy or other relationship of any nature whatsoever between Security Trustee and Grantor other than as holder and issuer or guarantor and Grantor and Security Trustee. SECTION 5.22. Intentionally Omitted. SECTION 5.23. Waiver of Stay. 26 00030 5.23.1. Grantor agrees that in the event that Grantor or any property or assets of Grantor shall hereafter become the subject of a voluntary or involuntary proceeding under the Bankruptcy Code or Grantor shall otherwise be a party to any federal or state bankruptcy, insolvency, moratorium or similar proceeding to which the provisions relating to the automatic 0003 stay under Section 362 of the Bankruptcy Code or any similar provision in any such law is applicable, then, in any such case, whether or not Security Trustee has commenced foreclosure proceedings under this Mortgage, Security Trustee shall be entitled to relief from any such automatic stay as it relates to the exercise of any of the rights and remedies (including, without limitation, any foreclosure proceedings) available to Security Trustee as provided in this Mortgage. 5.23.2. Security Trustee shall have the right to petition or move any court having jurisdiction over any proceeding described in subsection 5.23.1 for the purposes provided therein, and Grantor agrees (i) not to oppose any such petition or motion and (ii) at Grantor's sole cost and expense, to assist and cooperate with Security Trustee, as may be requested by Security Trustee from time to time, in obtaining any relief requested by Security Trustee, including, without limitation, by filing any such petitions, supplemental petitions, requests for relief, documents, instruments or other items from time to time requested by Security Trustee or any such court. SECTION 5.24. Continuing Security Interest; Assignment. This Mortgage shall create a continuing lien on and security interest in the Mortgaged Property and shall (i) be binding upon Grantor, its successors and assigns and (ii) inure, together with the rights and remedies of Security Trustee hereunder, to the benefit of Security Trustee, as security trustee for the Financiers and Agent, and each of their successors, transferees and assigns; no other Persons (including, without limitation, any other creditor of Grantor) shall have any interest herein or any right or benefit with respect hereto. Without limiting the generality of the foregoing clause (ii), any subsequent holder of indebtedness secured by this Mortgage may assign or otherwise transfer any indebtedness held by it and secured hereby to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such holder, as the case may be, herein or otherwise, subject however, to the provisions of the Loan Agreement and the other Transaction Documents. SECTION 5.25. Obligations Absolute. All obligations of Grantor hereunder shall be absolute and unconditional irrespective of: (i) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of Grantor or the Borrower; (ii) any lack of validity or enforceability of the Loan Agreement or any of the other Transaction Documents, or any other agreement or instrument relating thereto; (iii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Moneys, or any other amendment or waiver of or any consent to any departure from the Loan Agreement or any of the other Transaction Documents, or any other agreement or instrument relating thereto; (iv) any exchange, release or non perfection of any other collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Secured Moneys; and 27 00037 (v) any exercise or non exercise, or any waiver of any right, remedy, power or privilege under or in respect of this Mortgage, the Loan Agreement or any of the other Transaction Documents, or any other agreement or instrument relating thereto, except as specifically set forth in a waiver granted pursuant to the provisions of Section 5.12 hereof. SECTION 5.26. Security Trustee's Right To Sever Indebtedness. 5.26.1. Intentionally Omitted. 5.26.2. Grantor hereby waives to the greatest extent permitted under law the right to a discharge of any of the Secured Moneys under any statute or rule of law now or hereafter in effect which provides that foreclosure of the Encumbrance of this Mortgage or other remedy exercised under this Mortgage constitutes the exclusive means for satisfaction of the Secured Moneys or which makes unavailable a deficiency judgment or any subsequent remedy because Security Trustee elected to proceed with a power of sale foreclosure or such other remedy or because of any failure by Security Trustee to comply with laws that prescribe conditions to the entitlement to a deficiency judgment. In the event that, notwithstanding the foregoing waiver, any court shall for any reason hold that Security Trustee is not entitled to a deficiency judgment, Grantor shall not (a) introduce in any other jurisdiction such judgment as a defense to enforcement against Grantor of any remedy in the Loan Agreement or any of the other Transaction Documents, or any other document or instrument related thereto, or (b) seek to have such judgment recognized or entered in any other jurisdiction, and any such judgment shall in all events be limited in application only to the state or jurisdiction where rendered. 5.26.3. In the event any instrument is necessary to effectuate the provisions of this Section 5.26, including, without limitation, any amendment to this Mortgage, any substitute promissory note or affidavit or certificate of any kind, Security Trustee may execute, deliver or record such instrument as the attorney -in -fact of Grantor. Such power of attorney is coupled with an interest and is irrevocable. 5.26.4. Notwithstanding anything set forth herein to the contrary, the provisions of this Section 5.26 shall be effective only to the maximum extent permitted by law. This Page Intentionally Left Blank; Signature Page Follows 28 IN WITNESS WHEREOF, Grantor has caused this Mortgage to be duly executed and delivered under seal on September 2012, to be effective as of the day and year first above written. STATE OF TEXAS COUNTY OF HARRIS (Seal, if any) My commission expires: a� 40....,4. ELIZABETH B. EVANS 1 Notary Public, State of Texas My Commission Expires S November 14, 201 516181 000006 525084.1 .4- GRANTOR: LINC ENE GY (WYOMING), INC. By ACKNOWLEDGMENT Signa f notarial officer Tit e of notarial officer Gerry Agranoff, orporate ecretary 00033 This instrument was acknowledged before me on the (S day of September, 2012 by Gerry Agranoff as Corporate Secretary of Linc Energy (Wyoming), Inc., a Delaware corporation. Introduction to Schedule A to Mortgage (Description of Land) The properties listed on the attached schedule are described by reference to: (a) the date of the instrument, (b) the book and the page, if any, in which the instrument is recorded, (c) the County in which the property is located, and (d) the record owner. The description of the property and the instruments to which the Schedule refers are incorporated hereby by reference with the same force and effect as if the same were set forth at length herein. Schedule A 9 03 Introduction to Schedule B Mortgaged Leases The leases listed on the attached schedule are described by reference to: (a) the Lessor, (b) the date of the instrument, (c) the book and page, if any, at which the instrument is recorded (d) the county in which the instrument is recorded, (e) if recording information is unavailable, a description of the property, including watershed where available, and (f) a record owner of the referenced property. The description of the properties included in the leases and the instruments to which the Schedule refers are incorporated herein with the same force and effect as if the same were set forth at length herein. Schedule B 00035 Schedule C -1 0 Schedule C Secured Moneys The "Secured Moneys" referred to in the foregoing Agreement are as follows: 1. All indebtedness and other obligations now or hereafter incurred or arising pursuant to the provisions of that certain Loan Facility Agreement dated January 24, 2012, as amended and restated pursuant to Amending Deed No. 1 (Loan Facility Agreement) dated September 5, 2012 among Linc Energy Ltd., an Australian corporation "Borrower various subsidiaries, including Grantor, as guarantors, the financiers named therein (the "Financiers FCCD (Australia) Pty Ltd ACN 134 182 380, as agent "Agent and arranger, and FCCD (Australia) Nominee Pty Ltd ACN 134 182 657, as security trustee under the security trust created pursuant to that certain Security Trust Deed dated January 24, 2012 between Borrower and others and Security Trustee (in such capacity as Security Trustee, "Security Trustee and all supplements thereto and amendments or modifications thereof, and all agreements given in substitution therefor or in restatement, renewal or extension thereof, in whole or in part (such Loan Facility Agreement as the same may from time to time be supplemented, amended or modified, and all other agreements given in substitution therefor or in restatement, renewal or extension thereof, in whole or in part, being herein called the "Loan Agreement 2. Those certain Funding Portions in the maximum aggregate stated principal amount of AUS $120,000,000 that may be made from time to time pursuant to the Loan Agreement by Financiers to the Borrower, and all notes from time to time evidencing such loans (such loans, as from time to time supplemented, amended or modified, and all other notes given in substitution therefor, or in modification, renewal or extension thereof, in whole or in part, are herein collectively called the "Funding Portions 3. All indebtedness and other obligations now or hereafter incurred or arising pursuant to the provisions of the guaranty set forth in Section 11 of the Loan Agreement from Grantor for the benefit of Security Trustee, the Financiers and Agent, guarantying the indebtedness of Borrower under the Loan Agreement and the other Transaction Documents, and all supplements thereto and amendments or modifications thereof, and all agreements given in substitution therefor or in restatement, renewal or extension thereof, in whole or in part (such guaranty as the same may from time to time be supplemented, amended or modified, and all other agreements given in substitution therefor or in restatement, renewal or extension thereof, in whole or in part, being herein called the "Guaranty 4. All indebtedness and other obligations now or hereafter incurred or arising pursuant to or permitted by the provisions of the Loan Agreement, the Guaranty, this Mortgage or any other instrument now or hereafter evidencing, governing, guaranteeing or securing the "secured indebtedness" (as hereinafter defined) or any part thereof or otherwise executed in connection with any advance or loan evidenced or governed by the Loan Agreement; Schedule C -2 5. All other loans and future advances made pursuant to the Loan Agreement by one or more of the Financiers to Grantor and all other debts, obligations and liabilities of Borrower or Grantor of every kind and character now or hereafter existing in favor of one or more of the Financiers pursuant to the Loan Agreement, whether direct or indirect, primary or secondary, joint or several, fixed or contingent, it being contemplated that Borrower or Grantor may hereafter become indebted to one or more Financiers for such further debts, obligations and liabilities; and 6. Without limiting the generality of the foregoing, all post petition interest, expenses, and other duties and liabilities with respect to indebtedness or other obligations described above which would be owed but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization, or similar proceeding. It is the intention of Grantor, Security Trustee, Agent and Financiers that this Mortgage not constitute a fraudulent transfer or fraudulent conveyance under any state or federal law that may be applied hereto. Grantor, and by their acceptance hereof, Security Trustee, Agent and Financiers hereby acknowledge and agree that, notwithstanding any other provision of the Mortgage: (a) the indebtedness secured hereby shall be limited to the maximum amount of indebtedness that can be incurred or secured by Grantor without rendering this Mortgage voidable under applicable law relating to fraudulent conveyances or fraudulent transfers, and (b) the Mortgaged Property granted by Grantor hereunder shall be limited to the maximum amount of Mortgaged Property that can be granted by Grantor without rendering this Mortgage voidable under applicable law relating to fraudulent conveyances or fraudulent transfers. o ,o uoq.isp uoq.re3 �oo ,00 uogieD uloou1Z lalempams sang 017 0179 0179 0179 0179 0179 0179 I 0179 0179 9BU8g Iso Isom Isom Isom ISam Isom Is om I Isom 16 16 Z6 06 06 I6 Z6 I Lit 06 Township T.lJJ °N 1 r1l -roN qoN 4 u twoN uu I twoN u1 ZI £1 £1 £1 171 £I Z1 61 OZ Description NENW Section 17 Tract 41 (formerly All Sec. 36) All Section 36 All Section 36 All Section 16 All Section 16 All Section 16 All Section 16 91 uopoaS 1117' Recorded ale(' aseaq 6/2/2011 6/2/2011 8/2/2011 8/2/2011 8/2/2011 8/2/2011 1 I I OZ /Z /8 8/2/2011 •oN asna7 alelS N N 00 ON O O O O O O 00 00 00 00 00 00 00 N N N N N N N 000000 0 00038 516181 000006 Active 5263546.1