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HomeMy WebLinkAbout899922WHEN RECORDED RETURN TO: HICKEY & MACKEY 1800 Carey Avenue. Suite 700 P.O. Box 467 Cheyenne, WY 82003-0467 Attn: Scott W. Meier 899922 ~,.:' '. MORT-~AGE-COLLATERAL REAL ESTATE MORTGAGE, ASSIGNMENT OF AS-EXTRA,CTED COLLATERAL, SECURITY AGREEMENT AND FINANCING STATEMENT FROM CONDOR EXPLORATION, LLC, AS TIlE MORTGAGOR TO CASINO CREDIT CORPORATION, AS THE MORTGAGEE A CARBON, PHOTOGRAPHIC, OR OT}IER REPRODUCTION OF THIS INSTRUMENT IS SUFFICIENT AS A FINANCING STATEMENT. A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRLrMENT. IN CERTAIN STATES, A POWER OF SALE MAY ALLOW THE MORTGAGEE TO TAKE THIS MORTGAGED PROPERTY AND SELL IT WITHOUT GO1N(; TO COURT IN A FORECLOSURE ACTION UPON DEFAULT IIY THE MORTGAGOR UNDER Tills INSTRUMENT. THIS INSTRUMENT CONTAIN:; AEI'ER:ACQUIRED PROPERTY PROVISIONS. THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES. THIS INSTRUMENT COVERS FROCEEDS OF MORTGAGED PROPERTY. THIS INSTRUMENT COVERS AS-EXTRACTED COLLATERAL AND OTHER MINERALS AND OTI-IER SUBSTANCES OF VALUE WHICII MAY BE EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION OIL AND GAS) AND WHICH WILL BE FINANCED AT THE WELLHEADS OF THE WELL OR WELLS LOCATED ON THE PROPERTIES DESCRIBED 1N THE EXHIBITS HERETO. Tills FINANCING STATEMENT IS TO BE FILED OR FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR SIMILAR RECORDS OF THE COUNTY RECORDERS OF THE COUNTIES LISTED ON TIlE EXHIBITS HERETO. THE MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE CONCERNED, WHICH INTEREST IS DESCRIBED IN TIlE EXItlBITS AI~FACHED HERETO. PORTIONS OF THE MORTGAGED PROPERTY ARE GOODS WHICH ARE OR ARE TO BECOME AFFIXED TO OR FIXTURES ON THE LAND DESCRIBED IN OR REFERRED TO IN THE EXHIBITS HERETO. THIS FINANCING STATEMENT IS TO Big FILED FOR RECORD OR RECORDED, AMONG OTHER PLACES, IN TIlE REAL ESTATE RECORDS OR SIMILAR RECORDS OF EACH COUNTY 1N WHICH SAID LAND OR ANY PORTION THEREOF IS LOCA.TED. THE MORTGAGOR IS TIlE OWNER OF RECORD INTEREST IN THE REAL ESTATE CONCERNED. THIg INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS. 601816.0000 WEST 5492498 v.2 Section 1.01 Section 1.02 Section 1.03 Section 1.04 Section 1.05 Section 2.01 Section 2.02 Section 2.03 Section 3.01 Section 3.02 Section 3.03 Section 3.04 Section 3.05 Section 3:06 Section 3.07 Section 3.08 Section 3.09 Section 3.10 Section 3.11 Section 3.12 Section 3.13 Section 3.14 Section 3.15 Section 3.16 Section 3.17 Section 4.01 Section 4.02 Section 4.03 Section 4.04 Section 4.05 TABLE OF CONTENTS Page ARTICLE I Grant of Lien and Obligations Secured Grant of Liens ................................................................................................. 2 Grant of Security Interest ................................................................................ 5 Obligatior. s Secured ........................................................................................ 5 Fixture) Filing, Etc ........................................................................................... 7 Defined Terms ................................................................................................ 7 ARTICLE II Assignment of As-Extracted Collateral Assignment ..................................................................................................... 7 No Mc~dification of Payment Obligations ....................................................... 9 Rights of Producers ......................................................................................... 9 ARTICLE IH Representations, Warranties and Coven ants Title ................................................................................................................. 9 Perfect:ed Liens; Defend Title ......................................................................... 9 Further Assurances ........................................................................................ 10 The Mortgagor's Information ....................................................................... 1.1 Not a Foreign Person .................................................................................... 11 Power to Create Lien and Security ............................................................... 11 Rental'i Paid; Leases in Effect ....................................................................... 11 Operation of the Mortgaged Property, Etc..: ................................................. 11 Operation By Third Parties ........................................................................... 12 Aband. on, SaFes ................................................................... 12 Instrur~qents and Chattel Paper 12 Accounts ....................................... . ................................................................. 13 Limitations on Modifications, Waivers, Extensions' of Agreements ............ 13 Analyi;is of Accounts, Etc ............................................................................. 13 Insurance ....................................................................................................... 13 Furthe? Identification of Collateral ............................................................... 14 Failur<. to Perform ......................................................................................... 14 ARTICLE IV Rights and Remedies Event .of Default ............................................................................................ 14 Forecl,)sm'e .................................................................................................... 14 P,'u'tial Foreclosure ........................................................................................ 15 Power of Sale ................................................................................. ~ .............. 16 Receiver ........................................................................................................ 16 601815.0000 WEST 5492498 v.2 Section 4.06 Section 4.07 Section 4.08 Section 4.09 Section 4.10 Section 4.11 Section 4.12 Section 4.13 Section 4.14 Section 4.15 Section 4.16 Section 4.17 Section 4.18 Section 4.19 Section 4.20 Section 4.21 Section 4.22 Section 4.23 · 7'-38 Personi'fl Property Remedies ......................................................................... 16 Co]]ect~lonsl on Accounts, Etc ........................................................................ 17 Proceeds.,.~. .......................................... ~ 18 The Mortgagee and Agents ........................................................................... 18 Foreclcsure for Installments 18 Separate 'sales 19 The Mortgfigee as Purchaser ......................................................................... 19 Possession of the Mortgaged Property and Collateral .................................. 19 Occupancy) After Foreclosure ........................ 19 Remed!es Cumulative, Concurrent and Nonexclusive ................................. 20 No Release of Obligations ............................................................................ 20 Release of and Resort to Collateral .................................... 21 Certain Waivers ............................................................................................ 21 Disconqnuance of Proceedings ..................................................................... 22 Applic~tior,. of Proceeds ................................................................................ 23 Indemnity ...................................................................................................... 23 The Mortgagee Not "Mortgagee-In-Possession". ......................................... 24 The Mortgagee Attorney tn Fact ................................................................... 24 Section 5.01 Section 5.02 Section 5.03 Section 5.04 Section 5.05 Section 5.06 Section 5.07 Section 5.08 Section 5.09 Section 5.10 Section 5.11 Section 5.12 Section 5.13 Section 5.14 Section 5.15 Section 5.16 ARTICLE V Miscellaneous Scope of Mortgage ........................................................................................ 24 Place of Payment ........................................................................................... 24 Release: of Mortgage ..................................................................................... 24 Partial Releases ............................................................................................. 24 Acts Not Constituting Waiver ....................................................................... 25 Severability ................................................................................................... 25 Satisfactiop.. of Prior Encumbrance ............................................................... 25 Nature of Covenants ..................................................................................... 25 Notices ......................................................................................................... 25 Counte'~ar':s .................................................................................................. 26 Governing Law ............................................................................................. 26 Exculp ~tion Provisions ................................................................................. 26 Terms Generally; Rules of Construction ...................................................... 27 Recording ...................................................................................................... 27 Application of Payments to Certain Obligations .......................................... 27 Compliance with Usury Laws ....................................................................... 27 Exhibit A Morl gaged Property 601815.0000 WEST 5492498 v.2 2 ,799 MORTGAGE-COLLATERAL REAL ESTATE MORTGAGE, ASSIGNMENT OF AS- EXTRACTED COLLATERAL, SECURITY AGREEMENT AND FINANCING STATEMENT This MORTGAGE-.COLLATERAL REAL ESTATE MORTGAGE, ASSIGNMENT OF AS-EXTRACTED cOLLATERAL, SECURITY AGREEMENT AND FINANCING STATEMENT (as the sante re'ay from time to time be amended, modified, supplmnented or restated, this "Mortgage") is entered into as of April 2, 2004 by CONDOR EXPLORATION, LLC, a Nevada linfited liability company (the "Mortgagor"), in favor of CASINO CREDIT CORPORATION, a Nevad ~ cot;poration (the "Mortgagee") RECITALS: A. Of even date herewith, the Mortgagor executed that certain Promissory Note (as the same may from time to time be amended, modified, supplemented or restated, the "Note") in favor of Mortgagee. Mortgage. In connection with the Note, the Mortgagor is executing and delivering this C. Mortgagor has s01d substantially all of it's assets to Palace Exploration Company and Nevada Petroleum, [,LC in the Palace Transaction. "Palace Transaction" means the transaction (i) by which Mor}gagor, Palace Exploration Company, Zinke & Trumbo, Inc., Nevada Petroleum, LLC, ~'.nd ltors'etrap Partners, LLC entered into an Amended and Restated Exploration and Development Agreement (Darby Thrust) (the "EDA"); (ii) by which Mortgagor, Mortgagee, Horsetrap Partners, LLC, Oregon Lifestyles Realty, Inc., Steven Trono, Palace Exploration Company, Zihke & Trumbo, Inc., and Nevada Petroleum, LLC entered into a Subordination Agreement, dated September 24, 2003 (the "Subordination Agreement"); and (iii) which was approved by' the Order Granting Debtor's Sale Motion entered by the United States Bankruptcy Court for the District of Wyoming on September 24, 2003 in In re Condor Exploration, LLC, Debtor, Cas¢i No. 03-21226. D. The Palace Transaction required Mortgagor to commit certain assets that form pm-t of the Collateral under'this Agreement to the parties to the Palace Transaction; E. Certain ope':'ations conducted as part of the Palace Transaction are conducted under a Joint Operating Atireeraent which creates an operator's lien applicable to certain assets that form part of the Collateral under this Agreement; and F. Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Mortgagor hereby agrees with the Mortgagee as follows: 601816.0000WEST 5492498 v.2 ARTICLE I _Grant of Lien and Obligations Secured 800 Section 1.01 Grant of Liens. Subject to the first priority of the Palace 'Transaction, the Mortgagor, in order to secrete the prompt and complete payment of the Obligations hereinafter referred to and the performance of the obligations, covenants, agreements, warranties and undertakings of the Mortgagor hereinafter described, does hereby MORTGAGE, ASSIGN, WARRANT, HYPOTHECATE and PLEDGE to the Mortgagee with a POWER OF SALE (pursuant to this Mortgage and applicable law), the real and personal property, rights, titles, interests and estates descril:¢ed in Section 1.01 (a) through (h) (collectively called the "Mortgaged Property"): (a) All rights~ titles, interests and estates now owned or hereafter acquired by the Mortgagor in and to thc oil and gas leases and/or oil, gas and other mineral leases and other interests and estates and the lands and premises covered or affected thereby which are described on Exhibit A hereto (collectively called the ".Hydrocarbon Property"), including without limitation, the undivided interests of the Mortgagor which are more particularly described on attached Exhibit A. (b) All flights, titles, interests and estates now owned or hereafter acquired by the Mortgagor in and to:~ (i)the properties now or hereafter pooled or unitized with the Hydrocarbon Property; (ii) all presently existing or future unitization, communitization, pooling agreements and declaratio~s of pooled units and the units created thereby (including, without limitation, all units created under orders, regulations, rules or other official acts of any federal, state or other governmental body or agency having jurisdiction and any units created solely among working interest owner[s pursuant to operating agreements or otherwise) which may affect all or any portion of the Hydrocarbon Property including, without limitation, those units which may be described or refem:d to on attached Exhibit A; (iii) all operating agreements, production sales or other contracts, fannout agreements, farm-in agreements, area of mutual interest agreements, equipmen[leasesiand Other agreements described or referred to in this Mortgage or which relate to any of the HydrOcarbon Property or interests in the Hydrocarbon Property described or refen'ed to h~rei.n or on attached Exhibit A or to the production, sale, purchase, exchange, processing, handling, storage, transporting or marketing of the Hydrocarbons (hereinafter defined) from or attributable to such Hydrocarbon ProPerty or interests; (iv) all geological, geophysical, engineering, accounting, title, legal, and other technical or business data concerning the Mortgaged Property, the Hydrocarbons, or any other item of Property which are in the possession of the Mortgagor or in which the Mortgagor can otherwise grant a security interest, and all books, files, records, magnetic media, computer records, and other forms of recording or obtaining access to such data; and (v) the Hydrocarbon Property described on attaChed Exhibit A and covered by this Mortgage even though the Mortgagor's interests therein be incorrectly described or a description of a part or all of such Hydrocarbon Property or the Mortgagor's interests therein be omitted; it being intended by the Mortgagor and the Mortgagee herein to cover and affec:': hereby all interests which the Mortgagor may now own or may hereafter acquire in and m the Hydrocarbon Property notwithstanding that the interests as specified on Exhibit A may be limited to particular lands, specified dePths or particular types of property interests. 601816.0000 WEST 5492498 v.2 2 (c) All of t~e Mortgagor's rights, titles and interests in and to all surface fees and fee estates described in EXhibit A, compressor sites, settling ponds, equipment or pipe yards, office sites, office buildingi m~d all property and fixtures located thereon, whether such surface fees, fee estates, compressor s:'.ites, settling ponds, equipment or pipe yards, office sites, office buildings are fee simple e;tates, leasehold estates or otherwise, together with all present and future rights, titles, easem~nts~ and estates now owned or hereafter acquired by the Mortgagor under or in connection with isuch interest (all of which properties described in this Section 1.01(c) are referred to colle?tively as the "Surface Rights"). (d) All r!ghts, titles, interests and estates now oWned or hereafter acquired by the Mortgagor in and to all oil:, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarl:ons, gaseous hydrocarbons and all products refined or separated therefrom and all other minei-als (collectively called the "_H. ydrocarbons") in and under and which may be produced and Saved from or attributable to the Hydrocarbon Property, the lands pooled or unitized therewith and the Mortgagor's interests therein, including all oil in tanks and all rents, issues, profits, proceeds, products, revenues and other income from or attributable to the Hydrocarbon Property, the lands pooled or unitized therewith and the Mortgagor's interests therein which are subjected or required to be subjected to the liens and security interests of this Mortgage and including specifically but without limitation all liens and security interests in such Hydrocarbons securing payment of proceeds resulting from the sale of Hydrocarbons. (e) All tgnements, hereditaments, appurtenances and properties in any way appertaining, belonging, affixed or incidental to the Hydrocarbon Property, rights, titles, interests and estates described or referred to in Sections 1.01(a) and (b) above, which are now owned or which may hereafter be acquired by the Mortgagor, including, without limitation, any and all property, real or personal, now' owned or hereafter acquired and situated upon, used, held for use, or useful in connection with the operating, working or development of any of such Hydrocarbon Property or the lands pooled or unitized therewith (excluding drilling rigs, trucks, automotive equipment or other personal property which may be taken to the premises for the purpose of drilling a well or for other ~',imilar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, buildings, structures, field separators, liquid extraction plants, plant compressors, pumps, primping units, pipelines, sales and flow lines, gathering systems, field gathering systems, sa!t Water disposal facilities, tanks and tank batteries, fixtures, valves, fittings,' machinery and parts,? engines, boilers, stemn generation facilities, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements, servitudes, licenses and other surface and subsurface rights together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing properties.' (f) Any'property that may from time to time hereafter, by delivery or by writing of any kind, be subjected to the lien and security interest hereof by the Mortgagor or by anyone on the Mortgagor's behalf; and the Mortgagee is hereby authorized to receive the same at any time as additional security hereunder. (g) All of the rights, titles and interests of every nature whatsoever now owned or hereafter acquired by the Mortgagor in and to the Hydrocarbon Property rights, titles,. interests and estates and every part and parcel thereof, including, without limitation, the 601816.0000 WEST 5492498 v.2 Hydrocarbon Property rights, titles, interests and estates as the same may be enlarged by the discharge of any payments out :of production or by the removal of any charges or liens to which any of the Hydrocarbon Pr3perty rights, titles, interests or estates are subject, or otherwise; all rights of the Mortgagor to liens: and security interests securing payment of proceeds from the sale of production from the Mortgaged Property; together with any and all renewals and extensions of any of the Hydrocarbon Property rights, titles, interests or estates; all contracts and agreements supplemental to or amendatory :of or in substitution for the contracts and agreements described or mentioned above; and any an~t all additional interests of any kind hereafter acquired by the Mortgagor in and to the Hydrocarbon Property rights, titles, interests or estates. (h) All property of every kind and character which the Mortgagor has or at any time hereafter acquires, whether real or personal property, tangible or intangible, or mixed, all other interests of every idnd and character which the Mortgagor has or at any time hereafter acquires in and to the types and items of property and interests described in Section 1.01(a) through (g) preceding, all property which is used or useful in connection with the Mortgaged Property or otherwise, and the proceeds and products of all of the foregoing, whether now owned or hereafter acquired, including, without limitation: (i) All present and future personal property; (ii) All present and furore increases, profits, combinations, reclassifications, improvements and products of, accessions, attachments and other additions to, tools, ,parts and equipment used in connection with, and substitutes and replacements for, al~ or any part of the Mortgaged Property described in this or any other clause of this Section 1.01 (h); (iii) All present and future As-extracted collateral, Accounts, Equipment, Inventolry, contract rights, General Intangibles, Chattel Paper, Documents, Instruments, Fixtures, cash and noncash Proceeds and other rights arising from or by virtue of, or from the voluntary or involuntary sale or other disposition of, or collections with respect to, or insurance proceeds or unearned insurance premiums payable with respect to, or pr6ceeds payable by virtue of wan'anty or other claims against manufacturers of, or claims against any other person or entity with respect to, all or any part of the Hydrocarbons or the Mortgaged Property; and (iv) All present and future security for the payment to the Mortgagor of any o.l~ the Mortgaged Property and goods which gave or will give rise to any of such Mortgaged Property or are evidenced, identified, or represented therein or thereby. Any fractions or percentages specified on attached Exhibit A in referring to the Mortgagor's interests are solely for purposes of the warranties made by the Mortgagor pursuant to Section 3.01 hereof and shall in no manner limit the quantum of interest affected by this Section 1.01 with respect .to any Hydrocarbon Property or with respect to any unit or well identified on said Exhibit A. 601816.0000 WEST 5492498 v.2 4 TO HAVE AND;TO HOLD the Mortgaged Property unto the Mortgagee and its successors and assigns forsve~ to secure the payment of the Obligations (as defined herein) and to secure the performance af the covenants, agreements, and obligations of the Mortgagor herein contained. Section 1.02 Grant of Security Interest. Subject to the first priority of the Palace Transaction, the Mortgagor hereby grants to the Mortgagee, for its benefit, a security interest in and to all of the Mortgagor's right, title and interest in and to the following Property of the Mortgagor now owned or at any time hereafter acquired by the Mortgagor or in which the Mortgagor now has or at any time in the future may acquire any right, title or interest and whether now existing or hereafter coming into existence related to the Mortgaged Property (collectively, the "Collatef:al") as collateral security for the prompt and complete payment and performance when due (xi~hether at the stated maturity, by acceleration or otherwise) of the Obligations (as defined herein): (a) all Accounts; 00) all General Intangibles and all rights under insurance contracts and rights to in surance proceeds; (c) all Fixtures); all Goods (including, without limitation, all Inventory, all Equipment and (d) by a writing); all Letter-of-Credit Rights (whether or not the letter of credit is evidenced (e) all As-extracted collateral; (f) all books and records pertaining to the Collateral; (g) to the extent not otherwise included in the Collateral, the Mortgaged Property insofar as the lvlortgaged Property consists of personal property of any kind or character; and (h) to tke, extent not otherwise included, all Proceeds and products of any and all of the foregoing and all: co[;ateral security, guarantees and other Supporting Obligations given with respect to any of the foregoing. Section 1.03 Obligations Secured. This Mortgage is executed and delivered by the Mortgagor to secure and enforce the following (collectively, the "Obligations"): (a) all indebtedness, obligations, liabilities and undertakings (including, without limitation, the Indebtedness) of any kind or description, whether now in existence or hereafter arising, whether by acceleration or otherwise, of the Mortgagor, arising out of or outstanding under, advanced or issued pursuant to, or evidenced 'by, the Note and all other notes given in substitution for the foregoing Note, or in modification, renewal, rearrangement or extension thereof, in whole or in part, and with interest, collection and attorneys' fees, all as provided therein. 601816.0000 WEST 5492498 v.2 5 (b) all additional loans or advances made by the Mortgagee to or for the benefit of the Mortgagor pursuant to the Note (it being contemplated that the Mortgagee may tend additional sums to the-'-Mortgagor pursuant to the Note from time to time, but shall not be obligated to do so, and the Mortgagor agrees that the payment of any such additional loans shall be secured by this Mortgage). (c) any s"an-~ which may be advanced or paid by the Mortgagee under the terms hereof or of the Not~ on account of the failure of the Mortgagor or any other obligor to comply with the covenants 0f the Mortgagor or the obligor contained herein or in the Note; and all other indebtedness, oblig'ati0ns, liabilities and undertakings of the Mortgagor arising out of or outstanding under, or evidenced by, this Mortgage, including penalties, indemnities, legal and other fees, charges and exp,enses, and amounts advanced by and expenses incurred in order to preserve any collateral or segur~ty interest, whether due after acceleration or otherwise. (d) all in';erest (including, without limitation, interest accruing at any post- default rate and interest accruing after the filing of any petition in bankruptcy, or the commencement of any inso'.vency, reorganization or like proceeding, whether or not a claim for post-filing or post-petition~ interest is allowed in such proceeding) in respect of all of the Obligations described in this Section 1.03 and all costs of collection and attorneys' fees, all as provided herein and in the Note. (e) All renewals, extensions, amendments and changes of, or substitutions or replacements for, all or any part of the Obligations described under paragraphs (a) through (e) in this Section 1.03. Section 1.04 Limitations on the Pledge of Collateral - Palace Transaction. Mortgagor, with the consent and knowledge of Mortgagee, entered into the Palace Transaction, and has made certain contractual comm/tments in relation to the Collateral. Mortgagee, as an inducement to Palace to enter into the Palace Transaction, entered into the Subordination Agreement as part of the Palace Transaction. Mortgagee hereby acknowledges that the Collateral, and any rights'.' of Mortgagee in relation to the Collateral, are subject to and subordinated to the terms ,'of the Palace Transaction. The terms of the Palace Transaction affecting Collateral and Mortgagee's rights in relation to the Collateral include but are not (i) production [?ayments made by Condor pursuant to the terms of the EDA, including all exhibits and schedules to the EDA; (ii) Condor's olc'.ligation to convey interests in oil and gas leases and related equipment, personal proper'(y, ~nd contracts free from any lien or encumbrance, as set forth in the EDA, including all exhilfits and schedules to the EDA; (iii) the oPtion o? the Buyers under the EDA to acquire facilities at the Horsetrap PrOspect, as defined in the EDA; (iv) the right of zinke & Trumbo, Inc. to place an operator's lien on oil and/or gas when extracted, and in all equipment, pursuant to the Joint Operating Agreement entered into as part of the Palace Transaction, and attached as Exhibit C to the EDA. 601816.0000 WEST 5492498 v.2 . 6 Mortgagee hereby irrevocably covenants that it shall use its best efforts to assure that Mortgagor remains able to perform its obligations under the Palace Transaction, and shall execute any instrument or agreement seasonably required by Palace Exploration Company or Zinke & Trumbo, Inc. to assure complete performance by Mortgagor of the Palace Transaction. Mortgagee hereby acknov'/ledges the priority of the terms and conditions of the Palace Transaction over any right, :tuty, obligation, or security interests created by this Agreement. Should Mortgagee come to,possess or control Collateral that is subject to the terms of the Palace Transaction, it shall perfomi the obligations of Mortgagor under the Palace Transaction in lieu of Mortgagor. Section 1.05 Fixture Filing, Etc. Without in any manner limiting the generality of any of the other provisions of this:Mortgage: (a) some portions of the goods described or to which reference is made herein :ire or are to become fixtures on the land described or to which reference is made herein or on attached Exhibit A; (b) the security interests created hereby under applicable provisions of the Uniform Commercial Code will attach to all As-extracted collateral, including the Hydrocarbons (nfinerals including oil and gas) or the Accounts resulting from the sale thereof at the wellhead or minehead located on the land described or to which reference is made herein; (c) this Mortg3ge is to be filed of record in the real estate records of the County in which the Mortgaged Property is located as a financing statement and a fixture filing; and (d) the Mortgagor is the record owner of the real estate or interests in the real estate comprised of the Mortgaged Property. A ca~'i~'bon, photographic, facsimile or other reproduction of this Mortgage or of any financing statement relating to this Mortgage shall be sufficient as a financing statement for any of the purposes referred to in this Section 1.05. Section 1.06 Defired Terms. Each capitalized term used in this Mortgage and not defined in this Mortgage shall have the meaning assigned such term in the Note, and if not therein defined, such capitalized term shall have the meaning assigned such term in the Uniform Commercial Code. Ter~ns fised herein that are defined in the Uniform Commercial Code shall have the same meanings in :this Mortgage. As used herein, "Uniform Commercial Code" means the Uniform Conunercial COde presently in effect in the State of Wyoming, as the same may be amended from time to time, and any successor statute thereto, except to the extent that the Uniform Cominercial Code of some other jurisdiction applies mandatorily. ARTICLE I2 A~ssignment of As-Extracted Collateral Section 2.01 Assif)nment. (a) Subje.,ct to the prior interest created by the Palace Transaction, including but not limited to the operator's lien created by the Joint Operating Agreement that is found as Exhibit C to the EDA, the..'Mcrtgagor has absolutely and unconditionally assigned, transferred, conveyed and granted a secari[y interest, and does hereby absolutely and unconditionally assign, transfer, convey and grant :~ security interest unto the Mortgagee, its successors and assigns, in and to: 601816.0000WEST 5492498 v.2 7 (i) all of its As-extracted collateral located in or relating to Oil and Gas Properties located in the county where this Mortgage is filed, including without limitation, all As:extracted collateral relating to the Hydrocarbon Properties, the Hydrocarbons and ~11 p::oducts obtained or processed therefrom; (ii) the revenues and proceeds now and hereafter attributable to such Oil and Gas Properties, including the Hydrocarbons, and said products and all payments in lieu, such as "take or pay" payments or settlements; and (iii) } all amounts and proceeds hereafter payable to or to become payable to the Morigagor or now or hereafter relating to any part of the subject interests or the Surface Righ,':s and all amounts, sums, monies, revenues and income which become payable to the Moirtgagor from, or with respect to, any of the Mortgaged Property, present or future, now o'r hereafter constituting a part of the Mortgaged Property. (b) The Hydrocarbons and products are to be delivered into pipe lines connected with the Mortgaged Property, or to the purchaser thereof, to the credit of the Mortgagee, free and clear of all taxes, charges, costs, and expenses; and ali such revenues and proceeds shall be paid directly co the Mortgagee, at its offices in Las Vegas, Nevada with no duty or obligation of any party paying the same to inquire into the rights of the Mortgagee to receive the same, what application.; is made thereof, or as to any other matter. The Mortgagor agrees to perform all such acts, and :20 execute all such further assignments, transfers and division orders, and other instruments as may Oe required or desired by the Mortgagee or any party in order to have said proceeds and revenues so paid to the Mortgagee. hi addition to any and all rights of a secured party under Sections 9-607 and 9-609 of the Uniform Commercial Code, the Mortgagee is fully authorized to receive and receipt for said revenues and proceeds; to endorse and cash any and all checks and drafts p:~yable to the order of the Mortgagor or the Mortgagee for the account of the Mortgagor received from or in connection with said revenues or proceeds and to hold the proceeds thereof in a bank account as additional collateral securing the Obligations; and to execute transfer and division orders in the name of the Mortgagor, or otherwise, with warranties binding the Mortgagor. During the continuation of an Event of Default, all proceeds received by the Mortgagee pursuant to this grant and assignment shall be at the Mortgagee's sole discretion remitted to the Mortgagor. The Mortgagee shall not be liable for any delay, neglect, or failure to effect 'collection of any >roceeds or to take any other action in connection therewith or hereunder. During the continuation of an Event of Default, the Mortgagee shall have the right, at its election, in the name t,f the Mortgagor or otherwise, to prosecute and defend any and all actions or legal proceedings deemed advisable by the Mortgagee in order to collect such funds and to protect the interests of the Mortgagee, and/or the Mortgagor, with all costs, expenses and attorneys' fees incurred in connection therewith being paid by the Mortgagor.. The Mortgagor hereby appoints the Mortgagee as its attorney-in-fitct to pursue any and all rights of the Mortgagor to liens on and ~security interests in the Hydrocarbons securing payment of proceeds of runs attributable to the Hyd,rocarbons which may be exercised during the continuation of an Event of Default. In add'trio{, to the rights granted to the Mortgagee in Section 1.01 of this Mortgage, the Mortgagor heretiy further transfers and assigns to the Mortgagee any and all such liens, security interests, financing statements or similar interests of the Mortgagor attributable to its interest in the Hydrocmbonig and proceeds of runs therefi'om arising under or created by any statutory provision, judicial decision or otherwise. The power of attorney granted to the 601816.0000 WEST 5492498 v.2 8 Mortgagee in this Section 2:01, being coupled with an interest, shall be ri'revocable so long as the Obligations or any part thereof rmnains unpaid. Until such time as an Event of Default has occurred and is continuing, the Mortgagee hereby grants to the Mortgagor a license to sell such HydrocarbonS and receive proceeds from the sale of Hydrocarbons, which license shall automatically terminate upq:~ such Event of Default and for so long as the same continues. Section 2.02 No Modification of Payment Obligations. Nothing herein contained shall modify or otherwise alter the' obligation of the Mortgagor to make prompt payment of all principal and interest owing on the Obligations when and as the stone become due regardless of whether the proceeds of the Hydrocarbons am sufficient to pay the same and the rights provided in accordance with the foregoing assignment provision shall be cunmlative of all other secnrity of any and every character now or hereafter existing to secure payment of the Obligations. Nothing in this Article II is intended to be an acceptance of collateral in satisfaction of the Obligations. Section 2.03 .Rigtit~ of Producers. The Mortgagor hereby grants, sells, assigns, sets over and mortgages unto the', Mortgagee during the term hereof, all of the Mortgagor's rights and interests pursuant to any pr!)vision of applicable law granting producers of oil and gas a lien on the oil and gas produced by them and on the resulting accounts receivable hereby vesting in the Mortgagee all'of the Mortg/~gor's rights as an interest owner to the continuing security interest in and lien upon the Mortgaged Property. ARTICLE III ~..epresentations, Warranties and Covenants The Mortgagor herepy represents, warrants and covenants as follows: Section 3.01 Title., To the extent of the undivided interests specified on attached Exhibit A, the Mortgagor is 12ossessed of the Mortgaged Property. The Mortgaged Property is free of any and all liens, other than liens that would not have a material adverse effect on the use of such Mortgaged Property. The Mortgagor is the legal and beneficial owner of the Collateral free and clear of any and al liens, other than liens that would not have a material adverse effect of the use of such Mortgaged Property. No financing statement or other public notice with respect to all or any part of ;he Collateral is on file or of record in any public office, except such as have been filed in favor cf the Mortgagee pursuant to this Mortgage. Section 3.02 Perfected Liens; Defend Title. (a) Subject to the rights of the parties to the Palace Transaction, this Mortgage is, and always will be kept', a direct second priority lien and security interest upon the real and personal property presently, constituting the Mortgaged Property. The security interests granted in the Collateral pursuant: to this Mortgage upon the filing of financing statements in the appropriate offices in the appropriate jurisdictions (which filings have been delivered to the Mortgagee in completed f6rm) will constitute valid perfected security interests in all of the Collateral in favor of the Mortgagee as collateral security for the Obligations, enforceable in accordance With the terms hereof against all creditors of the Mortgagor and any Persons purporting to purchase any, Collateral from the Mortgagor and are prior to all other liens on the 601816.0000WEST 5492498 v.2 9 Collateral in existence on the date hereof except for liens that have priority claim on the Collateral by operation of law. ~ (b) The Mortgagor will not create or suffer to be created or permit to exist any lien, secm'ity interest or charge prior to or on a parity with the lien and security interest of this Mortgage upon the Mortgaged Property or the Collateral or any part thereof or upon the rents, issues, revenues, profits and o~her income therefrom other than as contmnplated by Section 3.02(a) to exist, to the exteni_ c6ntemplated by the terms thereof. The Mortgagor will not create or suffer to be created or permit .to exist any lien, security interest or charge junior to the lien and security interest of this Mo:~-tgage upon the Mortgaged Property or the Collateral or any part thereof or upon the rents, issi~esi revenues, profits and other income therefrom. (c) The Mortgagor will warrant and defend against the claims and demands of all other Persons whomsoeve,r against the Mortgaged Property and will maintain and preserve the lien created hereby so long a.s any of the Obligations secured hereby remains unpaid. Should an adverse claim (other thari as contemplated by this Section 3.02) be made against or a cloud develop upon the title which, materially affects part of the Mortgaged Property or the Collateral, the Mortgagor agrees it will immediately defend against such adverse claim or take appropriate action to remove such clouil at the Mortgagor's cost and expense, and the Mortgagor further agrees that the Mortgagee may take such other action as they deem advisable to protect and preserve their interests in the Mortgaged Property and the Collateral, and in such event the Mortgagor will indemnify the Mortgagee against any and all cost, attorney's fees and other expenses which they may incur in defending against any such adverse claim or taking action to remove any such cloud. Section 3.03 Further Assurances. (a) At any time and frown time to time, upon the request of the Mortgagee, and at the sole expense of the iMortgagor, the Mortgagor will promptly and duly give, execute, deliver, .indorse, file or record any and all financing statements, continuation statements, amendments, notices (including without limitation, notifications to financial institutions and any other Person), contracts, agreements, assignments, certificates, stock powers or other instruments, obtain any and' all governmental approvals and consents and take or cause to be taken any and all steps or hcts. that may be necessary or advisable or as the Mortgagee may reasonably request to create, perfect, establish the priority of, or to preserve the validity, perfection or priority of, the liens granted by this Mortgage or to enable the Mortgagee to enforce its rights, remedies, powers and privileges under this Mortgage and the Note with respect to such liens or to otherwise obtain or Preserve the full benefits of this Mortgage and the rights, powers and privileges herein grantea. (b) With6'ut 15.miting the obligations of the Mortgagor under Section 3.03(a) or under any other provision of this Mortgage, upon the request of the Mortgagee, the Mortgagor shall take or cause to be taken all actions (other than any actions required to be taken by the Mortgagee) requested by the Mortgagee to cause the Mortgagee to (i) have "control" (within the meaning of Sections 9-104, 9-105, 9-106 and 9-107 of the Uniform Commercial Code) over any Mortgaged Property or Ccllateral constituting Deposit Accounts, Electronic Chattel Paper, Investment Property or Letter-of-Credit Rights, including, without limitation, executing and 6018160000 WEST 5492498 v.2 i ] 0 delivering any agreements, in form and substance satisfactory to the Mortgagee, with securities intermediaries, issuers or other Persons in order to establish "control", and the Mortgagor shall promptly notify the Mortgagee of the Mortgagor's acquisition of any such Collateral, and (ii) be a "protected purchaser" (as defined in Section 8-303 of the Uniform Commercial Code); (iii) with respect to Collateral other than Goods covered by a Document in the possession of a Person other than the Mortgagor or ithe'Mortgagee, the Mortgagor shall obtain written acknowledgment that such Person holds possession for the Mortgagee's benefit; and (iv) with respect to any Collateral constituting Goodig th:at are in the possession of a bailee, the Mortgagor shall provide prompt notice to the Mortgagee :of any such Collateral then in the possession of such bailee, and the Mortgagor shall take or ~zause to be taken all actions (other than any actions required to be taken by the Mortgagee) nei~essary or requested by the Mortgagee to cause the Mortgagee to have a perfected security interest in such Mortgaged Property or Collateral under applicable law. (c) This S:ecfion 3.03 and the obligations imposed on the Mortgagor by this Section 3.03 shall be interp~:eted as broadly as possible in favor of the Mortgagee in order to effectuate the purpose and intern of this Mortgage. Section 3.04 The Mortgagor's Information. On the date hereof, the correct legal name of the Mortgagor is Condor Exploration, LLC. The Mortgagee has not used any name or any trade name since the date &~' its organization. The Mortgagee's jurisdiction of organization is Nevada and Nevada has been the Mortgagee's jurisdiction of organization since the date of its organization. The Mortgagee's federal taxpayor identification number is 88-0438411. The location(s) of the Mortgagee'S chief executive office is 7720 E. Belleview, Suite B-102, Greenwood Village, Colorado 80111. Section 3.05 Not a ;~orbign Person. The Mortgagor is not a "foreign person" within the meaning of the Internal Revenue Code of 1986, as amended (hereinafter called the "Code"), Sections 1445 and 7701 (i.e. the Mortgagor is not a non-resident alien, foreign corporation, foreign partnership, foreign trust or foreign estate as those terms are defined in the Code and any regulations promulgated thereunder). Section 3.06 Power to Create Lien and Security. The Mortgagor has full power and lawful authority to grant, bargain, sell, assign, transfer, mortgage, and convey a security interest in all of the Mortgaged Property and the Collateral in the manner and form herein provided and without obtaining the authorization, approval, consent or waiver of any lessor, sublessor, Governmental Authority or othe:t' party or parties whomsoever. Section 3.07 Rentals P.~id; Leases in Effect. All rentals and royalties due and payable in accordance with the terms of any leases or subleases comprising a part of the Hydrocarbon Property have been duly paid or provided for and all leases or subleases comprising a part of the Hydrocarbon Property are in: full force and effect. Section 3.08 Oper~tfion of the Mortgag.ed Property, Etc. Except with respect to those which the Mortgagor elects i:o allow to expire in the ordinary course of business, the Mortgagor will promptly pay and discharge all rentals, delay rentals, royalties and indebtedness accruing under, and perform or cause', to be performed each and every act, matter or thing required by, each and all of the assignments, deeds, leases, sub-leases, contracts and agreements described or 601816 0000 WEST 5492498 v.2 11 referred to herein or affecting the Mortgagor's interests in the Mortgaged Property, and will do all other things necessary tp keep unimpaired the Mortgagor's rights with respect thereto and p'event any forfmture thereof or default thereunder. The Mortgaged Property material to the Mortgagor and the Mortghged Properties when taken as a whole (and properties unitized therewith) has been maintained, operated and developed in a good and workmanlike manner and in conformity with all applicable laws and all rules, regulations and orders of all duly constituted authorities having jurisdiction and in conformity with the provisions of all leases, subleases or other contracts comprisinl[i a part of the Hydrocarbon Property and other contracts and agreements forming a part of the Mortgaged Property except where the failure to so maintain, operate or develop would rot have a Material Adverse Effect. The Mortgagor will operate its Mortgaged Property material to the Mortgagor and the Mortgaged Properties when taken as a whole in a careful and efficien~. manner in accordance with the practices of the industry and in compliance with all applicable.contracts and agreements and in compliance with all applicable proration and conservation ,:aws of the jurisdiction in which the Mortgaged Property is situated, and all applicable laws, rules and regulations of every other agency and authority from time to time constituted to regulate the development and operation of the Mortgaged Property and the production and sale of Hydrocarbons therefrom. The Mortgagor will do or cause to be done such development work as may be reasonably necessary to the prudent and econonfical operation of the Mortgaged Property materi~l to the Mortgagor and the Mortgaged Properties when taken as a whole in accordance with tile most approved practices of operators in the industry, including all to be done that may be appropriate to protect from diminution the productive capacity of the Mortgaged Property and each producing well thereon including, without limitation, cleaning out and reconditioning each well from time to time, plugging and completing at a different level each such well, drilling a substitute well to conform to changed spacing regulations and to protect the Mortgaged Property material to the Mortgagor and the Mortgaged Properties when taken as a whole against drainage whenever and as often as is necessary. Section 3.09 Operation By Third Parties. All or portions of the Mortgaged Property may be comprised of inte,rests in the Hydrocarbon Property which are other than working interests or which may be:operated by a party or parties other than the Mortgagor and with respect to all or any such interests and properties as may be comprised of interests other than working interests or which may be operated by parties other than the Mortgagor, the Mortgagor's covenants as expressed in ,this ARTICLE IH are modified to require that the Mortgagor use commercially reasonable efforts to obtain compliance with such covenants by the working interest owners or the opera':or or operators of such leases or properties. Section 3.10 Abandon, Sales. The Mortgagor will not sell, lease, assign, transfer or otherwise dispose or abandon any of the Mortgaged Property or the Collateral except as permitted this Mortgage. ' Section 3.11 Instrt-ments and Chattel Paper. The Mortgagor shall notify the Mortgagee promptly after the receipt of any Collateral constituting Instruments or Chattel Paper in which the amount payable thereurder equals to or exceeds $50,000. At tile request of the Mortgagee, the Mortgagor shall deliver to the Mortgagee all Collateral constituting Instruments and Tangible Chattel Paper, duly endorsed in a manner satisfactory to the Mortgagee, to be held as collateral pursuant to this Agreement.. No Collateral constituting Chattel Paper or Instruments contains, nor will it hereafter contain, any statement therein to the effect that such Collateral has been 601816.0000 WEST 5492498 v.2 1 2 .... ;:5:!:ii:' assigned to an identified party other than the Mortgagee, and the grant of a security interest in such Collateral in favor of the Mortgagee hereunder does not violate the rights of any other Person as a secured party. Section 3.12 ACcornts. The amount represented by the Mortgagor to the Mortgagee from time to time as owing ;~y each Account Debtor or by all Account Debtors in respect of the Accounts and Payment Intangibles will at such time be the correct amount actually owing by such Account Debtor or Acc. out~t Debtors thereunder. The place where the Mortgagor keeps its reCords concerning the Acc0uni:s and Payment Intangibles is 7720 E. Belleview, Suite B-102, Greenwood Village, Colorad~o 80111. Section3.13 Limit~:tiofis on Modifications, Waivers, Extensions of Agreements. ¢ · Except in the ordinary course oi business, the Mortgagor will not (a) amend, modit'y, terminate or waive any provision of .my Chattel Paper, Instrument or any agreement giving rise to an Account or Payment Intangi"ole in any manner which could reasonably be expected to materially adversely affect the value of' such Chattel Paper, Instrument, Payment Intangible or Account as Collateral, or (b) fail to exercise promptly and diligently each and every material right which it may have under any Chattel Paper, Instrument and each agreement giving rise to an Account or Payment Intangible (other than any right of termination). The Mortgagor shall deliver to the Mortgagee a copy of each material demand, notice or document received by it relating in any way to any Chattel Paper, Instrument or any agreement giving rise to an Account or Payment Intangible. Section 3.14 Analy,gis of AccoUnts, Etc. The Mortgagee shall have the right from time to time to make test verificatiOns of the Accounts and Payment Intangibles in any manner and through any medium that' it "reasonably considers advisable, and the Mortgagor, at the Mortgagor's sole cost and :expense, shall furnish all such assistance and information as the Mortgagee may reasonably require in connection therewith. At any time and from time to time, upon the Mortgagee's reaso~nable request and at the expense of the Mortgagor, the Mortgagor shall furnish to the Mortgaf;ee :eports showing reconciliations, aging and test verifications of, and trial balances for, the A~:counts, Chattel Paper and Payment Intangibles, and all original and other documents evidencing:: and relating to, the agreements and transactions which gave rise to the' Accounts, Chattel Paper and: Payment Intangibles, including, without limitation, all original orders, invoices and shipping receipts. Section 3.15 Insurahce. In the event of any loss under any insurance policies required to be carried by the Mortgagor, the Mortgagee shall have the right (but not the obligation) to make proof of loss and collect the same, and all amounts so received shall be applied toward costs, charges and expenses (including reasonable attorneys' fees), if any, incurred in the collection thereof, then to the 'payment, in the order determined by the Mortgagee, in its own discretion, of the Obligatior~s, and any balance remaining shall be subject to the order of the Mortgagor. During the continm'tion of an Event of Default, the Mortgagee is hereby authorized but not obligated to enforce 3n its name or in the name of the Mortgagor payment of any or all of said policies or settle or cc;mpronfise any claim in respect thereof, and to collect and make receipts for the proceeds thereof and the Mortgagee is hereby appointed the Mortgagor's agent and attorney-in-fact to endorlse any check or draft payable to the Mortgagor in order to collect the proceeds of insurance. In tl:!ie event of foreclosure of this Mortgage, or other transfer of title to .! 6018160000 WEST 5492498 v.2 13 the Mortgaged Property in:extinguishment in whole or in part of the Obligations, all right, title and interest of the Mortgago~i in and to such policies then in force concerning the Mortgaged Property and all proceeds payable thereunder shall thereupon vest in the purchaser at such foreclosure or the Mortgagee, :or other transferee in the event of such other transfer of title. Section 3.16 Further Identification of Collateral. The Mortgagor will furnish to the Mortgagee from time to tim. e, at the Mortgagor's sole cost and expense, statements and schedules further identifying and describing the Mortgaged Property and the Collateral and such other reports in connection with the Mortgaged Property and Collateral as the Mortgagee may reasonably request, all in reasonable detail. Section 3.17 Failu[~e 50 Perform. The Mortgagor agrees that if the Mortgagor fails to perform any act or to take any action which the Mortgagor is required to perform or take hereunder or pay any money iovhich the Mortgagor is required to pay hereunder, the Mortgagee may, but shall not be obligated to, perform or cause to perform such act or take such action or pay such money, and any expenses so incurred by either of them and any money so paid by either of them shall be a demand obligation owing by the Mortgagor to the Mortgagee and the Mortgagee, upon making such payment, shall be subrogated to all of the rights of the Person receiving such payment. Each amount due and owing by the Mortgagor to the Mortgagee pursuant to this Mortgage shall bear interest from the date of such expenditure or payment or other occurrence which gives rise to such amount being owed to such Person until paid at the Applicable Rate, and all such amounts together with such interest thereon shall be a part of the Obligations described in Se,:tion 1.03. ARTICLE IV Rights and Remedies Section 4.01 Even: of Default. An "Event of Default" under the Note shall be an Event of Default under this Mortgage. Section 4.02 Foreclosure. If an EVent of Default shall occur and be continuing, the Mortgagee shall become and be entitled, as of right, without notice and without regard to the adequacy of the Mortgaged Property or the Collateral as security for the Obligations hereby secured, to employ counsel to enforce payment of the obligations secured hereby, and this Mortgage may be foreclosed is to the Mortgaged Property or any part thereof, in any manner permitted by applicable law, and the Mortgagee may exercise such other rights and remedies granted herein, in any other Loan Document or by law and equity, which rights and remedies shall be cumulative and not exclusive. The Mortgagee may sell said Mortgaged Property either as a whole or in separate parcels, and in such order as it may deternfine. The purchase price shall be payable in lawful mones)' of the United States at the time of sale. Cumulative of the foregoing and the other provisions of this Section 4.02, as to the Mortgaged Property now or hereafter located in, or otherwise s~ilbject to the law of, the State of Wyoming, the Mortgagee may foreclose this Mortgage by'fil{ng an action in foreclosure in any county in Wyoming where any part of the Mortgaged Property is located, or in Federal Court for the District in which any of the Mortgaged Property is loca!:ed. Nothing contained herein shall be construed so as to limit in any way the Mortgagee's right,! to sell the Mortgaged Property, or any portion thereof, by private sale if, and to the extent thatl, such private sale is permitted under the laws of the applicable 60i816.0000 WEST 5492498 v.2 jurisdiction or by public or prS~vate sale after entry of a judgment by any court of competent jurisdiction so ordering. Tlle Mortgagor hereby irrevocably appoints the Mortgagee to be the attorney of the Mortgagor and in the name and on behalf of the Mortgagor after the occurrence and during the continuance ,of ~an Event of Default to execute and deliver any deeds, transfers, conveyances, assignments, ass!~rances, and notices which the Mortgagor ought to execute and deliver and do and perform anyland all such acts and things which the Mortgagor ought to do and perform under the covenants: herein contained and generally, to use the name of the Mortgagor in the exercise of all or any of the powers hereby conferred on the Mortgagee. At any such sale: (a) whether made under the power herein contained or any other legal enactment, or by virtue of any judicial proceedings or any citlmr legal right, remedy or recourse, it shall not be necessary for the Mortgagee to have physicailylpresent, or to have constructive possession of, the Mortgaged Property (the Mortgagor hereby covenanting and agreeing to deliver to the Mortgagee any portion of the Mortgaged Property'not actually or constructively possessed by the Mortgagee immediately upon demand by the Mortgagee) and the title to and right of possession of any such property shall pass to the purchaser thereof as completely as if the same had been actually present and delivered to pur':haser at such sale, (b) each instrument of conveyance executed by the Mortgagee shall contair~ a general warranty of title, binding upon the Mortgagor and its successors and assigns, (c).each and every recital contained in any instrument of conveyance made by the Mortgagee shall conclusively establish the truth and accuracy of the matters recited therein, including, without l(mitation, nonpayment of the Obligations, advertisement and conduct of such sale in the manner provided herein and otherwise by law and appointment of any successor the Mortgagee hereunder, (d) any and all prerequisites to the validity thereof shall be conclusively presumed to ha!Ye been performed, (e) the receipt of the Mortgagee or of such other party or officer making the s:ale shall be a sufficient discharge to the purchaser or purchasers for its purchase money and :no such purchaser or purchasers, or its assigns or personal representatives, shall thereafl;er be obligated to see to the application of such purchase money, or be in any way answerable fl~)r any loss, misapplication or nonapplication thereof, and (t) to the fullest extent permitted by la*.w, the Mortgagor shall be completely and irrevocably divested of all of its right, title, interest, clalim and demand whatsoever, either at law or in equity, in and to the property sold and such sal~'~ shall be a perpetual bar both at law and in equity against the Mortgagor, and against any and all other persons claiming or to clai~n the property sold or any part thereof, by, through or under the Mortgagor. section 4.03 Partial Foreclosure. To the extent permitted by applicable law, the sale of less than the whole of the M~)rtgaged Property shall not exhaust the power of sale herein granted or the right to judicial foreclosure, and a successive sale or sales may be made until the whole of the Mortgaged Property shall be sold, and, if the proceeds of such sale of less than the whole of the Mortgaged Property shail be less than the aggregate of the Obligations and the expense of conducting such sale, this Mortgage and the liens and security interests hereof shall remain in full force and effect as to the' unsold portion of the Mortgaged Property just as though no sale had been made; provided, however, that the Mortgagor shall never have any right to require the sale of less than the whole of !.he Mortgaged Property. In the event any sale hereunder is not completed or is defective in ':he, opinion of the Mortgagee, such sale shall not exhaust the powers of sale hereunder or the right to judicial foreclosure, and the Mortgagee shall have the right to cause a subsequent sale or sales to be made. 601816.0000 WEST 5492498 v.2 1 5 Section 4.04 Power. of Sale. A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED IqROPERTIES AND SEL£ THEM WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR UNDER THIS MORTGAG',E_ . WARNING: THIS MC;~RTGAGE CONTAINS A POWER OF SALE AND UPON DEFAULT MAY BE FORECLOSED BY ADVERTISEMENT. IN FORECLOSURE BY ADVERTISEMENT AND TilE SALE OF THE MORTGAGED PROPERTY IN CONNECTION THEREWITH, NO HEARING IS REQUIRED AND ri'HE ONLY NOTICE REQUIRED IS THE PUBLICATION OF NOTICE IN A LOCAl, NEWSPAPER. Section 4.05 Receiver. In addition to all other remedies herein provided for, the Mortgagor agrees that, upon ;he occurrence of an Event of Default or any event or circumstance which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default hereunder, the Mortgage=~ shall as a matter of right be entitled to the appointment of a receiver or receivers for all or' any part of the Mortgaged Property, whether such receivership be incident to a proposed sale (or Sales) of such property or otherwise, and without regard to the value of the Mortgaged Property or the solvency of any person or persons liable for the payment of the Obligations, and the Mortgagor does hereby consent to the appointment of such receiver or receivers, waives any and ~.11 'defenses to such appointment, and agrees not to oppose any application therefor by the ldor',gagee and agrees that such appointment shall in no manner impair, prejudice or otherwise affect the rights of the Mortgagee under Article II hereof. The Mortgagor expressly waives notice of a hearing for appointment of a receiver and the necessity for bond or an accounting bY the receiver. Nothing herein is to be construed to deprive the Mortgagee or any Lender of any other right, remedy or privilege it may now or hereafter have under the law to have a receiver appointed. Any money advanced by the Mortgagee or any Lender in connection with aqy such receivership shall be a demand obligation (which obligation the Mortgagor hereby expres'31y promises to pay) owing by the Mortgagor to the Mortgagee or such Lender and shall bear inlterest from the date of making such advancement by the Mortgagee or such Lender until paid, at the Applicable Rate. Section 4.06 Personal Property Remedies. (a) Upon ~he l~.appening and during tire continuance of an Event of Defitult, the Mortgagee is and shall be entitled to all of the rights, powers and remedies afforded a secured party by the Uniform Comrc.ercial Code with respect to the Collateral, or the Mortgagee may proceed as to both the real ahd personal property covered hereby in accordance with the rights and remedies granted under.' thi:~ Mortgage in respect of the real property covered hereby. Without limiting the generalil:y ofl the foregoing, the Mortgagee, without demand of performance or other demand, presentment, pi'otest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon the Mortgagor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwitk,2 sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), 601816.0000 WEST 5492498 v.2 1 6 in one or more parcels at public or private sale or sales, at any exchange, broker's board or office of the Mortgagee or any I:ender or elsewhere upon such terms and conditions as it may deem advisable and at such prices n:~ it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Mortgagee or any Lender shall have the right upon any such public sale or sal6s, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole o~~ any part of the Collateral so sold, free of any right or equity of redemption in the Mortgag~r, Which right or equity is hereby waived and released. If an Event of Default shall occur and be' continuing, the Mortgagor further agrees, at the Mortgagee's request, to assemble the Collateral and make it available to the Mortgagee at places which the Mortgagee shall reasonabl}' select, whether at tile Mortgngor's premises or elsewhere. Any such sale or transfer by the Mortgagee either to itself or to any other Person shall be absolutely free 'from any claim of right by the Mortgagor, including nny equity or right of redemption, stay or appraisal which the Mortgagor has or may have under any rule of law, regulation or statute now existing or hereafter adopted. Upon any such sale or transfer, the Mortgagee shall have the right to deliver, assign and transfer to the purchaser or transferee thereof the Collateral so sold or transferre0. The Mortgngee shall apply the net proceeds of any action tnken by it pursuant to this Section 4.06, after' deducting all reasonable costs and expenses of every kind incuged in connection therewith or incidental to the care or safekeeping of any of the Collateral Or in any way relating to the C°llal~eral or the rights of the Mortgagee hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations, and only after ~such application and after the payment by the Mortgagee of any other amount required by any provision of law, including, without limitation, Section 9-615 of the Uniform Commercial Code, need the Mortgagee account for the sm'plus, if any, to the Mortgagor. To the extent permitted by applicable law, the Mortgagor waives all claims, damages and demands it ~ay acquire against the Mortgagee or any Lender arising out of tile exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days befOre such sale o~ other disposition. (b) In tl:~e e!¢ent that the Mortgagee elects not to sell the Collateral, the Mortgagee retains its right::! to dispose of or utilize the Collateral or any part el' parts thereof in any manner authorized or permitted by law. or in equity, and to apply the proceeds of the same towards payment of the Obligations. Each and every method of disposition of the Collateral described in this Mortgage': shall constitute disposition in a commercially reasonable manner. The Mortgagee may appoirtt any Person as agent to perform any act or acts necessary or incident to any sale or transfer of the Collateral. (c) The Mortgagee may proceed as to the Mortgaged Property constituting Collateral in accordance with the Mortgagee's rights and remedies in respect to the Mortgaged Property or sell the Mortgz. gedi'Property constituting Collateral separately and without regard to the remainder of the Mortgaged Property in accordance with the Mortgagee's rights and remedies provided by this Mortgage, the other Loan Documents, the Uniform Commercial Code, as well as.other rights and remedies at law or in equity. Section 4.07 Collections on Accounts, Etc. The Mortgagee hereby authorizes the Mortgagor to collect upon, the Accounts, Instruments, Chattel Paper and Payment Intangibles subject to the Mortgagee's direction and control, and the Mortgagee may curtail or terminate said 601816.0000 WEST 5492498 v.2 17 authority at any time after l'.he occurrence and during the continuance of an Event of Default. Upon the request of the Mortgagee at any time after the occurrence and during the continuance of an Event of Default, the M~ortgagor shall notify the Account Debtors that the applicable Accounts, Chattel Paper and' Payment Intangibles have been assigned to the Mortgagee, and that payments in respect thereof .shall be made directly to the Mortgagee. The Mortgagee may in its own name or in the name of,. ot~iers communicate with the Account Debtors to verify with them to its satisfaction the existence, iamount and terms of any Accounts, Chattel Paper or Payment Intangibles. Section 4.08 Procei'~ds. i; If required by the Mortgagee at any time after the occurrence and during the continuance~ of :~an Event of Default, any payments of Accounts, h~struments, Chattel Paper and Payment llntangibles, when collected or received by the Mortgagor, and any other cash or non-cash Procti~eds received by the Mortgagor upon the sale or other disposition of any Collateral, shall be forthwitt'i (and, in any event, within two (2) Business Days) deposited by the Mortgagor in the exact :!'orm received, duly indorsed by the Mortgagor to the Mortgagee if required, in a special collatelral account maintained by the Mortgagee, subject to withdrawal by the Mortgagee only, as hei:einafter provided, and, until so turned over, shall be held by the Mortgagor in trust for the :Mortgagee, segregated from other funds of the Mortgagor. All Proceeds (including, without limitation, Proceeds constitutiug collections of Accounts, Chattel Paper, Instruments) while hekl by the Mortgagee (or by the Mortgagor in trust for the Mortgagee) shall continue 'to l;,e collateral security for all of the Obligations and shall not constitute payment thereof ')ntil applied as hereinafter provided. If an Event of Default shall have occurred and be continuing, at any time at the Mortgagee's election, the Mortgagee shall apply all or any part of the 5~unds on deposit in said special collateral account on account of the Obligations in such order a.a the Mortgagee may elect, and any part of such funds which the Mortgagee elects not so to apply and deems not required as collateral Security for the Obligations shall be paid over from time:,, to time by the Mortgagee to the Mortgagor or to whomsoever may be lawfully entitled to receiv, e the same. Section 4.09 The Mortgagee and Agents. The Mortgagee or its successor or substitute may appoint or delegate any;one or more Persons as agent to perform any act or acts necessary or incident to any sale held bylthe Mortgagee, including, without limitation, the posting of notices and the conduct of sale, but in the name and on behalf of the Mortgagee or its successor or [ substitute, as applicable. Iflthe Mortgagee or its successor or substitute shall have given notice of sale hereunder, any successor or substitute to such Person thereafter appointed may complete the sale and the conveyancelof the property pursuant thereto as if such notice had been given by the successor or substitute conducting the sale. Section 4.10 Forec:osure~' for Installments. The Mortgagee shall also have the option to proceed with foreclosure in satisfaction of any installments of the Obligations which have not been paid when dUe througtlt the courts in satisfaction of the matured but unpaid portion of the Obligations as if under a 'full foreclosure, conducting the sale as herein provided and without declaring the entire principal, balance and accrued interest due; such sale may be made subject to the unmatured portion of th'.~ Ot'~iligations, and any such sale shall not in any manner affect the unmatured portion of the O~?lig~itions, but as to such unmatured portion of the Obligations this Mortgage shall remain in fulil lbrce and effect just as though no sale had been made hereunder. It is further agreed that severail sales may be made hereunder without exhausting the right of sale 601816.0000 WEST 5492498 v.2 ~ 1 8 for any unmatured part 0f tl~e Obligations, it being the purpose hereof to provide for a foreclosure and sale of the security for any matured portion of the Obligations without exhausting the power to foreclose and sell the Mortgaged Property or the Collateral for any subsequently maturing portion of the Obligations. Section 4.11 Separate :Sales. The Mortgaged Property and the Collateral may be sold in one or more parcels and te the extent permitted by applicable law in such manner and order as the Mortgagee, in its sole discretion, may elect, it being expressly understood and agreed that the right of sale arising out of any Event of Default shall not be exhausted by any one or more sales. Section 4.12 The Mortgagee as Purchaser. The Mortgagee shall have the right to become the purchaser at any sa,e held in foreclosure of the liens evidenced hereby, and any such party purchasing at any such s~'le shall have the right to credit upon the amount of the bid made therefor, to the extent necessary to satisfy such bid, the Obligations owing to such party, or if such party holds less than all of such Obligations, the pro rata part thereof owing to such party, accounting to all other parties not joining in such bid in cash for the portion of such bid or bids apportionable to such non-bidding parties. Section 4.13 Possession of the Mortgaged Property and Collateral. The Mortgagor agrees to the full extent that it lawfully may, that, in case one or more of the Events of Default shall have occurred and ~hall not have been rmnedied, then, and in every such case, the Mortgagee shall have the right and power to enter into and upon and take possession of all or any part of the Mortgaged Property or the Collateral in the possession of the Mortgagor, its successors or assigns, or i.ts or their agents or servants, and may exclude the Mortgagor, its successors or assigns, and ~all Persons claiming under the Mortgagor, and its or their agents or servants wholly or partly therefrom; and, holding the same, the Mortgagee may use, administer, manage, operate and control th,e Mortgaged Property or the Collateral and conduct the business thereof to the same extent as the Mortgagor, its successors or assigns, might at the time do and may exercise all rights artd powers of the Mortgagor, in the name, place and stead of the Mortgagor, or otherwise as. the Mortgagee shall deem best. All out-of-pocket or reasonable and customary costs, expenses ~tnd liabilities incurred by the Mortgagee in administering, managing, operating, and controlling the Mortgaged Property or the Collateral shall constitute a demand obligation (which obligation the Mortgagor hereby expressly promises to pay) owing by the Mortgagor to the Mortgagee and shall bear interest from date of expenditure until paid at the Applicable Rate, all of which shall constitute a portion of the Obligations and shall be secured by this Mortgage and all other'Security Instruments. Section 4.14 Occupani:y After Foreclosure. In the event there is a foreclosure sale hereunder and at the time of such sale the Mortgagor or the Mortgagor's heirs, devisees, representatives, successors or assigns or any other Person claiming any interest in the Mortgaged Property or the Collateral by, tlu'ough or under the Mortgagor, are occupying or using the Mortgaged Property or the Collateral or any part thereof, each and all shall immediately become the tenant of the purchaser at such sale, which tenancy shall be a tenancy from day to day, terminable at the will of e'ithm the landlord or tenant, or at a reasonable rental per day based upon the value of the property occupied, such rental to be due daily to the purchaser; to the extent permitted by applicable law, the purchaser at such sale shall, notwithstanding any language herein apparently to the contrary, have the sole option to demand immediate possession 601816.0000 WEST 5492498 v.2 following the sale or to permit ~,~he occupants to remain as tenants at will. In the event the tenant fails to surrender possessio, n of said property upon demand, the purchaser shall be entitled to institute and maintain a surmnary action 'for possession of the Mortgaged Property or the Collateral (such as an actiorL for forcible entry and detainer) in any court having jurisdiction. Section 4.15 Reme:dies Cumulative, Concurrent and Nonexclusive. Each and every right, power, privilege andlmmedy shall be cumulative and in addition to those granted to the Mortgagee under this Mo~itgage, any other Loan Document and in any other instrument or agreement secm'ing, eviden~cin~: or relating to the Obligations, all rights, remedies, powers and privileges of a secured pa~'ty iunder the applicable Uniform Commercial Code (whether the Uniform Commercial Codejis in effect in the jurisdiction where such rights, remedieS, powers or privileges are asserted) or ahy 6ther applicable law or otherwise available at law or equity; each and every right, power, privilege and remedy whether specifically herein given or otherwise existing may be exercised from time to time and so often and in such order as may be deemed expedient by the Mortgagee 'and the exercise, or the beginning of the exercise, or the abandonment, of any such fight, power, privilege or remedy shall not be deemed a waiver of the right to exercise, at the same time or thereafter any other right, power, privilege or remedy. No delay or omission by the M0rtg:~gee in the exercise of any right, power, privilege or remedy shall impair any such right, power, privilege or remedy or operate as a waiver thereof or of any other right, power, privilege or remedy then or thereafter existing. Section 4.16 No Release of Obligations. Neither the Mortgagor nor any other Person hereafter obligated for payilnent of all or any part of the Obligations shall be relieved of. such obligation by reason of (al) the failm'e of the Mortgagee to co~nply with any request of the Mortgagor or any other Per'son .so obligated to foreclose the lien of this Mortgage or to enforce any provision hereunder or'i under the Note;i(b) the release, regardless of consideration, of the Mortgaged Property or the Collateral' or any portion thereof or interest therein or the addition of any other Property to the iMolrtgaged Property or the Collateral or the release of any other collateral or credit support'iarr,qngement securing the Obligations; (c) the release, regardless of Consideration, of any party lia'ole, either directly or indirectly, for the Obligations or for any covenant herein or in any other Loan Document; (d) any agreement or stipulation between any subsequent owner of thai Mortgaged Property and the Mortgagee extending, renewing, rearranging or in any 0the, r Way modifying the terms of this Mortgage withOut first having obtained the consent of, giv~en r!otice to or paid any consideration to the Mortgagor or such other Person, and in such event the Mortgagor, guarantor and all such other Persons shall continue to be liable to make payment according to the terms of anY such extension or modification agreement unless expressly released and discharged in writing by the Mortgagee; or (e) by any other act or occurrence s~'.ve and except the complete payment of the Obligations and the complete fulfillment of all obligations hereunder and under the Note. The Mortgagor authorizes the Mortgagee, without nc?rice or demand and without any reservation of rights against the Mortgagor and without affe:,ctinig the Mortgagor's liability hereunder or on the Obligations, and without impairing the Liens and rights of the Mortgagee hereunder, from time to time to (i) take or hold any other Property Of ariy type from any other Person' as security for the Obligations, and exchange, enforce, waive and release any or all of such other Property; (ii) apply the Mortgaged Property or such other Prol:!ert~,i and direct the order or .manner of sale thereof as the Mortgagee may in its discretion de~ermine; (iii) renew, extend for any period, accelerate, modify, compromise, settle or release m;.y of the obligations of any other Person liable on the Obligations 601816.0000 WEST 5492498 v.2 20 in respect to any or all of the Obligations or other security for tbe Obligations; (iv) waive, enforce, modify, amend or mp[',lement any of the provisions of any Loan Document with any Person other than the Mortgagor and (v) release or substitute any other Person liable on the Obligations. The Liens arid other security rights of the Mortgagee hereunder shall not be impaired by any indulgence: mo~'atorium or release granted by the Mortgagee including, but not limited to, any renewal, extension or modification which the Mortgagee may grant with respect to any of the Obligations, or an3' surrender, compromise, release, renewal, extension, exchange or substitution which the Mortg~gee may grant in respect of the Mort-gaged Property or any part thereof or any interest therein, o~,' any release or indulgence granted to any endorser, guarantor or surety of any of the Obligations. To the maximurn extent permitted by law, all rights of the Mortgagor, all security interests hereunder, and all obligations of the Mortgagor hereunder, shall be absolute and unconditional ir/'espective of: (A) any lack of validity or enforceability of any of the Obligations or any other agr~.Sement or instrument relating thereto, including any of the Loan Documents; (B) any change, in the time, manner or place of payment of, or in any other term of, all or any part of the Oblig:ttior. S, or any other amendment or waiver of or any consent to any departure from any of the Loan Documents, or any other agreement or instrument relating thereto; (C) any exchange, relez~se, or non-perfection of any other collateral, or any release or amendment or waiver of or' c6nsent to departure from any guaranty for all or any of the Obligations or (D) any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Mortgagor. Each successor and assign of the Mortgagor, including without limitation, a holder of a Lien subordinate to the Lien created hereby (without implying that the Mortgagor has, except as expressly provided herein, a right to grant an interest in, or a subordinate Lien on, the Mc. rtgaged Property), by acceptance of its interest or Lien agrees that it sball be bound by the waivers contained herein, as if it gave the waiver itself. Section4.17 Relea:;e cf and Resort to Collateral. The Mortgagee may release, regardless of consideration, !any .part of the Mortgaged Property or the Collateral without, as to the rexnainder, in any way impairing, affecting, subordinating or releasing the Lien or security interest created in or evide!nced by this Mortgage or its stature as a first and prior Lien and security interest in and to tine Ivlortgaged Property and the Collateral, and without in any way releasing or diminishing th,~ liability of any Person or entity liable for the repayment of the Obligations. For payment ,:)f tl~e Obligations, the Mortgagee may resort to any other security therefor held by the Mortga!~:ee in such order and manner as the Mortgagee may elect. Section'4.18 Certain Waivers. To the fullest extent permitted by law, the Mortgagor hereby irrevocably and unconditionally waives and releases (a) all benefits that might accrue to the Mortgagor by virtue of any present or future monttorium law or other law exempting the Mortgaged Property or tbe Collateral from attachment, levy or sale on execution or providing for any appraisement, valuation, stagy of execution, exemption from civil process, redemption or extension of time for payme:nt; (b) all notices of any default ox' of the Mortgagee's intention to accelerate maturity of the Obligations or of the Mortgagee's election to exercise or its actual exercise of any right, reme:ly c,r recourse provided for hereunder or under the Note; (c) any rights, legal and equitable, t'~ a marshalling of assets or a sale in inverse order of alienation (the Mortgagor acknowledges a,d agrees that in exercising any rights under or with respect to the Mortgaged Property or the. Col.lateral, the Mortgagee is under no'obligation to marshal any Mortgaged PropertY or Collateral; the Mortgagee may, in its absolute discretion, realize upon tbe Mortgaged Property in any order and in any manner it so elects and may, in its absolute 601816.0000WEST 5492498 v.2 21 discretion, apply the proceeds of any or all the Mortgaged Property or the Collateral to the Obligations in any order and ~n any manner it so elects); (d) any right to require the Mortgagee to proceed against any other Persoh, exhaust any Mortgaged Property or any Collateral or other security for the Obligations, or to have any other Person liable on the Obligations joined with the Mortgagor in any suit arising oat of the Obligations or this Agreement, or pursue any other remedy in the Mortgagee's powe'r; (e) until all of the Obligations shall have been paid in full in cash, any right to subrogation anld the Mortgagor waives the right to enforce any remedy which the Mortgagee has or may helceafter have against any other Person liable on the Obligations, and waives any benefit of and ~'.ny right to participate in any other security whatsoever now or hereafter held by the Mortgagee:' (f) any and all legal rights which might otherwise require the Mortgagee to enforce its rights by judicial process; (g) and the Mortgagor agrees not to assert any rights or privileges wlaich~it may acquire under the Uniform Commercial Code, any analogous common law right~,': or privileges or any other applicable law; (h) the right to plead any and all statutes of limitation, as i~ defense to any demand secured by or made pursuant to this Mortgage; (i) all claims, damage~; and demands it may acquire against the Mortgagee m'ising out of the exercise by them of any rghts hereunder; (,j) any and all notice of the creation, renewal, extension or accrual of any' of the Obligations and notice of or proof of reliance by the Mortgagee upon the provision of collateral contemplated hereby or acceptance of the provision of collateral contemplated hereby; the Obligations, and any of them, shall conclusively be deemed to have been created.. Contracted or incurred, or renewed, extended, amended or waived, in reliance upon the provision of:collateral contemplated hereby and no notice of creation of the Obligations or any extension of. credit already or hereafter contracted by or extended to the Mortgagor or any other Person need be given to the Mortgagor; (k) any and all notice of the creation, modification, rearrangement, renewal or extension for any period of any of the Obligations of any other Person l!(able on the Obligations from time to time; (1) any and all notice to the Mortgagor of the acceptance of this Mortgage and of the making, renewing or assignment of the Obligations and each item thereof, acceptance on the part of the Mortgagee being conclusively presumed by their~request for this Mortgage and delivery of the same to the Mortgagee:, (m) any defense arising by reason of any disability or other defense of any other Person or by reason of the (~essation from any cause whatsoever of the liability of any other Person; and (n) diligence, preseutment, protest, demand for payment and notice of default or nonpayment to or upon the ~V/ortgagor with respect to the Obligations and any other notice of any kind whatsoever. If any law refen'ed to in this Mortgage and now in force, of which the Mortgagor or its successor 6r successors might take advantage despite the provisions hereof, shall hereafter be repealed oy cease to be in force, such law shall thereafter be deemed not to constitute any part of the contract herein contained or to preclude the operation or application of the provisions hereof. Section4.19 Discontinuance of Proceedings. In case the Mortgagee shall have proceeded to invoke any right, remedy or recourse pernfitted hereunder or under the Note and shall thereafter elect to disccntinUe or abandon same for any reason, the Mortgagee shall have the unqualified right so to do and, in such an event, the Mortgagor and the Mortgagee shall be restored to their former poskions with respect to the Obligations, this Mortgage, the Note, the Mortgaged Property and the. COllateral and otherwise, and the rights, remedies, recourses and powers of the Mortgagee shall co.at~nue as if same had never been invoked. 601816.0000 wEST 5492498 v.2 22 Section 4.20 AppJicaSon of Proceeds. The proceeds of any sale of the Mortgaged Property or the Collateral or any part thereof and all other monies received by the Mortgagee in any proceedings for the enforcement hereof, whose application has not elsewhere herein been specifically provided for, shall, be applied first to the payment of all reasonable expenses incurred by the Mortgagee incident to the enforcement of this Mortgage, the Note or any. of the Obligations (including, wit, horn limiting the generality of the foregoing, expenses of any entry or taking of possession, of any sale, of advertisement thereof, and of conveyances, and court costs, compensation of agents and~ employees, legal fees and a reasonable commission to the Mortgagee acting), and to the payment of all other reasonable charges, expenses, liabilities and advances incurred or made b':, the Mortgagee under this Mortgage or in executing any power hereunder; an then as prow,ded! in the Note Section 4.21 Indei':nnt.:[y~. IN CONNECTION WITH ANY ACTION TAKEN BY THE MORTGAGEE PURSUANT TO THIS MORTGAGE, THE MORTGAGEE, EACH AGENT, AND THEIR OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, AGENTS, ATTORNE'~S, ACCOUNTANTS AND EXPERTS. ("INDEMNIFIED PARTIES") SHALL NOT BE LIABLE FOR ANY LOSS SUSTAINED BY THE MORTGAGOR RESULTING FROM AN ASSERTION THAT THE MORTGAGEE HAS RECEIVED FUNDS FROM THE PRODUCTION OF HYDROCARBONS CLAIMED BY THIRD PERSONS OR ~,NY ACT OR OMISSION OF ANY INDEMNIFIED PARTY IN ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE MORTGAGED PROPI~RT!Y OR THE COLLATERAL INCLUDING SUCH LOSS WHICH MAY RESULT FROM THE ORDINARY NEGLIGENCE OF AN INDEMNIFIED PART5'; UNLESS SUCH LOSS IS CAUSED BY THE WILLFUL MISCONDUCT OR Gl, tOSS NEGLIGENCE OF AN INDEMNIFIED PARTY, NOR SHALL THE MORT('iAGEE AND ANY OTHER INDEMNIFIED PARTY BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY OF THE MORTGAGOR. THE MORTGAGOR SHALL AND DOES HEREBY AGREE TO iNPEMNIFY EACH INDEMNIFIED PARTY FOR, AND TO HOLD EACH INDEMNIFIED PARTY HARMLESS FROM, ANY AND ALL LIABILITY, LOSS OR DAMAGE WHICH MAY OR MIGHT BE INCURRED BY ANY INDEMNIFIED PARTY BY, REASON OF THIS MORTGAGE OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER; SHOULD THE MORTGAGEE MAKE ANY EXPENDITURE ON ACCOUNT OF ANY SUCH LIABILITY, LOSS OR DAMAGE, THE AMOUNT THEREOF, INCLUDING COSTS, LXPENSES AND REASONABLE OUT OF POCKET A~[TORNEYS' FEES, SHALL BE A DEMAND OBLIGATION (WHICH OBLIGATION' TIlE MORTGAGOR HEREBY EXPRESSLY PROMISES TO PAY) OWING BY THE MORTGAGOR TO THE MORTGAGEE AND SHALL BEAR INTEREST FROM TH]~'_, DATE EXPENDED UNTIL PAID AT THE APPLICABLE RATE, SHALL BE A PART OF THE OBLIGATIONS AND SHALL BE SECURED BY THIS MORTGAGE t~,NI) ANY OTHER SECURITY INSTRUMENT. THE MORTGAGOR HEREB.iz ASSENTS TO, RATIFIES AND CONFIRMS ANY AND ALL ACTIONS OF THE MORTGAGEE WITH RESPECT TO THE MORTGAGED PROPERTY OR THE COLLATERAL TAKEN UNDER THIS MORTGAGE. THE LIABILITIES OF THE MORTGAGOR AS SET FORTH IN THIS SECTION 4.21 SHALL SURVIVE THE '.FERMINATION OF THIS MORTGAGE. 601816.0000 WEST 5492498 v.2 23 Section 4.22 .The_.M9rtgagee Not "Mortgagee-In-Possession". It is understood and agreed that neither the assignl~eht ~f Hydrocarbons, products therefrom, revenues and proceeds to the Mortgagee pursuant to ~,ectlon 2.01 nor the exercise by the Mortgagee of any of its rights or remedies hereunder shal b{5 deemed to make the Mortgagee a Mortgagee-m-possession or otherwise responsible or liable' in any manner with respect to the Mortgaged Property or the use, occupancy, enjoyment or .perat~on of all or any portion thereof, nor shall appointment of a receiver for the Mortgaged Property 'by any Court at the request of the Mortgagee or by agreement w~th the Mortgagor or the entenng into possession of the Mortgaged Property or any part thereof by such receiver be deemed to make the Mortgagee a "Mortgagee-in-possession" or otherwise responsible or liable~ in any manner with respect to the Mortgaged Property or the use, occupancy, enjoyment or Ol:,er!~tion of all or any portion thereof. Section 4.23 The ':Mortgagee Attorney In Fact. The Mortgagor hereby i~Tevocably constitutes and appoints the MOrtgagee the attorney in fact of the Mortgagor, and in such capacity, the Mortgagee, its co3nsel or its representative, may from time to time, execute, deliver and file with the appropriate, filing officer or office such security agreements, financing statements, continuation statements, amendments, other filing or recording documents or instruments as the Mortgagee may request or require, in such form as the Mortgagee reasonably determines appropriate, in order to impose, perfect, protect, preserve the priority of, or enforce, the Liens on the Collateral.~ ARTICLE V Miscellaneous Section 5.01 Scope of. Mortgage. This Mortgage is a mortgage of both real and personal property, a security agreement, a financing stateinent and an assignment, and also covers proceeds and fixtures. Section 5.02 Place of Payment. All of the Obligations which maybe owing hereunder at any time by the Mortgagor shall be payable at the place designated in the Loan Agreement (or if no such designation is made, at the address of the Mortgagee), or at such other place as the Mortgagee may designate irZi writing. Section 5.03 Release of Mortgage. If all of the Obligations secm'ed hereby shall be indefeasibly paid in full in cash, the Mortgagee shall forthwith cause reconveyance, satisfaction and discharge of this Mortgagi~ to be entered upon the record at the expense of the Mortgagor .and shall eXecute and deliver or cause to be executed and delivered such instruments of reconveyance, satisfaction and reassignment as may be appropriate. Otherwise, this Mortgage. shall remain and continue ir, fud force and effect. Section 5.04 Partial'R~leases. If any of the Mortgaged Property or the Collateral shall be sold, transferred or otherwise disposed of by the Mortgagor in a transaction permitted by the Note, then the Mortgagee, 'at the request and sole expense of the Mortgagor, shall promptly execute and deliver to the Mc!rtgagor all releases or other documents reasonably necessary or desirable for the release of the 'Liens created hereby on the Mortgaged Property or the Collateral, as the case may be. 601816.0000 WEST 5492498 v.2 82 3 Section 5.05 Acts Not Constituting Waiver. Any default may be waived without waiving any other prior or ~;ubsequent default. Any default may be remedied without waiving the default remedied. Neitherlfailure to exercise, nor delay in exercising, any right, power or remedy upon any default shall be construed as a waiver of such default or as a waiver of the right to exercise any such right, power or remedy at a later date. No single or partial exercise of any right, power or remedy here~unzler shall exhaust the same or shall preclude any other or further exercise thereof, and every .,;uci~,~ right, power or remedy hereunder may be exercised at any time' and from time to time. No' modification or waiver of any provision hereof nor consent to any departure by the Mortgagor .therefrom shall in any event be effective unless the same shall be in writing and signed by the Mort'gagee, as specified in and in accordance with the Note, and then such waiver or consent shall be effective only in the specific instances, for the purpose for which given andto the extent therein 3pecified. No notice to nor demand on the Mortgagor in any case shall of itself entitle the Mc'rtgagor to any other or further notice or demand in similar or other circumstances. Acceptance of anY payment in an amount less than the amount then clue on any Obligations shall be deemed an acceptance on account only and shall not in any way excuse the existence of a default hereurder. Section 5.06 Sever~bi'it55 If any provision hereof is invalid or unenforceable in any jurisdiction, the other provisions hereof shall remain in full force and effect in such jurisdiction and the remaining provisiolis hereof shall be liberally construed in favor of the Mortgagee in order to effectuate the provi.:sions hereof, and the invalidity or unenforceability of any provision hereof in any jurisdiction sl"tall not affect the validity or enforceability of any such provision in any other jurisdiction. '.. Section 5.07 Satisf:action of Prior Encumbrance. To the extent that proceeds of the Note are used to pay indebt:dr,.ess secured by any outstanding Lien, security interest, charge or prior encumbrance against 'i:he Mortgaged Property, such proceeds have been advanced by the Mortgagee at the Mortgagcr's request, and the Mortgagee shall be subrogated to any and all rights, security interests and Liens owned by any owner or holder of such outstanding Liens, security interests, charges or' encumbrances, irrespective of whether said Liens, security interests, charges or encumbrances are released, and it is expressly understood that, in consideration of the payment of such other indebtedness by the Mortgagee, the Mortgagor hereby waives and releases all demands and causes of fiction for offsets and payments to, upon and in connection with the said indebtedness. Section 5.08 Natur;: r~:f Covenants. The covenants and agreements herein contained shall constitute covenants r, ann~ing with the land and interests covered or affected hereby and shall be binding upon the ihei. rs, legal representatives, successors and assigns of the parties hereto. '" Section 5.09 Notices. ' All notices, requests, consents, demands and other comnmnications required 0r Permitted hereunder shall be in writing and shall be deemed sufficiently given or furnistied if deliVered by registered or certified United States mail, postage prepaid, or by personal service i(including express or courier service) at the addresses specified at the end of this Mortgage (unless changed by similar notice in writing given by the particular party whose address is to b'z changed). Any such notice or communication shall be deemed to have been given either at the ti.me of personal.delivery or, in the case of delivery at the address 601816~0000 WEST 5492498 v.2 25 and in the manner provided herein, upon receipt; provided that, service of notice as required by the laws of any state in which portions of the Mortgaged Property may be situated shall for all purposes be deemed appropr.iate and sufficient with the giving of such notice. Section 5.10 Count~tarts. This Mortgage is being executed in several counterparts, all of which are identical, except that to facilitate recordation, if the Mortgaged Property is situated in more than one county, de~cr:iptions of only those portions of the Mortgaged Property located in the county in which a parfict~lar counterpart is recorded shall be attached as Exhibit A thereto. An Exhibit A containing a ,:le~.cription of all Mortgaged Property wheresoever situated will be attached to that certain counte[-Part to be attached to a Financing Statement and filed with the Secretary of State of Wyo':rfigg in the Uniform Commercial Code Records. Each of such counterparts shall for all pu'.'rp6ses be deemed to be an original and all such counterparts shall t°gether constitute but one a:i~d the same instrument. Section 5.11 Governing Law. INSOFAR AS PERMITTED BY OTHERWISE APPLICABLE LAW, THIS MORTGAGE AND THE OBLIGATIONS SHALL BE CONSTRUED UNDER AND GOVERNED BY THE LAWS OF THE STATE OF WYOMING (EXCLUDING 'CHOICE OF LAW AND CONFLICT OF LAW RULES); PROVIDED, HOWEVER., THAT, WITH RESPECT TO ANY PORTION OF THE MORTGAGED PROPERTy OR COLLATERAL LOCATED OUTSIDE OF THE STATE OF WYOMING, '.['HE LAWS OF THE PLACE IN WHICH SUCH PROPERTY IS OR IS DEEMED TO "BE LOCATED IN, OR OFFSHORE ADJACENT TO (AND STATE LAW MADE Ala:PLICABLE AS A MATTER OF FEDERAL LAW), SHALL APPLY TO THE EXTI~;NT OF PROCEDUI~,L AND SUBSTANTIVE MATTERS RELATING ONLY TO THE .CREATION, PERFECTION, FORECLOSURE OF LIENS AND ENFORCEMENT OF RIGHTS AND REMEDIES AGAINST THE MORTGAGED PROPERTY OR COLLA'].?E~¢~kL. .Section5.12 Excubation Provisions. EACH OF THE PARTIES HERETO SPECIFICALLY AGREES :THAT IT HAS A DUTY TO READ THIS MORTGAGE; AND AGREES THAT IT iIS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS MORTGAGE; THAT IT HAS IN FACT READ THIS MORTGAGE AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS ,4!Nt) EFFECTS OF THIS MORTGAGE; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS MORTGAGE; AND H~i~S ".RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO .THIS :MORTGAGE; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS MORTGAGE RESULT IN ONE PARTY ASSUMING THE LIA, B[LITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELi~!EVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. !:EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTIsST THE 'VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISI~DN OF THIS MORTGAGE ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT "CQNSPICUOUS." 601816.0000 WEST 5492498 v.2 26 Section 5.13 Terms.. Generally; Rules of Constructmn. The definitions of terms herein shall apply equally to the singmar and plural forms of the terms defined. Whenever the context may require, any pronoun shall .include the corresponding masculine, .feminine and neuter forms. The words "include", "inclucles," and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless thc context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or othei' document as from time to time amended, supplemented or otherwise modified (subje:t to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any law shall be construed as referring to such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, (c) any reference herein to any Person shall be construed to include such Person's successors and assigns (sukject to the restrictions contained herein), (d) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety aad not to any particular provision hereof, (e) with respect to the determination of any time period, the word "from" means "from and including" and the word "to" means "to and including, and (f) any reference herein to Articles, Sections or Exhibits shall 'be construed to refer to Articles and Sections of, or Exhibits to, this Mortgage. No provision of this Mortgage or any other Loan Document shall be interpreted or construed against any Person · solely because such Person or its legal representative drafted such provision. Each covenant contained herein shall be "construed (absent express provision to the contrm'y) as being independent of each other.covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. Section 5.14 Recording,. The Mortgagor will cause this Mortgage and all amendments and supplements thereto and substitutions therefor and all financing statements and continuation statements relating thereto to bc~ recorded, filed, re-recorded and refiled in such a manner and in such places as the Mortgage,~ shall reasonably request and will pay all such recording, filing, re- recording and refiling taxes, fee:; and other charges. Section 5.15 Application of Payments to Certain Obligations. If any part of the Obligations cannot be' lawfully secured by this Mortgage or if any pm-t of the Mortgaged Property cannot be lawfully :;ubject to the lien and security interest hereof to the full extent of the Obligations, then all payments made shall be applied on said Obligations first in discharge of that portion thereof which is not .sec?red by this Mortgage. Section 5.16 Complia_ace with Usury Laws. It is the intention of the parties hereto that the Mortgagee and all Lender.; conform strictly to usury laws applicable to them, and this Mortgage is expressly made subject to the provisions of the Note pertaining to applicable usury laws. In furtherance thereof, ill is stipulated and agreed that none of the terms and provisions contained herein shall ever be construed to create a contract to pay, for the use, forbearance or detention of money, interest in excess of the maximum amount of interest permitted to be charged by applicable law from'time to time in effect, and neither the Mortgagor not' any present or future guarantors, endorsers ,lot other parties now or hereafter becoming liable for payment of 601816.0000 WEST 5492498 v.2 27 the Obligations shall ever be liable for unearned interest thereon or shall ever be required to pay interest thereon in excess of the maximum interest that may be lawfully charged under applicable law from time to time in effect; reference is made to the Note for further provisions with respect thereto. 601816.0000 WEST 5492498 v.2 28 WITNESS THE EXECUTION HEREOF, the undersigned has executed this Mortgage as of the date first set forth abo~,.e. Mortgagor: COND?~LORATION, LLC Title: /O'l,a-gA~c,, p't~t&~-~ The name, address and taxpayer identification number of the Debtor/Mortgagor is: CONDOR EXPLORATION, LLC Tax I.D. No. 88-0438411 7720 E. Belleview, Suite B-10g Greenwood Village, Colorado 80111 Phone: (303) 771-99!)9 Fax: (303) 771-9973. The name and address of the Secured Party/Mortgagee is: Casino Credit Corporation 1470 NE 1st Street, Suite 100 Bend, Oregon 97701 Phone: (212) 389-5900 Fax: (541) 388-0377 Signature Page - Mortgage 1 of 2 THE STATE OF ~ ..... : ::; ": ,_ CO'UNTY OF This instrument was acknowledged before me .by ~-~t' ic_k }t)/] ~q,,.~/&e (}qo_aa of Oa ~,4,,) p ~vO Icrr-~3D. 'o-~ J~ , thisalO__~day of April }604. ' Witness my hand andofficial seal. /,/, ,ey._://4 (S~ ~e of notana'~i~ofl'[cer) My commission expires: Signature Page - Mortgage 2 of 2 EXHIBIT A Hydrocarbon Property See the attached. '.-829 Exhibit A- 1 ,,..,.. 832 ,.- 83d 8 3 5 8 '3 7 m ~ o o o ~ 839 840 841 8,'!3 8~6 8,17 849 85O o o o $~ ~~~ o 0000 __ ~'~'~'~'~'!~-'~'~- ~.~-~.~. ZZZZZZZZZZZZZZ 00000000000000 ~'~'~'~'~'~-~'~'~.~.~-~.~.~- ZZZZZZZZZZZZZZ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ~ 0 ~'~-~'~'~'~.~.~-~.~.~-, ZZZZZZZZ~ o 0 0 0 0 0 0 0 0 ZZZ ~~~0 0 0 ~°m~°m~°~