Exhibit 10.2


 


MORTGAGE, COLLATERAL REAL ESTATE MORTGAGE, DEED OF
TRUST,


ASSIGNMENT OF AS-EXTRACTED COLLATERAL, SECURITY
AGREEMENT, 

FIXTURE FILING AND FINANCING STATEMENT


 


FROM


 


VOYAGER OIL AND GAS, INC.


 


TO


 


BONNIE TURPIN


 


as Administrative Agent


 


and the Other Secured Persons


 


A CARBON, PHOTOGRAPHIC, OR OTHER REPRODUCTION OF THIS INSTRUMENT IS 

SUFFICIENT AS A FINANCING STATEMENT.


 

















 


A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT.  IN CERTAIN STATES, A POWER OF SALE MAY ALLOW
THE TRUSTEE OR THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT
GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR UNDER THIS
INSTRUMENT.


 


THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.


 


THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.


 


THIS INSTRUMENT COVERS PROCEEDS OF MORTGAGED PROPERTY.


 


THIS INSTRUMENT COVERS MINERALS AND OTHER SUBSTANCES OF VALUE
WHICH MAY BE EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION OIL
AND GAS) AND THE ACCOUNTS RELATED THERETO, WHICH WILL BE FINANCED AT THE
WELLHEADS OF THE WELL OR WELLS LOCATED ON THE PROPERTIES DESCRIBED IN THE EXHIBIT HERETO.  THIS FINANCING STATEMENT IS TO BE FILED OR
FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR
SIMILAR RECORDS OF THE RECORDERS OF THE COUNTIES LISTED ON THE EXHIBIT HERETO
AND WITH A CLERK OF COURT.  THE MORTGAGOR
HAS AN INTEREST OF RECORD IN THE REAL ESTATE AND IMMOVABLE PROPERTY CONCERNED,
WHICH INTEREST IS DESCRIBED IN THE EXHIBIT ATTACHED 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
EXHIBIT HERETO.  THIS FINANCING
STATEMENT IS TO BE FILED FOR RECORD OR RECORDED, AMONG OTHER PLACES, IN
THE REAL ESTATE RECORDS OR SIMILAR RECORDS OF EACH COUNTY IN WHICH SAID LAND OR
ANY PORTION THEREOF IS LOCATED AND WITH A CLERK OF COURT.  THE MORTGAGOR IS THE OWNER OF RECORD INTEREST
IN THE REAL ESTATE CONCERNED.  THIS INSTRUMENT
IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS OR THE UCC RECORDS.


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
  DEFINITIONS

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Terms Defined Above

  	
  3

  
	
  Section 1.02

  	
  UCC and Other Defined Terms

  	
  3

  
	
  Section 1.03

  	
  Definitions

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
  GRANT OF LIEN AND SECURED OBLIGATIONS

  
	
   

  	
   

  
	
  Section 2.01

  	
  Grant of Liens

  	
  6

  
	
  Section 2.02

  	
  Grant of Security Interest

  	
  7

  
	
  Section 2.03

  	
  Secured Obligations

  	
  8

  
	
  Section 2.04

  	
  Fixture Filing, Etc.

  	
  8

  
	
  Section 2.05

  	
  Pro Rata Benefit

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
  ASSIGNMENT OF AS-EXTRACTED COLLATERAL

  
	
   

  	
   

  
	
  Section 3.01

  	
  Assignment

  	
  9

  
	
  Section 3.02

  	
  No Modification of Payment Obligations

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
  REPRESENTATIONS, WARRANTIES AND COVENANTS

  
	
   

  	
   

  
	
  Section 4.01

  	
  Title

  	
  10

  
	
  Section 4.02

  	
  Perfected Liens; Defend Title

  	
  10

  
	
  Section 4.03

  	
  Not a Foreign Person

  	
  11

  
	
  Section 4.04

  	
  Power to Create Lien and Security

  	
  11

  
	
  Section 4.05

  	
  Revenue and Cost Bearing Interest

  	
  11

  
	
  Section 4.06

  	
  Rentals Paid; Leases in Effect

  	
  11

  
	
  Section 4.07

  	
  Operation By Third Parties

  	
  12

  
	
  Section 4.08

  	
  Abandon, Sales

  	
  12

  
	
  Section 4.09

  	
  Failure to Perform

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
  RIGHTS AND REMEDIES

  
	
   

  	
   

  
	
  Section 5.01

  	
  Event of Default

  	
  12

  
	
  Section 5.02

  	
  Foreclosure and Sale

  	
  12

  
	
  Section 5.03

  	
  Substitute Trustees and Agents

  	
  14

  
	
  Section 5.04

  	
  Judicial Foreclosure; Receivership

  	
  14

  
	
  Section 5.05

  	
  Separate Sales

  	
  14

  
	
  Section 5.06

  	
  Possession of Mortgaged Property

  	
  14

  
	
  Section 5.07

  	
  Occupancy After Foreclosure

  	
  15

  
	
  Section 5.08

  	
  Remedies Cumulative, Concurrent and Nonexclusive

  	
  15

  



 

















 


	
  Section 5.09

  	
  No Release of Obligations

  	
  15

  
	
  Section 5.10

  	
  Release of and Resort to Collateral

  	
  16

  
	
  Section 5.11

  	
  Waiver of Redemption, Notice and Marshalling of Assets, Etc.

  	
  16

  
	
  Section 5.12

  	
  Discontinuance of Proceedings

  	
  16

  
	
  Section 5.13

  	
  Application of Proceeds

  	
  16

  
	
  Section 5.14

  	
  Resignation of Operator

  	
  17

  
	
  Section 5.15

  	
  Indemnity

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
  THE TRUSTEE

  
	
   

  	
   

  
	
  Section 6.01

  	
  Duties, Rights, and Powers of Trustee

  	
  17

  
	
  Section 6.02

  	
  Successor Trustee

  	
  18

  
	
  Section 6.03

  	
  Retention of Moneys

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
  MISCELLANEOUS

  
	
   

  	
   

  
	
  Section 7.01

  	
  Instrument Construed as Mortgage, Etc.

  	
  18

  
	
  Section 7.02

  	
  Releases

  	
  19

  
	
  Section 7.03

  	
  Severability

  	
  19

  
	
  Section 7.04

  	
  Successors and Assigns

  	
  19

  
	
  Section 7.05

  	
  Satisfaction of Prior Encumbrance

  	
  20

  
	
  Section 7.06

  	
  Application of Payments to Certain Obligations

  	
  19

  
	
  Section 7.07

  	
  Nature of Covenants

  	
  19

  
	
  Section 7.08

  	
  Notices

  	
  20

  
	
  Section 7.09

  	
  Counterparts

  	
  20

  
	
  Section 7.10

  	
  Governing Law

  	
  20

  
	
  Section 7.11

  	
  Financing Statement; Fixture Filing

  	
  20

  
	
  Section 7.12

  	
  Execution of Financing Statements

  	
  20

  
	
  Section 7.13

  	
  Exculpation Provisions

  	
  21

  
	
  Section 7.14

  	
  References

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
  STATE
  SPECIFIC PROVISIONS

  
	
   

  	
   

  
	
  Section 8.01

  	
  Special North Dakota Provisions

  	
  22

  
	
   

  	
   

  	
   

  
	
  Exhibit A — Oil and Gas Property

  	
   

  



 

















 


THIS MORTGAGE, COLLATERAL REAL ESTATE MORTGAGE, DEED OF TRUST,
ASSIGNMENT OF AS-EXTRACTED COLLATERAL, SECURITY AGREEMENT, FIXTURE FILING AND
FINANCING STATEMENT (this “Mortgage”) is entered into as of September     ,
2010 (the “Effective Date”) by VOYAGER OIL & GAS, INC., a
Delaware corporation (the “Mortgagor”), in favor of (i) BONNIE
TURPIN, as Administrative Agent (the “Mortgagee”), and the Other Secured
Persons with respect to all Mortgaged Properties located in the Deed of Trust
State and (ii) the Mortgagee for its benefit and the benefit of the Other
Secured Parties with respect to all Mortgaged Properties located in the
Mortgage State and with respect to all UCC Collateral.


 


R E C I T A L S


 


A.            On the even
date herewith, Mortgagor, as borrower, the Lenders, the Mortgagee, as
administrative agent for the Lenders and others, executed a Promissory Note
(such agreement, as may from time to time be amended or supplemented, the “Promissory
Note”) pursuant to such, upon the terms and conditions stated therein, the
Lenders agreed to make loans and other to the Mortgagor.


 


B.            On the even date herewith,
the Mortgagor, each of the signatories thereto and the Mortgagee executed a
Security Agreement (such agreement, as may from time to time be amended or
supplemented, the “Security Agreement”) pursuant to which, upon the
terms and conditions stated therein, the Mortgagor has agreed to grant a
security interest to the Mortgagee in all of its assets as specified therein
(the Promissory Note and the Security Agreement collectively being the “Secured
Transaction Documents”).


 


C.            The Mortgagee and the Other
Secured Persons have conditioned their obligations under the Secured
Transaction Documents upon the execution and delivery by the Mortgagor of this
Mortgage, and the Mortgagor has agreed to enter into this Mortgage to secure
all obligations owing to the Mortgagee and the Other Secured Persons under the
Secured Transaction Documents.


 


D.            Therefore, in order to
comply with the terms and conditions of the Secured Transaction Documents and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Mortgagor hereby agrees as follows:


 


ARTICLE I

DEFINITIONS


 


Section 1.01          Terms Defined
Above.  As used in this Mortgage, each
term defined above has the meaning indicated above.


 


Section 1.02          UCC and Other
Defined Terms.  Unless
otherwise defined in the Applicable UCC, each capitalized term used in this
Mortgage and not defined in this Mortgage shall have the meaning ascribed to
such term in the Promissory Note.  Any
capitalized term not defined in either this Mortgage or the Promissory Note
shall have the meaning ascribed to such term in the Applicable UCC.


 

















 


Section 1.03          Definitions.


 


“Applicable
UCC” means the provisions of the Uniform Commercial Code presently in
effect in the jurisdiction in which the relevant Collateral is situated.


 


“Collateral”
means collectively all the Mortgaged Property and all the UCC Collateral.


 


“Deed
of Trust State” has the meaning ascribed such term in Section 2.01.


 


“Event
of Default” has the meaning ascribed to such term in Section 5.01.


 


“Hydrocarbon
Interests” means all rights, titles, interests and estates and the lands
and premises covered or affected thereby now or hereafter acquired by the
Mortgagor in and to oil and gas leases, oil, gas and mineral leases, or other
liquid or gaseous hydrocarbon leases, fee interests, surface interests, mineral
fee interests, overriding royalty and royalty interests, net profit interests
and production payment interests, including any reserved or residual interests
of whatever nature, in each case, which are described on Exhibit A;
provided that, it is the intent of the Mortgagor all of its interests be
subject to the Lien of this Mortgage even if (i) its interests on Exhibit A
shall be incorrectly described or a description of a part or all of such
property or the Mortgagor’s interests therein be omitted limited to particular
lands, specified depths or particular types of property interests or (ii) such
properties or interests may be hereafter acquired.


 


“Hydrocarbons”
means all oil, gas, casinghead gas, drip gasoline, natural gasoline,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all
products refined or separated therefrom and all other minerals which may be
produced and saved from or attributable to the Oil and Gas Properties of the
Mortgagor, including all oil in tanks, and all rents, issues, profits,
proceeds, products, revenues and other incomes from or attributable to the
Hydrocarbon Interests of the Mortgagor or other properties constituting Oil and
Gas Properties of the Mortgagor.


 


“Indemnified
Parties” means the Trustee, the Mortgagee, each Other Secured Person and their
officers, directors, employees, representatives, agents, attorneys, accountants
and experts.


 


“Lien”
means any interest in property securing an obligation owed to, or a claim by, a
Person other than the owner of the property, whether such interest is based on
the common law, statute or contract, and whether such obligation or claim is
fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes or (b) production payments and the like
payable out of Oil and Gas Properties..


 


“Mortgaged
Property” means the Oil and Gas Properties and other properties and assets
described in Section 2.01(a) through Section 2.01(e).


 


“Mortgage
State” has the meaning ascribed such term in Section 2.01.


 


“Oil
and Gas Properties” means (a) Hydrocarbon Interests; (b) the
properties of the Mortgagor now or hereafter pooled or unitized with Hydrocarbon
Interests; (c) all presently existing or future unitization,
communitization, pooling agreements and declarations of pooled 


 

















 


units
and the units created thereby (including without limitation all units created
under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of the Hydrocarbon Interests; (d) all
operating agreements, production sales or other contracts, farmout agreements,
farm-in agreements, area of mutual interest agreements, equipment leases and
other agreements which relate to any of the Hydrocarbon Interests or any
interests therein or to the production, sale, purchase, exchange, processing,
handling, storage, transporting or marketing of the Hydrocarbons from or
attributable to such Oil and Gas Properties of the Mortgagor; (e) all
Hydrocarbons; (f) all tenements, hereditaments, appurtenances and
properties in any manner appertaining, belonging, affixed or incidental to the
Hydrocarbon Interests, including all compressor sites, settling ponds and
equipment or pipe yards; and (g) all properties, rights, titles, interests
and estates described or referred to above whether now owned or hereinafter
acquired, including any and all property, real or personal, immoveable or
moveable, situated upon, used, held for use or useful in connection with the
operating, working or development of any of such Hydrocarbon Interests or
property of the Mortgagor (excluding drilling rigs, automotive equipment,
rental equipment or other personal property which may be on such premises for
the purpose of drilling a well or for other similar temporary uses) and
including any and all oil wells, gas wells, injection wells or other wells,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, pipelines, sales and flow lines, gathering
systems, field gathering systems, salt water disposal facilities, tanks and
tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, steam 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.


 


“Other
Secured Persons” means each Lender under the Promissory Note and any legal
owner, holder, assignee or pledgee of any of the Secured Obligations.


 


“Paid
In Full In Cash” means the irrevocable and indefeasible payment in full in
cash of all principal, interest (including interest accruing during the
pendency of an insolvency or liquidation proceeding, regardless of whether
allowed or allowable in such insolvency or liquidation proceeding) and premium,
if any, on all Loans outstanding under the Promissory Note.


 


“Post
Default Rate” means the post default rate per annum set forth in the
Promissory Note applicable to past due payments.


 


“Secured
Obligations” has the meaning assigned to such term in Section 2.03.


 


“Trustee”
means Bonnie Turpin, whose address for notice hereunder is 130 Cheshire Lane,
#101, Minnetonka, Minnesota 55305, and any successors and substitutes in trust
hereunder.


 


“UCC
Collateral” means the property and other assets described in Section 2.02.


 
















 


ARTICLE II

GRANT OF LIEN AND SECURED OBLIGATIONS


 


Section 2.01          Grant of Liens.  To secure payment of the Secured Obligations,
the Mortgagor does by these presents hereby and subject to the terms hereof:


 


(i)            GRANT, BARGAIN,
SELL, ASSIGN, MORTGAGE, TRANSFER and CONVEY to the Trustee, for the use and
benefit of the Mortgagee and the Other Secured Persons, all the following
properties, rights and interests which are located in (or cover or relate to
such Oil and Gas Properties located in) the State of Montana (the “Deed of
Trust State”), TO HAVE AND TO HOLD unto the Trustee forever to secure the
Secured Obligations; and


 


(ii)           GRANT, BARGAIN,
SELL, WARRANT, MORTGAGE, ASSIGN, TRANSFER, PLEDGE, HYPOTHECATE and CONVEY AND,
to the extent permitted by applicable law, GRANT A POWER OF SALE to the
Mortgagee, for its benefit and the benefit of the Other Secured Persons, with
mortgage covenants, and upon the statutory mortgage condition for the breach of
which this Mortgage may be subject to foreclosure as provided by applicable
law, all the following properties, rights and interests which are located in
(or cover or relate to properties located in) the State of North Dakota (the “Mortgage
State”):


 


(a)           All rights,
titles, interests and estates now owned or hereafter acquired by the Mortgagor
in and to the Oil and Gas Properties described on Exhibit A.


 


(b)           All rights,
titles, interests and estates now owned or hereafter acquired by the Mortgagor
in and to all geological, geophysical, engineering, accounting, title, legal and
other technical or business data concerning the Oil and Gas Properties, the
Hydrocarbons or any other item of property which are in the possession of the
Mortgagor, and all books, files, records, magnetic media, computer records and
other forms of recording or obtaining access to such data.


 


(c)           All rights,
titles, interests and estates now owned or hereafter acquired by the Mortgagor
in and to all Hydrocarbons.


 


(d)           Any property
that may from time to time hereafter, by delivery or by writing of any kind, be
subjected to the Liens hereof by the Mortgagor or by anyone on the Mortgagor’s
behalf; and the Trustee and/or the Mortgagee are hereby authorized to receive
the same at any time as additional security hereunder.


 


(e)           All of the
rights, titles and interests of every nature whatsoever now owned or hereafter
acquired by the Mortgagor in and to the Oil and Gas Properties described in Exhibit A
and all other rights, titles, interests and estates and every part and parcel
thereof, including, without limitation, any 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 Permitted Encumbrances to which
any of such Oil and Gas Properties or other rights, titles, interests or
estates are subject or otherwise; all rights of the Mortgagor to Liens securing
payment of proceeds from the sale of production from any of such Oil and Gas
Properties, together with any and all renewals and extensions of any of such
related 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 and all additional interests
of 


 

















 


any kind hereafter acquired by the Mortgagor in and
to the such related rights, titles, interests or estates.


 


Any
fractions or percentages specified on Exhibit A in referring to the
Mortgagor’s interests are solely for purposes of the warranties made by the
Mortgagor pursuant to Section 4.01 and Section 4.05 and shall in no
manner limit the quantum of interest affected by this Section 2.01 with
respect to any Oil and Gas Property or with respect to any unit or well
identified on Exhibit A.


 


Section 2.02          Grant of
Security Interest.  To further
secure the Secured Obligations, the Mortgagor hereby grants to the Mortgagee,
for its benefit and the benefit of the Other Secured Persons, a security
interest in and to all of the following (whether now or hereafter acquired by
operation of law or otherwise):


 


(a)           all Accounts;


 


(b)           all Deposit
Accounts (other than payroll, withholding tax and other fiduciary Deposit
Accounts), all Commodities Accounts and all Securities Accounts;


 


(c)           all Documents;


 


(d)           all General
Intangibles (including, without limitation, rights in and under any Payment
Intangible, Swap Agreement or any Commodity Contract) and all rights under
insurance contracts and rights to insurance proceeds;


 


(e)           all
Instruments;


 


(f)            all Goods
(including, without limitation, all Inventory, all Equipment and all Fixtures
whether or not relating to the Mortgaged Property);


 


(g)           all
Letter-of-Credit Rights (whether or not the letter of credit is evidenced by a
writing);


 


(h)           all
As-Extracted Collateral from or attributable to the Oil and Gas Properties;


 


(i)            all books and
records pertaining to the Oil and Gas Properties;


 


(j)            all Fixtures;


 


(k)           all
Hydrocarbons;


 


(l)            to the extent
not otherwise included, any other property insofar as the it consists of
personal property of any kind or character defined in and subject to the
Applicable UCC; and


 

















 


(m)          to the extent
not otherwise included, all Proceeds and products of any and all of the
foregoing and all collateral security, guarantees and other Supporting
Obligations given with respect to any of the foregoing.


 


Notwithstanding
the foregoing, this Section 2.02 does not grant a security interest in any
(i) Auction-Rate Securities or (ii) personal property of the
Mortgagor that would otherwise be UCC Collateral, to the extent that such grant
is prohibited under any agreement relating to such property and the violation
of such prohibition would cause the Mortgagor to lose its interest in or rights
with respect to such property, except to the extent that Part 4 of Article 9
of the Applicable UCC would render such prohibition ineffective.


 


Section 2.03          Secured
Obligations.  This
Mortgage is executed and delivered by the Mortgagor to secure and enforce the
following (the “Secured Obligations”):


 


(a)           Payment of and
performance of any and all indebtedness, fees, interest, indemnities,
reimbursements, obligations and liabilities of the Mortgagor (including
interest accruing during the pendency of an insolvency or liquidation
proceeding, regardless of whether allowed or allowable in such insolvency or
liquidation proceeding) Loan Documents.


 


(b)           Any sums which
may be advanced or paid by the Trustee or the Mortgagee or any Other Secured
Person under the terms hereof or of the Loan Documents on account of the
failure of the Mortgagor to comply with the covenants of the Mortgagor
contained herein, in the Loan Documents; and all other obligations, liabilities
and indebtedness of the Mortgagor arising pursuant to the provisions of this
Mortgage or the Loan Documents.


 


(c)           Any and all
renewals, modifications, substitutions, rearrangements or extensions of any of
the foregoing, whether in whole or in part.


 


Section 2.04          Fixture Filing, Etc.  Without in any manner limiting the generality
of any of the other provisions of this Mortgage: (i) some portions of the
goods described or to which reference is made herein are or are to become
Fixtures on the land described or to which reference is made herein or on Exhibit A;
(ii) the security interests created hereby under applicable provisions of
the Applicable UCC will attach to all As-Extracted Collateral (all minerals
including oil and gas and the Accounts resulting from the sale thereof at the
wellhead or minehead located on the Oil and Gas Properties described or to
which reference is made herein or on Exhibit A) and all other
Hydrocarbons; (iii) this Mortgage is to be filed of record in the real
estate records or other appropriate records as a financing statement; and (iv) the
Mortgagor is the record owner of the real estate or interests in the real
estate or immoveable property comprised of the Mortgaged Property.


 


Section 2.05          Pro Rata
Benefit.  This Mortgage is executed and
granted for the pro rata benefit and security of the Mortgagee and the Other
Secured Persons to secure the Secured Obligations for so long as same remains
unpaid and thereafter until the Secured Obligations have been Paid In Full In
Cash.


 

















 


ARTICLE III

ASSIGNMENT OF AS-EXTRACTED COLLATERAL


 


Section 3.01          Assignment.


 


(a)           The Mortgagor
has absolutely and unconditionally assigned, transferred, conveyed and granted
a security interest, and does hereby absolutely and unconditionally assign,
transfer, convey and grant a security interest unto the Mortgagee, its
successors and assigns, in and to:


 


(i)            all of its
As-Extracted Collateral located in or relating to the Mortgaged Properties
located in the county where this Mortgage is filed, including without
limitation, all As-Extracted Collateral relating to the Hydrocarbon Interests,
the Hydrocarbons and all products obtained or processed therefrom;


 


(ii)           the revenues
and proceeds now and hereafter attributable to such Mortgaged 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 Mortgagor or now or
hereafter relating to any part of such Mortgaged Properties and all amounts,
sums, monies, revenues and income which become payable to the Mortgagor from,
or with respect to, any of the Mortgaged Properties, present or future, now or
hereafter constituting a part of the Hydrocarbon Interests.


 


(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, for its benefit and the benefit of the Other Secured Persons, free
and clear of all taxes, charges, costs and expenses; and all such revenues and
proceeds shall be paid directly to the Mortgagee, 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.


 


(c)           The Mortgagor
agrees to perform all such acts, and to execute all such further assignments,
transfers and division orders and other instruments as may be required or
desired by the Mortgagee or any party in order to have said proceeds and
revenues so paid to the Mortgagee.  In
addition to any and all rights of a secured party under Sections 9-607 and
9-609 of the Applicable UCC, the Mortgagee is fully authorized to receive and
receipt for said revenues and proceeds; to endorse and cash any and all checks
and drafts payable 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 Deposit Account with a Lender or
other acceptable commercial bank as additional collateral securing the Secured
Obligations; and to execute transfer and division orders in the name of the Mortgagor,
or otherwise, with warranties binding the Mortgagor.  All proceeds received by the Mortgagee
pursuant to this grant and assignment shall be applied as provided in Section 5.13.


 


(d)           The Mortgagee
shall not be liable for any delay, neglect or failure to effect collection of
any proceeds or to take any other action in connection therewith or hereunder;
but 


 

















 


the Mortgagee shall have the right, at its election,
in the name of 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.


 


(e)           The Mortgagor
hereby appoints the Mortgagee as its attorney-in-fact to pursue any and all
rights of the Mortgagor to Liens in the Hydrocarbons securing payment of
proceeds of runs attributable to the Hydrocarbons.  In addition to the Liens granted to the
Trustee and/or the Mortgagee in Section 2.01(e), the Mortgagor hereby
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 As-Extracted Collateral, any other
Hydrocarbons and proceeds of runs therefrom arising under or created by said
statutory provision, judicial decision or otherwise.  The power of attorney granted to the Mortgagee
in this Section 3.01, being coupled with an interest, shall be irrevocable
until the Secured Obligations have been Paid In Full In Cash, at which time
such power of attorney shall automatically terminate without any further action
by the Mortgagor.


 


Section 3.02          No Modification
of Payment Obligations. 
Nothing herein contained shall modify or otherwise alter the obligation
of the Mortgagor to make prompt payment of all amounts constituting Secured
Obligations when and as the same become due regardless of whether the proceeds
of the As-Extracted Collateral and Hydrocarbons are sufficient to pay the same
and the rights provided in accordance with the foregoing assignment provision
shall be cumulative of all other security of any and every character now or
hereafter existing to secure payment of the Secured Obligations.  Nothing in this Article III is intended
to be an acceptance of collateral in satisfaction of the Secured Obligations.


 


ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS


 


The
Mortgagor hereby represents, warrants and covenants as follows:


 


Section 4.01          Title.  To the extent of the undivided interests
specified on Exhibit A, the Mortgagor has good and defensible title to and
is possessed of the Hydrocarbon Interests and has good title to the UCC
Collateral.  The Collateral is free of
any and all Liens except Permitted Encumbrances.


 


Section 4.02          Perfected
Liens; Defend Title.


 


(a)           This Mortgage
is, and always will be kept, a subsisting first Lien upon the Mortgaged
Property; and a valid, absolute assignment of the Mortgaged Property
constituting as-extracted collateral.  No
intention to subordinate the first priority Lien granted in favor of the
Mortgagee is to be hereby implied or expressed by the permitted existence of
any Excepted Liens.


 


(b)           The Liens
granted in the UCC 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
form) will constitute valid 


 

















 


perfected, first priority Liens in all of the UCC
Collateral in favor of the Mortgagee, for the ratable benefit of the Lenders,
as collateral security for the Secured Obligations, enforceable in accordance
with the terms hereof against all creditors of the Mortgagor and any Persons purporting
to purchase any UCC Collateral from the Mortgagor and are prior to all other
Liens on the UCC Collateral in existence on the date hereof except for (i) Liens
that have priority claim on the UCC Collateral by operation of law and (ii) those
financing statements filed of record in connection with joint operating
agreements prior to the date hereof.


 


(c)           The Mortgagor
will warrant and defend the title to the Collateral against the claims and
demands of all other Persons whomsoever and will maintain and preserve the Lien
created hereby (and its priority) until the Secured Obligations shall be Paid
In Full In Cash.  If (i) an adverse
claim be made against or a cloud develop upon the title to any part of the
Collateral other than a Permitted Encumbrance or (ii) any Person,
including the holder of a Permitted Encumbrance, shall challenge the priority
or validity of the Liens created by this Mortgage, then the Mortgagor agrees to
immediately defend against such adverse claim, take appropriate action to remove
such cloud or subordinate such Permitted Encumbrance, in each case, at the
Mortgagor’s sole cost and expense.  The
Mortgagor further agrees that the Trustee and/or the Mortgagee may take such
other action as they deem advisable to protect and preserve their interests in
the Collateral, and in such event the Mortgagor will indemnify the Trustee and
the Mortgagee against any and all cost, attorneys’ fees and other expenses
which they may incur in defending against any such adverse claim or taking
action to remove any such cloud.


 


Section 4.03          Not a Foreign
Person.  The Mortgagor is not a “foreign
person” within the meaning of 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 4.04          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 Collateral in
the manner and form herein provided.  No
authorization, approval, consent or waiver of any lessor, sublessor,
Governmental Authority or other party or parties whomsoever is required in
connection with the execution and delivery by the Mortgagor of this Mortgage.


 


Section 4.05          Revenue and
Cost Bearing Interest.  The
Mortgagor’s ownership of the Hydrocarbon Interests and the undivided interests
therein as specified on Exhibit A will, after giving full effect to all
Permitted Encumbrances, afford the Mortgagor not less than those net interests
(expressed as a fraction, percentage or decimal) in the production from or
which is allocated to such Hydrocarbon Interest specified as Net Revenue
Interest on attached Exhibit A and will cause the Mortgagor to bear not
more than that portion (expressed as a fraction, percentage or decimal),
specified as Working Interest on Exhibit A, of the costs of drilling,
developing and operating the wells identified on Exhibit A except to the
extent of any proportionate corresponding increase in the Net Revenue Interest.


 


Section 4.06          Rentals Paid;
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 Mortgaged 


 

















 


Property have been duly paid or provided for, and
all leases or subleases comprising a part of the Oil and Gas Property are in
full force and effect.


 


Section 4.07          Operation By
Third Parties.  If any
portion of the Mortgaged Property is comprised of interests which are not
working interests or which are not operated by the Mortgagor or one of its
Affiliates, then with respect to such interests and properties, the Mortgagor’s
covenants as expressed in this Article III are modified to require that
the Mortgagor use reasonable commercial efforts to obtain compliance with such
covenants by the working interest owners or the operator or operators of such
Mortgaged Properties.


 


Section 4.08          Failure to
Perform.  The Mortgagor agrees that if
it fails to perform any act or to take any action which it is required to
perform or take hereunder or pay any money which the Mortgagor is required to
pay hereunder, each of the Mortgagee and the Trustee, in the Mortgagor’s name
or its or their own name, may, but shall not be obligated to, perform or cause
to perform such act or take such action or pay such money, and any expenses so
incurred by either of them and any money so paid by either of them shall be a
demand obligation owing by the Mortgagor to the Mortgagee or the Trustee, as
the case may be, and each of the Mortgagee and the Trustee, 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 each of the Mortgagee and the Trustee pursuant to this
Mortgage shall bear interest from the date of such expenditure or payment to
such Person until paid at the Post Default Rate.


 


ARTICLE V

RIGHTS AND REMEDIES


 


Section 5.01          Event of
Default.  An Event of Default under any
of the Secured Transaction Documents shall be an “Event of Default”
under this Mortgage.


 


Section 5.02          Foreclosure and
Sale.


 


(a)           If an Event of
Default shall occur and be continuing, to the extent provided by applicable
law, the Mortgagee shall have the right and option to proceed with foreclosure
by: (i) with respect to that portion of the Mortgaged Property located in
any Deed of Trust State directing the Trustee to proceed, and (ii) with
respect to that portion of the Mortgaged Property located in any Mortgage State
proceeding, with foreclosure and to sell all or any portion of such Mortgaged
Property at one or more sales, as an entirety or in parcels, at such place or
places in otherwise such manner and upon such notice as may be required by law,
or, in the absence of any such requirement, as the Mortgagee may reasonably
deem appropriate, and to make conveyance to the purchaser or purchasers.  Where the Mortgaged Property is situated in
more than one jurisdiction, notice as above provided shall be posted and filed
in all such jurisdictions (if such notices are required by law), and all such
Mortgaged Property may be sold in any such jurisdiction and any such notice
shall designate the jurisdiction where such Mortgaged Property is to be sold.  Nothing contained in this Section 5.02
shall be construed so as to limit in any way any rights to sell the Mortgaged
Property or any portion thereof by private sale if and to the extent that such
private sale is permitted under the laws of the applicable jurisdiction or by
public or private sale after entry of a judgment by any court of competent
jurisdiction so ordering.  The Mortgagor
hereby irrevocably appoints the Trustee and the 


 

















 


Mortgagee,
with full power of substitution, to be the attorneys-in-fact of the Mortgagor
and in the name and on behalf of the Mortgagor to execute and deliver any
deeds, transfers, conveyances, assignments, assurances and notices which the
Mortgagor ought to execute and deliver and do and perform any and 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 Trustee and/or the
Mortgagee; provided, however, that such power of attorney shall automatically
terminate without any further action by the Mortgagor at such time as the
Secured Obligations have been Paid In Full In Cash.  At any such sale: (i) whether made under
the power herein contained or any other legal enactment, or by virtue of any
judicial proceedings or any other legal right, remedy or recourse, it shall not
be necessary for the Trustee or the Mortgagee, as appropriate, to have
physically present, or to have constructive possession of, the Mortgaged
Property (the Mortgagor hereby covenanting and agreeing to deliver any portion
of the Mortgaged Property not actually or constructively possessed by the
Trustee or the Mortgagee immediately upon his or its demand) 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
purchaser at such sale, (ii) each instrument of conveyance executed by the
Trustee or the Mortgagee shall contain a general warranty of title, binding
upon the Mortgagor and its successors and assigns, (iii) each and every
recital contained in any instrument of conveyance made by the Trustee or the
Mortgagee shall conclusively establish the truth and accuracy of the matters
recited therein, including, without limitation, nonpayment of the Secured
Obligations, advertisement and conduct of such sale in the manner provided
herein and otherwise by law and appointment of any successor trustee hereunder,
(iv) any and all prerequisites to the validity thereof shall be
conclusively presumed to have been performed, (v) the receipt of the
Trustee, the Mortgagee or of such other party or officer making the sale 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 thereafter be obligated to see to the application of
such purchase money, or be in any way answerable for any loss, misapplication
or nonapplication thereof, (vi) to the fullest extent permitted by law,
the Mortgagor shall be completely and irrevocably divested of all of its right,
title, interest, claim and demand whatsoever, either at law or in equity, in
and to the property sold and such sale shall be a perpetual bar both at law and
in equity against the Mortgagor, and against any and all other Persons claiming
or to claim the property sold or any part thereof, by, through or under the
Mortgagor, and (vii) to the extent and under such circumstances as are
permitted by law, the Mortgagee may be a purchaser at any such public sale, and
shall have the right, after paying or accounting for all costs of said sale or
sales, to credit the amount of the bid upon the amount of the Secured
Obligations (in the order of priority set forth in Section 5.13) in lieu
of cash payment.


 


(b)           If an Event of
Default shall occur and be continuing, then (i) the Mortgagee shall be
entitled to all of the rights, powers and remedies afforded a secured party by
the Applicable UCC with reference to the UCC Collateral or (ii) the
Trustee or the Mortgagee may proceed as to any Collateral in accordance with
the rights and remedies granted under this Mortgage or applicable law in
respect of the Collateral.  Such rights,
powers and remedies shall be cumulative and in addition to those granted to the
Trustee or the Mortgagee under any other provision of this Mortgage or under
any other Loan Document.  Written notice
mailed to the Mortgagor as provided herein at least ten (10) days prior to
the date of public sale of any part of the Collateral which is personal
property subject to the provisions of the Applicable UCC, or 


 

















 


prior to the date after which private sale of any
such part of the Collateral will be made, shall constitute reasonable notice.


 


Section 5.03          Substitute
Trustees and Agents.  Each of the
Trustee and 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 by the Trustee or the Mortgagee, including,
without limitation, the posting of notices and the conduct of sale, but in the
name and on behalf of the Trustee or the Mortgagee or its successor or
substitute, as applicable.  If the
Trustee or the 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 conveyance of the property pursuant
thereto as if such notice had been given by the successor or substitute trustee
conducting the sale.


 


Section 5.04          Judicial
Foreclosure; Receivership.  If
any of the Secured Obligations shall become due and payable and shall not be
promptly paid, the Trustee or the Mortgagee shall have the right and power to
proceed by a suit or suits in equity or at law, whether for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for any foreclosure hereunder or for
the sale of the Collateral under the judgment or decree of any court or courts
of competent jurisdiction, or for the appointment of a receiver pending any
foreclosure hereunder or the sale of the Collateral under the order of a court
or courts of competent jurisdiction or under executory or other legal process,
or for the enforcement of any other appropriate legal or equitable remedy.  Any money advanced by the Trustee and/or the
Mortgagee in connection with any such receivership shall be a demand obligation
(which obligation the Mortgagor hereby expressly promises to pay) owing by the
Mortgagor to the Trustee and/or the Mortgagee and shall bear interest from the
date of making such advance by the Trustee and/or the Mortgagee until paid at
the Post Default Rate.


 


Section 5.05          Separate Sales.  The Collateral may be sold in one or more
parcels and to 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 5.06          Possession of
Mortgaged Property.  If an Event
of Default shall have occurred and be continuing, then, to the extent permitted
by applicable law, the Trustee or the Mortgagee shall have the right and power
to enter into and upon and take possession of all or any part of the Collateral
in the possession of the Mortgagor, its successors or assigns, or its 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 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 and powers of the Mortgagor, in the
name, place and stead of the Mortgagor, or otherwise as the Mortgagee shall
deem best.  All costs, expenses and
liabilities of every character incurred by the Trustee and/or the Mortgagee in
administering, managing, operating, and controlling the Mortgaged Property
shall constitute a demand obligation (which obligation the Mortgagor hereby
expressly promises to pay) owing by the Mortgagor to the Trustee and/or the
Mortgagee and shall bear interest from date of expenditure 


 

















 


until paid at the Post Default Rate, all of which
shall constitute a portion of the Secured Obligations.


 


Section 5.07          Occupancy 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 Collateral by, through
or under the Mortgagor, are occupying or using the Mortgaged Property 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 either 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 following the sale or to
permit the occupants to remain as tenants at will.  In the event the tenant fails to surrender
possession of said property upon demand, the purchaser shall be entitled to
institute and maintain a summary action for possession of the Mortgaged
Property (such as an action for forcible entry and detainer) in any court
having jurisdiction.


 


Section 5.08          Remedies
Cumulative, Concurrent and Nonexclusive.  Every right, power, privilege and remedy
herein given to the Trustee or the Mortgagee shall be cumulative and in
addition to every other right, power and remedy herein specifically given or
now or hereafter existing in equity, at law or by statute (including specifically
those granted by the Applicable UCC in effect and applicable to the Collateral
or any portion thereof).  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 Trustee or the Mortgagee, and the
exercise, or the beginning of the exercise, or the abandonment, of any such
right, 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
Trustee or the Mortgagee or any Other Secured Person in the exercise of any
right, power 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 5.09          No Release of
Obligations.  Neither the
Mortgagor nor any other Person hereafter obligated for payment of all or any
part of the Secured Obligations shall be relieved of such obligation by reason
of (a) the failure of the Trustee to comply with any request of the
Mortgagor or any other Person so obligated to foreclose the Lien of this
Mortgage or to enforce any provision hereunder or under the Promissory Note; (b) the
release, regardless of consideration, of the Mortgaged Property or any portion
thereof or interest therein or the addition of any other property to the
Mortgaged Property; (c) any agreement or stipulation between any subsequent
owner of the Mortgaged Property and the Mortgagee extending, renewing,
rearranging or in any other way modifying the terms of this Mortgage without
first having obtained the consent of, given notice to or paid any consideration
to the Mortgagor or such other Person , and in such event the Mortgagor 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 (d) by any other act or
occurrence save and except the complete payment of the Secured Obligations and
the complete fulfillment of all obligations hereunder or under the Promissory
Note.


 






 












 


Section 5.10          Release of and
Resort to Collateral.  The
Mortgagee may release, regardless of consideration, any part of the Collateral
without, as to the remainder, in any way impairing, affecting, subordinating or
releasing the Lien created in or evidenced by this Mortgage or its stature as a
first and prior Lien in and to the Collateral, and without in any way releasing
or diminishing the liability of any Person or entity liable for the repayment
of the Secured Obligations.  For payment
of the Secured Obligations, the Mortgagee may resort to any other security
therefor held by the Mortgagee or the Trustee in such order and manner as the
Mortgagee may elect.


 


Section 5.11          Waiver of
Redemption, Notice and Marshalling of Assets, Etc.  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
moratorium law or other law exempting the Collateral from attachment, levy or
sale on execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption or extension of time for
payment; (b) all notices of any Event of Default or of the Mortgagee’s
intention to accelerate maturity of the Secured Obligations or of any election
to exercise or any actual exercise of any right, remedy or recourse provided
for hereunder or under any Loan Document or available at law; and (c) any
right to a marshalling of assets or a sale in inverse order of alienation.  If any law referred to in this Mortgage and
now in force, of which the Mortgagor or its successor or successors might take
advantage despite the provisions hereof, shall hereafter be repealed or 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.  If the laws of
any state which provides for a redemption period do not permit the redemption
period to be waived, the redemption period is specifically reduced to the
minimum amount of time allowable by statute.


 


Section 5.12          Discontinuance
of Proceedings.  If the
Trustee or the Mortgagee shall have proceeded to invoke any right, remedy or
recourse permitted hereunder or under any Loan Document or available at law and
shall thereafter elect to discontinue or abandon same for any reason, then it
shall have the unqualified right so to do and, in such an event, the parties
shall be restored to their former positions with respect to the Secured
Obligations, this Mortgage, the Promissory Note, the Collateral and otherwise,
and the rights, remedies, recourses and powers of the Trustee and the
Mortgagee, as applicable, shall continue as if same had never been invoked.


 


Section 5.13          Application of
Proceeds.  The
proceeds of any sale of the Mortgaged Property or any part thereof and all
other monies received in any proceedings for the enforcement hereof or
otherwise, whose application has not elsewhere herein been specifically provided
for, shall be applied to the payment of all reasonable expenses incurred by the
Trustee or the Mortgagee incident to the enforcement of this Mortgage, the
Promissory Note to collect any portion of the Secured Obligations (including,
without 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 Trustee acting, if applicable), and to the
payment of all other reasonable charges, expenses, liabilities and advances
incurred or made by the Trustee or the Mortgagee under this Mortgage or in
executing any trust or power hereunder.


 

















 


Section 5.14          Resignation of
Operator.  In addition
to all rights and remedies under this Mortgage at law and in equity, if any
Event of Default shall occur and the Trustee or the Mortgagee shall exercise
any remedies under this Mortgage with respect to any portion of the Mortgaged
Property (or the Mortgagor shall transfer any Mortgaged Property “in lieu of”
foreclosure) whereupon the Mortgagor is divested of its title to any of the
Collateral, the Mortgagee shall have the right to request that any operator of
any Mortgaged Property which is either the Mortgagor to resign as operator
under the joint operating agreement applicable thereto, and no later than 60
days after receipt by the Mortgagor of any such request, the Mortgagor shall
resign (or cause such other party to resign) as operator of such Collateral.


 


Section 5.15          Indemnity.  THE INDEMNIFIED PARTIES SHALL NOT BE LIABLE, IN
CONNECTION WITH ANY ACTION TAKEN, 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 ANY ACT OR OMISSION OF
ANY INDEMNIFIED PARTY IN ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE
MORTGAGED PROPERTY INCLUDING SUCH LOSS WHICH MAY RESULT
FROM THE ORDINARY NEGLIGENCE OF AN INDEMNIFIED PARTY UNLESS SUCH
LOSS IS CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE INDEMNIFIED
PARTY SEEKING INDEMNITY.  NO INDEMNIFIED
PARTY SHALL BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR
LIABILITY OF THE MORTGAGOR.  THE
MORTGAGOR SHALL AND DOES HEREBY AGREE TO INDEMNIFY EACH INDEMNIFIED PARTY FOR,
AND TO HOLD EACH INDEMNIFIED PARTY HARMLESS FROM, ANY AND ALL LIABILITY, LOSS
OR DAMAGE WHICH MAY OR MIGHT BE INCURRED BY ANY INDEMNIFIED PARTY BY
REASON OF THIS MORTGAGE OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER.  IF ANY INDEMNIFIED PARTY SHALL MAKE ANY
EXPENDITURE ON ACCOUNT OF ANY SUCH LIABILITY, LOSS OR DAMAGE, THE AMOUNT
THEREOF, INCLUDING COSTS, EXPENSES AND REASONABLE ATTORNEYS’ FEES, SHALL
BE A DEMAND OBLIGATION (WHICH OBLIGATION THE MORTGAGOR HEREBY EXPRESSLY
PROMISES TO PAY) OWING BY THE MORTGAGOR TO SUCH INDEMNIFIED PARTY AND SHALL
BEAR INTEREST FROM THE DATE EXPENDED UNTIL PAID AT THE POST DEFAULT RATE, SHALL
BE A PART OF THE SECURED OBLIGATIONS AND SHALL BE SECURED BY THIS MORTGAGE
AND ANY OTHER LOAN DOCUMENT.  THE
MORTGAGOR HEREBY ASSENTS TO, RATIFIES AND CONFIRMS ANY AND ALL ACTIONS OF EACH
INDEMNIFIED PARTY WITH RESPECT TO THE MORTGAGED PROPERTY TAKEN UNDER AND IN
COMPLIANCE WITH THE TERMS OF THIS MORTGAGE. 
THE LIABILITIES OF THE MORTGAGOR AS SET FORTH IN THIS SECTION 5.15
SHALL SURVIVE THE TERMINATION OF THIS MORTGAGE.


 


ARTICLE VI

THE TRUSTEE


 


Section 6.01          Duties, Rights,
and Powers of Trustee.  The
Trustee shall have no duty to see to any recording, filing or registration of
this Mortgage or any other instrument in addition or supplemental thereto, or
to give any notice thereof, or to see to the payment of or be under any duty in
respect of any tax or assessment or other governmental charge which may be
levied or assessed on the Mortgaged Property, or any part thereof, or against
the Mortgagor, or to see to the performance or observance by the Mortgagor of
any of the covenants and agreements contained herein.  The Trustee shall not be responsible for the
execution, acknowledgment or validity of this Mortgage or of any instrument in
addition or supplemental hereto or for the sufficiency of the security
purported to be created hereby, and makes no representation in respect 


 

















 


thereof or in respect of the rights of the
Mortgagee.  The Trustee shall have the
right to advise with counsel upon any matters arising hereunder and shall be
fully protected in relying as to legal matters on the advice of counsel.  The Trustee shall not incur any personal
liability hereunder except for the Trustee’s own gross negligence and willful
misconduct; and the Trustee shall have the right to rely on any instrument,
document or signature authorizing or supporting any action taken or proposed to
be taken by him hereunder, believed by him in good faith to be genuine.


 


Section 6.02          Successor
Trustee.  The Trustee may resign by
written notice addressed to the Mortgagee or be removed at any time with or
without cause by an instrument in writing duly executed on behalf of the
Mortgagee.  In case of the death, resignation
or removal of the Trustee, a successor trustee may be appointed by the
Mortgagee by instrument of substitution complying with any applicable
Governmental Requirements, or, in the absence of any such requirement, without
other formality than appointment and designation in writing.  Written notice of such appointment and
designation shall be given by the Mortgagee to the Mortgagor, but the validity
of any such appointment shall not be impaired or affected by failure to give
such notice or by any defect therein. 
Such appointment and designation shall be full evidence of the right and
authority to make the same and of all the facts therein recited, and, upon the
making of any such appointment and designation, this Mortgage shall vest in the
successor trustee all the estate and title in and to all of the Mortgaged
Property, and the successor trustee shall thereupon succeed to all of the
rights, powers, privileges, immunities and duties hereby conferred upon the
Trustee named herein, and one such appointment and designation shall not
exhaust the right to appoint and designate a successor trustee hereunder but
such right may be exercised repeatedly as long as any Secured Obligations
remains unpaid hereunder.  To facilitate
the administration of the duties hereunder, the Mortgagee may appoint multiple
trustees to serve in such capacity or in such jurisdictions as the Mortgagee
may designate.


 


Section 6.03          Retention of
Moneys.  All moneys received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated in any
manner from any other moneys (except to the extent required by law) and the
Trustee shall be under no liability for interest on any moneys received by him
hereunder.


 


ARTICLE VII

MISCELLANEOUS


 


Section 7.01          Instrument
Construed as Mortgage, Etc.  With respect to any portions of the Mortgaged
Property located in any state or other jurisdiction the laws of which do not
provide for the use or enforcement of a deed of trust or the office, rights and
authority of the Trustee as herein provided, the general language of conveyance
hereof to the Trustee is intended and the same shall be construed as words of
mortgage unto and in favor of the Mortgagee and the rights and authority
granted to the Trustee herein may be enforced and asserted by the Mortgagee in
accordance with the laws of the jurisdiction in which such portion of the
Mortgaged Property is located and the same may be foreclosed at the option of
the Mortgagee as to any or all such portions of the Mortgaged Property in any
manner permitted by the laws of the jurisdiction in which such portions of the
Mortgaged Property is situated.  This
Mortgage may be construed as a mortgage, deed of trust, chattel mortgage,
conveyance, assignment, Security Agreement, pledge, 


 

















 


financing statement, hypothecation or contract, or
any one or more of them, in order fully to effectuate the Lien hereof and the
purposes and agreements herein set forth.


 


Section 7.02          Releases.


 


(a)           Full Release.  If all Secured Obligations shall be Paid In
Full In Cash, the Mortgagee shall forthwith cause satisfaction and discharge of
this Mortgage 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 satisfaction and reassignment as may be appropriate.  Otherwise, this Mortgage shall remain and
continue in full force and effect.


 


(b)           Partial Release.  If any of the Mortgaged Property shall be
sold, transferred or otherwise disposed of by the Mortgagor in a transaction
permitted by the Loan Documents, then the Mortgagee, at the request and sole
expense of the Mortgagor, shall promptly execute and deliver to the Mortgagor
all releases or other documents reasonably necessary or desirable for the
release of the Liens created hereby on the Mortgaged Property.


 


(c)           Possession of
Notes.  The Mortgagor acknowledges and
agrees that possession of any note (or any replacements of any said note or
other instrument evidencing any part of the Secured Obligations) at any time by
the Borrower, the Mortgagor or any other guarantor shall not in any manner
extinguish the Secured Obligations or this Mortgage, and the Mortgagor shall
have the right to issue and reissue any of the notes from time to time as its
interest or as convenience may require, without in any manner extinguishing or
affecting the Secured Obligations or the Lien of this Mortgage.


 


Section 7.03          Severability.  If any provision hereof is invalid or
unenforceable in any jurisdiction, the other provisions hereof shall remain in
full force and effect in such jurisdiction and the remaining provisions hereof
shall be liberally construed in favor of the Trustee, the Mortgagee and the
Other Secured Persons in order to effectuate the provisions hereof.  The invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of any such provision in any other jurisdiction.


 


Section 7.04          Successors and
Assigns.  The terms used to designate
any party or group of Persons shall be deemed to include the respective heirs,
legal representatives, successors and assigns of such parties or Persons.


 


Section 7.05          Application of
Payments to Certain Obligations.  If any part of the Secured Obligations cannot
be lawfully secured by this Mortgage or if any part of the Mortgaged Property
cannot be lawfully subject to the Lien hereof to the full extent of the Secured
Obligations, then all payments made shall be applied on said Secured Obligations
first in discharge of that portion thereof which is not secured by this
Mortgage.


 


Section 7.06          Nature of
Covenants.  The
covenants and agreements herein contained shall constitute covenants running
with the land and interests covered or affected hereby and shall be binding
upon the heirs, legal representatives, successors and assigns of the parties
hereto.


 

















 


Section 7.07          Notices.  All notices, requests, consents, demands and
other communications required or permitted hereunder shall be in writing and
shall be deemed sufficiently given or furnished if delivered by registered or
certified United States mail, postage prepaid, or by personal service
(including express or courier service) at the addresses specified in Section 7.11
(unless changed by similar notice in writing given by the particular party
whose address is to be changed). Any such notice or communication shall be
deemed to have been given either at the time of personal delivery or, in the
case of delivery at the address 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 appropriate and sufficient with the giving of such notice.


 


Section 7.08          Counterparts.  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 or
parish, descriptions of only those portions of the Mortgaged Property located
in the county or parish in which a particular counterpart is recorded shall be
attached as Exhibit A to such counterpart. 
Each of such counterparts shall for all purposes be deemed to be an
original and all such counterparts shall together constitute but one and the
same instrument.  Complete copies of this
Mortgage containing the entire Exhibit A have been retained by the
Mortgagee.


 


Section 7.09          Governing Law.  Insofar as permitted by otherwise applicable
law, this Mortgage shall be construed under and governed by the laws of the
State of Montana; provided, however, that, with respect to any portion of the
Mortgaged Property located outside of the State of Montana, the laws of the
place in which such property is located in, or offshore adjacent to (and State
law made applicable as a matter of Federal law), shall apply to the extent of
procedural and substantive matters relating only to the creation, perfection,
foreclosure of Liens and enforcement of rights and remedies against the
Mortgaged Property.


 


Section 7.10          Financing
Statement; Fixture Filing.  This
Mortgage shall be effective as a financing statement filed as a fixture filing
with respect to all fixtures included within the Mortgaged Property and is to
be filed or filed for record in the real estate records, mortgage records or
other appropriate records of each jurisdiction where any part of the Mortgaged
Property (including said fixtures) are situated.  This Mortgage shall also be effective as a
financing statement covering minerals or the like (including oil and gas and
all other substances of value which may be extracted from the ground) and
accounts financed at the wellhead or minehead of wells or mines (As-Extracted
Collateral) located on the properties subject to the Applicable UCC and is to
be filed for record in the real estate records, UCC records or other
appropriate records of each jurisdiction where any part of the Mortgaged
Property is situated.  In addition, the
Mortgagor shall execute and deliver to the Mortgagee, upon the Mortgagee’s
request, any financing statements or amendments thereof or continuation
statements thereto that the Mortgagee may require to perfect a security
interest in said items or types of property. 
The Mortgagor shall pay all costs of filing such instruments.


 


Section 7.11          Execution of
Financing Statements.  Pursuant to
the Applicable UCC, the Mortgagor authorizes the Mortgagee, its counsel or its
representative, at any time and from time to time, to file or record financing
statements, continuation statements, amendments thereto and other filing or
recording documents or instruments with respect to the Mortgaged Property 


 

















 


without the signature of the Mortgagee in such form
and in such offices as the Mortgagee reasonably determines appropriate to
perfect the security interests of the Mortgagee under this Agreement.  The Mortgagor also authorizes the Mortgagee,
its counsel or its representative, at any time and from time to time, to file
or record such financing statements that describe the collateral covered
thereby as “all assets of the Mortgagee”, “all personal property of the
Mortgagee” or words of similar effect.


 


In
that regard, the following information is provided:


 


	
  Name
  of Debtor:

  	
  Voyager
  Oil & Gas, Inc.

  
	
  Address
  of Debtor

  	
  2812 1st Avenue North, Suite 506

  
	
   

  	
  Billings, MT 59101

  
	
   

  	
  Attention: Chief Financial Officer

  
	
  State
  of Formation/Location

  	
  Delaware

  
	
  Facsimile:

  	
  (406)
  245-4914

  
	
  Telephone:

  	
  (406)
  245-4901

  
	
   

  	
   

  
	
  Principal
  Place of

  	
   

  
	
  Business
  of Debtor:

  	
  2812 1st Avenue North, Suite 506

  
	
   

  	
  Billings, MT 59101

  
	
   

  	
   

  
	
  Name
  of Secured Party:

  	
  Bonnie
  Turpin

  
	
   

  	
  as
  Administrative Agent

  
	
  Address
  of Secured Party:

  	
  130
  Cheshire Lane, #101

  
	
   

  	
  Minnetonka,
  MN 55305

  
	
   

  	
   

  
	
  Owner
  of Record of

  	
   

  
	
  Real
  Property:

  	
  Voyager
  Oil & Gas, Inc.

  



 


Section 7.12          Exculpation
Provisions.  EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO
READ THIS MORTGAGE; AND AGREES THAT IT IS 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 AND 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 HAS 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 LIABILITY INHERENT IN SOME ASPECTS OF THE
TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH
LIABILITY.  EACH PARTY HERETO AGREES AND
COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY
EXCULPATORY PROVISION OF THIS MORTGAGE ON THE BASIS THAT THE PARTY HAD NO
NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”


 


Section 7.13          References.  The words “herein,” “hereof,” “hereunder” and
other words of similar import when used in this Mortgage refer to this Mortgage
as a whole, and not to any 


 

















 


particular article, section or subsection.  Any reference herein to a Section shall
be deemed to refer to the applicable Section of this Mortgage unless
otherwise stated herein.  Any reference
herein to an exhibit or schedule shall be deemed to refer to the applicable
exhibit or schedule attached hereto unless otherwise stated herein.


 


ARTICLE VIII

STATE SPECIFIC PROVISIONS


 


Section 8.01          Special North
Dakota Provisions.


 


(a)           Future
Obligations.  Future
obligations are secured by this Mortgage even though all or part may not yet be
matured. Nothing in this Mortgage, however, shall constitute a commitment to
enter into any additional or future transaction.  Any such commitment would require a separate
writing.


 


(b)           Collateral Real
Estate Mortgage.  THE PARTIES
AGREE THAT THIS MORTGAGE CONSTITUTES A COLLATERAL REAL ESTATE MORTGAGE.


 


[SIGNATURES BEGIN NEXT PAGE]


 

















 


EXECUTED
this 22nd day of September, 2010, to be effective as of the 22nd day of September, 2010.


 


	
   

  	
  VOYAGER
  OIL AND GAS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  James R. Reger

  
	
   

  	
  By
  James R. Reger

  
	
   

  	
  Its
  Chief Executive Officer

  



 


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