Document:

Exhibit 10.25

 

Agreement

 

Execution version

 

 

Pledge agreement

 

 

Neutron Energy, Inc.

RMB Australia Holdings Limited

RMB Resources Inc.

 

 

 

 

	
QV.1 Building 250 St Georges Terrace Perth WA 6000 Australia
    	
 
    	
Telephone   +61 8 9211 7777  Facsimile +61 8 9211   7878
    
	
GPO Box U1942 Perth WA   6845 Australia
    	
 
    	
www.freehills.com  DX 104 Perth
    
	
 
    	
 
    	
 
    
	
Sydney Melbourne Perth Brisbane Singapore
    	
 
    	
Correspondent   offices in Hanoi Ho Chi Minh City Jakarta
    

 

 

Contents

 

	
 
    	
Table of contents
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
The agreement
    	
1
    
	
 
    	
 
    	
 
    
	
 
    	
Operative part
    	
2
    
	
 
    	
 
    	
 
    
	
1
    	
Definitions and interpretations
    	
2
    
	
 
    	
1.1
    	
Definitions
    	
2
    
	
 
    	
1.2
    	
Interpretations
    	
4
    
	
 
    	
 
    	
 
    
	
2
    	
Pledge
    	
4
    
	
 
    	
 
    	
 
    
	
3
    	
Delivery of Collateral
    	
4
    
	
 
    	
 
    	
 
    
	
4
    	
Voting rights and dividends
    	
5
    
	
 
    	
 
    	
 
    
	
5
    	
Representations, warranties and covenant of Pledgor
    	
5
    
	
 
    	
 
    	
 
    
	
6
    	
Further assurances
    	
6
    
	
 
    	
 
    	
 
    
	
7
    	
Covenants of Pledgor
    	
7
    
	
 
    	
 
    	
 
    
	
8
    	
Secured Party as Pledgor’s Attorney-in-Fact
    	
7
    
	
 
    	
 
    	
 
    
	
9
    	
Remedies upon Default
    	
8
    
	
 
    	
 
    	
 
    
	
10
    	
Application of proceeds
    	
10
    
	
 
    	
 
    	
 
    
	
11
    	
Indemnity and expenses
    	
10
    
	
 
    	
 
    	
 
    
	
12
    	
Duties of Secured Party
    	
10
    
	
 
    	
 
    	
 
    
	
13
    	
Choice of law and venue, waiver of jury trial
    	
10
    
	
 
    	
 
    	
 
    
	
14
    	
Amendments, etc
    	
11
    
	
 
    	
 
    	
 
    
	
15
    	
Notices
    	
11
    
	
 
    	
 
    	
 
    
	
16
    	
Continuing security interest
    	
12
    
	
 
    	
 
    	
 
    
	
17
    	
Security interest absolute
    	
12
    
	
 
    	
 
    	
 
    
	
18
    	
Headings
    	
13
    
	
 
    	
 
    	
 
    
	
19
    	
Severability
    	
13
    
	
 
    	
 
    	
 
    
	
20
    	
Counterparts
    	
13
    
	
 
    	
 
    	
 
    
	
21
    	
Waiver of Marshalling
    	
13
    
	
 
    	
Schedule 1 - Ownership Interest
    	
14
    
	
 
    	
 
    	
 
    
	
 
    	
Signing page
    	
15
    
	
 
    	
 
    	
 
    
	
 
    	
Indorsement Certificate — Neutron Energy, Inc
    	
 
    

 

1

 

The agreement

 

	
Date  
    	
 
    	
    April 12, 2010
    
	
 
    	
 
    	
 
    
	
Between the parties
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Pledgor
    	
 
    	
Neutron Energy, Inc.

 

a company existing under the laws of Nevada,   United States of America

 

of 9000 East Nichols Avenue, Suite 225,   Englewood, Colorado 80112, United States of America

 

(Pledgor)
    
	
 
    	
 
    	
 
    
	
Secured Party
    	
 
    	
RMB Australia Holdings   Limited

 

of Level 13, 60 Castlereagh Street, Sydney,   New South Wales, Australia

 

(RMBAH,   or collectively with RMBR, the Secured Party)
    
	
 
    	
 
    	
 
    
	
Secured Party
    	
 
    	
RMB Resources Inc.

 

of 7114 West Jefferson Avenue, Suite 100,   Lakewood, Colorado, United States of America

 

(RMBR,  or collectively with RMBAH, the Secured Party)
    
	
 
    	
 
    	
 
    
	
Background
    	
 
    	
1                  Pledgor has entered into a   Facility Agreement made on or about the date of this Agreement (Facility Agreement) with the Secured Party, pursuant to   which the Secured Party has agreed to make loans to the Debtor in accordance   with the terms and conditions contained in the Facility Agreement.

 

2                  Pledgor beneficially owns the ‘Ownership Interest’ (as hereinafter   defined) in CRL (as hereinafter defined).

 

3                  To induce Secured Party to make the loans provided to Pledgor pursuant   to the Facility Agreement, Pledgor desires to pledge, grant, transfer, and   assign to Secured Party a security interest in the ‘Collateral’ (as   hereinafter defined) to secure the ‘Obligations’ (as hereinafter defined), as   provided herein.
    
	
 
    	
 
    	
 
    
	
The parties agree
    	
 
    	
as set out in the Operative part of this   agreement, in consideration of, among other things, the mutual promises,   covenants, representations and warranties contained in this agreement.
    

 

1

 

Operative part

 

1                                                   Definitions and interpretations

 

1.1                                        Definitions

 

The meanings of the terms used in this document are set out below.

 

	
Term
    	
 
    	
Meaning
    
	
 
    	
 
    	
 
    
	
Bankruptcy Code
    	
 
    	
United States Bankruptcy Code (11 U.S.C.   Section 101 et seq.), as in effect from time to time, and any successor   statute thereto.
    
	
 
    	
 
    	
 
    
	
Business Day
    	
 
    	
a day on which banks are open for general   banking business in both Sydney, Australia and Denver, Colorado, excluding   Saturdays, Sundays and public holidays.
    
	
 
    	
 
    	
 
    
	
Code
    	
 
    	
the Uniform Commercial Code as in effect in   the State of New Mexico from time to time.
    
	
 
    	
 
    	
 
    
	
Collateral
    	
 
    	
the Ownership Interest, the Future Rights and   the Proceeds, collectively, and all books and records relating thereto.
    
	
 
    	
 
    	
 
    
	
CRL
    	
 
    	
the Person identified in Schedule 1 attached   hereto (or any addendum thereto), and any successor thereto, whether by   merger or otherwise.
    
	
 
    	
 
    	
 
    
	
Default
    	
 
    	
has the meaning ascribed thereto in the   Facility Agreement.
    
	
 
    	
 
    	
 
    
	
Facility Agreement
    	
 
    	
has the meaning ascribed thereto in the   recitals to this Agreement.
    
	
 
    	
 
    	
 
    
	
Future Rights
    	
 
    	
all dividends, cash, options, warrants,   rights, instruments, and other property or proceeds from time to time   received, receivable, or otherwise distributed in respect of or in exchange   for any or all of the Ownership Interest.
    
	
 
    	
 
    	
 
    
	
Holder and Holders
    	
 
    	
has the meaning ascribed thereto in Section 3(a)   of this Agreement.
    
	
 
    	
 
    	
 
    
	
Lien
    	
 
    	
any lien, mortgage, pledge, assignment   (including any assignment of rights to receive payments of money), security   interest, charge, or encumbrance of any kind (including any conditional sale   or other title retention agreement, any lease in the nature thereof, or any   agreement to give any security interest).
    
	
 
    	
 
    	
 
    
	
LLC Documents
    	
 
    	
the Limited Liability Company Members’   Agreement and the Limited Liability Company Operating Agreement, both dated   April 26, 2007, of CRL, between the Pledgor and UEC.
    

 

2

 

	
Term
    	
 
    	
Meaning
    
	
 
    	
 
    	
 
    
	
Obligations
    	
 
    	
all liabilities, obligations, or undertakings   owing by Pledgor to Secured Party of any kind or description arising out of   or outstanding under, advanced or issued pursuant to, or evidenced by the   Facility Agreement, this Agreement, or the other Transaction Documents,   irrespective of whether for the payment of money, whether direct or indirect,   absolute or contingent, due or to become due, voluntary or involuntary,   whether now existing or hereafter arising, and including all interest   (including interest that accrues after the filing of a case under the   Bankruptcy Code) and any and all costs, fees (including attorneys fees), and   expenses which Pledgor is required to pay pursuant to any of the foregoing,   by law, or otherwise.
    
	
 
    	
 
    	
 
    
	
Ownership Interest
    	
 
    	
the ownership interest in CRL currently owned   by Pledgor and all other rights and obligations arising under the LLC   Documents, as described in Schedule 1.
    
	
 
    	
 
    	
 
    
	
Pledgor
    	
 
    	
has the meaning ascribed thereto in the   preamble to this Agreement.
    
	
 
    	
 
    	
 
    
	
Proceeds
    	
 
    	
all proceeds (including proceeds of proceeds)   of the Ownership Interest and Future Rights including all:  

 

1                  rights, benefits, distributions, premiums, profits, dividends,   interest, cash, instruments, documents of title, accounts, contract rights,   inventory, equipment, general intangibles, payment intangibles, deposit   accounts, chattel paper, and other property from time to time received,   receivable, or otherwise distributed in respect of or in exchange for, or as   a replacement of or a substitution for, any of the Ownership Interest, Future   Rights or proceeds thereof (including any cash, or other securities or   instruments issued after any recapitalization, readjustment,   reclassification, merger or consolidation with respect to CRL and any   security entitlements, as defined in Section 8-102(a)(17) of the Code, with   respect thereto);  

 

2                  ‘proceeds’ as such term is defined in Section 9-102(a)(64) of the   Code;  

 

3                  proceeds of any insurance, indemnity, warranty, or guaranty (including   guaranties of delivery) payable from time to time with respect to any of the   Ownership Interest, Future Rights or proceeds thereof;  

 

4                  payments (in any form whatsoever) made or due and payable to Pledgor   from time to time in connection with any requisition, confiscation,   condemnation, seizure or forfeiture of all or any part of the Ownership   Interest, Future Rights or proceeds thereof; and  

 

5                  other amounts from time to time paid or payable under or in connection   with any of the Ownership Interest, Future Rights or proceeds thereof.
    
	
 
    	
 
    	
 
    
	
Registered Organisation
    	
 
    	
has the meaning ascribed thereto in Section 9-102(a)(73)   of the Code.
    
	
 
    	
 
    	
 
    
	
Secured Party
    	
 
    	
has the meaning ascribed thereto in the   preamble to this Agreement, together with its successors or assigns.
    
	
 
    	
 
    	
 
    
	
Securities Act
    	
 
    	
has the meaning ascribed thereto in Section 9(c)   of this Agreement.
    
	
 
    	
 
    	
 
    
	
Transaction Document
    	
 
    	
the Facility Agreement and all other   agreements, instruments, or other 
    

 

3

 

	
Term
    	
 
    	
Meaning
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
documents entered into or executed in   connection therewith, in each case, as amended, restated or otherwise   modified from time to time.
    

 

1.2                                        Interpretations

 

(a)                                           Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular and to the singular include the plural, the part includes the whole, the term ‘including’ is not limiting, and the term ‘or’ has, except where otherwise indicated, the inclusive meaning represented by the phrase ‘and/or.’ The words ‘hereof,’ ‘herein,’ ‘hereby,’ ‘hereunder,’ and other similar terms in this Agreement refer to this Agreement as a whole and not exclusively to any particular provision of this Agreement. Article, section, subsection, exhibit, and schedule references are to this Agreement unless otherwise specified. All of the exhibits or schedules attached to this Agreement shall be deemed incorporated herein by reference. Any reference to any of the following documents includes any and all alterations, amendments, restatements, extensions, modifications, renewals, or supplements thereto or thereof, as applicable: this Agreement, the Facility Agreement, or any of the other Transaction Documents.

 

(b)                                          Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Secured Party or Pledgor, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by both of the parties and their respective counsel and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties hereto.

 

(c)                                           In the event of any direct conflict between the express terms and provisions of this Agreement and of the Facility Agreement, the terms and provisions of the Facility Agreement shall control.

 

2                                                   Pledge

 

As security for the prompt payment and performance of the Obligations in full by Pledgor when due, whether at stated maturity, by acceleration or otherwise (including amounts that would become due but for the operation of the provisions of the Bankruptcy Code), Pledgor hereby pledges, grants, transfers, and assigns to Secured Party a security interest in all of Pledgor’s right, title, and interest in and to the Collateral.

 

3                                                   Delivery of Collateral

 

(a)                                           All certificates or instruments representing or evidencing the Collateral shall be promptly delivered by Pledgor to Secured Party or Secured Party’s designee pursuant hereto at a location designated by Secured Party and shall be held by or on behalf of Secured Party pursuant hereto, and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed indorsement certificates in the form attached hereto as Attachment 1 or other instrument of transfer or assignment in blank, in form and substance satisfactory to Secured Party.

 

(b)                                          Upon the occurrence and during the continuance of a Default, Secured Party shall have the right, at any time in its discretion and without notice to Pledgor, subject to the 

 

4

 

provisions of section 9 of this Agreement, to transfer to or to record on the books of CRL (or of any other Person maintaining records with respect to the Collateral) in the name of the Secured Party or any of its nominees any or all of the Collateral.

 

(c)                                           If, at any time and from time to time, any Collateral (including any certificate or instrument representing or evidencing any Collateral) is in the possession of a person or entity other than Secured Party or Pledgor (Holder), then Pledgor shall immediately, at Secured Party’s option, either cause such Collateral to be delivered into Secured Party’s possession, or cause such Holder to enter into a control agreement, in form and substance satisfactory to Secured Party, and take all other steps deemed necessary by Secured Party to perfect the security interest of Secured Party in such Collateral, all pursuant to Sections 9-106 and 9-313 of the Code or other applicable law governing the perfection of Secured Party’s security interest in the Collateral in the possession of such Holder.

 

(d)                                          Any and all Collateral (including dividends, interest, and other cash distributions) at any time received or held by Pledgor shall be so received or held in trust for Secured Party, shall be segregated from other funds and property of Pledgor and shall be forthwith delivered to Secured Party in the same form as so received or held, with any necessary indorsements; provided, that cash dividends or distributions received by Pledgor, may be retained by Pledgor in accordance with Section 4 and used in the ordinary course of Pledgor’s business.

 

(e)                                           If at any time, and from time to time, any Collateral consists of an uncertificated security or a security in book entry form, then Pledgor shall immediately cause such Collateral to be recorded or entered, as the case may be, in the name of Secured Party, or otherwise cause Secured Party’s security interest thereon to be perfected in accordance with the provisions of this Agreement and applicable law.

 

(f)                                             Pledgor shall cause the issuer of any membership interests in CRL to note the security interest of Secured Party on the books and records of CRL where such membership interests are recorded and kept in the ordinary course of business.

 

4                                                   Voting rights and dividends

 

(a)                                           So long as no Default shall have occurred and be continuing, Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of the Transaction Documents and shall be entitled to receive and retain any cash dividends or distributions paid or distributed in respect of the Collateral.

 

(b)                                          Upon the occurrence and during the continuance of a Default, all rights of Pledgor to exercise the voting and other consensual rights or receive and retain cash dividends or distributions that it would otherwise be entitled to exercise or receive and retain, as applicable pursuant to Section 4(a), shall cease, and all such rights shall thereupon become vested in Secured Party, who shall thereupon have the sole right to exercise such voting or other consensual rights and to receive and retain such cash dividends and distributions.  Pledgor shall execute and deliver (or cause to be executed and delivered) to Secured Party all such proxies and other instruments as Secured Party may reasonably request for the purpose of enabling Secured Party to exercise the voting and other rights which it is entitled to exercise and to receive the dividends and distributions that it is entitled to receive and retain pursuant to the preceding sentence.

 

5                                                   Representations, warranties and covenant of Pledgor

 

Pledgor represents, warrants, and covenants as follows:

 

5

 

(a)                                           Pledgor has taken all steps it deems necessary or appropriate to be informed on a continuing basis of changes or potential changes affecting the Collateral (including rights of conversion and exchange, rights to subscribe, payment of dividends, reorganizations or recapitalization, tender offers and voting and registration rights), and Pledgor agrees that Secured Party shall have no responsibility or liability for informing Pledgor of any such changes or potential changes or for taking any action or omitting to take any action with respect thereto.

 

(b)                                          Pledgor is a corporation organized and in good standing under the laws of the State of Nevada.

 

(c)                                           All information herein or hereafter supplied to Secured Party by or on behalf of Pledgor in writing with respect to the Collateral is, or in the case of information hereafter supplied will be, accurate and complete in all material respects.

 

(d)                                          Pledgor is and will be the sole legal and beneficial owner of the Collateral (including the Ownership Interest and all other Collateral acquired by Pledgor after the date hereof) free and clear of any adverse claim, Lien, or other right, title, or interest of any party, other than the Liens in favour of Secured Party.

 

(e)                                           This Agreement, and the pledge to Secured Party of the Ownership Interest representing Collateral (or the control agreements referred to in Section 3 of this Agreement), creates a valid, perfected, and first priority security interest in one hundred percent (100%) of the Ownership Interest in favour of Secured Party securing payment of the Obligations, and all actions necessary to achieve such perfection have been duly taken.

 

(f)                                             Schedule 1 to this Agreement is true and correct and complete in all material respects. Without limiting the generality of the foregoing:

 

(1)                                           except to the extent that the Ownership Interest is held in the name of Secured Party or its nominee pursuant to the provisions of this Agreement, the Ownership Interest is held in the name of Pledgor; and

 

(2)                                           the Ownership Interest as to CRL constitutes at least the percentage of all the fully diluted issued and outstanding membership interests of CRL as set forth in Schedule 1 to this Agreement.

 

(g)                                          There are no presently existing Future Rights or Proceeds owned by Pledgor.

 

(h)                                          The Ownership Interest has been duly authorized and validly issued and is fully paid and nonassessable.

 

(i)                                              Neither the pledge of the Collateral pursuant to this Agreement nor the extensions of credit represented by the Obligations violates Regulation T, U or X of the Board of Governors of the Federal Reserve System.

 

6                                                   Further assurances

 

(a)                                           Pledgor agrees that from time to time, at the expense of Pledgor, Pledgor will promptly execute and deliver all further instruments and documents, and take all further action that may be necessary or reasonably desirable, or that Secured Party may request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Collateral.  Without limiting the generality of the foregoing, Pledgor will:

 

(1)                                           at the request of Secured Party, mark conspicuously each of its records pertaining to the Collateral with a legend, in form and substance reasonably satisfactory to Secured Party, indicating that such Collateral is subject to the security interest granted hereby;

 

(2)                                           execute and deliver such instruments or notices, as may be necessary or reasonably desirable, or as Secured Party may request, in order to perfect and 

 

6

 

preserve the first priority security interests granted or purported to be granted hereby;

 

(3)                                           allow inspection of the Collateral by Secured Party or Persons designated by Secured Party; and

 

(4)                                           appear in and defend any action or proceeding that may affect Pledgor’s title to or Secured Party’s security interest in the Collateral.

 

(b)                                         Pledgor hereby authorizes Secured Party to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral, consistent with the provisions of this Agreement.  A carbon, photographic, or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.

 

(c)                                           Pledgor will furnish to Secured Party, upon the request of Secured Party such statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Secured Party may request.

 

7                                                   Covenants of Pledgor

 

Pledgor shall:

 

(a)                                           Perform each and every covenant in the Transaction Documents applicable to Pledgor;

 

(b)                                          Neither change its jurisdiction of organization nor cease to be a Registered Organisation, in each case without giving Secured Party at least 30 days prior written notice thereof;

 

(c)                                           To the extent it may lawfully do so, use its best efforts to prevent CRL from issuing Future Rights or Proceeds, except for cash dividends and other distributions to be paid by CRL to Pledgor; and

 

(d)                                          Upon receipt by Pledgor of any material notice, report, or other communication from CRL or any Holder relating to all or any part of the Collateral, deliver such notice, report or other communication to Secured Party as soon as possible, but in no event later than 5 days following the receipt thereof by Pledgor.

 

8                                                   Secured Party as Pledgor’s Attorney-in-Fact

 

(a)                                           Pledgor hereby irrevocably appoints Secured Party as Pledgor’s attorney-in-fact, with full authority in the place and stead of Pledgor and in the name of Pledgor, Secured Party or otherwise, from time to time at Secured Party’s discretion, to take any action and to execute any instrument that Secured Party may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including:

 

(1)                                           upon the occurrence and during the continuance of a Default, to receive, indorse, and collect all instruments made payable to Pledgor representing any dividend, interest payment or other distribution in respect of the Collateral or any part thereof to the extent permitted hereunder and to give full discharge for the same and to execute and file governmental notifications and reporting forms;

 

(2)                                           to enter into any control agreements Secured Party deems necessary pursuant to Section 3 of this Agreement; or

 

(3)                                           to arrange for the transfer of the Collateral on the books of CRL or any other Person to the name of Secured Party or to the name of Secured Party’s nominee.

 

(b)                                          In addition to the designation of Secured Party as Pledgor’s attorney-in-fact in subsection (a), Pledgor hereby irrevocably appoints Secured Party as Pledgor’s agent 

 

7

 

and attorney-in-fact to make, execute and deliver any and all documents and writings which may be necessary or appropriate for approval of, or be required by, any regulatory authority located in any city, county, state or country where Pledgor or CRL engage in business, in order to transfer or to more effectively transfer any of the Ownership Interest or otherwise enforce Secured Party’s rights as provided in this Agreement.

 

9                                                   Remedies upon Default

 

Upon the occurrence and during the continuance of a Default:

 

(a)                                           Secured Party may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the Code (irrespective of whether the Code applies to the affected items of Collateral), and Secured Party may also without notice (except as specified below) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or at any of Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as Secured Party may deem commercially reasonable, irrespective of the impact of any such sales on the market price of the Collateral.  To the maximum extent permitted by applicable law, Secured Party may be the purchaser of any or all of the Collateral at any such sale and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply all or any part of the Obligations as a credit on account of the purchase price of any Collateral payable at such sale.  Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of Pledgor, and Pledgor hereby waives (to the extent permitted by law) all rights of redemption, stay, or appraisal that it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.  Pledgor agrees that, to the extent notice of sale shall be required by law, at least 10 calendar days notice to Pledgor of the time and place of any public sale or the time after which a private sale is to be made shall constitute reasonable notification.  Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  To the maximum extent permitted by law, Pledgor hereby waives any claims against Secured Party arising because the price at which any Collateral may have been sold at such a private sale was less than the price that might have been obtained at a public sale, even if Secured Party accepts the first offer received and does not offer such Collateral to more than one offeree.

 

(b)                                          Pledgor hereby agrees that any sale or other disposition of the Collateral conducted in conformity with reasonable commercial practices of banks, insurance companies, or other financial institutions in the city and state where Secured Party is located in disposing of property similar to the Collateral shall be deemed to be commercially reasonable.

 

(c)                                           Pledgor hereby acknowledges that the sale by Secured Party of any Collateral pursuant to the terms hereof in compliance with the Securities Act of 1933 as now in effect or as hereafter amended, or any similar statute hereafter adopted with similar purpose or effect (Securities Act), as well as applicable ‘Blue Sky’ or other state securities laws, may require strict limitations as to the manner in which Secured Party or any subsequent transferee of the Collateral may dispose thereof.  Pledgor acknowledges and agrees that in order to protect Secured Party’s interest it may be necessary to sell the Collateral at a price less than the maximum price attainable if a sale were delayed or were made in another manner, such as a public offering under the Securities Act.  Pledgor has no objection to sale in such a manner and agrees that Secured Party shall have no obligation to obtain the maximum possible price for the Collateral.  Without limiting the generality of the foregoing, Pledgor agrees that, upon the occurrence and during the 

 

8

 

continuation of a Default, Secured Party may, subject to applicable law, from time to time attempt to sell all or any part of the Collateral by a private placement, restricting the bidders and prospective purchasers to those who will represent and agree that they are purchasing for investment only and not for distribution.  In so doing, Secured Party may solicit offers to buy the Collateral or any part thereof for cash, from a limited number of investors reasonably believed by Secured Party to be institutional investors or other accredited investors who might be interested in purchasing the Collateral.  If Secured Party shall solicit such offers, then the acceptance by Secured Party of one of the offers shall be deemed to be a commercially reasonable method of disposition of the Collateral.

 

(d)                                          If Secured Party shall determine to exercise its right to sell all or any portion of the Collateral pursuant to this Section, Pledgor agrees that, upon the request of Secured Party, Pledgor will, at its own expense:

 

(1)                                           use its best efforts to execute and deliver, and cause CRL and the directors and officers thereof to execute and deliver, all such instruments and documents, and to do or cause to be done all such other acts and things, as may be necessary or, in the opinion of Secured Party, advisable to register such Collateral under the provisions of the Securities Act, and to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectuses which, in the opinion of Secured Party, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto;

 

(2)                                           use its best efforts to qualify the Collateral under the state securities laws or ‘Blue Sky’ laws and to obtain all necessary governmental approvals for the sale of the Collateral, as requested by Secured Party;

 

(3)                                           cause CRL to make available to their respective security holders, as soon as practicable, an earnings statement which will satisfy the provisions of Section 11(a) of the Securities Act;

 

(4)                                           execute and deliver, or cause the officers and directors of CRL to execute and deliver, to any person, entity or governmental authority as Secured Party may choose, any and all documents and writings which, in Secured Party’s reasonable judgment, may be necessary or appropriate for approval, or be required by, any regulatory authority located in any city, county, state or country where Pledgor or CRL engage in business, in order to transfer or to more effectively transfer the Ownership Interest as provided in this Section 9 or otherwise enforce Secured Party’s rights hereunder; and

 

(5)                                           do or cause to be done all such other acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.

 

Pledgor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section and that such failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this Section may be specifically enforced.

 

(e)                                           PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW:

 

(1)                                           any constitutional or other right to a judicial hearing prior to the time Secured Party disposes of all or any part of the Collateral as provided in this section;

 

(2)                                           all rights of redemption, stay, or appraisal that it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted; and

 

(3)                                           except as set forth in subsection (b) of this section 9, any requirement of notice, demand, or advertisement for sale.

 

9

 

10                                             Application of proceeds

 

Upon the occurrence and during the continuance of a Default, any cash held by Secured Party as Collateral and all cash Proceeds received by Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Collateral pursuant to the exercise by Secured Party of its remedies as a secured creditor as provided in Section 9 shall be applied from time to time by Secured Party as provided in the Facility Agreement.

 

11                                             Indemnity and expenses

 

Pledgor agrees:

 

(a)                                           to indemnify and hold harmless Secured Party and each of its directors, officers, employees, agents and affiliates from and against any and all claims, damages, demands, losses, obligations, judgments and liabilities (including, without limitation, reasonable attorneys’ fees and expenses) in any way arising out of or in connection with this Agreement or the Obligations, except to the extent the same shall arise as a result of the negligence or wilful misconduct of the party seeking to be indemnified; and

 

(b)                                          to pay and reimburse Secured Party upon demand for all reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) that Secured Party may incur in connection with:

 

(1)                                           the custody, use or preservation of, or the sale of, collection from or other realization upon, any of the Collateral, including the reasonable expenses of re-taking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral;

 

(2)                                           the exercise or enforcement of any rights or remedies granted hereunder, under the Facility Agreement, or under any of the other Transaction Documents or otherwise available to it (whether at law, in equity or otherwise); and

 

(3)                                           the failure by Pledgor to perform or observe any of the provisions hereof.

 

The provisions of this Section 11 shall survive the execution and delivery of this Agreement, the repayment of any of the Obligations, the termination of the commitments of Secured Party under the Facility Agreement, and the termination of this Agreement or any other credit document.

 

12                                             Duties of Secured Party

 

The powers conferred on Secured Party hereunder are solely to protect its interests in the Collateral and shall not impose on it any duty to exercise such powers.  Except as provided in this Agreement, the LLC Documents, and Section 9-207 of the Code, Secured Party shall have no duty with respect to the Collateral or any responsibility for taking any necessary steps to preserve rights against any Persons with respect to any Collateral.

 

13                                             Choice of law and venue, waiver of jury trial

 

(a)                                           THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH 

 

10

 

THE LAWS OF THE STATE OF NEW MEXICO (WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF).  The parties agree that any action or claim arising out of, or any dispute in connection with, this Agreement, any rights, remedies, obligations, or duties hereunder, or the performance or enforcement hereof or thereof, may be brought in the courts of the State of Colorado or any federal court sitting therein and consents to the non-exclusive jurisdiction of such court and to service of process in any such suit being made upon the Debtor by mail at the address specified for notices in the Facility Agreement.  The Debtor hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient court.

 

(b)                                          PLEDGOR AND SECURED PARTY HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  Pledgor and Secured Party represent that each has reviewed this waiver and each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel.  In the event of litigation, a copy of this Agreement may be filed as a written consent to a trial by the court.

 

14                                             Amendments, etc

 

No amendment or waiver of any provision of this Agreement nor consent to any departure by Pledgor herefrom shall in any event be effective unless the same shall be in writing and signed by Secured Party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of Secured Party to exercise, and no delay in exercising any right under this Agreement, any other credit document, or otherwise with respect to any of the Obligations, shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Agreement, any other credit document, or otherwise with respect to any of the Obligations preclude any other or further exercise thereof or the exercise of any other right.  The remedies provided for in this Agreement or otherwise with respect to any of the Obligations are cumulative and not exclusive of any remedies provided by law.

 

15                                             Notices

 

Except as otherwise expressly provided herein, any notice, order, instruction, request or other communication required or permitted to be given under this Agreement shall be in writing and deemed to have been properly given when delivered in person, or when sent by facsimile transmission or other electronic means, or upon receipt of notice sent by overnight mail or certified or registered United States mail, return receipt requested, postage prepaid, addressed to the party at the address set forth below.  Any party may change its address for notices in the manner set forth above.

 

 

	
 
    	
Neutron Energy, Inc.

9000 East Nichols Avenue, Suite 225,   Englewood, Colorado 80112, United States of America 

Attn: Edward M. Topham

Fax: 303-531-0519

E-mail: etopham@neutronenergyinc.com
    

 

11

 

	
RMB Australia Holdings   Limited

Level 13

60 Castlereagh Street

Sydney New South Wales   2000

Australia

Attn: Gregory Gay

Fax: +61 2 9256 6291

E-mail: greg.gay@rmb.com.au
    	
RMB Resources Inc. 

7114 West Jefferson Avenue, Suite 100,

Lakewood, Colorado, 80235

United States of America 

Attn: Rick Winters

Fax: +1 303 986 5136

E-mail: rick.winters@rmbresources.com
    

 

16                                            Continuing security interest

 

This Agreement shall create a continuing security interest in the Collateral and shall:

 

(a)                                           remain in full force and effect until the indefeasible payment in full of the Obligations, including the cash collateralization, expiration, or cancellation of all Obligations, if any, consisting of letters of credit, and the full and final termination of any commitment to extend any financial accommodations under the Facility Agreement;

 

(b)                                          be binding upon Pledgor and its successors and assigns; and

 

(c)                                           inure to the benefit of Secured Party and its successors, transferees, and assigns.  Upon the indefeasible payment in full of the Obligations, including the cash collateralization, expiration, or cancellation of all Obligations, if any, consisting of letters of credit, and the full and final termination of any commitment to extend any financial accommodations under the Facility Agreement, the security interests granted herein shall automatically terminate and all rights to the Collateral shall revert to Pledgor.  Upon any such termination, Secured Party will, at Pledgor’s expense, execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence such termination.  Such documents shall be prepared by Pledgor and shall be in form and substance reasonably satisfactory to Secured Party.

 

17                                             Security interest absolute

 

To the maximum extent permitted by law, all rights of Secured Party, all security interests hereunder, and all obligations of Pledgor hereunder, shall be absolute and unconditional irrespective of:

 

(a)                                           any lack of validity or enforceability of any of the Obligations or any other agreement or instrument relating thereto, including any of the Transaction Documents;

 

(b)                                          any change in the time, manner, or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any of the Transaction Documents, or any other agreement or instrument relating thereto;

 

(c)                                           any exchange, release, or non-perfection of any other collateral, or any release or amendment or waiver of or consent to departure from any guaranty for all or any of the Obligations; or

 

(d)                                          any other circumstances that might otherwise constitute a defense available to, or a discharge of, Pledgor.

 

12

 

18                                             Headings

 

Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement or be given any substantive effect.

 

19                                             Severability

 

In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

20                                             Counterparts

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same Agreement dated as of the date first shown above.

 

21                                             Waiver of Marshalling

 

Each of Pledgor and Secured Party acknowledges and agrees that in exercising any rights under or with respect to the Collateral:

 

(a)                                           Secured Party is under no obligation to marshal any Collateral;

 

(b)                                          may, in its absolute discretion, realize upon the Collateral in any order and in any manner it so elects; and

 

(c)                                           may, in its absolute discretion, apply the proceeds of any or all of the Collateral to the Obligations in any order and in any manner it so elects.  Pledgor and Secured Party waive any right to require the marshalling of any of the Collateral.

 

13

 

	
 
    	
Schedule   1 - Ownership Interest
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Full Name
    	
 
    	
Jurisdiction
   of
   Organization
    	
 
    	
Type of
   Interest
    	
 
    	
Number of
   Shares/Units
   (if
   applicable)
    	
 
    	
Certificate
   Number(s)
   (if any)
    	
 
    	
Percentage of
   Outstanding
   Interests in
   CRL
    	
 
    
	
 
    	
Cibola Resources   LLC
    	
 
    	
Delaware
    	
 
    	
Ownership Interest
    	
 
    	
100
    	
%
    	
N/A
    	
 
    	
100
    	
%
    

 

14

 

Signing page

 

Executed as an agreement

 

 

	
 
    	
Pledgor
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed for  
    	
 
    
	
 
    	
Neutron Energy, Inc.  
    	
 
    
	
 
    	
by its authorised signatories
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
sign here  
    	
/s/ Gary C. Huber  
    	
 
    
	
 
    	
Gary C. Huber  
    	
 
    
	
 
    	
President and Chief Executive Officer  
    	
 
    
	
 
    	
Neutron Energy, Inc.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
sign here  
    	
/s/ Edward M. Topham  
    	
 
    
	
 
    	
Edward M. Topham  
    	
 
    
	
 
    	
Chief Financial Officer, Secretary and Treasurer  
    	
 
    
	
 
    	
Neutron Energy, Inc.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Secured Party
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed for  
    	
 
    
	
 
    	
RMB Resources Inc.  
    	
 
    
	
 
    	
by its authorised signatory
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
sign here  
    	
/s/ Richard A. Winters
    	
 
    
	
 
    	
Authorised Signatory
    	
 
    
	
 
    	
 
    	
 
    
	
print name  
    	
Richard A. Winters
    	
 
    
	
 
    	
 
    	
 
    
	
title  
    	
President
    	
 
    

 

15

 

	
 
    	
Secured Party
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed for  
    	
 
    
	
 
    	
RMB Australia Holdings   Limited  
    	
 
    
	
 
    	
by its attorney
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
sign here  
    	
/s/ Christopher Kamper
    	
 
    
	
 
    	
Attorney
    	
 
    
	
 
    	
 
    	
 
    
	
print name
    	
Christopher Kamper
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
in the presence of
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
sign here  
    	
/s/ Randy L. Parcel
    	
 
    
	
 
    	
Witness
    	
 
    
	
 
    	
 
    	
 
    
	
print name
    	
Randy L. Parcel
    	
 
    

 

16

 

Attachment 1

 

	
 
    	
Indorsement Certificate — Neutron Energy, Inc

 

FOR VALUE RECEIVED, the undersigned does   hereby sell, assign and transfer unto RMB AUSTRALIA HOLDINGS LIMITED, the   whole of its ownership interest in CIBOLA RESOURCES LLC (Issuer) standing in the undersigned’s   name on the books of the Issuer, and does hereby irrevocably constitute and   appoint RMB AUSTRALIA HOLDINGS LIMITED, as the undersigned’s attorney-in-fact   to transfer the said ownership interest on the books of the Issuer with full   power of substitution in the premises.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date:                         April,   2010.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed for
    	
 
    
	
 
    	
Neutron Energy, Inc.
    	
 
    
	
 
    	
by its authorised signatories
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
sign here  
    	
 
    	
 
    
	
 
    	
Gary C. Huber
    	
 
    
	
 
    	
President and Chief Executive Officer
    	
 
    
	
 
    	
Neutron Energy, Inc.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
sign here  
    	
 
    	
 
    
	
 
    	
Edward M. Topham
    	
 
    
	
 
    	
Chief Financial Officer, Secretary and   Treasurer
    	
 
    
	
 
    	
Neutron Energy, Inc.Exhibit 10.26

 

Recording requested by and

when recorded return to:

Christopher M. Kamper

Carver Schwarz McNab & Bailey, LLC

1600 Stout Street, Suite 1700

Denver, Colorado 80202-3164

 

Mortgage, Security Agreement,

Assignment of Leases and Rents, and

Fixture Filing

 

THIS MORTGAGE SECURES FUTURE ADVANCES AND CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS, AND SHALL SECURE AT ANY ONE TIME A MAXIMUM PRINCIPAL AMOUNT OF EIGHTEEN MILLION DOLLARS ONLY ($18,000,000.00) FOR PURPOSES OF SECTION 48-7-9 NMSA 1978, AS AMENDED OR REPLACED FROM TIME TO TIME.  THIS MORTGAGE SHALL BE A “LINE OF CREDIT MORTGAGE” AS THAT TERM IS USED IN SECTION 48-7-4(B) NMSA 1978, AS AMENDED OR REPLACED FROM TIME TO TIME.

 

THIS MORTGAGE COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES ON THE REAL ESTATE DESCRIBED IN THIS MORTGAGE AND ALSO COVERS MINERALS AND AS-EXTRACTED COLLATERAL LOCATED ON AND UNDER THE REAL ESTATE DESCRIBED IN THIS MORTGAGE.  THIS MORTGAGE IS TO BE FILED FOR RECORD IN THE REAL ESTATE RECORDS AS, AMONG OTHER THINGS, A FINANCING STATEMENT AND A FIXTURE FILING.

 

TO THE ATTENTION OF THE RECORDING OFFICER:

 

THIS INSTRUMENT IS A MORTGAGE OF BOTH REAL AND PERSONAL PROPERTY AND IS, AMONG OTHER THINGS, A SECURITY AGREEMENT AND FINANCING STATEMENT UNDER THE UNIFORM COMMERCIAL CODE.  THIS INSTRUMENT CREATES A LIEN ON RIGHTS IN OR RELATING TO LEASEHOLD INTERESTS, LANDS AND WATER RIGHTS OF MORTGAGOR WHICH ARE DESCRIBED IN EXHIBIT A HERETO.

 

This Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing (“Mortgage”) is made effective April 12, 2010 (the “Effective Date”), from NEUTRON ENERGY, INC., a Nevada corporation, and CIBOLA RESOURCES LLC, a Delaware limited liability company corporation, both having a principal place of business at 9000 E. Nichols Avenue Suite 225 Englewood, CO 80112 (“Mortgagor”), to RMB AUSTRALIA HOLDINGS, LTD. a banking corporation organized under the laws of Australia, and RMB RESOURCES

 

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INC., a Delaware corporation (the “Mortgagee”).

 

Recitals

 

A.            Mortgagor has entered a Guarantee Assumption Agreement pursuant to a Facility Agreement dated April 5, 2010 between Neutron Energy, Inc. (“Borrower”) and Mortgagee (as from time to time amended, supplemented, replaced or restated, the “Facility Agreement”) among Mortgagor and Mortgagee, pursuant to which Mortgagee made a loan facility available to Borrower in the principal amount of up to Sixteen Million United States Dollars (US$16,000,000.00) among both the First Tranche Commitment and the Second Tranche Commitment, in addition to capitalized interest of up to $900,000.00, fees of up to $1,020,000.00, and closing and certain other costs and fees, which loan facility must be repaid according to the schedule set forth in the Facility Agreement and no later than the maturity date, as such may be amended or extended from time to time, of the Promissory Note given by Mortgagor pursuant to the Facility Agreement.  Cibola Resources LLC will benefit financially from the financing and credit made available to Borrower under the Facility Agreement because these funds will be used to develop and operate the properties described herein, which are the only asset owned by Cibola Resources LLC.

 

B.            In accordance with the terms of the Facility Agreement, Mortgagor executes and delivers this Mortgage as continuing collateral security for the payment and performance of all present and future obligations of Mortgagor to Mortgagee under (i) the Facility Agreement; (ii) the Promissory Note; and (iii) any other Transaction Document (as such term is defined below) (collectively, the “Secured Obligations”).  This Mortgage is intended to grant to and provide Mortgagee with the liens and security interests as called for in the Facility Agreement and Transaction Documents with respect to Mortgagor’s present and future properties and assets.

 

D.            The defined terms in the Facility Agreement shall have the same meanings in this Mortgage, except where this Mortgage otherwise specifically defines such terms.  All and each of the Facility Agreement, the Promissory Note, and the Securities (as such term is defined in the Facility Agreement), all documents from time to time necessary to implement each or any of them, together with each and all other documents which Mortgagor and Mortgagee shall agree, in each case as from time to time amended, supplemented, replaced or restated, will be referred to as the “Transaction Documents”.

 

NOW, THEREFORE, in consideration of the mutual promises contained in the Guarantee Assumption Agreement, the Facility Agreement, this Mortgage and the other Transaction Documents, the debts described in this Mortgage and other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, and for the purpose of securing, in such order of priority as Mortgagee may determine, payment and performance of all Secured Obligations, Mortgagor, in consideration of the obligations and rights of the parties, and for the purposes described in this Mortgage, agrees with Mortgagee as follows:

 

1.             Grant of Security.  Mortgagor irrevocably mortgages, assigns, bargains, confirms, conveys, grants, sells and transfers to Mortgagee, and grants a security interest to Mortgagee with mortgage covenants and upon the statutory mortgage condition in, all of the following 

 

2

 

collateral (collectively, the “Property”) more specifically described as follows:

 

1.1          All of Mortgagor’s present or after-acquired right, title and interest in and to the leasehold interests, unpatented mining claims, easements, rights-of-ways, licenses, and permits, whether owned or leased, all as described in Exhibit A attached to and by this reference made part of this Mortgage (the “Real Estate”), all unpatented mining claims and any amended, relocated, renewal or replacement unpatented mining claims belonging to Mortgagor covering lands situated within such lands (collectively the “Claims”), together with all of the uranium, U3O8, uranium bearing ores, thorium, and any other fissionable material, together with vanadium, molybdenum, manganese, and other non-fissionable materials that are associated with uranium, uranium bearing ores and other fissionable materials within such leaseholds or unpatented mining claims, and all other metals, minerals, ores, concentrates, and refined metals in, on or under the Real Estate and Claims (collectively the “Products”) whether or not severed or extracted from such property (the Real Estate, the Claims, and the Products are collectively referred to in this Mortgage as the “Land”).

 

1.2          Together with (i) all the buildings, structures and improvements of every nature now or later situated on the Land; (ii) all fixtures now or later owned or leased by Mortgagor or in which Mortgagor has any interest, and all extensions, additions, accessions, improvements, betterment, renewals, substitutions, and replacements to any of the foregoing (the “Improvements”), and all of the right, title and interest of Mortgagor in and to any such Improvements, subject to any Permitted Encumbrances, which shall, to the fullest extent permitted by law, be conclusively deemed fixtures and a part of the real property encumbered by this Mortgage; and (iii) all architect’s drawings, plans or reports, engineer’s drawings, plans or reports, surveys and other general intangibles of any nature constituting part of or relating to the Land and the Improvements.

 

1.3          Together with all easements, rights-of-way, gores, strips or parcels of land, streets, ways, alleys, passages, sewer rights, water courses, water rights (including, without limitation, the water rights and applications for water rights described in Exhibit A) and powers, and all appurtenances, in any way belonging, relating or appertaining to any of the property described in Sections 1.1 and 1.2 or which shall in any way belong, relate or be appurtenant to the Land or the Improvements, whether now owned or later acquired by Mortgagor.

 

1.4          Together with all the estate, right, title and interest of Mortgagor in and to all judgments, insurance proceeds, awards of damages and settlements hereafter made resulting from condemnation proceedings or the taking of all or any part of the property described in Sections 1.1, 1.2 and 1.3 under power of eminent domain, or for any damage (whether caused by such taking or otherwise) to all or any part of the property described in Sections 1.1, 1.2 and 1.3 or to any rights appurtenant, and all proceeds of any sales or other dispositions of all or any part of the property described in Sections 1.1, 1.2 and 1.3 (provided that the foregoing shall not be deemed to permit such dispositions except as provided in this Mortgage or the Facility Agreement); and Mortgagee is authorized to collect and receive said awards and proceeds and to give proper receipts and accountings for them, and (if it so elects) to apply the same toward the payment of the Secured Obligations then due and payable; and all accounts, contract rights, general intangibles, actions and insurance proceeds and unearned premiums arising from or 

 

3

 

relating to the property described in Sections 1.1, 1.2 and 1.3 and all proceeds, products, replacements, additions, substitutions, renewals and accessions of and to the property described in Sections 1.1, 1.2 and 1.3.

 

1.5          Together with all rents, income, maintenance fees, and other benefits to which Mortgagor may now or later be entitled from the property described in Sections 1.1, 1.2 and 1.3 and any business or other activity conducted thereon, to be applied against the Secured Obligations; provided, however, that Mortgagee hereby confers upon Mortgagor a license, so long as no Default (as defined in Section 15, below) has occurred to collect and use such rents, income, maintenance fees and other benefits as they become due and payable, but not in advance. Upon the occurrence of any such Default, the permission given to Mortgagor to collect such rents, income, maintenance fees and other benefits from the property described in Sections 1.1, 1.2 and 1.3 shall automatically terminate and such permission shall not be reinstated upon a cure of such Default without Mortgagee’s specific written consent.

 

Notwithstanding anything to the contrary contained in this Mortgage, the foregoing provisions shall constitute an absolute, unconditional and present assignment of the rents, income and other benefits from the property described in Sections 1.1, 1.2 and 1.3 above, to Mortgagee, subject, however, to the limited license given to Mortgagor to collect and use such rents, income and other benefits; and the existence or exercise of such right by Mortgagor shall not operate to subordinate this assignment to any subsequent assignment by Mortgagor which shall not be made without the prior written approval of Mortgagee and shall be subject to the rights of Mortgagee.

 

1.6          Together with all right, title and interest of Mortgagor in and to all leases and subleases, license agreements, easement agreements, and/or rights-of-way agreements relating to or affecting all or any part of the property described in Sections 1.1, 1.2 and 1.3, in which Mortgagor is, or is the successor to, the lessor, as listed on Exhibit A along with the current lessees, now or later existing or entered into during the term of this Mortgage, including any extensions or renewals, and all other leases, license agreements, easement agreements, and right-of-way agreements hereafter entered into by Mortgagor, and any and all deposits held as security under such leases and subleases, advance rentals and other deposits or payments of a similar nature, reserving unto Mortgagor the right to collect and use the same as well as any other statutory rights Mortgagor may have, except during continuance of a Default, during which time Mortgagee may collect and enforce the same by any lawful means in the name of any party; provided that, in case of foreclosure sale, Mortgagor’s interest in any such leases and subleases then in force shall, upon expiration of Mortgagor’s rights, pass to the purchaser at such sale, subject to election by said purchaser to terminate or enforce any of such leases or subleases.

 

1.7          Together with all right, title and interest of Mortgagor in and to all leases and subleases, license agreements, easement agreements, and/or right-of-way agreements relating to or affecting all or any part of the property described in Sections 1.1, 1.2 and 1.3, in which Mortgagor is, or is the successor to, the lessee, as listed on Exhibit A along with the current lessors and a statement as to whether consent of such lessor is required to create a security interest in such leases and other contracts, now or later existing or entered into during the term of this Mortgage, including any extensions or renewals, and all other leases, license agreements, 

 

4

 

easement agreements, and right-of-way agreements hereafter entered into by Mortgagor (together with the interests identified in Section 1.6 above, the “Leases”).

 

1.8          All of Mortgagor’s present or after acquired right, title and interest in and to the surface or subsurface equipment, machinery, motor vehicles and other rolling stock, facilities, fixtures (as defined in accordance with applicable law) and structures, supplies, inventory and other chattels and personal property now or hereafter located in, on or under, affixed to or installed on the Lands or the Improvements or used or purchased for use by Mortgagor in connection with the locating, mining, production, storage and transportation, treatment, manufacture or sale of Products or the use or operation of the items listed above, the Land or the Improvements (collectively the “Operating Equipment”), including, without limitation, those items listed in Exhibit B attached to and by this reference made part of this Mortgage.

 

1.9          All of the accounts, contract rights (including, without limitation, all of Mortgagor’s interest in and rights under the Material Agreements described in Exhibit C attached to and by this reference made part of this Mortgage, as well as any other present or future access, joint venture, mining, milling, operating or other agreement relating to the development or operation of the Land) and general intangibles (including, without limitation, the interest of Mortgagor in any company, limited liability company, joint venture or partnership formed for the purpose of developing or operating any part of the Land), rental approvals, consents, licenses and permits (to the extent a security interest may be granted in them) now or after the Effective Date arising from, used in connection with or relating to the locating, mining, production and storage, transportation, treatment, manufacture or sale of Products or for the use or operation of the Land or the Improvements.

 

1.10        Together with any and all further or greater estate, right, title, interest, claim and demand whatsoever of Mortgagor, whether now owned or later acquired in or to any of the property described in Sections 1.1, 1.2, 1.3, 1.4, 1.5, 1.6, 1.7, 1.8 and 1.9 above.

 

1.11        Together with Mortgagor’s rights to further encumber the property described in Sections 1.1, 1.2, 1.3, 1.4, 1.5, 1.6, 1.7, 1.8, 1.9 and 1.10 above for debt.

 

1.12        All of Mortgagor’s claims, demands and causes of action, whether accrued before or after the Effective Date, for damage to the Land or the Improvements, arising from the ownership of the Land or the Improvements or the construction of improvements on the Land or the Improvements, are assigned to Mortgagee, including, but not limited to those (a) in connection with any transactions financed in whole or in part by the funds loaned to Mortgagor by Mortgagee; (b) against former owners of the Land or the Improvements; (c) against owners of the adjoining property; (d) against suppliers of labor, materials or services to the Land or the Improvements; (e) arising in contract or tort, including without limitation commercial tort claims; and (f) for fraud, misrepresentation or concealment of a material fact; the proceeds of any such claim, demand or cause of action shall be paid to Mortgagee who, after deducting from such payment all its expenses, including reasonable attorney’s fees and costs, may apply such proceeds to the Secured Obligations or to any deficiency under this Mortgage or may release any moneys so received by it to Mortgagor as Mortgagee may elect.  After such occurrence or determination, Mortgagee, at its option, may appear in and prosecute in its own name any action 

 

5

 

or proceeding to enforce any such claim, demand or cause of action and may make any compromise or settlement of any such claim, demand or cause of action.

 

1.13        To the extent the estate of Mortgagor in any of the property referred to above in this Section 1 is a leasehold estate, this conveyance shall include, and the lien and security interest created hereby shall encumber and extend to, all other or additional title, estates, interests or rights which are now owned or may hereafter be acquired by Mortgagor in or to the property demised under such leases creating the leasehold estate.

 

1.14        All of the property and rights described in Sections 1.1, 1.2, 1.3, 1.4, 1.5, 1.6, 1.7, 1.8, 1.9, 1.10, 1.11, 1.12 and 1.13 above, and each item of property described in those sections, collectively are referred to in this Mortgage as the “Property.”

 

1.15        Mortgagor’s assignment and grant of a security interest in any property or right comprising part of the Property for which consent of a third party is required shall be conditioned upon Mortgagor obtaining such consent.  Mortgagor’s execution, delivery and recording of this Mortgage are not, and the same shall not be construed to be, Mortgagee’s assumption or exercise of the administration, control, management, operation or ownership of Mortgagor, Mortgagor’s assets, Mortgagor’s business or the Property, including, without limitation, any approvals, consents, licenses or permits issued to or held by Mortgagor.

 

1.16        To the extent permitted by and subject to applicable law, the lien of this Mortgage will automatically attach, without further act, to all after acquired fixtures and improvements which are part of the Property.

 

2.                                     Performance of the Facility Agreement, Notes and Mortgage.  Mortgagor shall fully perform, observe and comply with all provisions of the Facility Agreement, this Mortgage and each other Transaction Document.  Mortgagor will promptly pay and perform all of the Secured Obligations as and when the same become due pursuant to the terms of the Transaction Documents.  All sums payable by Mortgagor shall be payable in immediately available funds.

 

3.                                     General Representations, Covenants and Warranties.  Mortgagor represents, covenants and warrants that:

 

3.1          Fee Title.  Except as otherwise set forth in the Title Reports and Opinions listed on Exhibit D hereto,  Mortgagor holds and owns good and marketable title in fee simple to the fee lands and patented mining claims which constitute part of the Property, and has all right, full power and lawful authority to mortgage and pledge the same and Mortgagee may at all times peaceably and quietly enter upon, hold, occupy and enjoy such Property in accordance with the terms of this Mortgage.  Mortgagor is in exclusive possession of such Property, and such Property is free and clear of all damages, claims, encumbrances, liens, royalties and security interests, except Permitted Encumbrances and Encumbrances identified in Exhibit A and except as otherwise set forth in the Title Reports and Opinions listed on Exhibit D hereto.

 

3.2          Title to Unpatented Mining Claims.  Regarding the Claims which constitute a portion of the Property, except as otherwise set forth in the Title Reports and Opinions listed on Exhibit D, Mortgagor covenants, represents and warrants that: (a) to its knowledge, 

 

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the Claims were properly located in accordance with applicable federal and state laws and regulations; (b) all assessment work requirements for the Claims have been performed and all filings and recordings of proof of performance have been made properly and all federal annual unpatented mining claim maintenance and rental fees have been paid properly and timely (in each case, save for where the non-compliance does not constitute, and could not reasonably be expected to constitute, a Material Adverse Effect); (c) the Claims are in good standing (save for where lack of good standing does not constitute, and could not reasonably be expected to constitute, a Material Adverse Effect), and Mortgagor owns its interest in the Claims, free and clear of all Encumbrances, subject only to the paramount title of the United States, Permitted Encumbrances, and the Encumbrances identified in Exhibit A; and (d) Mortgagor has good right and full power to assign, convey, grant and transfer the interests described in this Mortgage. Mortgagor makes no representation or warranty concerning the discovery or presence of valuable minerals on the Claims which comprise all or a portion of the Property, or as to the maintenance of pedis possessio rights with respect to any of the Claims or as to the nature or extent of its rights to use the surface of the Claims.

 

3.3          Leased Real Estate and Claims.   Regarding that portion of the Property in which Mortgagor holds an interest under the Leases or other contracts:  (a)  Mortgagor is in exclusive possession of such Property; (b) Mortgagor has not received any written notice of default of any of the material terms or provisions of such Leases or other contracts, which default remains uncured as of the date hereof; (c) neither Mortgagor nor, to Mortgagor’s knowledge, the lessor under any of the Leases to which Mortgagor is a party is in default under any such lease, nor, to Mortgagor’s knowledge,  has any event occurred which with the passage of time or the giving of notice would constitute a default: (d) except where a consent is identified in Exhibit A, Mortgagor has authority under such Leases or other contracts to perform fully its obligations under this Mortgage; (e) such Leases and other contracts are in good standing and, to Mortgagor’s knowledge, are valid (and enforceable and have not been altered, modified or amended in any manner, except as shown on Exhibit A; (f) Mortgagor has no knowledge of any act or omission or any condition on that portion of the Property held by such Leases or other contracts which could be considered or construed as a default thereunder; and (g) to Mortgagor’s knowledge, all portions of the Property held by such Leases or other contracts are free and clear of all damages, claims, encumbrances, liens, royalties and security interests, except as created by or identified in the Leases and except for Permitted Encumbrances and Encumbrances identified in Exhibit A, Part I(B). The foregoing representations and warranties will be true and correct with respect to each future Lease and each and any future lessors.

 

3.4          No Conflict.  Mortgagor covenants, represents and warrants that:  (a) Mortgagor’s execution and delivery of this Mortgage will not conflict with or result in a breach of (i) Mortgagor’s articles of incorporation, bylaws, operating agreement or other constituent or constating documents; (ii) any applicable Law binding on or affecting Mortgagor’s properties; (iii) any contractual restriction (other than the required consents identified in Exhibit A Part I(B) binding on or affecting Mortgagor or its properties (including any Material Agreement) where the breach results in or could reasonably be expected to result in a Material Adverse Effect; or (iv) any writ, judgment, injunction, determination or award which is binding on Mortgagor; (b) Mortgagor’s execution and delivery of this Mortgage will not result in, or require or permit (i) the imposition of any Lien (other than that imposed by the Securities) on or 

 

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with respect to any properties now owned or hereafter acquired by Mortgagor; or (ii) the acceleration of the maturity of any Mortgagor’s indebtedness under any contractual provision binding on or affecting it; (c) Mortgagor is not aware of any actions, proceedings or suits (whether or not purportedly on behalf of Mortgagor) pending or threatened against or affecting Mortgagor or any part of the Property which have a material likelihood of being determined adversely to Mortgagor and, if so adversely determined, have or could reasonably be expected to have a Material Adverse Effect; (d) Mortgagor has not previously assigned, conveyed, encumbered, granted, subleased or otherwise transferred any of its interest in the Property except i) pursuant to the royalty provisions contained in the Leases identified on Exhibit A or (ii) as otherwise set forth in Exhibit A; and (e) there has been no act or omission by Mortgagor which could result by notice or lapse of time in the abandonment, breach, default, forfeiture, relinquishment or termination of any agreement by or under which Mortgagor holds or owns any interest in the Property (save for where the act or omission does not have, and could not reasonably be expected to have, a Material Adverse Effect).

 

3.5          Maintenance of Unpatented Mining Claims.  For each annual assessment work year commencing during the term of this Mortgage, Mortgagor shall perform for the benefit of the unpatented mining claims which constitute all or part of the Claims work of a type customarily deemed applicable as assessment work and of sufficient value to satisfy the annual assessment work requirements, if any, of all applicable federal, state and local laws, regulations and ordinances, and shall prepare evidence of the same in form proper for recordation and filing, and shall timely record and/or file such evidence in the appropriate federal, state and local office as required by applicable federal, state and local laws, regulations and ordinances.  If under applicable federal, state or local laws and regulations annual mining claim maintenance or rental fees are required to be paid for the unpatented mining claims which constitute all or part of the Claims, beginning with the annual assessment work year of 2008, Mortgagor shall timely and properly pay the annual mining claim maintenance or rental fees, and shall execute and record or file, as required, proof of payment of the annual mining claim maintenance or rental fees and of Mortgagor’s intention to hold the unpatented mining claims which constitute all or part of the Claims.  Mortgagor shall perform such work, pay such fees and complete such filings and recordings as are required under applicable federal, state and local laws before the time required for completion of such acts, and shall deliver to Mortgagee proof of performance of such acts not less than fifteen (15) days before the time required for performance of such acts.

 

3.6          Amendment and Relocation of Unpatented Mining Claims.  Except as provided in this Mortgage, Mortgagor shall not abandon any unpatented mining claims or millsites covering any material part of the Property without Mortgagee’s prior written consent.  On not less than fifteen (15) days’ advance written notice to Mortgagee and Mortgagee’s advance consent (such consent not to be unreasonably withheld or delayed), Mortgagor shall have the right to amend or relocate any of the unpatented mining claims and millsites which constitute part of the Claims or to locate any additional unpatented mining claims or millsites which constitute all or part of the Claims.  In such event, all such unpatented mining claims and millsites shall automatically be brought within the terms and provisions of this Mortgage, to the extent permitted by applicable law, and Mortgagor shall execute and deliver any instrument which Mortgagee reasonably requires to evidence the inclusion of such unpatented mining claims and millsites within the coverage of this Mortgage.

 

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3.7          Maintenance of Lien.  Mortgagor will maintain and preserve the lien of this Mortgage until all of the Secured Obligations have been paid and performed in full and Mortgagor shall have no further obligations in respect of either or both of the Credit Facilities.

 

3.8          Binding Obligations.  Mortgagor’s obligations under this Mortgage are the valid and binding obligations of Mortgagor, enforceable in accordance with their respective terms (subject to laws generally affecting creditors’ rights and principles of equity), and Mortgagor’s execution and delivery and performance of such obligations do not contravene any law, order, decree, rule or regulation to which Mortgagor is subject.

 

3.9          Compliance With Environmental Laws.  Mortgagor shall comply with Section 8.4 of the Facility Agreement.  In furtherance of the foregoing, Mortgagor shall in all material respects comply and cause the Property to be in compliance with Environmental Laws.  “Environmental Laws” has the meaning given in the Facility Agreement and includes without limitation the Resource Conservation and Recovery Act of 1976, 42 US § 6901, et seq., (“RCRA”), the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 US § 9601, et seq., (“CERCLA”), the Hazardous Materials Transportation Act, 49 US § 1801 et seq., the Clean Air Act, 42 USC § 7401, et seq., the Clean Water Act, 33 USC § 1251, et seq., the Safe Drinking Water Act, 21 USC § 349 and 42 USC § 201 and § 300(f), et seq., the National Environmental Policy Act of 1969, 42 USC § 4321, the Superfund Amendment and Reauthorization Act of 1986 (codified in various sections of 10 USC, 29 USC, 33 USC and 42 USC), and Title III of the Superfund Amendment and Reauthorization Act, 40 USC § 1101, et seq, applicable New Mexico laws, or any and all regulations promulgated under any such law, or any and all similar or successor laws.

 

3.10        Indemnification.  Mortgagor shall defend, indemnify and hold harmless Mortgagee, and each of them and their successors, assigns, affiliates and the respective agents, directors, employees, officers and representatives of Mortgagee and such affiliates from any and all liability of any kind for any actions, costs, damages, disbursements, expenses, judgments, liabilities, obligations, penalties or suits in any way arising from or relating to Mortgagor’s performance or breach of its obligations under this Mortgage, including without limitation violation of any Environmental Laws relating to or affecting the Property or Mortgagor, in the manner prescribed in the Facility Agreement.

 

3.11        Conduct of Operations.  Mortgagor shall cause all development, construction, mining, milling, processing and reclamation operations on the Property to be done in accordance with Good Industry Practice and material compliance with applicable laws, and permit Mortgagee, through its agents and employees, and at Mortgagee’s expense, to enter on the Property for the purpose of investigating and inspecting the condition, operation and use of the Property (including soil and groundwater sampling and monitoring), provided, however, that Mortgagee shall conduct such investigations and inspections in accordance with applicable provisions of the Facility Agreement and in a manner so as to minimize the disruption of Mortgagor’s operations on the Property.

 

3.12        Notice of Environmental Matters.  Mortgagor shall promptly notify Mortgagee after Mortgagor becomes aware of any breach of any representation, covenant or warranty 

 

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contained in this Mortgage pertaining to Environmental Laws and of the receipt of any knowledge or notice pertaining to any Hazardous Substance, or the release or threatened release of any Hazardous Substance, or Environmental Laws from any governmental authority or any other source or person relating in any manner to the Property.

 

3.13        Survival of Representations and Warranties.  All representations, warranties, covenants and disclosures of Mortgagor contained in this Mortgage shall survive the execution and delivery of this Mortgage and shall remain continuing covenants, conditions, representations and warranties of Mortgagor so long as any portion of the Secured Obligations remain outstanding and shall inure to the benefit of and be enforceable by any person who may acquire title pursuant to foreclosure proceedings or deed in lieu of foreclosure.

 

3.14        Leasehold Estate Provisions.  To the extent the Mortgagor’s interest in any of the Property is a leasehold (“Leasehold”), Mortgagor agrees:

 

(a)           To perform and comply in all material respects with all agreements, covenants, terms, and conditions imposed on or assumed by Mortgagor as tenant under any Leases, subleases or other occupancy agreements, if any, and that if Mortgagor fails to do so, Mortgagee may, but shall not be obligated to, take any action the Mortgagee deems necessary or desirable to prevent or to cure any default by Mortgagor in the performance of or compliance with any of Mortgagor’s covenants or obligations under the leases.  On receipt by Mortgagee from the landlord under any Lease of any written notice of default by the tenant thereunder, Mortgagee may rely thereon and take any action as stated above to cure such default even though the existence of such default or the nature thereof is questioned or denied by Mortgagor or by any party on behalf of Mortgagor.  Mortgagor hereby expressly grants to Mortgagee, and agrees that Mortgagee shall have, the absolute and immediate right to enter in and on the Property to such extent and as often as Mortgagee, in Mortgagee’s sole discretion, deems necessary or desirable in order to prevent or to cure any such default by Mortgagor.  Mortgagee may pay such sums of money as Mortgagee, in its sole discretion, deems necessary for any such purpose, and Mortgagor hereby agrees to pay to Mortgagee, immediately and without demand, all such sums so paid by Mortgagee, together with interest thereon from the date of each such payment at the rate equal to the Funding Rate specified in the Facility Agreement.  All sums so paid and expended by Mortgagee and the interest thereon shall be added to and be secured by the lien hereof. Mortgagor shall also enforce the performance by the lessor under each Lease to which it is a party of such lessor’s material obligations under such Lease.

 

(b)           It will not surrender the Leasehold estate and interest or terminate or cancel any Lease (other than in the ordinary course of business) and that Mortgagor will not, without Mortgagee’s express, prior, written consent (such consent not to be unreasonably withheld or delayed), assign, sublease, modify, change, supplement, alter or amend any Lease either orally or in writing, and any such termination, cancellation, assignment, sublease, modification, change, supplement, alteration or amendment of any such Lease without Mortgagee’s prior written consent thereto shall be void and of no force and effect.  There shall be no merger of the Leasehold estates created by the Leases with the fee estate of the Property or any portion thereof without the prior written consent of Mortgagee.

 

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4.                                     Compliance with Laws.   Since Mortgagor’s taking of possession of the Property, the Property has complied in all material respects with and from the date of this Mortgage will continue to comply in all material respects with, all applicable restrictive covenants, applicable zoning and subdivision ordinances and building codes and all other applicable laws, rules and regulations, in each case, save for where non-compliance does not have, and could not reasonably be expected to have, a Material Adverse Effect.  If Mortgagor receives notice from any federal, state or other governmental body that Borrower or the Property is not in compliance in any material respect with any ordinance, code, law or regulation, Mortgagor will promptly attempt to cure any violation and will provide Mortgagee with a copy of such notice promptly.

 

5.                                     Taxes and Impositions.

 

5.1          Payment of Taxes.  All real property taxes and assessments, general and special, and all other taxes and assessments of any kind or nature whatsoever, including, without limitation, non-governmental levies or assessments such as charges for water or sewer maintenance, association dues or charges or fees levied, or charges resulting from covenants, conditions and restrictions affecting the Property which are assessed or imposed upon the Property, or become due and payable, and which create or appear to create a lien upon all or any part of the Property (all of which taxes, assessments and other governmental charges of like nature are later referred to as “Impositions”), shall be the obligation of Mortgagor.  Mortgagor shall pay or cause to be paid all Impositions, when due, before delinquency, shall file all required forms with appropriate governmental authorities when due and shall deliver to Mortgagee evidence of payment of all Impositions within fifteen (15) days of their due dates.  Notwithstanding the foregoing, Mortgagor shall have the right to contest or protest any such taxes and assessments.

 

5.2          No Joint Assessment.  Mortgagor covenants and agrees not to suffer, permit or initiate the joint assessment of the real and personal property, or any other procedure where the lien of the real property taxes and the lien of the personal property taxes shall be assessed, levied, or charged to the Property as a single lien, or by which the Property shall be assessed, levied or charged together with any other real property owned by Mortgagor.

 

5.3          Payment of Revenue Stamps.  If, at anytime, the United States of America, the State of New Mexico, any other state, or any governmental subdivision having jurisdiction, shall require internal revenue stamps to be affixed to this Mortgage, or other tax paid on or in connection with the execution, delivery or recording of any of the same, Mortgagor will pay them with any interest or other charges imposed in connection with the execution, delivery or recording.

 

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6.                                     Insurance.

 

6.1          Required Insurance.    Mortgagor will keep the Property insured for the benefit of Mortgagee, with companies approved by Mortgagee, acting reasonably, and shall obtain, maintain and keep in force policies of insurance for commercial general liability and property against all risks and such other coverages and in such amounts as Mortgagor is obligated to obtain and maintain in accordance with the Facility Agreement. All policies of insurance required under the terms of this Mortgage shall contain an endorsement or agreement by the insurer that any loss shall be payable to Mortgagee in accordance with the terms of such policy notwithstanding any act or negligence of Mortgagor which might otherwise result in forfeiture of such insurance and the further agreement of the insurer waiving all rights of set off, counterclaim or deductions against Mortgagor.  The policies shall name Mortgagee as an additional insured.  All insurance required to be obtained and maintained by Mortgagor under this Mortgage shall be written and issued in a manner sufficient such that Mortgagor is not a co-insurer under any such policy.

 

6.2          Endorsement for Mortgagee.  All policies of insurance shall have attached to them a lender’s loss payable endorsement for the benefit of Mortgagee in form satisfactory to Mortgagee.  Mortgagor shall on Mortgagee’s request furnish to Mortgagee a certificate of all policies of required insurance.  If Mortgagee consents to Mortgagor’s provision of any of the required insurance through blanket policies carried by Mortgagor and covering more than one location, Mortgagor shall deliver to Mortgagee a certificate of insurance for each such policy describing the coverage, the limits of liability, the carrier’s or insurer’s name, the policy number, and the expiration date.  At least thirty (30) days before the expiration of each such policy, Mortgagor shall deliver to Mortgagee evidence satisfactory to Mortgagee of the payment of premium and the reissuance of the policy continuing the insurance in force as required by this Mortgage.  Each policy shall contain a provision that the policy will not be cancelled or materially amended, which terms shall include any reduction in the scope or limits of coverage, without at least fifteen (15) days’ prior written notice to Mortgagee.  If Mortgagor fails to provide, maintain, keep in force or deliver and furnish to Mortgagee the policies of insurance required under this Section, Mortgagee may, but is not obligated to, procure such insurance or single-interest insurance for such risks covering Mortgagee’s interest at Mortgagor’s cost and expense.

 

6.3          Payment of Premiums.  Mortgagor will reimburse Mortgagee for any premiums paid for insurance made by Mortgagee on Mortgagor’s default in obtaining and maintaining insurance or in assigning and delivering policies of insurance, together with interest at the rate provided in the Facility Agreement.

 

6.4          Use of Insurance Proceeds.  So long as there is no Default and subject to the provisions of Section 8.3, Mortgagor shall be entitled to retain and apply the proceeds of any insurance policy on the Property paid on any loss covered by such insurance policy, provided, however, that Mortgagor shall apply and pay the proceeds under any such insurance policy to the repair and restoration of the Property.  If there is an existing Default:  (a) Mortgagee is authorized and empowered to adjust or compromise any loss under any insurance policy on the Property and to collect and receive the proceeds from any such policy; (b) each insurer under 

 

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such a policy is authorized and directed to make payments in the event of loss to Mortgagee directly; (c) after deducting its expenses incurred in collection or handling, Mortgagee shall be entitled to retain and apply the proceeds of any such insurance to the payment and performance of the Secured Obligations, whether or not then due, or, if Mortgagee, in the sole discretion of Mortgagee, shall so elect, Mortgagee may hold any and all such proceeds for application to payment of the cost of restoration or release any proceeds to Mortgagor or whoever is represented to be the owner of the Property at that time; and (d) Mortgagee shall have no liability to Mortgagor for failure to collect such payments in a timely manner or otherwise.

 

6.5          Successor Rights to Insurance.  To the extent permitted by law and the policies of insurance obtained and maintained by Mortgagor, in the event of a foreclosure of this Mortgage, the purchaser of the Property shall succeed to all the rights of Mortgagor, including any rights to the proceeds of insurance and to unearned premiums to the extent such proceeds and unearned premiums arise from events occurring or the passage of time after the sale on foreclosure of this Mortgage, in and to all policies of insurance assigned to Mortgagee.

 

6.6          No Mortgagee Liability for Insurance.  Mortgagee shall not, by the fact of approving, disapproving, accepting, preventing, obtaining or failing to obtain any insurance, incur any liability for or with respect to the amount of insurance carried, the form or legal sufficiency of insurance contracts, solvency of insurance companies, or payment or defense of lawsuits, and Mortgagor expressly acknowledges and agrees that Mortgagor has full responsibility and bears all liability for such obligations.  Mortgagor waives any and all right to claim or recover against Mortgagee or Mortgagee’s agents, employees, officers or representatives for loss of or damage to Mortgagor, the Property, Mortgagor’s property or the property of others, whether or not under Mortgagor’s control, from any cause insured against or required to be insured against under this Mortgage.

 

6.7          Delivery of Insurance Bills.  If a Default occurs and on Mortgagee’s request, Mortgagor shall deliver to Mortgagee copies of all bills, statements or other documents relating to insurance premiums and evidence of payment of the insurance premiums

 

7.                                     Condemnation.  To the extent allowed under applicable law, Mortgagee shall be entitled to all compensation awards, damages, claims, rights of action, settlement and proceeds of, or on account of, any damage or taking through condemnation or arising from a conveyance in lieu of condemnation, and is authorized, at its option, to commence, appear in and prosecute in its own or Mortgagor’s name any action or proceeding relating to any condemnation and to settle or compromise any claim asserted in any such action or proceeding.  All such compensation, awards, damages, claims, rights of action and proceeds and other payments or relief, and the right to them, are included in the Property and Mortgagee, after deducting from such proceeds and payments all of its expenses, including attorneys’ fees, may release any monies so received by it to Mortgagor or whoever is represented to be the owner of the Property at that time, without affecting the lien of this Mortgage, or may apply the same in such manner as Mortgagee shall determine, to the reduction of the Secured Obligations.  Any balance of such monies then remaining shall be paid to Mortgagor or whoever is represented to be the owner of the Property at that time.  Mortgagor agrees to execute such further assignments of any compensation awards, damages, claims, rights of action, settlements and proceeds as Mortgagee may require to give 

 

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effect to this Section.  Notwithstanding any such condemnation or conveyance in lieu of condemnation, Mortgagor shall continue to pay interest, computed at the rate provided in the Facility Agreement, on the entire unpaid balance of the Secured Obligations.

 

8.                                      Care of Property.

 

8.1          Maintenance of Property.  Mortgagor shall preserve and maintain the Property in good condition and repair (reasonable wear and tear and shutdowns for maintenance in the ordinary course of business excepted, and except to the extent, if applicable, that non-compliance is expressly permitted by the Facility Agreement), Mortgagor shall not permit, commit or suffer any waste, impairment or deterioration of all or any part of the Property which is inconsistent with Good Industry Practice, and will not take any action which will increase the risk of fire or other hazard to all or any part of the Property, other than in compliance with applicable laws.   Mortgagor shall supply to Mortgagee, promptly upon receipt by Mortgagor, any report, assessment or other evaluation pertaining to the physical condition of the Property, including but not limited to the presence of any Hazardous Substance or the condition of any underground storage tank.

 

8.2          Removal and Destruction of Property.  Except as otherwise provided in this Mortgage or as expressly permitted by the Facility Agreement, no part of the Property shall be removed, demolished or materially altered without the prior written consent of Mortgagee.  Mortgagor shall have the right, without such consent, to remove and dispose of, free from the lien of this Mortgage, any part of the Property, which is a fixture as from time to time may become worn out or obsolete, provided, however, that either simultaneously with or prior to such removal, any such property necessary for the conduct of Mortgagor’s business at or on the Property shall be replaced with other property of equal utility and of a value at least equal to that of the replaced property when first acquired and free from any security interest of any other person, and by such removal and replacement Mortgagor shall be deemed to have subjected such replacement property to the lien of this Mortgage.

 

8.3          Notice of Damage to Property.  If any part of the Property is lost, damaged or destroyed by fire, condemnation or any other cause, Mortgagor will give prompt written notice to Mortgagee and, provided that a Default has not occurred, Mortgagor shall have the option, in accordance with and subject to Sections 6.4 and 7 hereof, to either:  (a) promptly restore the Property to the equivalent of its original condition; or (b) use the proceeds of any insurance policy or condemnation award to make payments towards the unpaid balance of the Secured Obligations.

 

8.4          Repair of Property.  To the extent required under applicable laws, regulations and ordinances, no work of repair or improvement on or to the Property shall be undertaken until Mortgagor’s plans and specifications have been approved by all governmental and regulatory agencies having jurisdiction of the Property and such agencies shall have issued governmental approvals, licenses, permits, special use permits and zoning changes or variances as required by applicable laws, regulations and ordinances.

 

9.                                      Transfer; Further Encumbrance of Property.    Except for Permitted Encumbrances, 

 

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and except as otherwise permitted by the Facility Agreement, Mortgagor shall not, directly or indirectly, alienate or further encumber any interest in all or any part of the Property, assign, contract to sell, convey, sell or transfer, either voluntarily or involuntarily, all or any part of the Property or any interest in it, nor shall a voluntary grant of an option, pledge, sale or other transfer or any change in the ownership or control of Mortgagor be effected, in each case except to the extent, if applicable, that the same is expressly permitted by the Facility Agreement.  Any such sale, conveyance, alienation, transfer, pledge, option, or encumbrance made without Mortgagee’s prior written consent (and not expressly permitted by the Facility Agreement) shall be void, and shall give Mortgagee the right and option to declare any or all of the Secured Obligations to be forthwith due and payable (subject to any applicable limitation in the Facility Agreement).  The right and option of Mortgagee under this subsection to declare a default for any of the above-mentioned acts or events may be exercised at any time after the occurrence of any such act or event and Mortgagee’s acceptance of one or more payment or payments payable by Mortgagor or performance of any of Mortgagor’s obligations shall not constitute a waiver of Mortgagee’s right and option.  Mortgagee’s consent to any alienation, assignment, conveyance, disposition, encumbrance or other lien, sale or transfer or failure to exercise such right and option concerning any of the foregoing shall not be construed as a waiver of Mortgagee’s right and option with regard to any subsequent transactions.  Mortgagor shall not, without the prior written consent of Mortgagee, further assign the rents from the Property to anyone other than Mortgagee, and any such assignment without prior express written consent of Mortgagee shall be null and void.  Mortgagor agrees that if the ownership of all or any part of the Property becomes vested in a person other than Mortgagor, Mortgagee may, without notice to Mortgagor, deal in any way with such successor or successors in interest with reference to this Mortgage and the other Transaction Documents and the Secured Obligations without in any way vitiating or discharging Mortgagor’s liability under this Mortgage or the other Transaction Documents or the Secured Obligations.  No sale of the Property and no forbearance to any person with respect to the Mortgage, the other Transaction Documents or the Secured Obligations and no extension to any person of the time for payment or performance of any of the Secured Obligations given by Mortgagee shall operate to release, discharge, modify, change or affect the original liability of Mortgagor either in whole or in part.  If Mortgagor leases the Property subsequent to the date of this Mortgage, Mortgagor shall cause the terms and conditions of any lease to expressly provide that the lease, and the lessee’s rights under the lease, shall be subordinate and subject to Mortgagee’s rights under this Mortgage and the lessee under any such leasehold interest shall agree and covenant that such leasehold interest is subordinate and subject to this Mortgage.

 

10.          Further Assurances.  At any time and from time to time, upon Mortgagee’s request, Mortgagor shall make, execute and deliver, or cause to be made, executed and delivered to Mortgagee, and, where appropriate, shall cause to be recorded or filed, and from time to time to be re-recorded and refiled at such time and in such offices and places as shall be deemed desirable by Mortgagee, any and all such further deeds of trust, instruments of further assurance, certificates and other documents as are reasonably necessary to effectuate, complete or perfect, or to continue and preserve the obligations of Mortgagor under this Mortgage and the lien of this Mortgage as a lien upon all of the Property, whether now owned or later acquired by Mortgagor, and unto all and every person or persons deriving any estate, right, title or interest under this Mortgage or the power of sale granted under this Mortgage.

 

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11.          Security Agreement and Financing Statements.

 

11.1        Grant of Security Interest.  Mortgagor (as Debtor) grants to Mortgagee (as Creditor and Secured Party) a security interest in the Property, and in all proceeds thereof, pursuant to the Uniform Commercial Code of the State of New Mexico (  § 55-1-101 et seq. NMSA 1978, the “Code”).

 

11.2        Financing Statements.  When required under applicable law and as requested by Mortgagee, Mortgagor shall execute any and all such documents, including without limitation, financing statements pursuant to the Code, as Mortgagee may request, to preserve and maintain the priority of the lien created by this Mortgage on the fixtures, improvements and as-extracted collateral constituting part of the Property and the personal property described in the Exhibits attached to and by this reference incorporated in this Agreement.  Mortgagor authorizes and empowers Mortgagee to execute and file, on Mortgagor’s behalf, all financing statements and refilings and continuations as Mortgagee deems necessary or advisable to create, preserve and protect the lien.  This Mortgage shall be deemed a security agreement as defined in Section 30-9A-102(uuu) of the Code and the remedies for any violation of the covenants, terms and conditions of the parties’ agreements shall be cumulative and (i) as prescribed in this Mortgage, or (ii) by general law, or (iii) as to such part of the security which is also reflected in the financing statement by the specific statutory consequences now or later enacted and specified in the Code, all at Mortgagee’s sole election.

 

11.3        Character of Property.  Mortgagor and Mortgagee agree that the filing of a financing statement in the records normally having to do with personal property shall never be construed as derogating from or impairing the express declaration and intention of the parties, that the Improvements are, and at all times and for all purposes and in all proceedings, both legal or equitable, shall be regarded as part of the real estate encumbered by this Mortgage irrespective of whether (a) any such item is physically attached to the Improvements, (b) serial numbers are used for the better identification of certain equipment items capable of being thus identified in a recital or in any list filed with Mortgagee, or (c) any such item is referred to or reflected in any such financing statement so filed at any time.  Similarly, the mention in any such financing statement of (d) rights in or to the proceeds of any fire and/or hazard insurance policy, or (e) an award in eminent domain proceedings for a taking or for loss of value, or (f) Mortgagor’s interest as lessor in any present or future lease or rights to income growing out of the use and occupancy of the Property, whether pursuant to lease or otherwise, shall never be construed as altering any of the rights of Mortgagee as determined by this instrument or impugning the priority of Mortgagee’s lien or by any other recorded document, but such mention in the financing statement is declared to be solely for the protection of Mortgagee in the event any court or judge shall hold, with respect to the matters stated in the foregoing clauses (d), (e) and (f) that notice of Mortgagee’s priority of interest, to be effective against a particular class of persons, including but not limited to the federal government and any subdivision or entity of the federal government, must be filed in the Code records.

 

11.4        Fixtures.  The security agreement described above covers as-extracted collateral and goods which are or are to become fixtures, and this Mortgage shall be effective as a financing statement filed as a fixture filing from the date of its recording, in accordance with 

 

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Section 55-9-502 of the Code.  In that connection, the addresses of Mortgagor as debtor and Mortgagee as secured party are as stated above, and the address of Mortgagee is also the address from which information concerning the security interest may be obtained by an interested party.

 

12.          Assignment of Rents.  If Mortgagor, as a lessor, enters into any leases of the Property, the assignment contained under Section 1.5 shall be fully operative without any further action on the part of either party and specifically at any time before or after foreclosure Mortgagee shall be entitled, upon the occurrence of a Default and the continuation of such Default beyond any applicable cure period, to all business, rents, income and other benefits from the Property or from any business or other activity conducted thereon, described in Sections 1.1, 1.2, 1.3 and 1.4 whether or not Mortgagee takes possession of such property.  Mortgagor further grants to Mortgagee the right (a) to enter upon and take possession of the Property for the purpose of collecting the rents, income and other benefits, (b) to dispossess by the usual summary proceedings any tenant defaulting in the payment of rents to Mortgagee, (c) to let all or any part of the Property, and (d) to apply rent, income, maintenance fees, and other benefits, after payment of all necessary charges and expenses, on account of the Secured Obligations.  Such assignment and grant shall continue in effect until the Secured Obligations are paid and performed in full and Mortgagee shall have no further obligations in respect of the Credit Facilities, the execution of this Mortgage constituting and evidencing the irrevocable consent of Mortgagor to the entry upon and taking possession of the Property by Mortgagee pursuant to such grant, whether or not foreclosure has been instituted.  Neither the exercise of any rights under this Section 12 by Mortgagee nor the application of any such rents, income or other benefits to the Secured Obligations shall cure or waive any default or notice of default or invalidate any act done pursuant to this Mortgage or to any such notice, but shall be cumulative of all other rights and remedies.

 

It is understood and agreed that neither the foregoing assignment of rents and profits to Mortgagee nor the exercise by Mortgagee of any of its rights or remedies shall be deemed to constitute Mortgagee a “Mortgagee-in-possession” or otherwise responsible or liable in any manner with respect to the Property or the use, occupancy, enjoyment or operation of all or any portion of the Property, unless and until Mortgagee, in person or by agent, assumes actual possession.  The appointment of a receiver for the Property by any court at the request of Mortgagee or by agreement with Mortgagor, or the entering into possession of all or any part of the Property by such receiver, shall not be deemed to make Mortgagee a Mortgagee-in-possession or otherwise responsible or liable in any manner with respect to the Property or the use, occupancy, enjoyment or operation of all or any portion of the Property.

 

Mortgagor shall apply the rents and profits to the payment of all necessary and reasonable operating costs and expenses of the Property, debt service on the Secured Obligations, and a reasonable reserve for futures expenses, repairs and replacements for the Property, before using the rents and profits for Mortgagor’s personal use or any other purpose not for the direct benefit of the Property.

 

13.          Mechanic’s and Other Liens.  Mortgagor shall not permit or suffer any mechanic’s, laborer’s, or materialman’s statutory or other lien (other than any lien for taxes not yet due) to be created upon the Property other than Permitted Encumbrances; provided, however, that unless 

 

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the nonpayment of any such mechanic’s or other lien may create a forfeiture of any part of the Property, Mortgagor may, in good faith, by appropriate proceedings, contest the validity, applicability or amount of any assessed lien, and pending such contest, Mortgagor shall provide security in form and amount deemed satisfactory by Mortgagee in its reasonable discretion to be adequate to cover the payment of such lien with interest, penalties and costs.

 

14.          Mortgagee’s Performance of Defaults.  If Mortgagor defaults in the payment of any assessment or tax, encumbrance or other Imposition, in its obligation to furnish insurance under this Mortgage, or in the performance or observation of any other covenant, condition or term of this Mortgage or any of the other Transaction Documents, to preserve its interest in the Property, Mortgagee may perform or observe the same, and all payments made (whether such payments are regular or accelerated payments) and all costs and expenses incurred or paid by Mortgagee in that connection shall become due and payable immediately.  The amounts so incurred or paid by Mortgagee, together with interest at the Funding Rate prescribed in the Facility Agreement from the date incurred until paid by Mortgagor, shall be added to the Secured Obligations.  Mortgagee is empowered to enter and to authorize others to enter upon the Property for the purpose of performing or observing any such defaulted covenant, condition or term.

 

15.          Events of Default.  The term “Default,” wherever used in this Mortgage, shall mean any one or more of the following events:

 

15.1        Facility Agreement “Default.”  The occurrence of any Event of Default specified in the Facility Agreement.

 

15.2        Abandonment or Taking of Property.  If Mortgagor abandons all or any material part of the Property or all or any material part of the Property shall be damaged or taken through condemnation (which term shall include any damage or taking by any governmental authority or any other authority by the laws of the State of New Mexico or the United States of America to so damage or take, and any transfer by private sale in lieu of such taking), either temporarily for a period in excess of fourteen (14) days or permanently, provided that such damage or taking materially impairs Mortgagee’s security under this Mortgage and the proceeds, if any, from such damage or condemnation, which Mortgagor shall apply to the repair or restoration of the Property, are inadequate to repair or restore the Property such that Mortgagee’s security is not materially impaired.

 

16.          Remedies; Acceleration of Maturity; Mortgagee’s Power of Enforcement.

 

16.1        Acceleration of Indebtedness.  If a Default occurs, and subject to any obligations of Mortgagee to deliver or give notice of a Default in accordance with applicable laws and the terms of this Mortgage and the other Transaction Documents, Mortgagee may declare any or all of the Secured Obligations to be forthwith due and payable (subject to any applicable limitation in the Facility Agreement), and upon such declaration such Secured Obligations shall immediately become due and payable without demand or notice.

 

16.2        Right of Foreclosure.  Mortgagee shall have the following powers concerning enforcement of this Mortgage:

 

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16.2.1      Time is of the essence of this Mortgage.

 

16.2.2      If a Default occurs, Mortgagee may, either with or without entry or taking possession or otherwise, and without regard to whether or not the Secured Obligations shall be due and without prejudice to the right of Mortgagee later to bring an action or proceeding to foreclose or any other action for any default existing at the time such earlier action was commenced, proceed by any lawful action or proceeding to enforce payment and performance of any or all of the Secured Obligations or the performance of the terms of the Transaction Documents or any other right; to foreclose this Mortgage in the manner provided by law of the State of New Mexico applicable to the foreclosure of mortgages on real property and, subject to Mortgagee’s right of redemption (as reduced herein), to sell, as an entirety or in separate lots or parcels, the Property pursuant to the laws of the State of New Mexico or under the judgment or decree of a court or courts of competent jurisdiction; and Mortgagee shall be entitled to recover in any such proceeding all incidental costs and expenses, including reasonable attorneys’ fees and costs (including, expressly, costs incurred for services of paralegals and for computer-assisted legal research) in such amount as shall be awarded by the court; and to pursue any other remedy available to it at law or in equity.

 

16.3        Uniform Commercial Code Remedies.  If a Default occurs, Mortgagee may exercise any or all of the remedies and rights afforded to a secured party under the Uniform Commercial Code as in effect within the State of New Mexico.

 

16.4        Foreclosure; Expense of Litigation.  In the event of foreclosure of the lien, there shall be allowed and included as additional Secured Obligations, all expenditures and expenses which may be paid or incurred by or on behalf of Mortgagee for reasonable attorneys’ fees (including, expressly, costs of services of paralegals), appraiser’s fees, outlays for documentary and expert evidence, stenographers’ charges, publication costs, and costs (which may be estimated as to items to be expended after foreclosure sale or entry of the decree) of procuring all such abstracts of title, title searches and examinations, title insurance policies, and similar data and assurances with respect to title as Mortgagee may deem reasonably advisable either to prosecute such suit or to evidence to a bidder at any sale which may be had the true condition of the title to or the value of the Property.  All such expenditures and expenses and such expenses and fees as may be incurred in the protection of said premises and the maintenance of the lien of this Mortgage, including the reasonable fees of any attorney employed by Mortgagee in any litigation or proceeding affecting this Mortgage, the Transaction Documents or the Property, including probate and bankruptcy proceedings, or in the preparations for the commencement or defense of any proceeding or threatened suit or proceeding, shall be immediately due and payable by Mortgagor, with interest at the Funding Rate specified in the Facility Agreement, and shall be secured by this Mortgage.

 

16.5        Reduction in Redemption Period.   If this Mortgage is foreclosued, If this Mortgage is foreclosed, the redemption period shall be on (1) month in lieu of nine (9) months.

 

17.          Mortgagee’s Right to Enter and Take Possession, Operate and Apply Income.  The following provisions shall prescribe Mortgagee’s rights, in addition to those available at law and in equity, to take possession and operate the Property and apply income from the Property:

 

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17.1        Possession of Property.  If a Default occurs, (a) Mortgagor, on Mortgagee’s demand after Mortgagee’s compliance with applicable laws, shall surrender to Mortgagee the actual possession and, to the extent permitted by law, Mortgagee itself, or such officers or agents as it may appoint, may enter, and take possession of all of the Property, and may exclude Mortgagor and its agents and employees wholly from and may have joint access with Mortgagor to the books, papers and accounts of Mortgagor; and (b) Mortgagor will pay monthly in advance to Mortgagee on Mortgagee’s entry into possession, or to any receiver appointed to collect the rents, income and other benefits of the Property, the fair and reasonable rental value for the use and occupation of such part of the Property as may be in possession of Mortgagor with Mortgagee’s consent, and upon default in any such payment will vacate and surrender possession of such part of the Property to Mortgagee or to such receiver and, in default, Mortgagor may be evicted by summary proceedings or otherwise.

 

17.2        Mortgagee’s Action to Gain Possession.  If Mortgagor for any reason fails to surrender or deliver the Property after Mortgagee’s demand, Mortgagee may obtain a judgment or decree conferring on Mortgagee the right to immediate possession or requiring Mortgagor to deliver immediate possession of all or part of the Property to Mortgagee.  Mortgagor specifically consents to the entry of such judgment or decree and reasonable compensation to Mortgagee, its attorneys and agents, and all such costs, expenses and compensations shall, until paid, be secured by the lien of this Mortgage and bear interest at the Funding Rate specified in the Facility Agreement.

 

17.3        Mortgagee’s Property Rights.  Upon every such entering upon or taking of possession, Mortgagee may control, hold, operate, possess or use the Property, and, from time to time, conduct its business, and, from time to time, in its sole and absolute discretion:

 

17.3.1      Make all necessary and proper maintenance, repairs, renewals, replacements, additions, betterments and improvements to the Property and purchase or otherwise acquire additional fixtures, personalty and other property;

 

17.3.2      Insure or keep the Property insured;

 

17.3.3      Manage and operate the Property and exercise all the rights and powers of Mortgagor in its name or otherwise with respect to the same; and

 

17.3.4      Enter into agreements with others to exercise the powers granted to Mortgagee, all as Mortgagee from time to time may determine; and Mortgagee may collect and receive all the rents, income and other benefits, including those past due as well as those later accruing; and shall apply the monies so received by Mortgagee in such priority as Mortgagee may determine to (a) the payment of rent or any other tenant charges; (b) the payment of Secured Obligations which are due and payable; (c) the deposits for taxes and assessments and insurance premiums due; (d) the cost of insurance, taxes, assessments and other proper charges upon the Property; (e) the compensation, expenses and disbursements of the agents, attorneys and other representatives of Mortgagee; and (f) any other charges or costs required to be paid by Mortgagor under the terms of this Mortgage.

 

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17.4        Return of Property to Mortgagor.  Mortgagee shall surrender possession of the Property to Mortgagor only when all of the Secured Obligations shall have been paid and performed in full and all defaults fully cured and Mortgagee shall have no further obligations in respect of either or both of the Credit Facilities.  The same right of taking possession, however, shall exist if any subsequent Default shall occur and be continuing.

 

18.          Purchase by Mortgagee.  Upon any foreclosure sale, Mortgagee may bid for and purchase the Property and, upon compliance with the terms of sale, may hold, retain and possess and dispose of such property in its own absolute right without further accountability.

 

19.          Application of Indebtedness Toward Purchase Price.  Upon any such foreclosure sale, Mortgagee may, if permitted by law, and after allowing for costs and expenses of the sale, compensation and other charges in paying the purchase price, apply any or all of the Secured Obligations, in lieu of cash, to the amount which shall, upon distribution of the net proceeds of such sale, be payable.

 

20.          Waiver of Appraisement, Valuation, Stay, and Extension Laws.  Subject to Mortgagor’s right of redemption (as reduced herein), Mortgagor agrees to the fullest extent permitted by applicable law that if a Default occurs and is existing, neither Mortgagor nor anyone claiming through or under it shall or will set up a claim or seek to take advantage of any appraisement, valuation, stay or extension laws now or later in force, in order to prevent or hinder the enforcement or foreclosure of this Mortgage or the absolute sale of the Property or the final and absolute putting into possession, immediately after such sale, of the purchaser, and Mortgagor, for itself and all who may at any time claim through or under it, waives, to the fullest extent that it may do lawfully, the benefit of all such laws, and any and all right to have the assets, comprising the Property marshalled upon any foreclosure of the lien and agrees that Mortgagee, or any court having jurisdiction to foreclose such lien may sell the Property in part or as an entirety.

 

21.          Receiver.  If a Default occurs, Mortgagee, to the extent permitted by law, may apply to or petition a court of competent jurisdiction for the appointment of a receiver to enter upon and take possession of the Property and to collect all rents, income and other benefits and apply them as the court may direct.

 

22.          Suits to Protect the Property.  Mortgagee shall have the power and authority, but shall have no obligation, to institute and maintain any suits or proceedings as Mortgagee may deem advisable (a) to prevent any impairment of the Property by any acts which may be unlawful or any violation of this Mortgage; (b) to preserve or protect its interest in the Property; and (c) to restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment, rule or order might impair the security or be otherwise prejudicial to Mortgagee’s interest.

 

23.          Proofs of Claim.  In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding affecting Mortgagor or any guarantor, obligor, co-maker or endorser of any of Mortgagor’s obligations, its 

 

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creditors or its property, Mortgagee, to the extent permitted by law, shall be entitled to file such proofs of claim or other documents as may be necessary or advisable in order to have its claims allowed in such proceedings for the entire amount due and payable by Mortgagor under this Mortgage, at the date of the institution of such proceedings, and for any additional amounts which may become due and payable by Mortgagor after such date.

 

24.          Mortgagor to Pay Upon Default; Application of Monies by Mortgagee.

 

24.1        Collection of Indebtedness.  If there is an existing Default, then upon Mortgagee’s demand, Mortgagor will pay to Mortgagee the whole of the Secured Obligations so demanded; and if Mortgagor fails to pay the same upon such demand, Mortgagee shall be entitled to sue for and to recover judgment against Mortgagor for the whole amount so due and unpaid together with costs and expenses, including without limitation, the reasonable compensation, expenses and disbursements of Mortgagee’s agents, attorneys (including, expressly, costs of services of paralegals) and other representatives, either before, after or during the pendency of any proceedings for the enforcement of this Mortgage and the right of Mortgagee to recover such judgment shall not be affected by any taking, possession or foreclosure sale, or by the exercise of any other right, power or remedy for the enforcement of the terms of this Mortgage, or the foreclosure of the lien.

 

24.2        Deficiency on Foreclosure.  In case of a foreclosure sale of all or any part of the Property and of the application of the proceeds of sale towards payment of the Secured Obligations, Mortgagee shall be entitled to enforce payment from Mortgagor of all amounts then remaining due and unpaid and to recover judgment against Mortgagor for any portion remaining unpaid, with interest, if and to the fullest extent permitted by the law of the State of New Mexico.  If permitted by applicable law, all such deficiency amounts shall bear interest at the Overdue Rate specified in the Facility Agreement before and after the entry of any judgment.  In addition, Mortgagee shall be entitled to recovery of its costs in connection with such proceedings, including reasonable attorneys’ fees (including, expressly, costs of services of paralegals).  This provision shall survive any foreclosure or sale of the Property or the extinguishment of the lien.

 

24.3        Nonwaiver of Lien.  Mortgagor hereby agrees, to the extent permitted by law, that no recovery of any such judgment by Mortgagee and no attachment or levy of any execution upon any of the Property or any other property shall in any way affect the lien of this Mortgage upon the Property or any lien, rights, powers or remedies of Mortgagee under this Mortgage.

 

24.4        Application of Funds Collected.  Any monies collected or received by Mortgagee shall be applied to the payment of compensation, expenses and disbursements of the agents, attorneys and other representatives of Mortgagee, and the balance remaining shall be applied to the payment of the balance of the Secured Obligations in accordance with the provisions of the Facility Agreement.

 

24.5        Application of Funds Collected to Mortgagor’s Obligations.  If a Default 

 

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occurs, Mortgagee shall have the right, in its discretion, to apply sums deposited by Mortgagor with Mortgagee for the payment of taxes and assessments, insurance premiums, and any other amounts to the payment of the Secured Obligations.

 

25.          Delay or Omission No Waiver.  No delay or omission of Mortgagee or any holder of the Secured Obligations to exercise any right, power or remedy upon any Default shall exhaust or impair any such right, power or remedy or shall be construed to waive any such Default or to constitute acquiescence. Every right, power and remedy given to Mortgagee may be exercised from time to time and as often as may be deemed expedient by Mortgagee.

 

26.          No Waiver of One Default to Affect Another.  No waiver of any Default shall extend to or affect any subsequent or any other Default. If Mortgagee grants forbearance or any extension of time for the payment of any Secured Obligations, takes other or additional security for the payments, waives or does not exercise any right granted in the Facility Agreement, this Mortgage or any other Transaction Document, releases any part of the Property from the lien of this Mortgage or any other Transaction Document, consents to the filing of any map, plat or replat of the land, consents to the granting of any easement on the land, or makes or consents to any agreement changing the terms of this Mortgage or subordinating the lien or any change of this Mortgage, no such act or omission shall release, discharge, modify, change or affect the original liability under the Facility Agreement, this Mortgage or otherwise of Mortgagor, or any subsequent purchaser of the Property or any maker, obligor, co-signor, surety or guarantor.  No such act or omission shall preclude Mortgagee from exercising any right, power or privilege granted to Mortgagee or intended to be granted in case of any Default then existing or of any subsequent Default, nor, except as otherwise expressly provided in an instrument or instruments executed by Mortgagee, shall the lien of this Mortgage be altered except to the extent of any release.  In the event of the sale or transfer by operation of law or otherwise of all or any part of the Property, Mortgagee without notice to any person, firm or corporation, is authorized and empowered to deal with any vendee or transferee with reference to the Property or the Secured Obligations, or with reference to any of the terms or conditions of this Mortgage, as fully and to the same extent as it might deal with the original parties and without in any way releasing or discharging any of Mortgagor’s liabilities or undertakings.

 

27.          Discontinuance of Proceedings; Position of Parties Restored.  If Mortgagee proceeds to enforce any right or remedy under this Mortgage by foreclosure, entry or otherwise and such proceedings are discontinued or abandoned for any reason, or such proceedings result in a final determination adverse to Mortgagee, then and in every such case, Mortgagor and Mortgagee shall be restored to their former positions and rights, and all rights, powers and remedies of Mortgagee shall continue as if no such proceedings had been taken.

 

28.          Remedies Cumulative.  No right, power or remedy conferred upon or reserved to Mortgagee by the Facility Agreement, this Mortgage or any other Transaction Document or otherwise executed in connection with the Secured Obligations is exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent to any other right, power and remedy now or later existing at law or in equity or given under the Facility Agreement, this Mortgage or any other Transaction Document.

 

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29.          Interest After Default.  If a Default occurs, all sums outstanding and unpaid under the Facility Agreement, this Mortgage and the other Transaction Documents shall bear interest in accordance with the Facility Agreement or the other Transaction Documents.

 

30.          Legal Representatives, Successors and Assigns. Except as otherwise prohibited by the terms of this Mortgage, whenever one of the parties is named in this Mortgage, the successors and assigns of such party shall be included and all covenants, agreements, terms, provisions and conditions contained in this Mortgage, by or on behalf of Mortgagor or Mortgagee shall bind and inure to the benefit of their respective successors and assigns, whether so expressed or not.  In the event Mortgagor is composed of more than one party, the obligations arising under this Mortgage, are the joint and several obligations of each such party.

 

31.          Notices.    Except as otherwise expressly provided herein, any notice, order, instruction, request or other communication required or permitted to be given under this Mortgage shall be in writing and deemed to have been properly given when delivered in person or on the next Business Day after being sent by facsimile transmission or other electronic means, or upon receipt of notice sent by overnight mail or certified or registered United States mail, return receipt requested, postage prepaid, addressed to the party at the address set forth below. Any party may change its address for notices in the manner set forth above.

 

	
Mortgagee:
    	
 
    	
Mortgagor:
    
	
 
    	
 
    	
 
    
	
RMB   Resources, Inc.

7114   West Jefferson Ave, Suite 100

Lakewood,   Colorado 80235

Attn:  Rick Winters
    	
 
    	
Cibola   Resources LLC

9000   E. Nichols Avenue Suite 225

Englewood,   CO 80112

Attn:  Ed Topham
    

 

32.          Headings; Construction.  The headings of the articles, sections, paragraphs and subdivisions of this Mortgage are for convenience of reference only, are not to be considered a part of this Mortgage, and shall not limit or expand or otherwise affect any of the terms.  Wherever the context so requires, words used in the singular may be read in the plural, words used in the plural may be read in the singular, words importing the neuter shall include the masculine and feminine genders, words importing the feminine gender shall include the masculine and the neuter, and words importing the masculine gender shall include the feminine and the neuter.

 

33.          Severability.  In the event that any of the covenants, agreements, terms or provisions contained in this Mortgage shall be invalid, illegal or unenforceable in any respect, the validity of the remaining covenants, agreements, terms or provisions contained therein shall in no way be prejudiced or disturbed.

 

34.          Modification.  Neither this Mortgage nor any of its terms, may be changed, waived, discharged or terminated orally, or by any action or inaction, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought.  Any agreement later made by Mortgagor and Mortgagee relating to this Mortgage shall be superior to the rights of the holder of any intervening lien or encumbrance.  Whenever a 

 

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power of attorney is conferred upon Mortgagee, it is understood and agreed that such power is conferred with full power of substitution and Mortgagee may elect in its sole discretion to exercise such power itself or to delegate all or any part of such power to one or more sub-agents.

 

35.          Governing Law; Jurisdiction; Venue.

 

35.1    Governing Law.  This Mortgage shall be governed by the State of New Mexico and the applicable laws of the United States, without regard to the conflicts of laws provisions thereof.

 

35.2        Submission to Jurisdiction.  Mortgagor and Mortgagee agree that any action or claim arising out of, or any dispute in connection with, this Mortgage, any rights, remedies, obligations, or duties hereunder, or the performance or enforcement hereof or thereof, may be brought in the courts of the State of Colorado or any federal court sitting therein and each of them consents to the non-exclusive jurisdiction of such court and to service of process in any such suit being made upon the debtor by mail at the address specified for notices in the Facility Agreement.  Each of Mortgagor and Mortgagee hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient court.

 

35.3        Waiver of Right to Trial by Jury.  TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, THE MORTGAGOR AND THE MORTGAGEE WAIVE THEIR RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS, REMEDIES, OBLIGATIONS, OR DUTIES HEREUNDER, OR THE PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF. EXCEPT AS PROHIBITED BY LAW, THE MORTGAGOR AND THE MORTGAGEE WAIVE ANY RIGHT WHICH THEY MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  The Mortgagor and the Mortgagee: (a) certify that neither of them nor any representative, agent or attorney has represented, expressly or otherwise, that the Mortgagee or the Mortgagor would not, in the event of litigation, seek to enforce the foregoing waivers or other waivers contained in this Mortgage; and (b) acknowledge that, in entering into this Mortgage, the Facility Agreement and the other Transaction Documents to which each of them is a party, each of the Mortgagee and Mortgagor is relying upon, among other things, the waivers and certifications contained in this Section 35.3.

 

36.          Required Notices.  Mortgagor shall notify Mortgagee promptly of the occurrence of any of the following:  (a) receipt of notice from any governmental authority relating to and having an effect on the Property which could reasonably be expected to constitute a Material Adverse Effect; (b) any material change in the occupancy of the Property which could reasonably be expected to constitute a Material Adverse Effect; (c) receipt of any notice from the holder of any other lien or security interest in the Property (which receipt of notice shall not be deemed to be approval or consent to any lien or security interest created in violation of the terms of this Mortgage); (d) any actual or threatened judicial or administrative proceeding by or against or 

 

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otherwise affecting Mortgagor’s title to the Property or the Property; and (e) any matter for which Mortgagee is entitled to notice pursuant to any Transaction Document.

 

37.          Management.   Mortgagor covenants that at all times before the payment and performance in full of the Secured Obligations, the Property shall be managed by Mortgagor or by a party designated by Mortgagor reasonably satisfactory to Mortgagee.

 

38.          Discharge.  When all of the Secured Obligations have been paid and performed, and when Mortgagee has no further obligation in respect of either or both of the Credit Facilities, Mortgagee shall record a discharge of this Mortgage in the official land records of Sandoval, McKinley, and/or Cibola County, New Mexico, as applicable, in the form and within the time allowed under applicable law.

 

39.          Attorneys’ Fees.  Without limiting any other provision contained in this Mortgage, Mortgagor agrees to pay all costs of Mortgagee incurred in connection with the enforcement of this Mortgage or the taking of this Mortgage, including, without limitation, all reasonable attorneys’ fees (including, expressly, costs of services of paralegals)  whether or not suit is commenced, and including specifically fees incurred in connection with any appellate, bankruptcy, deficiency, or any other litigation proceedings, all of which sums shall be secured by this Mortgage.  If a suit is commenced by the parties concerning enforcement of or the parties’ rights and obligations under this Mortgage, the prevailing party in such suit shall be entitled to recover fees and costs as described in this Section.

 

40.          Accord and Satisfaction.  No payment by Mortgagor or receipt by Mortgagee of a lesser amount than any payments then due shall be deemed to be other than on account of the earliest payment falling due, nor shall any endorsement or statement on any check or draft, or any memorandum or letter accompanying any check, draft or payment be deemed to be an accord and satisfaction. Mortgagee may accept any such check, draft, or payment without prejudice to Mortgagee’s right to recover any balance due or pursue any other of Mortgagee’s remedies.

 

41.          Conflict With Facility Agreement.  In the event of any conflict between the terms of this Mortgage and the Facility Agreement, the terms of the Facility Agreement shall control, except in respect of the terms of this Mortgage governing Mortgagee’s enforcement of Mortgagor’s obligations under this Mortgage in accordance with New Mexico law by foreclosure or otherwise.

 

42.          Limitation on Indemnification.    To the extent, if at all, a court of competent jurisdiction determines that Section 56 7 1 NMSA 1978 applies to any indemnification provisions in this Mortgage, including certain types of insurance coverage as set forth in Section 56 7 1 NMSA 1978, such provisions shall not extend to liability, claims, damages, losses or expenses, including attorney fees, arising out of bodily injury to persons or damage to property caused by or resulting from, in whole or in part, the negligence, act or omission of the indemnitee or additional insured, as the case may be, its officers, employees or agents and shall further be modified, if required, by the provisions of Section 56 7 1(B) NMSA 1978.

 

26

 

IN WITNESS WHEREOF, Mortgagor and Mortgagee have executed this Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing effective as of the day and year first above written.

 

 

	
CIBOLA   RESOURCES LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:   Neutron Energy, Inc., Manager
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Edward M. Topham
    	
 
    
	
Edward   M. Topham, Secretary and Treasurer,

Neutron   Energy, Inc.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Gary C. Huber
    	
 
    
	
Gary   C. Huber, President and Chief Executive
   Officer, Neutron Energy, Inc.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
NEUTRON   ENERGY, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Edward M. Topham
    	
 
    
	
Edward   M. Topham, Secretary and Treasurer
    	
 
    

 

27

 

	
STATE   OF
    	
)
    
	
 
    	
ss.
    
	
COUNTY   OF
    	
)
    

 

                Before me, the undersigned, a Notary Public, on this 9 day of April 2010, personally appeared Gary C. Huber and Edward M. Topham to me known personally, and who, being by me duly sworn, depose and say that they are the President and Chief Executive Officer and the Chief Financial Officer, Secretary and Treasurer, respectively of Neutron Energy, Inc., which corporation is the Manager of Cibola Resources LLC, and that said instrument was signed and sealed on behalf of said limited liability company by authority of its Members and that said instrument is the free act and deed of said limited liability company.

 

My commission expires:

 

	
 
    	
\S\   Mary Young
    
	
 
    	
Notary   Public
    

 

	
STATE OF
    	
)
    
	
 
    	
ss.
    
	
COUNTY OF
    	
)
    

 

Before me, the undersigned, a Notary Public, on this 9 day of April 2010, personally appeared Edward M. Topham to me known personally, and who, being by me duly sworn, depose and say that he is the Chief Financial Officer, Secretary and Treasurer, of Neutron Energy, Inc., and that said instrument was signed and sealed on behalf of said and that said instrument is the free act and deed of said corporation.

 

My commission expires:

 

	
 
    	
\S\   Mary Young
    
	
 
    	
Notary   Public
    

 

28

 

Exhibits

 

	
Exhibit A
    	
Land,   Improvements and Water Rights
    
	
 
    	
 
    
	
Exhibit B
    	
Operating   Equipment
    
	
 
    	
 
    
	
Exhibit C
    	
Material   Agreements
    
	
 
    	
 
    
	
Exhibit D
    	
List   of Title Reports and Opinions
    

 

29

 

Exhibit A

To

Mortgage, Security Agreement,

Assignment of Leases and Rents and

Fixture Filing

 

 

Leasehold Interests, Unpatented Mining Claims,

Water Rights, and Improvements

Cibola County, NM

 

 

I.                                         Leasehold Interests. (A) List of leases under which Mortgagor is lessor; (B) List of leases where Mortgagor is lessee.

 

(A)                              None

 

(B)                                All of Mortgagor’s right, title and interest under that certain Uranium Mining Lease and Agreement effective April 6, 2007 between LA MERCED del PUEBLO DE CEBOLLETA, a political subdivision of the State of New Mexico, and NEUTRON ENERGY, INC., a Nevada corporation, as further evidenced by the Short Form Memorandum of the Material Terms of a Mining Lease and Agreement recorded April 27, 2007 as Document #200701543 in Cibola County, New Mexico.

 

All of Mortgagor’s right, title and interest in and to the Cebolleta Grant Lands, more particularly described as follows:

 

                “South L Bar Tract”

 

That certain tract of land known as the “South L Bar Tract”, located in Cibola (formerly Valencia) County, New Mexico, comprising a portion of the lands originally known and referred to as “L Bar Ranch,” lying within the boundaries of the Original Cebolleta Land Grant, the exterior boundaries of said tract being more particularly described as follows, to-wit:

 

Beginning at a point on the original South boundary of the Cebolleta Land Grant, which point bears North 89°56’ West 4842.42 feet from the 14-mile corner or marker on the original Southern boundary of said Cebolleta Land Grant; thence due North along the Easterly boundary of the lands owned by the Cebolleta people and adjoining the L Bar Ranch lands a distance of 10,411.75 feet to a point; thence South 89°59’20” East 13,751.27 feet to a point; thence South 00°18’21” East 10,443.41 feet to a point on the original Southern boundary of the Cebolleta Land Grant, which is the Southeast corner of this tract; thence along the original Southern boundary of the Cebolleta Land Grant North 

 

30

 

89°47’ West a distance of 1,081.2 feet; thence North 89°47’ West a distance of 2,638.35 feet to a point; thence North 89°57’ West a distance of 5,245.68 feet to a point’ thence North 89°56’ West 4,842.42 feet to the place and point of a beginning;

 

EXCEPTING AND EXCLUDING all portions of said South L Bar Tract lying and being East of the Exxon Mineral Fee West Boundary Line as set forth in that certain Quitclaim deed from Sohio Petroleum Company and Reserve Oil and Minerals Corporation as Grantors to Exxon Company, U.S.A. as Grantee dated February 11, 1974 and recorded in Volume 248, pages 5135-5137 of the official records of Valencia County, New Mexico;

 

ALSO EXCEPTING AND EXCLUDING all portions of said South L Bar Tract lying and being within the boundaries of “Tract I” as described in that certain Special Warranty Deed dated December 31, 1963 from Jno. Hampton and Hazel E. Hampton, husband and wife, et al as Grantors to Cebolleta Land Grant as Grantee, recorded in Volume 151 at page 196, official records of Valencia County, New Mexico;

 

ALSO EXCEPTING AND EXCLUDING all portions of said South L Bar Tract lying and being within the boundaries of the “DOE Tract” as described in Exhibit “A” to Warranty and Quitclaim Deed dated September 22, 2004 from Sohio Western Mining Company as Grantor to United States of America as Grantee, recorded in volume 13 at page 9438, official records of Cibola County, New Mexico;

 

ALSO EXCEPTING AND EXCLUDING a tract bound on the North by the North line of the South L Bar Tract; bound on the West by the East line of “Tract I” as described in that certain Special Warranty Deed dated December 31, 1963 from Jno. Hampton and Hazel E. Hampton, husband and wife, et al as Grantors to Cebolleta Land Grant as Grantee, recorded in volume 151 at page 196, official records of Valencia County, New Mexico; bound on the South by the North line of the “DOE Tract” as described in Exhibit “A” to Warranty and Quitclaim Deed dated September 22, 2004 from Sohio Western Mining Company as Grantor to United States of America as Grantee, recorded in volume 13 at page 9438, official records of Cibola County, New Mexico; and bound on the East by the following described line: beginning at the Northeast corner of the “DOE Tract” as described in Exhibit “A” to Warranty and Quitclaim Deed dated September 22, 2004 from Sohio Western Mining Company as Grantor to United States of America as Grantee, recorded in volume 13 at page 9438, official records of Cibola County, New Mexico; thence due North to the North line of said South L Bar tract.

 

“St. Anthony Tracts”

 

Township 11 North, Range 5 West of the N.M.P.M.

 

Section 23: All that portion of Section 23 lying and being South of the South Line of the Original Boundary of the Cebolleta Land Grant.

Section 24: All that portion of Section 24 lying and being South of the South Line of the Original Boundary of the Cebolleta Land Grant.

 

31

 

Section 25: N1⁄2

Section 26: N1⁄2

 

Township 11 North, Range 4 West of the N.M.P.M.

 

Section 19: All that portion of Section 19 lying and being South of the South Line of the Original Boundary of the Cebolleta Land Grant.

Section 20: All that portion of Section 20 lying and being South of the South Line of the Original Boundary of the Cebolleta Land Grant.

Section 21: All that portion of Section 21 lying and being South of the South Line of the Original Boundary of the Cebolleta Land Grant.

Section 22: All that portion of Section 22 lying and being South of the South Line of the Original Boundary of the Cebolleta Land Grant.

Section 23: SW1⁄4

Section 26: NW1⁄4

Section 27: All

Section 28: All

Section 29: N1⁄2

Section 20: N1⁄2

 

Total acreage subject to this lease: 6,717.0, more or less

 

II                                        Unpatented Mining Claims

 

The following described unpatented lode mining and millsite claims situated in Cibola County, New Mexico:

 

	
 
    	
County Recording
   Claim Name
    	
 
    	
Book
    	
 
    	
Page
    	
 
    	
BLM Serial Number
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
None
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

III                                   Water Rights

 

Such rights as granted pursuant to Section 17 of the LA MERCED del PUEBLO DE CEBOLLETA lease dated April 6, 2007.

 

32

 

Exhibit B

To

Mortgage, Security Agreement,

Assignment of Leases and Rents and

Fixture Filing

 

 

Operating Equipment

 

 

ALL EQUIPMENT OWNED EXCEPT WHERE INDICATED

 

	
Equipment
    	
 
    	
Make/Model
    	
 
    	
 
    	
 
    	
 
    
	
Number
    	
 
    	
MAJOR EQUIPMENT
    	
 
    	
Serial Number
    	
 
    	
Cat Lease
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
NONE
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

33

 

Light Vehicles

 

	
EQUIP. #
    	
 
    	
YEAR
    	
 
    	
MAKE
    	
 
    	
TYPE
    	
 
    	
MODEL
    	
 
    	
SERIAL #
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
NONE
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

34

 

Exhibit C

To

Mortgage, Security Agreement,

Assignment of Leases and Rents and

Fixture Filing

 

 

Material Agreements

 

 

 

No other Material Agreement other than disclosure in Exhibit A, Section I.(B).

 

 

Exhibit D

To

Mortgage, Security Agreement,

Assignment of Leases and Rents and

Fixture Filing

 

 

List of Title Reports and Opinions

 

 

Neutron Energy, Inc. Project, Fee Land Title Report, Portions of the Juan Tafoya Land Grant and Portions of the Cebolleta Land Grant, Cibola, McKinley and Sandoval Counties, New Mexico, prepared by Cortney E. Stewart at the request of Bensing Associates, Inc., March 15, 2010.

 

Fee Title Opinion dated October 10, 2006 by Rodey, Dickason, Sloan, Akin and Robb, P.A. re:  Fee land in McKinley and Sandoval Counties, New Mexico within the Town on Cebolleta Land Grant.

 

Mineral Fee Title Opinion dated April 27, 2007 by Rodey, Dickason, Sloan, Akin and Robb, P.A. re:  Fee land in Cibola County, New Mexico.

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