Common use of Security Covenants Clause in Contracts

Security Covenants. With respect to any Production Proceeds (as defined in the Mortgages) received by Company or any of its Subsidiaries which constitute (i) payment of oil or gas proceeds received on account of, or for the benefit of, any third-party owner of oil or gas interests or (ii) taxes, charges, costs and expenses that are required to be paid on account of such Production Proceeds on account of, or for the benefit of, any third-party owner of oil or gas interests (the items in clauses (i) and (ii), the "THIRD-PARTY PRODUCTION PROCEEDS"), the Company shall, and shall cause its Subsidiaries to, segregate that portion of Production Proceeds received on any day constituting Third-Party Production Proceeds into a segregated Deposit Account (as defined in the Security Agreement) covered by an Account Control Agreement (as defined in the Security Agreement) which only has Third-Party Production Proceeds on deposit therein at any time. Company shall, and shall cause its Subsidiaries to, deposit all Production Proceeds not constituting Third-Party Production Proceeds into a Deposit Account of the Company or one of its Subsidiaries which does not contain Third-Party Production Proceeds or any other Production Proceeds that are subject to an ownership interest or other claim by any third-party. The Company shall provide written notice to the holders of the Notes as to which Deposit Account is segregated for Third-Party Production Proceeds, and shall not change the Deposit Account segregated for Third-Party Production Proceeds without prior written consent of the holders of the Notes. Notwithstanding anything else to the contrary contained in this Agreement or any Transaction Document, Company shall, and shall cause its Active Subsidiaries to, enter into Mortgages covering all Real Property located in the State of Kansas within thirty (30) days of the Initial Closing and, in connection therewith, shall simultaneously deliver to the Buyers an opinion from Kansas counsel acceptable to the Buyers with respect to (i) the creation and perfection of the security interests purported to be created by such Mortgages, (ii) the compliance of such Mortgages with applicable laws, (iii) taxes, fees or other charges required under applicable laws in connection with the filing of such Mortgages, and (iv) such other opinions with respect to the Mortgages as reasonably requested by the Buyers, in each case in form and substance substantially similar to the opinions received by the Buyers in connection with the Mortgages filed in connection with the Initial Closing. The Company shall, and shall cause its Subsidiaries to, engage in the businesses conducted by such Persons as of the date hereof (and businesses related or complimentary thereto) and preserve, renew and keep in full force and effect their respective material rights, privileges and franchises necessary or desirable in the normal conduct of their business, including receiving, collecting and enforcing their rights to receive payment of Production Proceeds, enforcing liens and security interests in respect thereof and protecting their interests in and to all Production Proceeds. Immediately upon creation of any Active Subsidiary or any Inactive Subsidiary's becoming an Active Subsidiary, the Company shall immediately pledge or cause to be pledged to the Buyers the stock of such new Active Subsidiary in accordance with the terms of the Pledge Agreement, and cause such Active Subsidiary to enter into the Guaranty and the Security Agreement and such other Security Documents as necessary to grant to the Buyers a security interest in, and lien on, substantially all of the assets of such new Active Subsidiary, and comply with the terms thereof.

Security Covenants. With respect to any (i) All Production Proceeds (as defined in the Mortgages) received by Company or any of its Subsidiaries which constitute shall initially be deposited in a Deposit Account (ias defined in the Security Agreement) (the “Initial Account”). The Company shall, and shall cause its Subsidiaries to, provide that all Production Proceeds in the Initial Account not constituting (A) payment of oil or gas proceeds received on account of, or for the benefit of, any third-party owner of oil or gas interests interests, including royalty, rentals, overriding royalties and third party working interest payments, or (iiB) taxes, charges, costs and expenses that are required to be paid on account of such Production Proceeds on account of, or for the benefit of, any third-party owner of oil or gas interests (the items in clauses (iA) and (iiB), the "THIRD-PARTY PRODUCTION PROCEEDS"), the Company shall, and shall cause its Subsidiaries to, segregate that portion of Production Proceeds received on any day constituting “Third-Party Production Proceeds Proceeds”) be periodically (and in no event later than two (2) Business Days after their deposit into the Initial Account) swept pursuant to a segregated Deposit Account (as defined in the Security Agreement) covered by an Account Control Agreement (as defined in the Security Agreement) which only has Third-Party Production Proceeds on deposit therein at any time. Company shall, and shall cause its Subsidiaries to, deposit all Production Proceeds not constituting Third-Party Production Proceeds standing sweep order into a Deposit Account of the Company or one of its Subsidiaries which that does not contain Third-Party Production Proceeds or any other Production Proceeds that are subject to an ownership interest or other claim by any third-partyparty and that is covered by an Account Control Agreement (the “Segregated Account”). Notwithstanding the foregoing, lease operating expenses, rents, overriding royalties and production, revenue, excise, gathering and other taxes required to be paid by the Company or any of its Subsidiaries on account of Production Proceeds deposited into the Initial Account on account of the Company or such Subsidiary shall not be required to be swept into the Segregated Account if such amounts are paid by the Company or such Subsidiary within two (2) Business Days after their deposit in the Initial Account. (ii) The Company shall not, and shall not permit its Subsidiaries to, deposit funds other than Production Proceeds in the Initial Account, and the Company shall provide written notice to the holders of the Notes as to which Deposit Account is segregated for Third-Party Production Proceedsthe Segregated Account. (iii) The Company shall not change or move the Segregated Account unless an Account Control Agreement is in place with respect to the Deposit Account to which the Segregated Account is to be changed or moved. (iv) The Company shall not, and shall not change the Deposit Account segregated for Third-Party Production Proceeds without prior written consent permit any of the holders of the Notes. Notwithstanding anything else to the contrary contained in this Agreement or any Transaction Document, Company shall, and shall cause its Active Subsidiaries to, enter into Mortgages covering all Real Property located engage to any substantial extent in any business other than the State business in which the Company and its Subsidiaries are engaged on the date of Kansas within thirty this Agreement (30) days which, for purposes of the Initial Closing and, in connection therewiththis Section 4(t)(iv), shall simultaneously deliver be deemed to the Buyers an opinion from Kansas counsel acceptable to the Buyers with respect to include coal mining and exploration activities in Australia) and business reasonably related thereto or in furtherance thereof. (iv) the creation and perfection of the security interests purported to be created by such Mortgages, (ii) the compliance of such Mortgages with applicable laws, (iii) taxes, fees or other charges required under applicable laws in connection with the filing of such Mortgages, and (iv) such other opinions with respect to the Mortgages as reasonably requested by the Buyers, in each case in form and substance substantially similar to the opinions received by the Buyers in connection with the Mortgages filed in connection with the Initial Closing. The Company shall, and shall cause its Subsidiaries to, engage in the businesses conducted by such Persons as of the date hereof (and businesses related or complimentary thereto) and preserve, renew and keep in full force and effect their respective material rights, privileges and franchises necessary or desirable in the normal conduct of their business, including receiving, collecting and enforcing their rights to receive payment of Production Proceeds, enforcing liens and security interests in respect thereof and protecting their interests in and to all Production Proceeds. therein. (vi) Immediately upon creation of any Active a Subsidiary or acquisition of an equity interest in any Inactive Subsidiary's becoming an Active Subsidiaryentity, the Company shall immediately pledge or cause to be pledged to the Buyers the stock of such new Active Subsidiary equity interest (including any securities representing such interest) in accordance with the terms of the Pledge Agreement, Agreement and shall cause such Active Subsidiary entity, upon its becoming a Subsidiary, to enter into the Guaranty and the Security Agreement and such other Security Documents as necessary to grant to the Buyers a valid, perfected first priority security interest in, and lien on, substantially all of the assets of such new Active SubsidiarySubsidiary (other than assets located in Australia or as provided in Section 4(n)(d) or 4(o)(ii)), and comply with the terms thereof. (vii) Within ten (10) Business Days after the Company or any of its Subsidiaries loans or invests any funds for the development of any Real Property located in the State of California or the State of Kansas or in Canada, in either case in excess of $250,000, the Company and its Subsidiaries shall grant to Buyers a valid, perfected first priority security interest in all of the Real Property located in the State of California or the State of Kansas or in Canada, as the case may be.