PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (the “Agreement”) is entered into effective as
of August 6, 2007 (the "Effective Date") by and between J. Dick Eastman and Cody
Eastman, husband and wife,, Stephen M. Rae, a single man dealing with his sole
and separate property, and David A. Rae, a single man dealing with his sole and
separate property (collectively "Owner”), and Bolsa Resources, Inc., an Arizona
corporation ("Bolsa").

 

RECITALS:

 

WHEREAS, Owner is the owner of certain patented mining claims and other real
property situated in Cochise County, Arizona, which patented mining claims and
other properties are more particularly described in Exhibit A, attached hereto
and incorporated herein by this reference, which, together with all extralateral
rights and all mines, minerals, mineral substances, deposits, ores, ore bearing
materials, metals, tailings, dumps, mine waste and all other materials of any
type whatsoever, including water and water rights, in, on, under or benefiting
the real property, are herein referred to as the "Property";

WHEREAS, Owner desires to sell the Property to Bolsa and Bolsa desires to
purchase the Property from Owner; and

WHEREAS, Bolsa and Owner desire to enter into this Agreement setting forth their
respective rights and obligations with respect to the purchase and sale of the
Property.

NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein, and other good and valuable consideration, Owner and Bolsa agree
as follows:

 

1. Sale of Property

Owner hereby agrees to sell, grant, convey and transfer to Bolsa, and Bolsa
hereby agrees to purchase and accept from Owner the Property, together with all
rights and interests appurtenant thereto or located thereon, including
rights-of-way and easements pertaining to or used in connection with the
Property. The term Property shall also include all right, title and interest in
and to improvements and fixtures owned by Owner appurtenant to or benefiting the
Property.

 

2. Purchase Price

The purchase price for the Property shall be One Million Three Hundred Thousand
Dollars ($1,300,000.00) (the “Purchase Price”) payable as follows:

 

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i.

On the Effective Date, the sum of Ten Thousand Dollars ($10,000.00) (the
"Earnest Money") shall be deposited by Bolsa with the Escrow Agent designated
pursuant to Section 3 hereof;

 

ii.

Prior to the closing of the sale of the Property, the additional sum of Two
Hundred Fifty Thousand Dollars ($250,000.00) (the "Initial Payment") shall be
paid by Bolsa to Escrow Agent in cash, cashier's check or other immediately
available funds; and

 

iii.

Prior to the closing of the sale of the Property, the balance of the purchase
price, in the amount of One Million Forty Thousand Dollars ($1,040,000.00), by
the delivery of a Promissory Note, fully executed by Bolsa in favor of Owner, to
Escrow Agent. The Promissory Note shall provide for four semi-annual payments of
principal, each in the amount of Two Hundred Sixty Thousand Dollars
($260,000.00), together with semi-annual payments of interest on the unpaid
balance of the Promissory Note at the simple rate of seven percent (7%) per
annum. The first semi-annual payment of principal and interest shall be due on
the date six (6) months following the date of closing and subsequent payments
shall be due each six (6) months thereafter. The Promissory Note shall provide
for a grace period of ten (10) days following a payment due date and in the
event payment is not made within such ten (10) day period, there shall be due
and payable a late payment fee of One Thousand Dollars ($1,000.00) for each such
late payment.

 

The Promissory Note shall be a non-recourse, purchase money note in the form of
Exhibit B, attached hereto and incorporated herein by this reference. The
Promissory Note shall be secured by a purchase money first Deed of Trust on the
Property, which deed of trust shall be in the form of Exhibit C, attached hereto
and incorporated herein by this reference.

 

3. Conditions of Closing

A. Preliminary Title Report. Within ten (10) days of the Effective Date, Owner
shall provide Bolsa, at Owner's expense, a standard form coverage preliminary
title report for the Property, together with legible copies of all documents
shown as exceptions in the report, and a title commitment for a standard form
owner’s title insurance policy. Within ten (10) days after receipt of all such
documents, Bolsa shall provide written notice to Owner specifying any
encumbrances or exceptions in the report which are not acceptable to Bolsa. If
amendments to the preliminary title report are issued, Bolsa will have ten (10)
days after receipt of any such amendment to review and notify Owner of any
objections to such amendment, including any survey exception added to the title
commitment. All encumbrances and exceptions not

 

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specifically rejected to by Bolsa pursuant to the provisions hereof shall
constitute "Permitted Encumbrances."

 

Within ten (10) days of Bolsa’s notice, Owner shall provide Bolsa with notice
specifying whether Owner elects to attempt to cure the matter or matters to
which an objection has been raised. If Owner elects not to cure any such
matters, then Bolsa shall have ten (10) days following Owner's notice to either:
(i) waive the matter or matters to which objection has been raised; or (ii) to
terminate this Agreement. If this Agreement is terminated by Bolsa pursuant to
the provisions hereof, then Escrow Agent shall, without further instructions
from either party, deliver to Bolsa the Earnest Money and thereafter Bolsa shall
have no further liabilities or obligations pursuant to the provisions of this
Agreement.

B. Delivery of Documents. Within ten (10) days of the Effective Date, Owner
shall deliver to Bolsa copies of all documents, agreements and studies relating
to the Property which are in the possession of Owner or are reasonably available
to Owner, including, but not limited to: title documents including deeds,
abstracts of title and agreements and contracts affecting the Property including
lease and occupancy agreements; documents concerning the nature, quality,
quantity, scope or ownership of ores, minerals, mines and wells or water rights
on or appurtenant to the Property; documents pertaining to the zoning of the
Property; all existing surveys, soil reports, production records, engineering
studies, environmental audits or reports or any similar type of information
pertaining to the Property; and all environmental data, information and reports
relating to the Property.

C. Inspection Period. Bolsa shall have a period of forty five (45) days
following the Effective Date (the "Inspection Period") to inspect the Property
and to conduct such studies and investigations regarding feasibility, utilities,
access, zoning, governmental approvals, environmental and other hazards,
including hazardous waste, the condition of the improvements and any other
matters which it wishes to study or investigate. Bolsa shall have the right to
enter on the Property at any time during such period for the purpose of
inspecting and studying the Property and for any other purposes related to its
investigation of the Property. All such inspections and investigations shall be
at the sole expense of Bolsa. Bolsa shall repair any damage caused by its
investigations and inspections and shall indemnify and hold Owner harmless from
and against any and all losses, damages, costs or expenses incurred by Owner as
a direct result of such investigations, studies or inspections. Owner agrees to
cooperate with Bolsa during the Inspection Period and to furnish Bolsa such
documents, instruments and other information concerning the Property as Bolsa
may, from time to time, reasonably request.

 

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At any time during the Inspection Period, Bolsa may elect to terminate this
Agreement if Bolsa determines for any reason, in its sole and absolute
discretion, that it does not desire to purchase the Property. In such event,
Bolsa shall provide written notice thereof to Owner. Escrow Agent shall, without
further instructions from either party, deliver to Bolsa the Earnest Money and
thereafter Bolsa shall have no further liabilities or obligations pursuant to
the provisions of this Agreement.

D. Survey Period. Promptly following the execution of this Agreement by all
parties, Owner and Bolsa shall select a mutually acceptable, registered Arizona
land surveyor to provide a boundary survey of the Property with monumented
corners, together with a survey plat depicting the boundary of the Property and
all corners thereof. The survey shall be delivered to Owner and Bolsa within
sixty (60) days following the Effective Date (the “Survey Period”). If the
survey can not be completed during the Survey Period, the Survey Period shall be
extended until ten (10) days following the delivery of the final survey to Owner
and Bolsa. Owner and Bolsa shall each pay one-half (1/2) of the cost of the
survey, which shall be paid out of escrow at the closing.

At any time during the ten (10) day period following the delivery of the survey
to Owner and Bolsa, Bolsa may elect to terminate this Agreement if Bolsa
determines, in its sole discretion reasonably exercised, that the survey reveals
adverse information with respect to the Property or the location of any material
portion thereof. In such event, Bolsa shall provide written notice thereof to
Owner and Escrow Agent and Escrow Agent shall, without further instructions from
either party, deliver to Bolsa the Earnest Money and thereafter Bolsa shall have
no further liabilities or obligations pursuant to the provisions of this
Agreement; provided, however, that Owner and Bolsa shall each be responsible for
the payment of one-half (1/2) of the cost of the survey.

 

4. Escrow Agent; Delivery; Closing

A. Escrow Agent. Owner and Bolsa hereby designate Pioneer Title Agency, Benson,
Arizona to serve as escrow agent (herein "Escrow Agent"), subject to the terms
and conditions of this Agreement. This Agreement shall constitute escrow
instructions to the Escrow Agent. Bolsa and Owner shall execute such additional
reasonable escrow instructions as shall be consistent with this Agreement and
reasonably required by Escrow Agent. In the event of any conflict between such
escrow instructions and this Agreement, the terms and conditions of this
Agreement shall control. The fees and costs of the Escrow Agent shall be paid
equally by Owner and Bolsa.

B. Delivery by Owner. Prior to the closing, Owner shall deliver to Escrow Agent
a fully executed and acknowledged Warranty Deed, in the form of Exhibit D
attached hereto and incorporated herein by this reference, conveying to Bolsa
all right, title and interest in and to the Property free and clear of all
liens, claims and encumbrances of any type whatsoever, except Permitted
Encumbrances. Owner shall cause to be

 

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delivered to Bolsa, through Escrow Agent, a standard form owner’s policy of
title insurance insuring title to the Property in favor of Bolsa in the amount
of the Purchase Price, subject only to Permitted Encumbrances. The cost of the
title policy shall be paid by Owner. Owner shall execute such other documents
and perform such additional acts as Bolsa or Escrow Agent may reasonably require
to effect the transfer of the Property to Bolsa, including any documents or
forms required to transfer water rights, if any.

C. Delivery by Bolsa. Bolsa shall pay to Escrow Agent the Initial Payment and
shall deliver to Escrow Agent the executed Promissory Note, in the form of
Exhibit B hereto, and the fully executed and acknowledged Deed of Trust, in the
form of Exhibit C hereto. Bolsa shall execute such other documents and perform
such additional acts as Owner and Escrow Agent may reasonably require to
complete the sale of the Property.

D. Closing. Closing shall take place within ninety (90) days from the Effective
Date, provided, however, that if the Survey Period is extended pursuant to the
provisions of Section 3 (D) hereof, the Closing shall be extended to a date
which is not less than fifteen (15) days following the end of the Survey Period.
Upon receipt of all funds and documents required to complete the transaction,
Escrow Agent shall cause the Warranty Deed and Deed of Trust to be recorded in
Cochise County, Arizona and shall deliver to Owner the Promissory Note and all
funds due it. Ad valorem taxes shall be prorated between the parties. Owner
shall bear the cost of all transfer and other taxes assessed on the conveyance
and the Purchase Price. All fees and expenses of the escrow and closing not
specifically the responsibility of a party pursuant to the terms and conditions
of this Agreement shall be paid from escrow and allocated between the parties as
is customary for transactions of this type in Cochise County, Arizona.

 

5. Owner Warranties

Owner represents and warrants to Bolsa as follows: that Owner is the sole owner
of and has the exclusive possession of the Property free and clear of all
claims, liens, encumbrances, royalties, options, agreements or rights of
third-parties whatsoever, except as specifically set forth in Exhibit A hereto;
that all necessary taxes and assessments have been timely made in accordance
with all applicable local, state and federal laws; that Owner is in actual
possession of the Property and knows of no claim to or possession of the
Property adverse to Owner; and that Owner has the full right, power and capacity
to enter into this Agreement on the terms and conditions herein contained. Owner
covenants that the status of the Property, as represented above, shall not be
affected adversely because of any act or omission on the part of Owner during
the term of this Agreement. Owner hereby further represents and warrants to
Bolsa, its successors and assigns: that the consummation of this Agreement will
not result in or constitute a default or an event that, with notice or lapse of
time or both, would be a default, breach or violation of any contract,
commitment or arrangement to which Owner is a party or by which Owner is bound;
that Owner shall not create, permit or

 

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suffer any liens or encumbrances, reservations, restrictions or easements on the
Property; that to the best of Owner's knowledge, there are no environmental or
physical conditions on the Property which are, or would be, a violation of any
applicable federal, state or local law, regulation or ordinance and that Owner
has not received any notice of any investigation of any such condition or
violation; that Owner has good right and lawful authority to convey the
Property; and that Owner shall defend the title to the Property against the
lawful claims of all persons whomsoever.

 

6. Bolsa Warranties

Bolsa represents and warrants to Owner as follows: Bolsa has full power and
authority to enter into and perform this Agreement in accordance with the terms
and conditions hereof; and the individual executing this Agreement on behalf of
Bolsa is authorized to do so, and, upon execution, this Agreement shall be
binding and enforceable upon Bolsa.

 

7. Lesser Interest Provision

If Owner's title to the Property (or any portion thereof) is less than the
entire undivided interest in and to the Property or is subject to a superior
adverse interest, Bolsa shall have the right to elect to accept such title as
Owner has by giving notice of such election to Owner. Since the Purchase Price
is predicated upon Owner owning the entire undivided interest in the Property
free and clear of any superior adverse interests, if Owner owns less than the
entire interest, or such interest is subject to a superior adverse interest,
then the Purchase Price shall be reduced proportionately. Properties represented
as being fractional interests in Exhibit A hereto shall not be deemed or
regarded as insufficient by virtue of being fractional or partial interests,
unless the actual interest owned is less than the fractional interest
represented in Exhibit A.

 

8. Real Estate Commissions

Bolsa and Owner each represent to the other that no real estate brokers or other
parties have been involved in connection with this transaction that are entitled
to a commission or other compensation as a result of this Agreement other than
Cochise County Realty, Sunsites, Arizona who was retained by Owner and whose
commission shall be paid solely by Owner. Bolsa and Owner do each hereby agree
to indemnify and hold the other harmless from and against any costs, expenses or
liability for compensation, commissions or charges which may be claimed by any
broker, finder or other similar party, by reason of any dealings or actions of
the other party.

 

 

 

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9. Default

In the event Owner or Bolsa considers that the other party has not complied with
any material obligation hereunder, either express or implied, such party shall
give notice to the other setting forth with specificity in what respect it is
claimed that there is a material default under this Agreement. The giving of
such notice and the passage of fifteen (15) days after its effective date
without the receiving party commencing action reasonably designed to cure the
alleged default and thereafter diligently pursue the same to completion, shall
give rise to an "Event of Default."

In the case of an Event of Default on the part of Owner, Bolsa's exclusive
remedies for such failure shall be to: (i) terminate this Agreement and receive
a refund of the Earnest Money; (ii) waive the default and proceed with closing;
or (iii) institute an action for specific performance. Owner hereby acknowledges
that the Property is unique and that, accordingly, it would be equitable for any
court of competent jurisdiction to order the specific performance by Owner of
Owner’s obligations hereunder.

In the case of an Event of Default on the part of Bolsa, Owner's exclusive
remedies for such failure shall be to: (i) waive the default and proceed with
closing; or (ii) terminate this Agreement and retain the Earnest Money as
liquidated damages. Buyer acknowledges that Owner’s actual damages for a breach
of this Agreement by Bolsa would be difficult to determine and that the Earnest
Money represents a reasonable and good faith estimate of damages in the event of
a default by Bolsa.

If either Owner or Bolsa in good faith contest the existence of an Event of
Default, it shall provide written notice of the same to the other party, and
thereafter no remedy shall be exercised pursuant to the terms and conditions of
this Agreement until there has been secured from a court of competent
jurisdiction a final judicial determination of the existence of an Event of
Default. Bolsa and Owner agree that prior to commencing any legal action or
proceeding pertaining to any disputed matter arising from or related to this
Agreement, such matter shall be first submitted to non-binding mediation;
provided, however, that such obligation shall not limit or impede Bolsa’s right
to seek specific performance pursuant to the terms and conditions of this
Agreement. All mediation costs shall be paid equally by Bolsa and Owner.

 

10. Risk of Loss.

Owner shall bear the risk of loss during the term of this agreement and shall
immediately notify Bolsa of damage or destruction to the Property. Bolsa shall
then have the right, at Bolsa’s option, to cancel this Agreement within fifteen
(15) days following such notice. If Bolsa terminates this Agreement, the Earnest
Money shall be paid to Bolsa by the Escrow Agent and thereafter Bolsa shall have
no further obligations or liabilities pursuant to the terms of this Agreement.
If Bolsa does not cancel this Agreement pursuant to the provisions hereof, Owner
shall assign to Bolsa all insurance proceeds and rights to insurance proceeds
arising from such damage or destruction.

 

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  11. Notice

All notices required or permitted hereunder shall be in writing and shall be
effective when personally delivered or when deposited, postage prepaid,
certified or registered in the United States mail, addressed as follows:

 

 

If to Owner:

 

David A. Rae and Stephen M. Rae,

 

 

 

 

J.Dick Eastman, Cody Eastman

 

 

 

 

PO.Box 68

 

 

 

 

Bowie,AZ 85605

 

 

 

 

 

 

 

with a copy to:

 

Allred Law Office,P.C.

 

 

 

 

151-B S.Haskell Ave

 

 

 

 

Willcox,AZ 85643

 

 

 

 

 

 

 

If to Bolsa:

 

President

 

 

 

 

Bolsa Resources, Inc.

 

 

 

 

5554 S. Prince St. Suite 200

 

 

 

 

Littleton, CO 80120

 

 

 

 

 

 

 

with a copy to:

 

Bensing and Associates, Inc.

 

 

 

 

P.O. Box 805

 

 

 

 

Franktown, CO 80116

 

Any party providing notice hereunder shall provide a copy of such notice to the
Escrow Agent at the address designated by Escrow Agent for purposes of such
notice. Either party may change its address for purposes of future notice by
providing notice to the other as set forth above.

 

12. Force Majeure

The obligations of either party hereunder shall be suspended to the extent and
for the period that performance is prevented by any cause, whether foreseeable
or unforeseeable, beyond its reasonable control, including, without limitation:
labor disputes (however arising and whether or not employee demands are
reasonable or within the power of the party to grant); acts of God; laws,
regulations, orders, proclamations, instructions or requests of any government
or governmental entity; judgments or orders of any court; inability to obtain on
reasonably acceptable terms and within such reasonable periods of time as are
customary in the jurisdiction, any public or private license, permit or other
authorization; curtailment or suspension of activities to remedy or avoid an
actual or alleged, present or prospective violation of federal, state or local
environmental standards; acts of war or terrorism or conditions arising out of
or attributable to war or terrorism, whether declared or undeclared; riot, civil
strife, insurrection or rebellion; fire, explosion, earthquake, storm, flood,
sink holes, drought or other adverse weather condition; delay or failure by

 

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suppliers or transporters of materials, parts, supplies, services or equipment
or by contractors' or subcontractors' shortage of, or inability to obtain labor,
transportation, materials, machinery, equipment, supplies, utilities or
services; accidents; breakdown of equipment, machinery or facilities; or any
other cause whether similar or dissimilar to the foregoing. The affected party
shall promptly give notice to the other party of the suspension of performance,
stating therein the nature of the suspension, the reasons therefore, and the
expected duration thereof. The affected party shall resume performance as soon
as reasonably possible.

 

13. Assignment; Binding Effect

The rights and obligations of either party pursuant to this Agreement may be
assigned in its entirety, provided such assignment or transfer is made expressly
subject to this Agreement and require the assignee to assume and agree in
writing to perform all of the obligations of the assignor under this Agreement.
No such transfer shall be effective as between the parties until the delivery to
the non-transferring party of satisfactory evidence of such transfer.

This Agreement and the terms and conditions hereof shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
successors and assigns.

 

14. Miscellaneous

The title headings in this Agreement are inserted for convenience only and shall
not be deemed to be a part of this Agreement. This Agreement constitutes the
sole understanding of the parties with respect to the subject matter hereof and
no modification or alteration of the terms hereof shall be binding unless such
modification or alteration shall be in writing, executed subsequent to the
Effective Date by all of the parties hereto. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same agreement. Time is of the
essence hereunder. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Arizona. This Agreement shall not be
recorded.

 

 

 

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                IN WITNESS WHEREOF, Owner and Bolsa have executed this PURCHASE
AND SALE

 

AGREEMENT as of the Effective Date.

 

"Owner"

"Bolsa"

 

 

Bolsa Resources Inc.

/s/ J. Dick Eastman

J. Dick Eastman

By /s/ Fred W. Warnaars

 

Its Chairman

 

 

/s/ Cody Eastman

Cody Eastman

 

/s/ Stephen M. Rae

Stephen M. Rae

 

/s/ David A. Rae

David A. Rae

 

STATE OF COLORADO

COUNTY OF ARAPAHOE

)
)
)

 

 

The foregoing instrument was acknowledged before me this 10th day of August
2007, by Fred Warnaars the Chairman of Bolsa Resources, Inc., an Arizona
corporation.

 

 

/s/ Doris S. Wasson

 

 

Notary Public

My Commission Expires:

 

 

9-30-08

 

 

 

 

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STATE OF NEW YORK

COUNTY OF NEW YORK

)
)
)

 

 

The foregoing instrument was acknowledged before me this 6th day of August 2007,
by J. Stephen M. Rae.

 

 

/s/ Steven E. Hiller

 

 

Notary Public

My Commission Expires:

 

 

11/30/09

 

 

 

 

STATE OF NEW YORK

COUNTY OF NEW YORK

)
)
)

 

 

The foregoing instrument was acknowledged before me this 6th day of August 2007,
by David A. Rae.

 

 

/s/ Steven E. Hiller

 

 

Notary Public

My Commission Expires:

 

 

11/30/09

 

 

 

 

STATE OF ARIZONA

COUNTY OF COCHISE

)
)
)

 

 

The foregoing instrument was acknowledged before me this 6th day of August 2007,
by J. Dick Eastman and Cody Eastman, husband and wife.

 

 

/s/ Victoria L. Cranford

 

 

Notary Public

My Commission Expires:

 

 

January 30, 2011

 

 

 

 

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EXHIBIT A

 

The “Property” which is the subject of the Purchase and Sale Agreement to which
this Exhibit A is attached is comprised of all real property and patented mining
claims owned by “Owner” in Sections 17, 21, 27, 28, 29 and 32, T.19S., R.25E.
G&SRM, Cochise County, Arizona, including:

 

Sections 17

Gift Lode, Cyclone and Poorman patented mining claims.

 

Section 21

Key, Parsia, Australia (undivided 1/2 interest), Oneida and Empire patented
mining claims.

 

Section 27

NW1/4 and W1/2NE1/4, surface and minerals.

 

Section 28

Lots 1, 2, 3, 4, 5, 7 and 8, surface only, federal minerals.

 

Lots 6 and 9, surface and minerals.

 

Astio (also known as Astec) and Turquoise patented mining claims.

 

Sections 29 and 32

NW1/4, NW1/4NE1/4 and Lots 1, 2, 6, 7, 8, 9 and 10, surface only, federal
minerals.

 

Mystery, Hilltop and Queen of the Hills patented mining claims.

 

 

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EXHIBIT B  

 

 

PROMISSORY NOTE

NON-RECOURSE NOTE SECURED BY DEED OF TRUST

 

$1,040,000.00

Willcox, Arizona

 

 

_____________ ___, 2007

 

FOR VALUE RECEIVED, Bolsa Resources, Inc., an Arizona corporation (herein
“Maker”), promises to pay to J. Dick Eastman and Codi Eastman, husband and wife,
Stephen M. Rae, a single man, and David A. Rae, a single man, jointly and not
severally (herein collectively “Holder”) at ________________________________,
_____________, Arizona __________ the sum of One Million Forty Thousand Dollars
($1,040,000.00), payable as follows:

 

i.

On the date six (6) months following the date of this Promissory Note, the
principal sum of Two Hundred Sixty Thousand Dollars ($260,000.00), together with
accrued interest on the outstanding principal balance of this Promissory Note at
the simple interest rate of seven percent (7%) per annum;

 

ii.

On the date twelve (12) months following the date of this Promissory Note, the
principal sum of Two Hundred Sixty Thousand Dollars ($260,000.00), together with
accrued interest on the outstanding principal balance of this Promissory Note at
the simple interest rate of seven percent (7%) per annum;

 

iii.

On the date eighteen (18) months following the date of this Promissory Note, the
principal sum of Two Hundred Sixty Thousand Dollars ($260,000.00), together with
accrued interest on the outstanding principal balance of this Promissory Note at
the simple interest rate of seven percent (7%) per annum; and

 

iv.

On the date twenty four (24) months following the date of this Promissory Note,
the principal sum of Two Hundred Sixty Thousand Dollars ($260,000.00), together
with accrued interest on the outstanding principal balance of this Promissory
Note at the simple interest rate of seven percent (7%) per annum.

If all or any part of any payment of principal or interest in not paid within
ten (10) days after the same is due, then without notice Maker shall pay to
Holder a late-payment charge of One Thousand Dollars ($1,000.00). If all or any
part of any payment of principal or interest in not paid within fifteen (15)
days after the same is due, this Promissory Note shall be considered in default
and Holder shall be entitled to accelerate and pursue collections of the amounts
owed hereunder without notice to Maker.

This Note is secured by a Deed of Trust of even date herewith (herein the “Deed
of Trust”), to                                                        , as
Trustee.

 

 

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The obligations represented by this Promissory Note and the Deed of Trust are
without recourse to Maker. Notwithstanding anything contained in this Promissory
Note or the Deed of Trust to the contrary, the sole and exclusive remedy of the
holder of this Promissory Note for any breach or default under this Promissory
Note or the Deed of Trust shall be to cause the sale of the property that is
encumbered by the Deed of Trust by judicial foreclosure or other legal means,
and Maker shall not be subject to any suit or action or have any personal
liability under this Promissory Note or the Deed of Trust, and no property or
assets of Maker, other than the property that is encumbered by the Deed of
Trust, shall be subject to attachment, levy or other process on account of any
breach or default by Maker under this Promissory Note or the Deed of Trust.

Principal and interest shall be payable in lawful money of the United States of
America. This Note may be prepaid in full or in part at any time and from time
to time without penalty. The Maker and endorsers hereof severally waive demand,
presentment for payment, protest, and notice of default. Time is of the essence
in this Promissory Note.

 

BOLSA RESOURCES INC., an Arizona corporation

 

By:                                                            

 

Its:                                                              

 

 

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EXHIBIT “C”

 

At the request of and

WHEN RECORDED, RETURN TO:

ALLRED LAW OFFICE, P.C.

151-B S. Haskell Ave.

Willcox, AZ 85643

 

DEED OF TRUST

DATE:

 

TRUSTOR:

Bolsa Resources, Inc., an Arizona corporation;

TRUSTOR'S MAILING ADDRESS: 5554 S. Prince St. Suite 200, Littleton, CO 80120

 

BENEFICIARIES: J. Dick Eastman and Cody Eastman, husband and wife, Stephen M.
Rae, a single man dealing with his sole and separate property, and David A. Rae,
a single man dealing with his sole and separate property;

BENEFICIARY'S MAILING ADDRESS: c/o 151-B S. Haskell Ave., Willcox, AZ 85643

 

TRUSTEE: PIONEER TITLE AGENCY, INC., an Arizona corporation;

TRUSTEE'S MAILING ADDRESS:

P.O. Box 1900, Sierra Vista, AZ 85636

 

PROPERTY in COCHISE County, State of Arizona, described as:

 

See Exhibit “A” attached.

 

This Deed of Trust made between the Trustor, Trustee and Beneficiary above
named, WITNESSETH: That Trustor irrevocably grants and conveys to Trustee in
Trust, with Power of Sale, the above described real property and all buildings,
improvements and fixtures located thereon or hereinafter erected thereon,
together with the leases, rents, issues, profits, or income thereof, (all of
which are hereinafter called "property income"); SUBJECT HOWEVER, to the right,
power and authority hereinafter given to and conferred upon Beneficiary to
collect and apply such property income; AND SUBJECT TO covenants, conditions,
restrictions, rights of way, and easements of record.

 

FOR THE PURPOSE OF SECURING:

 

 

A.

Performance of each agreement of Trustor herein contained.

B.         Payment of the indebtedness evidenced by a promissory note or notes
of even date herewith, and any extension or renewal thereof, in the principal
sum of One Million Forty Thousand Dollars ($1,040,000.00) executed by Trustor in
favor of Beneficiary or order.

C.         Payment of additional sums and interest thereon which may hereafter
be loaned to Trustor, or his successors or assigns, when evidenced by a
promissory note or notes reciting that they are secured by this Deed of Trust.

 

TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES:

 

1.         To keep said property in good condition and repair; not to remove or
demolish any building thereon; to complete or restore promptly and in good and
workmanlike manner any building which may be constructed, damaged, or destroyed
thereon, and to pay when due all claims for labor performed and materials
furnished therefore; to comply with all laws affecting said property or
requiring any alterations or improvements to be made thereon; not to commit or
permit waste thereof; not to commit, suffer, or permit any act upon said
property in violation of law; and do all other acts which from the character or
use of said property may be reasonably necessary, the specific enumerations
herein not excluding the general.

 

 

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2.         To provide, maintain, and deliver to Beneficiary fire insurance
policies satisfactory to and with loss payable to Beneficiary. The amount
collected under any fire or other insurance policy [shall be used to repair the
improvements covered by said policy, and to restore the premises to its previous
condition. If the Trustor elects not to use the funds to repair and restore the
premises to its previous condition, then the amount collected] may be applied by
Beneficiary upon any indebtedness secured hereby and in such order as
Beneficiary may determine, or at option of Beneficiary, the entire amount so
collected or any part thereof may be released to Trustor. Such application or
release shall not cure or waive any default or notice of Trustee's sale
hereunder or invalidate any act done pursuant to such notice.

 

3.         To appear in and defend any action or proceeding purporting to affect
the security hereof or the rights or powers of Beneficiary or Trustee; and to
pay all costs and expenses of Beneficiary and Trustee, including cost of
evidence of title and attorney's fees in a reasonable sum, in any such action or
proceeding in which Beneficiary or Trustee may appear or be named, and in any
law suit brought by Beneficiary to foreclose this Deed of Trust.

 

4.         To pay: before delinquent, all taxes and assessments affecting said
property; when due, all encumbrances, charges, and liens with interest, on said
property or any part thereof which appear to be prior or superior hereto; all
costs, fees, and expenses of this Trust, including, without limiting the
generality of the foregoing, the fees of Trustee for issuance of any Deed of
Partial Release and Partial Reconveyance or Deed of Release and Full
Reconveyance, and all lawful charges, costs and expenses in the event of
reinstatement of, following default in, this Deed of Trust or the obligations
secured, hereby.

 

Should Trustor fail to make any payment or to do any act as herein provided,
then Beneficiary or Trustee, but without obligation so to do and without notice
to, or demand upon Trustor and without releasing Trustor from any obligation
hereof, may: make or do the same in such manner and to such extent as either may
deem necessary to protect the security hereof; Beneficiary or Trustee being
authorized to enter upon said property for such purposes; appear in and defend
any action or proceeding purporting to affect the security hereof or the rights
or powers of Beneficiary or Trustee; pay, purchase, contest, or compromise any
encumbrance, charge or lien which in the judgment of either appears to be prior
or superior hereto; and, in exercising any such powers, pay necessary expenses,
employ counsel, and pay his reasonable fees.

 

5.         To pay immediately and without demand all sums expended by
Beneficiary or Trustee pursuant to the provisions hereof, together with interest
from date of expenditure at the same rate as is provided for in the note secured
by this Deed of Trust or at the highest legal rate, whichever be the greater
rate. Any amounts so paid by Beneficiary or Trustee shall become part of the
debt secured by this Deed of Trust and a lien upon said premises or shall become
immediately due and payable at option of Beneficiary or Trustee.

 

IT IS MUTUALLY AGREED:

 

6.         That any award of damages in connection with any condemnation or any
such taking, or for injury to the property by reason of public use, or for
damages for private trespass or injury thereto, [shall be sued to repair the
improvements damaged and to restore the premises to its previous condition. If
the Trustor elects not to use the damages awarded to restore the premises to its
previous condition, then the damages awarded are] [is] assigned and shall be
paid to Beneficiary as further security for all obligations secured hereby
(reserving unto the Trustor, however, the right to sue therefore and the
ownership thereof subject to this Deed of Trust), and upon receipt of such
moneys Beneficiary may hold the same as such further security, or apply or
release the same in the same manner and with the same effect as above provided
for disposition of proceeds of fire or other insurance.

 

 

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7.         That time is of the essence of this Deed of Trust, and that by
accepting payment of any sum secured hereby after its due date, Beneficiary does
not waive his right either to require prompt payment when due of all other sums
so secured or to declare default for failure so to pay.

 

8.         That at any time or from time to time, and without notice, upon
written request of Beneficiary and presentation of this Deed of Trust and said
note(s) for endorsement, and without liability therefore, and without affecting
the personal liability of any person for payment of the indebtedness secured
hereby, and without affecting the security hereof for the full amount secured
hereby on all property remaining subject hereto, and without the necessity that
any sum representing the value or any portion thereof of the property affected
by the Trustee's action be credited on the indebtedness, the Trustee may:
(a)release and reconvey all or any part of said property; (b) consent to the
making and recording, or either, of any map or plat of the property or any part
thereof; (c) join in granting an easement thereof; (d) join in or consent to any
extension agreement or any agreement subordinating the lien, encumbrance or
charge hereof.

 

9.         That upon written request of Beneficiary stating that all sums
secured hereby have been paid and upon surrender of this Deed of Trust and said
note(s) to Trustee for cancellation, and upon payment of its fees, Trustee shall
release and reconvey, without covenant or warranty, express or implied, the
property then held hereunder. The recitals in such reconveyance of any matters
or facts shall be conclusive proof of the truthfulness thereof. The grantee in
such reconveyance may be described as "the person or persons legally entitled
thereto".

 

10.       That as additional security, Trustor hereby gives to and confers upon
Beneficiary the right, power and authority, during the continuance of this
Trust, to collect the property income, reserving to Trustor the right, prior to
any default by Trustor in payment of any indebtedness secured hereby or in
performance of any agreement hereunder, to collect and retain such property
income as it becomes due and payable. Upon any such default, Beneficiary may at
any time, without notice, either in person, by agent, or by a receiver to be
appointed by a court, and without regard to the adequacy of any security for the
indebtedness hereby secured, enter upon and take possession of said property or
any part thereof, in his own name sue for or otherwise collect such property
income, including that past due and unpaid, and apply the same, less costs and
expenses of operation and collection, including reasonable attorney's fees, upon
any indebtedness secured hereby, and in such order as Beneficiary may determine.
The entering upon and taking possession of said property, the collection of such
property income, and the application thereof as aforesaid, shall not cure or
waive any default or notice of Trustee's sale hereunder or invalidate any act
done pursuant to such notice.

 

11.       That upon default by Trustor in the payment of any indebtedness
secured hereby or in performance of any agreement hereunder, Beneficiary may
declare all sums secured hereby immediately due and payable by delivery to
Trustee of written notice thereof, setting forth the nature thereof, and of
election to cause to be sold said property under this Deed of Trust. Beneficiary
also shall deposit with Trustee this Deed of Trust, said note(s) and all
documents evidencing expenditures secured hereby.

 

Trustee shall record and give notice of Trustee's sale in the manner required by
law, and after the lapse of such time as may then be required by law, Trustee
shall sell, in the manner required by law, said property at public auction at
the time and place affixed by it in said notice of Trustee's sale to the highest
bidder for cash in lawful money of the United States, payable at time of sale.
Trustee may postpone or continue the sale by giving notice of postponement or
continuance by public declaration at the time and place last appointed for the
sale. Trustee shall deliver to such purchaser its Deed conveying the property so
sold, but without any covenant or warranty, expressed or implied. Any persons,
including Trustor, Trustee, or Beneficiary, may purchase at such sale.

 

 

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After deducting all costs, fees and expenses of Trustee and of this Trust,
including cost of evidence of title in connection with sale and reasonable
attorney's fees, Trustee shall apply the proceeds of sale to payment of: All
sums then secured hereby and all other sums due under the terms hereof, with
accrued interest; and the remainder, if any, to the person or persons legally
entitled thereof, or as provided in A.R.S. §33-812. To the extent permitted by
law, an action may be maintained by Beneficiary to recover a deficiency judgment
for any balance due hereunder. In Lieu of sale pursuant to the power of sale
conferred hereby, this Deed of Trust may be foreclosed in the same manner
provided by law for the foreclosure of mortgages on real property. Beneficiary
shall also have all other rights and remedies available to it hereunder and at
law or equity. All rights and remedies shall be cumulative.

 

12.       That Beneficiary may appoint a successor Trustee in the manner
prescribed by law. A successor Trustee herein shall, without conveyance from the
predecessor Trustee, succeed to all the predecessor's title, estate, rights,
powers and duties. Trustee may resign by mailing or delivering notice thereof to
Beneficiary and Trustor.

 

13.       That this Deed of Trust applies to, inures to the benefit of, and
binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors and assigns. The term Beneficiary shall mean the owner and
holder of the note(s) secured hereby, whether or not named as Beneficiary
herein. In this Deed of Trust, whenever the context so requires, the masculine
gender includes the feminine and neuter, and the singular number includes the
plural.

 

14.       That Trustee accepts this Trust when this Deed of Trust duly executed
and acknowledged, is made a public record as provided by law. Trustee is not
obligated to notify any party hereto of pending sale under any other Deed of
Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee
shall be a party unless brought by Trustee.

 

The undersigned Trustor requests that a copy of any notice of Trustee's sale
hereunder be mailed to him at his address hereinbefore set forth.

 

Bolsa Resources Inc., Trustor

 

                                          
                                                 

By                                           
                                      

Its                                           
                                      

 

STATE OF                                                      )

 

)

 

COUNTY OF

                                             )

 

The foregoing instrument was acknowledged before me this ______ day of
________________, 2007, by ________________________________ the
______________________ of Bolsa Resources, Inc., an Arizona corporation.

 

 

_______________________________

 

Notary Public

 

My Commission Expires:

_____________________