LAND BANK LOAN/

PARTICIPATION AGREEMENT

(Revised)

 July 26, 2013

 

This Land Bank Loan/Participation Agreement revises and replaces the previous
Agreement signed and Dated July 26, 2013.

 

Land Bank Loan Ref.: Tract #1, 320 Acres, Jack County, Texas

 

This Land Bank Loan/Participation Agreement (the “LPA”) is by and between Proven
Fields Energy, LLC – The Jack County Prospect, Jack Ward, President, hereinafter
referred to as the “Participant”, and Santa Fe Land, LLC., a Texas Limited
Liability corporation (the “Land Bank”), a wholly owned subsidiary of Santa Fe
Petroleum, Inc., hereinafter referred to as “SFL”, together referred to as the
“Parties”.

 

Article I: The Financing

 

1.1 The Loan. Participant agrees, based on the terms and conditions and relying
upon the representations and warranties set forth in this Agreement, to lend to
the Land Bank, and Land Bank agrees to borrow from Participant, a loan (the
“Loan) to be more fully described in a note (the “Note”) and payable according
to the terms of the Note (the form of which is attached hereto). As a condition
to the making of any Loan, the Land Bank shall execute and deliver to
Participant a Note evidencing the terms of repayment of such Loan. The
Participant shall fund the Loan in a total amount of $340,000, with $35,000
non-refundable earnest money (“Earnest Money”) to be funded on or before July
29, 2013 and an additional $305,000 to be funded on or before the earlier of
August 26, 2013 or the final funding of that certain related Santa Fe Letz #1
Working Interest Purchase Agreement by Santa Fe Petroleum, Inc. dated the date
hereof (the “Final Funding”).

 

(the objective in para. no. 1.1 above is that the funding of the Land Bank loan
proceeds total of $340,000 must be complete at the same time the Working
Interest Purchase (WIP) amount of $1,590,950 is complete, but no later than
August 26, 2013. Otherwise, should the WIP get funded first we would have all of
the drilling funds but the land would not have been paid for. Thus, the Land
Bank funding is priority 1 to get funded vs. the WIP; otherwise we loose the
land to drill on. Bottom line, the land must be funded on or before August 26,
2013 even if the WI Purchase takes a while longer.)

1.2 Loan Due Date: The Loan will be due in two years from the date of the Final
Funding, (the “Maturity Date”), unless extended by the Parties provided that if
by August 26, 2013 there has not been a Final Funding, the parties agree that
the LPA Loan of the Earnest Money shall be voided and the Land Bank shall be
entitled to keep all Loans to date (including the Earnest Money) without any
repayment, interest, participation return, additional return or other payment
due thereon.

 

1.3 Use of Proceeds. The purpose of the Loan is to provide the investment funds
for the leasing of mineral interest acreage (MIA) for the drilling of oil and
gas well prospects. Expenses involved in the leasing and/or lease purchasing
process may include but not be limited to mineral interest lease bonus per acre,
land man services, attorney fees for title review, curative, division orders,
title certification, surveys, administrative expenses, etc. (costs). The Loan
will be used to lease and/or purchase existing leases on approximately 320+-
acres of land (the “Property”). The Property will be divided into well drilling
unit tracts of typically 40 acres each per the driller’s instruction.

 

1.4 Participation Return. Once there has been a Final Funding, a 50%
participation return will be due on or before the “Maturity Date”. For example,
if there is no sale of all or a portion of the Property prior to the Maturity
Date, then $510,000 ($340,000 of principal plus a participation return of
$170,000) shall be due on the Maturity Date, unless extended by the Parties. If
there is no Final Funding there shall be no participation return on amounts
provided by the Participant to the Land Bank and all monies funded to date shall
be forfeited.

 

1.5 Sale of Property Prior to Maturity Date.

 

(a) Participation Return. If prior to the Maturity Date, the Land Bank sells all
or a portion of the Property, within ten Business Days (a “Business Day” being
any day on which the banks in the State of Texas are generally open) of such
sale funding, the Land Bank shall repay the portion of the Loan plus a 50%
participation return thereon based on the ratio between the acreage sold and the
total acreage of the Property. Upon a sale of a portion of the Property and the
payment described above, the terms “Property” and “Loan shall be adjusted
accordingly.

 

By way of example, if Prior to the Maturity Date, the Land Bank sells 40 acres
of Property, prior to the expiration of ten Business Days from such sale
funding, (i) the Land Bank shall pay the Participant $63,750 (representing
$42,500 of the principal on the Loan plus $21,250 of participation return, the
50%), (ii) the amount of the “Loan” shall be reduced by $42,500 and (iii) the
amount of the “Property” shall be reduced by 40 acres.

 

(b) Additional Sale Proceeds: If prior to the Maturity Date, the Land Bank sells
all or a portion of the Property and the Proceeds Per Acre sold exceeds the 50%
Participation return, then the Land Bank shall retain the excess proceeds as
income to the Land Bank.

 

“Proceeds Per Acre” is defined as the income pertaining to each acre of the
Property (as may be prorated) from the sale of mineral interest acreage/leases
and/or its reserves.

 

“Purchase Lease Price Per Acre” is defined as pertaining to each acre of the
Property (as may be prorated) all direct and indirect associated costs of
purchase (which initially shall be at least $1,062.50 per acre) and resale
including but not limited to mineral interest lease bonus per acre, land man
services, attorney fees, curative, title certification, administrative expenses,
sale fees, closing costs and administrative fees.

 

If there is no Final Funding there shall be no return on amounts provided by the
Participant to the Land Bank.

 

1.6 Area of Interest: This Participation Agreement is primarily for the purchase
of mineral interest leases in, but not limited to, Jack County, Texas, being the
primary focus area of Santa Fe Petroleum, Inc.’s Marble Falls (and/or other
formations) oil and gas drilling projects.

 

This Agreement shall be governed by and construed under the laws of the State of
Texas. Any dispute, claim or controversy arising out of or relating to this
agreement or the breach, termination, enforcement, interpretation or validity
thereof, including the determination of the scope or applicability of this
agreement to arbitrate, shall be determined by binding arbitration in the City
and County of Dallas, before one arbitrator. The arbitration shall be
administered by JAMS and in English. Judgment on the award may be entered in any
court having jurisdiction. This clause shall not preclude parties from seeking
provisional remedies in aid of arbitration from a court of appropriate
jurisdiction. Each party will bear its own costs for arbitration. The prevailing
party in arbitration shall be entitled to reasonable attorneys’ fees. 

 

This Agreement shall be binding upon and inure to the benefit of the Parties
hereto, their successors and/or assigns.

 

IN WITNESS HERETO, the duly authorized representatives of the Parties have
caused this Land Bank Loan/Participation Agreement to be executed as of this
date first above written.

 

 

Santa Fe Land, LLC (“Land Bank”)

 

 

________________________________

Tom Griffin

President

 

Date: July 26, 2013

 

 

 

 

Proven Fields Energy, LLC – The Jack County Prospect (“Participant”)

 

 

___________________________

Jack Ward, President

20 Trailview Ct. Novato, CA 94945

 

 

Date: July 26, 2013

 

 

 

 

 

 

Form of Note

(Revised )

 

Santa Fe Land, LLC agrees and promises to pay to Proven Fields Energy, LLC – The
Jack County Prospect the sum of $340,000 Dollars for value received. This Note
affirms the terms set out in the Land Bank Loan/Participation Agreement (the
“Agreement”), including (but not limited) those relating to the Maturity Date
and the participation return. (each as described in the Agreement).

 

If there is no Final Funding (as defined in the Agreement) by August 26, 2013,
this Note shall be deemed satisfied in full and Santa Fe Land, LLC shall owe no
amounts that may otherwise be due under this Note including any principal,
participation return or additional return (each as described in the Agreement).

 

The terms of the Agreement, including those related to governing law and
arbitration apply to this Note as if they were set out below.

 

 

Santa Fe Land, LLC.

 

 

________________________

Tom Griffin, President

Date: July 26, 2013