Exhibit 10.3
 

 

DEED OF TRUST, MORTGAGE, ASSIGNMENT OF PRODUCTION,
SECURITY AGREEMENT AND FINANCING STATEMENT
from
_________________________
(Federal Income Tax Identification No. ________________)
(“Grantor,” “Mortgagor” and “Debtor”)
to
the PUBLIC TRUSTEE OF ______________ COUNTY, COLORADO, TRUSTEE
for the benefit of
_________________________________
(Federal Income Tax Identification No. _____________)
(“Grantee,” “Mortgagee” and “Secured Party,” as nominee)
A REPRODUCTION OF THIS INSTRUMENT IS SUFFICIENT AS A FINANCING STATEMENT.  FOR
PURPOSES OF FILING THIS INSTRUMENT AS A FINANCING STATEMENT, THE ADDRESS OF THE
GRANTOR AND DEBTOR IS:

AND THE ADDRESS OF THE GRANTEE AND SECURED PARTY IS:

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.
THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.
THIS INSTRUMENT COVERS PROCEEDS OF COLLATERAL.
THIS INSTRUMENT COVERS PRODUCTS OF COLLATERAL.
THIS INSTRUMENT COVERS MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE
EXTRACTED FROM THE EARTH (INCLUDING, WITHOUT LIMITATION, OIL AND GAS).  THIS
FINANCING STATEMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL
ESTATE RECORDS OF THE COUNTY RECORDER OF WELD COUNTY, COLORADO.  THE GRANTOR HAS
AN INTEREST OF RECORD IN THE REAL ESTATE CONCERNED, WHICH INTEREST IS DESCRIBED
IN EXHIBIT A ATTACHED HERETO.
THIS INSTRUMENT WAS PREPARED BY AND WHEN RECORDED OR FILED SHOULD BE RETURNED
TO:
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DEED OF TRUST, MORTGAGE, ASSIGNMENT OF PRODUCTION,
SECURITY AGREEMENT AND FINANCING STATEMENT
________________, a _____________ corporation (hereinafter referred to as
“Grantor”), for and in consideration of the sum of TEN DOLLARS ($10.00) to
Grantor in hand paid by ______________________, a __________ limited liability
company, as “Grantee,” “Holder” or “Secured Party” of the obligations as
hereinafter recited, and in order to secure the payment and performance of the
obligations, covenants, warranties, agreements and undertakings of Grantor
hereinafter described, does hereby GRANT, BARGAIN, SELL, CONVEY, MORTGAGE,
PLEDGE, TRANSFER, ASSIGN and SET OVER to the Public Trustee of _________ County,
Colorado (hereinafter called the “Trustee”) for the benefit of Grantee, and  IN
TRUST WITH POWER OF SALE, the following property to the fullest extent such
described interests are assignable:
(a)  All of Grantor’s rights, titles, and interests in, under and attributable
to the oil and gas leases described in Exhibit A (the “Leases”) including,
without limitation, any and all royalty interests and all other interests of
whatsoever nature or kind and however characterized in, under or attributable to
the Leases;
(b)  All Grantor’s rights, titles and interests in the mineral estate, whether
now owned or hereafter acquired, in the Lands described on attached Exhibit A
hereto (the “Lands”), including, without limitation, any and all reversionary
interests or other interests of whatsoever nature or kind and however
characterized in the Lands described on attached Exhibit A, all of which such
rights, titles, interests and estates of Grantor and howsoever characterized,
together with the rights, title and interests in the Leases described in
subparagraph (a) being hereinafter collectively called the “Mineral Interests”;
(c)  All rights, titles, interests and estates now owned or hereafter acquired
by Grantor in and to (i) the properties now or hereafter pooled or unitized with
any part of the Mineral Interests insofar as they are attributable to or derive
from the Mineral Interests; and (ii) all presently existing or future
unitization, communitization, pooling agreements and declarations of pooled
units and the units created thereby (including, without limitation, all units
created under orders, regulations, rules or other official acts of any Federal,
State or other governmental body or agency having jurisdiction), insofar as they
are attributable to or derive from the Mineral Interests;
(d)  Without limitation, all rights, titles and interests now owned or
hereinafter acquired by Grantor in oil and gas wells located on the Lands (the
“Wells”);
(e)  All rights, titles, and interests now owned or hereafter acquired by
Grantor in and to all oil, gas, casinghead gas, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons and all products refined therefrom and all
other minerals (collectively called the “Hydrocarbons”) in, under and which may
be produced and saved from the Lands or attributable to the Mineral Interests,
including all oil in tanks and all rents, issues, profits, proceeds, products,
revenues and other income and proceeds from the sale or use of Hydrocarbons;
 
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(f)  All tenements, hereditaments, appurtenances and properties in anywise
appertaining, belonging, affixed or incidental to the Mineral Interests and
properties, rights, titles, interests and estates described above which are now
owned or which may hereafter be acquired by Grantor, including, without
limitation, any and all property, real or personal, now owned or hereafter
acquired and situated upon, used, held for use, or useful in connection with the
operating, working or development of the Leases or the Wells or properties
including without limitation, easements, servitudes, licenses and other surface
use rights;
 (g)  All of the rights, titles and interests of every nature whatsoever now
owned or hereafter acquired by Grantor in and to the Mineral Interests, as the
same may be enlarged by the removal of any charges or encumbrances to which the
Mineral Interests are subject, or otherwise; together with any and all renewals
and extensions of the Leases, properties, rights, titles, interests or estates;
all contracts and agreements supplemental to or amendatory of or in substitution
for the contracts and agreements described or mentioned above; and any and all
additional interests of any kind hereafter acquired by Grantor in and to the 
Lands, Leases and Wells described on Exhibit A;
(h)  All accounts, contract rights, choses in action and general intangibles as
such terms are defined in Article 9 of the Uniform Commercial Code from time to
time in effect in the State of Colorado (the “Uniform Commercial Code”) 
constituting a part of, relating to, or arising out of the Mineral Interests and
collateral described or mentioned above, and all proceeds and products of the
property and collateral described or mentioned in this and said preceding
paragraphs; and
(i)  All of Grantor’s rights, now owned or hereafter acquired, in and to all
records which relate to the Lands, Leases, Mineral Interests, and Wells.
All of the properties, interests and rights described in the preceding
subparagraphs (a) through (i) shall be hereinafter sometimes referred to as the
“Mortgaged Properties”.  If any of the lands covered by the Leases or other
instrument mentioned in Exhibit A are incorrectly described, then nevertheless
this Mortgage (as defined herein) shall cover all Grantor’s interest in such
Leases or other instrument as to all of the lands and interests covered thereby.
TO HAVE AND TO HOLD the Mortgaged Properties, together with all and singular the
rights, estates, hereditaments, powers and privileges appurtenant or incident
thereto, unto the Trustee and his successors or substitutes in this trust and to
his or their successors and assigns, forever.
BUT IN TRUST, NEVERTHELESS, for the benefit and security of the Holders of the
obligations and indebtedness secured hereby and upon the trusts and subject to
the terms and provisions herein set forth.
Secured Indebtedness
1.1  This instrument (hereinafter called the “Mortgage”) is made irrevocably in
trust, with power of sale to secure and enforce the following obligations and
indebtedness:
(a)  All Grantor’s obligations and indebtedness to Holder under that certain
Secured Promissory Note, of even date herewith, in the face amount of
$_______________ (the “Note”) of every kind and character now or hereafter owing
by Grantor to the Holder under, whether direct or indirect, primary or
secondary, fixed or contingent, and including, without limitation, all advances,
debts and liabilities arising under or out of the warranties, representations,
indemnity and other obligations made and assumed by Grantor under the Note,  and
any and all fees, expenses or costs (including attorneys’ fees) incurred by
Holder to enforce any of  their  rights against Grantor thereunder;
 
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(b)  All Grantor’s express and implied obligations assumed under the Leases
identified in Exhibit A, including, but not limited to, warranties of title and
all other express and implied obligations of Grantor thereunder;
(c)  All other future advances and sums paid by Holder and its successors and
assigns on behalf or for the benefit of Grantor, or in satisfaction of
obligations owed by Grantor to Holder under the Note.
(d)  All indebtedness and obligations, whether direct or indirect, primary or
secondary, fixed or contingent assumed by Grantor hereunder, or relating to the
enforcement of the rights of the “Holder” hereunder.
1.2  The indebtedness and obligations referred to in clauses (a), (b), (c) and
(d) of Section 1.1 are hereinafter sometimes referred to as the “Secured
Indebtedness.”  Grantee, as designated nominee and agent for and on behalf of
the Working Interest Owners and its successors and assigns, is referred to
herein  as the “Holder.”
ARTICLE II
Representations, Warranties and Covenants
2.1  Grantor represents, warrants and covenants that Grantor is a corporation in
good standing in the State of ________ and has full authority to enter into this
Mortgage, that Grantor has good right and authority to grant, bargain, sell,
transfer, convey, assign and mortgage all its right, title and interest in the
Mortgaged Properties; that Grantor is the lawful owner of an undivided 100%
mineral interest in the Lands free and clear from all liens, claims and
encumbrances by, through and under Grantor, except the lien evidenced by this
Mortgage and the rights of the lessee granted under the Leases; and Grantor does
hereby bind itself, its heirs, legal representatives, successors and assigns to
forever warrant and defend the title to an undivided 100% mineral interest in
the Lands unto the said Trustee and Grantee, and their successors and assigns,
against the claims of all persons whomsoever claiming or claim the same or any
part thereof by, through or under Grantor.  Any additional rights, title, or
interest which Grantor may hereafter acquire or become entitled to in the Lands
and properties aforesaid or in the oil, gas or other minerals in, under or
produced therefrom shall inure to the benefit of this trust and Grantee, the
same as if expressly described and conveyed herein.
2.2  With respect to advances and indebtedness arising out of Grantor’s
obligations under the Note that become due, Grantor covenants and agrees:
(a)  That Grantor will make timely payment of sums due or to become due under
the Note and will make timely payment of all other Secured Indebtedness
hereunder.
 
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(b)  That Grantor will observe and materially comply with all of the terms and
provisions, express or implied, of the Note.
(c)  That if the validity or priority of this Mortgage or of any right, titles,
liens or interests created or evidenced hereby with respect to the Mortgaged
Properties or any part thereof shall be endangered or questioned or shall be
attacked directly or indirectly or if any legal proceedings are instituted
against Grantor with respect thereto, Grantor will give written notice thereof
to the Holder promptly and, at Grantor’s own cost and expense, Grantor will
diligently endeavor to cure any defect that may be  claimed, and will take all
necessary and proper steps for the defense of such legal proceedings, including,
but not limited to, the employment of counsel agreeable to the Holder, the
prosecution or defense of litigation and the release or discharge of all adverse
claims.  If Grantor fails or refuses to take such action, the Trustee and the
Holder, or any of them (whether or not named as parties to legal proceedings
with respect thereto), are hereby authorized and empowered to take such
additional steps as in their judgment and discretion may be necessary or proper
for the defense of any such legal proceedings, including, but not limited to,
the employment of independent counsel, the prosecution or defense of litigation,
and the compromise or discharge of any adverse claims made with respect to the
Mortgaged Properties, and all expense so incurred of every kind and character
shall be a demand obligation owing by Grantor and shall bear interest at the
rate of 8 percent, compounded annually from the date of expenditure until paid
and shall be secured by the lien evidenced by this Mortgage, and the party
incurring such expenses shall be subrogated to all rights of the person
receiving such payment.
(d)  That Grantor will not, without the prior written consent of the Holder,
suffer or permit any lien to be hereafter claimed or created on any of the
Mortgaged Properties, and should a lien become attached hereafter in any manner
to any part of the Mortgaged Properties without the prior written consent of the
Holder, Grantor will cause such lien to be promptly discharged.
(e)  That Grantor will, on request of the Holder, promptly correct any defect,
error or omission which may be discovered in the contents of this Mortgage, the
Note, or other documents executed in connection herewith or in the execution or
acknowledgment of any thereof, and will execute and deliver any and all
additional instruments as may be requested by the Holder to correct such defect,
error or omission and will execute, acknowledge and deliver such further
assurances and instruments as shall be, in the opinion of the Holder, necessary
or proper to convey and assign to the Trustee all of the Mortgaged Properties
herein conveyed or assigned, or intended so to be.
(f)  Grantor will proceed with reasonable diligence to correct any material
defect in title to the Mineral Interest in the Lands arising by, through or
under Grantor which, in the reasonable opinion of Holder, constitutes a material
defect should any such defect be found to exist after the execution and delivery
of this instrument; and in this connection, should it be found after the
execution and delivery of this instrument that there exists upon the Mortgaged
Properties any lien or encumbrance, equal or superior in rank to the lien
created by this instrument arising by, through or under Grantor, or should any
such hereafter arise, Grantor will promptly discharge and remove any such lien
or encumbrance from said property.
 
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(g)  Holder at all times shall have the right to release any part of the
property now or hereafter subject to the lien hereof or any part of the proceeds
of production or other income herein or hereafter assigned or pledged or any
other security it now has or may hereafter have hereunder, without releasing any
other part of said property, proceeds or income, and without affecting the lien
hereof as to the part or parts thereof not so released, or the right to receive
future proceeds and income.
(h)  That, promptly upon receipt of any written request from the Holder, Grantor
will furnish and deliver, pursuant to such request, any information or data
possessed by Grantor with respect to the Mortgaged Properties, including all
title materials and other records in the possession, custody or control, and all
deeds, conveyances, instruments, contracts, documents, title opinions, title
abstracts, division orders, and other records concerning said property.
2.3  Grantor agrees that if Grantor fails to perform any act or to take any
action which hereunder Grantor is required to perform or take or to pay any
money which hereunder Grantor is required to pay, the Holder, in Grantor’s name
or its own name, may (but shall not be obligated to) perform or cause to be
performed such act or take such action or pay such money, and any expenses so
incurred by the Holder and any money so paid by the Holder: (a) shall be a part
of the obligations owing by Grantor, (b) shall bear interest from the date of
making such payment until paid at the rate of 10 percent compounded annually,
(c) shall be a part of the Secured Indebtedness, and (d) shall be secured by the
lien evidenced by this Mortgage.  The  Holder, upon making such payment, shall
be subrogated to all of the rights of the person, corporation or body politic
receiving such payment.
ARTICLE III
Assignment of Production, Accounts,
Contract Rights and Proceeds
3.1  To facilitate the discharge of any and all of Grantor’s indebtedness and
obligations under the Note and this Mortgage, and as cumulative of any and all
rights and remedies herein provided for, Grantor hereby BARGAINS, SELLS,
TRANSFERS, ASSIGNS, SETS OVER and DELIVERS to the Holder, its successors and
assigns, all of the following upon the failure of Grantee to promptly fulfill
its obligations and discharge and pay any indebtedness under the Note or
Mortgage:
(a)  All oil, gas, casinghead gas, distillate and other minerals, produced and
to be produced from or attributable to the Mineral Interests of Grantor and any
other interests now or hereafter constituting a part of the Mortgaged Properties
from and after the Effective Date (as hereafter defined);
(b)  All royalties and proceeds of production hereafter payable to or to become
payable to Grantor or to which Grantor is entitled by virtue of its Leases or
Mineral Interests, and Grantor authorizes and empowers said Holder to demand,
collect and receive said royalties and proceeds;
 
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(c)  All amounts, sums, revenues and income which otherwise become payable to
Grantor from any of the Lands or under the Leases; and
(d)  All of Grantor’s contract rights, choses in action, and claims of any kind
arising out of the Leases to the extent assignable.
Grantor hereby, irrevocably, authorizes and directs that all parties owing
royalties or other sums to Grantor attributable to Grantor’s Mineral Interests
pay all such amounts directly to the Holder.  The Holder is authorized to
collect such amounts and no party making payment shall have any responsibility
to see to the application of any funds paid to the Holder, but shall be fully
protected in making such payment to the Holder under the assignments herein
contained.  Should the Holder bring suit against any third party for collection
of any amounts or sums included within this assignment (and the Holder shall
have the right to bring any such suit) it may sue either in its own name or in
the name of Grantor.
3.2  Grantor authorizes and empowers the Holder to receive, hold and collect all
sums of money paid to the Holder in accordance with this assignment and to apply
the same as is hereinafter provided, all without any liability or responsibility
on the part of the Holder, save as to good faith in so receiving and applying
said sums.  All payments provided for in this assignment shall be paid promptly
to the Holder.  It is understood and agreed that should said payments provided
for by this assignment be less than the sum or sums then due on said
indebtedness, such sum or sums then due shall nevertheless be payable by
Holder.  Likewise, neither this assignment nor any provision herein contained
shall in any manner be construed to affect the lien, rights and remedies herein
granted securing said indebtedness, nor Grantor’s liability therefor.  The
rights under this assignment are cumulative of the other rights, remedies and
powers granted under this Mortgage and are cumulative of any other security
which the Noteholder now holds or may hereafter hold to secure the payment of
said indebtedness.
3.3  Nothing herein contained shall detract from or limit the absolute
obligation of Grantor to make prompt payment of any indebtedness arising under
the Note at the time and in the manner provided for therein or shall detract
from or limit the absolute obligation of Grantor to make prompt payment  of all
amounts owing hereunder at the time and in the manner provided herein,
regardless of whether the proceeds herein assigned are sufficient to pay the
same, and the rights under this assignment shall be cumulative of all other
security of any and every character now or hereafter existing to secure the
payment of sums due under the Note and all other Secured Indebtedness.
ARTICLE IV
Waiver and Partial Release
4.1  The Holder  may at any time and from time to time in writing:
(a)  Waive compliance by Grantor with any covenant herein made by Grantor to the
extent and in the manner specified in such writing;
 
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(b)  Consent to Grantor’s doing any act which hereunder Grantor is prohibited
from doing, or to Grantor’s failing to do any act which hereunder Grantor is
required to do, to the extent and in the manner specified in writing; or,
(c)  Release any part of the Mortgaged Properties, or any interest therein, or
any proceeds of Hydrocarbon sales from the lien of this Mortgage, without the
joinder of the Trustee.
No such act by Noteholder shall in any way impair the rights of the Holder
hereunder except to the extent specifically agreed to by the Holder in such
writing.
4.2  The lien and other security rights of the Holder hereunder shall not be
impaired by any indulgence, including but not limited to (a) any forbearance,
renewal, extension or modification (whether one or more) which the Holder may
grant with respect to any Secured Indebtedness, or (b) any surrender,
compromise, release, renewal, extension, exchange or substitution which the
Holder may grant in respect of any item of the Mortgaged Properties or any part
thereof or any interest therein.
ARTICLE V
Possession Until Default; Defeasance and Termination
5.1  Unless a default specified in Section 6.1 hereof shall occur and be
continuing, Grantor shall retain full right to the Mortgaged Properties subject,
however, to all of the terms and provisions of this Mortgage, including without
limitation, the assignments under Article III.
ARTICLE VI
Remedies in Event of Default
6.1  The term “default” as used in this Mortgage shall mean the failure of
Grantor to pay any sums due Holder under the Note or under this Mortgage within
ten (10) days of receipt by Grantor of demand for payment.
6.2           (a)  If a default shall occur and be continuing, the Mortgagee
shall have the right and option to proceed with foreclosure and to sell, to the
extent permitted by law, all or any portion of the Mortgaged Property at one or
more sales, as an entirety or in parcels, at such place or places and otherwise
in such manner and upon such notice as may be required by applicable law or, in
the absence of any such requirements, as the Mortgagee may deem appropriate, and
to make conveyance to the purchaser or purchasers.
(b)  With regard to any part of the Mortgaged Property, it is agreed that the
appraisement of any such properties is expressly waived at the option of the
Mortgagee, and any such option may be exercised prior to the time judgment is
rendered in any foreclosure hereon.
(c)  Notwithstanding any other provision of this Section 6.2, if any of the
Secured Indebtedness is not promptly paid, Mortgagee shall have the right and
power to proceed by a suit or suits in equity or at law, whether for the
specific performance of any covenant or agreement herein contained or in aid of
the execution of any power herein granted, or for any foreclosure hereunder or
for the sale of the Mortgaged Property under the judgment or decree of any court
or courts of competent jurisdiction.
 
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(d)  Notwithstanding any other provision, Mortgagee shall also have the option
to proceed with foreclosure in satisfaction of any Secured Indebtedness which
has not been paid when due either through the courts or by proceeding with
foreclosure.  It is further agreed that several sales may be made hereunder
without exhausting the right of sale for any subsequent Secured Indebtedness, it
being the purpose hereof to provide for a foreclosure and sale of the security
for any matured portion of the Secured Indebtedness without exhausting the power
to foreclose and sell the Mortgaged Property for any subsequently maturing
portion of the Secured Indebtedness.
(e)  The Mortgaged Property may be sold in one or more parcels and in such
manner and order as Mortgagee, in his sole discretion, may elect, it being
expressly understood and agreed that the right of sale arising out of any event
of default shall not be exhausted by any one or more sales.
(f)  Grantor agrees to the full extent that it lawfully may, that in the event
of a default that has not been remedied, Mortgagee shall have the right and
power to enter into and upon and take possession of all or any part of the
Mortgaged Property in the possession of Grantor, its successors or assigns, or
its or their agents or servants.
(g)  Every right, power and remedy herein given to Mortgagee shall be cumulative
and in addition to every other right, power and remedy herein specifically given
or now or hereafter existing in equity, at law or by statute (including
specifically those granted by the Uniform Commercial Code in effect and
applicable to the Mortgaged Property or any portion thereof) each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time and so often and in such order as may be
deemed expedient by Mortgagee, and the exercise, or the beginning of the
exercise, of any such right, power or remedy shall not be deemed a waiver of the
right to exercise, at the same time or thereafter any other right, power or
remedy.  No delay or omission by Mortgagee in the exercise of any right, power
or remedy shall impair any such right, power or remedy or operate as a waiver
thereof or of any other right, power or remedy then or thereafter existing.
(h)  Grantor shall not be relieved of any obligation herein by reason of the
failure of Mortgagee to comply with any request of Grantor to foreclose the lien
of this Mortgage or the release, regardless of consideration, of the Mortgaged
Property or any portion thereof or interest therein.
(i)  Mortgagee may release, regardless of consideration, any part of the
Mortgaged Property without, as to the remainder, in any way impairing,
affecting, subordinating or releasing the lien or security interest created in
or evidenced by this Mortgage or its stature as a first and prior lien and
security interest in and to the Mortgaged Property, and without in any way
releasing or diminishing the liability of any person or entity liable for the
repayment of the Secured Indebtedness.  For payment of the Secured Indebtedness,
Mortgagee may resort to any other security therefor held by Mortgagee in such
order and manner as Mortgagee may elect.
 
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(j)  To the fullest extent permitted by law, Grantor hereby irrevocably and
unconditionally waives and releases (a) all benefits that might accrue to
Grantor by virtue of any present or future moratorium law or other law exempting
the Mortgaged Property from attachment, levy or sale on execution or providing
for any appraisement, valuation, stay of execution, exemption from civil
process, redemption or extension of time for payment; (b) all notices of any
event of default or of Mortgagee’s election to exercise (or his actual exercise
of) any right, remedy or recourse provided for hereunder; and (c) any right to a
marshaling of assets.
(k)  In case Mortgagee shall have proceeded to invoke any right, remedy or
recourse permitted hereunder and shall thereafter elect to discontinue or
abandon same for any reason, Mortgagee shall have the unqualified right so to do
and, in such an event, Grantor and Mortgagee shall be restored to their former
positions with respect to the Secured Indebtedness, this Mortgage, the Mortgaged
Property and otherwise, and the rights, remedies, recourses and powers of
Mortgagee shall continue as if same had never been invoked.
(l)  The proceeds of any sale of the Mortgaged Property or any part thereof and
all other monies received by Mortgagee through any proceedings for the
enforcement hereof or otherwise, shall be applied:
FIRST, to the payment of all expenses incurred by Mortgagee incident to the
enforcement of this Mortgage, the Note or any of the Secured Indebtedness
(including, without limiting the generality of the foregoing, expenses of any
entry or taking of possession, of any sale, of advertisement thereof and of
conveyances, and court costs, compensation of agents and employees, legal fees
and a reasonable commission to the Trustee acting), and to the payment of all
other charges, expenses, liabilities and advances incurred or made by Mortgagee
under this Mortgage or in executing any power hereunder;
SECOND, to payment of the Secured Indebtedness in such order and manner as
Mortgagee may elect; and,
THIRD, to Grantor or as otherwise required by any governmental authority having
jurisdiction over the application of such proceeds.
6.3  To foreclose this Mortgage pursuant to the power of public sale contained
herein in accordance with the laws of the State of Colorado, in which case
Mortgagee/Holder shall (i) deliver to Trustee a written notice of default and
election to cause Grantor’s interest in the Mortgaged Properties to be sold, and
(ii) deposit with Trustee this Mortgage, and such receipts or evidence of the
Secured Indebtedness as Trustee may require.  Upon receipt of such notice from
Mortgagee/Holder, Trustee shall give notice of sale and shall sell the Mortgaged
Properties according to the laws of the State of Colorado.  The costs and
expenses incurred by Mortgagee/Holder in the exercise of any of the remedies
provided in this Mortgage shall be secured by this Mortgage.
 
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ARTICLE VII
Security Agreement
7.1  Without limiting any of the provisions of this instrument, Grantor,
referred to in this Article VII as “Debtor”  expressly GRANTS unto the Holder
(referred to in this Article VII as “Secured Party”, whether one or more), a
security interest in all the Mortgaged Properties hereinabove described
(including both those now and those hereafter existing) to the full extent that
such properties may be subject to the Uniform Commercial Code of the State of
Colorado.  The security interest granted hereby also covers and includes all
contract rights, general intangibles, choses in actions, and accounts with
respect to said properties and all products and proceeds of said properties
(said properties, contract rights, choses in action, general intangibles,
accounts, products and proceeds thereof being hereinafter collectively referred
to as the “Collateral” for the purposes of this paragraph).  Debtor covenants
and agrees with Secured Party that:
(a)  In addition to and cumulative of any other remedies granted in this
instrument to Secured Party or the Trustee, Secured Party may, in event of
default, proceed under said Uniform Commercial Code as to all or any part of the
Collateral and shall have and may exercise with respect to the Collateral all
the rights, remedies and powers of a secured party under said Uniform Commercial
Code, including, without limitation, the right and power to sell, at public or
private sale or sales, or otherwise dispose of, lease or utilize the Collateral
and any part or parts thereof in any manner authorized or permitted under said
Uniform Commercial Code after default by a debtor, and to apply the proceeds
thereof toward payment of any costs and expenses and attorneys’ fees and legal
expenses thereby incurred by Secured Party, and toward payment of the Secured
Indebtedness in such order or manner as Secured Party may elect.
(b)  Upon a default, Secured Party shall have the right (without limitation,
subject to said Uniform Commercial Code) to take possession of the Collateral
and to enter upon any premises where same may be situated for such purpose
without being deemed guilty of trespass and without liability for damages
thereby occasioned, and to take any action deemed necessary or appropriate or
desirable by Secured Party, at its option and in its discretion, to repair,
refurbish or otherwise prepare the Collateral for sale, lease or other use or
disposition as herein authorized.
(c)  To the extent permitted by law, Debtor expressly waives any notice of sale
or other disposition of the Collateral and any other right or remedies of a
debtor or formalities prescribed by law relative to sale or disposition of the
Collateral or exercise of any other right or remedy of Secured Party existing
after default hereunder; and to the extent any such notice is required and
cannot be waived, Debtor agrees that if such notice is mailed, postage prepaid,
to Debtor at the address shown with debtor’s signature hereinbelow at least ten
days before the time of the sale or disposition, such notice shall be deemed
reasonable and shall fully satisfy any requirement for giving of said notice.
(d)  Secured Party is expressly granted the right to receive the monies, income,
proceeds or benefits attributable or accruing to the Collateral and to hold the
same as security for the Secured Indebtedness or to apply it on the principal
and interest or other amounts owing on any of the Secured Indebtedness, in such
order or manner as Secured Party may elect.  All rights to marshaling of assets
of Debtor, including any such right with respect to the Collateral, are hereby
waived.
 
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(e)  All recitals in any instrument of assignment or any other instrument
executed by Secured Party incident to sale, transfer, assignment, lease or other
disposition or utilization of the Collateral or any part thereof hereunder shall
be prima facie evidence of the matter stated therein, no other proof shall be
required to establish full legal propriety of the sale or other action or of any
fact, condition or thing incident thereto, and all prerequisites of such sale or
other action and of any fact, condition or thing incident thereto shall be
presumed to have been performed or to have occurred.
(f)  Should Secured Party elect to exercise its right under said Uniform
Commercial Code as to part of the personal property described herein, this
election shall not preclude Secured Party or the Trustee from exercising the
rights and remedies granted by the preceding paragraphs of this instrument as to
the remaining personal property.
(g)  Secured Party may, at its election, at any time after delivery of this
instrument, sign one or more copies hereof in order that such copies may be used
as a financing statement under said Uniform Commercial Code.  Such signature by
Secured Party may be placed between the last sentence of this instrument and the
Debtor’s acknowledgment or may follow the Debtor’s acknowledgment.  Secured
Party’s signature need not be acknowledged and is not necessary to the
effectiveness hereof as a deed of trust, mortgage, assignment, or security
agreement.
7.2  Any copy of this instrument which is signed by both Debtor and Secured
Party may also serve as a financing statement under said Uniform Commercial Code
between the DEBTOR, WHOSE ADDRESS IS:

and the SECURED PARTY, WHOSE ADDRESS IS:
This Mortgage secures and shall be security for any and all future advances made
by or costs and expenses incurred by Grantee/Holder for the benefit of Grantor,
provided, however, that the total unpaid balance secured hereby at any one time
shall not exceed $__________.  Nothing contained herein shall be deemed an
obligation on the part of Secured Party/Holder Holder to make any further
advances or incur any expenses for the benefit of Debtor.
 
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ARTICLE VIII
Miscellaneous
8.1  This instrument is a deed of trust and mortgage of both real and personal
property, a security agreement, a financing statement and an assignment, and
also covers proceeds and fixtures.
8.2  All options and rights of election herein provided for the benefit of the
Holder are continuing, and the failure to exercise any such option or right of
election upon a particular default or breach or upon any subsequent default or
breach shall not be construed as waiving the right to exercise such option or
election at any later date.  By the acceptance of payment of any indebtedness
secured hereby after its due date, the Holder does not waive the right either to
require prompt payment when due of all other sums so secured or to regard as a
default failure to pay any other sums due which are secured hereby.  No exercise
of the rights and powers herein granted and no delay or omission in the exercise
of such rights and powers shall be held to exhaust the same or be construed as a
waiver thereof, and every such right and power may be exercised at any time and
from time to time. No release of any part of the Mortgaged Properties shall in
anywise alter, vary or diminish the force, effect or lien of this instrument on
the balance of Mortgaged Properties.
8.3  Any notice, request, demand or other instrument which may be required or
permitted to be given or furnished to or served upon Grantor shall be addressed
to it at its address set forth below, or such other address as Grantor may
furnish to the Trustee and the Holder in writing:

Notices to the Trustee and the Holder shall be deemed to have been properly
given if delivered in like fashion to them at:
(1) _________ County Public Trustee, ___________________, and
(2) ___________________________________

or at such other address as the Trustee or the Noteholder may furnish to Grantor
in writing.
8.4 If any provision hereof is invalid or unenforceable in any jurisdiction, the
other provisions hereof shall remain in full force and effect, and the remaining
provisions hereof shall be liberally construed in favor of the Trustee, Lender
and the Noteholder in order to effectuate the provisions hereof, and the
invalidity or unenforceability of any provision hereof shall not affect the
validity or enforceability of any such provision in any other jurisdiction.
8.5 Grantee and Trustee shall at all times have the right to assign and/or
transfer any and all of their rights and privileged under this Mortgage.  All of
the terms, provisions, covenants and conditions hereof shall be binding upon
Grantor and the successors and assigns of Grantor, and the Holder and successors
and assigns of Holder, and shall inure to the benefit of the Trustee and the
Holder and their respective successors and assigns. Grantor’s covenants shall
constitute covenants running with the lands covered by the Mortgaged Properties,
but this provision shall not be construed to authorize any sale or other
disposition of the Mortgaged Properties contrary to any other provisions hereof.
 
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8.6 The Mortgage may be executed in multiple counterparts, each of which is
deemed to be an original for all purposes although all such executed copies
shall evidence and constitute one and the same Mortgage.
8.7 The term “Grantor,” “Mortgagor” and “Debtor” herein used shall include
their  successor(s) in interest in the Mortgaged Properties.  The number and
gender of pronouns used in referring to Grantor shall be construed to mean and
correspond with the number and gender of the individuals and/or corporations
executing this instrument as Grantor, and, further, the term “Grantor” herein
used shall mean and include both all of the parties executing this instrument as
Grantor as well as any single one or more of them.
8.8 The “Effective Date” of this instrument is 7:00 a.m. local time at the
location of the Mortgaged Properties on the date this Mortgage is executed and
delivered to Grantee by Grantor.
8.9 This Mortgage shall be governed by and construed and interpreted under the
laws of the State of Colorado (without giving effect to conflicts of laws
principles).
THIS WRITTEN AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH
RESPECT HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

[The Next Page is the Signature Page]
 
 
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IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed
by their duly authorized undersigned officers effective as of May 13, 2015.
 
“GRANTOR,” “MORTGAGOR” AND “DEBTOR”
 
 
 
 
 
 
By: ______________________________________
 
 
 
Printed Name: ______________________________
 
 
 
Title: _____________________________________
 

This Deed of Trust, Mortgage, Assignment of Production, Security Agreement and
Financing Statement is executed by the undersigned solely for the purpose of
acknowledging and accepting the benefits conferred on Grantee and to evidence
its agreement with the covenants of Lender set forth herein.
 
“GRANTEE,”  “MORTGAGEE” AND “SECURED PARTY”
 
 
 
 
 
 
By: ______________________________________
 
 
 
Printed Name: ______________________________
 
 
 
Title: _____________________________________
 

 

[The Next Page is the Acknowledgment Page]
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ACKNOWLEDGMENTS
STATE OF _____________
§
 
 
§
 
COUNTY OF ___________
§
 

 
 
This instrument was acknowledged before me on this _____ day of ______________.
2015, by ________________________, _________________ of ______________________,
on behalf of said corporation.
Witness my hand and official seal.

__________________________________________
Notary Public, State of _______________________
My commission expires: _________________

STATE OF _____________
§
 
 
§
 
COUNTY OF ___________
§
 

 
 
This instrument was acknowledged before me on this _____ day of _____________,
2015, by ___________ the ____________ of __________________________.
Witness my hand and official seal.

__________________________________________
Notary Public, State of  ______________________
My commission expires: _________________
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EXHIBIT A
ATTACHED TO AND FORMING A PART OF THE
DEED OF TRUST, MORTGAGE, ASSIGNMENT OF PRODUCTION,
SECURITY AGREEMENT AND FINANCING STATEMENT
DATED __________________________,  2015
FROM

This Exhibit A contains specific description of the “Lands,” “Leases,” “Mineral
Interests”  and Wells comprising a portion of the “Mortgaged Properties”, as
those terms are defined in the Deed of Trust, Mortgage, Assignment of
Production, Security Agreement and Financing Statement (the “Mortgage”) to which
this Exhibit A is attached.
LANDS
The Mortgage covers all right, title and interest the Mortgagor now owns or
subsequently acquires in the following lands situated in ____________ County,
Colorado (“Lands”):
 
 
 
 
 
A-1