AMENDED AND EXTENDED PROMISSORY NOTE
 

 

$4,000,000  Houston Texas  Originally dated February 7, 2011,      as amended on
August 5, 2011

 
FOR VALUE RECEIVED, Sun River Energy, Inc. ("Maker") promises to pay to the
order of Katy Resources ETX, LLC ("Payee") at such address in Houston, Texas, as
set forth below or as the holder of this Note may designate from time to time in
writing to Maker, the principal sum of FOUR MILLION AND NO/100 DOLLARS
($4,000,000) together with interest thereon from the original date of this Note
(February 7, 2011) at the rate of eight percent (8%) per annum, payable as
hereinafter provided.
 
This Note is being amended to provide for an extension of ninety (90) days from
its original due date of August 6, 2011, so that the new due date of this Note
will be November 4, 2011.  As consideration for the extension of this Note,
Maker promises to deliver 65,000 shares of Maker’s restricted common stock to be
issued by Maker to Payee promptly upon the execution of this Note by both Maker
and Payee.
 
All principal, accrued and unpaid interest and other amounts owing from Maker
hereunder (collectively, the “Outstanding Balance”) shall be due and payable on
the date that is two hundred and seventy (270) days counted from and after the
date this Note was originally  executed, such that the new due date will be
November 4, 2011 (the “Scheduled Payment Date”); provided, however, that if
Maker issues any form of equity or debt securities after the date hereof but
before the Scheduled Payment Date, whether pursuant to a secondary offering,
private placement or otherwise but excluding an Excluded Offering (as
hereinafter defined), the Outstanding Balance shall accelerate and become due
and payable on the date of such issuance of securities (the “Accelerated Payment
Date”).  For purposes hereof, an “Excluded Offering” means one of the following
types of issuances of debt or equity securities: (i) any issuances of securities
made pursuant to employment agreements, consulting agreements, employee stock
plans or similar instruments, (ii) any issuances of debt or securities made for
consideration other than cash, (iii) debt for which the total net proceeds are
equal to or less than $3,000,000 in the aggregate, and which proceeds are used
in connection with Maker’s drilling activities, or (iv) issuances made for the
sole purpose of paying this Note and for which all net proceeds of such
issuances are applied to this Note.  In the event the Outstanding Balance
becomes due and payable on the Accelerated Payment Date, such Outstanding
Balance shall be paid first in priority out of the proceeds of the applicable
issuance of securities, provided that if such proceeds are not sufficient to
cover the Outstanding Balance, the unpaid remainder of the Outstanding Balance
shall remain immediately due and payable.
 
Maker shall promptly notify Payee of each issuance of debt or equity securities
made after the date hereof but before the Scheduled Payment Date, which notice
shall state the number of securities and whether such issuance constitutes an
Excluded Offering as defined herein, provided that Payee shall maintain the
confidentiality of any such information until it is made public by Maker.  Maker
shall have the right to prepay this Note in whole or in part at any time without
penalty or premium.
 

 
 

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All amounts paid hereunder shall be applied first to all interest then accrued
and unpaid hereunder, and the balance, if any, to principal.  All past due
principal and interest on this Note shall bear interest at the maximum rate
permitted by law from maturity until paid, but in no event greater than thirteen
percent (13%).  All sums called for, payable or to be paid hereunder shall be
paid in lawful money of the United States of America which at the time of
payment is legal tender for the payment of public and private debts therein.
 
If default is made in the payment of this Note at maturity (regardless of how
its maturity may be brought about) or the same is placed in the hands of an
attorney for collection, or if suit is filed hereon, or proceedings are had in
bankruptcy, probate, receivership, reorganization, or other judicial proceedings
for the establishment or collection of any amount called for hereunder, or any
amount payable or to be payable hereunder is collected through any such
proceedings, Maker agrees to pay the holder of this Note a reasonable amount as
attorney's or collection fees.
 
Maker shall be given at least fifteen (15) days written notice of presentment
and demand for payment, notice of intent to accelerate maturity, notice of
acceleration of maturity, protest or notice of protest and non-payment, bringing
of suit and diligence in taking any action to collect any sums owing hereunder
and in proceeding against any of the rights and properties securing payment
hereof, and agrees that its liability on this Note shall not be affected by any
release of or change in any security for the payment of this Note.  All amounts
payable under this Note shall be payable without relief from valuation and
appraisement laws.
 
In the event of a default in the payment of any installment of either principal
or interest as provided for herein, or in the performance of any agreement or
covenant contained in this Note or any instrument securing payment hereof, the
holder of this Note shall have the right and option to declare the unpaid
balance of principal and accrued interest on this Note at once due and payable
and to foreclose or require foreclosure of any and all liens securing payment
hereof, and to exercise any and all other rights and remedies it may
have.  Failure to exercise this option upon any default shall not constitute a
waiver of the right to exercise it in the event of any subsequent default.
 
Payment of this Note is secured by one or more instruments entitled DEED OF
TRUST, MORTGAGE, SECURITY AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT OF
PRODUCTION AND REVENUES (the "Deeds of Trust") of even date herewith, executed
by Maker in favor of Philip D. Weller, Trustee, covering certain property
located in Texas, United States as described therein, and by a UCC1 financing
statement.
 
All notices permitted hereunder shall be given to the addressee at the following
address:
 
If to Payee:
 
Kayne Anderson Capital Advisors
Attention: Chuck Yates, Senior Managing Director
717 Texas Avenue, Suite 3100
Houston, Texas  77002
713-655-7354 (office)
 
 
 
 

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If to Maker:
 
Sun River Energy, Inc.
Attention: Donal R. Schmidt, Jr.
5950 Berkshire Lane, Ste. 1650
Dallas, Texas 75225
214-369-7300 (phone)
214-369-7301 (fax)
 
With a copy to:
 
Sun River Energy, Inc
Attention: James E. Pennington,
General Counsel
5950 Berkshire Lane, Ste. 1650
Dallas, Texas 75225
214-369-7300 (phone)
214-369-7301 (fax)
 
All notices given hereunder shall be in writing and shall be considered properly
given if mailed by first-class United States mail, postage prepaid, registered
or certified with return receipt requested, or by delivering same in person to
the addressee.  Any notice given in accordance herewith shall be effective upon
receipt at the address of the addressee.  Each of Payee and Maker may change its
address for notice by notice to the other in the manner set forth above.
 
It is expressly stipulated and agreed to be the intent of Maker and Payee to at
all times comply with the usury and other laws applicable to this Note and the
instruments securing the payment hereof (the "Security Instruments") and any
subsequent revisions, repeals, or judicial interpretations thereof, to the
extent any of the same are applicable hereto.  If such laws are ever revised,
repealed, or judicially interpreted so as to render usurious any amount called
for under this Note or under any of the Security Instruments, or contracted for,
charged, or received with respect to the indebtedness evidenced by this Note, or
if Payee's exercise of the option herein contained to accelerate the maturity of
this Note or if any prepayment by Maker results in Maker having paid any
interest in excess of that permitted by law, then it is Maker's and Payee's
express intent that all excess amounts theretofore collected by Payee be
credited on the principal balance of this Note (or, if the Note has been paid in
full, refunded to Maker), and the provisions of this Note and the Security
Instruments immediately be deemed reformed and the amounts thereafter
collectable hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the then applicable law, but
so as to permit the recovery of the fullest amount otherwise called for
hereunder and thereunder.
 
 
 
 

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All of the stipulations, promises and agreements in this Note made by or on
behalf of Maker shall bind the successors and assigns of Maker, whether so
expressed or not, and inure to the benefit of the successors and assigns of
Maker and Payee.  Maker may not assign, pledge or otherwise transfer this Note,
including by merger or other means, without the prior written consent of Payee.
 
This Note shall be governed by and construed in accordance with the laws of the
State of Texas, without reference to the principles of conflicts of law that
would direct the application of the laws of another jurisdiction.
 

 
EXECUTED on this 5th day of August, 2011.
 
 

 
SUN RIVER ENERGY, INC.
          By:   /s/ Donal R. Schmidt, Jr.  
Name:   Donal R. Schmidt, Jr.
 
Title:     President and CEO
             
KATY RESOURCES ETX, LLC
          By:  /s/ Chuck Yates  
Name:   Chuck Yates
 
Title:     Manager

 
 

 
 

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