f8k031910ex10v_recovery.htm


     

    EXHIBIT
10.5

    
      


       

      MORTGAGE, SECURITY
AGREEMENT,

      ASSIGNMENT OF PRODUCTION AND
PROCEEDS,

      FINANCING STATEMENT AND
FIXTURE FILING

       

      FROM

       

      RECOVERY
ENERGY INC. (Taxpayer I.D. No. 74-3231613), AS DEBTOR

       

      TO

       

      HEXAGON
INVESTMENTS, LLC, AS SECURED PARTY

       

      Dated as
of March 25, 2010

       

       

      
        

      

       

      THIS
INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.

       

      THIS
INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.

       

      EXHIBIT
“A” CONTAINS A LEGAL DESCRIPTION OF THE REAL ESTATE CONCERNED.  DEBTOR
HAS AN INTEREST OF RECORD IN THE REAL ESTATE.  SOME OF THE PERSONAL
PROPERTY CONSTITUTING A PORTION OF THE COLLATERAL IS OR IS TO BECOME FIXTURES
RELATED TO THE REAL ESTATE.

       

      THIS
INSTRUMENT IS TO BE RECORDED IN THE REAL ESTATE RECORDS OF THE COUNTY RECORDER
IN EACH COUNTY WHERE THE REAL ESTATE IS LOCATED.

       

      THIS
INSTRUMENT COVERS FIXTURES AND AS-EXTRACTED COLLATERAL.

       

      A POWER
OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT.  A POWER OF SALE MAY
ALLOW SECURED PARTY TO TAKE THE COLLATERAL AND SELL IT WITHOUT GOING TO COURT IN
A FORECLOSURE ACTION.

       

      THIS
INSTRUMENT WAS PREPARED BY

       

      AND WHEN
RECORDED AND/OR FILED

       

      RETURN
TO:

       

      
        	
                Deborah
      J. Thomas

                Holme
      Roberts & Owen LLP

                1700
      Lincoln, Suite 4100

                Denver,
      Colorado 80203

              


      

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      MORTGAGE, SECURITY
AGREEMENT,

       

      ASSIGNMENT OF PRODUCTION AND
PROCEEDS,

       

      FINANCING
STATEMENT

       

      AND FIXTURE
FILING

       

      This
Mortgage, Security Agreement, Assignment of Production and Proceeds, Financing
Statement and Fixture Filing (this “Instrument”), dated
as of March 25, 2010, is from RECOVERY ENERGY, INC., a
Nevada corporation (“Debtor”), with
Organizational I.D. No. 74-3231613 and with an address of 1515 Wynkoop Street,
Suite 200, Denver, Colorado 80202, to HEXAGON INVESTMENTS, LLC, a
Colorado limited liability company (“Secured Party”), with
an address of 730 17th Street,
Suite 800, Denver, Colorado  80202.

       

      COLLATERAL

       

      All of
the property described in paragraphs 1-8 below is herein collectively called the
“Collateral”:

       

      1. The
entire estates or the undivided interests therein as described in Exhibit “A” in
and to all of the mineral estates, surface estates, leasehold estates and other
estates described in Exhibit “A” and in and to the mineral interests, royalty
interests, working interests, operating rights interest, record title interests,
overriding royalty interests, production payment interests, net profit interests
and other interests described in Exhibit “A” and in and to the leases, licenses,
subleases, sublicenses, easements, rights-of-way, farmouts, farmins, minerals
agreements, unit agreements, cooperative development agreements, communitization
agreements, unit operating agreements, pooling agreements, joint operating
agreements and other documents and instruments described in Exhibit “A” and any
other estates, property interests and rights described in Exhibit “A”, covering
or relating to all or any part of the land described either in Exhibit “A” or in
the leases, licenses, subleases, sublicenses, easements, rights-of-way,
agreements and other documents and instruments described in Exhibit “A” (the
“Land”; the
term “Land” as
used herein includes the land specifically described in Exhibit “A” and all land
described in or covered by the leases, licenses, subleases, sublicenses,
easements, rights-of-way, agreements and other documents and instruments
described in Exhibit “A” whether or not such land is specifically described in
Exhibit “A”), together with any and all other right, title and interest of
Debtor of whatever kind or character (whether now owned or hereafter acquired by
operation of law or otherwise) (which right, title and interest of Debtor shall,
for all purposes of this Instrument, be deemed to include any and all right,
title and interest now owned or hereafter acquired by Debtor in any amendment,
modification, supplement, restatement, extension, renewal or replacement of any
of the leases, licenses, subleases, sublicenses, easements, rights-of-way,
agreements and other documents and instruments described in Exhibit “A”) in, to
and under or that covers, affects or otherwise relates to the Land or the
leases, licenses, subleases, sublicenses, easements, rights of way, agreements
and other documents and instruments described in Exhibit “A” or to any of the
estates, property, interests or rights described or referred to above or herein,
including the following:

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      a. All of
Debtor’s right, title and interest of whatever kind or character (whether now
owned or hereafter acquired by operation of law or otherwise) in, to and under
or that covers, affects or otherwise relates to the Land or the leases,
licenses, subleases, sublicenses, easements, rights-of-way, agreements and other
documents and instruments described in Exhibit “A” or to any of the estates,
property, interests or rights described or referred to above or herein, even
though Debtor’s interest therein may be incorrectly described in, omitted from
or not described in Exhibit “A”;

       

      b. All of
Debtor’s right, title and interest (whether now owned or hereafter acquired by
operation of law or otherwise) in, to and under all presently existing and
hereafter created oil, gas or mineral unitization, cooperative development,
pooling, spacing or communitization agreements, declarations or orders, and in
and to the lands and properties covered and the units created thereby (including
units formed under orders, rules, regulations or other official acts of any
federal, state, tribal, local or other authority having jurisdiction and so
called “working interest units” created under operating and similar agreements
or otherwise), that cover, affect or otherwise relate to the Land or the leases,
licenses, subleases, sublicenses, easements, rights-of-way, agreements and other
documents and instruments described in Exhibit “A” or to any of the estates,
property, interests or rights described or referred to above or
herein;

       

      c. All of
Debtor’s right, title and interest (whether now owned or hereafter acquired by
operation of law or otherwise) in, to and under all presently existing and
hereafter created operating agreements, equipment leases, production sales,
purchase, exchange or processing agreements, transportation or gathering
agreements, farmout or farmin agreements, disposal agreements, area of mutual
interest agreements and other contracts or agreements that cover, affect or
otherwise relate to the Land or the leases, licenses, subleases, sublicenses,
easements, rights-of-way, agreements and other documents and instruments
described in Exhibit “A” or to any of the estates, property, interests or rights
described or referred to above or herein or the operations thereon, or the
production, treatment, storage, gathering, transportation, handling, processing,
manufacturing, sale or marketing of Hydrocarbons (as hereinafter defined)
produced therefrom or allocated or attributed thereto, including those contracts
and agreements listed in Exhibit “A” as the same may be amended or supplemented
from time to time; and

       

      d. All of
Debtor’s right, title and interest of whatever kind or character (whether now
owned or hereafter acquired by operation of law or otherwise) in, to and under
all presently existing or hereafter created easements, servitudes,
rights-of-way, surface leases, licenses, permits and other surface rights used,
or held for use, in connection with the Land or any of the estates, property,
interests or rights described or referred to above or herein, or the operations
thereon, or the production, treatment, storage, gathering, transportation,
handling, processing, manufacturing, sale or marketing of Hydrocarbons produced
therefrom or allocated or attributed thereto, including the easements and
rights-of-way described in Exhibit “A” hereto as same may be amended or
supplemented from time to time;

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

       

      2. All of
the oil, gas, drip gasoline, natural gasoline, natural gas liquids, condensate,
distillate, casinghead gas and other solid, liquid or gaseous hydrocarbons and
other associated or related substances of whatever kind or character and in
whatever form or phase, including gases produced from coal-bearing formations
and strata such as so-called “coal-bed gas” and “coal-bed methane”
(collectively, “Hydrocarbons”) in,
on, under or allocated or attributed to any of the estates, property, interests
or rights described or referred to above or herein or any other interest of
Debtor (whether now owned or hereafter acquired by operation of law or
otherwise) in, to and under or that covers, affects or otherwise relates to the
Land or to any of the estates, property, interests or rights described or
referred to above or herein;

       

      3. All
wells, platforms, derricks, casing, tubing, tanks, tank batteries, treaters,
separators, rods, pumps, pumping units, flow lines, water lines, transportation
lines, gathering lines, gas lines, machinery, pipelines, power lines and other
goods and equipment, and all of the personal property and fixtures, as defined
under applicable state law, now or hereafter located in, on, under, affixed,
allocated or attributed to or obtained or used in connection with any of the
estates, property, interests or rights described or referred to above or herein
or any other interest of Debtor (whether now owned or hereafter acquired by
operation of law or otherwise) in, to and under or that covers, affects or
otherwise relates to the Land or to any of the estates, property, interests or
rights described or referred to above or herein, or that are used or purchased
for the production, treatment, storage, gathering, transportation, handling,
processing, manufacturing, sale or marketing of Hydrocarbons;

       

      4. All of
the accounts, contract rights and general intangibles now or hereafter arising
in connection with the production, treatment, storage, gathering,
transportation, handling, processing, manufacturing, sale or marketing of
Hydrocarbons produced from or allocated or attributed to any of the estates,
property, interests or rights described or referred to above or herein or any
other interest of Debtor (whether now owned or hereafter acquired by operation
of law or otherwise) in, to or under or that covers, affects or otherwise
relates to the Land or to any of the estates, property, interests or rights
described or referred to above or herein and all other accounts, contract rights
and general intangibles now or hereafter arising in connection with the estates,
property, interests or rights described or referred to above or
herein;

       

      5. All of
the severed and extracted Hydrocarbons, including “as-extracted collateral” (as
defined in the applicable version of the Uniform Commercial Code in effect in
each jurisdiction in which any of the Land is located) produced from or
allocated or attributed to any of the estates, property, interests or rights
described or referred to above or herein or any other interest of Debtor
(whether now owned or hereafter acquired by operation of law or otherwise) in,
to and under or that covers, affects or otherwise relates to the Land or to any
of the estates, property, interests or rights described or referred to above or
herein;

       

      6. All
renewals, extensions and restatements of, modifications, changes, amendments and
supplements to, and substitutions for the estates, property, interests and
rights described or referred to in paragraphs 1 through 5 above, and all
additions and accessions thereto;

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

       

      7. All of
the rights, privileges, benefits, hereditaments and appurtenances in any way
belonging, incidental or appertaining to the estates, property, interests and
rights described or referred to in paragraphs 1 through 6 above;
and

       

      8. All of
the proceeds and products of the estates, property, interests and rights
described or referred to in paragraphs 1 through 7 above, including,
condemnation awards and the proceeds of any and all insurance policies
(including title insurance policies as well as other types of insurance
policies) covering all or any part of said estates, property, interests or
rights and, to the extent they may constitute proceeds, instruments, accounts,
securities, general intangibles, contract rights and inventory.

       

      GRANTING
CLAUSES

       

      In
consideration of ten dollars and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Debtor, and the
matters hereinafter set forth, Debtor hereby:

       

      A. Real
Property.  Grants,
bargains, sells, mortgages, assigns, transfers and conveys to Secured Party with
POWER OF SALE, that part of the Collateral that is real property (including any
fixtures that are real property under applicable state law) subject to the
assignment of severed and extracted Hydrocarbons and the proceeds thereof made
under paragraph C below; TO HAVE AND TO HOLD all of the Collateral that is
real property (including any fixtures that are real property under applicable
state law), together with all of the rights, privileges, benefits, hereditaments
and appurtenances in any way belonging, incidental or pertaining thereto, for
the security and benefit of Secured Party and its successors and assigns,
subject to all of the terms, conditions, covenants and, agreements herein set
forth;

       

      B. Personal
Property.  Grants
to Secured Party a security interest in that part of the Collateral that is
personal property (including any fixtures that are personal property under
applicable state law); and

       

      C. Assignment of
Production.  Absolutely
assigns to Secured Party all of the severed and extracted Hydrocarbons produced
from or allocated or attributed to any of the Collateral or any other interest
of Debtor (whether now owned or hereafter acquired by operation of law or
otherwise) in, to and under or that covers, affects or otherwise relates to the
Land or to any of the estates, property rights or other interests described or
referred to above, together with all of the proceeds thereof.

       

      ARTICLE
I   

       

      Obligations

       

      Section
1.1      Obligations
Secured.  This
Instrument is executed, acknowledged and delivered by Debtor to secure and
enforce the following indebtedness, liabilities and obligations (the “Obligations”):

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

       

      A. Note.  All
indebtedness (including principal, interest, fees and penalties), liabilities
and obligations under or pursuant to that certain Promissory Note, dated March
25, 2010, in the principal amount of $6,000,000, made by Debtor, and payable to
the order of Secured Party on or before December 1, 2010, together with interest
until maturity or default at the rate of 15% per annum (the “Standard Interest
Rate”), and after maturity or default at the rate of 20% per annum (the
“Default
Rate”), and any renewals, extensions or restatements thereof,
modifications, changes, amendments or supplements thereto and substitutions
therefor (collectively, the “Note”):

       

      B. Credit
Agreement.  All
indebtedness, liabilities and obligations of Debtor of whatever kind or
character, now existing or hereafter created or arising under or pursuant to
that certain Credit Agreement (the “Credit Agreement”),
of even date herewith, as amended and as may be amended from time to time,
between Debtor and Secured Party;

       

      C. This
Instrument.  All
indebtedness, liabilities and obligations of Debtor to Secured Party of whatever
kind or character, now existing or hereafter created or arising under or
pursuant to this Instrument, including those arising under or pursuant to the
representations, warranties, covenants and indemnities contained herein and any
and all amounts advanced to protect the liens and security interests herein
granted and all reasonable attorneys’ fees, court costs, and expenses of
whatever kind or character now existing or hereafter created or arising,
incident thereto or to the collection of the indebtedness, liabilities and
obligations hereby secured and enforcement of the liens and security interests
herein granted and created;

       

      D. Other
Obligations.  All
other indebtedness, liabilities and obligations of Debtor to Secured Party of
whatever kind or character now existing or hereafter created or arising, whether
fixed, absolute or contingent, direct or indirect, primary or secondary, joint,
several or joint and several, due or to become due, and however evidenced
whether by note, open account, overdraft, endorsement, security agreement,
guarantee or otherwise, it being contemplated that Debtor may hereafter become
indebted to Secured Party in such further sum or sums; and

       

      E. Renewals, Extensions and
Amendments.  All
indebtedness, liabilities and obligations of whatever kind or character, now
existing or hereafter created or arising under or pursuant to all renewals,
extensions and restatements of, modifications, changes, amendments and
supplements to and substitutions for, all or any part of the
foregoing.

       

      Section
1.2      Future
Advances.  Debtor
and Secured Party agree and acknowledge that Secured Party may elect to make
additional advances under the terms of the Note, the Credit Agreement or
otherwise, and that any such future advances shall be subject to, and secured
by, this Instrument.  Should the Obligations decrease or increase
pursuant to the terms of the Note, the Credit Agreement or otherwise, at any
time or from time to time, this Instrument shall retain its priority position of
record until (a) the termination of the Credit Agreement, (b) the full, final
and complete payment of all the Obligations, and (c) the full release and
termination of the liens and security interests created by this Instrument. The
aggregate unpaid principal amount of the Obligations outstanding at any
particular time (after having given effect to all advances and all repayments
made prior to such time) which is secured by this Instrument shall not aggregate
in excess of $12,000,000.  Such amount does not in any way imply that
Secured Party is obligated to make any future advances to Debtor at any time
unless specifically so provided in the Credit Agreement.

       

      
        
          
          

        

        
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      ARTICLE
II   


       

      Warranties, Representations,
Covenants

       

      and
Indemnities

       

      Section
2.1       Representations and
Warranties.  Debtor
warrants and represents as follows:

       

      A. Power and
Authority.  Debtor has the power and authority to mortgage,
pledge and hypothecate the Collateral as provided herein.

       

      B. Title. Unless
otherwise indicated in Exhibit “A”, to the best of Debtor's knowledge the oil
and gas leases and licenses described in Exhibit “A” cover all of the oil, gas
and other Hydrocarbons in and under the Land. Debtor has good and defensible
title to the Collateral; and Debtor has good and defensible title to the
undivided interests in the leases, licenses, sublicenses, sublicensing,
easements, rights-of-way, agreements and other documents and instruments as
described in Exhibit “A” free and clear of all royalties and other burdens,
charges, liens, security interests, encumbrances, agreements, contracts,
assignments and other matters, except (1) landowner’s royalties and the
overriding royalties and the agreements and contracts specifically described in
Exhibit “A”, (2) the liens and security interests evidenced by this Instrument,
(3) statutory liens for taxes which are not yet delinquent, (4) liens under
operating agreements, pooling orders and unitization agreements, and mechanics'
and materialmen's liens, with respect to obligations which are not yet due, and
(5) other interests in favor of Secured Party. To the best of Debtor's knowledge
the leases, licenses, subleases, sublicenses, easements, rights-of-way,
agreements and other documents and instruments described in Exhibit “A” are
valid and subsisting and are in full force and effect. To the best of Debtor's
knowledge, all rents and royalties due and payable under the leases, licenses,
subleases, sublicenses, easements, rights-of-way, agreements and other documents
and instruments described in Exhibit “A” have been paid. All wells located on
the Land have been drilled, operated and produced in conformity with all
applicable laws and rules, regulations and orders of all regulatory authorities
having jurisdiction, and are subject to no penalties on account of past
production. To the best of Debtor's knowledge none of such wells are deviated
from the vertical more than the maximum permitted by applicable laws, rules,
regulations and orders. To the best of Debtor's knowledge such wells are in fact
bottomed under and are producing from, and the well bores are wholly within, the
lands described in Exhibit “A”. Debtor warrants and will forever defend the
title to the Collateral, subject to the aforesaid, against the claims of all
persons claiming or to claim the same or any part thereof by, through or under
the Debtor but not otherwise.

       

      
        
          
          

        

        
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      C. Working and Net Revenue
Interests.

       

      (1) With
respect to each of the oil and gas leases and wells described in Exhibit “A”,
Debtor’s share of development and operating costs with respect to the portion of
the Land covered thereby as described in Exhibit “A”, without regard to pooling
and unitization, is not greater than the “Working Interest” or “WI” specified in
Exhibit “A”; and Debtor’s share of the gross production of all oil, gas and
other Hydrocarbons produced, saved and marketed from said Land, without regard
to pooling and unitization, is no less than the “Net Revenue Interest” or “NRI”
specified in Exhibit “A”.

       

      (2) With
respect to each of the overriding royalty interests described in Exhibit “A”,
Debtor’s share of the gross production of oil, gas and other Hydrocarbons
produced, saved and marketed from the portion of the Land subject thereto as
described in Exhibit “A”, is no less than the percentage specified in Exhibit
“A”.

       

      (3) With
respect to each of the mineral interests described in Exhibit “A”, Debtor’s
share of the oil, gas and other Hydrocarbons in and under and that may be
produced, saved and marketed from the portion of the Land subject thereto as
described in Exhibit “A” is no less than the stated percentage specified in
Exhibit “A”.

       

      (4) With
respect to each of the royalty interests described in Exhibit “A”, Debtor’s
share of the gross production of oil, gas and other Hydrocarbons produced, saved
and marketed from the portion of the Land subject thereto as described in
Exhibit “A” is no less than the percentage specified in Exhibit
“A”.

       

      (5) With
respect to each of the units and pools described in Exhibit “A”, Debtor’s share
of development and operating costs with respect to the portion of the Land
covered thereby as described in Exhibit “A” or in the agreements creating such
units and pools recorded as described in Exhibit “A” and the wells on said Land,
is no greater than the “Working Interest” or “WI” specified in Exhibit “A”; and
Debtor’s share of the gross production of oil, gas and other Hydrocarbons
produced, saved and marketed from said Land and said wells is no less than the
“Net Revenue Interest” or “NRI” specified in Exhibit “A”.

       

      All such
shares of development and operating costs and of gross production are not and
will not be subject to change (other than changes that arise pursuant to
nonconsent provisions of operating agreements described in Exhibit “A” in
connection with operations hereafter proposed) except, and only to the extent
that such changes are reflected in Exhibit “A”.

       

       

      
        
          
          

        

        
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      D. Operations of Oil and Gas
Properties.  The Collateral (and all properties spaced,
communitized, unitized or otherwise aggregated therewith) will be maintained,
operated and developed in a good and workmanlike manner and in conformity in all
material respects with all applicable laws, rules, regulations and orders of all
federal, state, tribal and local governmental bodies, authorities and agencies
and in conformity in all material respects with the provisions of all leases,
subleases or other contracts and agreements comprising a part of the
Collateral.  To the best of Debtor's knowledge none of the Collateral
is subject to having allowable production reduced below the full and regular
allowable (including the maximum permissible tolerance) because of an
overproduction (whether or not the same was permissible at the time) prior to
the date hereof.

       

      E. Sale of
Production.

       

      (1) All
proceeds from the sale of Debtor’s interests in Hydrocarbons from the Collateral
are currently being paid in full to Debtor by the purchaser or remitter thereof
on a timely basis and at prices and terms comparable to market prices and terms
generally available at the time such prices and terms were negotiated for oil
and gas production from producing areas situated near the Collateral, and none
of such proceeds are currently being held in suspense by such purchaser or any
other party.

       

      (2) Neither
Debtor, nor to the best of Debtor's knowledge its predecessors in title, have
entered into or are subject to any agreement or arrangement (including “take or
pay” or similar arrangements) nor to the best of Debtor's knowledge is the
Collateral subject to any such agreement or arrangement, to deliver Hydrocarbons
produced or to be produced from the Collateral at some future time without then
or thereafter receiving full payment therefor.

       

      (3) To the
best of Debtor's knowledge none of the Collateral is or will become subject to
any contractual or other arrangement whereby payment for production from such
Collateral is to be deferred for a substantial period after the month in which
such production is delivered (that is, in the case of oil, not in excess of 60
days, and in the case of gas, not in excess of 90 days).

       

      (4) Except
for existing production sales contracts, processing agreements or transportation
agreements, none of the Collateral is or will become subject to any contractual
or other arrangement for the sale of crude oil that cannot be canceled on 180
days’ or less notice; and none of the Collateral is or will become subject to a
gas sales contract that contains terms that are not customary in the
industry.

       

      (5) To the
best of Debtor's knowledge none of the Collateral is subject at the present time
to any regulatory refund obligation and, no facts exist that might cause the
same to be imposed.

       

      (6) None of
the Collateral is subject to a gas balancing arrangement under which an
imbalance exists with respect to which imbalance Debtor or the Collateral is in
an overproduced status and is required to (i) permit one or more third
parties to take a portion of the production attributable to such Collateral
without payment (or without full payment) therefor or (ii) make payment in
cash, in order to correct such imbalance.

       

      F. Condition of Personal
Property.  The inventory, equipment, fixtures and other
tangible personal property and fixtures forming a part of the Collateral are in
good repair and condition.  All of such Collateral is located on the
Land.

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      G. Contracts and
Agreements.  Except for contracts and agreements that do not
have a material effect on the use, ownership, value or operation of the
Collateral, to the best of Debtor's knowledge Exhibit “A” sets forth all
operating agreements, equipment leases, production sales, purchase, exchange or
processing agreements, transportation or gathering agreements, farmout or farmin
agreements, disposal agreements, area of mutual interest agreements and other
contracts and agreements that cover, effect or otherwise relate to the Land or
the leases, licenses, subleases, sublicenses, easements, rights-of-way,
agreements and other documents and instruments described in Exhibit “A” that
relate to operations thereon, or the production, treatment, storage, gathering,
transportation, handling, processing, manufacturing, sale or marketing of
hydrocarbons produced therefrom or allocated or attributed thereto.

       

      H. Consents and Preferential
Rights to Purchase.  Except as specifically set forth in
Exhibit “A”, to the best of Debtor's knowledge there are no preferential rights
to purchase all or any portion of the Collateral and there are no rights of
third parties to consent to the transfer of all or any portion of the
Collateral.

       

      I. Taxes.  To
the best of Debtor's knowledge all ad valorem, property, production, severance,
excise and similar taxes and assessments based on or measured by the ownership
of property or the production of Hydrocarbons or the receipt of proceeds
therefrom relating to the Collateral that have become due and payable have been
properly and timely paid.

       

      J. Federal State and Tribal
Interests Leases.  Debtor is duly qualified to own, hold and
operate leases, easements, rights-of-way, mineral agreements and other
agreements covering, affecting or otherwise relating to federal, state and
tribal lands (including leases, easements and rights-of-way issued by the Bureau
of Land Management; leases, easements and rights-of-way issued by the Bureau of
Indian Affairs; and leases, easements, rights-of-way, mineral agreements and
other agreements with tribal governments or agencies or allottees).

       

      K. Environmental
Matters.

       

      (1) To the
best of Debtor's knowledge the Collateral is being, operated in compliance with
all applicable Environmental Laws (as hereinafter defined); and no conditions
exist on or with respect to the Collateral or, on any property adjoining the
Collateral that would subject Debtor, Secured Party or the owner of any
adjoining property to any damages (including actual, consequential, exemplary
and punitive damages), penalties, injunctive relief or cleanup costs under any
Environmental Laws (as hereinafter defined), or that require or are likely to
require cleanup, removal, remedial action or other response by Debtor, Secured
Party or the owner of any adjoining property pursuant to any Environmental
Laws.  Debtor is not a party to any litigation or administrative
proceeding, nor, to the best of Debtor’s knowledge, is any litigation,
administrative proceeding or investigation threatened against Debtor or the
Collateral, that asserts or alleges that Debtor or its predecessors in title to
the Collateral violated or are violating Environmental Laws or that Debtor or
such predecessors are required to clean up, remove or take remedial or other
responsive action due to the use, storage, treatment, disposal, discharge,
leaking or release of any Hazardous Substances or Solid Waste (as such terms are
hereinafter defined).  Neither Debtor nor to the best of Debtor's
knowledge such predecessors or any part of the Collateral is subject to any
judgment, decree, order or citation related to or arising out of Environmental
Laws and Debtor has not been named or listed as a potentially responsible party
by any governmental or other entity in a matter arising under or relating to any
Environmental Laws.  This representation shall continue to be true and
correct following disclosure to the applicable governmental authorities of all
relevant facts, conditions, and circumstances, if any, pertaining to the
Collateral or to Debtor.

       

      
        
          
          

        

        
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      (2) Debtor
undertook, at the time of acquisition of the Collateral, all appropriate inquiry
into the previous ownership and uses of the Collateral consistent with good
commercial and industry practice.  To the best of Debtor's knowledge
no Hazardous Substances or Solid Waste have been disposed of or otherwise
released on, to or from the Collateral, except in full compliance with all
Environmental Laws.  The use which Debtor makes and intends to make of
the Collateral will not result in the use or storage of any Hazardous Substances
or Solid Waste on, in or in connection with the Collateral, or disposal from the
Collateral, except in full compliance with all Environmental Laws, or result in
any requirement that Debtor apply for or obtain a permit under RCRA (as
hereinafter defined) or other Environmental Law for the treatment, storage or
disposal of Hazardous Substances or Solid Waste.  To the best of
Debtor's knowledge there are no regulated underground storage tanks located on
or in the Collateral.

       

      (3) As used
herein, the term “Environmental Laws”
shall mean any and all present and future laws (whether common or statutory),
compacts, treaties, conventions or rules, regulations, codes, plans,
requirements, criteria, standards, orders, decrees, judgments, injunctions,
notices or demand letters issued, promulgated or entered thereunder by any
federal, tribal, state or local governmental entity relating to public or
employee health and safety, pollution or protection of the environment,
including the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended by the Superfund Amendment and Reauthorization Act of
1986 (“CERCLA”), the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984, (“RCRA”), the Federal
Safe Drinking Water Act, the Federal Water Pollution Control Act, the Oil
Pollution Act of 1990, the Emergency Planning and Community Right-to-Know Act of
1986, the Clean Air Act and any and all other federal, state, tribal and local
laws, rules, regulations and orders relating to reclamation of land, wetlands
and waterways or relating to use, storage, emissions, discharge, cleanup,
release or threatened release of pollutants, contaminants, chemicals or
industrial, toxic or Hazardous Substances or Solid Waste on or into the
workplace or the environment (including ambient air, oceans, waterways,
wetlands, surface water, ground water (tributary and nontributary), land surface
or subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, chemicals or industrial, toxic, hazardous or similar
substances, as all of the foregoing may be amended, supplemented and
reauthorized from time to time.

       

      
        
          
          

        

        
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      (4) As used
herein, the term “Hazardous Substances” shall mean any and all
(a) “hazardous substances,” as defined by CERCLA; (b) “hazardous
wastes,” as defined by RCRA; (c) any pollutant, contaminate or hazardous,
dangerous or toxic chemicals, materials or substances within the meaning of any
Environmental Law; (d) any radioactive material, including any source,
special nuclear or by-product material as defined at 42 U.S.C. § 2011 et seq., as amended;
and (e) asbestos in any form or condition.  As used herein, the
term “release” shall have the meaning specified in CERCLA, and the terms “Solid Waste,”
“disposal” or “disposed” shall have the meaning specified in RCRA.  In
the event CERCLA, RCRA or any other applicable Environmental Law is amended so
as to broaden the meaning of any terms defined thereby, such broader meaning
shall apply subsequent to the effective date of such amendment; and to the
extent that the laws of any state in which the Collateral are located establish
a meaning for “hazardous substance,” “release,” “solid waste,” “hazardous
wastes,” or “disposal” that is broader than that specified in either CERCLA or
RCRA, such broader meaning shall apply.

       

      L. Non-Foreign Person
Status.  Debtor is not a “foreign person” within the meaning of
the Internal Revenue Code of 1986, as amended (the “Code”), Sections 1445 and
7701; that is, Debtor is not a nonresident alien, foreign corporation, foreign
partnership, foreign trust or foreign estate as those terms are defined in the
Code and any regulations promulgated thereunder.

       

      M. Structure.  Debtor’s
name, identity, entity structure, organizational identification number and state
of organization are correctly reflected in the preamble to this
Instrument.

       

      Section
2.2       Covenants.  Debtor
covenants and agrees as follows:

       

      A. Obligations.  Debtor
shall pay when due and perform the Obligations in accordance with the terms
thereof and hereof.

       

      B. Recording and
Filing.  Debtor
shall (1) promptly and at Debtor’s own expense, file in such offices, at
such times and as often as may be necessary, this Instrument and every other
instrument in addition or supplemental hereto, including applicable financing
statements, as may be necessary to create, perfect, maintain and preserve the
first priority of the liens and security interests intended to be created hereby
and the rights and remedies of Secured Party hereunder; (2) promptly
furnish to Secured Party evidence satisfactory to Secured Party of all such
filings; and (3) otherwise do all things necessary or expedient to be done
effectively to create, perfect, maintain and preserve the priority of the liens
and security interests intended to be created hereby as a first lien on real
property and fixtures and a first priority security interest in personal
property and fixtures.

       

      C. Modifications and
Dispositions.  Without
the prior written consent of Secured Party, Debtor shall not (1) amend,
modify or otherwise revise any lease, license or other agreement described in
Exhibit “A”; (2) release, surrender, abandon or forfeit the Collateral or
any part thereof; (3) sell, convey, assign, lease, sublease, alienate,
mortgage or grant security interests in or otherwise dispose of or encumber the
Collateral or any part thereof, except to the extent explicitly permitted by the
Credit Agreement and except sales of severed Hydrocarbons in the ordinary course
of Debtor’s business and for fair consideration, and except for the liens and
security interests created by this Instrument and liens for taxes, assessments
and governmental charges not delinquent; or (4) consent to, permit or
authorize any such act by another party with respect to the Land, the Collateral
or any part thereof.

       

       

      
        
          
          

        

        
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      D. Maintenance of
Collateral.  Debtor
shall, at Debtor’s own expense, (1) keep in full force and effect all of
the leases, licenses and other agreements described in Exhibit “A” and all
rights-of-way, easements and privileges necessary or appropriate for the proper
operation of such leases, licenses and agreements, by the proper payment of all
rentals, royalties and other sums due thereunder and the proper performance of
all obligations and other acts required thereunder; (2) cause the
Collateral to be properly maintained, developed and continuously operated for
the production of Hydrocarbons and protected against drainage and damage in a
good and workmanlike manner as a prudent operator would in accordance with good
oil field practice and applicable federal, state, tribal and local laws, rules,
regulations and orders; (3) pay or cause to be paid when due all expenses
incurred in connection with such maintenance, development, operation and
protection of the Collateral; (4) keep all goods, including equipment,
inventory and fixtures included in the Collateral in good and effective repair,
working order and operating condition and make all repairs, renewals,
replacements, substitutions, additions and improvements thereto and thereof as
are necessary and proper; (5) permit Secured Party, and its respective
agents, employees, contractors, designees and consultants, to enter upon the
Collateral for the purpose of investigating and inspecting the condition and
operation of the Collateral, and do all things necessary or proper to enable
Secured Party to exercise this right whenever Secured Party so desires; and
(6) do all other things necessary to keep unimpaired Secured Party’s
interests in the Collateral.

       

      E. Notification of
Breach.  Debtor
shall promptly, and in no event later than 3 days after becoming aware, notify
Secured Party (1) if any representation or warranty of Debtor contained in
this Agreement is discovered to be or becomes untrue, or (2) Debtor fails
to perform or comply with any covenant or agreement contained in this Agreement
or it is reasonably anticipated that Debtor will be unable to perform or comply
with any covenant or agreement contained in this Agreement.  Debtor
shall cause all the representations and warranties of Debtor contained in this
Agreement to be true and correct in all material respects from time to time and
all times.

       

      F. Defense of
Title.  If
the title or interest of Debtor or Secured Party to the Collateral or any part
thereof, or the lien or encumbrance created by this Instrument, or the rights or
powers of Secured Party hereunder, shall be attacked, either directly or
indirectly, or if any legal proceedings are commenced against Debtor or the
Collateral, Debtor shall promptly give written notice thereof to Secured Party
and, to the extent the same arises by, through or under Debtor, at Debtor’s own
expense shall take all reasonable steps diligently to defend against any such
attack or proceedings, employing attorneys acceptable to Secured
Party.  Secured Party and may take such independent action in
connection therewith as it may in its discretion deem advisable, and all costs
and expenses, including attorneys’ fees and legal expenses, incurred by or on
behalf of Secured Party in connection therewith, to the extent the same arises
by, through or under Debtor, shall be a demand obligation owing by Debtor to
Secured Party and shall bear interest at the Default Rate until paid, and shall
constitute a part of the Obligations and be indebtedness secured and evidenced
by this Instrument.

       

      
        
          
          

        

        
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      G. Environmental
Matters.  (1) Debtor
shall comply with all Environmental Laws and shall maintain and obtain all
permits, licenses and approvals required under Environmental
Laws.  Debtor shall not cause or permit the Collateral or Debtor to be
in violation of, or do anything or permit anything to be done that will subject
the Collateral, Debtor or Secured Party to any remedial obligations under any
applicable Environmental Laws, assuming disclosure to the applicable
governmental authorities of all relevant facts, conditions and circumstances, if
any, pertaining to the Collateral or otherwise.  Debtor shall promptly
notify Secured Party in writing of any existing, pending or threatened
investigation or inquiry by any governmental authority in connection with any
applicable Environmental Laws.  Debtor shall take all steps necessary
to determine that no Hazardous Substances or Solid Waste have been used or
stored on, in or in connection with the Collateral, or disposed of or otherwise
released on, to or from the Collateral, except in full compliance with all
Environmental Laws.  Debtor shall not cause or permit the use or
storage of Hazardous Substances or Solid Waste on, in or in connection with the
Collateral or disposal of Hazardous Substances or Solid Waste from the
Collateral, except in full compliance with all Environmental Laws, or make any
use of the Collateral that results in any requirement that Debtor apply for or
obtain a permit under RCRA or other Environmental Law for the treatment, storage
or disposal of Hazardous Substances or Solid Waste.  Debtor covenants
and agrees to keep or cause the Collateral to be kept free of any Hazardous
Substances or Solid Waste except in full compliance with all Environmental Laws,
and, promptly upon the discovery that the presence of any such substance on the
Collateral is not in full compliance, to remove the same (or if removal is
prohibited by law, to take whatever action is required by law) at its sole
expense.  Upon Secured Party’s reasonable request based upon the
condition of or operations on the Collateral, at any time and from time to time,
Debtor shall provide at Debtor’s sole expense inspections, tests and audits of
the Collateral from an engineering or consulting firm approved by Secured Party
indicating the presence or absence of Hazardous Substances or Solid Waste on, in
or under the Collateral that are not in compliance with applicable Environmental
Laws.  If Debtor fails to provide same after 20 days’ notice, Secured
Party may order same, and Debtor grants to Secured Party and its respective
employees, agents, contractors, designees and consultants access to the
Collateral and a license (which is coupled with an interest and irrevocable) to
perform inspections, tests and audits.  The cost of such inspections,
tests and audits shall be a demand obligation owing by Debtor to Secured Party
and shall bear interest at the Default Rate until paid, and shall constitute a
part of the Obligations and be indebtedness secured and evidenced by this
Instrument.  Nothing contained herein shall relieve Debtor from
conducting its own inspections, tests and audits or taking any other steps
necessary to comply with all Environmental Laws, nor shall anything contained
herein be construed to imply or impose any duty on Secured Party concerning
Debtor’s compliance or noncompliance therewith.  Secured Party’s
rights under this paragraph are for the sole purpose of protecting Secured
Party’s security for the repayment of the Obligations and shall not under any
circumstances be construed as granting the right to participate or constitute
participation in the management of the Collateral or the business conducted
thereon.

       

       

      
        
          
          

        

        
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      H. Change in
Debtor.  Debtor
shall not cause or permit any change to be made in its name, identity, corporate
structure or state of organization, unless Debtor shall have notified Secured
Party of such change at least thirty days prior to the effective date of such
change, and shall have first taken all action required by Secured Party for the
purpose of further perfecting or protecting the security interest in favor of
Secured Party in the Collateral.  In any notice furnished pursuant to
this Subsection 2.2H., Debtor shall expressly state that the notice is
required by this Instrument and contains facts that may require additional
filings of financing statements or other notices for the purposes of continuing
perfection of Secured Party’s security interest in the Collateral.

       

      I. Further
Assurances.  Debtor
shall execute, acknowledge and deliver, or cause to be executed, acknowledged or
delivered, to Secured Party such other and further instruments and do such other
acts as in the reasonable opinion of Secured Party may be necessary or desirable
to effect the intent of this Instrument, promptly upon request of Secured Party
and at Debtor’s expense.

       

      Section
2.3       Costs, Expenses and
Indemnities.  Debtor
agrees to pay and indemnify Secured Party as follows:

       

      A. Costs and
Expenses.  Debtor
shall indemnify Secured Party from and reimburse and pay Secured Party for all
fees, costs and expenses (including attorneys’ fees, court costs and legal
expenses and consultant’s and expert’s fees and expenses), incurred or expended
by Secured Party in connection with (1) the breach by Debtor of any
representation or warranty contained in this Instrument, the Credit Agreement,
the Note or any other documents and instruments evidencing, securing or
otherwise relating to the Obligations; (2) the failure by Debtor to perform
any agreement, covenant, condition, indemnity or obligation contained in this
Instrument, the Credit Agreement, the Note or any other documents and
instruments evidencing, securing or otherwise relating to the Obligations;
(3) Secured Party’s exercise of any of its rights and remedies under this
Instrument, the Credit Agreement, the Note and the other documents and
instruments evidencing, securing or otherwise relating to the Obligations; or
(4) the protection of the Collateral and the liens thereon and security
interests therein.  All such fees, costs and expenses shall be a
demand obligation owing by Debtor to Secured Party and shall bear interest at
the Default Rate until paid, and shall constitute a part of the Obligations and
be indebtedness secured and evidenced by this Instrument.  The
liabilities of Debtor as set forth in this Section 2.3A shall survive the
termination of this Instrument.

       

      
        
          
          

        

        
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      B. Indemnity.  Debtor
shall indemnify and hold harmless Secured Party and persons or entities owned or
controlled by or affiliated with Secured Party and their respective directors,
officers, shareholders, partners, employees, consultants and agents (herein
individually, an “Indemnified Party,”
and collectively, “Indemnified Parties”)
from and against, and reimburse and pay Indemnified Parties with respect to, any
and all claims, demands, liabilities, losses, damages (including actual,
consequential, exemplary and punitive damages), causes of action, judgments,
penalties, fees, costs and expenses (including attorneys’ fees, court costs and
legal expenses and consultant’s and expert’s fees and expenses), of any and
every kind or character, known or unknown, fixed or contingent, that may be
imposed upon, asserted against or incurred or paid by or on behalf of any
Indemnified Party on account of, in connection with, or arising out of
(1) any bodily injury or death or property damage occurring in or upon or
in the vicinity of the Collateral through any cause whatsoever, (2) any act
performed or omitted to be performed hereunder or the breach of or failure to
perform any warranty, representation, indemnity, covenant, agreement or
condition contained in this Instrument, the Credit Agreement, the Note or any
other documents and instruments evidencing, securing or relating to the
Obligations, (3) any transaction, act, omission, event or circumstance
arising out of or in any way connected with the Collateral or with this
Instrument, the Credit Agreement, the Note or any other documents and
instruments evidencing, securing or relating to the Obligations, and
(4) the violation of or failure to comply with any statute, law, rule,
regulation or order, including Environmental Laws and statutes, laws, rules,
regulations and orders relating to Hazardous Substances or Solid
Waste.  Without limiting the generality of the foregoing, it is the
intention of Debtor and Debtor agrees that the foregoing indemnities shall apply
to each Indemnified Party with respect to claims, demands, liabilities, losses,
damages (including actual, consequential, exemplary and punitive damages),
causes of action, judgments, penalties, fees, costs and expenses (including
attorneys’ fees, court costs and legal expenses and consultant’s and expert’s
fees and expenses) of any and every kind or character, known or unknown, fixed
or contingent, that in whole or in part are caused by or arise out of the
negligence of such Indemnified Party; however, such indemnities shall not apply
to any Indemnified Party to the extent the subject of the indemnification is
caused by or arises out of the gross negligence or willful misconduct of such
Indemnified Party.  The foregoing indemnities shall not terminate upon
the release, foreclosure or other termination of this Instrument, but shall
survive the foreclosure of the liens and security interests created by this
Instrument or conveyance in lieu of foreclosure and the repayment and
performance of the Obligations and the discharge and release of the liens and
security interest created by this Instrument and the other instruments and
documents evidencing, securing or relating to the Obligations.  Any
amount to be paid hereunder by Debtor to Secured Party or for which Debtor has
indemnified an Indemnified Party shall be a demand obligation owing by Debtor to
Secured Party and shall bear interest at the Default Rate until paid, and shall
constitute a part of the Obligations and be indebtedness secured and evidenced
by this Instrument.  The rights, powers and remedies herein conferred
are cumulative, and not exclusive, of any and all other rights, powers and
remedies existing at law or in equity (including rights, powers and remedies
under Environmental Laws) or provided for in any other documents or instruments
evidencing, securing or relating to the Obligations and nothing in this
paragraph or elsewhere in this Instrument or in any other documents or
instruments evidencing, securing or relating to the Obligations shall limit or
impair any rights, powers or remedies of Secured Party under any Environmental
Laws, including any rights of contribution or indemnification available
thereunder. The liabilities of Debtor as set forth in this Section 2.3B
shall survive the termination of this Instrument.

       

       

      
        
          
          

        

        
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      Section
2.4       Performance by Secured
Party.  Debtor
agrees that, if Debtor fails to perform any act which Debtor is required to
perform hereunder, Secured Party may, but shall not be obligated to, perform or
cause to be performed such act, and any expense so incurred by Secured Party in
connection therewith shall be a demand obligation owing by Debtor to Secured
Party and shall bear interest at the Default Rate until paid, and shall
constitute a part of the Obligations and be indebtedness secured and evidenced
by this Instrument, and Secured Party shall be subrogated to all of the rights
of the party receiving such payment.  Debtor hereby irrevocably
appoints Secured Party as Debtor’s attorney-in-fact and proxy, with full
authority in the place and stead of Debtor and in the name of Debtor or
otherwise, from time to time to take any action and to execute any instrument
which Secured Party may deem necessary or advisable to accomplish the purposes
of this Agreement.  Such appointment is coupled with an interest and
shall be irrevocable from the date hereof and so long as any part of the
Obligations is outstanding.

       

      ARTICLE
III

       

      Collection of Proceeds of
Production

       

      Section
3.1       Assignment of
Proceeds.  Pursuant
to paragraph C of the granting clause of this Instrument, Secured Party is
absolutely assigned and entitled to receive all of the severed and extracted
Hydrocarbons produced from or allocated or attributed to all of the Collateral,
together with all of the proceeds thereof and payments in lieu thereof such as
“take or pay” or similar payments.  Debtor acknowledges and agrees
that said assignment is intended to be an absolute and unconditional assignment
and not merely a pledge of or creation of a security interest in said
Hydrocarbons and proceeds or an assignment as additional security upon demand
and in the event of default.  Debtor shall execute, acknowledge and
deliver or cause to be executed, acknowledged and delivered, transfer orders or
letters-in-lieu thereof directing all pipeline companies or other purchasers of
Hydrocarbons to make payments directly to Secured Party.  All parties
producing, purchasing, receiving or having in their possession any such
Hydrocarbons or proceeds are hereby authorized and directed by Debtor to treat
and regard Secured Party as the party entitled in Debtor’s place and stead to
receive such Hydrocarbons and proceeds; and said parties shall be fully
protected in so treating and regarding Secured Party and shall be under no
obligation to see to the application by Secured Party of any such proceeds
received by it.  For its convenience, Secured Party may, with respect
to any or all such Hydrocarbons or proceeds, permit Debtor to receive such
Hydrocarbons or proceeds until such time as Secured Party shall have made
written demand therefor.  Such election by Secured Party shall not in
any way waive the right of Secured Party to demand and receive such Hydrocarbons
and proceeds thereafter allocated or attributed to the Collateral and shall not
in any way diminish the absolute and unconditional right of Secured Party to
receive all of such Hydrocarbons and proceeds and cash proceeds not theretofore
expended or distributed by Debtor.  Any such Hydrocarbons or proceeds
received by Debtor shall, when received, constitute trust funds in Debtor’s
hands and shall be held by Debtor for the benefit of Secured
Party.  Debtor hereby agrees that upon the first to occur of either
(A) written demand of Secured Party, or (B) the occurrence of any
event which constitutes an Event of Default (as hereinafter defined) or which
upon the giving (or receiving) of notice or lapse of time, or both, would
constitute such an Event of Default, all cash, proceeds, instruments and other
property, of whatever kind or character, received by Debtor on account of the
Collateral, whether received by Debtor in the exercise of its collection rights
hereunder or otherwise, shall, in accordance with instructions then given by
Secured Party, be remitted to Secured Party or deposited to an account
designated by Secured Party, in the form received (properly assigned or endorsed
to the order of Secured Party or for collection and in accordance with Secured
Party’s instructions) not later than the first banking business day following
the day of receipt, to be applied as provided in Section 3.2 hereof and, until
so applied, may be held by Secured Party in a separate account on which Debtor
may not draw.  Debtor agrees not to commingle any such property,
following the receipt of any such demand from Secured Party or the occurrence of
an Event of Default, with any of its other funds or property and agrees to hold
the same upon an express trust for Secured Party until remitted to Secured
Party.

       

      
        
          
          

        

        
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      Section
3.2       Application of
Proceeds.  Secured
Party shall apply all of the proceeds received pursuant to Section 3.1 hereof in
satisfaction of the Obligations as provided below, unless otherwise agreed to by
Secured Party and Debtor.  All such proceeds received and to be
applied by Secured Party up to the close of business on the last day of each
calendar month shall be applied by Secured Party on or before the fifth business
day of the next succeeding calendar month as follows (with any balance remaining
after such application to be paid to Debtor):

       

      A. First, to
the payment to Secured Party of all outstanding or unreimbursed fees, costs and
expenses incurred by Secured Party pursuant hereto, and any part of the
Obligations not evidenced by written instrument, including all charges and
penalties, including interest thereon, due Secured Party;

       

      B. Second,
to the payment of all interest accrued on the Obligations; and

       

      C. Third, to
the payment or prepayment of the principal of the Obligations in any order the
Secured Party may elect from time to time.

       

      If any
date of application specified above shall be a Saturday, Sunday or legal
holiday, the proceeds to be applied by Secured Party pursuant to this Section
3.2 shall be applied on the business day next succeeding such date which is not
a Saturday, Sunday or legal holiday, and the amount to be applied as described
above shall be the amount accrued up to such date.  If the proceeds
received by Secured Party pursuant to Section 3.1 during any month are not
sufficient to make the minimum payments of principal of and interest on the
Obligations required by the terms of the Credit Agreement or the Note, then
Debtor on or before the due date shall make payment to Secured Party of an
amount sufficient when added to such proceeds received to make the minimum
required payments of principal and interest of the Obligations.

       

      Section
3.3       Inclusion in
Sale

       

      .  Upon
any sale of any of the Collateral pursuant to ARTICLE V hereof and expiration of
any mandatory redemption periods, the Hydrocarbons thereafter produced from or
attributed to the part of the Collateral so sold, and the proceeds thereof,
shall be included in such sale and shall pass to the purchaser free and clear of
the provisions of this ARTICLE III.

       

       

      
        
          
          

        

        
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      Section
3.4       No Liability in Secured
Party.  Secured
Party is hereby absolved from all liability for failure to enforce collection of
any such proceeds and from all other responsibility in connection therewith,
except the responsibility to account to Debtor for proceeds actually
received.

       

      Section
3.5       Indemnity.  Debtor
shall indemnify Secured Party against all claims, actions, liabilities,
judgments, costs, attorneys’ fees or other charges of every kind or nature
(“Claims”) made against or incurred by Secured Party as a consequence of the
assertion, either before or after the payment in full of the Obligations, that
Secured Party received Hydrocarbons or proceeds pursuant to this ARTICLE III
which were claimed by third persons.  Secured Party shall have the
right to employ attorneys and to defend against any Claims, and unless furnished
with reasonable indemnity, Secured Party shall have the right to pay or
compromise and adjust all Claims.  Debtor shall indemnify and pay to
Secured Party all such amounts as may be paid with respect thereto or as may be
successfully adjudicated against Secured Party, and such amounts shall be a
demand obligation owing by Debtor to Secured Party and shall bear interest at
the Default Rate until paid, and shall constitute a part of the Obligations and
be indebtedness secured and evidenced by this Instrument.  The
liabilities of Debtor as set forth in this Section 3.5 shall survive the
termination of this Instrument.

       

      Section
3.6       Rights of Secured
Party.  Secured
Party shall have the immediate and continuing right to demand, collect, receive
and receipt for all production, proceeds and payments assigned hereunder, and
Secured Party is hereby appointed agent and attorney-in-fact of Debtor (which
appointment is coupled with an interest and is irrevocable) for the purpose of
executing any release, receipt, division order, transfer order, relinquishment
or other instrument that Secured Party deems necessary in order for Secured
Party to collect and receive such production, proceeds and
payments.  In addition, Debtor agrees that, upon the request of
Secured Party, it will promptly execute and deliver to Secured Party such
transfer orders, payment orders, division orders and other instruments as
Secured Party may deem necessary, convenient or appropriate in connection with
the payment and delivery directly to Secured Party of all proceeds, production,
and payments assigned hereunder.  Debtor hereby authorizes and directs
that, upon the request of Secured Party, all pipeline companies, purchasers,
transporters and other parties now or hereafter purchasing oil, gas or other
mineral production produced from or allocated or attributed to the Collateral or
any other interest of Debtor (whether now owned or hereafter acquired by
operation of law or otherwise), in, to or relating to the Land or to any of the
estates, property, rights or other interests included in the Collateral, or any
part thereof, or now or hereafter having in their possession or control any
production from or allocated to the Collateral or any other interest of Debtor
(whether now owned or hereafter acquired by operation of law or otherwise), in,
to or relating to the Land or to any of the estates, property, rights or other
interests included in the Collateral, or any part thereof, or the proceeds
therefrom, or now or hereafter otherwise owing monies to Debtor under contracts
and agreements herein assigned, shall, until Secured Party directs otherwise,
pay and deliver such proceeds, production or amounts directly to Secured Party
at Secured Party’s address set forth in the introduction to this Instrument, or
in such other manner as Secured Party may direct such parties in writing, and
this authorization shall continue until the assignment of production and
proceeds contained herein is released and reassigned.  Debtor agrees
that all division orders, transfer orders, receipts and other instruments that
Secured Party may from time to time execute and deliver for the purpose of
collecting and receipting for such proceeds, production or payments may be
relied upon in all respects, and that the same shall be binding upon Debtor and
its successors and assigns.  No payor making payments to Secured Party
at its request under the assignment of production and proceeds contained herein
shall have any responsibility to see to the application of any of such funds,
and any party paying or delivering proceeds, production or amounts to Secured
Party under such assignments shall be released thereby from any and all
liability to Debtor to the full extent and amount of all payments, production or
proceeds so delivered.  Debtor agrees to indemnify and hold harmless
any and all parties making payments to Secured Party, at the request of the
Secured Party under the assignment of production and proceeds contained herein,
against any and all liabilities, actions, claims, judgments, costs, charges and
attorneys’ fees and legal expenses resulting from the delivery of such payments
to Secured Party.  The indemnity agreement contained in the previous
sentence is made for the direct benefit of and shall be enforceable by all such
persons and shall survive the termination of this Instrument.  Should
Secured Party bring suit against any third party for collection of any amounts
or sums included within the assignment of production and proceeds contained
herein (and Secured Party shall have the right to bring any such suit), it may
sue either in its own name or in the name of Debtor, or both.

       

       

      
        
          
          

        

        
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      Section
3.7       Change of
Connection.  Should
any purchaser taking the production from the Collateral or any other interest of
Debtor (whether now owned or hereafter acquired by operation of law or
otherwise), in, to or relating to the Land or to any of the estates, property,
rights or other interests included in the Collateral, or any part thereof, fail
to make any payment promptly to Secured Party, in accordance with the assignment
of production and proceeds herein made, then Secured Party, to the fullest
extent permissible under applicable law, shall have the right to demand a change
of connection and to designate another purchaser with whom a new connection may
be made, without any liability on the part of Secured Party in making such
selection; and failure of Debtor to consent to and promptly effect such change
of connection shall constitute an Event of Default under ARTICLE V
below.

       

      Section
3.8       No Delegation or
Assumption.  Nothing
in this Instrument shall be deemed or construed to create a delegation to or
assumption by Secured Party, of the duties and obligations of Debtor under any
agreement or contract relating to the Collateral or any portion thereof, and all
of the parties to any such contract shall continue to look to Debtor for
performance of all covenants and other obligations and the satisfaction of all
representations, warranties, covenants, indemnities and other agreements of
Debtor thereunder, notwithstanding the assignment of production and proceeds
contained herein or the exercise by Secured Party, prior to foreclosure, of any
of its rights hereunder or under applicable law.

       

      Section
3.9       Cumulative.  The
assignment of production and proceeds contained herein shall not be construed to
limit in any way the other rights and remedies of Secured Party hereunder,
including its right to accelerate the indebtedness evidenced by the Obligations
upon an Event of Default and the other rights and remedies herein conferred,
conferred in the other documents and instruments evidencing, securing or
relating to the Obligations, or conferred by operation of law.  Monies
received under the assignment of production and proceeds contained herein shall
not be deemed to have been applied in payment of the Obligations unless and
until such monies actually are applied thereto by Secured Party.

       

       

       

      
        
          
          

        

        
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      ARTICLE
IV     


       

      Termination and
Release

       

      Section
4.1       Release Upon
Termination.  If
all of the Obligations shall be paid in full and otherwise satisfied pursuant to
the terms and conditions of this Instrument and the other documents and
instruments evidencing, securing or relating to the Obligations, and if Secured
Party has no further obligation to advance any amounts to Debtor, then all of
the Collateral shall revert to Debtor, the liens and security interests created
by this Instrument shall terminate and Secured Party shall, promptly after the
request of Debtor or as otherwise required by applicable law, execute,
acknowledge and deliver to Debtor a release or reconveyance of this Instrument
and such other instruments as may be necessary to evidence the termination of
the liens and security interests created by this Instrument.

       

      Section
4.2       Partial
Release.  No
partial release or reconveyance from the liens and security interests created by
this Instrument of any part of the Collateral by Secured Party shall in any way
alter, vary or diminish the force or effect of this Instrument or impair,
release or subordinate the liens and security interests created by this
Instrument on the remainder of the Collateral.  Except as specifically
provided in any such partial release or reconveyance (A) this Instrument
and liens and security interests created hereby shall remain in full force and
effect, (B) such partial release or reconveyance will not modify or affect
the terms, conditions or provisions of this Instrument, and (C) nothing
contained in any such partial release or reconveyance shall be deemed to be, or
construed as, a waiver of any such terms, conditions or provisions or as a
waiver of any other term, condition or provision.

       

      Section
4.3       Execution.  All
releases and reconveyances executed in connection with this Instrument shall be
without warranty of any kind, express, implied or statutory.

       

      Section
4.4       Costs, Expenses and
Effect.  Debtor
shall pay all legal fees and other fees, costs and expenses incurred by Secured
Party for preparing and reviewing instruments of termination and release or
reconveyance and the execution and delivery thereof and Secured Party may
require payment of the same prior to delivery of such
instruments.  The release and reconveyance of this Instrument and the
termination of the liens and security interests created by this Instrument,
shall not terminate or otherwise affect Secured Party’s right or ability to
exercise any right, power or remedy relating to any claim for breach of warranty
or representation, for failure to perform any covenant or other agreement, under
any indemnity or for fraud, deceit or other misrepresentation or
omission.

       

      ARTICLE
V    


       

      Default

       

      Section
5.1       Events of
Default.  The occurrence of any of the following events shall
constitute an event of default (“Event of Default”) and upon the occurrence
thereof the liens and security interests created hereby shall be subject to
foreclosure in any manner provided for herein or provided for by applicable
law:

       

       

       

      
        
          
          

        

        
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      A. Failure
of Debtor to pay any fee or other amount due Secured Party under this Instrument
within 10 days after the date that any such payment is due;

       

      B. Failure
of Debtor to perform or observe any covenant, agreement, indemnity, condition or
provision in this Instrument and such failure shall continue for 30 days after
the earlier to occur of (1) Debtor becoming aware of such failure, and
(2) written notice of such failure has been given to Debtor;

       

      C. Any of
Debtor’s representations or warranties made in this Instrument or any statement
or certificate at any time given in writing pursuant hereto or in connection
herewith shall be false or misleading in any material respect as of the date
made or deemed made; or

       

      D. An “Event
of Default” as defined in the Credit Agreement  shall
occur.

       

      Section
5.2       Treatment of
Fixtures.  If an Event of Default shall have occurred and be
continuing, if deemed appropriate by Secured Party or if required by applicable
law, Secured Party may elect to treat the fixtures included in the Collateral
either as real property or as personal property, or both, and proceed to
exercise such rights as apply to the type of property selected.

       

      Section
5.3       Acceleration and
Foreclosure.  If an Event of Default shall have occurred and be
continuing, in addition to any other rights, powers and remedies herein
conferred or conferred by operation of law, (a) Secured Party shall have
all of the rights, powers and remedies of a creditor, secured party and
mortgagee, (b) Secured Party may, without notice, demand or declaration of
default, which are hereby waived by Debtor to the extent such waiver is not
prohibited by applicable law, declare all indebtedness secured hereby due and
payable, and (c) whether or not Secured Party exercises such option, it
may, at its option and in its sole discretion, without any prior notice to or
demand upon Debtor, proceed by one or more actions in equity or at law for the
seizure and sale of the Collateral or any portion thereof, for the foreclosure
or sale of the Collateral or any portion thereof by judicial foreclosure by
appropriate proceedings in any court of competent jurisdiction, by the power of
sale granted herein, or in any other manner then permitted by law, for the
specific performance of any covenant or agreement of Debtor herein contained or
in aid of the execution of any right, power or remedy herein granted, or for the
enforcement of any other appropriate equitable or legal remedy and to recover
judgment against Debtor.  In furtherance, and not in limitation,
thereof:

       

      A. Mortgage.  This
Instrument shall constitute a mortgage under applicable law, and if an Event of
Default shall have occurred and be continuing, may be foreclosed as to any of
the Collateral by judicial action or in any manner then permitted by applicable
law.

       

      B. Election.  In
the event a sale of the Collateral under the power of sale shall be commenced by
Secured Party, Secured Party may at any time before the sale of the Collateral,
elect to abandon the sale, and Secured Party may then institute a suit for the
collection of the Obligations and for the foreclosure of this Instrument by
judicial action.  It is agreed that if Secured Party should institute
a suit for the foreclosure of this Instrument by judicial action, Secured Party
may at any time before the entry of a final judgment, dismiss such suit, and
then sell, or cause to be sold, the Collateral under the power of sale herein
granted in accordance with the provisions of this Instrument.

       

      
        
          
          

        

        
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      C. Additional
Actions.  This Instrument shall also constitute and may be
enforced from time to time as an assignment, chattel mortgage, contract,
mortgage, financing statement and security agreement, and from time to time as
any one or more thereof as appropriate under applicable law.  Secured
Party shall be entitled to all of the rights, remedies and benefits of a secured
party, mortgagee and a beneficiary granted under applicable law; and, to the
fullest extent of such law, shall be entitled to enforce such rights, remedies
and benefits.  Debtor intends and hereby grants to Secured Party all
rights, powers and remedies accorded a secured party, mortgagee and a
beneficiary under applicable law whether or not such rights, powers and remedies
are expressly granted or reserved herein.

       

      D. Notice, Place and Manner of
Sale.  Any sale of the Collateral under this ARTICLE V
shall take place at such place or places and otherwise in such manner and upon
such notice as may be required by law; or, in the absence of any such
requirement, as Secured Party may deem appropriate.  Debtor expressly
agrees that, except as may be required by applicable law, Secured Party may
offer the Collateral as a whole or in such parcels or lots as Secured Party
elects, regardless of the manner in which the Collateral may be
described.

       

      E. Postponement of
Sale.  Any sale of the Collateral conducted under this
ARTICLE V may be postponed from time to time as provided by applicable law;
or, in the absence of any such provisions, Secured Party may postpone the sale
of the Collateral or any part thereof by public announcement at the time and
place of such sale, and from time to time thereafter may further postpone such
sale by public announcement made at the time of sale fixed by the preceding
postponement.  Sale of a part of the Collateral will not exhaust the
power of sale, and sales may be made from time to time until all Collateral is
sold or the Obligations are paid in full.

       

      F. Secured Party’s Right to
Purchase.  Secured Party shall have the right to bid or to
become the purchaser at any sale made pursuant to the provisions of this
ARTICLE V, and shall have the right to credit upon the amount of the bid
made therefor the amount payable to it out of the net proceeds of such
sale.

       

       

      
        
          
          

        

        
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      G. Conveyance to
Purchaser.  Any deed, bill of sale or other conveyance executed
by or on behalf of Secured Party, the sheriff or other official or party
responsible for conducting the sale shall be prima facie evidence of the
compliance with all statutory requirements for the sale and execution of such
deed, bill of sale or other conveyance and will conclusively establish the truth
and accuracy of the recitals and other matters stated therein, including
nonpayment or nonperformance of the Obligations, violation of the terms and
covenants contained herein, and the advertisement and conduct of such sale in
the manner provided herein or as provided by applicable law.  Debtor,
to the extent not prohibited by applicable law, does hereby ratify and confirm
all legal acts that Secured Party may do in carrying out the provisions of this
Instrument.  Any sale of the Collateral or any portion thereof
pursuant to the provisions of this ARTICLE V will operate to divest all
right, title, interest, claim and demand of Debtor in and to the property sold
and will be a perpetual bar against Debtor and shall, subject to applicable law,
vest title in the purchaser free and clear of all liens, security interests and
encumbrances, including liens, security interests and encumbrances junior or
subordinate to the liens, security interests and encumbrances created by this
Instrument.  Upon any sale of the Collateral or any portion thereof
pursuant to the provisions of this ARTICLE V, the receipt by Secured Party,
the sheriff or other official or party responsible for conducting the sale,
shall be sufficient discharge to the purchaser or purchasers at any sale for the
purchase money, and such purchaser or purchasers and the heirs, devisees,
personal representatives, successors and assigns thereof shall not, after paying
such purchase money and receiving such receipt of Secured Party, the sheriff or
such other official or party, be obliged to see to the application thereof or be
in anywise answerable for any loss, misapplication or nonapplication
thereof.  Any purchaser at a sale will, subject to mandatory
redemption periods, if any, receive immediate possession of the Collateral
purchased, and Debtor agrees that if Debtor retains possession of the Collateral
or any part thereof subsequent to such sale, Debtor will be considered a tenant
at sufferance of the purchaser, and will, if Debtor remains in possession after
demand to remove, be guilty of forcible detainer, and will be subject to
eviction and removal, forcible or otherwise, with or without process of law and
all damages to Debtor by reason thereof are hereby expressly waived by
Debtor.

       

      H. Federal
Transfers.  Upon a sale conducted pursuant to this
ARTICLE V of all or any portion of the Collateral consisting of interests
(the “Federal Interests”) in leases, easements, rights-of-way, agreements or
other documents and instruments covering, affecting or otherwise relating to
federal lands (including leases, easements and rights-of-way issued by the
Bureau of Land Management); Debtor agrees to take all action and execute all
instruments necessary or advisable to transfer the Federal Interests to the
purchaser at such sale, including to execute, acknowledge and deliver
assignments of the Federal Interests on officially approved forms in sufficient
counterparts to satisfy applicable statutory and regulatory requirements, to
seek and request approval thereof and to take all other action necessary or
advisable in connection therewith.  By separate instruments, Debtor
has irrevocably appointed, and by this Instrument hereby irrevocably appoints,
Secured Party as Debtor’s attorney-in-fact and proxy, with full power and
authority in the place and steed of Debtor, in the name of Debtor or otherwise,
to take any such action and to execute any such instruments on behalf of Debtor
that Secured Party may deem necessary or advisable to so transfer the Federal
Interests, including the power and authority to execute, acknowledge and deliver
such assignments, to seek and request approval thereof and to take all other
action deemed necessary or advisable by Secured Party in connection therewith;
and Debtor hereby adopts, ratifies and confirms all such actions and
instruments.  By separate instruments Debtor has also irrevocably
appointed Secured Party as Debtor’s attorney-in-fact and proxy, with full power
and authority in the place and steed of Debtor, in the name of Debtor or
otherwise, to take any such action and to execute any such instruments on behalf
of Debtor that Secured Party may deem necessary or advisable to so transfer the
Federal Interests, including the power and authority to execute, acknowledge and
deliver such assignments, to seek and request approval thereof and to take all
other action deemed necessary or advisable by Secured Party in connection
therewith; and by such separate instruments Debtor has adopted, ratified and
confirmed all such actions and instruments.  Such powers of attorney
and proxies are coupled with an interest, shall survive the dissolution,
termination, reorganization or other incapacity of Debtor and shall be
irrevocable.  No action taken by Secured Party shall constitute
acknowledgment of, or assumption of liabilities relating to, the Federal
Interests, and neither Debtor nor any other party may claim that Secured Party
is bound, directly or indirectly, by any such action.

       

       

      
        
          
          

        

        
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      Section
5.4      Personal
Property.  If an Event of Default shall have occurred and be
continuing, in addition to all other rights, powers and remedies herein
conferred or conferred by operation of law, Secured Party shall have all of the
rights and remedies of an assignee and secured party granted by applicable law,
including the applicable Uniform Commercial Code as then in effect, and shall,
to the extent permitted by applicable law, have the right and power, but not the
obligation, to take possession of the personal property included in the
Collateral and any proceeds thereof wherever located, and for that purpose
Secured Party may enter upon any premises on which any or all of such personal
property is located and take possession of and operate such personal property or
remove the same therefrom.  Secured Party may require Debtor to
assemble such personal property and make it available to Secured Party at a
place to be designated by Secured Party that is reasonably convenient to both
parties.  The following presumptions shall exist and shall be deemed
conclusive with regard to the exercise by Secured Party of any of its remedies
with respect to personal property:

       

      A. If notice
is required by applicable law, Debtor agrees that five days’ prior written
notice of the time and place of any public sale or of the time after which any
private sale or any other intended disposition thereof is to be made shall be
deemed reasonable notice to Debtor.  No such notice is necessary if
such property is perishable, threatens to decline speedily in value or is of a
type customarily sold on a recognized market.

       

      B. If
Secured Party in good faith believes that the Securities Act of 1933 or any
other state or federal law prohibits or restricts the customary manner of sale
or distribution of any of such property, Secured Party may sell such property
privately or in any other manner deemed advisable by Secured Party at such price
or prices as Secured Party determines in its sole discretion.  Debtor
recognizes that such prohibition or restriction may cause such property to have
less value than it otherwise would have and that, consequently, such sale or
disposition by Secured Party may result in a lower sales price than if the sale
were otherwise held.

       

      Section
5.5       Possession.  If
an Event of Default shall have occurred and be continuing, in addition to all
other rights, powers and remedies herein conferred or conferred by operation of
law, Secured Party shall, to the extent not prohibited by applicable law, have
the right and power, but not the obligation, to enter upon and take immediate
possession of the Collateral or any portion thereof, to exclude Debtor
therefrom, to hold, use, operate, manage, enjoy and control such Collateral, to
make all such repairs, replacements, alterations, additions and improvements to
the same as Secured Party may deem proper or expedient, to sell all of the
severed and extracted Hydrocarbons included in the same subject to the
provisions of ARTICLE III hereof, to demand, collect and retain all other
earnings, rents, issues, profits, proceeds and other sums due or to become due
with respect to such Collateral accounting for and applying to the payment of
the Obligations only the net earnings arising therefrom after charging against
the receipts therefrom all fees, costs, expenses, charges, damages and losses
incurred by reason thereof plus interest thereon at the Default Rate without any
liability to Debtor in connection therewith.  Such possession shall at
once be delivered to Secured Party upon request, and on refusal or failure to so
deliver possession, the delivery of such possession may be enforced by Secured
Party by any appropriate civil suit, proceeding or other action.

       

      
        
          
          

        

        
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      Section
5.6       Appointment of
Receiver.  If an Event of Default shall have occurred and be
continuing, in addition to all other rights, powers and remedies herein
conferred or conferred by operation of law, Secured Party shall be entitled to
the appointment of a receiver of the Collateral without the necessity of the
posting of a bond or notice; and shall, to the extent not prohibited by
applicable law, be entitled to such receiver as a matter of right, without
regard to the solvency or insolvency of Debtor, the value or adequacy of the
Collateral or the Collateral being in danger of being materially injured or
reduced in value as security by removal, destruction, deterioration,
accumulation of prior liens or otherwise; and such receiver may be appointed by
any court of competent jurisdiction upon ex parte application, and without
notice, notice being expressly waived by Debtor to the extent such waiver is not
prohibited by applicable law.  Debtor does hereby consent to the
appointment of such receiver or receivers, waives any and all defenses to such
appointment, and agrees not to oppose any application therefor by Secured Party,
and agrees that such appointment shall in no manner impair, prejudice or
otherwise affect the rights of Secured Party under this
ARTICLE V.  Nothing herein is to be construed to deprive Secured
Party of any other right, remedy or privilege it may now or hereafter have under
law to have a receiver appointed.  Any money advanced by Secured Party
in connection with any such receivership shall be a demand obligation owing by
Debtor to Secured Party and shall bear interest, from the date of making such
advancement until paid, at the Default Rate.  Any such receiver shall
have all powers conferred by the court appointing such receiver, which powers
shall, to the extent not prohibited by applicable law include, the right to
enter upon and take immediate possession of the Collateral or any part thereof,
to exclude Debtor therefrom, to hold, use, operate, manage and control such
Collateral, to make all such repairs, replacements, alterations, additions and
improvements to the same as such receiver or Secured Party may deem proper or
expedient, to lease, sell or otherwise transfer the Collateral or any portion
thereof as such receiver or Secured Party may deem proper or expedient, to sell
all of the Hydrocarbons included in the same subject to the provisions of
ARTICLE III hereof, to demand and collect all of the other earnings, rents,
issues, profits, proceeds and other sums due or to become due with respect to
such Collateral, accounting for only the net earnings arising therefrom after
charging against the receipts therefrom all fees, costs, expenses, charges,
damages and losses incurred by reason thereof plus interest thereon at the
Default Rate without any liability to Debtor in connection therewith which net
earnings shall be turned over by such receiver to Secured Party to be applied by
Secured Party to the payment of the Obligations in the order set forth in
Section 5.10.

       

      Section
5.7       Waiver by
Debtor.  To the extent not prohibited by applicable law, Debtor
agrees that Debtor shall not at any time have, invoke, utilize or assert any
right under any laws pertaining to the marshaling of assets or liens, the sale
of property in the inverse order of alienation, the exemption of homesteads, the
administration of estates of decedents, appraisement, moratorium, valuation,
stay, extension or redemption now or hereafter in force, and Debtor hereby
waives the benefit of all such laws to the fullest extent not prohibited by
applicable law.

       

      
        
          
          

        

        
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      Section
5.8       Remedies
Cumulative.  All rights, powers and remedies herein conferred
are cumulative, and not exclusive, of (a) any and all other rights and remedies
herein conferred, (b) any and all rights, powers and remedies existing at law or
in equity, and (c) any and all other rights, powers and remedies provided for in
any other documents or instruments evidencing, securing or relating to the
Obligations, and Secured Party shall, in addition to the rights, powers and
remedies herein conferred, be entitled to avail itself of all such other rights,
powers and remedies as may now or hereafter exist at law or in equity for the
collection of and enforcement of the Obligations and the enforcement of the
warranties, representations, covenants, indemnities and other agreements
contained in this Instrument and the other documents and instruments evidencing,
securing or relating to the Obligations and the foreclosure of the liens and
security interests created by this Instrument.  Each and every such
right, power and remedy may be exercised from time to time and as often and in
such order as may be deemed expedient by Secured Party and 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 Secured Party, the sheriff or other
official or person in the exercise of any right, power or remedy will 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.

       

      Section
5.9      Costs and
Expenses.  All fees, costs and expenses (including reasonable
attorneys’ fees and legal expenses, court costs, filing fees, and mortgage,
transfer, stamp and other excise taxes, inspection fees, appraisers’ fees,
outlays for documentary and expert evidence, stenographers’ charges,
publication, notice and advertising costs, postage, photocopies, telephone
charges and costs of procuring all abstracts of title, title searches and
examinations, title opinions, title insurance policies and similar title data
and assurances as Secured Party may deem appropriate either to prosecute such
suit or to evidence to bidders at the sales that may be had pursuant to such
proceeding the condition of the title to or the value of the Collateral,
sheriff’s fees and expenses, receiver’s fees and expenses, and fees and expenses
of agents of Secured Party, costs and expenses of defending, protecting and
maintaining the Collateral and Secured Party’s interest therein including repair
and maintenance costs and expenses and costs and expenses of protecting and
securing the Collateral including insurance costs and all other fees, costs and
expenses provided for or authorized by applicable law), incurred by or on behalf
of Secured Party in protecting and enforcing its rights hereunder or incident to
the enforcement of this Instrument and the liens and security interests created
hereby, shall be a demand obligation owing by Debtor to Secured Party and shall
bear interest at the Default Rate until paid, and shall constitute a part of the
Obligations and be indebtedness secured and evidenced by this
Instrument.

       

      Section
5.10     Application of
Proceeds.  The proceeds of any sale of the Collateral or any
part thereof made pursuant to this ARTICLE V shall be applied as may be
required by applicable law, or, in the absence of any such requirements, as
follows:

       

       

      
        
          
          

        

        
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      A. First, to
the payment of all fees, costs and expenses referred to in Section 6.1(k) of the
Credit Agreement and incident to the enforcement of this Instrument and the
liens and security interests created hereby, including the fees, costs and
expenses described in Section 5.9 hereof;

       

      B. Second,
to the payment of accrued interest remaining unpaid on the Note;

       

      C. Third, to
the payment or prepayment of principal remaining unpaid on the Note in such
order as Secured Party may elect;

       

      D. Fourth,
to the payment or prepayment of the Obligations other than the Obligations
evidenced by the Note in such order as Secured Party may elect; and

       

      E. Fifth,
the remainder, if any, shall be paid to Debtor or such other person or persons
as may be legally entitled thereto.

       

      Section
5.11    Waiver of Statute of
Limitations.  Debtor hereby waives the right to assert any
statute of limitations as a defense to the Obligations (including the
indebtedness, liabilities and obligations under and pursuant to this Instrument,
the Note, the Credit Agreement  and any other instrument evidencing,
securing or otherwise relating to the Obligations), to the fullest extent not
prohibited by applicable law.

       

      Section
5.12     Limitation on Rights and
Waivers.  All rights, powers and remedies herein conferred
shall be exercisable by Secured Party only to the extent not prohibited by
applicable law; and all waivers and relinquishments of rights and similar
matters shall only be effective to the extent such waivers or relinquishments
are not prohibited by applicable law.

       

      ARTICLE
VI      

       

      Miscellaneous
Provisions

       

      Section
6.1       Waiver.  Any
and all covenants of Debtor in this Instrument may from time to time, be waived
by Secured Party by an instrument in writing signed by Secured Party to such
extent and in such manner as Secured Party may desire, but no such waiver will
ever affect or impair Secured Party’s rights hereunder, except to the extent
specifically stated in such written instrument.  All changes to,
amendments and modifications of this Instrument must be in writing and signed by
Secured Party.

       

      Section
6.2       Severability.  If
any provision of this Instrument or of any of the instruments and documents
evidencing, securing or relating to the Obligations is invalid or unenforceable
in any jurisdiction, such provision shall be fully severable from this
Instrument and the other provisions hereof and of said instruments and documents
shall remain in full force and effect in such jurisdiction and the remaining
provisions hereof shall be liberally construed in favor of Secured Party in
order to carry out the provisions and intent hereof.  The invalidity
of any provision of this Instrument in any jurisdiction shall not affect the
validity or enforceability of any such provision in any other
jurisdiction.

       

       

      
        
          
          

        

        
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      Section
6.3       Subrogation.  This
Instrument is made with full substitution and subrogation of Secured Party in
and to all covenants and warranties by others heretofore given or made with
respect to the Collateral or any part thereof.

       

      Section
6.4       Financing
Statement.  This
Instrument shall be deemed to be and may be enforced from time to time as an
assignment, contract, deed of trust, mortgage, financing statement, real estate
mortgage or security agreement, and from time to time as any one or more thereof
is appropriate under applicable state law.  Debtor hereby authorizes
Secured Party to file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Collateral without the
signature of Debtor at any time after the execution of this Instrument, and
hereby ratifies any thereof filed prior to the execution of this
Instrument.

       

      Section
6.5       Rate of
Interest.  Except
as otherwise provided in the Credit Agreement, all interest required hereunder
and under the Obligations shall be calculated on the basis of a year of 360
days.

       

      Section
6.6       Recording.  All
recording references in the Exhibits hereto are to the official real property
records of the county in which the affected Land is located and in which records
such documents are or in the past have been customarily recorded, whether deed
records, oil and gas records, oil and gas lease records or other
records.  The references in this Instrument and in the Exhibits hereto
to liens, encumbrances and other burdens are for the purposes of defining the
nature and extent of Debtor’s warranties and shall not be deemed to ratify,
recognize or create any rights in third parties.

       

      Section
6.7       Execution in
Counterparts.  This
Instrument may be executed in one or more original counterparts.  To
facilitate filing and recording, there may be omitted from any counterpart the
parts of Exhibit “A” containing specific descriptions of the Collateral that
relate to land located in counties other than the county in which the particular
counterpart is to be filed or recorded.  Each counterpart shall be
deemed to be an original for all purposes, and all counterparts shall together
constitute but one and the same instrument.

       

      Section
6.8        Notices.  All
notices given hereunder shall be in writing, shall be given by certified mail,
return receipt requested, overnight courier service, telecopy, facsimile or copy
delivered by hand, and, (A) if mailed, shall be deemed received three
business days after having been deposited in a receptacle for United States
mail, postage prepaid; (B) if delivered by overnight air courier service,
shall be deemed received one business day after having been deposited with such
overnight air courier service, postage prepaid; and (C) if delivered by
telecopy or hand delivery, shall be deemed received on the day the notice is
sent if the sender thereof exercises reasonable efforts to confirm receipt
thereof, in each case addressed as follows:

       

      To
Debtor:

       

      Recovery
Energy, Inc.

      1515
Wynkoop Street, Suite 200

      Denver,
Colorado  80202

      Attn:   Jeffrey
A. Beunier, Chief Executive Officer

      Facsimile
No.  (888) 887-4449

       

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

       

      To Secured
Party:

       

      Hexagon
Investments, LLC

      730
17th
Street, Suite 800

      Denver,
Colorado  80202

      Attn:    Brian
Fleischmann

                Facsimile
No.  (303) 571-1221

       

      Any party
may, by written notice so delivered to the others, change the address or
facsimile number to which delivery shall thereafter be made.

       

      Section
6.9       Binding
Effect.  This
Instrument shall bind and inure to the benefit of the respective successors and
assigns of Debtor and Secured Party.  Notwithstanding any other
provision of this Instrument, if any right, interest or estate in property
granted by this Instrument or pursuant hereto does not vest upon the date
hereof, such right, interest or estate shall vest, if at all, within 21 years
less 1 day after the death of the last surviving descendant of Joseph P.
Kennedy, father of John F. Kennedy, former President of the United States of
America, who is living on the date of the execution of this Instrument by Debtor
or the effective date hereof, whichever is earlier.

       

      Section
6.10     References. All
references in this Instrument to Exhibits, Articles, Sections, Subsections,
paragraphs, subparagraphs and other subdivisions refer to the Exhibits,
Articles, Sections, Subsections, paragraphs, subparagraphs and other
subdivisions of this Instrument unless expressly provided otherwise. Titles and
headings appearing at the beginning of any subdivision are for convenience only
and do not constitute any part of any such subdivision and shall be disregarded
in construing the language contained in this Instrument. The words “this
Instrument,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar
import refer to this Instrument as a whole and not to any particular subdivision
unless expressly so limited. The phrases “this Section,” “this Subsection” “this
paragraph,” “this subparagraph” and similar phrases refer only to the Sections,
Subsections, paragraphs or subparagraphs hereof in which the phrase occurs.
Capitalized terms used herein without definition shall have the meanings
ascribed thereto in the Credit Agreement. The word “or” is not exclusive, and
the word “including” (and its derivatives) shall mean “including, without
limitation.” All references to days are to calendar days unless otherwise
specifically stated. Pronouns in masculine, feminine and neuter gender shall be
construed to include any other gender. Words in the singular form shall be
construed to include the plural and words in the plural form shall be construed
to include the singular, unless the context otherwise requires.

       

      Section
6.11     Filing.  Some
of the above described goods are or are to become fixtures on the Land described
in Exhibit “A”.  This Instrument is to be filed for record in, among
other places, the real estate records of each county identified in Exhibit
“A”.  Debtor is the owner of an interest of record in the real estate
concerned.

       

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

       

      Section 6.12
WAIVER OF JURY TRIAL,
PUNITIVE DAMAGES, ETC. DEBTOR HEREBY: (A) KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, AND IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS INSTRUMENT, THE NOTE, THE CREDIT AGREEMENT OR ANY OTHER
DOCUMENTS AND INSTRUMENTS EVIDENCING, SECURING OR RELATING TO THE OBLIGATIONS OR
ANY TRANSACTION PROVIDED FOR THEREIN OR ASSOCIATED THEREWITH, BEFORE OR AFTER
MATURITY; (B) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; (C) CERTIFIES THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (D) ACKNOWLEDGES THAT IT
HAS BEEN INDUCED TO ENTER INTO THIS INSTRUMENT, THE NOTE, THE CREDIT AGREEMENT
AND ANY OTHER DOCUMENTS AND INSTRUMENTS EVIDENCING, SECURING OR RELATING TO THE
OBLIGATIONS AND THE TRANSACTIONS PROVIDED FOR HEREIN AND THEREIN, AMONG OTHER
THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.

       

      Section 6.13
USURY SAVINGS. IT IS
THE INTENTION OF THE PARTIES HERETO TO COMPLY WITH ALL APPLICABLE USURY LAWS;
ACCORDINGLY, IT IS AGREED THAT NOTWITHSTANDING ANY PROVISIONS TO THE CONTRARY IN
THIS INSTRUMENT, THE NOTE, THE CREDIT AGREEMENT OR ANY OTHER DOCUMENTS OR
INSTRUMENTS EVIDENCING, SECURING OR OTHERWISE RELATING TO THE OBLIGATIONS, IN NO
EVENT SHALL SUCH DOCUMENTS OR INSTRUMENTS REQUIRE THE PAYMENT OR PERMIT THE
COLLECTION OF INTEREST (WHICH TERM, FOR PURPOSES HEREOF, SHALL INCLUDE ANY
AMOUNT WHICH, UNDER APPLICABLE LAW, IS DEEMED TO BE INTEREST, WHETHER OR NOT
SUCH AMOUNT IS CHARACTERIZED BY THE PARTIES AS INTEREST) IN EXCESS OF THE
MAXIMUM AMOUNT PERMITTED BY SUCH LAWS. IF ANY EXCESS INTEREST IS UNINTENTIONALLY
CONTRACTED FOR, CHARGED OR RECEIVED UNDER THE NOTE OR UNDER THE TERMS OF THIS
INSTRUMENT, THE CREDIT AGREEMENT OR ANY OTHER DOCUMENTS OR INSTRUMENTS
EVIDENCING, SECURING OR RELATING TO THE OBLIGATIONS, OR IN THE EVENT THE
MATURITY OF THE INDEBTEDNESS EVIDENCED BY THE NOTE IS ACCELERATED IN WHOLE OR IN
PART, OR IN THE EVENT THAT ALL OR PART OF THE PRINCIPAL OR INTEREST OF THE NOTE
SHALL BE PREPAID, SO THAT THE AMOUNT OF INTEREST CONTRACTED FOR, CHARGED OR
RECEIVED UNDER THE AMOUNT OF INTEREST CONTRACTED FOR, CHARGED OR RECEIVED UNDER
THE NOTE OR UNDER THIS INSTRUMENT, THE CREDIT AGREEMENT OR ANY OTHER DOCUMENTS
OR INSTRUMENTS EVIDENCING, SECURING OR RELATING TO THE OBLIGATIONS, ON THE
AMOUNT OF PRINCIPAL ACTUALLY OUTSTANDING FROM TIME TO TIME UNDER THE NOTE SHALL
EXCEED THE MAXIMUM AMOUNT OF INTEREST PERMITTED BY THE APPLICABLE USURY LAWS,
THEN IN ANY SUCH EVENT (A) THE PROVISIONS OF THIS SECTION SHALL GOVERN AND
CONTROL, (B) NEITHER DEBTOR NOR ANY OTHER PERSON OR ENTITY NOW OR HEREAFTER


       

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

       

       

      LIABLE
FOR THE PAYMENT THEREOF, SHALL BE OBLIGATED TO PAY THE AMOUNT OF SUCH INTEREST
TO THE EXTENT THAT IT IS IN EXCESS OF THE MAXIMUM AMOUNT OF INTEREST PERMITTED
BY SUCH APPLICABLE USURY LAWS, (C) ANY SUCH EXCESS WHICH MAY HAVE BEEN COLLECTED
SHALL BE EITHER APPLIED AS A CREDIT AGAINST THE THEN UNPAID PRINCIPAL AMOUNT
THEREOF OR REFUNDED TO DEBTOR AT SECURED PARTY’S OPTION, AND (D) THE EFFECTIVE
RATE OF INTEREST SHALL BE AUTOMATICALLY REDUCED TO THE MAXIMUM LAWFUL RATE OF
INTEREST ALLOWED UNDER THE APPLICABLE USURY LAWS AS NOW OR HEREAFTER CONSTRUED
BY THE COURTS HAVING JURISDICTION THEREOF. IT IS FURTHER AGREED THAT WITHOUT
LIMITATION OF THE FOREGOING, ALL CALCULATIONS OF THE RATE OF INTEREST CONTRACTED
FOR, CHARGED OR RECEIVED UNDER THE NOTE OR UNDER THIS INSTRUMENT, THE CREDIT
AGREEMENT OR ANY OTHER DOCUMENTS OR INSTRUMENTS EVIDENCING, SECURING OR RELATING
TO THE OBLIGATIONS WHICH ARE MADE FOR THE PURPOSE OF DETERMINING WHETHER SUCH
RATE EXCEEDS THE MAXIMUM LAWFUL RATE OF INTEREST, SHALL BE MADE, TO THE EXTENT
NOT PROHIBITED BY APPLICABLE LAWS, BY AMORTIZING, PRORATING, ALLOCATING AND
SPREADING IN EQUAL PARTS DURING THE PERIOD OF THE FULL STATED TERM OF THE
OBLIGATIONS EVIDENCED THEREBY, ALL INTEREST AT ANY TIME CONTRACTED FOR, CHARGED
OR RECEIVED FROM DEBTOR OR OTHERWISE BY SECURED PARTY IN CONNECTION WITH THE
OBLIGATIONS.

       

      Section
6.14     GOVERNING
LAW.  THIS INSTRUMENT AND ALL MATTERS ARISING UNDER OR GROWING
OUT HEREOF SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF WYOMING, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS
OF LAWS, AND THE LAWS OF THE UNITED STATES OF AMERICA.

       

      [Signature
Pages Follow]

       

       

       

       

       

       

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      


       

      Executed
as of the date first above written.

      
 

      
        	 	 	DEBTOR:
	 	 	 
	
                ATTEST:
      

                (SEAL)

              	 	
                RECOVERY
      ENERGY, INC., 

                a
      Nevada
      corporation

              
	 	 	 	 	 
	
                By:

              	
                /s/
      Roger A. Parker

              	 
      	
                By:

              	
                /s/
      Jeffrey A. Beunier

              
	
                Name:

              	
                Roger
      A. Parker

              	 
      	
                Name:

              	
                Jeffrey
      A. Beunier

              
	
                Title:

              	
                Chairman

              	 
      	
                Title:

              	
                Chief
      Executive Officer

              
	 
      

                (CORPORATE
      SEAL)

              	 	Tax
      I.D. No.
      74-3231613


      

    

     

     

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    
 

    
      ACKNOWLEDGEMENT
CERTIFICATE

       

      
        	
                STATE
      OF COLORADO

              	
                )

              	 
      
	 
      	
                )

              	
                ss.

              
	
                CITY
      AND COUNTY OF DENVER

              	
                )

              	 
      


      

      


      The
foregoing instrument was acknowledged before me this 25th day of March, 2010, by
Jeffrey A. Beunier, President of RECOVERY ENERGY, INC., a Nevada
corporation.

       

      Witness
my hand and official seal.

       

      
        	 
      	 
      	/s/
      Ruth
      L. Elder
	 
      	 
      	
                Notary
      Public

              
	 
      	 
      	
                Name:

              	
                Ruth
      L. Elder

              
	 
      	 
      	
                Address:

              	
                1515
      Wynkoop Street, Suite 200

                Denver, CO 80202

              
	 
      	 
      	
                    

              
	 
      	 
      	 
      
	
                My
      commission expires:    

              	
                4/30/13

              	 
      


      

      


      


      (NOTARIAL
SEAL)

       

       

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

       

       

      PREAMBLE
TO

       

      EXHIBIT
“A”

       

      Attached
to and made a part of that certain

      Mortgage,

      Security
Agreement, Assignment of Production and Proceeds,

      Financing
Statement and Fixture Filing,

      dated as
of March 25, 2010 (the “Mortgage”),

      from
Recovery Energy, Inc., as Debtor,

      and to
and for the benefit of Hexagon Investments, LLC,

      as
Secured Party

       

      
        	
                9.  

              	
                The
      Mortgage covers all right, title and interest of Debtor (whether now owned
      or hereafter acquired by operation of law or otherwise) in and to the
      leases, licenses, subleases, sublicenses, easements, rights-of-way,
      agreements and other documents, and instruments described in this Exhibit
      “A” and in and to the land specifically described in this Exhibit “A” and
      the land described in or covered by the leases, licenses, subleases,
      sublicenses, easements, rights-of-way, agreements and other documents and
      instruments described in this Exhibit “A” whether or not such land is
      specifically described in this Exhibit
“A”.

              


      

       

       

       

       

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

       

       

      EXHIBIT
“A”

      Description of the Land and
Collateral

       

      Laramie County,
Wyoming

       

      ALBIN AREA PROSPECT LANDS
AND LEASE

      Township 17 North, Range 60
West, Laramie County, Wyoming

      Section   3:  ALL

      Section   4:  N/2NE/4,
W/2, S/2SE/4

      Section   9:  All

      Section
10:  S/2

      Section
11:  All

      Section
14:  All

      Section
15:  E/2

      Section
15:  NW/4

      Section
22:  NE/4

      Section
23:  N/2

      


      Township 18 North, Range 60
West, Laramie County, Wyoming

      Section
28:  W/2NE/4, E/2W/2, SW/4NW/4, W/2SW/4, SE/4

      Section
29:  All East of Railroad ROW

      Section
32:  N/2NE East of Railroad ROW

      


      Township 14 North, Range 60
West, Laramie County, Wyoming

      Section   4:  ALL

      Section   5:  E/2SW/4

      Section   8:  All

      Section
17:  W/2

      Section
18:  NE/4, SE/4, E/2SW/4

      Section
19:  E/2, SW/4

       

      
        
          	
                  Lessor:

                	
                  Anadarko
      E&P Company, LP and Anadarko Land Corp

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  June
      3, 2008

                
	
                  Recorded:

                	
                  Book
      2063, Page 422, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 17 North. Range 60
      West

                
	 
      	
                  Section
      3:  Lots 1 (39.78), 2 (39.74), 3 (39.70), 4 (39.67), S/2N/2,
      S/2

                
	 
      	
                  Section
      9:  All

                
	 
      	
                  Section
      11: Lots 1 (09.71), 2 (09.69), 3 (09.67), 4 (09.65)

                
	 
      	
                  Section
      15: NW/4

                
	 
      	
                  Section
      23: Lots 1 (09.19), 2 (09.17)

                
	 
      	
                  from
      the surface of the earth to a depth of 8,500 feet

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  State
      of Wyoming 08-000383

                
	
                  Lessee:

                	
                  Bear
      Oil and Gas, Inc.

                
	
                  Dated:

                	
                  October
      2, 2008

                
	
                  Recorded:

                	
                  State
      Records Only, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 17 North. Range 60
      West

                
	 
      	
                  Section
      4:  Lots 1 and 2

                
	 
      	 
      	 
      


           

           

          
            
              
              

            

            
              Exhibit
"A" -1

              
                

              

            

            
              
              

            

          

           

           

           

          	
                  Lessor:

                	
                  Jean
      C. Branigan and David C. Branigan, wife and husband

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  June
      17, 2008

                
	
                  Recorded:

                	
                  Book
      2067, Page 86, Laramie County, WY

                
	 
      	
                  RATIFICATION
      AND REVIVOR OF OIL AND GAS LEASE

                
	
                  Recorded:

                	
                  Book
      2131, Page 718, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 17 North. Range 60
      West

                
	 
      	
                  Section
      4:  Lots 3 and 4 (a/d/a N/2NW/4), S/2NW/4, SW/4,
      S/2SE/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  Mickey
      L. Branigan, a single man

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  June
      17, 2008

                
	
                  Recorded:

                	
                  Book
      2067, Page 89, Laramie County, WY

                
	 
      	
                  RATIFICATION
      AND REVIVOR OF OIL AND GAS LEASE

                
	
                  Recorded:

                	
                  Book
      2131, Page 719, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 17 North. Range 60
      West

                
	 
      	
                  Section
      4:  Lots 3 and 4 (a/d/a N/2NW/4), S/2NW/4, SW/4,
      S/2SE/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  John
      C. McLaughlin, Individually and as Trustee of the John C. McLaughlin
      Living  Trust dated September 8, 2000 and LeAnn M. McLaughlin,
      Individually and as Trustee of the LeAnn M. McLaughlin Living Trust dated
      September 8, 2000

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  June
      17, 2008

                
	
                  Recorded:

                	
                  Book
      2067, Page 83, Laramie County, WY

                
	 
      	
                  RATIFICATION
      AND REVIVOR OF OIL AND GAS LEASE

                
	
                  Recorded:

                	
                  Book
      2131, Page 720, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 17 North. Range 60
      West

                
	 
      	
                  Section
      4:  Lots 3 and 4 (a/d/a N/2NW/4), S/2NW/4, SW/4,
      S/2SE/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  William
      L. Hogerson and Connie J. Holgerson, husband and wife

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  February
      19, 2008

                
	
                  Recorded:

                	
                  Book
      2054, Page 867, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 17 North. Range 60
      West

                
	 
      	
                  Section
      10:  S/2

                
	 
      	 
      	 
      


           

           

          
            
              
              

            

            
              Exhibit
"A" -2

              
                

              

            

            
              
              

            

          

           

           

          	
                  Lessor:

                	
                  Palm-Egle
      Land Company, Inc., a Wyoming corporation

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  January
      3, 2008

                
	
                  Recorded:

                	
                  Book
      2054, Page 873, Laramie County, WY

                
	 
      	
                  Correction
      of Description of Oil and Gas Leasse

                
	
                  Recorded:

                	
                  Book
      2132, Page 1348, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 17 North, Range 60
      West

                
	 
      	
                  Section
      14:  Lots 1, 2, 3, 4 (ALL)

                
	 
      	
                  Section
      15:  E/2

                
	 
      	
                  Section
      22:  NE/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  Robert
      G. Adcock, Trustee of the Robert G. Adcock Revocable Trust dated August
      17, 2000 and Delight M. Adcock, Trustee of the Delight M. Adcock Revocable
      Trust dated August 17, 2000

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  August
      8, 2008

                
	
                  Recorded:

                	
                  Book
      2071, Page 386, Laramie County, WY

                
	 
      	
                  Correction
      of Description of Oil and Gas Leasse

                
	
                  Recorded:

                	
                  Book
      2135, Page 682, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 18 North, Range 60
      West

                
	 
      	
                  Section
      28:  S/2SE/4SE/4, Pt. SW/4 - Described and Bounded as
      follows:

                
	 
      	
                  Beginning
      at a
      point on the south line of said SW1/4, 1726.00' N 89"21'56" E of
      the SW corner of said SW1/4; thence N 0"10'12" W for  683.30' to
      a point; thence N 39"49'49" E for 660.00' to a point; thence S 0"10'12" E
      for 677.95' to
      a point on the south line of the SW1\4 Section 28; thence S 89·21'
      56” W
      for 660,03' along the south line of said SW1/4 to the point of beginning,
      containing 10.3123 acres, more or less.

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  Richard
      A. Person and Louise E. Person, husband and wife

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  August
      6, 2008

                
	
                  Recorded:

                	
                  Book
      OG 131, Page 339, Banner County, NE

                
	 
      	
                  Correction
      of Description and Amendment of Oil and Gas Lease

                
	
                  Recorded:

                	
                  Book
      2135, Page 699, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 18 North, Range 60
      West

                
	 
      	
                  Section
      28:  W/2SW/4, SW/4NW/4

                
	 
      	
                  Section
      29: All those portions of the S/2NE, W/2, SE/4 all lying East of the ROW
      of the UPRR as described in Book 285, Pages 19-21

                
	 
      	
                  Section
      32:  All those portions of the N/2NE lying East of the ROW of
      the UPRR as described in Book 285, Pages 19-21

                
	 
      	 
      


           

           

          
            
              
              

            

            
              Exhibit
"A" -3

              
                

              

            

            
              
              

            

          

           

          	
                  Lessor:

                	
                  Darlene
      M. Bowman Living Trust u/w Dated 07/28/2005, Darlene M. Bowman
      individually and as Trustee, and Dale A. Bowman Living Trust u/w Dated
      07/28/2008, Dale A Bowman individually and as Trustee

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  October
      22, 2010

                
	
                  Recorded:

                	
                  Book
      2136, Page 1323, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 18 North. Range 60
      West

                
	 
      	
                  Section
      28: W/2NE/4, SW/4SE/4, N/2SE/4, N/2SE/4SE/4, E/2W/2: Less a portion of the
      SW/4 Described and Bounded as follows: Beginning at a point on the south
      line of said SW1/4, 1726.00' N.089"21'56"E.,of the Southwest corner of
      said SW1/4; thence N 0"10'12" W., for 683.30' to a point; thence N
      89"49'49"E., for 660.00' to a point; thence S .0"10'12" E for 677.95' to a
      point on the south line of the SW1\4 Section 28; thence S 89·21' 56” W for
      660,03' along the south line of said SW1/4 to the point of beginning,
      containing 10.3123 acres, more or less.

                
	 
      	
                  Section
      29: N1/2NE1/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  Debra
      Kay Dorigatti, f/k/a Debra Kay Smith, f/k/a Debra Kay
      Willoughby

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  October
      19, 2010

                
	
                  Recorded:

                	
                  Book
      2144, Page 690, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 18 North. Range 60
      West

                
	 
      	
                  Section
      28: W/2NE/4, SW/4SE/4, N/2SE/4, N/2SE/4SE/4, E/2W/2: Less a portion of the
      SW/4 Described and Bounded as follows: Beginning at a point on the south
      line of said SW1/4, 1726.00' N.089"21'56"E.,of the Southwest corner of
      said SW1/4; thence N 0"10'12" W., for 683.30' to a point; thence N
      89"49'49"E., for 660.00' to a point; thence S .0"10'12" E for 677.95' to a
      point on the south line of the SW1\4 Section 28; thence S 89·21' 56” W for
      660,03' along the south line of said SW1/4 to the point of beginning,
      containing 10.3123 acres, more or less.

                
	 
      	
                  Section
      29: N1/2NE1/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  Shelly
      M. Flohr, f/k/a Shelly Willoughby

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  October
      19, 2010

                
	
                  Recorded:

                	
                  Book
      2144, Page 687, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 18 North. Range 60
      West

                
	 
      	
                  Section
      28: W/2NE/4, SW/4SE/4, N/2SE/4, N/2SE/4SE/4, E/2W/2: Less a portion of the
      SW/4 Described and Bounded as follows: Beginning at a point on the south
      line of said SW1/4, 1726.00' N.089"21'56"E.,of the Southwest corner of
      said SW1/4; thence N 0"10'12" W., for 683.30' to a point; thence N
      89"49'49"E., for 660.00' to a point; thence S .0"10'12" E for 677.95' to a
      point on the south line of the SW1\4 Section 28; thence S 89·21' 56” W for
      660,03' along the south line of said SW1/4 to the point of beginning,
      containing 10.3123 acres, more or less.

                
	 
      	
                  Section
      29: N1/2NE1/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  Mark
      James Willoughby

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  October
      19, 2010

                
	
                  Recorded:

                	
                  Book
      2144, Page 684 Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 18 North. Range 60
      West

                
	 
      	
                  Section
      28: W/2NE/4, SW/4SE/4, N/2SE/4, N/2SE/4SE/4, E/2W/2: Less a portion of the
      SW/4 Described and Bounded as follows: Beginning at a point on the south
      line of said SW1/4, 1726.00' N.089"21'56"E.,of the Southwest corner of
      said SW1/4; thence N 0"10'12" W., for 683.30' to a point; thence N
      89"49'49"E., for 660.00' to a point; thence S .0"10'12" E for 677.95' to a
      point on the south line of the SW1\4 Section 28; thence S 89·21' 56” W for
      660,03' along the south line of said SW1/4 to the point of beginning,
      containing 10.3123 acres, more or less.

                
	 
      	
                  Section
      29: N1/2NE1/4

                
	 
      	 
      	 
      


           

           

          
            
              
              

            

            
              Exhibit
"A" -4

              
                

              

            

            
              
              

            

          

           

           

          	
                  Lessor:

                	
                  Dave
      A. Duello, a married man dealing in his sole and separate
      property

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  September
      2, 2008

                
	
                  Recorded:

                	
                  Book
      2080, Page 1118, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 14 North. Range 60
      West

                
	 
      	
                  Section
      4:  ALL

                
	 
      	
                  Section
      8:  E/2, N/2NW/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  Wisroth
      Ranch, Co., a Wyoming Corporation

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  August
      29,2003

                
	
                  Recorded:

                	
                  Book
      17864, Page 1656, Laramie County, WY

                
	 
      	
                  Extension
      of Oil and Gas Lease dated August 25, 2008

                
	
                  Recorded:

                	
                  Book
      2073, Page 1112, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 14 North. Range 60
      West

                
	 
      	
                  Section
      4:  ALL

                
	 
      	
                  Section
      8:  E/2, N/2NW/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  Gross-Wilkinson
      Ranch, a Wyoming corporation

                
	
                  Lessee:

                	
                  New
      Century Production Company, L.L.C.

                
	
                  Dated:

                	
                  October
      3, 2008

                
	 
      	
                  Memorandum
      of Oil and Gas Lease

                
	
                  Recorded:

                	
                  Book
      2087, Page 828, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 14 North. Range 60
      West

                
	 
      	
                  Section
      5:  E/2SW/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  Louise
      E. Scheel  a widow and as Trustee of the Louise E. Scheel Living
      Trust, dated 6-25-2002

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  August
      22, 2008

                
	
                  Recorded:

                	
                  Book
      2076, Page 1657, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 14 North. Range 60
      West

                
	 
      	
                  Section  8:  S/2NW/4,
      SW/4

                
	 
      	
                  Section
      18:  A tract of land in the E/2NE/4, containing 6.5
      acres

                
	 
      	 
      	 
      
	 
      	 
      	 
      


           

           

          
            
              
              

            

            
              Exhibit
"A" -5

              
                

              

            

            
              
              

            

          

           

           

          	
                  Lessor:

                	
                  Kathryn
      Ann Eisenbraun and Paul G. Eisenbraun, wife and husband

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  August
      22, 2008

                
	
                  Recorded:

                	
                  Book
      2080, Page 1121, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 14 North. Range 60
      West

                
	 
      	
                  Section  8:  S/2NW/4,
      SW/4

                
	 
      	
                  Section
      18:  NE/4, less a 6.5 acres tract located in the E/2NE/4,
      described in WD dated 6-20-96

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  E.
      Vivian Trompke, f/k/a  E. Vivian Bridges and Leonard S. Trompke,
      wife and husband

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  September
      9, 2008

                
	
                  Recorded:

                	
                  Book
      2080, Page 1133, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 14 North. Range 60
      West

                
	 
      	
                  Section
      17:  W/2

                
	 
      	
                  Section
      18:  SE/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  Mavis
      Peterson, a married woman dealing in her sole and separate property and as
      Heir of the Estate of Floyd Bridges Jr. and Dorothy Mae Bridges, both
      deceased

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  September
      17, 2008

                
	
                  Recorded:

                	
                  Book
      _______, Page _________, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 14 North. Range 60
      West

                
	 
      	
                  Section
      17:  W/2

                
	 
      	
                  Section
      18:  SE/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  Dale
      Bridges, a married man dealing in his sole and separate property and as
      Heir of the Estate of Floyd Bridges Jr. and Dorothy Mae Bridges, both
      deceased

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  September
      17, 2008

                
	
                  Recorded:

                	
                  Book
      2080, Page 1130, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 14 North. Range 60
      West

                
	 
      	
                  Section
      17:  W/2

                
	 
      	
                  Section
      18:  SE/4

                
	 
      	 
      	 
      
	
                  Lessor:

                	
                  Alvin
      Bridges, a married man dealing in his sole and separate property and as
      Heir of the Estate of Floyd Bridges Jr. and Dorothy Mae Bridges, both
      deceased

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  September
      17, 2008

                
	
                  Recorded:

                	
                  Book
      2080, Page 1127, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	
                  Township 14 North. Range 60
      West

                
	 
      	
                  Section
      17:  W/2

                
	 
      	
                  Section
      18:  SE/4

                
	 
      	 
      	 
      


           

           

          
            
              
              

            

            
              Exhibit
"A" -6

              
                

              

            

            
              
              

            

          

           

           

          	
                  Lessor:

                	
                  Charles
      T. Fornstrom, aka  Charles Thomas Fornstrom and Kathleen Jo
      Fornstrom, individually, and as husband and wife

                
	
                  Lessee:

                	
                  Edward
      Mike Davis, L.L.C.

                
	
                  Dated:

                	
                  August
      21, 2008

                
	
                  Recorded:

                	
                  Book
      2076, Page 1645, Laramie County, WY

                
	
                  Description:

                	
                  Insofar
      and only insofar as the lease covers:

                
	 
      	

                  TOWNSHIP 14 NORTH,
      RANGE 60 WEST, 6th
      P.M.

                  Section
      17: E/2SW/4

                  Section
      18: E/2SW/4

                  Section
      18: SE/4 except 2 parcels of land described as follows:  Parcel
      (1) Beginning at the SE corner of said Section 18; thence westerly along
      the South boundary of said Section 18 a distance of 820 feet; thence
      Northerly, parallel to the East boundary of said Section 18 a distance of
      155 feet; thence westerly, parallel to the South boundary of said Section
      18 a distance of 156 feet; thence northerly parallel to the East boundary
      of said Section 18 a distance of 368 feet; thence easterly, parallel to
      the South boundary of said Section 18 a distance of 976 feet to a point on
      the East boundary of said Section 18; thence southerly along the East
      boundary of said Section 18 a distance of 523 feet to the point of
      beginning.  Said parcel contains 9.97 net acres and is more
      fully described in book 1122, page 1569. Parcel (2) Beginning at a point
      820 feet west of the SE corner of said Section 18 on the south boundary of
      said Section 18: thence westerly along the south boundary of said Section
      18 a distance of 156 feet; thence northerly, parallel to the east boundary
      of said Section 18 a distance of 155 feet; thence easterly, parallel to
      the sought boundary of said Section 18 a distance of 156 feet; thence
      southerly, parallel to the east boundary of said Section 18 a distance of
      155 feet to a point of beginning.  Said parcel contains .41
      acres and is more fully described in book 1499, page 1153

                  TOWNSHIP 14 NORTH,
      RANGE 61 WEST, 6th
      P.M.

                  Section
      25: NW/4NW/4

                


        

      

       

    

    
      
        	
                Lessor:

              	
                Leonard
      A. Fornstrom, Trustee of the Leonard A. Fornstrom Revocable Trust, U/A/D
      6-30-1997, and Leonard A. Fornstrom, Trustee of the Alice E. Fornstrom
      Family Trust, U/A/D 6-30-1997

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                October13,
      2008

              
	
                Recorded:

              	
                Book
      2096 Page 486, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

                Section
      17:  E/2W/4

              
	 
      	 
      
	
                Lessor:

              	
                Vickie
      Ley, a widow and as Heir of the Estate of Victor Schwartz,
      deceased

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                October
      11, 2008

              
	
                Recorded:

              	
                Book
      2080 Page 1124, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      17:  E/2W/4

              
	 
      	 
      


         

         

        
          
            
            

          

          
            Exhibit
"A" -7

            
              

            

          

          
            
            

          

        

         

         

        	
                Lessor:

              	
                Darryl
      May, a widower, and as the Legal Guardian for McKenna May and Keegan May,
      both the minor children of Darryl May and Gwendolyn May, and as Heir of
      the Estate of Gwendolyn May, deceased and as Heir of the Estate of Victor
      Schwartz, deceased

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                October
      14, 2008

              
	
                Recorded:

              	
                Book
      2096 Page 492, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      17:  E/2W/4

              
	 
      	 
      
	
                Lessor:

              	
                Teresa
      Mercer, a.k.a. Terresa Mercer, a married woman dealing in her sole and
      separate property and as Heir of the Estate of Victor Schwartz,
      deceased

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                October
      14, 2008

              
	
                Recorded:

              	
                Book
      _______ Page ________, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      17:  E/2W/4

              
	 
      	 
      
	
                Lessor:

              	
                Gaylan
      Roth, a.k.a. Gaylen May, a married man dealing in his sole and separate
      property, and as Heir of the Estate of Victor Schwartz,
      deceased

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                October
      14, 2008

              
	
                Recorded:

              	
                Book
      2096 Page 489, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      17:  E/2W/4

              
	 
      	 
      
	
                Lessor:

              	
                Kenneth
      Macy and Angela Macy and Frederick Macy and Bertram Macy, as Joint
      Tenants.

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                October
      13, 2008

              
	
                Recorded:

              	
                Book
      2096 Page 483, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  E/2, less a 14.60 acre tract, as described as exception in
      warranty deed dated May 9, 2007, in book 2006, page
  1558.

              
	 
      	 
      
	
                Lessor:

              	
                Anderson
      Livestock, Inc.

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                November
      2, 2008

              
	
                Recorded:

              	
                Book
      2096 Page 477, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  Part of the NE/4, a 14.60 acre tract, as described as
      exception in warranty deed dated May 9, 2007, in book 2006, page
      1558.

              
	 
      	 
      


         

         

        
          
            
            

          

          
            Exhibit
"A" -8

            
              

            

          

          
            
            

          

        

         

         

        	
                Lessor:

              	
                Scott
      L. Vasko and Kristine S. Vasko, husband and wife

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                October
      13, 2008

              
	
                Recorded:

              	
                Book
      2096 Page 480, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  Lot 3(40.09), NE/4SW/4

              
	 
      	 
      
	
                Lessor:

              	
                Irene
      Young, a widow and heir to James Young

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                August
      29, 2008

              
	
                Recorded:

              	
                Book
      2076 Page 1660, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  Lot 3(40.09), Lot 4(40.16), NE/4, E/2SW/4,
    SE/4

              
	 
      	 
      
	 
      	 
      
	
                Lessor:

              	
                Donald
      J. Young, Trustee  of  The  Robert Gary
      Young Trust dated 14 May 1981Trust

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                September
      3, 2008

              
	
                Recorded:

              	
                Book
      2076 Page 1675, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  Lot 3(40.09), Lot 4(40.16), NE/4, E/2SW/4,
    SE/4

              
	 
      	 
      
	
                Lessor:

              	
                Donald
      J. Young, a married man dealing in his sole and separate
      property

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                September
      3, 2008

              
	
                Recorded:

              	
                Book
      2076 Page 1678, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  Lot 3(40.09), Lot 4(40.16), NE/4, E/2SW/4,
    SE/4

              
	 
      	 
      
	
                Lessor:

              	
                Larry
      W. Young, a.k.a. Lawrence W. Young II, a married man dealing in his sole
      and separate

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                September
      3, 2008

              
	
                Recorded:

              	
                Book
      2076 Page 1654, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  Lot 3(40.09), Lot 4(40.16), NE/4, E/2SW/4,
    SE/4

              
	 
      	 
      


         

         

        
          
            
            

          

          
            Exhibit
"A" -9

            
              

            

          

          
            
            

          

        

         

         

        	
                Lessor:

              	
                Sharon
      K. Soderquist, a married woman dealing in her sole and separate
      property 

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                September
      3, 2008

              
	
                Recorded:

              	
                Book
      2076 Page 1666, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  Lot 3(40.09), Lot 4(40.16), NE/4, E/2SW/4,
    SE/4

              
	 
      	 
      
	
                Lessor:

              	
                Lana
      J. Ford, a single woman

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                September
      3, 2008

              
	
                Recorded:

              	
                Book
      2076 Page 1669, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  Lot 3(40.09), Lot 4(40.16), NE/4, E/2SW/4,
    SE/4

              
	 
      	 
      
	
                Lessor:

              	
                Judy
      King, a single woman

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                September
      3, 2008

              
	
                Recorded:

              	
                Book
      2076 Page 1672, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  Lot 3(40.09), Lot 4(40.16), NE/4, E/2SW/4,
    SE/4

              
	 
      	 
      
	
                Lessor:

              	
                Peggy
      Jo Bunger, a married woman dealing in her sole and separate property and
      as Trustee of the Peggy Jo Bunger Living Trust

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                September
      9, 2008

              
	
                Recorded:

              	
                Book
      2076 Page 1648, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  Lot 3(40.09), Lot 4(40.16), NE/4, E/2SW/4,
    SE/4

              
	 
      	 
      
	
                Lessor:

              	
                Diana
      K. Simons a.k.a. Diana Simons, a married woman with sole and separate
      property

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                September
      9, 2008

              
	
                Recorded:

              	
                Book
      2076 Page 1651, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  Lot 3(40.09), Lot 4(40.16), NE/4, E/2SW/4,
    SE/4

              
	 
      	 
      
	
                Lessor:

              	
                Linda
      Sue Skirrow, a married woman with sole and separate
    property

              
	
                Lessee:

              	
                Edward
      Mike Davis, L.L.C.

              
	
                Dated:

              	
                September
      3, 2008

              
	
                Recorded:

              	
                Book
      2076 Page 1663, Laramie County, WY

              
	
                Description:

              	
                Insofar
      and only insofar as the lease covers:

              
	 
      	
                Township 14 North. Range 60
      West

              
	 
      	
                Section
      19:  Lot 3(40.09), Lot 4(40.16), NE/4, E/2SW/4,
    SE/4

              
	 
      	 
      


      

    

     

     Exhibit
"A" -10