Document:

Exhibit 10.1

 

 

REVOLVING LINE OF CREDIT FACILITY AGREEMENT

May 13, 2015

This Revolving Line of Credit Facility Agreement (this “Agreement”) sets forth the terms pursuant to which Providence Energy Operators, LLC (“Lender”) is making available to PetroShare Corp. (“Borrower”), a revolving line of credit (the “Line of Credit”), to be evidenced by a Promissory Note dated of even date herewith and in the form of Exhibit A attached hereto and made a part hereof (the “Note”).  The terms of the Line of Credit are as follows:

	Borrower:	PetroShare Corp., a Colorado C Corporation.

Loan Commitment

Amount/Line of

	Credit:	$5,000,000.

	Maturity Date:	June 1, 2017, on which date Borrower agrees to repay the remaining unpaid balance of the Line of Credit in its entirety, including all outstanding principal, interest, fees, expenses and other amounts due in connection therewith.

	Interest:	Interest on the outstanding principal balance of the Line of Credit shall accrue commencing on the dates of advancements of principal hereunder at an annual rate equal to eight percent (8.0%) simple interest per annum.  After the occurrence of an Event of Default (defined below), interest on the Line of Credit shall accrue at a rate of the greater of 12.0% simple interest per annum or the maximum rate of interest allowed by law under the laws of the state of Colorado but in no event to exceed 18% per annum.  Borrower shall pay the interest monthly in accordance with the Note and subject to that certain Participation Agreement dated May 13, 2015 by and between Lender and Borrower and ending on the Maturity Date.

	Advances:	Lender shall make advances (“Advances”) to Borrower from time to time, by wire transfer in amounts not to be less than $250,000, no later than ten (10) days after Lender receives proper written notice from Borrower, to fund general administrative, legal and working capital costs, expenses and other related items for the acquisition and maintenance of the Leases or Assets as set forth in the Participation Agreement.  Proper written notice shall include the amount of the requested advance, a breakdown of the use of proceeds, including but not limited to information for the Lease(s) or Assets sought to be reimbursed or funded, and any other relevant information or documentation to reasonably identify the costs and expenses underlying the request.  Any request by Borrower for an Advance shall be deemed a certification by Borrower that the conditions precedent contained in this Agreement have been satisfied.

 

  

	Limitations:	Unless agreed to in writing by Lender, Lender shall not have any obligation to make an Advance if, after the making of such Advance, the aggregate amount of all Advances then outstanding under this Agreement would exceed the Commitment Amount,.

Representations

	and Warranties:	Borrower represents and warrants to Lender that:  (a) Borrower is duly organized, validly existing and in good standing under the laws of the State of Colorado, having all powers required to carry on its business and to enter into and carry out the transactions contemplated hereby, and is duly qualified, in good standing, and authorized to do business in all other jurisdictions where such qualification is necessary, (b) this Agreement, the Note, the Participation Agreement and all other documents executed in connection herewith are legal and binding obligations of Borrower, enforceable in accordance with their respective terms, except as may be limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors’ rights and as limited by general equitable principles, (c) the financial statements of Borrower heretofore provided to Lender by Borrower fairly present Borrower’s financial positions at the respective dates thereof, (d) to the best of Borrower’s knowledge, there are no actions, suits or other proceedings pending or threatened against Borrower, (e) all tax returns required to be filed by Borrower have been filed, and all taxes and other governmental charges upon Borrower or upon any of its assets or income have been paid, and (f) Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U or X of the Board of Governors of the Federal Reserve System), and no part of the proceeds of the Line of Credit will be used to purchase or carry any such margin stock or to extend credit to any person or entity for the purpose of purchasing or carrying any such margin stock.

Reporting

	Requirements:	Borrower agrees to submit to Lender:  (a) within 90 days of each fiscal year-end of Borrower, audited annual financial statements of Borrower, prepared in accordance with generally accepted accounting principles, (b) within 45 days of the end of each fiscal quarter of Borrower (except for the last fiscal quarter in Borrower’s fiscal year), quarterly financial statements of Borrower, prepared by Borrower in accordance with generally accepted accounting principles, (c) within 30 days after the filing of the same, copies of any and all federal income tax returns filed by Borrower, and (d) such other information as Lender may request at any time or from time to time.

 

  

Page 2 of 6

Affirmative

	Covenants:	Borrower will:  (a) operate its assets and the leases taken under the Participation Agreement in a good and workmanlike manner, (b) maintain insurance with responsible carriers and in amounts customary in the industry for the types of operations to be conducted by Borrower in connection with the leases and wells, (c) in all material respects conduct its business and affairs in compliance with all laws, regulations and orders applicable thereto (including those relating to pollution and other environmental matters), (d) permit representatives appointed by Lender to visit and inspect, at their sole risk, any property, books of account, other books and records, and any facilities or other business assets of Borrower, (e) pay all amounts due hereunder or in connection herewith in accordance with the terms hereof, (f) observe, perform and comply with every covenant, term and condition, express or implied, herein or in any other documents delivered in connection herewith, (g) promptly notify Lender of:  (1) any material adverse change in the financial condition of Borrower, (2) any material adverse development with respect to the business, property or assets of Borrower, and (3) the occurrence of any Event of Default, (h) maintain and preserve its existence, rights and franchises in full force and effect and qualify to do business in all states or jurisdictions where required by applicable law.

Negative

	Covenants:	Without Lender’s prior written consent, Borrower will not:  (a) incur any indebtedness other than: (1) the Line of Credit, (2) trade debt incurred by Borrower in the ordinary course of business, (b) make loans or advances to any third party, except trade debt extended in the ordinary course of business, (c) sell, lease or dispose of any material assets in excess of $100,000 during any calendar year.

 

 

Page 3 of 6

Events of

	Default:	The occurrence of any of the following shall be deemed an Event of Default hereunder, shall relieve Lender of any further obligation to make Advances hereunder and shall permit Lender, at its option, to declare the Line of Credit to be forthwith due and payable together with all accrued and unpaid interest thereon, without presentation, demand, protest or other notice of any kind, all of which are expressly waived by Borrower:  (a) Borrower becomes insolvent or fails to pay any amount due hereunder or in connection herewith when due and payable,  (b) any “default”, “event of default” or “Event of Acceleration”, (c) Borrower fails to duly observe, perform or comply with any covenant, agreement, condition or provision (other than those referred to in subsections (a) and (b) above) of this Agreement or of any other document executed in connection herewith and such failure continues beyond 30 days after written notice thereof from Lender to Borrower, unless extended in writing by Lender, (d) Borrower suffers the commencement of any voluntary or involuntary bankruptcy proceeding against it, suffers the appointment of a receiver, liquidator, trustee or similar official for a substantial part of its assets, makes a general assignment for the benefit of creditors, fails generally to pay (or admits in writing its inability to pay) its debts as such debts become due, suffers the entry of any order issued by any court or tribunal seizing all or any substantial part of its property, (e) any default occurs with respect to any indebtedness owed by Borrower to any other person or entity, and/or (f) the dissolution or termination of existence of Borrower.

	Force Majeure:	Lender shall not be required to fund any advance not previously approved, in the event of an act of “force majeure” that delays, prevents or interrupts the acquisition or maintenance of any leases, wells or other assets sought to be acquired or maintained under the Participation Agreement.  An act of force majeure is a risk beyond the reasonable control of the Parties, such as a flood or other act of God, fire, war, rebellion, insurrection, sabotage, riot, or state or federal order, rule, regulation, or law, any of which have the effect of prohibiting the Parties' activities on the Leases or the AMI, which prohibition does not arise, directly or indirectly, out of Lender’s action or inaction, a shortage or materials or labor, or an event that renders the lease or other assets sought to be acquired to be undesirable, unreasonably priced or marketed, highly contentious due to the politics or other local land, legal or other concerns.

 

 

Page 4 of 6

	Miscellaneous:	This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.  This Agreement, the Note, the Participation Agreement and the other documents executed in connection herewith set forth the entire understanding between the parties hereto, and no modification or amendment of or supplement hereto or thereto shall be valid or effective unless the same is in writing and signed by the party against whom it is sought to be enforced.  In the event of any conflict between the provisions of this Agreement, and the Note or any of the other documents executed in connection herewith, the provisions of this Agreement shall control.  All notices shall be in writing and shall be deemed sufficiently given or furnished if delivered by personal delivery or by expedited delivery service with proof of delivery, or by registered or certified United States mail, return receipt requested, postage prepaid, at the addresses of the parties specified on the letterhead and the inside address hereof (unless changed by similar notice in writing given by the particular person whose address is to be changed).  The maturity of any payment which becomes due and payable hereunder on a day other than a business day, shall be extended to the next succeeding business day.  This Agreement shall be deemed a contract made under the laws of the State of Colorado.

Executed as of the date first above written.

 

	
Borrower: PetroShare Corp.

	
Lender: Providence Energy Operators, LLC

	
By:   /s/ Stephen J. Foley          

	
 

By:   /s/ Jim Sinclair           

	

Name:  Stephen J. Foley 

Title:  CEO

	
Name: Jim Sinclair

Title:   COO

  

  

 

 

Page 5 of 6

EXHIBIT A

FORM OF NOTE

 

 

 

 

Page 6 of 6

 

 

PROMISSORY NOTE

 

	
$5,000,000 (US Dollars) 

	
Date: May 13, 2015

FOR VALUE RECEIVED, pursuant to the terms and conditions of this Promissory Note (this “Note”), PetroShare Corp., a Colorado C Corporation, whose address is 7200 S Alton Way, Suite B220, Centennial CO 80112 (the “Borrower”), hereby promises to pay to the order of Providence Energy Operators, LLC, whose address is 16400 N Dallas Pkwy, Suite 400, Dallas TX 75248 (the “Lender”), the principal sum of Five Million Dollars ($5,000,000), or so much thereof that may be advanced by Lender prior to maturity, together with interest pursuant to the terms and conditions set forth herein.

PAYMENT OF INTEREST AND PRINCIPAL. Payments of interest only shall accrue commencing on the date of the advancement(s) of the principal amount(s) that are made pursuant to that certain Participation Agreement dated May 13, 2015 by and between Lender and Borrower. First payment of accrued interest shall be due the first day of the month after Borrower receives the first production payment from a well associated with the Participation Agreement referenced herein, and/or in which Borrower has or has had a working interest, and shall continue on a month to month basis thereafter. Payment of principal amounts may be made at any time during the term hereof. All payments under this Note shall be applied first to accrued but unpaid interest, and next to outstanding principal.  If not sooner paid, the entire remaining indebtedness (including unpaid principal and accrued interest) shall be due and payable on June 1, 2017. Payments shall be made to Lender at:

Providence Energy Operators, LLC

16400 N. Dallas Parkway, Suite 400

Dallas, TX 75248

(or any alternative location as requested by Lender)

INTEREST.  This Note shall bear interest at an annual rate of eight percent (8.0%) simple interest per annum.  Interest shall be computed on each advance of principal from the date of its disbursement to Borrower (computed on the basis of a 365‐day year, actual days elapsed).

PREPAYMENT.  The Borrower shall have the right at any time and from time to time to prepay this Note in whole or in part without premium or penalty.

DEED OF TRUST.  The indebtedness evidenced by this Note is secured by a Deed of Trust dated May 13, 2015 (“Deed of Trust”) from Borrower for the benefit of Lender covering all of Borrower’s interest, whether now owned or hereinafter acquired, in and to various oil and gas interests, including without limitation, leasehold interests, working interests, and accompanying net revenue interests, along with any wells, equipment and fixtures located thereon and proceeds derived therefrom that are located in Colorado and/or related to the interests set forth on Exhibit A and B attached hereto (the “Security”), and until released the Deed of Trust contains additional rights of Lender. Such rights may cause Acceleration of the indebtedness evidenced by this Note.

 

  

1

REMEDIES.  No delay or omission on the part of the Lender of this Note, in exercising any right hereunder, shall operate as a waiver of any such right or of any other right of such Lender, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion.  The rights and remedies of the Lender shall be cumulative and may be pursued singly, successively, or together, in the sole discretion of the Lender.

EVENTS OF ACCELERATION.  The occurrence of any of the following shall constitute an “Event of Acceleration” by Borrower under this Note:

(a)   Borrower’s failure to pay any part of the principal or interest as and when due under this Note;

(b)   the commencement by or on behalf of Borrower of any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, moratorium or similar law or statute;

(c)    Borrower’s becoming insolvent or not paying its debts as they become due;

(d)  the failure by Borrower to perform any of the promises or other obligations (other than payment) set forth herein or in the Participation Agreement entered into of even date herewith between Lender and Borrower, and the continuation of such failure for a period of thirty (30) days after written notice thereof from Lender;

(e)   the execution by Borrower of a general assignment of any of the Security for the benefit of creditors;

(f)   Borrower consents to or suffers the appointment of a receiver, trustee or custodian for all or any portion of Borrower's property or assets that is not vacated within thirty (30) days; or

(g)   the dissolution or termination of existence of Borrower.

ACCELERATION.  Upon the occurrence of an Event of Acceleration under this Note, and in addition to any other rights and remedies that Lender may have, Lender shall have the right, at its sole and exclusive option, to declare this Note immediately due and payable.  Lender’s declaration of the Note being due and payable shall not prejudice Lender or Lender’s rights to pursue any other right or remedy (albeit legal, equitable or otherwise) in this regard.

SUBORDINATION.  The Borrower’s obligations under this Promissory Note are subordinated to all indebtedness, if any, of Borrower, to any unrelated third party lender to the extent such indebtedness is outstanding on the date of this Note, and Lender has been notified of same in writing on the date of this Note, and such subordination is required under the loan documents providing for such third party indebtedness.

 

2

  

WAIVERS BY BORROWER.  All signatories and Borrower-related parties to this Note, such as Borrower and any sureties, endorsers, and guarantors hereof, hereby waive protest, presentment, notice of dishonor, and notice of acceleration of maturity and agree to continue to remain bound for the payment of principal, interest and all other sums due under this Note notwithstanding any change or changes by way of release, surrender, exchange, modification or substitution of any security for this Note or by way of any extension or extensions of time for the payment of principal and interest; and all such parties waive all and every kind of notice of such change or changes and agree that the same may be made without notice or consent of any of them.

EXPENSES.  In the event any payment under this Note is not paid when due, the Borrower agrees to pay, in addition to the principal and interest hereunder, reasonable attorneys’ fees not exceeding a sum equal to 15% of the then outstanding balance owing on the Note, plus all other reasonable costs and expenses incurred by Lender in exercising any of its rights and remedies upon a breach or an event of default or Event of Acceleration under this Note and any costs of collection related thereto.

GOVERNING LAW.  This Note shall be governed by, and construed in accordance with, the laws of the State of Colorado.

SUCCESSORS.  All of the foregoing is the promise of Borrower and shall bind Borrower and Borrower’s successors, heirs and assigns; provided, however, that Borrower may not assign any of its rights or delegate any of its obligations hereunder without the prior written consent of the Lender of this Note.

IN WITNESS WHEREOF, Borrower has executed this Promissory Note as of the day and year first above written.

BORROWER:

PETROSHARE CORP

A Colorado Corporation

By:    /s/ Stephen J. Foley     

Name: Stephen J. Foley

Title:   CEO

Executed this 13th day of May, 2015

3

Exhibit A – Lease Schedule

(see attached)

 

 

 

 

Exhibit B

(There is no exhibit B)­­­­­­­Exhibit 10.2

 

PROMISSORY NOTE

 

	
$5,000,000 (US Dollars) 

	
Date: May 13, 2015

FOR VALUE RECEIVED, pursuant to the terms and conditions of this Promissory Note (this “Note”), PetroShare Corp., a Colorado C Corporation, whose address is 7200 S Alton Way, Suite B220, Centennial CO 80112 (the “Borrower”), hereby promises to pay to the order of Providence Energy Operators, LLC, whose address is 16400 N Dallas Pkwy, Suite 400, Dallas TX 75248 (the “Lender”), the principal sum of Five Million Dollars ($5,000,000), or so much thereof that may be advanced by Lender prior to maturity, together with interest pursuant to the terms and conditions set forth herein.

PAYMENT OF INTEREST AND PRINCIPAL. Payments of interest only shall accrue commencing on the date of the advancement(s) of the principal amount(s) that are made pursuant to that certain Participation Agreement dated May 13, 2015 by and between Lender and Borrower. First payment of accrued interest shall be due the first day of the month after Borrower receives the first production payment from a well associated with the Participation Agreement referenced herein, and/or in which Borrower has or has had a working interest, and shall continue on a month to month basis thereafter. Payment of principal amounts may be made at any time during the term hereof. All payments under this Note shall be applied first to accrued but unpaid interest, and next to outstanding principal.  If not sooner paid, the entire remaining indebtedness (including unpaid principal and accrued interest) shall be due and payable on June 1, 2017. Payments shall be made to Lender at:

Providence Energy Operators, LLC

16400 N. Dallas Parkway, Suite 400

Dallas, TX 75248

(or any alternative location as requested by Lender)

INTEREST.  This Note shall bear interest at an annual rate of eight percent (8.0%) simple interest per annum.  Interest shall be computed on each advance of principal from the date of its disbursement to Borrower (computed on the basis of a 365‐day year, actual days elapsed).

PREPAYMENT.  The Borrower shall have the right at any time and from time to time to prepay this Note in whole or in part without premium or penalty.

DEED OF TRUST.  The indebtedness evidenced by this Note is secured by a Deed of Trust dated May 13, 2015 (“Deed of Trust”) from Borrower for the benefit of Lender covering all of Borrower’s interest, whether now owned or hereinafter acquired, in and to various oil and gas interests, including without limitation, leasehold interests, working interests, and accompanying net revenue interests, along with any wells, equipment and fixtures located thereon and proceeds derived therefrom that are located in Colorado and/or related to the interests set forth on Exhibit A and B attached hereto (the “Security”), and until released the Deed of Trust contains additional rights of Lender. Such rights may cause Acceleration of the indebtedness evidenced by this Note.

 

  

1

REMEDIES.  No delay or omission on the part of the Lender of this Note, in exercising any right hereunder, shall operate as a waiver of any such right or of any other right of such Lender, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion.  The rights and remedies of the Lender shall be cumulative and may be pursued singly, successively, or together, in the sole discretion of the Lender.

EVENTS OF ACCELERATION.  The occurrence of any of the following shall constitute an “Event of Acceleration” by Borrower under this Note:

(a)   Borrower’s failure to pay any part of the principal or interest as and when due under this Note;

(b)   the commencement by or on behalf of Borrower of any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, moratorium or similar law or statute;

(c)    Borrower’s becoming insolvent or not paying its debts as they become due;

(d)  the failure by Borrower to perform any of the promises or other obligations (other than payment) set forth herein or in the Participation Agreement entered into of even date herewith between Lender and Borrower, and the continuation of such failure for a period of thirty (30) days after written notice thereof from Lender;

(e)   the execution by Borrower of a general assignment of any of the Security for the benefit of creditors;

(f)   Borrower consents to or suffers the appointment of a receiver, trustee or custodian for all or any portion of Borrower's property or assets that is not vacated within thirty (30) days; or

(g)   the dissolution or termination of existence of Borrower.

ACCELERATION.  Upon the occurrence of an Event of Acceleration under this Note, and in addition to any other rights and remedies that Lender may have, Lender shall have the right, at its sole and exclusive option, to declare this Note immediately due and payable.  Lender’s declaration of the Note being due and payable shall not prejudice Lender or Lender’s rights to pursue any other right or remedy (albeit legal, equitable or otherwise) in this regard.

SUBORDINATION.  The Borrower’s obligations under this Promissory Note are subordinated to all indebtedness, if any, of Borrower, to any unrelated third party lender to the extent such indebtedness is outstanding on the date of this Note, and Lender has been notified of same in writing on the date of this Note, and such subordination is required under the loan documents providing for such third party indebtedness.

 

2

  

WAIVERS BY BORROWER.  All signatories and Borrower-related parties to this Note, such as Borrower and any sureties, endorsers, and guarantors hereof, hereby waive protest, presentment, notice of dishonor, and notice of acceleration of maturity and agree to continue to remain bound for the payment of principal, interest and all other sums due under this Note notwithstanding any change or changes by way of release, surrender, exchange, modification or substitution of any security for this Note or by way of any extension or extensions of time for the payment of principal and interest; and all such parties waive all and every kind of notice of such change or changes and agree that the same may be made without notice or consent of any of them.

EXPENSES.  In the event any payment under this Note is not paid when due, the Borrower agrees to pay, in addition to the principal and interest hereunder, reasonable attorneys’ fees not exceeding a sum equal to 15% of the then outstanding balance owing on the Note, plus all other reasonable costs and expenses incurred by Lender in exercising any of its rights and remedies upon a breach or an event of default or Event of Acceleration under this Note and any costs of collection related thereto.

GOVERNING LAW.  This Note shall be governed by, and construed in accordance with, the laws of the State of Colorado.

SUCCESSORS.  All of the foregoing is the promise of Borrower and shall bind Borrower and Borrower’s successors, heirs and assigns; provided, however, that Borrower may not assign any of its rights or delegate any of its obligations hereunder without the prior written consent of the Lender of this Note.

IN WITNESS WHEREOF, Borrower has executed this Promissory Note as of the day and year first above written.

BORROWER:

PETROSHARE CORP

A Colorado Corporation

By:    /s/ Stephen J. Foley     

Name: Stephen J. Foley

Title:   CEO

Executed this 13th day of May, 2015

 

 

3

Exhibit A – Lease Schedule

(see attached)

 

 

 

 

4

 

 

 

	
C S M K F

	

CARVER SCHWARZ McNAB 

KAMPER & FORBES, LLC

	
LAWYERS

 

HUDSON'S  BAY CENTRE

1600 STOUT STREET, SUITE 1700

DENVER, COLORADO 80202

MAIN LINE:  303.893.1815

FACSIMILE: 303.893.1829

 

	

PETER C. FORBES PFORBES@CSMKF.COM

303.893.1827

 

May 6, 2015

VIA EMAIL

 

Frederick J. Witsell President 

PetroShare Corp.

7200 South AltonWay Suite B220

Centennial, CO 80111

 

	
Re:

	
Kingdom Resources/Todd Creek Farms

 

Dear Fred:

 

TCF has cleared title to an additional approximately 22 acres of mineral interests acres in Filings 1, 2 and 5, as reflected in the attached updated spreadsheet. I have also enclosed copies of the lease amendments adding this additional acreage to the TCF/Kingdom Lease. To the extent you think a modification of the Kingdom/Petroshare lease assignment is necessary to include these amendments, let me know and we can prepare one.

Because TCF's total net mineral acreage has increased to 333.24 net acres, I have enclosed a revised Bonus Payment order and a revised Contractor’s Fee invoice. Finally, I have included the additional invoices from our firm for charges incurred after our original submission that arc payable pursuant to the Contractor’s Agreement.

Therefore, assuming the closing goes forward on May 15, 2015 as scheduled, the total amount payable (including the Borders  invoices and the CSMKF invoices included with our original  submission) will be $785,630.10, broken down as follows:

	
Payee

	
Item

	 	
Amount 

	 	 	 		 
	
TCF

	
Bonus

	 	
$

	
683,142.00

	 
	
Kingdom

	
Contractor's Fee

	 	
$

	
68,314.20

	 
	
Kingdom

	
Borders Invoices

	 	
$

	
15,110.90

	 
	
Kingdom

	
CSMKF Invoices

	 	
$

	
19,063.00

	 

 

  

Frederick J. Witsell

May 6, 2015

Page 2

CSMKF

Lawyers

Also, there is one additional lot in Filing 5 where TCF obtained a QCMD, but where the homeowner had already executed a lease with Ward.  Therefore, TCF’s interest in that lot is limited to the 17.5% landowner royalty provided by the Ward lease. Kingdom has not included any net acreage for that lot in this submission, because that lease does not comply with the parameters set forth in the Contractor’s Agreement.  If that royalty is of interest to Ward, however, let us know and we can discuss an appropriate payment arrangement for that lot.

Thanks much, and as always let me know if you have any questions.

Very truly yours,

  /s/ Peter C. Forbes

Peter C. Forbes

cc:  Gene Osborne

Enclosure

 

 

Todd Creek Farms

	
SUMMARY OF NET ACREAGE ALL FILINGS 

	 	
Homeowner 

Leases

	
Summary 

Judgments

	
Defaults

	
Quit

claims

	
ROW

	
TOTALS

	
Filling 1

	
1.86

	
3.635

	
35.96

	
30.72

	
12.12

	
84.29

	
Filing 2

	
0

	
13.79

	
39.51

	
6.58

	
18.68

	
64.77

	
Filing 3

	
0

	
0

	
0.00

	
0.00

	
0.00

	
0.00

	
Filing 4

	
0

	
0

	
24.10

	
3.29

	
67.06

	
94.45

	
Filings

	
0

	
0

	
32.99

	
14.02

	
28.93

	
75.94

	
    TOTAL

	
1.860

	
17.425

	
132.560

	
54.605

	
126.790

	
333.240

TOTAL NET ACRES:   333.240

 

 

Page 1 of 9

 

 

Todd Creek Farms

	
FILING 1

	
Defaults

	 	
Quit Claim Mineral Deeds

 

	
Lot

	
Block

	
Total Acres

	
Net Acres

	
Comments

	
Lot

	
Block

	
Total Acres

	
Net Acres

	
Comments

	
15

	
3

	
1.57

	
1.570

	 	
5

	
2

	
1.74

	
0.870

	
50% Reduction - Tract 1

	
4

	
4

	
1.5

	
1.500

	 	
8

	
2

	
2.18

	
1.090

	
50% Reduction - Tract 1

	
2

	
1

	
1.59

	
1.590

	 	
11

	
3

	
1.73

	
1.730

	 
	
6

	
4

	
1.5

	
1.500

	 	
10

	
3

	
1.75

	
1.750

	 
	
15

	
2

	
2

	
1.000

	
50% Reduction - Tract 1

	
16

	
3

	
2.43

	
2.430

	 
	
8

	
4

	
1.5

	
1.500

	 	
7

	
3

	
1.86

	
0.930

	
50% Reduction - Tract 1

	
12

	
2

	
2

	
1.000

	
50% Reduction - Tract 1

	
1

	
2

	
1.68

	
1.680

	 
	
3

	
4

	
1.5

	
1.500

	 	
5

	
3

	
1.99

	
0.995

	
50% Reduction - Tract 1

	
2

	
5

	
1.97

	
1.970

	 	
19

	
3

	
1.94

	
0.970

	
50% Reduction - Tract 1

	
5

	
4

	
1.5

	
1.500

	 	
6

	
3

	
1.82

	
0.910

	
50% Reduction- Tract 1

	
10

	
2

	
2.49

	
1.245

	
50% Reduction - Tract 1

	
3

	
3

	
1.78

	
1.780

	 
	
14

	
3

	
1.63

	
1.630

	 	
7

	
2

	
2.87

	
1.435

	
50% Reduction - Tract 1

	
13

	
3

	
1.94

	
1.940

	 	
1

	
3

	
1.86

	
1.860

	 
	
13

	
2

	
2

	
1.000

	
50% Reduction - Tract 1

	
16

	
2

	
2

	
1.000

	
50% Reduction - Tract 1

	
22

	
3

	
2.09

	
1.045

	
50% Reduction - Tract 1

	
12

	
3

	
2.18

	
2.180

	 
	
1

	
5

	
1.62

	
1.620

	 	
9

	
3

	
1.86

	
1.860

	 
	
17

	
3

	
2.32

	
2.320

	 	
8

	
3

	
1.82

	
1.820

	 
	
14

	
2

	
2

	
1.000

	
50% Reduction - Tract 1

	
3

	
5

	
2.26

	
2.260

	 
	
21

	
3

	
2.09

	
1.045

	
50% Reduction - Tract 1

	
11

	
2

	
2.13

	
1.065

	
50% Reduction - Tract 1

	
4

	
5

	
2.64

	
2.640

	 	
4

	
3

	
2.1

	
2.100

	 
	
7

	
4

	
1.5

	
1.500

	 	
TOTALS

	
39.98

	
30.72

	 
	
1

	
4

	
1.5

	
1.500

	 	 
	
9

	
2

	
2.07

	
1.035

	
50% Reduction - Tract 1

	
1

	
1

	
1.81

	
1.810

	 
	
TOTALS

	
44.330

	
35.960

	 

	
 

	
TOTAL ACREAGE FOR FILING NO. 1 LOTS:

		
84.31

	
 

	
 

	
REDUCTIONS:

		
17.64

	
 

	
 

	
TOTAL NET ACREAGE FOR FILING NO. 1 LOTS

		
66.68

	
 

	
 

	
 

		
 

	
 

  

Page 2 of 9

 

Todd Creek Farms

	
FILING 2

	
Defaults

	 	
Quit Claim Mineral Deeds

	
Lot

	
Block

	
Total Acres

	
Net Acres

	
Plat

	
Comments

	
Lot

	
Block

	
Total Acres

	
Net Acres

	
Plat

	
Comments

	
1

	
5

	
1.69

	
1.69

	
Original

	 	
2

	
1

	
1.89

	
1.89

	
Amended

	 
	
3

	
5

	
1.96

	
1.96

	
Original

	 	
7

	
3

	
2.90

	
1.45

	
Original

	
50% Reduction - Tract 1

	
6

	
5

	
1.51

	
1.51

	
Original

	 	
1

	
1

	
1.94

	
0.97

	
Original

	
50% Reduction - Tract 1

	
3

	
3

	
2.05

	
2.05

	
Original

	 	
3

	
1

	
1.87

	
1.87

	
Original

	 
	
8

	
7

	
2.01

	
2.01

	
Original

	 	
Tract D

	
0.40

	
0.40

	 	 
	
4

	
3

	
2.15

	
2.15

	
Original

	 	
TOTALS

	
9.00

	
6.58

	 
	
2

	
4

	
1.69

	
1.69

	
Original

	 	 
	
2

	
7

	
1.96

	
1.96

	
Original

	 
	
1

	
4

	
1.49

	
1.49

	
Original

	 
	
2

	
5

	
2.29

	
2.29

	
Original

	 
	
5

	
1

	
2.15

	
2.15

	
Amended

	 
	
5

	
3

	
2.25

	
2.25

	
Original

	 
	
5

	
5

	
2.18

	
2.18

	
Original

	 
	
4

	
5

	
2.14

	
2.14

	
Original

	 
	
1

	
2

	
1.68

	
1.68

	
Amended

	 
	
3

	
2

	
1.54

	
0.77

	
Original

	
50% Reduction - Tract 1

	
7

	
7

	
2.28

	
2.28

	
Original

	 
	
1

	
3

	
2.29

	
2.29

	
Original

	 
	
1

	
1

	
2.96

	
2.96

	
Amended

	 
	
3

	
9

	
2.01

	
2.01

	
Original

	 
	
TOTALS

	
40.28

	
39.51

	 	 

 

 

	
TOTAL ACREAGE FOR FILING NO. 2

		
49.28

	
REDUCTIONS:

		
3.19

	
TOTAL NET ACREAGE FOR FILING NO. 2

		
46.09

 

  

Page 3 of 9

 

 

Todd Creek Farms

	
Filing 3

	
Default

s

	 	 	 	 	 	
Quit Claim Mineral Deeds

	
Lot

	
Block

	
Total Acres

	
Net Acres

	
Comments

	Lot	Block	Total Acres	Net Acres	
Comments

	
11

	
4

	
1.73

	
0.00

	
HBP Issue (1.73)

	6	3	1.81	0.00	
HBP Issue (1.81)

	
TOTALS

	
1.73

	
0.00

	 	TOTALS		1.81	0.00	

 

 

	
TOTAL ACREAGE FOR FILING NO. 3

		
3.54

	
REDUCTIONS:

		
0.00

	
TOTAL NET ACREAGE FOR FILING NO.

		
0.00

 

 

 

 

Page 4 of 9

 

Todd Creek Farms

	
Filing 4

	
Defaults

	 	
Quit Claim Mineral Deeds

 

	
Lot

	
Block

	
Total Acres

	
Net Acres

	
Comments

	
Lot    

	Block	
Total Acres

	
Net Acres

	
Comments

	
7

	
5

	
2.13

	
2.13

	
Guard Lease (void)

	
26

	2	
1.72

	
1.72

	 
	
5

	
5

	
1.81

	
1.81

	 	
6

	3	
1.57

	
1.57

	 
	
14

	
4

	
1.79

	
1.79

	 	
TOTAL ACREAGE

		
3.29

	
3.29

	 
	
9

	
7

	
1.95

	
1.95

	 	 
	
37

	
2

	
1.53

	
1.53

	 
	
33

	
2

	
1.61

	
1.61

	 
	
12

	
4

	
1.59

	
1.59

	
Extraction Lease (void)

	
23

	
2

	
1.51

	
1.51

	 
	
16

	
3

	
1.54

	
1.54

	
Guard Lease {void)

	
40

	
4

	
1.88

	
1.88

	 
	
38

	
4

	
1.78

	
1.78

	 
	
9

	
4

	
1.88

	
1.88

	
Extraction Lease (void)

	
34

	
2

	
1.60

	
1.60

	 
	
21

	
2

	
1.50

	
1.50

	 
	
TOTAL ACREAGE

	
24.10

	
24.10

	 

 

 

	
TOTAL ACREAGE FOR FILING NO. 4

		
27.39

	
REDUCTIONS:

		
0

	
TOTAL NET ACREAGE FOR FILING NO. 4 LOTS:

		
27.39

Page 5 of 9

 

Todd Creek Farms

	
Filing 5

	
Defaults

	 	
Quit Claim Mineral Deeds

 

	
Lot

	
Block

	
Total Acres

	
Net Acres

	
Comments

	
Lot

	
Block

	
Total Acres

	
Net Acres

	
Comments

	
25

	
1

	
1.67

	
1.67

	 	
38

	
1

	
1.67

	
1.67

	 
	
30

	
1

	
1.80

	
1.80

	 	
3

	
3

	
1.52

	
0.00

	
Lease prior to QCMD

	
12

	
2

	
2.10

	
2.10

	 	
12

	
1

	
1.98

	
1.98

	 
	
35

	
4

	
2.00

	
2.00

	 	
24

	
1

	
1.52

	
1.52

	 
	
6

	
3

	
1.76

	
1.76

	 	
25

	
4

	
2.46

	
2.46

	 
	
30

	
2

	
1.80

	
1.80

	 	
26

	
4

	
1.98

	
1.98

	 
	
14

	
2

	
1.80

	
1.80

	 	
38

	
1

	
1.67

	
1.67

	 
	
29

	
3

	
1.53

	
1.53

	 	
40

	
4

	
2.11

	
2.11

	 
	
4

	
2

	
1.56

	
1.56

	 	
Outlots A, B, C, D. E

	
0.63

	
0.63

	 
	
13

	
1

	
1.86

	
1.86

	 	
TOTALS

	
15.54

	
14.02

	 
	
12

	
4

	
1.67

	
1.67

	 	 
	
31

	
1

	
1.80

	
1.80

	 
	
10

	
2

	
1.69

	
1.69

	 
	
36

	
1

	
1.61

	
1.61

	 
	
18

	
3

	
1.60

	
1.60

	 
	
29

	
2

	
1.72

	
1.72

	 
	
8

	
3

	
1.63

	
1.63

	
Guard Lease (void)

	
35

	
3

	
1.50

	
0.00

	
Title transfer issue (1.50)-Montano

	
10

	
3

	
1.71

	
1.71

	 
	
17

	
1

	
1.68

	
1.68

	 
	
TOTALS

	
34.49

	
32.99

	 

 

 

 

 

	
TOTAL ACREAGE FOR FILING NO. 5

		
50.03

	
REDUCTIONS:

		
  4.58

	
TOTAL NET ACREAGE FOR FILING NO. 5 LOTS:

		
47.01

Page 6 of 9

 

Todd Creek Farms

	
ROW

	 	
Total Acres

	
Reduction

	
Net Acreage

	
Comments

	
Filing 1

	
14.49

	
2.37

	
12.12

	
50% Reduction - Tract 1

	
Filing 2

	
18.92

	
0.24

	
18.68

	
50% Reduction - Tract 1

	
Filing 3

	
20.72

	
20.72

	
0.00

	
HBP Issue

	
Filing 4

	
67.06

	
0

	
67.06

	 
	
Filing 5

	
28.93

	
0

	
28.93

	 
	
TOTALS

	
150.12

	
23.33

	
126.79

	 

Page 7 of 9

Todd Creek Farms

	
Amendment No. 1 - Summary Judgments

 

	
Filing

	
Lot

	
Block

	
Total

Acres

	
Net

Acres

	
Comments

	
1

	
2

	
2

	
1.64

	
1.64

	 
	
1

	
20

	
3

	
2.12

	
1.06

	
50% Reduction Tract 1

	
1

	
6

	
2

	
1.87

	
0.935

	
50% Reduction Tract 1

	
2

	
1

	
2

	
2.31

	
2.31

	 
	
2A

	
2

	
2

	
1.89

	
1.89

	 
	
2A

	
3

	
1

	
2.2

	
1.100

	
50% Reduction Tract 1

	
2

	
2

	
3

	
2.11

	
2.11

	 
	
2

	
2

	
2

	
2.29

	
2.29

	 
	
2

	
6

	
4

	
1.91

	
1.91

	 
	
2

	
3

	
7

	
2.18

	
2.18

	 
	 	
TOTALS

	
20.520

	
17.425

	 

 

 

Page 8 of 9

 

Todd Creek Farms

	
Amendment No. 2 -  Homeowner Leases

	
Filing

	
Lot  

	Block	
Total

Acres

	
Net Acres

	
Comments

	
1

	
2

	3	
1.86

	
1.86

	
85/15 Lease

	 	
TOTALS

	
1.860

	
1.860

	 

 

 

  

Page 9 of 9

 

KINGDOM RESOURCES, LLC

7501 Village Square Drive Suite 205

Castle Pines, CO 80108

ORDER OF PAYMENT

May 5, 2015

On approval of the Oil and Gas Lease associated herewith and on approval of the title to same, Kingdom Resources, LLC will make or cause to be made the payment indicated herein by check no later than May 15, 2015.  Payment is deemed complete upon mailing or dispatch. No default shall be declared for failure to make payment until 10 days after receipt of written notice from payee of intention to declare such default.

If the Oil and Gas Lease referenced herein covers less than the entire undivided interest in the oil and gas or other rights in such land, then the dollar amount listed herein shall be paid to the Lessor only in the proportion which the interest in said lands covered by this Agreement bears to the entire undivided interest therein. Further, should Lessor own more or less than the net interest defined herein, Lessee shall increase or reduce the dollar amount payable hereunder proportionately.

PAY TO:  Todd Creek Farms, LLC

THE AMOUNT OF:  Six Hundred Eighty Three Thousand One Hundred Forty Two and No/100 Dollars ($683,142.00)

 

ADDRESS: 7501 Village Square Drive, Suite 205, Castle Pines, CO 80108 

 

Consideration for execution of a new Paid Up Oil and Gas Lease dated November 28, 2014 covering portions of Sections 10 and 15, Township 1 South, Range 67 West of the 6th  P.M, as amended.

 

	
KINGDOM  RESOURCES, LLC 

 

LESSOR

	
TODD CREEK FARMS, LLC

 

LESSEE

	
 

	
 

	
By:  /s/ Gene Osborne

Name:  Gene Osborne

Title:  Manager

	
By:  /s/ Gene Osborne

Name:  Gene Osborne

Title:  Authorized Agent

	
 

	
 

 

 

INVOICE

 

	
Date

	
Invoice #

	
5/5/2015

	
101

Kingdom Resources, LLC

7501 Village Square Dr.#205 

Castle Pines, CO 80108

 

Bill to:

PetroShare Corp.

Frederick J. Witsell

7200 South Albion Way, Suite B220

Centennial, CO  80111

 

	
Description

	
Amount

	
 

	
 

	
Contract Fee pursuant to Article 1 of Exhibit B of the "Services Agreement"

	
$68,314.20

	
 

 

TOTAL

	
 

 

 

 

 

 

$68,134.20

 

 

 

 

AMENDMENT NO. 1 TO PAID UP OIL AND GAS LEASE

 

 

The terms of that certain Paid-Up Oil and Gas Lease dated as of November 24, 2014 by and between Todd Creek Farms, LLC and Kingdom Resources, LLC, as recorded with the Clerk and Recorder of Adams County, Colorado on or about January 13, 2015 at Reception No.

2015000002735 (the "Lease") are hereby amended as follows:

The description of the property subject to the Lease is amended to include the property in Exhibit A-4 to this Amendment, which is incorporated into the Lease, and the description of the acreage covered by the Lease is amended to read "containing 373.16 acres more or less."

Other than as set forth above, the terms of the Lease are not amended in any way.

TODD CREEK FARMS, LLC

  

By:  /s/ Gene Osborne

Name:  Gene Osborne

Title:  Authorized Agent

 

	
STATE OF COLORADO

	
)

	
 

	
 

	
) ss.

	
 

	
COUNTY OF DENVER

	
)

	
 

 

The foregoing instrument was acknowledged before me on this 14th day of April, 2015, by Gene Osborne, as Authorized Agent for Todd Creek Farms, LLC, a Colorado limited liability company, on behalf of said entity.

 

	

[SEAL]

MARY BAYER

NOTARY PUBLIC      

STATE OF COLORADO

NOTARY ID 20044029804

MY COMMISSION EXPIRES 02/27/2017

	

/s/ Mary Bayer

  Notary Public – State of Colorado

My Commission Expires: 2/27/2017

	
 

	
 

	
 

	
 

  

Consented and Agreed To:

KINGDOM RESOURCES, LLC

	By: /s/ Gene Osborne	

Name:  Gene Osborne

Title:  Manager

 

	
STATE OF COLORADO

	
)

	
 

	
 

	
) ss.

	
 

	
COUNTY OF DENVER

	
)

	
 

 

The foregoing instrument was acknowledged before me on this 14th day of April, 2015, by Gene Osborne, as Manager of Todd Creek Farms, LLC, a Colorado limited liability company, on behalf of said entity.

 

	

[SEAL]

MARY BAYER

NOTARY PUBLIC      

STATE OF COLORADO

NOTARY ID 20044029804

MY COMMISSION EXPIRES 02/27/2017

	

/s/ Mary Bayer

  Notary Public – State of Colorado

My Commission Expires: 2/27/2017

	
 

	
 

	
 

	
 

  

EXHIBIT "A-4"

TODD CREEK FARMS SUBDIVISION

 

 Attached to and made part of that certain oil and gas lease dated November 24, 2014 by and between Todd Creek Farms, LLC as Lessor and Kingdom Resources, LLC as Lessee:

 

	
1.

	
Lot 2, Block 2 of Filing No. 1 as shown on the plat of the Todd Creek Farms subdivision, as recorded with the Clerk and Record of Adams County on March 22, 1996, located in Section 10, Township 1 South, Range 67 West of the 6th P.M. and also known as 9195 E. 159th Avenue, Brighton, CO 80602 and containing 1.64 acres more or less.

	
2.

	
Lot 20, Block 3 of Filing No. 1 as shown on the plat of the Todd Creek Farms subdivision, as recorded with the Clerk and Record of Adams County on March 22, 1996, located in Section 10, Township 1 South, Range 67 West of the 6th P.M. and also known as 15775 Dallas Street, Brighton, CO 80602 and containing 2.12 acres more or less.

	
3.

	
Lot 6, Block 2 of Filing No. 1 as shown on the plat of the Todd Creek Farms subdivision, as recorded with the Clerk and Record of Adams County on March 22, 1996, located in Section 10, Township 1 South, Range 67 West of the 6th P.M. and also known as 9395 East 159th Avenue, Brighton, CO 80602 and containing

1.87 acres more or less.

	
4.

	
Lot 1, Block 2 of Filing No. 2 as shown on the plat of the Todd Creek Farms subdivision, as recorded with the Clerk and Record of Adams County on May 22, 1997, and, as amended, March 19, 1998, located in Section 10, Township 1 South, Range 67 West of the 61 P.M. and also known as 15600 Boston Street, Brighton, CO 80602 and containing 2.31 acres more or less.

	
5.

	
Lot 2, Block 2 of Filing No. 2 as shown on the amended plat of the Todd Creek Farms subdivision, as recorded with the Clerk and Record of Adams County on March 19, 1998, located in Section 10, Township 1 South, Range 67 West of the 6th P.M. and also known as 15250 Akron Street, Brighton, CO 80602 and containing 1.89 acres more or less.

	
6.

	
Lot 3, Block 1 of Filing No. 2 as shown on the amended plat of the Todd Creek Farms subdivision, as recorded with the Clerk and Record of Adams County on March 19, 1998, located in Section 10, Township 1 South, Range 67 West of the 6th P.M. and also known as 9081 East 153rd Avenue, Brighton, CO 80602 and containing 2.2 acres more or less.

	
7.

	
Lot 2, Block 3 of Filing No. 2 as shown on the plat of the Todd Creek Farms subdivision, as recorded with the Clerk and Record of Adams County on May 22, 1997, and, as amended, March 19, 1998, located in Section 10, Township 1 South,

 

Range 67 West of the 6th P.M. and also known as 9303 East 155th Drive, Brighton, CO 80602 and containing 2.11 acres more or less.

	
8.

	
Lot 2, Block 2 of Filing No. 2 as shown on the plat of the Todd Creek Farms subdivision, as recorded with the Clerk and Record of Adams County on May 22, 1997, and, as amended, March 19, 1998, located in Section 10, Township 1 South, Range 67 West of the 6th P.M. and also known as 9453 East 155th Drive,

Brighton, CO 80602 and containing 2.29 acres more or less.

	
9.

	
Lot 6, Block 4 of Filing No. 2 as shown on the plat of the Todd Creek Farms subdivision, as recorded with the Clerk and Record of Adams County on May 22, 1997, and, as amended, March 19, 1998, located in Section l 0, Township 1 South, Range 67 West of the 6th P.M. and also known as 9347 East 153rd Avenue, Brighton, CO 80602 and containing 1.91 acres more or less.

	
10.

	
Lot 3, Block 7 of Filing No. 2 as shown on the plat of the Todd Creek Farms subdivision, as recorded with the Clerk and Record of Adams County on May 22, 1997, and, as amended, March 19, 1998, located in Section 10, Township 1 South, Range 67 West of the 6th P.M. and also known as 9204 East 153rd Avenue, Brighton, CO 80602 and containing 2.18 acres more or less.

 

AMENDMENT NO. 2 TO PAID UP OIL AND GAS LEASE

 

The terms of that certain Paid-Up Oil and Gas Lease dated as of November 24, 2014 by and between Todd Creek Farms, LLC and Kingdom Resources, LLC, as recorded with the Clerk and Recorder of Adams County, Colorado on or about January 13, 2015 at Reception No. 2015000002735 (the "Lease") are hereby amended as follows:

The description of the property subject to the Lease is amended to include the property in Exhibit A-5 to this Amendment, which is incorporated into the Lease, and the description of the acreage covered by the Lease is amended to read "containing 375.02 acres more or less."

Other than as set forth above, the terms of the Lease are not amended in any way.

 

TODD CREEK FARMS, LLC

 

By:  /s/ Gene Osborne

Name:  Gene Osborne

Title: Authorized Agent

 

	
STATE OF COLORADO

	
)

	
 

	
 

	
) ss.

	
 

	
COUNTY OF DENVER

	
)

	
 

 

The foregoing instrument was acknowledged before me on this 13th day of April, 2015, by Gene Osborne, as Authorized Agent for Todd Creek Farms, LLC, a Colorado limited liability company, on behalf of said entity.

 

	

[SEAL]

MARY BAYER

NOTARY PUBLIC      

STATE OF COLORADO

NOTARY ID 20044029804

MY COMMISSION EXPIRES 02/27/2017

	

/s/ Mary Bayer

  Notary Public – State of Colorado

My Commission Expires: 2/27/2017

	
 

	
 

	
 

	
 

  

 

Consented and Agreed To:

 

KINGDOM RESOURCES, LLC

	By: /s/ Gene Osborne	

Name:  Gene Osborne

Title:  Manager

 

	
STATE OF COLORADO

	
)

	
 

	
 

	
) ss.

	
 

	
COUNTY OF DENVER

	
)

	
 

 

The foregoing instrument was acknowledged before me on this 14th day of April, 2015, by Gene Osborne, as Manager of Todd Creek Farms, LLC, a Colorado limited liability company, on behalf of said entity.

 

	

[SEAL]

MARY BAYER

NOTARY PUBLIC      

STATE OF COLORADO

NOTARY ID 20044029804

MY COMMISSION EXPIRES 02/27/2017

	

/s/ Mary Bayer

  Notary Public – State of Colorado

My Commission Expires: 2/27/2017

	
 

	
 

	
 

	
 

 

 

 

EXHIBIT "A-5"

TODD CREEK FARMS SUBDIVISION

Attached to and made part of that certain oil and gas lease dated November 24, 2014 by and between Todd Creek Farms, LLC as Lessor and Kingdom Resources, LLC as Lessee:

	
1.

	
Lot 1, Block 3 of Filing No. 1 as shown on the plat of the Todd Creek Farms subdivision, as recorded with the Clerk and Record of Adams County, Colorado on March 22, 1996, located in Section 10, Township 1 South, Range 67 West of the 6th P.M. and also known as 15985 Alton Street, Brighton, CO 80602 and containing 1.86 acres more or less.

 

AMENDMENT NO. 3 TO PAID UP OIL AND GAS LEASE

 

The terms of that certain Paid-Up Oil and Gas Lease dated as of November 24, 2014 by and between Todd Creek Farms, LLC and Kingdom Resources, LLC, as recorded with the Clerk and Recorder of Adams County, Colorado on or about January 13, 2015 at Reception No.

2015000002735 (the "Lease") are hereby amended as follows:

Exhibit A-2 to the Lease is amended to include the following property:

Tract D, Todd Creek Farms Filing No. 2, according to the plat thereof recorded May 22, 1997 in File 17, Map 688, as amended according to the plat thereof recorded March 19, 1998 in File 17, Map 815 at County of Adams, State of Colorado, consisting of 0.40 acres, more or less

Outlots A, B, C, D and E, Todd Creek Farms Filing No. 5, according to the plat thereof recorded May 1, 2000 in File 18, Map 211, at County of Adams, State of Colorado, consisting of 0.63 acres, more or less

And the description of the acreage covered by the Lease is amended to read ''containing 376.05 acres more or less."·

Other than as set forth above, the terms of the Lease are not amended in any way.

 

By:  /s/ Gene Osborne

Name:  Gene Osborne

Title: Authorized Agent

 

	
STATE OF COLORADO

	
)

	
 

	
 

	
) ss.

	
 

	
COUNTY OF DOUGLAS

	
)

	
 

 

The foregoing instrument was acknowledged before me on this 5th day of May, 2015, by Gene Osborne, as Authorized Agent for Todd Creek Farms, LLC, a Colorado limited liability company, on behalf of said entity.

 

	

[SEAL]

KIM T HARRISON

NOTARY PUBLIC      

STATE OF COLORADO

MY COMM EXP 05/23/2016

	

/s/ Kim T. Harrision

  Notary Public – State of Colorado

My Commission Expires: 5/23/16

	
 

	
 

	
 

	
 

 

 

 

 

Consented and Agreed To: 

 

KINGDOM  RESOURCES, LLC

 

By:  /s/ Gene Osborne

Name: Gene Osborne 

Title: Manager

 

 

	
STATE OF COLORADO

	
)

	
 

	
 

	
) ss.

	
 

	
COUNTY OF DOUGLAS

	
)

	
 

 

The foregoing instrument was acknowledged before me on this 5th day of May, 2015, by Gene Osborne, as Manager of Kingdom Resources, LC, a Colorado limited liability company, on behalf of said entity.

 

	

[SEAL]

KIM T HARRISON

NOTARY PUBLIC      

STATE OF COLORADO

MY COMM EXP 05/23/2016

	

/s/ Kim T. Harrision

  Notary Public – State of Colorado

My Commission Expires: 5/23/16

	
 

	
 

	
 

	
 

 

CARVER SCHWARZ McNAB KAMPER & FORBES, LLC

ATTORNEYS AT LAW

EIN No. 20-0509232

 

HUDSON'S BAY CENTRE

1600 STOUT STREET. SUITE 1700

DENVER. COLORADO 80202-3164

 

TELEPHONE 303.893.1815

FAX 303.893.1829

March 06, 2015

Kingdom Resources, LLC 

Attn: Gene A. Osborne

7501 Village Square Dr. #205 

Castle Rock, CO 80108

 

Invoice Number 19419

In Reference  To:  Kingdom Resources, LLC - Lease Matters - 33030.002

Professional Services

	 				Hours			Amount	
	
 2/6/2015

	
PCF

	
Drafting correspondence to Petroshare concerning lease assignment.

	 	
0.60

	 	 	
255.00

	 
	
2/10/2015

	
PCF

	
Work on matters concerning finalization of lease assignment;

	 	 	
2.60

	 	 	 	
1,105.00

	 
	
2/11/2015

	
PCF

	
Work on resolution of various issues concerning lease   submission;

	 	 	
1.00

	 	 	 	
425.00

	 
	
2/12/2015

	
MB

	
Review exhibits with deed information per P. Forbes.

	 	 	
1.70

	 	 	 	
178.50

	 
	
 

	
 PCF

	
Reconciliation of matters for submission to Petroshare; revise and finalize documents for Petroshare.

	 	 	
1.10

	 	 	 	
467.50

	 
	
2/13/2015

	
MB

	
Review lot information on map and lease exhibits per P. Forbes.

	 	 	
2.40

	 	 	 	
252.00

	 
	
 

	PCF	
Follow up on information request from Mr. Witsell.

	 	 	
1.30

	 	 	 	
552.50

	 
	
2/24/2015

	
PCF

	
Follow up on questions from  Mr. Witsell.

	 	 	
0.20

	 	 	 	
85.00

	 
	
2/26/2015

	
PCF

	
Prepare for and attend meeting with Mr. Osborne, Mr. Witsell, Mr. Foley at Petroshare.

	 	 	
3.80

	 	 	 	
1,615.00

	 
	
2/27/2015

	
PCF

	
Draft acceptance letter for Petroshare and correspondence concerning same; telecon  Mr. Osborne.

	 	 	
1.20

	 	 	 	
510.00

	 
		 	 	 	 	 	 	 	 
	
For professional services rendered

	 	 	
15.90

	 	 	
$

	
5,445.50

	 
	
Previous balance

	 	 	 	 	 	
$

	
11,790.00

	 

 

CARVER SCHWARZ McNAB KAMPER & FORBES, LLC

 

Page 2

Kingdom Resources, LLC 

 

	 			Amount
	 		 	 
			
 

	
Balance due

	 	
$17,235.50

 

 

 

  

CARVER SCHWARZ McNAB KAMPER & FORBES, LLC

ATTORNEYS AT LAW

EIN No. 20-0509232

 

HUDSON'S BAY CENTRE

1600 STOUT STREET. SUITE 1700

DENVER. COLORADO 80202-3164

 

TELEPHONE 303.893.1815

FAX 303.893.1829

April 08, 2015

Kingdom Resources, LLC 

Attn: Gene A. Osborne

7501 Village Square Dr. #205 

Castle Rock, CO 80108

Invoice Number 19478

In Reference  To:  Kingdom Resources, LLC - Lease Matters - 33030.002

Professional Services

	 		Hours	Amount
	
    3/2/2015 PCF

	
  Research issues concerning ownership of mineral rights under E-470

	
1.10

	
467.50

	 	
and condemnation  issues; begin work on Filing No. 2 MSJ Response.

	 	 
	
3/6/2015 PCF

	
Follow up on various matters raised by Mr. Wltsel and various emails.

	
0.80

	
340.00

	
3/16/2015  PCF

	
Review documents, office conferences Ms. Bayer; draft letter concerning

	
0.30

	
127.50

	 	
supplemental acreage and various emails regarding  same.

	 	 
	
For professional services rendered

	
2.20

	
$935.00

	
Previous balance

	 	
$17,235.50

	
Balance due

	 	
$18,170.50

CARVER SCHWARZ McNAB KAMPER & FORBES, LLC

ATTORNEYS AT LAW

EIN No. 20-0509232

 

HUDSON'S BAY CENTRE

1600 STOUT STREET. SUITE 1700

DENVER. COLORADO 80202-3164

 

TELEPHONE 303.893.1815

FAX 303.893.1829

May 6, 2015

Kingdom Resources, LLC 

Attn: Gene A. Osborne

7501 Village Square Dr. #205 

Castle Rock, CO 80108

Invoice Number 19523

In Reference  To:  Kingdom Resources, LLC - Lease Matters - 33030.002

Professional Services

 

	
4/14/2015 PCF

	
Work on matters relating to additional lots to add to lease; office conferences Ms. Bayer; letter to Mr. Witsell regarding extending closing

	
1.10

	
467.50

	 	
date; letter to Mr. Witsell regarding additional lots added to lease.

	 	 
	
5/5/2015 PCF

	
Prepare additional lease amendment; review matters concerning title transfer issues; revise and finalize net acreage spreadsheet; various

	
1.00

	
425.00

	 	
emails Mr. Osborne; draft letter to Mr. Witsell.

	 	 
	
For professional services rendered

	
2.10

	
$892.50

	
Previous balance

	 	
$18,170.50

	
Balance due

	 	
$19,063.00

 

 

 

 

 

 

 

 

 

Exhibit B

(There is no exhibit B)­­­­­­­

 

 

 

 

 

 

5

FORM OF DEED TO NOTE

 

DEED OF TRUST, MORTGAGE, ASSIGNMENT OF PRODUCTION,

SECURITY AGREEMENT AND FINANCING STATEMENT

from

_________________________

(Federal Income Tax Identification No. ________________)

(“Grantor,” “Mortgagor” and “Debtor”)

to

the PUBLIC TRUSTEE OF ______________ COUNTY, COLORADO, TRUSTEE

for the benefit of

_________________________________

(Federal Income Tax Identification No. _____________)

(“Grantee,” “Mortgagee” and “Secured Party,” as nominee)

A REPRODUCTION OF THIS INSTRUMENT IS SUFFICIENT AS A FINANCING STATEMENT.  FOR PURPOSES OF FILING THIS INSTRUMENT AS A FINANCING STATEMENT, THE ADDRESS OF THE GRANTOR AND DEBTOR IS:

AND THE ADDRESS OF THE GRANTEE AND SECURED PARTY IS:

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.

THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.

THIS INSTRUMENT COVERS PROCEEDS OF COLLATERAL.

THIS INSTRUMENT COVERS PRODUCTS OF COLLATERAL.

THIS INSTRUMENT COVERS MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE EXTRACTED FROM THE EARTH (INCLUDING, WITHOUT LIMITATION, OIL AND GAS).  THIS FINANCING STATEMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OF THE COUNTY RECORDER OF WELD COUNTY, COLORADO.  THE GRANTOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE CONCERNED, WHICH INTEREST IS DESCRIBED IN EXHIBIT A ATTACHED HERETO.

THIS INSTRUMENT WAS PREPARED BY AND WHEN RECORDED OR FILED SHOULD BE RETURNED TO:

1

DEED OF TRUST, MORTGAGE, ASSIGNMENT OF PRODUCTION,

SECURITY AGREEMENT AND FINANCING STATEMENT

________________, a _____________ corporation (hereinafter referred to as “Grantor”), for and in consideration of the sum of TEN DOLLARS ($10.00) to Grantor in hand paid by ______________________, a __________ limited liability company, as “Grantee,” “Holder” or “Secured Party” of the obligations as hereinafter recited, and in order to secure the payment and performance of the obligations, covenants, warranties, agreements and undertakings of Grantor hereinafter described, does hereby GRANT, BARGAIN, SELL, CONVEY, MORTGAGE, PLEDGE, TRANSFER, ASSIGN and SET OVER to the Public Trustee of _________ County, Colorado (hereinafter called the “Trustee”) for the benefit of Grantee, and  IN TRUST WITH POWER OF SALE, the following property to the fullest extent such described interests are assignable:

(a)  All of Grantor’s rights, titles, and interests in, under and attributable to the oil and gas leases described in Exhibit A (the “Leases”) including, without limitation, any and all royalty interests and all other interests of whatsoever nature or kind and however characterized in, under or attributable to the Leases;

(b)  All Grantor’s rights, titles and interests in the mineral estate, whether now owned or hereafter acquired, in the Lands described on attached Exhibit A hereto (the “Lands”), including, without limitation, any and all reversionary interests or other interests of whatsoever nature or kind and however characterized in the Lands described on attached Exhibit A, all of which such rights, titles, interests and estates of Grantor and howsoever characterized, together with the rights, title and interests in the Leases described in subparagraph (a) being hereinafter collectively called the “Mineral Interests”;

(c)  All rights, titles, interests and estates now owned or hereafter acquired by Grantor in and to (i) the properties now or hereafter pooled or unitized with any part of the Mineral Interests insofar as they are attributable to or derive from the Mineral Interests; and (ii) all presently existing or future unitization, communitization, pooling agreements and declarations of pooled units and the units created thereby (including, without limitation, all units created under orders, regulations, rules or other official acts of any Federal, State or other governmental body or agency having jurisdiction), insofar as they are attributable to or derive from the Mineral Interests;

(d)  Without limitation, all rights, titles and interests now owned or hereinafter acquired by Grantor in oil and gas wells located on the Lands (the “Wells”);

(e)  All rights, titles, and interests now owned or hereafter acquired by Grantor in and to all oil, gas, casinghead gas, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined therefrom and all other minerals (collectively called the “Hydrocarbons”) in, under and which may be produced and saved from the Lands or attributable to the Mineral Interests, including all oil in tanks and all rents, issues, profits, proceeds, products, revenues and other income and proceeds from the sale or use of Hydrocarbons;

 

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(f)  All tenements, hereditaments, appurtenances and properties in anywise appertaining, belonging, affixed or incidental to the Mineral Interests and properties, rights, titles, interests and estates described above which are now owned or which may hereafter be acquired by Grantor, including, without limitation, any and all property, real or personal, now owned or hereafter acquired and situated upon, used, held for use, or useful in connection with the operating, working or development of the Leases or the Wells or properties including without limitation, easements, servitudes, licenses and other surface use rights;

 (g)  All of the rights, titles and interests of every nature whatsoever now owned or hereafter acquired by Grantor in and to the Mineral Interests, as the same may be enlarged by the removal of any charges or encumbrances to which the Mineral Interests are subject, or otherwise; together with any and all renewals and extensions of the Leases, properties, rights, titles, interests or estates; all contracts and agreements supplemental to or amendatory of or in substitution for the contracts and agreements described or mentioned above; and any and all additional interests of any kind hereafter acquired by Grantor in and to the  Lands, Leases and Wells described on Exhibit A;

(h)  All accounts, contract rights, choses in action and general intangibles as such terms are defined in Article 9 of the Uniform Commercial Code from time to time in effect in the State of Colorado (the “Uniform Commercial Code”)  constituting a part of, relating to, or arising out of the Mineral Interests and collateral described or mentioned above, and all proceeds and products of the property and collateral described or mentioned in this and said preceding paragraphs; and

(i)  All of Grantor’s rights, now owned or hereafter acquired, in and to all records which relate to the Lands, Leases, Mineral Interests, and Wells.

All of the properties, interests and rights described in the preceding subparagraphs (a) through (i) shall be hereinafter sometimes referred to as the “Mortgaged Properties”.  If any of the lands covered by the Leases or other instrument mentioned in Exhibit A are incorrectly described, then nevertheless this Mortgage (as defined herein) shall cover all Grantor’s interest in such Leases or other instrument as to all of the lands and interests covered thereby.

TO HAVE AND TO HOLD the Mortgaged Properties, together with all and singular the rights, estates, hereditaments, powers and privileges appurtenant or incident thereto, unto the Trustee and his successors or substitutes in this trust and to his or their successors and assigns, forever.

BUT IN TRUST, NEVERTHELESS, for the benefit and security of the Holders of the obligations and indebtedness secured hereby and upon the trusts and subject to the terms and provisions herein set forth.

Secured Indebtedness

1.1  This instrument (hereinafter called the “Mortgage”) is made irrevocably in trust, with power of sale to secure and enforce the following obligations and indebtedness:

(a)  All Grantor’s obligations and indebtedness to Holder under that certain Secured Promissory Note, of even date herewith, in the face amount of $_______________ (the “Note”) of every kind and character now or hereafter owing by Grantor to the Holder under, whether direct or indirect, primary or secondary, fixed or contingent, and including, without limitation, all advances, debts and liabilities arising under or out of the warranties, representations, indemnity and other obligations made and assumed by Grantor under the Note,  and any and all fees, expenses or costs (including attorneys’ fees) incurred by Holder to enforce any of  their  rights against Grantor thereunder;

 

3

(b)  All Grantor’s express and implied obligations assumed under the Leases identified in Exhibit A, including, but not limited to, warranties of title and all other express and implied obligations of Grantor thereunder;

(c)  All other future advances and sums paid by Holder and its successors and assigns on behalf or for the benefit of Grantor, or in satisfaction of obligations owed by Grantor to Holder under the Note.

(d)  All indebtedness and obligations, whether direct or indirect, primary or secondary, fixed or contingent assumed by Grantor hereunder, or relating to the enforcement of the rights of the “Holder” hereunder.

1.2  The indebtedness and obligations referred to in clauses (a), (b), (c) and (d) of Section 1.1 are hereinafter sometimes referred to as the “Secured Indebtedness.”  Grantee, as designated nominee and agent for and on behalf of the Working Interest Owners and its successors and assigns, is referred to herein  as the “Holder.”

ARTICLE II

Representations, Warranties and Covenants

2.1  Grantor represents, warrants and covenants that Grantor is a corporation in good standing in the State of ________ and has full authority to enter into this Mortgage, that Grantor has good right and authority to grant, bargain, sell, transfer, convey, assign and mortgage all its right, title and interest in the Mortgaged Properties; that Grantor is the lawful owner of an undivided 100% mineral interest in the Lands free and clear from all liens, claims and encumbrances by, through and under Grantor, except the lien evidenced by this Mortgage and the rights of the lessee granted under the Leases; and Grantor does hereby bind itself, its heirs, legal representatives, successors and assigns to forever warrant and defend the title to an undivided 100% mineral interest in the Lands unto the said Trustee and Grantee, and their successors and assigns, against the claims of all persons whomsoever claiming or claim the same or any part thereof by, through or under Grantor.  Any additional rights, title, or interest which Grantor may hereafter acquire or become entitled to in the Lands and properties aforesaid or in the oil, gas or other minerals in, under or produced therefrom shall inure to the benefit of this trust and Grantee, the same as if expressly described and conveyed herein.

2.2  With respect to advances and indebtedness arising out of Grantor’s obligations under the Note that become due, Grantor covenants and agrees:

(a)  That Grantor will make timely payment of sums due or to become due under the Note and will make timely payment of all other Secured Indebtedness hereunder.

 

4

(b)  That Grantor will observe and materially comply with all of the terms and provisions, express or implied, of the Note.

(c)  That if the validity or priority of this Mortgage or of any right, titles, liens or interests created or evidenced hereby with respect to the Mortgaged Properties or any part thereof shall be endangered or questioned or shall be attacked directly or indirectly or if any legal proceedings are instituted against Grantor with respect thereto, Grantor will give written notice thereof to the Holder promptly and, at Grantor’s own cost and expense, Grantor will diligently endeavor to cure any defect that may be  claimed, and will take all necessary and proper steps for the defense of such legal proceedings, including, but not limited to, the employment of counsel agreeable to the Holder, the prosecution or defense of litigation and the release or discharge of all adverse claims.  If Grantor fails or refuses to take such action, the Trustee and the Holder, or any of them (whether or not named as parties to legal proceedings with respect thereto), are hereby authorized and empowered to take such additional steps as in their judgment and discretion may be necessary or proper for the defense of any such legal proceedings, including, but not limited to, the employment of independent counsel, the prosecution or defense of litigation, and the compromise or discharge of any adverse claims made with respect to the Mortgaged Properties, and all expense so incurred of every kind and character shall be a demand obligation owing by Grantor and shall bear interest at the rate of 8 percent, compounded annually from the date of expenditure until paid and shall be secured by the lien evidenced by this Mortgage, and the party incurring such expenses shall be subrogated to all rights of the person receiving such payment.

(d)  That Grantor will not, without the prior written consent of the Holder, suffer or permit any lien to be hereafter claimed or created on any of the Mortgaged Properties, and should a lien become attached hereafter in any manner to any part of the Mortgaged Properties without the prior written consent of the Holder, Grantor will cause such lien to be promptly discharged.

(e)  That Grantor will, on request of the Holder, promptly correct any defect, error or omission which may be discovered in the contents of this Mortgage, the Note, or other documents executed in connection herewith or in the execution or acknowledgment of any thereof, and will execute and deliver any and all additional instruments as may be requested by the Holder to correct such defect, error or omission and will execute, acknowledge and deliver such further assurances and instruments as shall be, in the opinion of the Holder, necessary or proper to convey and assign to the Trustee all of the Mortgaged Properties herein conveyed or assigned, or intended so to be.

(f)  Grantor will proceed with reasonable diligence to correct any material defect in title to the Mineral Interest in the Lands arising by, through or under Grantor which, in the reasonable opinion of Holder, constitutes a material defect should any such defect be found to exist after the execution and delivery of this instrument; and in this connection, should it be found after the execution and delivery of this instrument that there exists upon the Mortgaged Properties any lien or encumbrance, equal or superior in rank to the lien created by this instrument arising by, through or under Grantor, or should any such hereafter arise, Grantor will promptly discharge and remove any such lien or encumbrance from said property.

 

5

(g)  Holder at all times shall have the right to release any part of the property now or hereafter subject to the lien hereof or any part of the proceeds of production or other income herein or hereafter assigned or pledged or any other security it now has or may hereafter have hereunder, without releasing any other part of said property, proceeds or income, and without affecting the lien hereof as to the part or parts thereof not so released, or the right to receive future proceeds and income.

(h)  That, promptly upon receipt of any written request from the Holder, Grantor will furnish and deliver, pursuant to such request, any information or data possessed by Grantor with respect to the Mortgaged Properties, including all title materials and other records in the possession, custody or control, and all deeds, conveyances, instruments, contracts, documents, title opinions, title abstracts, division orders, and other records concerning said property.

2.3  Grantor agrees that if Grantor fails to perform any act or to take any action which hereunder Grantor is required to perform or take or to pay any money which hereunder Grantor is required to pay, the Holder, in Grantor’s name or its own name, may (but shall not be obligated to) perform or cause to be performed such act or take such action or pay such money, and any expenses so incurred by the Holder and any money so paid by the Holder: (a) shall be a part of the obligations owing by Grantor, (b) shall bear interest from the date of making such payment until paid at the rate of 10 percent compounded annually, (c) shall be a part of the Secured Indebtedness, and (d) shall be secured by the lien evidenced by this Mortgage.  The  Holder, upon making such payment, shall be subrogated to all of the rights of the person, corporation or body politic receiving such payment.

ARTICLE III

Assignment of Production, Accounts,

Contract Rights and Proceeds

3.1  To facilitate the discharge of any and all of Grantor’s indebtedness and obligations under the Note and this Mortgage, and as cumulative of any and all rights and remedies herein provided for, Grantor hereby BARGAINS, SELLS, TRANSFERS, ASSIGNS, SETS OVER and DELIVERS to the Holder, its successors and assigns, all of the following upon the failure of Grantee to promptly fulfill its obligations and discharge and pay any indebtedness under the Note or Mortgage:

(a)  All oil, gas, casinghead gas, distillate and other minerals, produced and to be produced from or attributable to the Mineral Interests of Grantor and any other interests now or hereafter constituting a part of the Mortgaged Properties from and after the Effective Date (as hereafter defined);

(b)  All royalties and proceeds of production hereafter payable to or to become payable to Grantor or to which Grantor is entitled by virtue of its Leases or Mineral Interests, and Grantor authorizes and empowers said Holder to demand, collect and receive said royalties and proceeds;

 

6

(c)  All amounts, sums, revenues and income which otherwise become payable to Grantor from any of the Lands or under the Leases; and

(d)  All of Grantor’s contract rights, choses in action, and claims of any kind arising out of the Leases to the extent assignable.

Grantor hereby, irrevocably, authorizes and directs that all parties owing royalties or other sums to Grantor attributable to Grantor’s Mineral Interests pay all such amounts directly to the Holder.  The Holder is authorized to collect such amounts and no party making payment shall have any responsibility to see to the application of any funds paid to the Holder, but shall be fully protected in making such payment to the Holder under the assignments herein contained.  Should the Holder bring suit against any third party for collection of any amounts or sums included within this assignment (and the Holder shall have the right to bring any such suit) it may sue either in its own name or in the name of Grantor.

3.2  Grantor authorizes and empowers the Holder to receive, hold and collect all sums of money paid to the Holder in accordance with this assignment and to apply the same as is hereinafter provided, all without any liability or responsibility on the part of the Holder, save as to good faith in so receiving and applying said sums.  All payments provided for in this assignment shall be paid promptly to the Holder.  It is understood and agreed that should said payments provided for by this assignment be less than the sum or sums then due on said indebtedness, such sum or sums then due shall nevertheless be payable by Holder.  Likewise, neither this assignment nor any provision herein contained shall in any manner be construed to affect the lien, rights and remedies herein granted securing said indebtedness, nor Grantor’s liability therefor.  The rights under this assignment are cumulative of the other rights, remedies and powers granted under this Mortgage and are cumulative of any other security which the Noteholder now holds or may hereafter hold to secure the payment of said indebtedness.

3.3  Nothing herein contained shall detract from or limit the absolute obligation of Grantor to make prompt payment of any indebtedness arising under the Note at the time and in the manner provided for therein or shall detract from or limit the absolute obligation of Grantor to make prompt payment  of all amounts owing hereunder at the time and in the manner provided herein, regardless of whether the proceeds herein assigned are sufficient to pay the same, and the rights under this assignment shall be cumulative of all other security of any and every character now or hereafter existing to secure the payment of sums due under the Note and all other Secured Indebtedness.

ARTICLE IV

Waiver and Partial Release

4.1  The Holder  may at any time and from time to time in writing:

(a)  Waive compliance by Grantor with any covenant herein made by Grantor to the extent and in the manner specified in such writing;

 

7

(b)  Consent to Grantor’s doing any act which hereunder Grantor is prohibited from doing, or to Grantor’s failing to do any act which hereunder Grantor is required to do, to the extent and in the manner specified in writing; or,

(c)  Release any part of the Mortgaged Properties, or any interest therein, or any proceeds of Hydrocarbon sales from the lien of this Mortgage, without the joinder of the Trustee.

No such act by Noteholder shall in any way impair the rights of the Holder hereunder except to the extent specifically agreed to by the Holder in such writing.

4.2  The lien and other security rights of the Holder hereunder shall not be impaired by any indulgence, including but not limited to (a) any forbearance, renewal, extension or modification (whether one or more) which the Holder may grant with respect to any Secured Indebtedness, or (b) any surrender, compromise, release, renewal, extension, exchange or substitution which the Holder may grant in respect of any item of the Mortgaged Properties or any part thereof or any interest therein.

ARTICLE V

Possession Until Default; Defeasance and Termination

5.1  Unless a default specified in Section 6.1 hereof shall occur and be continuing, Grantor shall retain full right to the Mortgaged Properties subject, however, to all of the terms and provisions of this Mortgage, including without limitation, the assignments under Article III.

ARTICLE VI

Remedies in Event of Default

6.1  The term “default” as used in this Mortgage shall mean the failure of Grantor to pay any sums due Holder under the Note or under this Mortgage within ten (10) days of receipt by Grantor of demand for payment.

6.2           (a)  If a default shall occur and be continuing, the Mortgagee shall have the right and option to proceed with foreclosure and to sell, to the extent permitted by law, all or any portion of the Mortgaged Property at one or more sales, as an entirety or in parcels, at such place or places and otherwise in such manner and upon such notice as may be required by applicable law or, in the absence of any such requirements, as the Mortgagee may deem appropriate, and to make conveyance to the purchaser or purchasers.

(b)  With regard to any part of the Mortgaged Property, it is agreed that the appraisement of any such properties is expressly waived at the option of the Mortgagee, and any such option may be exercised prior to the time judgment is rendered in any foreclosure hereon.

(c)  Notwithstanding any other provision of this Section 6.2, if any of the Secured Indebtedness is not promptly paid, Mortgagee shall have the right and power to proceed by a suit or suits in equity or at law, whether for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for any foreclosure hereunder or for the sale of the Mortgaged Property under the judgment or decree of any court or courts of competent jurisdiction.

 

8

(d)  Notwithstanding any other provision, Mortgagee shall also have the option to proceed with foreclosure in satisfaction of any Secured Indebtedness which has not been paid when due either through the courts or by proceeding with foreclosure.  It is further agreed that several sales may be made hereunder without exhausting the right of sale for any subsequent Secured Indebtedness, it being the purpose hereof to provide for a foreclosure and sale of the security for any matured portion of the Secured Indebtedness without exhausting the power to foreclose and sell the Mortgaged Property for any subsequently maturing portion of the Secured Indebtedness.

(e)  The Mortgaged Property may be sold in one or more parcels and in such manner and order as Mortgagee, in his sole discretion, may elect, it being expressly understood and agreed that the right of sale arising out of any event of default shall not be exhausted by any one or more sales.

(f)  Grantor agrees to the full extent that it lawfully may, that in the event of a default that has not been remedied, Mortgagee shall have the right and power to enter into and upon and take possession of all or any part of the Mortgaged Property in the possession of Grantor, its successors or assigns, or its or their agents or servants.

(g)  Every right, power and remedy herein given to Mortgagee shall be cumulative and in addition to every other right, power and remedy herein specifically given or now or hereafter existing in equity, at law or by statute (including specifically those granted by the Uniform Commercial Code in effect and applicable to the Mortgaged Property or any portion thereof) each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and so often and in such order as may be deemed expedient by Mortgagee, and the exercise, or the beginning of the exercise, of any such right, power or remedy shall not be deemed a waiver of the right to exercise, at the same time or thereafter any other right, power or remedy.  No delay or omission by Mortgagee in the exercise of any right, power or remedy shall impair any such right, power or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter existing.

(h)  Grantor shall not be relieved of any obligation herein by reason of the failure of Mortgagee to comply with any request of Grantor to foreclose the lien of this Mortgage or the release, regardless of consideration, of the Mortgaged Property or any portion thereof or interest therein.

(i)  Mortgagee may release, regardless of consideration, any part of the Mortgaged Property without, as to the remainder, in any way impairing, affecting, subordinating or releasing the lien or security interest created in or evidenced by this Mortgage or its stature as a first and prior lien and security interest in and to the Mortgaged Property, and without in any way releasing or diminishing the liability of any person or entity liable for the repayment of the Secured Indebtedness.  For payment of the Secured Indebtedness, Mortgagee may resort to any other security therefor held by Mortgagee in such order and manner as Mortgagee may elect.

 

9

(j)  To the fullest extent permitted by law, Grantor hereby irrevocably and unconditionally waives and releases (a) all benefits that might accrue to Grantor by virtue of any present or future moratorium law or other law exempting the Mortgaged Property from attachment, levy or sale on execution or providing for any appraisement, valuation, stay of execution, exemption from civil process, redemption or extension of time for payment; (b) all notices of any event of default or of Mortgagee’s election to exercise (or his actual exercise of) any right, remedy or recourse provided for hereunder; and (c) any right to a marshaling of assets.

(k)  In case Mortgagee shall have proceeded to invoke any right, remedy or recourse permitted hereunder and shall thereafter elect to discontinue or abandon same for any reason, Mortgagee shall have the unqualified right so to do and, in such an event, Grantor and Mortgagee shall be restored to their former positions with respect to the Secured Indebtedness, this Mortgage, the Mortgaged Property and otherwise, and the rights, remedies, recourses and powers of Mortgagee shall continue as if same had never been invoked.

(l)  The proceeds of any sale of the Mortgaged Property or any part thereof and all other monies received by Mortgagee through any proceedings for the enforcement hereof or otherwise, shall be applied:

FIRST, to the payment of all expenses incurred by Mortgagee incident to the enforcement of this Mortgage, the Note or any of the Secured Indebtedness (including, without limiting the generality of the foregoing, expenses of any entry or taking of possession, of any sale, of advertisement thereof and of conveyances, and court costs, compensation of agents and employees, legal fees and a reasonable commission to the Trustee acting), and to the payment of all other charges, expenses, liabilities and advances incurred or made by Mortgagee under this Mortgage or in executing any power hereunder;

SECOND, to payment of the Secured Indebtedness in such order and manner as Mortgagee may elect; and,

THIRD, to Grantor or as otherwise required by any governmental authority having jurisdiction over the application of such proceeds.

6.3  To foreclose this Mortgage pursuant to the power of public sale contained herein in accordance with the laws of the State of Colorado, in which case Mortgagee/Holder shall (i) deliver to Trustee a written notice of default and election to cause Grantor’s interest in the Mortgaged Properties to be sold, and (ii) deposit with Trustee this Mortgage, and such receipts or evidence of the Secured Indebtedness as Trustee may require.  Upon receipt of such notice from Mortgagee/Holder, Trustee shall give notice of sale and shall sell the Mortgaged Properties according to the laws of the State of Colorado.  The costs and expenses incurred by Mortgagee/Holder in the exercise of any of the remedies provided in this Mortgage shall be secured by this Mortgage.

 

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ARTICLE VII

Security Agreement

7.1  Without limiting any of the provisions of this instrument, Grantor, referred to in this Article VII as “Debtor”  expressly GRANTS unto the Holder (referred to in this Article VII as “Secured Party”, whether one or more), a security interest in all the Mortgaged Properties hereinabove described (including both those now and those hereafter existing) to the full extent that such properties may be subject to the Uniform Commercial Code of the State of Colorado.  The security interest granted hereby also covers and includes all contract rights, general intangibles, choses in actions, and accounts with respect to said properties and all products and proceeds of said properties (said properties, contract rights, choses in action, general intangibles, accounts, products and proceeds thereof being hereinafter collectively referred to as the “Collateral” for the purposes of this paragraph).  Debtor covenants and agrees with Secured Party that:

(a)  In addition to and cumulative of any other remedies granted in this instrument to Secured Party or the Trustee, Secured Party may, in event of default, proceed under said Uniform Commercial Code as to all or any part of the Collateral and shall have and may exercise with respect to the Collateral all the rights, remedies and powers of a secured party under said Uniform Commercial Code, including, without limitation, the right and power to sell, at public or private sale or sales, or otherwise dispose of, lease or utilize the Collateral and any part or parts thereof in any manner authorized or permitted under said Uniform Commercial Code after default by a debtor, and to apply the proceeds thereof toward payment of any costs and expenses and attorneys’ fees and legal expenses thereby incurred by Secured Party, and toward payment of the Secured Indebtedness in such order or manner as Secured Party may elect.

(b)  Upon a default, Secured Party shall have the right (without limitation, subject to said Uniform Commercial Code) to take possession of the Collateral and to enter upon any premises where same may be situated for such purpose without being deemed guilty of trespass and without liability for damages thereby occasioned, and to take any action deemed necessary or appropriate or desirable by Secured Party, at its option and in its discretion, to repair, refurbish or otherwise prepare the Collateral for sale, lease or other use or disposition as herein authorized.

(c)  To the extent permitted by law, Debtor expressly waives any notice of sale or other disposition of the Collateral and any other right or remedies of a debtor or formalities prescribed by law relative to sale or disposition of the Collateral or exercise of any other right or remedy of Secured Party existing after default hereunder; and to the extent any such notice is required and cannot be waived, Debtor agrees that if such notice is mailed, postage prepaid, to Debtor at the address shown with debtor’s signature hereinbelow at least ten days before the time of the sale or disposition, such notice shall be deemed reasonable and shall fully satisfy any requirement for giving of said notice.

(d)  Secured Party is expressly granted the right to receive the monies, income, proceeds or benefits attributable or accruing to the Collateral and to hold the same as security for the Secured Indebtedness or to apply it on the principal and interest or other amounts owing on any of the Secured Indebtedness, in such order or manner as Secured Party may elect.  All rights to marshaling of assets of Debtor, including any such right with respect to the Collateral, are hereby waived.

 

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(e)  All recitals in any instrument of assignment or any other instrument executed by Secured Party incident to sale, transfer, assignment, lease or other disposition or utilization of the Collateral or any part thereof hereunder shall be prima facie evidence of the matter stated therein, no other proof shall be required to establish full legal propriety of the sale or other action or of any fact, condition or thing incident thereto, and all prerequisites of such sale or other action and of any fact, condition or thing incident thereto shall be presumed to have been performed or to have occurred.

(f)  Should Secured Party elect to exercise its right under said Uniform Commercial Code as to part of the personal property described herein, this election shall not preclude Secured Party or the Trustee from exercising the rights and remedies granted by the preceding paragraphs of this instrument as to the remaining personal property.

(g)  Secured Party may, at its election, at any time after delivery of this instrument, sign one or more copies hereof in order that such copies may be used as a financing statement under said Uniform Commercial Code.  Such signature by Secured Party may be placed between the last sentence of this instrument and the Debtor’s acknowledgment or may follow the Debtor’s acknowledgment.  Secured Party’s signature need not be acknowledged and is not necessary to the effectiveness hereof as a deed of trust, mortgage, assignment, or security agreement.

7.2  Any copy of this instrument which is signed by both Debtor and Secured Party may also serve as a financing statement under said Uniform Commercial Code between the DEBTOR, WHOSE ADDRESS IS:

and the SECURED PARTY, WHOSE ADDRESS IS:

This Mortgage secures and shall be security for any and all future advances made by or costs and expenses incurred by Grantee/Holder for the benefit of Grantor, provided, however, that the total unpaid balance secured hereby at any one time shall not exceed $__________.  Nothing contained herein shall be deemed an obligation on the part of Secured Party/Holder Holder to make any further advances or incur any expenses for the benefit of Debtor.

 

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ARTICLE VIII

Miscellaneous

8.1  This instrument is a deed of trust and mortgage of both real and personal property, a security agreement, a financing statement and an assignment, and also covers proceeds and fixtures.

8.2  All options and rights of election herein provided for the benefit of the Holder are continuing, and the failure to exercise any such option or right of election upon a particular default or breach or upon any subsequent default or breach shall not be construed as waiving the right to exercise such option or election at any later date.  By the acceptance of payment of any indebtedness secured hereby after its due date, the Holder does not waive the right either to require prompt payment when due of all other sums so secured or to regard as a default failure to pay any other sums due which are secured hereby.  No exercise of the rights and powers herein granted and no delay or omission in the exercise of such rights and powers shall be held to exhaust the same or be construed as a waiver thereof, and every such right and power may be exercised at any time and from time to time. No release of any part of the Mortgaged Properties shall in anywise alter, vary or diminish the force, effect or lien of this instrument on the balance of Mortgaged Properties.

8.3  Any notice, request, demand or other instrument which may be required or permitted to be given or furnished to or served upon Grantor shall be addressed to it at its address set forth below, or such other address as Grantor may furnish to the Trustee and the Holder in writing:

Notices to the Trustee and the Holder shall be deemed to have been properly given if delivered in like fashion to them at:

(1) _________ County Public Trustee, ___________________, and

(2) ___________________________________

or at such other address as the Trustee or the Noteholder may furnish to Grantor in writing.

8.4 If any provision hereof is invalid or unenforceable in any jurisdiction, the other provisions hereof shall remain in full force and effect, and the remaining provisions hereof shall be liberally construed in favor of the Trustee, Lender and the Noteholder in order to effectuate the provisions hereof, and the invalidity or unenforceability of any provision hereof shall not affect the validity or enforceability of any such provision in any other jurisdiction.

8.5 Grantee and Trustee shall at all times have the right to assign and/or transfer any and all of their rights and privileged under this Mortgage.  All of the terms, provisions, covenants and conditions hereof shall be binding upon Grantor and the successors and assigns of Grantor, and the Holder and successors and assigns of Holder, and shall inure to the benefit of the Trustee and the Holder and their respective successors and assigns. Grantor’s covenants shall constitute covenants running with the lands covered by the Mortgaged Properties, but this provision shall not be construed to authorize any sale or other disposition of the Mortgaged Properties contrary to any other provisions hereof.

 

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8.6 The Mortgage may be executed in multiple counterparts, each of which is deemed to be an original for all purposes although all such executed copies shall evidence and constitute one and the same Mortgage.

8.7 The term “Grantor,” “Mortgagor” and “Debtor” herein used shall include their  successor(s) in interest in the Mortgaged Properties.  The number and gender of pronouns used in referring to Grantor shall be construed to mean and correspond with the number and gender of the individuals and/or corporations executing this instrument as Grantor, and, further, the term “Grantor” herein used shall mean and include both all of the parties executing this instrument as Grantor as well as any single one or more of them.

8.8 The “Effective Date” of this instrument is 7:00 a.m. local time at the location of the Mortgaged Properties on the date this Mortgage is executed and delivered to Grantee by Grantor.

8.9 This Mortgage shall be governed by and construed and interpreted under the laws of the State of Colorado (without giving effect to conflicts of laws principles).

THIS WRITTEN AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[The Next Page is the Signature Page]

 

 

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IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed by their duly authorized undersigned officers effective as of May 13, 2015.

	
 

	
“GRANTOR,” “MORTGAGOR” AND “DEBTOR”

	
 

	
 

	
 

	
 

	
 

 

	
By: ______________________________________

	
 

	
 

 

	
Printed Name: ______________________________

	
 

	
 

 

	
Title: _____________________________________

	
 

This Deed of Trust, Mortgage, Assignment of Production, Security Agreement and Financing Statement is executed by the undersigned solely for the purpose of acknowledging and accepting the benefits conferred on Grantee and to evidence its agreement with the covenants of Lender set forth herein.

	
 

	
“GRANTEE,”  “MORTGAGEE” AND “SECURED PARTY”

	
 

	
 

	
 

	
 

	
 

 

	
By: ______________________________________

	
 

	
 

 

	
Printed Name: ______________________________

	
 

	
 

 

	
Title: _____________________________________

	
 

 

[The Next Page is the Acknowledgment Page]

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ACKNOWLEDGMENTS

	
STATE OF _____________

	
§

	
 

	
 

	
§

	
 

	
COUNTY OF ___________

	
§

	
 

 

 

This instrument was acknowledged before me on this _____ day of ______________. 2015, by ________________________, _________________ of ______________________, on behalf of said corporation.

Witness my hand and official seal.

__________________________________________

Notary Public, State of _______________________

My commission expires: _________________

	
STATE OF _____________

	
§

	
 

	
 

	
§

	
 

	
COUNTY OF ___________

	
§

	
 

 

 

This instrument was acknowledged before me on this _____ day of _____________, 2015, by ___________ the ____________ of __________________________.

Witness my hand and official seal.

__________________________________________

Notary Public, State of  ______________________

My commission expires: _________________

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EXHIBIT A

ATTACHED TO AND FORMING A PART OF THE

DEED OF TRUST, MORTGAGE, ASSIGNMENT OF PRODUCTION,

SECURITY AGREEMENT AND FINANCING STATEMENT

DATED __________________________,  2015

FROM

This Exhibit A contains specific description of the “Lands,” “Leases,” “Mineral Interests”  and Wells comprising a portion of the “Mortgaged Properties”, as those terms are defined in the Deed of Trust, Mortgage, Assignment of Production, Security Agreement and Financing Statement (the “Mortgage”) to which this Exhibit A is attached.

LANDS

The Mortgage covers all right, title and interest the Mortgagor now owns or subsequently acquires in the following lands situated in ____________ County, Colorado (“Lands”):

 

 

 

 

 

A-1

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