PROMISSORY NOTE
$6,600,000.00 ____________, Colorado
_______________, 2006
FOR VALUE RECEIVED, SUN RIVER ENERGY, INC., a Colorado
corporation ("Maker"), promises to pay to the order of NOVA LEASING, LLC, a
Wyoming limited liability company, at P.O. Box 3412, Casper, WY 82602 (or, at
the option of the legal holder of this Note, at such other place as said holder
shall designate in writing), in coin or currency which, at the time or times of
payment, is legal tender for public or private debts in the United States, the
principal sum of SIX MILLION SIX HUNDRED THOUSAND AND 00/100ths DOLLARS
($6,600,000.00), with interest thereon from the date hereof at the rate of seven
and one half percent (7 1/2%) per annum. All principal and accrued interest
shall become due and payable on October 15, 2008.
Maker shall pay this note in installments as follows: (i) the
first installment shall be the principal sum of One Million One Hundred Thousand
and no/100ths Dollars ($1,100,000.00) and accrued interest due on or before
March 15, 2007; (ii) the second installment shall be the principal sum of Two
Million Eight Hundred Thousand and no/100ths Dollars ($2,800,000.00) and accrued
interest due on or before October 15, 2007; and (iii) third installment shall be
the principal sum of Two Million Seven Hundred Thousand and no/100ths Dollars
($2,700,000.00) and accrued interest due on or before October 15, 2008. The
balance of principal and interest shall be due and payable on the date
hereinabove set forth. Maker may prepay any amount due hereunder upon payment of
a Thirty Percent (30%) prepayment penalty on the sum(s) prepaid.
The payment of this Note and all interest herein is secured in
part by a Mortgage, Assignment of Production, Security Agreement and Financing
Statement ("Mortgage"), said Mortgage being of even date herewith and being duly
recorded in the Counties of Converse and Natrona, Wyoming. This Note is to be
construed according to the laws of the State of Wyoming.
If there shall be any default in the making of any payment as
herein provided, or any part thereof, or in the performance of any of the terms,
agreements, covenants, or conditions contained in said Mortgage, then the entire
principal amount hereof, together with all accrued interest and any additional
sums to be paid under the Mortgage or advanced by the holder hereof, at the
election of the holder hereof, shall at once become due and payable and shall
bear interest at the rate of fifteen percent (15%) per annum. The failure to
exercise this election upon a default shall not constitute a waiver of the right
to exercise this option in the event of any subsequent or continuing default.
The provisions of this Note and of all agreements between
Maker and the holder hereof are hereby expressly limited so that in no
contingency or event whatsoever shall the amount paid or agreed to be paid to
the holder for the use, forbearance, or detention of the money to be loaned
under this Note or secured by the Mortgage exceed the maximum amount permissible
under applicable law. If from any circumstance whatsoever the performance or
fulfillment of any provision hereof or of any other agreement between Maker and
the holder hereof shall, at the time performance or fulfillment of such
provision shall be due, involve transcending the limit or validity prescribed by
law, then, ipso facto, the obligation to be performed or fulfilled shall be
reduced to the limit of such validity, and if from any circumstance whatsoever
the holder hereof should ever receive as interest an amount which would exceed
the highest lawful rate, the amount which would be excessive interest shall be
applied to the reduction of the principal balance owing hereunder (or, at the
holder's option, be paid over to Maker) and not to the payment of interest.
In the event that any payment shall not be received on the
installment payment date, the Maker shall pay an amount equal to four percent
(4%) of the amount of such past due installment as a late charge for the loss of
the use of the funds and for the expense of handling the delinquent payment.
The rights or remedies of the holder as provided in this Note
and the Mortgage, shall be cumulative and concurrent and may be pursued singly,
successively, or together against Maker, the property described in said
Mortgage, any guarantor hereof, and any other funds, property, or security held
by the holder for the payment hereof or otherwise at the sole discretion of the
holder. The failure to exercise any such right or remedy shall in no event be
construed as a waiver or release of said rights or remedies or of the rights to
exercise them at any later time.
The Maker and all endorsers, guarantors, sureties,
accommodation parties hereof, and all other persons liable or to become liable
for all or any part of this indebtedness, jointly and severally waive diligence,
presentment, protest, and demand, and also notice of protest, of demand, of
nonpayment, of dishonor, and of maturity; and they also jointly and severally
hereby consent to any and all renewals, extensions, or modifications of the
terms hereof, including time for payment, and further agree that any such
renewal, extension, or modification of the terms hereof or the release or
substitution of any security for the indebtedness evidenced hereby shall not
affect the liability of any of said parties for the indebtedness evidenced by
this Note. Any such renewals, extensions, or modifications may be made without
notice to any of said parties.
The Maker, and all endorsers, guarantors, sureties, accommodation parties
hereof, and all other persons liable or to become liable on this note agree
jointly and severally to pay all costs of collection, including reasonable
attorney's fees in the amount as a minimum equal to ten percent (10%) of the
indebtedness remaining unpaid and all costs of suit, in case the unpaid
principal sum of this Note or any payment of interest or principal and interest
thereon or premium is not paid when due, or in case it becomes necessary to
protect the security for the indebtedness evidenced hereby, or for the
foreclosure by the holder of the Mortgage or in the event the holder is made a
party to any litigation because of the existence of the indebtedness evidenced
by this Note, or because of the existence of the Mortgage or otherwise, whether
suit be brought or not, and whether through courts of original jurisdiction, as
well as in courts of appellate jurisdiction, or through a bankruptcy court or
other legal proceedings.
This Note may not be amended, modified, or changed, nor shall any waiver of
any provision hereby be effective, except only by an instrument in writing and
signed by the party against whom enforcement of any waiver, amendment, change,
modification, or discharge is sought.
Whenever used herein, the words "Maker" and "holder" shall be deemed to
include their respective heirs, personal representatives, successors, and
assigns.
IN WITNESS WHEREOF, Maker has caused this Note to be executed as of the
date first hereinabove written.
SUN RIVER ENERGY, INC., a Colorado corporation
By: _________________________________
Title:_______________________________
By: _________________________________
MAKER