PROMISSORY NOTE
Princ Loan Matur Loan Call Colla Accou Offic Initi
ipal Date ity No. teral nt er als
$90,0 03-23- 03-23- 21537 5000 40315 028
00.00 1998 1999 8 3
References in the shaded area are for Lender's use only and do
not limit the applicability of this document to any particular
loan or item.
Borrower: CROFF ENTERPRISES, INC., A UTAH
Lender: Union Bank & Trust
CORPORATION; Et AL Main Office
1675 BROADWAY, SUITE 1030 100 Broadway
DENVER, CO 80202 Denver, Co 8d203
Principal Amount: $90,000.00 Initial Rate: 10.500% Date
of Note: March 23, 1998
PROMISE TO PAY. CROFF ENTERPRISES, INC., A UTAH CORPORATION and
GERALD L JENSEN (referred to in this Note Individually and
collectively as "Borrower") Jointly and severally promise to
pay to Union Bank & Trust ("Lender'", or order, In lawful money
of the United
Stales of America, the principal amount of Ninety Thousand &
00/100 Dollars ($90,000.00), together with Interest on the
unpaid principal balance from March 23,1998, until paid in
full.
PAYMENT. Subject to any payment changes resulting from changes
in the index, Borrower will pay this loan in ii payments of
$7,941.85 each payment and an irregular last payment estimated
at $7,941.91. Borrower's first payment is due April 23, 1998,
and all subsequent payments are due on the same day of each
month after that. Borrower's final payment will be due on
March23, 1999, and will be for all principal and all accrued
interest not yet paid. Payments Include principal and Interest.
The annual interest rate for this Note is computed on a
36S~flSO basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay
tender at Lender's address shown above or at such other place
as Lender may designate in writing. Unless otherwise agreed or
required by applicable law, payments Will be applied first to
accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is
subject to change from time to time based on changes in an
independent index which is the Norwest Bank Colorado, NA. Prime
Rate (the 'Index"). The index is not necessarily the lowest
rate charged by Lender on its loans. lithe Index becomes
unavailable during the term of this loan, Lender may designate
a substitute index after notice to Borrower. Lender will tell
Borrower the current Index rate upon Borrower's request.
Borrower understands that Lender may make loans based oh other
rates as well. The interest rate change will not occur more
often than each day. The Index currently Is 8.500% per annum.
The Interest rate to be applied to the unpaid principal
balance of this Note will be at a rate of 2.000 percentage
points over the Index, resulting in an initial rate of 10.500%
per annum. NOTICE:
Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law. Whenever
increases occur in the interest rate, Lender, at its option,
may do one or more of the following: (a) increase Borrower's
payments to ensure Borrower's loan will pay off by its original
final maturity date, (b) increase Borrower's payments to cover
accruing interest, (c) increase the number of Borrower's
payments, and (d) continue Borrower's payments at the same
amount and increase Borrower's final payment.
PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all
loan fees and other prepaid finance charges are earned fully as
of the date of the loan and will not be subject to refund upon
early payment (whether voluntary' or as a result of default),
except as otherwise required by law. In any event, even upon
full prepayment of this Note, Borrower understands that Lender
is entitled to a minimum interest charge of $25.00. Other than
Borrower's obligation to pay any minimum interest charge,
Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower's
obligation to continue to make payments under the payment
schedule. Rather, they will reduce the principal balance due
and may result in Borrower making fewer payments.
DEFAULT. Borrower will be in default if any of the following
happens: (a) Borrower fails to make any payment when due. (b)
Borrower breaks any promise Borrower has made to Lender, or
Borrower fails to comply with or to perform when due any other
term, obligation, covenant, or condition contained in this Note
or any agreement related to this Note, or in any other
agreement or loan Borrower has with Lender. (a) Any
representation or statement made or furnished to Lender by
Borrower or on Borrower's behalf is false or misleading in any
material respect either now or at the time made or furnished.
(d) Borrower becomes insolvent, a receiver is appointed for any
part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either
by Borrower or against Borrower under any bankruptcy or
insolvency laws. (e) Any creditor tries to take any of
Borrower's property on or in which Lender has a lien or
security interest. This includes a garnishment of any of
Borrower's accounts with Lender. (f) Any guarantor dies or any
of the other events described in this default section occurs
with respect to any guarantor of this Note. (g) A material
adverse change occurs in Borrower's financial condition, or
Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
LENDER'S RIGHTS. Upon default, Lender may declare the entire
unpaid principal balance on this Note and all accrued unpaid
interest immediately due, without notice, and then Borrower
will pay that amount. Upon default, including failure to pay
upon final maturity, Lender, at its option, may also, if
permitted under applicable law, increase the variable interest
rate on this 'vale to 8.000 percentage points over the index.
The interest rate will not exceed the maximum rate permitted by
applicable law. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower also will
pay Lender that amount. This includes, subject to any limits
under applicable law, Lender's attorneys' lees and Lender's
legal expenses whether or not there is a lawsuit, including
attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post~udgment
collection services. If not prohibited by applicable law,
Borrower also will pay any court costs, in addition to all
other sums provided by law. This Note has been delivered to
Lender and accepted by Lender In the Stare o~ Colorado. It
there Is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the court of Denver County, the
State of Colorado. Subject to the provIsions on arbitration,
this Note shall be governed by and construed in accordance with
the laws of the State of Colorado.
RIGHT OF SETOFF. Borrower grants to Lender a contractual
possessory security interest In, and hereby assigns, conveys,
delivers, pledges, and transfers to Lender all Borrower's
right, title and interest in and to, Borrower's accounts with
Lender (whether checking, savings, or some other account),
including without limitation all accounts held jointly with
someone else and all accounts Borrower may open in the future,
excluding however all IRA and Keogh accounts, and an twst
accounts tar which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing
on this Note against any and all such accounts.
ARBITRATION. Lender and Borrower agree that all disputes, clams
and controversies between them, whether individual, Joint, or
class in nature, arising from this Note or otherwise, including
without limitation contract and tort disputes, shall be
arbitrated pursuant to the Rules of the American Arbitration
Association, upon request of either party. No act to take or
dispose of any collateral securing this Note shall constitute a
waiver of this arbitration agreement or be prohibited by this
arbitration agreement. This includes, without limitation,
obtaining injunctive relief or a temporary restraining order;
invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including
taking or disposing of such property with or without judicial
process pursuant to Article S of the Uniform Commercial Code.
Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of any act, or exercise of any
right. concerning any collateral securing this Note, including
any claim to rescind, reform, or otherwise modify any agreement
relating to the collateral securing this Note, shall also be
arbitrated. provided however that no arbitrator shall have the
right or the power to enjoin or restrain any act oI any party.
Judgment upon any award rendered by any arbitrator may be
entered in any court having jurisdiction. Nothing In this Note
shall preclude any party from seeking equitable relief from a
court of competent jurisdiction. The statute of limitations,
estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in an action brought by a party shall
be applicable in any arbitration proceeding, and the
commencement of an arbitration proceeding shall be deemed the
commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction,
interpretation, and enforcement of this arbitration provision.
GENEflAL PROVISIONS. Lender may delay or forgo enforcing any of
its rights or remedies under this Note without losing them.
Each Borrower understands and agrees that, with or without
notice to Borrower, Lender may with respect to any other
Borrower (a) make one or more additional secured or unsecured
loans or otherwise extend additional credit; (b) alter,
compromise, renew, extend, accelerate, or otherwise change one
or more times the time for payment or other terms any
indebtedness, Including increases and decreases of the rate of
interest on the indebtedness; (c) exchange, enforce, waive,
subordinate, fail or decide not to perfect, and release any
security, with or without the substitution of new collateral;
(d) apply such security and direct the order or manner of sale
thereof, including without limitation, any nonjudicial sale
permitted by the terms of the controlling security agreements,
as Lender in its discretion may determine; (e) release,
substitute, agree not to sue, or deal with any one or more of
Borrower's sureties, endorsers, or other guarantors on any
terms or in any manner Lender may choose; and (I) determine
how, when and what application of payments and credits shall be
made on any other indebtedness owing by such other borrower.
Borrower and any other person who signs, guarantees or endorses
this fiote, to (he extent allowed by law, waive presentment,
demand for payment, protest and notice of dishonor. Upon any
change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser,
shall be released from liability. All such parties agree that
Lender may renew or extend (repeatedly and for any length of
time) this loan, or release any party or guarantor or
collateral; or impair, fall to realize upon or perfect Lender's
security interest in the collateral; and take any other action
deemed necessary by Lender without the consent of or notice to
anyone. ~l such parties also agree that Lender may modify this
loan without the consent of or notice to anyone other than the
party with whom the modification is made. The obligations under
this Note are Joint and several
CORPORATE RESOLUTION TO BORROW
Princ Loan Matur Loan Call Colla Accou Offic Initi
ipal Date ity No. teral nt er als
$90,0 03-23- 03-23- 21537 5000 40315 028
00.00 1998 1999 8 3
References in the shaded area are for Lender's use only and do
not limit the applicability of this document to any particular
loan or item.
Borrower: CROFF ENTERPRISES, INC., A UTAH
Lender: Union Bank & Trust
CORPORATION; Et AL Main Office
1675 BROADWAY, SUITE 1030 100 Broadway
DENVER, CO 80202 Denver, CO 80203
Principal Amount: $90,000.00 Initial Rate: 10.500% Date
of Note: March 23, 1998
I, the undersigned Secretary or Assistant Secretary' of CROFF
ENTERPRISES, INC., A UTAH CORPORATION (the "Corporation"),
HEREBY CERTIFY that the Corporation is organized and existing
under and by virtue of the laws of the Stale of Utah as a
corporation for profit, with its principal office at 167S
BROADWAY, SUITE 1030, DENVER, CO 80202, and is duly authorized
to transact business In the State of Colorado.
I FURTHER CERTIFY that at a meeting of the Directors of the
Corporation, duly called and held on March 10, 1998, at which a
quorum was present and voting, or by other duly authorized
corporate action In lieu of a meeting, the following
resolutions were applied:
BE IT RESOLVED, that any one (1) of the following named
officers, employees, or agents of this Corporation, whose
actual signatures are shown below:
NAME POSITION
GERALD L. JENSEN PRESIDENT
acting for and on behalf of the Corporation and as its act and
deed be, and he or she hereby Is, authorized and empowered:
Borrow Money. To borrow from time to time from Union Bank &
Trust ("Lender"), on such terms as may b agreed upon between
the Corporation and Lender, such sum or sums of money as in
his or her judgment should be borrowed, without limitation.
Execute Notes. To execute and deliver to Lender the
promissory' note or notes, or other evidence of credit
accommodations of the Corporation, on Lender's forms, at such
rates of Interest and on such terms as may be agreed upon,
evidencing the sums of money so borrowed or any indebtedness
of the Corporation to Lender, and also to execute and deliver
to Lender one or more renewals, extensions, modifications,
refinancing, consolidations, or substitutions for one or more
of the notes, any portion of the notes, or any other evidence
of credit accommodations.
Grant Security. To mortgage, pledge, transfer, endorse,
hypothecate, or otherwise encumber and deliver to Lender, as
security for the payment of any loans or credit
accommodations so obtained, any promissory notes so executed
(including any amendments to or modifications, renewals, and
extensions of such promissory' notes), or any other or
further indebtedness of the Corporation to Lender at any time
owing, however the same may be evidenced, any property now or
hereafter belonging to the Corporation or In which the
Corporation now or hereafter may have an interest, including
without limitation all real property and all personal
property (tangible or Intangible) of the Corporation. Such
property may be mortgaged, pledged, transferred, endorsed,
hypothecated, or encumbered at the time such loans are
obtained or such Indebtedness is incurred, or at any other
time or times, and may be either In addition to or In lieu of
any property theretofore mortgaged, pledged, transferred,
endorsed, hypothecated, or encumbered.
Execute Security Documents. To execute and deliver to Lender
the forms of mortgage, deed of trust, pledge agreement,
hypothecation agreement, and other security agreements and
financing statements which may be submitted by Lender, and
which shall e'4'dence the terms and conditions under and
pursuant to which such liens and encumbrances, or any of
them, are given: and also to execute and deliver to Lender
any other written Instruments, any chattel paper, or any
other collateral, of any kind or nature, which he or she may
In his or her discretion deem reasonably necessary or proper
in connection with or pertaining to the giving of the liens
and encumbrances.
Negotiate Items. To draw, endorse, and discount with Lender
all drafts, trade acceptances, promissory' notes, or other
evidences of indebtedness payable to or belonging to the
Corporation in which the Corporation may have an interest,
and either to receive cash for the same or to cause such
proceeds to be credited to the account of the Corporation
with Lender, or to cause such other disposition of the
proceeds derived therefrom as they may deem advisable.
Further Acts. In the case of lines of credit, to designate
additional or alternate Individuals as being authorized to
request advances thereunder, and In all cases, to do and
perform such other acts and things, to pay any and all foes
and costs, and to execute and deliver such other documents
and agreements as he or she may in his or her discretion deem
reasonably necessary' or proper in order to carry Into effect
the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized
pursuant to these Resolutions and performed prior to the
passage of these Resolutions are hereby ratified and approved,
that these Resolutions shall remain In full force and effect
and Lender may rely on these Resolutions until written notice
of his or her revocation shall have been delivered to and
received by Lender. Any such notice shall not affect any of the
Corporation's agreements or commitments in effect at the time
notice is given.
BE IT FURTHER RESOLVED, that the Corporation may enter Into
transactions in which there are multiple borrowers on
obligations to Lender and the Corporation understands and
agrees that, with or without notice to the Corporation,
discharge or release of any party or collateral securing an
obligation, any extension of time for payment, any delay in
enforcing any rights granted to Lender, or any other action or
Inaction will not cause Lender to lose any of its rights
against the Corporation; and that Lender may modify
transactions without the consent of or notice to anyone other
than the party with whom the modification Is made.
BE IT FURTHER RESOLVED, that the Corporation will notify Lender
In writing at Lender's address shown above (or such other
addresses as Lender may designate from lime to time) prior to
any (a) change in the name of the Corporation, (b) change in
the assumed business name(s) of the Corporation, (c) change In
the management of the Corporation,, (d) change In the
authorized signer(s), (e) conversion of the Corporation to a
new or different type of business entity, or (f) change In any
other aspect of the Corporation that directly or Indirectly
relates to any agreements between the Corporation and Lender.
No change In the name of the Corporation will take effect until
after Lender has been notified.
I FURTHER CERTIFY that the officer, employee, or agent named
above Is duly elected, appointed, or employed by or for the
Corporation, as the case may be, and occupies the position set
opposite the name; that the foregoing Resolutions now stand of
record on the books of the Corporation; and that the
Resolutions are In full force and effect and have not been
modified or revoked In any manner whatsoever. The Corporation
has no corporate seal, and therefore, no seal Is affixed to
this certificate.
IN TESTIMONY WHEREOF, I have hereunto set my hand on Match
23,199B and attest that the signatures set opposite the names
tinted above are their genuine signatures.
C RTIFIED TO AND
ATTESTED BY: r
X Colleen Jensen
X Assistant
Secretary
NOTE: in case the secretary or other certifying officer is
designated by the foregoing resolutions as one of the signing
officers, it is advisable to have this certificate signed by a
second Officer or Director of the corporation.
LAsER PRO, Reg. u.s. Pat. & TM, off,, ver. 3.24(ctlgaacPi
STATE OF UTAH
DEPARTMENT OF COMMERCE
CERTIFICATION
OF GOOD STANDING
THE UTAH DIVISION OF CORPORATIONS AND COMMERCIAL
CODE HEREBY CERTIFIES THAT
CROFF ENTERPRISES, INC.
is a Utah corporation and is qualified to transact business
in the State of Utah, and that its most recent annual report
required by Utah law has been filed, and that Articles of
Dissolution have not been filed, A Certificate of
Incorporation was issued from this office on NOVEMBER 13,
1907 and said corporation is in good standing, as appears of
record in the offices of the Division
This certification is not intended to reflect the financial
condition, business activity or practices of this
corporation.
File Number: CO 006667
Dated this 19th day
Of March, 1998
Korla T Woods
Director, Division of
Corporations and
Commercial Code