FIRST AMENDMENT TO

(1) MASTER CONTRACT CONCERNING CONSOLIDATED OIL AND GAS

EXPLORATION AND PRODUCTION FACILITIES, PROPERTY PURCHASE, OIL
AND GAS MINERAL LEASES AND RECIPROCAL COMPENSATION,
(2) OPERATOR'S AGREEMENT, and
(3) OIL AND GAS LEASES
This First Amendment to (1) Master Contract Concerning Consolidated Oil and Gas
Exploration and Production Facilities, Property Purchase, Oil and Gas Mineral Leases and
Reciprocal Compensation, (2) Operator's Agreement and (3) Oil and Gas Leases ("First
Amendment") is effective as of February 28, 2013 ("Effective Date"), and is by and among the
City of Longmont, Colorado, a municipal corporation with an address of350 Kimbark Street,
Longmont, Colorado 80501 (referred to hereinafter as "City"), and TOP Operating Co. with an
address of 10881 West Asbury Avenue, Ste. 230, Lakewood, Colorado 80227 (referred to
hereinafter as "Company"). The City and the Company may be collectively referred to herein as
the "Parties" or individually as a "Party".

RECITALS
WHEREAS, the City and the Company are Parties to that certain Master Contract
Concerning Consolidated Oil and Gas Exploration and Production Facilities, Property Purchase,
Oil and Gas Mineral Leases and Reciprocal Compensation, dated effective August 8, 20 12 and
recorded at Reception No. 03244965 of the records of the Clerk and Recorder of Weld County,
Colorado ("Master Contract"), and
WHEREAS, the City and the Company are Parties to that certain Operator's Agreement
dated effective July 17, 2012 and recorded at Reception No. 3866504 of the records of the Clerk
and Recorder of Weld County, Colorado ("Operator's Agreement"), and
WHEREAS, the City and the Company are Parties to certain Oil and Gas Leases that are
identified in paragraph 2 herein; and
WHEREAS, the City and the Company have agreed to amend the Master Contract, the
Operator's Agreement, and the Oil and Gas Leases to conform to their letter agreement dated
February 28, 2013 ("Letter Agreement").
NOW THEREFORE, in consideration and mutual promises set forth in this First
Amendment, including those in the Recitals herein, and for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by the Parties, the Parties agree to
amend the Master Contract, the Operator's Agreement, and the Oil and Gas Leases as follows:
1.
Stay Concerning Master Contract and Operator's Agreement. Article XVI of the
Longmont Municipal Charter restricts hydraulic fracturing within the City and was passed by the

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citizens of Longmont in November 2012. Unless and until that restriction is declared invalid or
unlawful by a final non-appealable order of a court as discussed in paragraph 3 herein, the time
table for the Parties to exercise the following rights and to comply with the following obligations
under the Master Contract, and the Operator's Agreement are tolled, suspended, and stayed from
the Effective Date until the occurrence of the condition described in paragraph 3:
a.
The Company's right to repurchase the Lindberg Property pursuant to
Article 7 of the Master Contract;
b.
The Company's obligation to plug and abandon the Rider No. 1 Well as
required by Article 2 of the Master Contract;
c.
The Company's obligation to drill a well on each drilling site within five
years, as provided in paragraph 1d of the Operator's Agreement; and
d.
Any provision in the Operator's Agreement relating directly to paragraphs
1a and 1b herein and any provision in either agreement that is premised on the
Company undertaking drilling operations on the lands covered by these
agreements;
2.

Stay Concerning the Oil and Gas Leases.

The primary term of each of the following Oil and Gas Leases owned or were issued in
whole or in part by the City, as defmed in section 1 of each lease, is tolled, suspended and stayed
from the Effective Date until the occurrence of the condition described in paragraph 3 herein:
a.
October 31, 2012 Oil and Gas Lease between the City of Longmont and
TOP Operating for the property known as the Northern Shores property, recorded
at Reception No. 3903234 of the records of the Clerk and Recorder of Weld
County, Colorado;
b.
The October 31, 2012 Oil and Gas Lease between the City of Longmont
and TOP Operating for the property known as the Koester property, recorded at
Reception No. 3903235 of the records of the Clerk and Recorder of Weld County,
Colorado; and
c.
The October 31, 2012 Oil and Gas Lease between the City of Longmont
and TOP Operating for the property known as the Lower Adrian property,
recorded at Reception No. 3903233 of the records of the Clerk and Recorder of
Weld County, Colorado.
Other than the Company's obligation to pay royalties that are owed to the City into the Royalty
Account described in Article 18 of the Master Contract, the Parties' obligation to pay money to
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the other Party under the Master Contract, Operator's Agreement, and the Oil and Gas Leases is
hereby tolled, suspended and stayed from the Effective Date until the occurrence of the
conditions set forth in paragraph 3 below; pro\lided, however, that this agreement shall not
affect, toll or stay any obligation to pay mon~y that was due before the Effective Date. The
Company shall continue to receive its share of payments for production from the Oil and Gas
Leases. All deadlines in the Oil and Gas Leases shall be extended and tolled, including the
primary term of each Oil and Gas Lease, from the Effective Date of this First Amendment until
the occurrence of the condition set forth in paragraph 3 below.
3.
Termination of Stay. The stay periods provided in paragraphs 1 and 2 herein shall
remain in effect until, and shall terminate upon,. the entry of a fmal, non-appealable judgment in
Colorado Oil and Gas Association v. City ofLongmont, Case No. 2013-CV-63, Boulder County
District Court (referred to as the "COGA Action"), or upon issuance of an injunction by the
Court in the COGA Action enjoining any further enforcement or implementation of the
prohibition on hydraulic fracturing by the City, or upon written agreement by the City and
Company, whichever condition occurs earlier ("Termination Date"). The period of time that has
elapsed from the Effective Date to the Termination Date shall be added to the primary terms of
the Oil and Gas Leases described in Paragraph 2 herein, and the deadlines for any obligations of
the parties described in paragraph l or 2 herein shall again become effective starting on the
Termination Date; provided, however, that the Company shall be obligated to plug and abandon
the Rider No. 1 Well during either the first summer vacation or the first Christmas break of the
St. Vrain Valley School District which follows the Termination Date.
4.
Additional Processing Stay. An additional stay shall apply to future permit
applications, for sites contemplated in the Master Contract, that TOP either submits to the City
after the Termination Date or has submitted to the City after the date of this First Amendment
but has not been subject to a final determination by the City by the Termination Date. At the time
that TOP submits such an application to the City that conforms to the Longmont Municipal
Code, the time limitations noted in sections 1(c-d) and 2 of this First Amendment shall, with
regard to the leases and/or sites to which the application applies, be stayed, continued, and tolled
until the City makes a final determination (including any appeal to a City appeal body) to
approve or deny the application. Specifically, if a permit application that conforms to the
Longmont Municipal Code has been submitted prior to the Termination Date, the stay period
discussed in sections 1-3 of this First Amendment shaH be extended until the City makes a such a
fmal determination; whereas, if a permit application that conforms to the Longmont Municipal
Code has been submitted after the Termination Date, a new stay period shall begin at such time
and shall continue until such a fmal determination on the application. This paragraph shall not
relieve TOP of its obligation to comply with paragraph 5 of the Letter Agreement.
5.
Best Practices. The City and TOP will continue to investigate, identify, and use
best practices to reduce TOP's footprint and environmental impact.

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6.
Transportation Impact/Cost Recovery Fee. The Operator's Agreement is
amended by the addition of the following paragraph ll(c):
c.
. Transportation Impact/Cost Recovery Fee. Pursuant to
Master Contract section 14 and this Operator's Agreement the
Company acknowledges its development and operation of oil wells
and associated activities are subject to the City's Land
Development Code.
The Land Development Code,
15.04.020(B)(32)(v)(xiii), L.M.C. (2013) ("Impact fees"),
provides that "[ e]very permit issued by the City under this section
shall require the applicant or operator to pay a fee that is sufficient
to pay for all impacts which the proposed operation will cause to
facilities owned or operated by the City . . . . The City shall
establish a mechanism to assess and obtain payment of such
fees ...." Fees for transportation impacts under that section for
Company's oil and gas operations subject to the provisions of the
Master Contract and this Operator's Agreement are established as
follows. At the time of commencement of oil and gas operations,
the Company shall pay to the City a per well fee for each City road
segment the Company will use, calculated as follows:
(total equivalent single axle loads (ESALs) by Company over the
road segment I total ESALs for which road segment is designed
over its lifetime) x replacement cost of City road segment used for
trips accessing well site
To calculate ESALs the Company shall provide the City with
good-faith and reasonably accurate estimates of:
I. The total number of trips to be made, per well, for the life
of the well operation distributed by number of truck trips
and vehicle size and number of axles by vehicle for each
phase, including construction, completion, production and
maintenance.
2. The specific route of these trips.
The City shall make reasonable and good-faith estimates, based on
all available facts, of the capital replacement cost of the specific
City road segment(s) and of the total ESALs for which each road
segment is designed over its lifetime, and shall calculate fees for
traffic impacts based on the above formula.
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6.
Entire Agreement Other than as specifically amended by the Parties in this First
Amendment, all other provisions of the Master Contract, Operator's Agreement, the Oil and Gas
Leases and the Letter Agreement shall remain in full force and effect
7.
Further Assurances. The Parties agree to execute such additional documents and
provide each other with such further assurances as may be reasonably required to accomplish the
provisions of this First Amendment.
8.
Dispute Resolution and Arbitration. Any dispute, disagreement or controversy
arising out of, relating to or connected with this First Amendment shall be governed by the
Dispute Resolution and Arbitration provisions of paragraph 29 of the Master Contract
9.
Counterpart Executions. This First Amendment may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute one and the same
instrument.

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.
TOP OPERATING CO.

setter's mailing address:

TOP Operating Co.

I 0881 W. Asbury Ave .. Ste. 230

Lakewood. CO 80227
ScHer's social security or other tax

m # _D_~_L.(___1- - - - - - - - -

ACKNOWLEDGMENT

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of

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Countyaf ~.):e~\".;,.-)

The foregoing instrument was acknowledged be lore me by

,Ko ~""' ~ . ._, K\-l

.:.v .:-;, .t;J.

(Name of party signing)

alS

-o,.r

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_.L_

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(Title of party signing)

C;

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of ____

{Name of corp(ffiifion)

a ___c___;'"-.\. :. ;" "~.=.../..:::c..;:..;:.h=->_ _ _ _ _ _ _ corporation. on behalf of the corporation. this

(State of incorporation)

2"'~
_2.
_
_ _ day of

Q c.-.4.\ n\.!:Jd
I
. .r

. 2013.

TJiE CITY OF LONGMONT

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A municipal corporation

MAYOR

ATTEST:

CITY CLERK

APPROVED AS TO FORM:

/fJ/21113
DATE

DATE

APPROVED AS TO FORM AND SUBSTANCE:

DIRECTOR F PUBLIC WORKS AND

NATURAL RESOURCES

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