SECOND AMENDED AND RESTATED PROMISSORY NOTE

 

Salt Lake City, Utah

 

$7,746,717.00 August 8, 2017

 

WHEREAS, Maker (as defined below) previously executed that certain Promissory
Note dated May 30, 2014 (the “Initial Note”), which Initial Note was amended and
restated on December 31, 2015, in the principal amount of Eight Million Two
Hundred Ninety-Six Thousand Seven Hundred Seventeen and 22/100 Dollars
($8,296,717.22) for the benefit of Lender (as defined below) (the “Amended and
Restated Note”);

 

WHEREAS, Maker and Lender desire to amend and restate the Amended and Restated
Note to, among other things, change the outstanding principal amount due and
owing therein, and Maturity Date (as defined herein);

 

WHEREAS, as of the date hereof, Maker has paid Lender all accrued and unpaid
interest due and owing on the Amended and Restated Note through December 31,
2016;

 

NOW, THEREFORE, the Amended and Restated Note is hereby amended and restated in
its entirety with this Note to read as follows:

 

TRONCO ENERGY CORPORATION, a Delaware corporation, (“Maker”) for value received,
promises and agrees to pay to the order of SUPERIOR DRILLING PRODUCTS, INC., a
Utah corporation or its assigns (herein called “Lender” which term shall herein
in every instance refer to the owner or holder of this Second Amended and
Restated Promissory Note (“Note”)), at 1583 S. 1700 E. Vernal, UT 84078, or at
such other place as Lender may hereafter designate in writing, in lawful money
of the United States of America, the principal sum of SEVEN MILLION SEVEN
HUNDRED FORTY SIX THOUSAND SEVEN HUNDRED SEVENTEEN and No/Dollars
($7,746,717.00) (the “Loan”), or so much thereof as may be outstanding from time
to time under the terms and limitations of the Seconded Amended and Restated
Loan Agreement dated as of the date hereof by and between Lender and Maker (the
“Agreement”), together with interest accruing during the term hereof on the
principal balance from time to time outstanding until paid, at the prime rate of
interest quoted by J.P. Morgan Chase Bank from time to time, plus one-quarter
percent (.25%). Interest shall be calculated on the average daily outstanding
principal balance. All capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Agreement.

 

From and after the date hereof, the outstanding principal balance of this Note
and the Loan described in the Agreement is and shall be a fixed term loan and no
further advances will be made under the terms of this Note or under the terms of
the Agreement, provided however additional sums may be added to the principal
balance of this Note, from time to time, as provided for hereinbelow.

 

The principal of this Note has been fully advanced to the Maker hereof prior to
the date hereof.

 

Maker shall repay the outstanding principal balance due (together with accrued
interest thereon) under this Note paid as follows:

 

  (1) An interest only payment on December 31, 2017 of all accrued interest as
of such date; and         (2) An interest only payment on December 31, 2018 of
all accrued interest as of such date; and         (3) An interest only payment
on December 31, 2019 of all accrued interest as of such date; and         (4) An
interest only payment on December 31, 2020 of all accrued interest as of such
date; and         (5) An interest only payment on December 31, 2021 of all
accrued interest as of such date; and         (6) All principal and accrued,
unpaid interest shall be due on December 31, 2022 (the “Maturity Date”).

 

 

  

 

All payments made by Maker shall be applied in the following order:

 

  (1) All accrued and unpaid interest; and         (2) All outstanding and
unpaid principal on the Note.

 

The principal balance of this Note, all accrued but unpaid interest, and all
other amounts due under this Note (collectively the “Indebtedness”), may be
prepaid, in whole or in part, at any time from and after the date of this Note,
without premium or penalty. For the purposes hereof, any prepayments upon the
Indebtedness shall be applied in the manner and order as provided for in Section
2.4 of the Agreement.

 

TIME IS OF THE ESSENCE IN REGARDS TO MAKER’S PAYMENT OBLIGATIONS HEREUNDER.

 

If a payment on this Note shall become due on a Saturday, Sunday or public
holiday under the laws of the State of Utah on which day Lender is not open for
business, such payment shall be made on the next succeeding business day of
Lender, unless the effect of such extension would be to carry the payment over
to the next calendar month, in which case such payment shall be due on the
preceding business day of Lender, and such extension or reduction of time shall
in such case be included in computing interest in connection with such payment.
All sums required to be paid hereunder shall be applied first to any sums
expended by Lender to preserve or protect the collateral securing this Note
(including advances, if any, made to pay the taxes thereon), then to any
reasonable attorneys’ fees incurred by Lender in enforcing the provision of this
Note or any document securing same, if any, then to accrued interest and then to
principal, except that Maker may prepay any principal amount prior to its due
date. Provided however, if at any time Lender receives, from Maker or otherwise,
any amount applicable to the Loan which is less than all amounts due and payable
at such time, Lender may apply that payment to amounts then due and payable in
any manner and in any order determined by Lender, in Lender’s discretion. Maker
agrees that neither Lender’s acceptance of a payment from Maker in an amount
that is less than all amounts then due and payable nor Lender’s application of
such payment shall constitute or be deemed to constitute either a waiver of the
unpaid amounts or an accord and satisfaction.

 

To the extent permitted by applicable law, any payments due hereunder not
received by Lender on or before the fifth (5th) day following the date on which
such payment is due shall bear interest from the date of notice to Maker of such
nonpayment or other occurrence which gives rise to such amount being owed to the
Lender, until paid, equal to the prime rate of interest quoted by J.P. Morgan
Chase Bank from time to time, plus three percent (3%) per annum. Maker
acknowledges that its failure to make timely payments will cause Lender to incur
additional expenses in servicing and processing the Loan evidenced by this Note,
and that it is extremely difficult and impractical to determine those additional
expenses. Maker agrees that the late charge payable pursuant to this Paragraph
represents a fair and reasonable estimate, taking into account all circumstances
existing on the date of this Note, of the additional expenses Lender will incur
by reason of such late payment.

 

Neither this Note nor any of the other Loan Documents shall be construed to
create a contract for the use, forbearance or detention of money requiring
payment of interest at a rate greater than the maximum interest rate permitted
to be charged under applicable law. If any applicable law limiting the amount of
interest or other charges permitted to be collected from Maker in connection
with the Loan is interpreted so that any interest or other charge provided for
in any Loan Document, whether considered separately or together with other
charges provided for in any other Loan Document, violates that law, and Maker is
entitled to the benefit of that law, that interest or charge is hereby reduced
to the extent necessary to eliminate that violation. The amounts, if any,
previously paid to Lender in excess of the permitted amounts shall be applied by
Lender to reduce the unpaid principal balance of this Note. For the purpose of
determining whether any applicable law limiting the amount of interest or other
charges permitted to be collected from Maker has been violated, all indebtedness
that constitutes interest, as well as other charges made in connection with the
indebtedness that constitute interest, shall be deemed to be allocated and
spread ratably over the stated term of the Note. Unless otherwise required by
applicable law, such allocation and spreading shall be effected in such a manner
that the rate of interest so computed is uniform throughout the stated term of
this Note.

 

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If an Event of Default (as defined below) be made in the performance of Maker
under this Note, then the Lender may, at Lender’s option, declare the entire
unpaid principal hereof and all accrued interest on this Note immediately due
and payable without additional notice, demand or presentment, all of which are
hereby waived, and upon such Lender hereof shall have the right to foreclosure
or otherwise enforce all liens or security interest securing payment hereof, or
any part hereof, and offset against this Note any sum or sums owed by the Lender
to Maker. Failure of the Lender to exercise this option shall not constitute a
waiver of the right to exercise the same upon the occurrence of a subsequent
Event of Default.

 

For purposes hereof, an “Event of Default” shall mean:

 

  (1) the failure by Maker to perform any obligation to pay principal or
interest when due under the Note after receipt of written notice of such failure
to pay and after the expiration of a five (5) day grace period;         (2) the
failure by Maker or any other obligor to perform any other obligation or to pay
any other sum when due under the terms of the Note or any other Loan Document;
or         (3) Maker’s assignment for the benefit of creditors or becoming the
subject of any voluntary of involuntary bankruptcy proceeding; or         (4)
The filing of any bankruptcy proceeding, either voluntary or involuntary by or
against any Guarantor of this Note as same are described in the Agreement.

 

Except as otherwise provided hereinabove, Maker and each surety, guarantor
endorser and other party ever liable for payment of any sums of money payable on
this Note jointly and severally waive presentment and demand for payment,
protest, notice of protest and non-payment or dishonor, notice of acceleration,
notice of intent to accelerate, notice of intent to accelerate, notice of intent
to demand, diligence in collecting, and grace, and consent to all extensions
without notice for any period or periods of time and partial payments, before or
after Maturity, without prejudice to the Lender. The Lender shall similarly have
the right to deal in any way, at any time, with one or more of the foregoing
parties without notice of any other party, and to grant any such party an
extensions of time for payment of any of said indebtedness, or to release part
or all of the collateral securing this Note, or to grant any other indulgences
or forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.

 

If the Lender expends any effort in any attempt to enforce payment of all or any
part or installment of any sum, either principal and/or interest, due and the
Lender, or if this Note is placed in the hands of an attorney for collection, or
if it is collected through any legal proceedings, Maker agrees to pay all
reasonable collection costs and fees incurred by the Lender, including
reasonable attorney’s fees and expenses.

 

This Note is made and is deemed performable at 1583 S. 1700 E. Vernal, UT 84078,
and Maker and each surety, guarantor, endorser and other party ever liable for
payment of any sums of money on this Note, jointly and severally waive the right
to be sued hereon elsewhere. This Note shall be governed by and construed in
accordance with the laws of the State of Utah.

 

Any check, draft, money order or other instrument given in payment of all or any
portion hereof may be accepted by the Lender and handled in collection in the
customary manner, but the same shall not constitute payment hereunder or
diminish any rights of the Lender except to the extent that actual cash proceeds
of such instruments are unconditionally received by the Lender and applied to
this indebtedness in the manner elsewhere herein provided.

 

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It is the intention of the parties to comply strictly with applicable usury laws
of the State of Utah, if any; accordingly, notwithstanding any provision to the
contrary in this Note or in any of the documents securing the payment hereof or
otherwise relating hereto, in no event shall this Note or such documents require
or permit the payment, taking, reserving, receiving, collection or charging of
any sums constituting interest under applicable laws which exceed the maximum
amount permitted by such laws. If any such excess interest is called for,
contracted for, charged, taken reserved or received in connection with the loan
evidenced by this Note or in any of the documents securing the payment hereof or
otherwise relating hereto, or in any communication by Lender or any other person
to Marker or any other person, or in the event all or part of the principal or
interest hereof shall be prepaid or accelerated, so that under any of such
circumstances or under any other circumstances whatsoever the amount of interest
contracted for, charged, taken, reserved, or received on the amount of principal
actually outstanding from time to time under this Note shall exceed the maximum
amount of interest permitted by applicable usury laws, then in any such event it
is agreed as follows: (i) the provisions of this paragraph shall govern and
control, (ii) neither the Maker nor any other person or entity now or hereafter
liable for the payment of this Note shall be obligated to pay the amount of
interest permitted by applicable laws, (iii) any such excess which is or has
been received notwithstanding this paragraph shall be credited against the then
unpaid principal balance hereof or, if this Note has been or would be paid in
full by such credit, refunded to Maker, and (iv) the provision of this Note and
the document securing the payment hereof and otherwise relating hereto, and any
communication to Maker, shall immediately be deemed reformed and such excess
interest reduced, without the necessity of executing any other document, to the
maximum lawful rate allowed under applicable laws as now or hereafter construed
by courts having jurisdiction hereof or thereof. The terms of this paragraph
shall be deemed to be incorporated in every Loan Document, and any communication
relating to this Note and the Loan.

 

This Note is secured. This Note is given in renewal and full substitution of
that certain Amended and Restated Note.

 

This Note is dated as of the date set forth first above. In the event of a
conflict between this Note and the Agreement, the terms of the Agreement, shall
be deemed controlling.

 

NOTICE OF NO ORAL AGREEMENTS. THIS DOCUMENT AND ALL OTHER LOAN DOCUMENTS
RELATING TO THIS LOAN OR REFERRED TO ABOVE TOGETHER CONSTITUTE A WRITTEN LOAN
AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES 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 RELATING TO THIS LOAN.

 

    MAKER:           TRONCO ENERGY CORPORATION         By: /s/G. Troy Meier    
G. Troy Meier, President

 

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