Document:

Exhibit 10.3

 

LOAN AGREEMENT

 

This
Loan Agreement (this “Agreement”) is made as of the 31st day of July, 2018, by and between Kodak Brothers
Real Estate Cash Flow Fund, LLC, a Texas limited liability company (the “Lender”), and Victory
Oilfield Tech, Inc., a Nevada corporation f/k/a Victory Energy Corporation (the “Borrower”).

 

RECITALS

 

A.
On or about the date hereof, Borrower is entering into a Stock Purchase Agreement with Pro-Tech Hardbanding Services, Inc.,
an Oklahoma corporation (“PTHS”), and Stewart Matheson (“Matheson”), the sole shareholder
of PTHS, whereby Borrower is purchasing the issued and outstanding shares of PTHS (such transaction is referred to herein as the
“PTHS Acquisition”).

 

B.
The Borrower has requested a loan (the “Loan”) from the Lender in the amount of Three Hundred Seventy-Five
Thousand Dollars ($375,000) (the “Loan Amount”) as part of Borrower’s financing of the PTHS Acquisition.
The Lender is willing to advance the Loan Amount to Borrower on the terms and conditions reflected in this Agreement.

 

C.
The Loan will be secured by a first priority security interest in all of the assets of the Borrower, including, without
limitation, the sublicense granted to the Borrower from Armacor Victory Ventures, LLC pursuant to that certain Exclusive Sublicense
Agreement, dated August 21, 2017 (the “First Priority Assets”), save and except for (i) the stock of
PTHS to be acquired by Borrower from Matheson in the PTHS Acquisition (the “PTHS Stock”), which PTHS Stock is
the subject of a first priority security interest granted by the Borrower in favor of Matheson pursuant to the terms of the PTHS
Acquistion and the assets of PTHS (the “PTHS Assets” and, together with the PTHS Stock, the “Second
Priority Assets”), which PTHS Assets are also the subject of a first priority security interest granted by the Borrower
in favor of Matheson pursuant to the terms of the PTHS Acquisition. The foregoing first priority security interest in the First
Priority Assets will be pari passu with a prior security interest granted by Borrower to Visionary Private Equity Group I, LP (“VPEG
I”).

 

D.
Upon closing of the PTHS Acquisition, the Loan will be further secured by second priority security interests in the Second
Priority Assets, each such security interest to be second in priority to the first priority security interest in such assets granted
by Borrower and PTHS to Matheson in the PTHS Acquisition.

 

E.
On the date hereof, the Borrower, the Lender, VPEG I and Matheson are entering into an intercreditor agreement (the “Intercreditor
Agreement”) pursuant to which, the parties to the Intercreditor Agreement will agree that the Lender and VPEG I have
a pari passu first priority security interest in the First Priority Assets, that the Lender has a second priority security interest
in the Second Priority Assets and VPEG I will relinquish its lien on and security interest in the Second Priority Assets.

 

     

     

    

 

AGREEMENTS

 

In consideration
of the foregoing recitals, which are incorporated herein by this reference, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Borrower and the Lender agree as follows:

 

		1.	Definitions

 

1.1.
General Application and Interpretation. Unless a clear contrary intention appears, as used herein (a) the
singular includes the plural and vice versa, reference to any document means such document as amended from time to time,
“include” or “including” means including without limiting the generality of any description preceding such
term, (b) the word “or” is not exclusive, unless otherwise expressly stated, (c) the terms “hereof,” “herein,”
“hereby,” and derivative or similar words refer to this entire Agreement, and (d) headings are for convenience only
and do not constitute a part of this Agreement.

 

		2.	Loan

 

2.1
Loan. On the terms and subject to the conditions hereinafter set forth, the Lender will loan to the Borrower
the Loan Amount.

 

2.2
Note. The Loan shall be evidenced by, and the Borrower shall deliver to the Lender immediately upon receipt
of funds from the Lender, a secured convertible promissory note in the form attached hereto as Exhibit A (the “Note”),
duly executed by Borrower, dated of even date herewith. The principal amount of the Note shall be due and payable in the manner
and at the times set forth in the Note. Should the principal of the Note become due and payable on any day other than a business
day, the maturity thereof shall be extended to the next succeeding business day. All payments on the Note shall be made to the
Lender at its address as specified in the Note in federal or other immediately available funds, and payments shall be applied first
to the payment of any costs and expenses owed by the Borrower to the Lender with respect thereto, then to accrued interest and
then to principal. The Borrower agrees that if documentary stamp taxes and intangible taxes are applicable with respect to the
execution or delivery of the Note, the Borrower shall pay such tax and consents to the Lender advancing such amount pursuant to
the Note for the benefit of the Lender in connection with the payment of such tax.

 

		3.	Grant of Warrant

 

Upon execution
of this Loan Agreement, Borrower will issue to Lender a warrant to acquire Three Hundred and Seventy-Five Thousand (375,000) shares
of Borrower’s Common Stock, such warrant to have an exercise price of $0.75 per share and a period of exercise of 5 years
from issuance, and to contain “cashless exercise” provisions.

 

		4.	Representations and Warranties; Covenants

 

4.1
Lender represents that it has the requisite power to enter into this Agreement and to carry out its obligations hereunder
and that the terms of this Agreement have been fully disclosed to its general partner and that the requisite approvals have been
obtained, prior to its execution.

 

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4.2
Borrower represents that it has the requisite power to enter into this Agreement and to carry out its obligations hereunder
and that the terms of this Agreement have been fully disclosed to its board of directors, that the requisite approvals have been
obtained, prior to its execution, that the Borrower’s execution and delivery of and consummation of its obligations under
the Note and other Loan Documents do not conflict with any other obligations or the organizational documents of the Borrower, and
that Borrower is and will remain solvent following the transaction contemplated herein.

 

4.3
Each party represents that this Agreement has been duly executed and delivered and constitutes a valid and binding obligation
enforceable in accordance with its terms.

 

4.4
Borrower covenants with Lender that $350,000 of the Loan Amount will be applied by Borrower towards funding of the PTHS
Acquisition and the remaining $25,000 of the Loan Amount will be used by Borrower first for the initial payment of prepaid interest
pursuant to the Note, second in satisfaction of Borrower’s agreement to pay the Lender’s costs incurred in connection
with the Loan transaction, which costs shall not exceed $7,500, and finally any remaining amounts for Borrower’s general
corporate purposes. Borrower additionally covenants to promptly notify the Lender of any defaults or any purported defaults with
respect to any obligations of the Borrower to any other party to the Intercreditor Agreement.

 

4.5
Borrower agrees to pay all expenses of the Loan, and also including all recording
charges, costs for certified copies of instruments, fees, expenses and charges of Lender’s attorneys and other professional
advisors, and all costs and expenses incurred by Lender in connection with the determination of whether Borrower has performed
the obligations undertaken by Borrower under this Agreement or has satisfied any conditions precedent to the obligations of Lender
under this Agreement. All such expenses, charges, costs and fees shall be the Borrower’s obligation regardless of whether
the Loan is disbursed in whole or in part unless such failure to disburse is due to Lender’s wrongful failure to disburse
hereunder. Any and all advances or payments made by Lender under this Agreement from time to time, or for attorney fees and expenses
or fees of other professional advisors, if any, and all other Loan expenses shall, as and when advanced or incurred by Lender,
constitute additional indebtedness evidenced by the Note and secured by the Security Agreement included at Section 4 of
the Note and the other Loan Documents to the same extent and effect as if the terms and provisions of this Agreement were set forth
therein, whether or not the aggregate of such indebtedness shall exceed the aggregate face amount of the Note.

 

		5.	Security

 

On the
date hereof, the Borrower is signing and delivering to the Lender the Note, Section 4 of which constitutes a Security Agreement
pursuant to which (i) the Borrower is granting to the Lender a first priority security interest in all of the First Priority Assets,
which security interest will be pari passu with security interests previously granted by Borrower to VPEG I and (ii) the
Borrower is granting to the Lender a second-priority security interest in the PTHS Stock which becomes effective upon the closing
of the PTHS Acquisition, which closing is expected to occur simultaneously with the closing of the Loan. Furthermore, the Borrower
agrees that it shall cause PTHS, as a wholly-owned subsidiary of Borrower, to guaranty the Borrower’s obligations under the
Note and, upon closing of the PTHS Acquisition, to grant Lender a second priority security interest in the PTHS Assets. The second
priority security interest in the Second Priority Assets shall only be subordinate to the first priority security interests in
the Second Priority Assets that is being granted by Borrower and PTHS to Matheson in connection with the PTHS Acquisition.

 

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		6.	Further Assurances

 

The Borrower shall from time to time, at its
sole expense, promptly execute and deliver all further instruments and documents, and take all further actions, as may be necessary
and desirable, or that the Lender may reasonably request, in order to enable Lender to exercise and enforce their rights and remedies
hereunder, and, following closing of the PTHS Acquisition, will further cause PTHS as a wholly-owned subsidiary of Borrower to
abide by the foregoing covenant as though expressly named along with Borrower therein.

 

		7.	Events of Default

 

The occurrence of any Event of Default under
the Note shall be an Event of Default under this Agreement.

 

		8.	Miscellaneous

 

8.1
Entire Agreement. This Agreement, the other Loan Documents, and instruments delivered in connection herewith
and therewith constitute the entire agreement of Borrower and Lender with respect to the
Loan, and all prior discussions, negotiations and document drafts are merged herein and therein. Neither Lender nor any employee
of Lender has made or is authorized to make any representation or agreement upon which Borrower may rely unless such matter is
made for the benefit of Borrower and is in writing signed by an authorized officer of Lender. Borrower agrees that it has not and
will not rely on any custom or practice of Lender, or on any course of dealing with Lender, in connection with the Loan unless
such matters are set forth in this Agreement or the Loan Documents or in an instrument made for the benefit of Borrower and in
a writing signed by an authorized officer of Lender.

 

8.2
Severability. If any provision of this Agreement or any other of the other documents being entered into in
connection with this Agreement shall be determined by any court having jurisdiction to be unlawful or unenforceable, such provision
shall be deemed separate and apart from all other provisions of this Agreement, and all remaining provisions of this Agreement
shall be fully enforceable.

 

8.3
Notices. All notices and other communications that are required or permitted to be given to the parties under
this Agreement shall be sufficient in all respects if given in writing and delivered in person, by electronic mail, by telecopy,
by overnight courier, or by certified mail, postage prepaid, return receipt requested, to the receiving party at the address specified
on the signature page to this Agreement or to such other address as such party may have given to the other by notice pursuant to
this Section. Notice shall be deemed given on the date of delivery, in the case of personal delivery, electronic mail, or telecopy,
or on the delivery or refusal date, as specified on the return receipt in the case of certified mail or on the tracking report
in the case of overnight courier.

 

8.4
Choice of Law and Jurisdiction. The laws of the State of Texas shall apply to and control any interpretation,
construction, performance or enforcement of this Agreement. The Parties agree that the exclusive jurisdiction for any legal proceeding
arising out of or relating to this Settlement Agreement shall be the State or Federal courts located in Travis County, Texas and
the Parties hereby waive any challenge to personal jurisdiction or venue in that court.

 

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8.5
Modification; Waiver.  No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is in writing and signed by the party against which the enforcement of such modification, waiver,
amendment, discharge or change is sought.

 

8.6
Waiver of Consequential Damages.  In no event shall Lender
be liable to Borrower for consequential damages, whatever the nature of a breach by Lender of its obligations under this Agreement,
or any of the Loan Documents, and Borrower for itself and all Affiliated Parties hereby waives all claims for consequential damages.

 

8.7
WAIVER OF JURY TRIAL.  BORROWER AND LENDER EACH HEREBY WAIVE (TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM WHETHER
IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF NOTEHOLDER, ITS OFFICERS, EMPLOYEES, MANAGERS, DIRECTORS OR AGENTS IN CONNECTION
THEREWITH; AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

8.8
Counterparts and Facsimile or Electronic Signatures. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which, taken together, shall constitute one agreement. A facsimile or electronic
signature, including through technology such as DocuSign, to this Agreement shall be deemed an original and binding upon the party
against whom enforcement is sought.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first above written.

 

	 	LENDER:
	 	 
	 	Kodak Brothers Real Estate Cash Flow Fund, LLC,
	 	By:	Kodak Brothers Capital Management, LLC,
	 	 	its manager
	 	 	 
	 	By:	/s/ Scott Kodak
	 	 	Scott Kodak, Manager
	 	 	 
	 	Address:	3355 Bee Cave Road, 
	 	 	Suite 608
	 	 	Austin, Texas 78746
	 	 	 
	 	BORROWER:
	 	 
	 	Victory Oilfield Tech, Inc. 
	 	 	 
	 	By:	/s/ Kenneth Hill
	 	Name: 	Kenneth Hill
	 	Title: 	Chief Executive Officer
	 	 	 
	 	Address:	3355 Bee Caves Road
	 	 	Suite 608
	 	 	Austin, TX 78746Exhibit 10.4

 

THIS NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE
TO THE MAKER, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID ACT.

 

SECURED CONVERTIBLE

PROMISSORY NOTE

 

	US$375,000	 	July 31, 2018

 

FOR VALUE RECEIVED, on
the date hereof (the “Funding Date”), the undersigned, Victory Oilfield
Tech, Inc., a Nevada corporation f/k/a Victory Energy Corporation (the “Maker”), promises to pay
to the order of Kodak Brothers Real Estate Cash Flow Fund, LLC, a Texas limited liability company, or its assigns (collectively,
the “Holder”), the principal sum of Three Hundred Seventy-Five Thousand Dollars ($375,000) (the “Principal
Amount”), in lawful money of the United States, together with all costs and expenses due hereunder calculated in the
manner hereinafter set forth in this Secured Convertible Promissory Note (the “Note”).

 

This Note is being issued
in connection with the entry by the Maker and the Holder into a Loan Agreement, dated as of the date hereof (the “Loan
Agreement”) and is being secured by the security interest granted by the Maker to the Holder pursuant to Section 4
of this Note, which will, upon closing of Maker’s acquisition of the issued and outstanding shares of capital stock of PTHS,
additionally include second-priority security interests in the Second Priority Assets. Capitalized terms used, but not otherwise
defined, herein have the meanings ascribed to such terms in the Loan Agreement.

 

		1.	Term; Payments; Interest; Prepayments of Interest

 

(a)
The term of this Note is from the Funding Date until March 31, 2019; (the “Maturity Date”). Provided
Borrower is not in default under this Note or any of the Loan Documents (as hereinafter defined), Borrower shall have the right
and option to extend the Maturity Date until June 30, 2019 (the “Term Option”) upon and in accordance with the
following terms and conditions: (a) Borrower shall give written notice to Lender on or before the Maturity Date of Borrower’s
intent to exercise the Term Option; (b) Borrower shall on or before March 31, 2019 pay the sum of $9,375 to Kodak Brothers Capital
Management, LLC, Lender’s Manager, as an extension fee in consideration of Borrower’s exercise of the Term Option.

 

(b)
The Maker shall pay to the Holder the unpaid Principal Amount in full on the Maturity Date, together with interest accrued
thereon (to the extent such accrued interest has not been pre-paid by Maker).

 

(c)
Subject to increase to the Default Rate (as hereinafter defined) upon occurrence of an Event of Default, Interest will accrue
on the unpaid principal balance of this Note at the rate of Ten Percent (10.0%) per annum, simple interest (the “Base
Rate”).

 

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(d)
Borrower will prepay interest under this Note as follows:

 

		1.	Borrower will upon funding of this Note prepay to Lender interest due for
the period from the date of funding through and including December 31, 2018 in the amount of $15,625.

 

		2.	Borrower will on or before January 10, 2019 prepay to Lender interest due
for the period from January 1, 2019 through March 31, 2019 in the amount of $9,375.

 

		3.	In the event Borrower exercises the Option Term, Borrower will on or before
April 10, 2019 prepay to Lender interest due for the period from April 1, 2019 through June 30, 2019 in the amount of $9,375.

 

 

		2.	Acceleration and Events of Default

 

In the event that any of the following (each, an
“Event of Default”) shall occur:

 

(a)
The Maker shall default in the payment of (i) the Principal Amount of or any interest due under this Note, including required
prepayments of interest, (ii) any obligation of the Maker to Visionary Private Equity Group I, LP (“VPEG I”)
secured by the Collateral referenced herein, or (iii) any obligation of the Maker to Stewart Matheson (“Matheson”)
under that certain Pledge and Security Agreement dated July 31, 2018 by and among, in relevant part, Maker as Debtor and Matheson
as Secured Party, as and when the same shall become due and payable, whether by acceleration or otherwise; or

 

(b)
The Maker shall default in any material manner in the observance or performance of any covenants or agreements set forth
in this Note or the Loan Agreement (all as may be amended, restated, extended, supplemented or otherwise modified from time to
time, herein collectively called, the “Loan Documents”), or in any agreements governing secured obligations
of Maker to VPEG I or to Matheson referenced in Section 2(a);

 

(c)
The Maker shall: (i) admit in writing its inability to pay its debts as they become due; (ii) apply for, consent to, or
acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Maker or any of its property, or
make a general assignment for the benefit of creditors; (iii) in the absence of such application, consent or acquiesce in, permit
or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the Maker or for any part of its
property; or (iv) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case
or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the
Maker, and, if such case or proceeding is not commenced by the Maker or converted to a voluntary case, such case or proceeding
shall be consented to or acquiesced in by the Maker or shall result in the entry of an order for relief; then, and so long as such
Event of Default is continuing for a period of two (2) business days in the case of non-payment under Section 2(a) or 2(b)
(and the event which would constitute such Event of Default, if curable, has not been cured), by written notice to the Maker from
the Holder, then the Holder shall have the right to declare all obligations of the Maker under this Note to become immediately
due and payable without presentment, demand, protest or any other action nor obligation of the Holder of any kind, all of which
are hereby expressly waived, and Holder may exercise any other remedies the Holder may have at law or in equity. If an Event of
Default specified in Section 2(c) above occurs, the principal amount of this Note shall automatically, and without any declaration
or other action on the part of any Holder, become immediately due and payable;

 

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(d)
Borrower shall challenge the validity or enforceability of any provision of any of the Loan Documents;

 

(e)
Borrower shall default in its obligations to any party to the Intercreditor Agreement, which default is not resolved within
fifteen (15) days of receipt of written notice from the Holder; or

 

(f)
Any representation or warranty of Borrower made to Lender in the Loan Documents is or prior to satisfaction of Borrower’s
obligations under this Note becomes materially inaccurate in any material respect.

 

Upon the
occurrence of an Event of Default, interest upon the unpaid Principal Amount shall begin to accrue at a rate equal to the lesser
of (a) twelve percent (12.0%) per annum or (b) the maximum interest rate allowed from time to time under applicable law (the “Default
Rate”), and shall continue at the Default Rate until the Event of Default is cured (at which time interest at the Base
Rate will again apply to the unpaid Principal Amount) or full payment is made of the unpaid Principal Amount. If any judgment is
rendered in favor of the Holder against the Maker, said judgment shall bear interest at the Default Interest Rate or the maximum
rate permitted by applicable law from time to time, in effect as of the date of this Note.

 

		3.	Prepayment Without Penalty

 

Maker
shall have the right at any time prior to the occurrence of an Event of Default to prepay, in whole or in part, the Principal Amount
without penalty, subject to the qualification, however, that no partial prepayment of the Principal Amount shall in any way release,
discharge or affect the obligation of the Maker to make full payment in the amount of the balance of said Principal Amount on the
Maturity Date. If Maker desires to prepay this Note, Maker shall provide the Holder with reasonable advance written notice such
that Holder will have the opportunity to convert this Note in accordance with Section 5 hereof prior to any such prepayment.

 

		4.	Security Agreement

 

(a)
Grant of Security Interest. To secure the prompt repayment of each and all of the obligations of the Maker hereunder
to the Holder and its assigns, the Maker hereby pledges, grants, assigns and transfers to the Holder and its assigns a continuing
lien on and security interest in and to all of the following property of the Maker (collectively the “Collateral”):

 

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(i)
All accounts, accounts receivable, contract rights, general intangibles related to or arising from any account, debit balances,
note, documents, chattel paper, instruments, acceptances, drafts or other forms of obligations and receivables of the Maker arising
from the sale or lease of inventory or rendition of services by the Maker, or on behalf of the Maker, in the ordinary course of
its business or otherwise (all of the foregoing being herein collectively called “Accounts”), whether or not
the same are listed on any schedules, assignments or reports furnished to the Holder from time to time, whether such Accounts are
now existing or are created at any time hereafter, and all proceeds therefrom including without limitation, proceeds of insurance
thereon and all guaranties, securities, and liens which the Maker may hold for the payment of any Accounts, including without limitation,
all rights of stoppage in transit, replevin and reclamation and all other rights and remedies of unpaid vendor or lienor, and any
liens held by the Maker as a mechanic, contractor, subcontractor, processor, materialman, machinist, manufacturer, artisan, or
otherwise.

 

(ii)
All documents, instruments, documents of title, policies and certificates of insurance, guaranties, securities, chattel
paper, deposits, proceeds of insurance, cash, liens or other property relating to Accounts and owned by the Maker or in which the
Maker has an interest, which are now or may hereafter be in the possession of the Maker or as to which the Maker may now or hereafter
control possession by documents of title or otherwise.

 

(iii)
All books records, customer lists, supplier lists, ledgers, evidences of shipping invoices, purchase orders, sales orders,
computer records, lists, software, programs, and all other such evidences of the Maker’s business records related to the
Accounts, including all cabinets, drawers, etc. that may hold same, all whether now existing or hereafter arising or acquired.

 

(iv)
All of the Maker’s tangible property of whatever nature or description, whether real or personal, now or hereafter
used, owned, held or leases, including without limitation all furniture, fixtures, equipment, inventory and supplies.

 

(v)
All of the Maker’s intangible property of whatever nature or description, including without limitation, all intellectual
property, trade names, trademarks, service marks, computer programs (including source code and object code), patents and copyrights
now owned or hereafter acquired and, specifically including, without limitation, the sublicense granted to the Maker from Armacor
Victory Ventures, LLC pursuant to that certain Exclusive Sublicense Agreement, dated August 21, 2017.

 

(vi)
All renewals, substitutions, replacements, additions, accessions, proceeds, and products of any and all the foregoing.

 

The Maker’s
grant of such security interests to the Holder shall secure the payment and performance of the indebtedness, obligations and liabilities
of the Maker to the Holder of every kind and description, direct and indirect, absolute and contingent, due or to become due, now
existing or hereafter arising, that relate to this Note and the rights and remedies created hereunder, and all legal and other
professional fees incurred in connection with any of the foregoing. The security interest granted to the Holder hereunder shall
be prior to all other interests in the Collateral except as otherwise specified in the Intercreditor Agreement.

 

Holder
acknowledges that the security interests in all Collateral other than the Second Priority Assets are pari passu with the
security interests in such collateral previously granted by Maker to VPEG I, and that the security interests in the Second Priority
Assets which will result at closing of the PTHS Acquisition are second priority to the first priority security interests granted
by Maker and PTHS to Matheson in connection with the PTHS Acquisition.

 

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(b)
The Maker hereby agrees that the Holder shall have all the rights and remedies of a secured party under the Uniform Commercial
Code as in effect from time to time in the State of Texas. The Maker agrees that at any time, and from time to time, at the request
of the Holder, the Maker shall execute and deliver (or cause to be executed and delivered) any and all such further instruments
and/or documents (including without limitation, UCC-1 financing statements) as the Holder may consider reasonably necessary or
desirable in order to effectuate, complete, perfect or preserve and maintain the lien created hereby. Upon any failure by the Maker
to do so, the Holder may make, execute, record, file, re-record or refile any and all such instruments and documents for and in
the name of the Maker; the Maker hereby irrevocably appoints the Holder as the agent and attorney-in-fact of the Maker to do so;
and the Maker shall reimburse the Holder, on demand, for all costs and expenses incurred by the Holder in connection therewith,
such amount being added to the indebtedness arising under the Note.

 

(c)
The security interest created hereunder shall terminate upon the payment in full by the Maker to the Holder of any and all
indebtedness, obligations and liabilities arising from, or in any way related to, the Note.

 

(d)
Events of Default; Acceleration of Maturity. If an Event of Default shall have occurred and be continuing (whatever
the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation of any governmental authority), then, in addition
to the remedies provided for elsewhere in this Note and without limitation thereof, at the option of the Holder exercised by written
notice to the Maker, the Holder may (A) foreclose the liens and security interests created under this Note or under any other agreement
relating to the Collateral, by any available judicial process, (B) enter any premises where any of the Collateral may be located
for the purpose of taking possession or removing the same, and (C) sell, assign, lease or otherwise dispose of the Collateral or
any part thereof, either at public or private sale or at any broker’s board, in lots or in bulk, for cash, on credit or otherwise,
with or without representations or warranties, and upon such terms as shall be acceptable to the Holder, all at the sole option
of the Holder and as the Holder, in its sole discretion, may deem advisable and to the extent permitted by law, the Holder may
bid or become a purchaser at any such sale, and the Holder shall have the right, at its option, to apply or be credited with the
amount of all or any part of the obligations owing by the Maker to the Holder under this Note, against the purchase price bid by
the Holder at any such sale. The net cash proceeds resulting from the collection, liquidation, sale, lease or other disposition
of the Collateral (including, without limitation a sale where the Holder is the purchaser) shall be applied first to the expenses
(including reasonable attorneys’ and other professional fees) of retaking, holding, storing, processing and preparing the
Collateral for sale, selling, collecting, liquidating and the like, and then to the satisfaction of all such obligations, application
as to particular obligations or against principal or any interest to be in the sole discretion of the Holder. The Holder shall
give the Maker at least five (5) Business Days prior written notice of the time and place of any public sale of Collateral.

 

(e)
Suits for Enforcement. In case any one or more of the Events of Default shall have occurred and be continuing, the
Holder may proceed to protect and enforce rights of the Holder either by suit in equity or by action at law, or both, whether for
the specific performance of any covenant or agreement in this Note or in aid of the exercise of any power granted in this Note,
including without limitation, possession or foreclosure on the Collateral securing the Note, or the Holder may proceed to enforce
the payment of the Note or to enforce any other legal or equitable right of the Holder.

 

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(f)
Remedies Cumulative. No remedy herein conferred upon the Holder is intended to be exclusive of any other remedy,
and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise.

 

(g)
Remedies Not Waived. No course of dealing between the Maker and the Holder and no delay in exercising any rights
hereunder shall operate as a waiver of any rights of the Holder.

 

(h)
Notice of Action of Claimed Defaults. If a holder of other obligations of the Maker shall give any notice of a claimed
default or event of default (as those terms may be defined in the relevant documentation) or shall take any other action with respect
to a claimed default or event of default, immediately upon obtaining knowledge thereof, the Maker shall give the Holder written
notice specifying such action and the nature and status of the claimed default or event of default.

 

		5.	Conversion

 

(a)
Generally. The Holder shall have the right, exercisable at any time from and after the Maturity Date and prior to
payment in full of the Principal Amount, to convert all or any portion of the Principal Amount then outstanding, plus all accrued
but unpaid interest hereunder, into shares of the Maker’s common stock, par value $0.001 per share (the “Common
Stock”) at a conversion price (the “Conversion Price”) equal to $0.75 per share or, such lower price
as shares of Common Stock are sold to investors in the ongoing $5 million private placement contemplated by that certain private
placement memorandum, dated May 29, 2018, as supplemented, a copy of which has been delivered to the Holder (the “Private
Placement”), subject to adjustment in accordance with Section 5(d) herein (the Common Stock underlying the Note
being referred to herein as the “Shares”). If the Holder exercises its right to convert the Note into Shares
pursuant to this Section 5, the Maker shall issue to the Holder on the date of such conversion a warrant (the “Warrant”)
to purchase a number of shares of Common Stock equal to the number of Shares issuable upon such conversion of the Note, the terms
of which shall be mutually agreeable to the parties; provided that the warrant shall have a five (5) year term and the exercise
price shall be $0.75 per share (or such lower exercise price per share of Common Stock as may be afforded to investors in the Private
Placement) with the ability of the Holder to exercise the warrant on a cashless basis.

 

(b)
Mechanics of Conversion. The conversion of this Note shall be conducted in the following manner: upon any conversion
of any portion of the outstanding Principal Amount of this Note, plus all accrued but unpaid Interest thereon: (i) the Holder shall
deliver a completed and executed Notice of Conversion attached hereto as Exhibit A and, if such conversion is for
the entire outstanding Principal Amount due under this Note surrender and deliver this Note, duly endorsed, to the Maker’s
office or such other address which the Maker shall designate against delivery of the certificates representing the Shares to be
delivered; (ii) the Maker shall, within three (3) business days of receipt of the Notice of Conversion cause the Maker’s
transfer agent to issue such required number of Shares as set forth in the Conversion Notice. The Holder shall not be required
to physically surrender this Note to the Maker until all of the Principal Amount and accrued and unpaid interest under this Note
have been converted into Shares or been paid in full, in which case, the Holder shall surrender this Note to the Maker for cancellation
within three (3) business days of the date the final Notice of Conversion is delivered to the Maker. Partial conversions of this
Note shall have the effect of lowering the outstanding Principal Amount due hereunder. The Holder and the Maker shall maintain
records showing the number of Shares purchased and the date of such purchases. In the event of any dispute or discrepancy, the
records of the Maker shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance
of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, the Principal Amount due hereunder at
any given time may be less than the amount stated on the face hereof.

 

    6

     

    

 

(c)
Reservation of Common Stock. The Maker covenants that during the period the conversion right exists, the Maker will
reserve from its authorized and unissued Common Stock a sufficient number of shares of Common Stock, free from preemptive rights,
to provide for the issuance of Shares upon the full conversion of this Note and exercise of the Warrant. In addition, if the Maker
shall issue any securities or make any change to its capital structure which would change the number of Shares into which the Note
shall be convertible at the then current Conversion Price, the Maker shall at the same time make proper provision so that thereafter
there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion
of the outstanding Note and exercise of the Warrant.

 

(d)
Adjustments to Conversion Price.

 

(i)
Adjustments for Stock Splits and Combinations and Stock Dividends. If the Maker shall at any time or from time to
time after the date hereof, effect a stock split or combination of the outstanding Common Stock or pay a stock dividend in shares
of Common Stock, then the Conversion Price shall be proportionately adjusted. Any adjustments under this Section 5(d)(i)
shall be effective at the close of business on the date the stock split or combination becomes effective or the date of payment
of the stock dividend, as applicable.

 

(ii)
Merger Sale, Reclassification, etc. In case of any (A) consolidation or merger (including a merger in which the Maker
is the surviving entity), (B) sale or other disposition of all or substantially all of the Maker’s assets or distribution
of property to shareholders (other than distributions payable out of earnings or retained earnings), or reclassification, change
or conversion of the outstanding securities of the Maker or of any reorganization of the Maker (or any other corporation the stock
or securities of which are at the time receivable upon the conversion of this Note) or any similar corporate reorganization on
or after the date hereof, then and in each such case the Holder of this Note, upon the conversion hereof at any time thereafter
shall be entitled to receive, in lieu of the stock or other securities and property receivable upon the conversion hereof prior
to such consolidation, merger, sale or other disposition, reclassification, change, conversion or reorganization, the stock or
other securities or property to which such Holder would have been entitled upon such consummation if such Holder had converted
this Note immediately prior thereto.

 

(e)
Elimination of Fractional Interests. No fractional shares of Common Stock shall be issued upon conversion of this
Note, nor shall the Maker be required to pay cash in lieu of fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated and that all issuances of Common Stock shall be rounded up to the nearest whole share.

 

    7

     

    

 

		6.	Legal Rate of Interest

 

Nothing
herein contained shall be construed or so operate as to require payment of interest at a rate greater than the highest permitted
rate under applicable law, or to make any payment or to do any act contrary to applicable law. To this end, if during the course
of any litigation involving the enforceability of the obligations under this Note, a court having jurisdiction of the subject matter
or of the parties to said litigation shall determine that either the default interest rate as set forth herein, or the effect of
said rate in relation to the particular circumstances of default resulting in said litigation, are separately or collectively usurious,
then the interest rate set forth herein shall be reduced, or the operation and effect thereof ameliorated, to achieve the highest
interest rate or charge which shall not be usurious.

 

		7.	Costs of Collection

 

The Maker
agrees to pay to the Holder, in addition to the amounts due hereunder, all costs and expenses incurred by the Holder to collect
any and all sums due under this Note, including the Holder’s attorneys’ fees, regardless of whether any action or proceeding
is commenced. Further, the Maker agrees to pay all applicable documentary stamp taxes and intangible taxes applicable to this Note.

 

		8.	Binding Nature; Assignment

 

This Note
shall bind the Maker and its principals, receivers, administrators, successors and assigns, and shall inure to the benefit of the
Holder and principals, receivers, administrators, successors and assigns. This Note and the obligations hereunder may not be assigned
by the Maker or assumed by another party without the prior specific written consent of the Holder. This Note and the entitlements
hereunder may be assigned by the Holder without the consent of the Maker.

 

		9.	Waivers by Maker

 

The Maker hereby waives demand,
presentment for payment, notice of protest, and notice of dishonor or nonpayment of this Note.

 

		10.	Notice

 

Any claim,
notice, request, instruction or demand required to be given or elected to be given, in connection with this Note shall be in writing
and sent via personal delivery or overnight courier or via email with confirmation of receipt, to the Maker or the Holder at the
addresses set forth in the Loan Agreement, or such other address to be designated in writing by Maker or Holder.

 

		11.	Jury Trial Waiver

 

The Maker
and the Holder each hereby knowingly and voluntarily waive trial by jury and the right thereto in any action or proceeding of any
kind, arising under or out of, or otherwise related to or connected with this Note.

 

    8

     

    

 

		12.	Governing Law; Mediation

 

This Agreement shall be
governed by and construed under the laws of the State of Texas without regard to the choice of law principles thereof.

 

		13.	Complete and Voluntary Agreement

 

This Note, along with the Loan
Documents and the Intercreditor Agreement, constitutes the entire understanding of the parties on the subjects covered. The Maker
expressly acknowledges and warrants that he/she/it has read and fully understands the terms of this Note; that the Maker has had
the opportunity to seek legal counsel of his/her/its own choosing and to have the terms of this Note fully explained to him/her/it;
that the Holder has advised the Maker to consult with an attorney prior to signing this Note; that the Maker is not executing this
Note in reliance on any promises, representations or inducements other than those contained herein; and that the Maker is executing
this Note voluntarily, free of any duress or coercion. If there is any ambiguity between the terms and provisions of this Note
and the Loan Documents, then the terms and provisions of the Note shall prevail and control such ambiguity.

 

		14.	Miscellaneous

 

(a) The
Maker shall, upon the Holder’s written request, promptly make, execute and deliver to the Holder any and all
further documents or instruments the Holder may consider necessary or desirable in order to effectuate, complete or perfect
the Maker’s obligations under this Note.

 

(b) If
any provision of this Note is held to be unenforceable for any reason, such provision shall be adjusted rather than
voided, if possible, in order to achieve the intent of the Maker and the Holder to the fullest extent possible. In any event,
all other provisions of this Note shall be deemed valid and enforceable to the fullest extent possible.

 

		15.	Waiver of Trial by Jury

 

THE
MAKER AND THE HOLDER (BY ACCEPTANCE OF THIS INSTRUMENT) HEREBY KNOWINGLY, IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS NOTE, OR ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF ANY PARTY HERETO.

 

[SIGNATURES FOLLOW]

 

    9

     

    

 

IN WITNESS WHEREOF,
the Maker has signed this Note as of the date first set forth above.

 

	MAKER:	 
	 	 
	Victory Oilfield Tech, Inc.	 
	 	 	 
	By:	/s/ Kenneth Hill	 
	Name: 	Kenneth Hill	 
	Title: 	Chief Executive Officer	 

 

     

     

    

 

EXHIBIT A

 

VICTORY OILFIELD TECH, INC.

NOTE CONVERSION NOTICE

 

Reference
is made to the Secured Convertible Promissory Note in the original principal amount of $375,000 of Victory Oilfield Tech, Inc.,
a Nevada corporation f/k/a Victory Energy Corporation (the “Maker”), issued to the undersigned (the “Note”).

 

In accordance
with and pursuant to the terms of the Note, the undersigned hereby elects to convert the entire outstanding principal amount due
and owing under the Note, together with all accrued but unpaid Interest thereon, into shares of Common Stock, $0.001 par value
per share, of the Maker (the “Common Stock”), by tendering the original of the Note for cancellation.

 

Please confirm the following information:

 

Principal Amount Outstanding

under the Note: ______________________________

 

[Accrued but unpaid Interest

under the Note: _____________________________]

 

Conversion Price: ____________________________

 

Number of Shares to be issued: __________________________

 

Please issue the Shares into which the Note
is being converted in the following name and to the following address:

 

	Issue to:	 	 
	 	 	 
	Address:	 	 
	 	 	 
	 	 	 

 

 

	Name of Holder:	 	 

 

	Signature of Holder:	 	 

 

	Title:	 	 
	 	 	 
	Date:

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