Document:

Exhibit 10.21

 

PROMISSORY
NOTE

 

	
        Principal

        $650,000.00
	
        Loan Date

        04-02-2012
	
        Maturity

        04-01-2022
	Loan No	Call / Coll	Account	
        Officer

        CB
	Initials
	References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.

Any item above containing “***” has been omitted due to text length limitations.

 

	Borrower:	 	Superior Drilling Products
    of California, llc	 	Lender:	 	US Employment Development
    Lending Center, LLC
	 	 	2221 North 3250 West	 	 	 	1 World Trade Center, Suite 1870
	 	 	Vernal, UT 84078	 	 	 	Long Beach, CA 90831

 

 

	Principal Amount: $650,000.00	Date of Note: April 2, 2012

 

PROMISE
TO PAY. Superior Drilling Products of California, LLC (“Borrower”) promises to pay to US Employment Development
Lending Center, LLC (“Lender”), or order, in lawful money of the United States of America, the principal
amount of Six Hundred Fifty Thousand & 00/100 Dollars ($650,000.00), together with Interest on the unpaid principal balance
from April 2, 2012, until paid in full.

 

PAYMENT.
Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan in 119 regular payments of $4,022.15
each and one irregular last payment estimated at $493,690.04. Borrower’s first payment is due May 1, 2012, and all
subsequent payments are due on the same day of each month after that. Borrower’s final payment will be due on April 1, 2022,
and will be for all principal and all accrued interest not yet paid. Payments include principal and interest. Unless otherwise
agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to
any late charges; and then to any unpaid collection costs. Borrower will pay Lender at Lender’s address shown above or at
such other place as Lender may designate in writing.

 

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 the London Interbank Offered Rate Swaps (LIBOR SWAPS) for maturities of Five Years as published in the Wall Street
Journal (the “Index”). The Index is not necessarily the lowest rate charged by Lender on its loans. If the index
becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower. Lender will
tell Borrower the current Index rate upon Borrower’s request. The interest rate change will not occur more often than each
Five Years. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 1.241% per annum.
Interest on the unpaid principal balance of this Note will be calculated as described in the “INTEREST CALCULATION METHOD”
paragraph using a rate of 3.500 percentage points over the Index, adjusted if necessary for any minimum and maximum rate limitations
described below, resulting in an initial rate of 5.500%. NOTICE: Under no circumstances will the interest rate on this Note be
less than 5.500% per annum or 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.

 

INTEREST
CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the 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. All interest payable under this Note is computed using this method.

 

PREPAYMENT;
MINIMUM INTEREST CHARGE. In any event, even upon full prepayment of this Note, Borrower understands that Lender
is entitled to a minimum interest charge of $50.00. 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, early payments will reduce the principal balance due and may result in Borrower’s
making fewer payments. Borrower agrees not to send Lender payments marked “paid in full”,
“without recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing
any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender.
All written communications concerning disputed amounts, including any check or other payment instrument that indicates that
the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or
limitations or as full satisfaction of a disputed amount must be mailed or delivered to: US Employment Development Lending
Center, LLC, 1 World Trade Center, Suite 1870 Long Beach, CA 90831.

 

LATE
CHARGE. If a payment is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled
payment.

 

INTEREST
AFTER DEFAULT. Upon default, the interest rate on this Note shall, if permitted under applicable law, Immediately increase
by adding an additional 5.000 percentage point margin (“Default Rate Margin”). The Default Rate Margin shall also apply
to each succeeding interest rate change that would have applied had there been no default.

 

DEFAULT.
Each of the following shall constitute an event of default (“Event of Default”) under this Note:

 

Payment
Default. Borrower fails to make any payment when due under this Note.

 

Other
Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note
or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any
other agreement between Lender and Borrower.

 

Environmental
Default. Failure of any party to comply with or perform when due any term, obligation, covenant or condition contained in any
environmental agreement executed in connection with any loan.

 

False
Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf
under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.

 

Death
or Insolvency. The dissolution of Borrower (regardless of whether election to continue is made), any member withdraws from
Borrower, or any other termination of Borrower’s existence as a going business or the death of any member, the insolvency
of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors,
any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency jaws by or against Borrower.

 

Creditor
or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the
loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event
of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which
is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, In an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

 

    	 

    	 

    

 

	 	PROMISSORY NOTE	 
	 	(Continued)	Page 2

 

 

Events
Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced
by this Note.

 

Adverse
Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment
or performance of this Note is impaired.

 

Insecurity.
Lender in good faith believes itself insecure.

 

FAILURE
OF THE DEBENTURE TO FUND. Notwithstanding anything to the contrary herein, in the event that the Debenture as defined in the
SBA 504 Loan Program does not close or otherwise fund pursuant to the terms of the SBA Authorization within six (6) months of the
Closing Date, then Lender shall, at its option, have the right to declare the entire principal amount of the Loan plus any accrued
interest due and payable In full upon thirty (30) days written notice to Borrower.

 

LENDER’S
RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount.

 

ATTORNEYS’
FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender
that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal
expenses, whether or not there is a lawsuit, including attorneys’ fees, expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), and appeals. Borrower also will pay any court costs, in addition to all
other sums provided by law.

 

GOVERNING
LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws
of the State of California without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State
of California.

 

CHOICE
OF VENUE. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of
Los Angeles County County, State of California.

 

DISHONORED
ITEM FEE. Borrower will pay a fee to Lender of $25.00 if Borrower makes a payment on Borrower’s loan and the check or
preauthorized charge with which Borrower pays is later dishonored.

 

COLLATERAL.
Borrower acknowledges this Note is secured by the following collateral described in the security instruments listed herein:

 

(A)  a
Deed of Trust dated April 2, 2012, to a trustee in favor of Lender on real property located in Kern County, State of California.
That agreement contains the following due on sate provision: Lender may, at Lender’s option, declare Immediately due and
payable all sums secured by the Deed of Trust upon the sale or transfer, without Lender’s prior written consent, of all or
any part of the Real Property, or any interest in the Real Property. A “sale or transfer” means the conveyance of Real
Property or any right, title or interest in the Real Property; whether legal, beneficial or equitable; whether voluntary or involuntary;
whether by outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater
than three (3) years, lease-option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust
holding title to the Real Property, or by any other method of conveyance of an interest in the Real Property. If any Borrower is
a corporation, partnership or limited liability company, transfer also includes any change in ownership of more than twenty-five
percent (25%) of the voting stock, partnership interests or limited liability company interests, as the case may be, of such Borrower.
However, this option shall not be exercised by Lender if such exercise is prohibited by applicable law.

 

(B)  an
Assignment of All Rents to Lender on real property located in Kern County, State of California.

 

(C)  equipment,
fixtures and mineral, oil and gas described in a Commercial Security Agreement dated April 2, 2012.

 

SUCCESSOR
INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives,
successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

 

GENERAL
PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay
or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive any applicable statute of limitations,
presentment, demand for payment, 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, fail 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. All 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.

 

PRIOR
TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
BORROWER AGREES TO THE TERMS OF THE NOTE.

 

BORROWER
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

 

BORROWER:

 

SUPERIOR
DRILLING PRODUCTS OF CALIFORNIA, LLC

 

	By: 	/s/ Annette D. Meier	 
	 	Annette D. Meier, Manager of Superior Drilling 
	 	Products of California, LLC

 

LASER
PRO Lending, Ver. 5.60.00.005 Copr. Harland Financial Solutions, Inc. 1997, 2012. All Rights Reserved. – CA C:\HARLANDLP\CFI\LPL\G14.FC
TR-112 PR-14Exhibit 10.22

 

RECORDATION
REQUESTED BY:

US Employment
Development Lending Center, LLC

1 World Trade
Center, Suite 1870

Long Beach, CA
90831

 

WHEN
RECORDED MAIL TO:

US Employment
Development Lending Center, LLC

1 World Trade
Center, Suite 1870

Long Beach, CA
90831

 

SEND
TAX NOTICES TO:

US Employment
Development Lending Center, LLC

1 World Trade
Center, Suite 1870

	Long
    Beach, CA 90831	FOR
    RECORDER’S USE ONLY

 

ASSIGNMENT
OF RENTS

 

THIS
ASSIGNMENT OF RENTS dated April 2, 2012, Is made and executed between Superior Drilling Products of California, LLC, a California
Limited Liability Company, whose address is 2221 North 3250 West, Vernal, UT 84078; (referred to below as “Grantor”)
and US Employment Development Lending Center, LLC, whose address is 1 World Trade Center, Suite 1870, Long Beach, CA 90831 (referred
to below as “Lender”).

 

ASSIGNMENT.
For valuable consideration, Grantor hereby assigns, grants a continuing security Interest in, and conveys to Lender all of Grantor’s
right, title, and interest in and to the Rents from the following described Property located in Kern County, State of California:

 

PARCEL
2 OF PARCEL MAP NO. 8961 IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, AS PER MAP RECORDED MAY 9, 1991,
IN BOOK 42 OF PARCEL MAPS, PAGE 25 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

 

EXCEPTING
THEREFROM 1/2 OF ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES AS CONVEYED TO GERI BLOEMER COOPER IN DEED RECORDED OCTOBER
11, 1989, IN BOOK 6301, PAGE 990 OF OFFICIAL RECORDS.

 

ALSO
EXCEPEPTING THEREFROM ALL REMAINING OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND AS RESERVED
BY JACK M. HOOD AND SHARON B. HOOD, AS TRUSTEES UNDER THE JACK M. HOOD AND SHARON B. HOOD LIVING TRUST DATED DECEMBER 27, 1991,
AS TO AN UNDIVIDED 1/3 INTEREST; ROBERT A. HOOD AND MARY MARTHA HOOD AS CO-TRUSTEES OF THE ROBERT A. AND MARY MARTHA HOOD LIVING
TRUST DATED JULY 2, 1992, AS TO AN UNDIVIDED 1/3 INTEREST AND HAZEL MARY HOBBA HENDERSON, TRUSTEE OF THE HAZEL MARY HOBBA
HENDERSON REVOCABLE TRUST DATED SEPTEMBER 18, 1987, AS TO AN UNDIVIDED 1/3 INTEREST IN DEED RECORDED MARCH 7, 2000, AS INSTRUMENT
NO. 02-26223 OF OFFICIAL RECORDS.

 

The
Property or its address is commonly known as 1140 Black Gold Road, Bakersfield, CA 93308. The Assessor’s Parcel Number for
the Property is 481-200-22-00-9.

 

This
is an absolute assignment of Rents made in connection with an obligation secured by property pursuant to California Civil Code
section 2938.

 

THIS
ASSIGNMENT IS GIVEN TO SECURE (1) PAYMENT OF THE INDEBTEDNESS AND (2) PERFORMANCE OF ANY AND ALL OBLIGATIONS OF GRANTOR UNDER
THE NOTE, THIS ASSIGNMENT, AND THE RELATED DOCUMENTS. THIS ASSIGNMENT IS GIVEN AND ACCEPTED ON THE FOLLOWING TERMS:

 

PAYMENT
AND PERFORMANCE. Except as otherwise provided in this Assignment or any Related Documents, Grantor shall pay to Lender all
amounts secured by this Assignment as they become due, and shall strictly perform all of Grantor’s obligations under this
Assignment. Unless and until Lender exercises its right to collect the Rents as provided below and so long as there is no default
under this Assignment, Grantor may remain in possession and control of and operate and manage the Property and collect the Rents,
provided that the granting of the right to collect the Rents shall not constitute Lender’s consent to the use of cash collateral
in a bankruptcy proceeding.

 

GRANTOR’S
REPRESENTATIONS AND WARRANTIES. Grantor warrants that:

 

Ownership.
Grantor is entitled to receive the Rents free and clear of all rights, loans, liens, encumbrances, and claims except as disclosed
to and accepted by Lender in writing.

 

Right
to Assign. Grantor has the full right, power and authority to enter into this Assignment and to assign and convey the Rents
to Lender

 

    	 

    	 

    

 

	 	ASSIGNMENT
    OF RENTS	 
	 	(Continued)	Page 2
	 	 	 

 

No
Prior Assignment. Grantor has not previously assigned or conveyed the Rents to any other person by any instrument now in force.

 

No
Further Transfer. Grantor will not sell, assign, encumber, or otherwise dispose of any of Grantor’s rights in the Rents
except as provided in this Assignment.

 

LENDER’S
RIGHT TO RECEIVE AND COLLECT RENTS. Lender shall have the right at any time, and even though no default shall have occurred
under this Assignment, to collect and receive the Rents, For this purpose, Lender is hereby given and granted the following rights,
powers and authority:

 

Notice
to Tenants. Lender may send notices to any and all tenants of the Property advising them of this Assignment and directing all
Rents to be paid directly to Lender or Lender’s agent.

 

Enter
the Property. Lender may enter upon and take possession of the Property; demand, collect and receive from the tenants or from
any other persons liable therefor, all of the Rents; institute and carry on all legal proceedings necessary for the protection
of the Property, including such proceedings as may be necessary to recover possession of the Property; collect the Rents and remove
any tenant or tenants or other persons from the Property.

 

Maintain
the Property. Lender may enter upon the Property to maintain the Property and keep the same in repair; to pay the costs thereof
and of all services of all employees, including their equipment, and of all continuing costs and expenses of maintaining the Property
in proper repair and condition, and also to pay all taxes, assessments and water utilities, and the premiums on fire and other
insurance effected by Lender on the Property.

 

Compliance
with Laws. Lender may do any and all things to execute and comply with the laws of the State of California and also all other
laws, rules, orders, ordinances and requirements of all other governmental agencies affecting the Property.

 

Lease
the Property. Lender may rent or lease the whole or any part of the Property for such term or terms and on such conditions
as Lender may deem appropriate.

 

Employ
Agents. Lender may engage such agent or agents as Lender may deem appropriate, either in Lender’s name or in Grantor’s
name, to rent and manage the Property, including the collection and application of Rents.

 

Other
Acts. Lender may do all such other things and acts with respect to the Property as Lender may deem appropriate and may act
exclusively and solely in the place and stead of Grantor and to have all of the powers of Grantor for the purposes stated above.

 

No
Requirement to Act. Lender shall not be required to do any of the foregoing acts or things, and the fact that Lender shall
have performed one or more of the foregoing acts or things shall not require Lender to do any other specific act or thing.

 

APPLICATION
OF RENTS. All costs and expenses incurred by Lender in connection with the Property shall be for Grantor’s account and
Lender may pay such costs and expenses from the Rents. Lender, in its sole discretion, shall determine the application of any and
all Rents received by it; however, any such Rents received by Lender which are not applied to such costs and expenses shall be
applied to the Indebtedness. All expenditures made by Lender under this Assignment and not reimbursed from the Rents shall become
a part of the Indebtedness secured by this Assignment, and shall be payable on demand, with interest at the Note rate from date
of expenditure until paid.

 

FULL
PERFORMANCE. If Grantor pays all of the Indebtedness when due and otherwise performs all the obligations imposed upon Grantor
under this Assignment, the Note, and the Related Documents, Lender shall execute and deliver to Grantor a suitable satisfaction
of this Assignment and suitable statements of termination of any financing statement on file evidencing Lender’s security
interest in the Rents and the Property. Any termination fee required by law shall be paid by Grantor, if permitted by applicable
law.

 

LENDER’S
EXPENDITURES. if any action or proceeding is commenced that would materially affect Lender’s interest in the Property
or if Grantor fails to comply with any provision of this Assignment or any Related Documents, including but not limited to Grantor’s
failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Assignment or any Related Documents,
Lender on Grantor’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but
not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or
placed on the Rents or the Property and paying all costs for insuring, maintaining and preserving the Property. All such expenditures
incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred
or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender’s
option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any
installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of
the Note; or (C) be treated as a balloon payment which will be due and payable at the Note’s maturity. The Assignment also
will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled
upon Default.

 

DEFAULT.
Each of the following, at Lender’s option, shall constitute an Event of Default under this Assignment:

 

Payment
Default. Grantor fails to make any payment when due under the Indebtedness.

 

Other
Defaults. Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Assignment
or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any
other agreement between Lender and Grantor.

 

Default
on Other Payments. Failure of Grantor within the time required by this Assignment to make any payment for taxes or insurance,
or any other payment necessary to prevent filing of or to effect discharge of any lien.

 

Environmental
Default. Failure of any party to comply with or perform when due any term, obligation, covenant or condition contained in any
environmental agreement executed in connection with the Property.

 

False
Statements. Any warranty, representation or statement made or furnished to Lender by Grantor or on Grantor’s behalf under
this Assignment or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.

 

    	 

    	 

    

 

	 	ASSIGNMENT
    OF RENTS	 
	 	(Continued)	Page 3
	 	 	 

 

Defective
Collateralization. This Assignment or any of the Related Documents ceases to be in full force and effect (including failure
of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.

 

Death
or Insolvency. The dissolution of Grantor’s (regardless of whether election to continue is made), any member withdraws
from the limited liability company, or any other termination of Grantor’s existence as a going business or the death of any
member, the insolvency of Grantor, the appointment of a receiver for any part of Grantor’s property, any assignment for
the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency
laws by or against Grantor.

 

Creditor
or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by Judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any governmental agency against the Rents or any property securing
the Indebtedness. This includes a garnishment of any of Grantor’s accounts, including deposit accounts, with Lender. However,
this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim
which is the basis of the creditor or forfeiture proceeding and if Grantor gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

 

Property
Damage or Loss. The Property is lost, stolen, substantially damaged, sold, or borrowed against.

 

Events
Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.

 

Adverse
Change. A material adverse change occurs in Grantor’s financial condition, or Lender believes the prospect of payment
or performance of the Indebtedness is impaired.

 

Insecurity.
Lender in good faith believes itself insecure.

 

RIGHTS
AND REMEDIES ON DEFAULT. Upon the “occurrence of any Event of Default and at any time thereafter, Lender
may exercise any one or more of the following rights and remedies, in addition to any other rights or remedies provided
by law:

 

Accelerate
indebtedness. Lender shall have the right at its option without notice to Grantor to declare the entire Indebtedness immediately
due and payable, including any prepayment fee that Grantor would be required to pay.

 

Collect
Rents. Lender shall have the right, without notice to Grantor, to take possession of the Property and collect the Rents, including
amounts past due and unpaid, and apply the net proceeds, over and above Lender’s costs, against the Indebtedness. In furtherance
of this right, Lender shall have all the rights provided for in the Lender’s Right to Receive and Collect Rents Section,
above. If the Rents are collected by Lender, then Grantor irrevocably designates Lender as Grantor’s attorney-in-fact to
endorse instruments received in payment thereof in the name of Grantor and to negotiate the same and collect the proceeds. Payments
by tenants or other users to Lender in response to Lender’s demand shall satisfy the obligations for which the payments are
made, whether or not any proper grounds for the demand existed. Lender may exercise its rights under this subparagraph either in
person, by agent, or through a receiver.

 

Appoint
Receiver. Lender shall have the right to have a receiver, appointed to take possession of all or any part of the Property,
with the power to protect and preserve the Property, to operate the property preceding foreclosure or sale, and to collect the
Rents from the Property and apply the proceeds, over and above the cost of the receivership, against the indebtedness. The receiver
may serve without bond if permitted by law. Lender’s right to the appointment of a receiver shall exist whether or not the
apparent value of the Property exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify a person
from serving as a receiver.

 

Other
Remedies. Lender shall have all other rights and remedies provided in this Assignment or the Note or by law.

 

Election
of Remedies. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Grantor under this Assignment, after Grantor’s failure to perform,
shall not affect Lender’s right to declare a default and exercise its remedies.

 

Attorneys’
Fees; Expenses. If Lender institutes any suit or action to enforce any of the terms of this Assignment, Lender shall be
entitled to recover such sum as the court may adjudge reasonable as attorneys’ fees at trial and upon any appeal.
Whether or not any court action is involved, and to the extent not prohibited by law, all reasonable expenses Lender incurs
that in Lender’s opinion are necessary at any time for the protection of its interest or the enforcement of its rights
shall become a part of the Indebtedness payable on demand and shall bear interest at the Note rate from the date of the
expenditure until repaid. Expenses covered by this paragraph include, without limitation, however subject to any limits under
applicable law, Lender’s attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit,
including attorneys’ fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection services, the cost of searching records, obtaining
title reports (including foreclosure reports), surveyors’ reports, and appraisal fees, title insurance, and fees for
the Trustee, to the extent permitted by applicable law. Grantor also will pay any court costs, in addition to all other sums
provided by law.

 

MISCELLANEOUS
PROVISIONS. The following miscellaneous provisions are a part of this Assignment:

 

Amendments.
This Assignment, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Assignment. No alteration of or amendment to this Assignment shall be effective unless given in writing
and signed by the party or parties sought to be charged or bound by the alteration or amendment.

 

Caption
Headings. Caption headings in this Assignment are for convenience purposes only and are not to be used to interpret or define
the provisions of this Assignment.

 

Governing
Law. This Assignment will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the
laws of the State of California without regard to its conflicts of law provisions. This Assignment has been accepted by Lender
in the State of California.

 

    	 

    	 

    

 

	 	ASSIGNMENT
    OF RENTS	 
	 	(Continued)	Page 4
	 	 	 

 

Choice
of Venue. If there is a lawsuit, Grantor agrees upon Lender’s request to submit to the jurisdiction of the courts of
Los Angeles County County, State of California.

 

Merger.
There shall be no merger of the interest or estate created by this assignment with any other interest or estate in the Property
at any time held by or for the benefit of Lender in any capacity, without the written consent of Lender.

 

Interpretation.
(1) In all cases where there is more than one Borrower or Grantor, then all words used in this Assignment in the singular shall
be deemed to have been used in the plural where the context and construction so require, (2) If more than one person signs this
Assignment as “Grantor, “the obligations of each Grantor are joint and several. This means that if Lender brings a
lawsuit, Lender may sue any one or more of the Grantors. If Borrower and Grantor are not the same person, Lender need not sue Borrower
first, and that Borrower need not be joined in any lawsuit. (3) The names given to paragraphs or sections in this Assignment are
for convenience purposes only. They are not to be used to interpret or define the provisions of this Assignment.

 

No
Waiver by Lender. Lender shall not be deemed to have waived any rights under this Assignment unless such waiver is given in
writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such
right or any other right. A waiver by Lender of a provision of this Assignment shall not prejudice or constitute a waiver of Lender’s
right otherwise to demand strict compliance with that provision or, any other provision of this Assignment. No prior waiver by
Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender’s rights or of any
of Grantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this Assignment,
the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.

 

Notices.
Any notice required to be given under this Assignment shall be given in writing, and shall be effective when actually delivered,
when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight
courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid,
directed to the addresses shown near the beginning of this Assignment. Any party may change its address for notices under this Assignment
by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s
address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantor’s current address. Unless otherwise
provided or required by law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice
given to all Grantors.

 

Powers
of Attorney. The various agencies and powers of attorney conveyed on Lender under this Assignment are granted for purposes
of security and may not be revoked by Grantor until such time as the same are renounced by Lender.

 

Severability.
If a court of competent jurisdiction finds any provision of this Assignment to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance.
If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending
provision cannot be so modified, it shall be considered deleted from this Assignment. Unless otherwise required by law, the Illegality,
invalidity, or unenforceability of any provision of this Assignment shall not affect the legality, validity or enforceability of
any other provision of this Assignment.

 

Successors
and Assigns. Subject to any limitations stated in this Assignment on transfer of Grantor’s interest, this Assignment
shall be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Property becomes
vested in a person other than Grantor, Lender, without notice to Grantor,
may deal with Grantor’s successors with reference to this Assignment and the Indebtedness by way of forbearance or
extension without releasing Grantor from the obligations of this Assignment or liability under the Indebtedness.

 

Time
is of the Essence. Time is of the essence in the performance of this Assignment.

 

Waiver
of Right of Redemption. NOTWITHSTANDING ANY OF THE PROVISIONS TO THE CONTRARY CONTAINED IN THIS ASSIGNMENT, GRANTOR HEREBY
WAIVES ANY AND ALL RIGHTS OF REDEMPTION FROM SALE UNDER ANY ORDER OR JUDGMENT OF FORECLOSURE ON GRANTOR’S BEHALF AND ON
BEHALF OF EACH AND EVERY PERSON, EXCEPT JUDGMENT CREDITORS OF GRANTOR, ACQUIRING ANY INTEREST IN OR TITLE TO THE PROPERTY SUBSEQUENT
TO THE DATE OF THIS ASSIGNMENT.

 

DEFINITIONS.
The following capitalized Words and terms shall have the following meanings when used in this Assignment, Unless specifically stated
to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and
terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words
and terms not otherwise defined in this Assignment shall have the meanings attributed to such terms in the Uniform Commercial Code:

 

Assignment.
The word “Assignment” means this ASSIGNMENT OF RENTS, as this ASSIGNMENT OF RENTS may be amended or modified from time
to time, together with all exhibits and schedules attached to this ASSIGNMENT OF RENTS from time to time.

 

Borrower.
The word “Borrower” means Superior Drilling Products of California, LLC.

 

Default.
The word “Default” means the Default set forth in this Assignment in the section titled “Default”.

 

Event
of Default. The words ‘‘Event of Default” mean any of the events of default set forth in this Assignment
in the default section of this Assignment.

 

Grantor.
The word “Grantor” means Superior Drilling Products of California, LLC.

 

Guarantor.
The word “Guarantor” means any guarantor, surety, or accommodation party of any
or all of the Indebtedness.

 

Guaranty.
The word “Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty of
all or part of the Note.

 

Indebtedness.
The word “Indebtedness” means all principal, interest, and other amounts, costs and expenses payable under the Note
or Related Documents, together with all renewals of, extensions of, modifications of, consolidations of and substitutions for the
Note or Related Documents and any amounts expended or advanced by Lender to discharge Grantor’s obligations or expenses incurred
by Lender to enforce Grantor’s obligations under this Assignment, together with interest on such amounts as provided in this
Assignment.

 

    	 

    	 

    

 

	 	ASSIGNMENT
    OF RENTS	 
	 	(Continued)	Page 5
	 	 	 

 

Lender.
The word “Lender” means US Employment Development Lending Center, LLC, its successors and assigns.

 

Note.
The word “Note” means the promissory note dated April 2, 2012, in the original principal amount of $650,000.00
from Grantor to Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of,
and substitutions for the promissory note or agreement.

 

Property.
The word “Property” means all of Grantor’s right, title and interest in and to all the Property as described
in the “Assignment” section of this Assignment.

 

Related
Documents. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, security
agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the Indebtedness; except that the words do not mean any guaranty
or environmental agreement, whether now or hereafter existing, executed in connection with the Indebtedness.

 

Rents.
The word “Rents” means all of Grantor’s present and future rights, title and interest in, to and under any and
all present and future leases, including, without limitation, all rents, revenue, income, issues, royalties, bonuses, accounts
receivable, cash or security deposits, advance rentals, profits and proceeds from the Property, and other payments and benefits
derived or to be derived from such leases of every kind and nature, whether due now or later, including without limitation Grantor’s
right to enforce such leases and to receive and collect payment and proceeds thereunder.

 

THE
UNDERSIGNED ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS ASSIGNMENT, AND NOT PERSONALLY BUT AS AN AUTHORIZED SIGNER, HAS
CAUSED THIS ASSIGNMENT TO BE SIGNED AND EXECUTED ON BEHALF OF GRANTOR ON APRIL 2, 2012.

 

GRANTOR:

 

SUPERIOR
DRILLING PRODUCTS OF CALIFORNIA, LLC

 

	By: 	/s/ Annette D. Meier
	 	Annette D. Meier, Manager of Superior Drilling Products of California, LLC

 

	 
	CERTIFICATE OF ACKNOWLEDGMENT

 

	STATE OF	Utah	)	 
	 	 	     ) SS	 
	COUNTY OF 	Salt Lake	)	 
	 	 	 	 
	On 	April 9, 2012 before me,	 	Rich Mahoney Notary Public
	 	 	(here
    insert name and title of the officer)

 

personally
appeared Annette D. Meier, who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s),
or the entity upon behalf of which the person(s) acted, executed the instrument.

 

I certify
under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

 

	WITNESS my hand and official seal.	 	 
	Signature	 	/s/ Rich Mahoney 	 	

 

LASER PRO Lending, Ver. 5.60.00.005 Copr.
Harland Financial Solutions, Inc. 1997, 2012. All Rights Reserved. - CA

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