Document:

Exhibit 10.1

                  AMENDED, RESTATED AND CONSOLIDATED TERM NOTE

$1,006,000.00                                                    August 31, 2010

     THIS AMENDED,  RESTATED AND CONSOLIDATED TERM NOTE ("Amended,  Restated and
Consolidated  Note") is made and dated as of the 31st of  August,  2010,  by and
between BARON ENERGY, INC., a Nevada Corporation  ("Maker"),  and NEWTON ENERGY,
INC., a California corporation ("Holder").

                                R E C I T A L S:

     A. Maker delivered to American State Bank, a Texas banking association (the
"Bank")  that  certain  Term  Note  dated  as of May 1,  2010,  in the  original
principal  amount of $450,000.00  ("Note 1") and that certain Term Note dated as
of May 1, 2010, in the original  principal amount of $550,000.000  ("Note 2" and
collectively with Note 1, the "Notes").

     B. The Bank, Maker and Holder entered into that certain Assignment of Notes
and Security  Documents (the  "Assignment" and  collectively  with this Amended,
Restated and  Consolidated  Note,  the "Loan  Documents"),  dated as of the date
hereof,  pursuant to which the Bank will assign,  and the Holder will assume the
Notes and the Security Documents (as such term is defined in the Assignment).

     C. The Holder and Maker desire to amend,  restate and consolidate the Notes
into this Amended, Restated and Consolidated Note, as set forth herein.

     In  consideration  of the foregoing and the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:

     1. For value  received,  Maker promises to pay to the order of Holder,  the
sum of ONE MILLION SIX THOUSAND  AND 00/100  DOLLARS  ($1,006,000.00),  together
with interest on the principal amount from time to time  outstanding  hereunder,
from the date of  disbursement  of such  principal in  accordance  with the wire
instructions  provided by Maker to Holder  until  maturity,  at a simple rate of
interest per annum equal to the "BASE RATE",  as defined below,  and in no event
to exceed the "HIGHEST LAWFUL RATE," as defined below.

     2. This Amended, Restated and Consolidated Note is executed pursuant to the
terms of that certain Assignment.  This Amended,  Restated and Consolidated Note
incorporates  by reference the terms of the Assignment.  This Amended,  Restated
and Consolidated Note amends, restates, and supercedes in its entirety the Notes
(as herein  defined).  It is the  intention  of Maker and Holder that while this
Amended,  Restated and  Consolidated  Note amends,  restates and  supercedes the
original Notes, it is not in payment or satisfaction of the original Notes,  but
rather is the substitute of one evidence of debt for another  without any intent
to extinguish the old. Should there be any conflict  between any of the terms of
the original  Notes and the terms of this  Amended,  Restated  and  Consolidated
Note, the terms of this Amended,  Restated and Consolidated  Note shall control.
This Amended, Restated and Consolidated Note is not a novation.
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     3. Notwithstanding the foregoing,  if at any time the Base Rate exceeds the
Highest  Lawful Rate,  the rate of interest to accrue on this Amended,  Restated
and Consolidated Note shall be limited to the Highest Lawful Rate.

     4.  If  at  Maturity  or  final  payment  of  this  Amended,  Restated  and
Consolidated  Note the  total  amount  of  interest  paid or  accrued  under the
foregoing  provisions is less than the total amount of interest which would have
accrued if the Base Rate had at all times been in effect,  then Maker  agrees to
pay to Holder, to the extent permitted by law, an amount equal to the difference
between (a) the lesser of (i) the amount of interest which would have accrued on
this Amended,  Restated and Consolidated  Note if the Highest Lawful Rate had at
all times  been in  effect,  or (ii) the  amount of  interest  which  would have
accrued if the Base Rate had at all times been in effect,  and (b) the amount of
interest  accrued  in  accordance  with the other  provisions  of this  Amended,
Restated and Consolidated Note.

     5. The term "BASE RATE" shall mean  thirteen and one-half  percent  (13.5%)
per annum.

     6. The term  "HIGHEST  LAWFUL  RATE"  shall  mean the  maximum  nonusurious
interest  rate,  if any, that at any time or from time to time may be contracted
for, taken, reserved, charged, collected or received by the Holder in connection
with this Amended,  Restated and Consolidated  Note under laws applicable to the
Holder  which are  presently in effect or, to the extent  allowed by law,  under
applicable  laws  which  may  hereafter  be in effect  and which  allow a higher
maximum nonusurious interest rate than applicable laws now allow.

     7. The principal balance of this Amended,  Restated and Consolidated  Note,
together with all accrued and unpaid interest thereon,  shall be due and payable
on AUGUST 25, 2015 (the  "MATURITY  DATE").  Holder shall be under no obligation
whatsoever  to  extend  the  Maturity   Date  of  this  Amended,   Restated  and
Consolidated Note.

     8. For the period beginning on August 25, 2010,  through the Maturity Date,
specifically August 25, 2015, interest shall accrue on the outstanding principal
of this  Amended,  Restated  and  Consolidated  Note at the Base  Rate as herein
defined.   Payments  of  interest   only  in  the  amount  of  ELEVEN   THOUSAND
THREE-HUNDRED SEVENTEEN AND 50/100 DOLLARS ($11,317.50) shall be due and payable
on or before the first 25th day of each and every month,  with the first of such
payments to be made on or before September 25, 2010, and subsequent  payments to
be made on the 25th day of each month  thereafter.  For the period  beginning on
August  25,  2011,  through  the period  ending  August 25,  2015,  payments  of
principal and interest in the amount of TWENTY SEVEN THOUSAND TWO HUNDRED THIRTY
EIGHT AND 78/100 DOLLARS  ($27,238.78) shall be due and payable on or before the
first 25th day of each and every  month,  with the first of such  payments to be
made on or before September 25, 2011, and subsequent  payments to be made on the
25th day of each month  thereafter  until the  Maturity  Date (See  Amortization
Scheduled attached hereto as "Exhibit A"). Notwithstanding anything the contrary
contained herein, all of the outstanding principal and accrued,  unpaid interest
hereunder,  and all other monies,  fees and costs accrued in accordance with the
provisions of this Amended,  Restated and  Consolidated  Note,  shall be due and

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payable in full on the Maturity  Date.  Said  payments of principal and interest
shall be payable in lawful money of the United  States,  on the dates and in the
amounts  specified  herein and shall be paid either by ACH,  wire,  or any other
form of transfer directly to:

          Newton Energy Inc.
          Bank of America
          ABA: Electronic (ex. Direct Deposit/Automatic Payment:
          Wire Transfer:
          Account #:

     9. All past due  principal  and  interest  on this  Amended,  Restated  and
Consolidated  Note shall bear  interest from the date that said payments are due
until  paid,  at the Highest  Lawful Rate  irrespective  of any  declaration  of
maturity or  acceleration.  Any judgment  obtained by Holder against Maker as to
any amounts due under this Amended,  Restated and  Consolidated  Note shall also
bear interest at the Highest Lawful Rate. Failure to exercise any and all rights
of remedies Holder may in the event of any such default be entitled to shall not
constitute  a waiver of the right to exercise any such rights or remedies in the
event of any subsequent  default,  whether of the same or different  nature.  No
waiver  of any  right or remedy by  Holder  shall be  effective  unless  made in
writing  and signed by Holder,  nor shall any  waiver on  occasion  apply to any
future occasion.  Interest on this Amended, Restated and Consolidated Note shall
be computed on a 1/360 simple interest basis;  that is, by applying the ratio of
the annual  interest over a year of 360 days,  times the  outstanding  principal
balance,  times the actual number of days the principal is  outstanding,  unless
such  calculation  would result in a usurious rate, in which case interest shall
be calculated on a per diem basis of 360 days.

     10. In the event of the  continuation  of any default in the payment of any
interest or principal under this Amended,  Restated and Consolidated  Note for a
period of ten (10) days after such payment  becomes due, or upon the  occurrence
of any other event of default  under the terms and  provisions  of this Amended,
Restated and Consolidated Note, or under any other documents delivered to Holder
in connection with this Amended,  Restated and  Consolidated  Note, or any other
obligation  of Maker to Holder  (which  event of default is not cured within ten
days from the date Maker  receives  written notice of such event of default from
Holder),  then Holder may declare the entire unpaid principal amount outstanding
hereunder,  together with interest  accrued thereon and any other lawful charges
accrued  hereunder,  immediately  due and payable,  regardless of the stipulated
date of Maturity,  without demand,  notice of default,  notice of  acceleration,
notice  of intent to  accelerate  the  maturity  hereof,  notice of  nonpayment,
presentment,  protest or notice of dishonor,  all of which are hereby  expressly
waived by Maker and each other liable party. Holder, in its sole discretion, may
accept payments made by Maker after any default has occurred,  and may waive any
default  without  waiving  any prior or  subsequent  default or  waiving  any of
Holder's rights herein.

     11. If a payment is ten (10) days or more late  (except for any payment due
on the Maturity Date for which there is no grace period),  Maker will be charged
five percent (5%) of the regularly  scheduled payment,  provided that collection
of said five  percent  (5%) shall not be deemed a waiver by Holder of any of its
rights under the Amended, Restated and Consolidated Note.

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     12. In the event Holder deems itself  insecure or upon the happening of any
of the following events, each of which shall constitute a default hereunder, all
sums hereunder shall thereupon or thereafter, at Holder's option, without notice
or demand, become immediately due and payable: (a) failure of any Obligor (which
terms shall mean and include each Maker,  endorser,  surety,  or any other party
liable for payment under this Amended,  Restated and  Consolidated  Note) to pay
any sum due  hereunder;  (b)  occurrence of default under any Loan Agreement and
Security  Instruments  (as defined in the Assignment) now or hereafter in effect
which, by its terms, covers this Amended,  Restated and Consolidated Note or the
indebtedness  evidenced hereby; (c) death or dissolution of any Obligor; (d) the
filing of any petition under the Bankruptcy Code or any similar federal or state
statute by or against any Obligor or the  insolvency of any Obligor;  (e) making
of a general assignment by any Obligor for the benefit of creditors, appointment
of or taking by  possession  by a  receiver,  trustee  or  custodian  or similar
official for any Obligor or for any assets of any such Obligor or institution by
or against any Obligor of any kind or insolvency  proceedings  or any proceeding
for dissolution or liquidation of any Obligor;  (f) entry of a judgment  against
any Obligor  which,  in the opinion of Holder,  would  materially  and adversely
affect the ability of Maker to pay the  indebtedness  evidenced by this Amended,
Restated  and  Consolidated  Note;  (g)  material  falsity  in any  certificate,
statement, representation,  warranty or audit at any time furnished to Holder by
or on behalf of any Obligor  pursuant  to or in  connection  with this  Amended,
Restated and Consolidated Note, the Loan Agreement,  Security Instruments or any
loan agreement or security  agreements now or hereafter in effect which,  by its
terms, covers this Amended,  Restated and Consolidated Note for the indebtedness
evidenced hereby or otherwise including the omission to disclose any substantial
contingent or liquidated liabilities or any material adverse change in any facts
disclosed  by any  certificate,  statement,  representation,  warranty  or audit
furnished  to  Holder;  (h)  issuance  of any  writ  of  attachment  or  writ of
garnishment or filing of any lien against any Collateral (as herein  defined) or
the property of any Obligor; (i) taking of possession of any material Collateral
or of any substantial part of the property of any Obligor at the instance of any
governmental   authority;   (j)   dissolution,    merger,   consolidation,    or
reorganization of any Obligor; (k) assignment,  transfer or sale by Maker or any
Obligor of any  interest in any  Collateral  securing  payment of this  Amended,
Restated and Consolidated Note without the prior written consent of Holder;  (l)
the  determination  by Holder that a material adverse change has occurred in the
financial  condition  of any Obligor  from the  condition  set forth in the most
recent  financial  statements  of such  Obligor  heretofore  furnished to Holder
executed in connection  with this  Amended,  Restated and  Consolidated  Note or
under any  obligation  of Maker or of any  Obligor to Holder,  which in Holder's
sole discretion  negatively impacts Maker's ability to pay the amounts specified
herein.

     13.  Holder  shall  have all of the  rights  and  remedies  of a  creditor,
mortgagee  and secured  party under all  applicable  law.  Without  limiting the
generality of the foregoing, upon the occurrence of any default herein or in the
event Holder,  at any time, in its reasonable  discretion deems itself insecure,
Holder may, in its sole discretion, and without notice or demand (i) declare the
entire unpaid principal and accrued interest  accelerated and due and payable at
once,  together  with  any and all  other  liabilities  of  Maker or any of such
liabilities selected by Holder; and (ii) set-off against this Amended,  Restated

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<PAGE>
and  Consolidated  Note all  monies  owed by  Holder in any  capacity  to Maker,
whether or not due. Upon the disposition of any Collateral  after the occurrence
of any  default  hereunder,  Maker  shall be and  shall  remain  liable  for any
deficiency;  and Holder shall account to Maker for any surplus, but Holder shall
have the right to apply all or part of such surplus (or to hold same as reserve)
against any and all other liabilities of Maker to Holder.

     14. To the extent not  prohibited  by  applicable  law,  Maker will pay all
reasonable  costs and expenses and reimburse Holder for any and all expenditures
of every character  incurred or expended from time to time,  which shall include
attorneys' fees in connection with any trial proceedings, bankruptcy proceedings
and/or  appellate  proceedings  or  otherwise,  incurred  or paid by  Holder  in
enforcing this Amended,  Restated and Consolidated  Note or preserving any right
or interest of Holder set forth  herein,  regardless  of whether a default shall
have  occurred,   in  connection  with  (a)  Holder's  evaluating,   monitoring,
administering and protecting the Mortgaged  Property (as such term is defined in
the Security Documents), and (b) Holder's creating, perfecting or realizing upon
Holder's  security  interest  in and liens on the  Mortgaged  Property,  and all
reasonable costs and expenses relating to Holder's  exercising any of its rights
and remedies under this or any other  instrument  now or hereafter  securing the
indebtedness or at law, including,  without limitation,  all filing fees, taxes,
documentary  stamps and/or any additional  fee imposed by the applicable  agency
for  recording  or  perfecting  Holder's  security  interest in and liens on the
Mortgaged  Property,  brokerage fees and commissions,  title review and abstract
fees,  Uniform  Commercial Code search fees, other fees and expenses incident to
title searches, reports and security interests,  escrow fees, attorneys' fees at
all tribunal  levels with counsel of Holder's  sole  choosing,  legal  expenses,
court  costs,  fees and  expenses  incurred in  connection  with any complete or
partial liquidation of the Mortgaged Property, and all fees and expenses for any
professional  services  relating to the  Mortgaged  Property  or any  operations
conducted in  connection  with it;  provided,  however,  that no right or option
granted by Maker or Holder or  otherwise  arising  pursuant to any  provision of
this or any  other  instrument  shall be deemed to impose or admit a duty on the
Holder to supervise, monitor or control any aspect of the character or condition
of the Mortgaged Property or any operations  conducted in connection with it for
the benefit of Maker or any other person or entity other than the Holder.

     15. If this Amended, Restated and Consolidated Note is not paid at Maturity
whether by  acceleration  or otherwise and is placed in the hands of an attorney
for  collection,  or suit is filed hereon,  or  proceedings  are had in probate,
bankruptcy, receivership, reorganization. arrangement or other legal proceedings
for  collection  hereof,  Maker and each other liable party agrees to pay Holder
their collection costs, including a reasonable amount for attorneys' fees at all
tribunal  levels with  counsel of  Holder's  sole  choosing,  but in no event to
exceed the maximum amount permitted by law. Maker and each other liable party is
and shall be  directly  and  primarily,  jointly and  severally,  liable for the
payment of all sums called for hereunder,  and Maker and each other liable party
hereby  expressly  waives bringing of suit and diligence in taking any action to
collect any sums owing hereon and in the handling of any security, and Maker and
each other liable party hereby  consents to and agrees to remain  liable  hereon
regardless of any renewals,  extensions for any period or rearrangements hereof,
or partial  prepayments  hereon,  or any  release or  substitution  of  security
hereof,  in whole or in part, with or without notice,  from time to time, before
or after maturity.

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     16.  It is the  intent  of the  Maker  and  Holder  in  the  execution  and
performance  of this  Amended,  Restated  and  Consolidated  Note to contract in
strict  compliance  with the usury  laws of the  State of Texas  and the  United
States of America from time to time in effect.  For purposes hereof,  "interest"
shall include the aggregate of all charges which constitute  interest under such
laws that are contracted for,  reserved,  taken,  charged or received under this
Amended,  Restated and Consolidated Note. In furtherance thereof, the Holder and
the Maker stipulate and agree that none of the terms and provisions contained in
this Amended,  Restated and Consolidated Note, shall ever be construed to create
a contract to pay for the use,  forbearance  or detention of money with interest
at a rate in excess of the Highest  Lawful Rate.  In the event the Holder or any
other holder of the  Amended,  Restated  and  Consolidated  Note ever charges or
contracts  for any  amount  in  excess  of lawful  interest,  the  documents  or
instruments  constituting  such charge or contract  shall be IPSO FACTO modified
without  any  further  action by any party so that no amount in excess of lawful
interest  shall be charged or contracted  for. If the Holder or any other holder
of the  Amended,  Restated  and  Consolidated  Note ever  receives,  collects or
applies as interest any amount in excess of lawful  interest,  such amount which
would be  excessive  interest  shall be applied to the  reduction  of the unpaid
principal balance of the Amended,  Restated and Consolidated  Note, and, if upon
such application the principal balance of the Amended, Restated and Consolidated
Note is paid in full, any remaining excess shall be forthwith paid to the Maker.
In  determining  whether or not the interest  paid or payable under any specific
contingency  exceeds the Highest Lawful Rate, the Maker and the Holder shall, to
the maximum extent permitted under applicable law, (a) treat all advances as but
a single  extension  of credit (and the Maker and the Holder  agree that such is
the case and that any provision herein for multiple  advances is for convenience
only), (b) characterize any nonprincipal  payment as an expense,  fee or premium
rather than as  interest,  (c)  exclude  voluntary  prepayments  and the effects
thereof,  and (d) "spread" the total  amount of interest  throughout  the entire
contemplated term of the Amended, Restated and Consolidated Note. The provisions
of this  paragraph  shall  control over all other  provisions  of this  Amended,
Restated and  Consolidated  Note or other documents  executed in connection with
this Amended,  Restated and Consolidated  Note which may be in apparent conflict
herewith.

     17. Except as otherwise  provided in the Loan  Documents,  all payments and
prepayments on this Amended,  Restated and Consolidated Note, including proceeds
from the exercise of any rights of the Holder under the Loan Documents, shall be
applied to this Amended,  Restated and Consolidated Note in the following order:
(i) first,  to  reasonable  expenses  for which the  Holder  shall not have been
reimbursed  under the Loan  Documents  and to all amounts to which the Holder is
entitled  to  indemnification  under the Loan  Documents;  (ii)  second,  to any
obligation of Borrower under the Loan Documents,  exclusive of accrued  interest
and  outstanding  principal  due; (iii) third,  to the accrued  interest on this
Amended, Restated and Consolidated Note being paid or prepaid; (iv) and last, to
the  principal of this  Amended,  Restated and  Consolidated  Note being paid or
prepaid,  with the amounts so prepaid to be applied  upon  installments  of most
remote  maturity,  except  that from and after any default  under this  Amended,
Restated and Consolidated  Note,  Holder may apply such payments in any order of
priority determined by Holder in its sole and exclusive judgment.

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     18. Maker  reserves the option of prepaying  the principal of this Amended,
Restated and Consolidated  Note, in whole or in part, at any time after the date
that is one year after the date  hereof  without  penalty.  Maker  reserves  the
option  of  prepaying  all,  but not less  than all,  of the  principal  of this
Amended, Restated and Consolidated Note, at any time before the date that is one
year after the date hereof,  but  acknowledges  and agrees that such  prepayment
shall be  subject to a  prepayment  penalty  in an amount  equal to ONE  HUNDRED
THIRTY  FIVE  THOUSAND  EIGHT  HUNDRED  TEN AND  00/100  ($135,810.00)  less any
interest  payments  made by Maker to Holder prior to Maker's  prepayment  of the
principal.  At the  option of  Holder,  it may  demand  (at any time at or after
prepayment) all accrued and unpaid interest with respect to the principal amount
prepaid through the date of prepayment.  All amounts of principal so prepaid and
received by the owner and holder of this Amended, Restated and Consolidated Note
shall be applied to the last maturing installments of this Amended, Restated and
Consolidated Note in their inverse order of maturity.

     19.  Unless  otherwise   specified  below,   this  Amended,   Restated  and
Consolidated Note shall be construed under and governed by the laws of the State
of Texas  (including  applicable  federal law),  but in any event TEX, FIN. CODE
ANN. SECTION 346.001 et. seq. (which regulates  certain  revolving loan accounts
and revolving tripartite accounts) shall not apply to the loan evidenced by this
Amended, Restated and Consolidated Note.

     20. Unless changed in accordance  with the law, the applicable rate ceiling
under Texas law shall be the  indicated  (weekly) rate ceiling from time to time
in effect as  provided  in TEX,  FIN.  CODE ANN.  SECTION  303.001  et seq.,  as
amended.

     21. Maker warrants and  represents to the Holder,  and to all other holders
of this Amended, Restated and Consolidated Note that all loans evidenced by this
Amended,   Restated  and  Consolidated  Note  are  and  will  be  for  business,
commercial, investment or other similar purposes and not primarily for personal,
family,  household or agricultural use, as such terms are used in TEX. REV. CIV.
STAT. ANN. ART. 5069-ID. 201, as amended.

     22. This Amended,  Restated and Consolidated  Note is secured by the pledge
of the following Collateral:

          a. all present and future interests now owned or hereafter acquired by
          the Maker in those oil,  gas,  and mineral  properties  identified  in
          Deeds of Trust  attached  hereto as "Exhibit B", by and between  Maker
          and the Bank as  assigned  to Holder,  together  with all  proceeds of
          production therefrom;

          b.  all  present   and  future   increases,   profits,   combinations,
          reclassifications,   improvements   and   products   of,   accessions,
          attachments,  and other additions to, and substitutes and replacements
          for, any of the Collateral;

          c. all cash and noncash  proceeds and other rights  arising from or by
          virtue of, or from the voluntary or involuntary  sale,  lease or other
          disposition of, or collections with respect to, or insurance  proceeds

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          payable with respect to, or proceeds  payable by virtue of warranty or
          other claims  against  manufacturers  of, or claims  against any other
          persons with respect to, any of the Collateral;

          d. all present and future security for the payment to Maker for any of
          the Collateral;

          e. all goods which gave or will give rise to any of the  Collateral or
          are evidenced, identified or represented therein or thereby; and

          f. all certificates of title,  manufacturer's statements of origin, or
          other documents, accounts and chattel paper arising from or related to
          any of the Collateral.

The  Collateral is covered and governed by second lien Deeds of Trust,  Security
Agreements,  and  Financing  Statements,  or  amendments  thereto,  of even date
herewith,  covering  oil and gas  properties;  and  first  lien  Deeds of Trust,
Security Agreements,  and Financing  Statements,  or amendments thereto, of even
date herewith, covering oil and gas properties.  Failure to describe all or part
of the security shall not be considered as a waiver of such security.  Additions
to, releases,  reductions or exchanges or of  substitutions  for the Collateral,
payments  on  account  of this  Amended,  Restated  and  Consolidated  Note,  or
increases of the same may from time to time be made in Holder's sole  discretion
without affecting the provisions of this Amended, Restated and Consolidated Note
or the liabilities of any party hereto.

23.  Holder  reserves the right,  exercisable  in Holder's sole  discretion  and
without notice to Maker or any other person, to sell  participations,  to assign
its  interest  or  both,  in all or  any  part  of  the  Amended,  Restated  and
Consolidated   Note  or  the  debt  evidenced  by  the  Amended,   Restated  and
Consolidated  Note.  Holder  may,  at any  time,  whether  or not this  Amended,
Restated  and  Consolidated  Note is due: (i) pledge or transfer  this  Amended,
Restated  and  Consolidated  Note and its  interest in the  Collateral,  and the
pledgee or the transferee shall, for all purposes,  stand in the place of Holder
and have all the  rights  of Holder  set forth  herein;  (ii)  demand,  sue for,
collect,  or make any compromise or settlement it deems desirable with reference
to the  Collateral;  (iii) take  possession  or control of any  proceeds  of the
Collateral;  and (iv)  exercise  all other  rights  necessary  or  required,  in
Holder's  sole  discretion,  in order to protect its interests  hereunder.  This
Amended,  Restated and Consolidated Note is not assumable without Holder's prior
written consent,  which consent may be granted by Holder or denied by Holder, in
Holder's sole and absolute discretion.

24.  By  execution  of this  Amended,  Restated  and  Consolidated  Note.  Maker
acknowledges the receipt of the following notices from Holder:

           THIS  AMENDED,  RESTATED AND  CONSOLIDATED  NOTE,  AND ALL OTHER LOAN
           PAPERS  EXECUTED   SUBSTANTIALLY   CONCURRENTLY   HEREWITH   TOGETHER
           CONSTITUTE A WRITTEN  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.

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           THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

           MAKER  COVENANTS  WITH  AND  WARRANTS  UNTO  HOLDER,   ITS  OFFICERS,
           DIRECTORS,  EMPLOYEES,  ATTORNEYS, AGENTS AND ITS OR THEIR AFFILIATES
           AND ASSIGNS THAT THROUGH THE DATE OF THE  EXECUTION OF THIS  AMENDED,
           RESTATED AND CONSOLIDATED NOTE THERE EXISTS NO CLAIMS, COUNTERCLAIMS,
           DEFENSES,  OBJECTIONS, OFFSETS OR CLAIMS OF OFFSETS AGAINST HOLDER AS
           TO THIS AMENDED,  RESTATED AND CONSOLIDATED NOT, OR THE OBLIGATION OF
           MAKER  TO REPAY  THIS  AMENDED,  RESTATED  AND  CONSOLIDATED  NOTE IN
           ACCORDANCE WITH ITS TERMS. MAKER HEREBY EXPRESSLY WAIVES AND RELEASES
           ALL CLAIMS, COUNTERCLAIMS, DEFENSES, OBJECTIONS, OFFSETS OR CLAIMS OF
           OFFSET  AGAINST  HOLDER  ARISING AT ANY TIME  THROUGH THE DATE HEREOF
           WITH REGARD TO THIS AMENDED,  RESTATED AND  CONSOLIDATED  NOTE OR THE
           INDEBTEDNESS OR ANY PART THEREOF EVIDENCED BY THIS AMENDED,  RESTATED
           AND CONSOLIDATED NOTE.

           MAKER HEREBY KNOWINGLY, WILLINGLY AND VOLUNTARILY WAIVES THE RIGHT TO
           TRIAL BY JURY AND NO  PARTY,  NOR ANY  ASSIGNEE,  SUCCESSOR,  HEIR OR
           LEGAL  REPRESENTATIVE  OF THE MAKER  SHALL  SEEK A JURY  TRIAL IN ANY
           LAWSUIT, PROCEEDING,  COUNTERCLAIM OR ANY OTHER LITIGATION PROCEEDING
           BASED UPON OR ARISING OUT OF THIS NOTE OR THE  SECURITY  INSTRUMENTS,
           OR  ANY  INSTRUMENT   EVIDENCING,   SECURING,   OR  RELATING  TO  THE
           INDEBTEDNESS AND OTHER OBLIGATIONS.

25.  Holder  acknowledges  and  agrees  that as a material  inducement  to Maker
entering into and executing this Amended,  Restated and  Consolidated  Note, and
that Maker would not have entered into this Amended,  Restated and  Consolidated
Note,  without Holder's promise to, and actual taking of, the following actions,
and that  subsections  a. and b.  below  shall be deemed to have  occurred  upon
Holder's execution of this Amended, Restated and Consolidated Note:

          a. Holder shall  terminate,  cancel or  otherwise  nullify each of the
          Stock Pledge Agreement and Security Agreements made by each of Lisa P.
          Hamilton,  Ronnie L. Steinocher and  Pierce-Hamilton  Energy Partners,
          LP, in favor of Bank as assigned to Holder  pursuant to the Assignment
          as part of the Security Documents.

                                       9
<PAGE>
          b. Holder shall  terminate,  cancel or  otherwise  nullify each of the
          Guaranty  Agreements  made by each of  Lisa  P.  Hamilton,  Ronnie  L.
          Steinocher and Pierce-Hamilton  Energy Partners,  LP, in favor of Bank
          as  assigned  to  Holder  pursuant  to the  Assignment  as part of the
          Security Documents.

          c. Holder  shall  release  any and all of its  security  interests  by
          amending the Security Documents and filing, or permitting the Maker to
          file,  such UCC-3  Termination  Statements to evidence  termination of
          same for the following  leases,  which are more fully described in the
          Security Documents: (i) the Lera B. Hughes Lease, Haskell County: (ii)
          the O'Brien  Strawn Unit,  Haskell  County:  (iii) the Collins  Lease,
          Jones  County;  (iv) the G. B. Sliger  Lease,  Nolan  County;  (v) the
          Sanger-Katlaco  Lease,  Reagan  County;  (vi) the Curb  Lease,  Taylor
          County; (vii) the Curb Surface Lease Agreement;  (viii) the Salt Water
          Disposal  Lease - D.L.  Moore  #1,  Taylor  County;  (ix) the Moore #1
          Lease,  Taylor  County;  (x) the Price,  P. Price, & Price "A" Leases,
          Taylor  County;  (xi) the Salt Water  Disposal  Lease,  Bert Young #4,
          Taylor  County;  (xii) the S.J.  Young Estate  Lease,  Taylor  County;
          (xiii)  the Young  Lease,  Taylor  County.  All costs  related  to the
          amending  and/or  filing of the Security  Documents  shall be the sole
          responsibility of Maker.

26. Any notice to Maker  shall be  forwarded  to the address set forth below and
shall be  sufficiently  served for all  purposes if placed in the mail,  postage
prepared,  addressed  to, or left upon the  premises  at the address of Maker as
provided to Holder.

27. All of the terms of this Amended, Restated and Consolidated Note shall inure
to the benefit of Holder and it successors and assigns and shall be binding upon
Maker  and each and  every  one of the  Obligors  and  their  respective  heirs,
executors,  administrators,  personal  representatives,  successors and assigns,
jointly and severally.

ADDRESS:

392 W. Mill St.
New Braunfels, TX  78130
Telephone/Fax:  (830) 608-0300

                                          BARON ENERGY, INC., a Nevada
                                          corporation

                                          By:_____________________
                                          Name:  Ronnie L. Steinocher
                                          Title: President

By its signature,  Holder  acknowledges the truth of the notice  hereinabove and
its  acknowledgment,  agreement  and  to  the  representations,  warranties  and
covenants set forth in Section 23 hereof.

                                          NEWTON ENERGY, INC., a California
                                          corporation

                                          By: _____________________
                                          Name: _____________________
                                          Title: _____________________

                                       10THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THIS NOTE OR SUCH SECURITIES, FILED AND MADE EFFECTIVE UNDER THE
        SECURITIES ACT OF 1933, AS AMENDED, AND SUCH APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.

        SECURED CONVERTIBLE PROMISSORY NOTE

         

        
            	
                        $750,000.00

                    	
                        Houston, Texas

                    	
                        September 17, 2010

                    

        

         

        For value received, DAYBREAK OIL AND GAS, INC., a Washington corporation (the “Company”), hereby promises to pay to the order of WELL WORKS, LLC, a Utah limited liability company or registered assigns (the “Holder”), the principal sum of SEVEN HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($750,000.00), on the
        dates specified herein, with interest as specified herein.

        This Note is subject to the following additional provisions, terms and conditions:

        ARTICLE 1. DEFINITIONS.

        Section 1.1. Certain Definitions.

        “Applicable Rate” means 10% per annum.

        “Bankruptcy Law” means Title 11, United State Code or any similar federal or state law for the relief of debtors.

        “Business Day” means any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in Houston, Texas. 

        “Closing Date” means September 17, 2010.

        “Common Stock” means the Company’s common stock, $0.001 par value.

        “Conversion Price” means Sixteen Cents ($0.16).

        “Default Rate” means 12% per annum. 

        “Distribution Event” means any insolvency, bankruptcy, receivership, liquidation, reorganization or similar proceeding (whether voluntary or involuntary) relating to the Company 

         

        

        

        

        or its property, or any proceeding for voluntary or involuntary liquidation, dissolution or other winding up of the Company, whether or not involving insolvency or bankruptcy.

        “Holder” has the meaning given to such term in the first paragraph of this Note. 

        “Interest Payment Date” means September 17, 2010.

        “Issuance Date” has the meaning given to such term in Section 2.6.

        “Maturity Date” means September 17, 2011.

        “Maximum Rate” means the maximum nonusurious interest rate permitted under applicable law. 

        “Note” means this Secured Convertible Promissory Note made by the Company payable to the Holder, together with all amendments and supplements hereto, all substitutions and replacements herefor, and all renewals, extensions, increases, restatements, modifications, rearrangements and waivers hereof from time to time. 

        “Person” means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. 

        “Services Agreement” means that certain Technical and Consulting Services Agreement of even date herewith by and between the Company and Well Works.

        “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

        “Specified Percentage” has the meaning given to such term in Section 4.1. 

        “Well Works” means Well Works, LLC, a Utah limited liability company.

        ARTICLE 2. BASIC TERMS.

        Section 2.1. Principal.

        (a)       Scheduled Repayment. To the extent not previously paid, the entire unpaid principal balance of this Note shall be due and payable on the Maturity Date.

        (b)       Prepayment. The Company may make voluntary prepayments of principal hereunder from time to time without penalty or premium.

        Section 2.2. Interest.

        (a)       The Company agrees to pay interest in respect of the unpaid principal amount of this Note at a rate per annum equal to the lesser of the Applicable Rate or the Maximum Rate. Notwithstanding the preceding sentence, the Company agrees to pay interest in respect of overdue principal, and, to the extent
        permitted by law, overdue interest, at a rate per

         

        2

        

        

        

        annum equal to the lesser of the Default Rate or the Maximum Rate. In addition to the foregoing, upon the occurrence and during the continuance of an Event of Default, which has not been cured, the Company agrees to pay a default fee equal to 10% of the then unpaid principal balance of the Note, which fee shall be added to the then existing unpaid principal balance of
        the Note and shall be payable on the earlier of (i) the date on which this Note is paid or prepaid in full and (ii) the Maturity Date.

        (b)       Interest on the unpaid principal balance of this Note shall be due and payable on the Interest Payment Date.

        (c)       Interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.

        Section 2.3. Payments in General. All payments of principal and interest on this Note shall be in such coin or currency of the United States of America as at the time of payment shall be legal tender for payment of public and private debts. If any payment (whether of principal, interest or otherwise) on this Note is due on a day which is not
        a Business Day, such payment shall be due and payable on the next succeeding Business Day. All payments under this Note shall be made by wire transfer or check in accordance with Holder’s instructions.

        Section 2.4. Surrender of Note on Transfer or Conversion. This Note shall, as a condition to transfer, be surrendered to the Company in exchange for a new Note in a principal amount equal to the principal amount remaining unpaid on the surrendered Note, and with the same terms and conditions as this Note. In case the entire principal amount
        of this Note is prepaid or converted pursuant to Article 4, this Note shall be surrendered to the Company for cancellation and shall not be reissued.

        Section 2.5. Security. This Note is secured by that certain Mortgage, Deed of Trust, Assignment of Production, Security Agreement and Financing Statement of even date herewith by the Company in favor of Well Works, as trustee and beneficiary thereunder.

        Section 2.6. Loan Origination Fee.

        (a)       The Company agrees to pay to Well Works a loan origination fee equal to 250,000 shares of the Company’s Common Stock. Such shares of Common Stock shall be unregistered shares and the Company shall have no obligation to register such shares. The Company agrees to issue such shares within 60 days after
        the Closing Date or such later date as mutually agreed between the Company and Wells Works (the “Issuance Date”).

        (b)       If, between the Closing Date and the Issuance Date, the outstanding shares of Common Stock shall have been changed into a different number of shares or a different class by reason of any reclassification, recapitalization, split-up, combination, exchange of shares or readjustment, or a stock dividend
        thereon shall be declared with a record date prior to the Issuance Date, the number of shares or class of Common Stock to be issued and delivered pursuant to the terms of this Section 2.6 as the loan origination fee shall be appropriately adjusted.

         

        3

        

        

        

        (c)       Well Works agrees to use its reasonable efforts to execute and deliver any agreements, instruments or other documents requested by the Company in connection with the issuance of such shares of Common Stock in connection with the payment of such loan origination fee.

        Section 2.7. Services Agreement. It is a condition precedent to the funding of the proceeds of this Note on the Closing Date that the Company execute and deliver the Services Agreement whereby the Company agrees to perform the services outlined in Schedule B to the Services Agreement.

        ARTICLE 3. DEFAULT AND REMEDIES.

        Section 3.1. Events of Default. An “Event of Default” occurs if:

        (a)       the Company defaults in the payment of principal or interest on the Note when the same becomes due and payable and such default continues for 3 days after the Company has received written notice thereof;

        (b)       there shall have occurred a material breach by the Company under the Services Agreement, which has not been cured within 45 days after the Company has received written notice thereof;

        (c)       default by the Company in the punctual performance of any other obligation, covenant, term or provision contained in this Note, and such default shall continue unremedied for a period of 30 days or more following written notice of default by Holder to the Company; or

        (d)       the Company (i) commences a voluntary case concerning itself under any Bankruptcy Law now or hereafter in effect, or any successor thereof; (ii) is the object of an involuntary case under any Bankruptcy Law; or (iii) commences any Distribution Event or is the object of an involuntary Distribution
        Event.

        Section 3.2. Remedies.

        (a)       If an Event of Default (other than an Event of Default under Section 3.1(d)) shall occur, the Holder may declare by notice in writing given to the Company, the entire unpaid principal amount of the Note, together with accrued but unpaid interest thereon, to be immediately due and payable, in
        which case the Note shall become immediately due and payable, both as to principal and interest, without presentment, demand, default, notice of intent to accelerate and notice of such acceleration, protest or notice of any kind, all of which are hereby expressly waived, anything herein or elsewhere to the contrary notwithstanding.

        (b)       If an Event of Default under Section 3.1(d) shall occur and be continuing, the entire unpaid principal amount of the Note, together with accrued but unpaid interest thereon, shall automatically become immediately due and payable, both as to principal and interest, without presentment, demand,
        default, notice of intent to accelerate and notice of such acceleration, protest or notice of any kind, all of which are hereby expressly waived, anything herein or elsewhere to the contrary notwithstanding.

         

        4

        

        

        

        (c)       If any Event of Default shall have occurred, the Holder may proceed to protect and enforce their rights either by suit in equity or by action at law, or both.

        ARTICLE 4. CONVERSION.

        Section 4.1. Right of Conversion. The Holder shall have the right exercisable at any time at or prior to payment or prepayment in full of the Note, to convert, subject to the terms and provisions of this Article 4, up to 50% of the unpaid principal of this Note (such actual percentage elected to be converted, the “Specified
        Percentage”) into a number of fully paid and nonassessable shares of Common Stock equal to (i) the Specified Percentage multiplied by the amount of unpaid principal balance of the Note, divided by (ii) the Conversion Price.

        Section 4.2. Mechanics of Exercise. The right of conversion shall be exercised by the surrender of this Note to the Company during usual business hours at its principal place of business accompanied by written notice to the Company (a) that the Holder elects to convert the Specified Percentage of the unpaid principal of this Note and
        specifying the Specified Percentage in such notice, and (b) specifying the name (with address) in which the certificate for shares is to be issued and, if the certificate is to be issued to a Person other than the Holder, (i) a written instrument of transfer in form reasonably satisfactory to the Company, duly executed by the Holder, together with transfer tax stamps or funds therefor if required pursuant to Section 4.7 and (ii) an opinion of counsel satisfactory to the
        Company to the effect that registration of such transfer under the Securities Act is not required. Upon surrender for conversion, this Note shall be cancelled and, the Company shall issue a new Note to the Holder in a principal amount equal to the unpaid principal amount of this Note not so converted.

        Section 4.3. Issuance of Shares; Time of Conversion. As promptly as practicable after the surrender, as herein provided, of this Note for conversion, the Company shall deliver or cause to be delivered at the Company’s office (or such other location that the Holder reasonably requests in writing) a certificate for the shares of Common
        Stock issuable in connection with such conversion. To the extent permitted by law, the rights of the Holder as the Holder shall cease as of the date of actual receipt of such stock certificate by the Person entitled to receive the stock certificate, and the Person entitled to receive the stock certificate deliverable upon such conversion shall be treated for all purposes as having become the record holder of the stock represented by such certificate at such time. Notwithstanding
        delivery of this Note to the Company for conversion, the Holder shall be deemed to continue to hold this Note and shall be entitled to all of the rights hereunder (including interest) until the delivery of such stock certificate to the Person entitled to receive such stock certificate, other than rights arising from any Event of Default that results solely from the expiration of a time period (including the Maturity Date) for so long as the Company is taking all reasonable efforts to
        provide such stock certificate promptly.

        Section 4.4. No Stockholder Rights. Prior to the issuance of Common Stock upon conversion, the Holder shall not be entitled to any rights of a stockholder with respect to the Common Stock, including (without limitation) the right to vote such stock, receive dividends or other distributions thereon, exercise preemptive rights or be notified
        of stockholder meetings, and the Holder shall not, by virtue of holding this Note, be entitled to any notice or other communication concerning the business or affairs of the Company.

         

        5

        

        

        

        Section 4.5. Shares to be Reserved. Prior to the time this Note is repaid in full or is converted pursuant to the terms hereof, the Company covenants that it will reserve and keep available out of its authorized but unissued Common Stock, free from preemptive rights, solely for the purpose of issuance upon conversion of this Note as herein
        provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all principal on this Note. The Company covenants that all Common Stock which shall be so issuable shall, when issued, be duly and validly issued and fully paid and nonassessable and shall be free of any liens, encumbrances, or restrictions on transfer (other than those created by applicable state and/or federal securities law).

        Section 4.6. No Registration or Listing of Shares. The shares of Common Stock issuable on conversion will not be registered with any governmental authority, and the Company shall have no obligation to register such stock. The stock issued upon conversion of the Note shall bear a restrictive legend describing limitations of the
        transferability of such stock under the Securities Act and any other restrictions imposed by law or contract.

        Section 4.7. Taxes and Charges. The issuance of certificates for stock upon the conversion of this Note shall be made without charge to the Holder for such certificates or for any tax in respect of the issuance of such certificates or the securities represented thereby, and such certificates shall be issued in the respective names of, or in
        such names as may be directed by, the Holder; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of the Holder of the Note, and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall
        have established to the satisfaction of the Company that such tax has been paid.

        Section 4.8. Adjustments. In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation or any other change in the corporate structure of the Company, or a sale by the Company of all or substantially all of its assets, or any distribution to stockholders other than a normal cash
        dividend, the Board of Directors of the Company shall make appropriate adjustment in the number and kind of shares into which this Note is convertible.

        ARTICLE 5. MISCELLANEOUS.

        Section 5.1. Amendment. This Note may be amended, modified, superseded or cancelled, and any of the terms, covenants, representations, warranties or conditions hereof and thereof may be waived, only by a written instrument executed by the Holder and the Company.

        Section 5.2. Successors and Assigns.

        (a)       The rights and obligations of the Company and the Holder under this Note shall be binding upon, and inure to the benefit of, and be enforceable by, the Company and the Holder, and their respective permitted successors and assigns.

        (b)       The Holder may not sell, assign (by operation of law or otherwise), transfer, pledge, grant a security interest in, or otherwise dispose of this Note or any portion

         

        6

        

        

        

        hereof or any rights or obligations hereunder unless (i) the Company has granted its prior written consent, and (ii) the Company shall have received a written opinion of counsel acceptable to the Company, addressed to the Company, to the effect that any such proposed transfer or other disposition complies with all applicable Federal and state securities
        laws.

        (c)       The registered owner of this Note may be treated as the owner of it for all purposes.

        Section 5.3. Defenses. The obligations of the Company under this Note shall not be subject to reduction, limitation, impairment, termination, defense, set-off, counterclaim or recoupment for any reason.

        Section 5.4. Replacement of Note. Upon receipt by the Company of evidence, satisfactory to it, of the loss, theft, destruction, or mutilation of this Note and (in the cases of loss, theft or destruction) of any indemnity reasonably satisfactory to it, and upon surrender and cancellation of this Note, if mutilated, the Company will deliver a
        new Note of like tenor in lieu of this Note. Any Note delivered in accordance with the provisions of this Section 5.4 shall be dated as of the date of this Note.

        Section 5.5. Attorneys’ and Collection Fees. Each party will bear its own fees and expenses incurred in connection with the preparation, execution and performance of this Note and the transactions contemplated hereby, including all fees and expenses of agents, representatives, financial advisors, legal counsel and accountants and all
        costs of collection.

        Section 5.6. Governing Law. This Note and the validity and enforceability hereof shall be governed by and construed and interpreted in accordance with the laws of the State of Utah.

        Section 5.7. Waivers. Except as may be otherwise provided herein, the makers, signers, sureties, guarantors and endorsers of this Note severally waive demand, presentment, notice of dishonor, notice of intent to demand or accelerate payment hereof, notice of acceleration, diligence in collecting, grace, notice, and protest, and agree to one
        or more extensions for any period or periods of time and partial payments, before or after maturity, without prejudice to the Holder.

        Section 5.8. No Waiver by Holder. No failure or delay on the part of the Holder in exercising any right, power or privilege hereunder and no course of dealing between the Company and the Holder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or
        further exercise thereof or the exercise of any other right, remedy, power or privilege.

        Section 5.9. No Impairment. The Company will not, by amendment of its certificate of incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be
        observed or performed hereunder by the Company, but will at times in good faith assist in the carrying out of all the provisions of this Note.

         

        7

        

        

        

        Section 5.10. Limitation on Interest. Notwithstanding any other provision of this Note, interest on the indebtedness evidenced by this Note is expressly limited so that in no contingency or event whatsoever, whether by acceleration of the maturity of this Note or otherwise, shall the interest contracted for, charged or received by the Holder
        exceed the maximum amount permissible under applicable law. If from any circumstances whatsoever fulfillment of any provisions of this Note or of any other document evidencing, securing or pertaining to the indebtedness evidenced hereby, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such
        circumstances the Holder shall ever receive anything of value as interest or deemed interest by applicable law under this Note or any other document evidencing, securing or pertaining to the indebtedness evidenced hereby or otherwise an amount that would exceed the highest lawful rate, such amount that would be excessive interest shall be applied to the reduction of the principal amount owing under this Note or on account of any other indebtedness of the Company to the Holder, and not
        to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal of this Note and such other indebtedness, such excess shall be refunded to the Company. In determining whether or not the interest paid or payable with respect to any indebtedness of the Company to the Holder, under any specific contingency, exceeds the highest lawful rate, the Company and the Holder shall, to the maximum extent permitted by applicable law, (a) characterize any
        non-principal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) amortize, prorate, allocate and spread the total amount of interest throughout the term of such indebtedness so that the actual rate of interest on account of such indebtedness does not exceed the maximum amount permitted by applicable law, and/or (d) allocate interest between portions of such indebtedness, to the end that no such portion shall bear
        interest at a rate greater than that permitted by applicable law. The terms and provisions of this paragraph shall control and supersede every other conflicting provision of this Note and all other agreements between the Company and the Holder.

        Section 5.11. Severability.     If one or more provisions of this Note are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Note and the balance of this Note shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its
        terms.

        Section 5.12. Construction.   This Note has been freely and fairly negotiated among the parties. If an ambiguity or question of intent or interpretation arises, this Note will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of the
        authorship of any provision of this Note. Unless the context requires otherwise, any agreements, documents, instruments or laws defined or referred to in this Note will be deemed to mean or refer to such agreements, documents, instruments or laws as from time to time amended, modified or supplemented, including (a) in the case of agreements, documents or instruments, by waiver or consent and (b) in the case of laws, by succession of comparable successor statutes. All references in this
        Note to any particular law will be deemed to refer also to any rules and regulations promulgated under that law. The words “include, “includes” and “including will be deemed to be followed by “without limitation.” The word “or” is used in the inclusive sense of “and/or” unless the context requires otherwise. References to a person are also to its permitted successors and assigns. Pronouns in masculine, feminine and neuter
        genders will be construed to include any other gender, and words in the singular form will

         

        8

        

        

        

        be construed to include the plural and vice versa, unless the context requires otherwise. When a reference in this Note is made to an Article, Section, Exhibit, Annex or Schedule, such reference is to an Article or Section of, or Exhibit, Annex or Schedule to, this Note unless otherwise indicated. The words “this Note,” “herein,”
        “hereof,” “hereby,” “hereunder” and words of similar import refer to this Note as a whole and not to any particular subdivision unless expressly so limited.

        [Signature Page Follows]

         

        9

        

        

        

        EXECUTED as of the date first written above.

        	 	DAYBREAK OIL AND GAS, INC.
	 	
                     

                
	 	By:	/s/James F. Westmoreland	 
	 	 	James F. Westmoreland
	 	 	President, Chief Executive Officer and interim principal finance and accounting officer

      

        The Holder hereby accepts this Note and, agrees that all of its rights and remedies hereunder are subject to the subordination provisions contained herein.

         

        	 	WELL WORKS, LLC
	 	
                     

                
	 	By:	/s/Eric Hale	 
	 	 	Eric Hale
	 	 	Title: Managing Member
	 	 	 
	 	 	
                    Address: 

                    1575 Federal Heights Drive

                    Salt Lake City, UT 84103

                    ATTN: Eric Hale

                

 

         

        Signature Page

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