Sky Quarry Inc.

EVENT OF DEFAULT

The occurrence of any of the following events of default (“Event of Default”) shall, at the option of the Holder hereof, make all sums of principal and interest then remaining unpaid hereon and all other amounts payable hereunder immediately due and payable, upon demand, without presentment or grace period, all of which hereby are expressly waived, except as set forth below:

4.1 Failure to Pay Principal or Interest. The Borrower fails to pay any installment of principal, interest or other sum due under this Note when due in full, subject to a ten (10) day grace period.

4.2 Breach of Covenant. The Borrower or any Subsidiary breaches any material covenant or other term or condition of this Note in any material respectand such breach, if subject to cure, continues for a period of ten (10) business days after written notice to the Borrower from the Holder.

4.3 Breach of Representations and Warranties. Any material representation or warranty of the Borrower made herein, or in any agreement, statement or certificate given in writing pursuant hereto or in connection therewith shall be false or misleading in any material respect as of the date made and the Closing Date and such inaccuracy, if subject to cure, continues for a period of ten (10) business days after written notice to the Borrower from the Holder.

4.4 Liquidation. Any dissolution, liquidation or winding up of Borrower or a Subsidiary’s substantial portion of their business.

4.5 Cessation of Operations. Any cessation of operations by Borrower or a Subsidiary.

4.6 Maintenance of Assets. The failure by Borrower or any Subsidiary to maintain any material intellectual property rights, personal, real property, equipment, leases or other assets which are necessary to conduct its business (whether now or in the future)and such breach is not cured with ten (10) business days after written notice to the Borrower from the Holder.

4.7 Receiver or Trustee. The Borrower or any Subsidiary shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed.

4.8 Judgments. Any money judgment, writ or similar final process shall be entered or made in a non-appealable adjudication against Borrower or any Subsidiary or any of its property or other assets for more than $250,000, unless stayed vacated or satisfied within ten days.

4.9 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by or against the Borrower or any Subsidiary.

4.10 Notification Failure. A failure by Borrower to notify Holder of any material event of which Borrower is obligated to notify Holder pursuant to the terms of this Note or any other transaction document.

4.11 Failure to Deliver Shares/DWAC Shares. A failure by Borrower or Borrower’s transfer agent for any reason or for no reason to electronically transfer any shares of Common Stock issuable upon conversion of this Note as DWAC Shares on or before the Delivery Date. “DWAC Shares” means shares of Common Stock that are (i) issued in electronic form, (ii) freely tradable and transferable and without restriction on resale and (iii) timely credited by the Company to the Investor’s or its designee’s specified Deposit/Withdrawal at Custodian (DWAC) account with DTC under its Fast Automated Securities Transfer (FAST) Program, or any similar program hereafter adopted by DTC performing substantially the same function.

4.12 Cross-Default. A breach or default by the Borrower of any representation, warranty, covenant or other term or condition contained in any other material agreement, including, without limitation, any note purchase agreement, loan agreement(s) or promissory note(s), entered into between the Holder and the Borrower or issued by the Borrower to the Holder, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note.

Upon the occurrence and during the continuation of any Event of Default specified in this Article IV, (i) the Note shall become immediately due and payable (subject to any applicable cure periods); and (ii) if the Borrower fails to pay all principal and interest due and payable within five (5) business days of the date which such amount is due and payable, then the Holder shall have the right at any time, so long as the Borrower remains in default, to require the Borrower upon written notice, to immediately issue the number of shares of Common Stock of the Borrower equal to the amount of outstanding principal and interest then due and owing divided by the 90% of the Conversion Price then in effect.

ARTICLE V