SECURED PROMISSORY NOTE
$122,500.00 April 23, 1998
For value received, SANTA BARBARA PARTNERS, an Oklahoma general partnership ("Borrower"),
HALLADOR PETROLEUM, LLP, a Colorado limited liability partnership, HALLADOR PETROLEUM
COMPANY, a Colorado corporation, HALLADOR PRODUCTION COMPANY, a Colorado corporation,
and TRIO PETROLEUM, INC., a California corporation (collectively, "Maker"), jointly and severally promise
to pay to the order of TCW DR III ROYALTY PARTNERSHIP, a California limited partnership ("Holder"), the
principal sum of One Hundred Twenty-Two Thousand Five Hundred and No/Hundredths Dollars ($122,500.00)
at the times as set forth herein. This Secured Promissory Note (the "Note") is issued in connection with that
certain Term Loan Agreement dated as of May 25, 1990 by and among Borrower, Trust Company of the West,
a California trust company, in the capacities set forth therein ("TCW"), and The TCW Commingled Debt and
Royalty Fund IIIB, a California Limited Partnership (as heretofore or hereafter amended, modified or
supplemented, from time to time, the "Term Loan Agreement") and in connection with the execution by Holder of
the Reconveyance of Overriding Royalty Interest of even date herewith. As used herein, the term "Holder" shall
mean Holder and any subsequent holder of this Note, whichever is applicable from time to time. Capitalized
terms used herein without definition shall have the meanings set forth in the Term Loan Agreement.
2. Maturity Date.
(a) The unpaid principal balance hereof and all other amounts payable by Maker under the terms of the Loan
Documents shall be due and payable on June 1, 1999 (the "Maturity Date") unless sooner paid or as otherwise
provided herein or in the Term Loan Agreement.
(b) If the Maturity Date should fall on a day other than a Business Day, payment of the outstanding principal and
all other amounts due under the terms hereof shall be made on the immediately preceding Business Day.
Upon not less than t