EXHIBIT 10.2

 

EXECUTION COPY

 

Original Issue Date: December 27, 2018

Original Principal Amount: $23,777,948.01

 

10% SECURED PROMISSORY NOTE

DUE JANUARY 31, 2020

 

THIS 10% SECURED PROMISSORY NOTE is a duly authorized and validly issued
Promissory Note of Viking Energy Group, Inc. (formerly, Viking Investments
Group, Inc.), a Nevada corporation, (the “Company”), having its principal place
of business at 15915 Katy Freeway, Suite 450, Houston, Texas (this “Note”, or
the “Note”).

 

FOR VALUE RECEIVED, the Company promises to pay to RPM INVESTMENTS, A DIVISION
OF OPUS BANK, or its permitted assigns (the “Holder”), pursuant to the terms
hereunder, the principal sum of TWENTY-THREE MILLION SEVEN HUNDRED SEVENTY-SEVEN
THOUSAND NINE HUNDRED FORTY-EIGHT AND 01/100 DOLLARS ($23,777,948.01) on the
earlier of: (i) the date on which the Company or one of its affiliates completes
an acquisition transaction with one or more of the Sellers (as defined in the
PSA (as defined below)) for a purchase price equal to or greater than
$50,000,000 (excluding the acquisition transaction between the Company and the
Sellers completed on or about the date hereof pursuant to the Purchase and Sale
Agreement dated as of September 1, 2018 (as amended, the “PSA”) by and among the
Sellers, as sellers, and the Company, as purchaser); or (ii) January 31, 2020
(the “Maturity Date”), or such earlier date as this Note is required or
permitted to be repaid as provided hereunder, and to pay interest to the Holder
on the aggregate then outstanding principal amount of this Note in accordance
with the provisions hereof. This Note is the “Seller Note” as defined in the PSA
and is subject to the following additional provisions:

 

Section 1. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Note, the following terms shall have the following
meanings:

 

“Bankruptcy Event” means any of the following events: (a) the Company or any of
its subsidiaries, commences a case or other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction relating to the
Company or any of its subsidiaries (including, without limitation, Ichor Energy
Holdings, LLC, a Nevada limited liability company (“IEH”), Ichor Energy, LLC, a
Nevada limited liability company (“Ichor”), Ichor Energy (TX), LLC, a Texas
limited liability company (“Ichor TX”) and Ichor Energy (LA), LLC, a Louisiana
limited liability company (“Ichor LA”; and together with IEH, Ichor, Ichor TX
and each other subsidiary of IEH, if any, each an “Ichor Company”)), (b) there
is commenced against the Company or any of its subsidiaries (including without
limitation the Ichor Companies) any such case or proceeding that is not
dismissed within 60 days after commencement, (c) the Company or any of its
subsidiaries (including without limitation the Ichor Companies) is adjudicated
insolvent or bankrupt or any order of relief or other order approving any such
case or proceeding is entered, (d) the Company or any of its subsidiaries
(including without limitation the Ichor Companies) suffers any appointment of
any custodian or the like for it or any substantial part of its property that is
not discharged or stayed within 60 calendar days after such appointment, (e) the
Company or any of its subsidiaries (including without limitation the Ichor
Companies) makes a general assignment for the benefit of creditors, (f) the
Company or any of its subsidiaries (other than the Ichor Companies) calls a
meeting of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts (other than the debts of the Ichor Companies) or (g)
the Company or any of its subsidiaries (including without limitation the Ichor
Companies), by any act or failure to act, expressly indicates its consent to,
approval of or acquiescence in any of the foregoing or takes any corporate or
other action for the purpose of effecting any of the foregoing.

 

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“Change of Control Transaction” means the occurrence after the date hereof of
any of (a) an acquisition after the date hereof by an individual or legal entity
or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 35% of the
voting securities of the Company, (b) the Company merges into or consolidates
with any other Person, or any Person merges into or consolidates with the
Company and, after giving effect to such transaction, the stockholders of the
Company immediately prior to such transaction own less than 51% of the aggregate
voting power of the Company or the successor entity of such transaction, (c) the
Company sells or transfers all or substantially all of its assets to another
Person, (d) a replacement at one time or within a three year period of more than
one-half of the members of the Company’s board of directors which is not
approved by a majority of those individuals who are members of the Company’s
board of directors on the date hereof (or by those individuals who are serving
as members of the Company’s board of directors on any date whose nomination to
the Company’s board of directors was approved by a majority of the members of
the Company’s board of directors who are members on the date hereof), (e) the
execution by the Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth in clauses (a)
through (d) above, (f) the Company ceases to own directly or indirectly all of
the outstanding equity interests of the Ichor Companies, other than any equity
interests issued pursuant to warrants to be issued in connection with the Ichor
Credit Facility (as defined below), or (g) any Ichor Company sells or transfers
all or substantially all of its assets to another Person (other than to another
Ichor Company).

 

“Event of Default” shall have the meaning set forth in Section 6(a).

 

“Fundamental Transaction” means (i) any merger or consolidation of the Company
with or into another Person, (ii) any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) pursuant to which holders of the Company’s common stock are
permitted to sell, tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the outstanding
common stock, (iv) one or more related transactions which effects any
reclassification, reorganization or recapitalization of the common stock or any
compulsory share exchange pursuant to which the Company’s common stock is
effectively converted into or exchanged for other securities, cash or property,
or (v) one or more related transactions which consummates a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than 50% of the
outstanding shares of Company’s common stock (not including any shares of common
stock held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to, such stock
or share purchase agreement or other business combination).

 

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“Late Fees” shall have the meaning set forth in Section 2(b).

 

“Texas Courts” shall have the meaning set forth in Section 8(d).

 

Section 2. Interest.

 

a) Payment of Interest. The Company shall pay interest to the Holder on the
outstanding principal amount of this Note equal to ten percent (10%) per annum,
calculated semi-annually not in advance. All interest hereunder will be payable
in cash on the Maturity Date or the Prepayment Date, as applicable.
Notwithstanding the foregoing, if the Company pays the Principal Amount of this
Note in full on or before the 150th day following the date hereof, no interest
shall be payable to the Holder.

 

b) Late Fee. Subject to Section 10 herein, all overdue accrued and unpaid
principal and interest to be paid hereunder shall entail a late fee at an
interest rate equal to 18% per annum (the “Late Fees”) which shall accrue daily
from the date such amount is due hereunder through and including the date of
actual payment in full.

 

Section 3. Information. Within five business days after the delivery thereof,
the Company shall deliver to the Holder copies of all financial statements,
production reports, reserve reports, notices of default and all other material
reports, notices or other information required to be delivered by (a) the
Company to the holders of the Company’s 10% Secured Notes or (b) any Ichor
Company to the lenders under the credit facility among Ichor Energy as borrower,
Ichor TX and Ichor LA, as guarantors and mortgagors, and ABC Funding, LLC, as
administrative agent, and the lenders party thereto, dated as of the date hereof
(as amended, modified, supplemented or restated, the “Ichor Credit Facility”).

 

Section 4. Intentionally Omitted.

 

Section 5. Intentionally Omitted.

 

Section 6. Events of Default.

 

a) “Event of Default” means, wherever used herein, any of the following events
(whatever the reason for such event and whether such event shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

 

i. any default in the payment of (A) the principal amount of this Note or (B)
interest, Late Fees and other amounts owing to the Holder on this Note, as and
when the same shall become due and payable (whether on the Maturity Date or by
acceleration or otherwise) which default, solely in the case of an interest
payment or other default under clause (B) above, is not cured within three (3)
business days;

 

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ii. the Company shall fail to observe or perform any other material covenant or
agreement contained in this Note or the Pledge Agreement (as defined below)
which failure is not cured, if possible to cure, within the earlier to occur of
(A) five (5) business days after notice of such failure sent by the Holder to
the Company and (B) ten (10) business days after the Company has become or
should have become aware of such failure;

 

iii. a default or event of default (subject to any grace or cure period provided
in the applicable agreement, document or instrument) shall occur under) any
other material agreement, lease, document or instrument to which the Company or
any of its subsidiaries (other than the Ichor Companies) is obligated and/or by
which any of their respective assets are subject to or bound by (and not covered
by clause (vi) below)

 

iv. any representation or warranty made in this Note, the Pledge Agreement, any
written statement pursuant hereto or thereto or any other report, financial
statement or certificate made or delivered to the Holder shall be untrue or
incorrect in any material respect as of the date when made or deemed made;

 

v. the Company or any of its subsidiaries (including without limitation any
Ichor Company) shall be subject to a Bankruptcy Event;

 

vi. the Company or any subsidiary (other than the Ichor Companies) shall default
on any of its obligations under the 10% Secured Notes or any other mortgage,
credit agreement or other facility, indenture agreement, factoring agreement or
other instrument under which there may be issued, or by which there may be
secured or evidenced, any indebtedness for borrowed money or money due under any
long term leasing or factoring arrangement that (a) involves an obligation
greater than $50,000, whether such indebtedness now exists or shall hereafter be
created, and (b) such default is not fully cured by the Company or such
subsidiary prior to the expiration of any applicable grace or cure period;

 

vii. the Company or any Ichor Company shall be a party to any Change of Control
Transaction or the Company or any subsidiary (other than any Ichor Company)
shall be a party to any Fundamental Transaction or shall agree to sell or
dispose of all or substantially all of its assets in one transaction or a series
of related transactions, without the approval of the Holder (whether or not such
sale would constitute a Change of Control Transaction);

 

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viii. the Company or any of its subsidiaries (including without limitation any
Ichor Company) shall: (i) apply for or consent to the appointment of a receiver,
trustee, custodian or liquidator of it or any of its properties, (ii) admit in
writing its inability to pay its debts as they mature, (iii) make a general
assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or
insolvent or be the subject of an order for relief under Title 11 of the United
States Code or any bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation law or statute of any other jurisdiction or foreign
country, or (v) file a voluntary petition in bankruptcy, or a petition or an
answer seeking reorganization or an arrangement with creditors or to take
advantage or any bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation law or statute, or an answer admitting the material
allegations of a petition filed against it in any proceeding under any such law,
or (vi) take or permit to be taken any action in furtherance of or for the
purpose of effecting any of the foregoing;

 

ix. if any order, judgment or decree shall be entered, without the application,
approval or consent of the Company or any of its subsidiaries (including without
limitation any Ichor Company), by any court of competent jurisdiction, approving
a petition seeking liquidation or reorganization of the Company or any of its
subsidiaries (including without limitation any Ichor Company), or appointing a
receiver, trustee, custodian or liquidator of the Company or any of its
subsidiaries (including without limitation any Ichor Company), or of all or any
substantial part of its assets, and such order, judgment or decree shall
continue unstayed and in effect for any period of sixty (60) days;

 

x. Any Ichor Company shall default on any of its payment obligations under the
Ichor Credit Facility and (i) such default is not fully cured by the Ichor
Companies prior to the expiration of any applicable grace or cure period
(including any extension, forbearance or waiver granted with respect thereto by
the lenders thereunder) and (ii) the lenders under the Ichor Credit Facility
shall have accelerated the debt under the Ichor Credit Facility.

 

b) Remedies Upon Event of Default. Subject to clause (c) below, if any Event of
Default occurs, then the outstanding principal amount of this Note, plus accrued
but unpaid interest, liquidated damages and other amounts owing in respect
thereof through the date of acceleration, shall become, at the Holder’s
election, immediately due and payable in cash. Upon the payment in full of the
amount owing hereunder, the Holder shall promptly surrender this Note to or as
directed by the Company. In connection with such acceleration described herein,
the Holder need not provide, and the Company hereby waives, any presentment,
demand, protest or other notice of any kind, and the Holder may immediately and
without expiration of any grace period enforce any and all of their rights and
remedies hereunder and all other remedies available to them under applicable
law. Such acceleration may be rescinded and annulled by Holder at any time prior
to payment hereunder and the Holder shall have all rights as the holder of this
Note until such time, if any, as the Holder receives full payment pursuant to
this Section 6(b). No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.

 

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c) Standstill. Until the earlier of (i) such time as the Ichor Credit Facility
is paid in full in cash and all commitments to make extensions of credit
thereunder have been terminated and (ii) 90 days after delivery of written
notice to the administrative agent under the Ichor Credit Facility that an Event
of Default has occurred, Holder shall (notwithstanding anything to the contrary
herein) be prohibited from accelerating this Note and shall be prohibited from
(i) taking from or for the account of Company or any subsidiary of Company, by
set-off or in any other manner, the whole or any part of any moneys which may
now or hereafter be owing by Company or any subsidiary of Company with respect
to this Note, (ii) suing for payment of, or initiating or participate with
others in any suit, action or proceeding against Company or any subsidiary of
Company to (x) enforce payment of or to collect the whole or any part of the
amounts owed pursuant to this Note or (y) commence judicial enforcement of any
of the rights and remedies under this Note or applicable law with respect to
this Note, (iii) accelerating the amounts owed under this Note, (iv) exercising
any put option or to cause Company or any subsidiary of Company to honor any
redemption or mandatory prepayment obligation under this Note or (v) taking any
action under the provisions of any state or federal law, including, without
limitation, the Uniform Commercial Code, or under any contract or agreement,
enforcing, foreclosing upon, taking possession of or selling any property or
assets of Company or any subsidiary of Company; provided, that, the Holder shall
not be bound by this Section 6(c) (other than with respect to the prohibition on
any exercise of remedies against the Ichor Companies or the taking of any action
described in the foregoing clauses (i)-(v) with respect to the Ichor Companies)
if (I) an Event of Default described in Section 6(a)(i), 6(a)(v), 6(a)(vii),
6(a)(viii), 6(a)(ix) or (6)(a)(x), or a payment default under Section 6(a)(vi)
constituting an Event of Default, has occurred and is continuing or (II) the
holders of the Company’s 10% Secured Notes or other defaulted indebtedness or
obligation as described in Section 6(a)(vi) shall have elected to pursue any
remedy or enforcement action with respect to a default thereunder.

 

Section 7. Prepayment. The Company may at any time upon not less than one
business day’s notice prepay any portion of the principal amount of this Note,
all accrued and unpaid interest relating to such prepaid portion of the
principal and all other amounts due under this Note. If the Company exercises
its right to prepay the Note, the Company shall make payment to the Holder of an
amount in cash equal to the sum of (x) the then outstanding principal amount of
this Note, and (y) all accrued but unpaid interest and (z) all other amounts
owed pursuant to this Note, including, but not limited to all Late Fees, if
applicable (collectively the “Prepayment Amount”).

 

Section 8. Miscellaneous.

 

a) Notices. Any and all notices or other communications or deliveries to be
provided by the Holder hereunder shall be in writing and delivered personally,
by facsimile, or sent by a nationally recognized overnight courier service,
addressed to the Company, at its registered office address, or such other
facsimile number or address as the Company may specify for such purposes by
notice to the Holder delivered in accordance with this Section 8(a). Any and all
notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile, or sent by
a nationally recognized overnight courier service addressed to the Holder at the
facsimile number or address of the Holder appearing on the books of the Company,
or if no such facsimile number or address appears on the books of the Company,
at the principal place of business of the Holder. Any notice or other
communication or deliveries hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number set forth on the signature pages
attached hereto prior to 12:00 p.m. (New York City time) on any date, (ii) the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto on a day that is not a Trading Day or later than 12:00
p.m. (New York City time) on any Trading Day, (iii) the second Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service or (iv) upon actual receipt by the party to whom such notice is
required to be given.

 

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b) Absolute Obligation. Except as expressly provided herein, no provision of his
Note shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, and accrued interest, as applicable, on
this Note at the time, place, and rate, and in the coin or currency, herein
prescribed. This Note is a direct debt obligation of the Company.

 

c) Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Note, or in lieu of or in substitution
for a lost, stolen or destroyed Note, a new Note for the principal amount of
this Note so mutilated, lost, stolen or destroyed, but only upon receipt of
evidence of such loss, theft or destruction of such Note, and of the ownership
hereof, reasonably satisfactory to the Company.

 

d) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by and construed
and enforced in accordance with the internal laws of the State of Texas, without
regard to the principles of conflict of laws thereof. Each party agrees that all
legal proceedings concerning the interpretation, enforcement and defense of the
transactions contemplated by this Note and the Pledge Agreement (whether brought
against a party hereto or thereto or their respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of Houston, Texas (the “Texas Courts”). Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
Nevada Courts for the adjudication of any dispute hereunder (including with
respect to the enforcement of this Note or the Pledge Agreement) or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such Nevada Courts, or such Nevada Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Note and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by applicable law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Note or the transactions contemplated hereby. If any party
shall commence an action or proceeding to enforce any provisions of this Note,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys' fees and other costs and expenses incurred in
the investigation, preparation and prosecution of such action or proceeding.

 

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e) Waiver. Any waiver by the Company or the Holder of a breach of any provision
of this Note shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this Note.
The failure of the Company or the Holder to insist upon strict adherence to any
term of this Note on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Note on any other occasion. Any waiver by
the Company or the Holder must be in writing.

 

f) Severability. If any provision of this Note is invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum rate of interest permitted
under applicable law. The Company covenants (to the extent that it may lawfully
do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on this Note as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Note, and the Company (to the
extent it may lawfully do so) hereby expressly waives all benefits or advantage
of any such law, and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the Holder.

 

g) Remedies, Characterizations, Other Obligations. The remedies provided in this
Note shall be cumulative and in addition to all other remedies available under
this Note and the Pledge Agreement at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall
limit the Holder’s right to pursue actual and consequential damages for any
failure by the Company to comply with the terms of this Note. The Company
covenants to the Holder that there shall be no characterization concerning this
instrument other than as expressly provided herein. Amounts set forth or
provided for herein with respect to payments shall be the amounts to be received
by the Holder and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). The Company
shall provide all information and documentation to the Holder that is requested
by the Holder to enable the Holder to confirm the Company’s compliance with the
terms and conditions of this Note.

 

h) Next Business Day. Whenever any payment or other obligation hereunder shall
be due on a day other than a business day, such payment shall be made on the
next succeeding business day.

 

i) Headings. The headings contained herein are for convenience only, do not
constitute a part of this Note and shall not be deemed to limit or affect any of
the provisions hereof.

 

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Section 9. Security. As security for the performance of its obligations under
this Note, the Company contemporaneously herewith is executing that certain
Security and Pledge Agreement of even date herewith by the Company in favor of
the Holder, pursuant to which the Company is granting to the Holder a pledge of
the membership units of IEH.

 

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a
duly authorized officer as of the date first above indicated.

 

 

VIKING ENERGY GROUP, INC.

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

Name:

James A. Doris

 

 

Title:

President & C.E.O.

 

 

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