Legend Oil and Gas, Ltd. 8-K


 


Exhibit 10.2


 


Execution Version


 


SECURED PROMISSORY NOTE


 


	April 3, 2015	$2,854,000.00


Maturity Date: April 3, 2016


 


FOR VALUE RECEIVED, the
undersigned, Legend Oil and Gas, Ltd., a Colorado corporation (“Legend”) and Black Diamond Energy Holdings
LLC, a Delaware limited liability company (“Black Diamond”) (Legend and Black Diamond hereinafter collectively
referred to as “Makers”), joint and severally, hereby execute this Secured Promissory Note (this
“Note”) and hereby unconditionally promise to pay to the order of Sher Trucking L.L.C., a Nevada limited
liability company (hereinafter referred to as “Payee”), the principal sum of two
million eight hundred fifty four thousand DOLLARS ($2,854,000.00) in lawful money of the United States of America,
on the terms provided below.


 


1.


Definitions. For purposes
of this Note, unless the context otherwise requires, the following terms shall have the definitions assigned to such terms as follows:


 


a.


“Business
Day” shall mean for all purposes any day except Saturday, Sunday, or a day which in the United States is a legal
holiday or a day on which banking institutions are authorized or required by law or other government action to close in the State
of Utah.


 


b.


“Dollars”
and the sign “$” shall mean lawful currency of the United States of America.


 


c.


“Event
of Default” shall mean the occurrence of any one or more of the following events:


 


i.


Failure of Makers
to pay any installment of principal and interest on this Note in a timely manner or on any other indebtedness of Makers to Payee
when due under this Note; or


 


ii.


Makers shall fail
to perform or observe any term, covenant or agreement on its part to be performed or observed in this Note (other than any such
term, covenant or agreement specified in clause (i), immediately above) and such failure shall continue unremedied or shall not
be waived for a period of thirty (30) Business Days after written notice thereof from Payee to Makers; or


 


iii.


If any Maker or any
of its subsidiaries party to the Security Agreement (collectively with the Makers, the “Obligors”) shall admit
in writing its inability to pay such debts generally, or shall make a general assignment for the benefit of creditors or any Obligor
shall become insolvent (however defined or evidenced) or makes an assignment for the benefit of creditors; or


 


 




    	 



    	 



    

 


iv.


If there shall be
filed by or against any Obligor a petition for any relief under the bankruptcy laws of the United States now or hereafter in effect
or any proceeding shall be commenced with respect to any Obligor under any insolvency, readjustment of debt, reorganization, dissolution,
liquidation or similar law or statute of any jurisdiction now or hereafter in effect (whether at law or in equity), provided that
in the case of any involuntary filing or the commencement of any involuntary proceeding against any Obligor and such proceeding
or petition shall have continued undismissed and unvacated for at least sixty (60) days; or


 


v.


If any petition or
application to any court or tribunal, at law or in equity, shall be filed by or against any Obligor for the appointment of any
receiver or trustee for any Obligor or any material part of the property of any Obligor, provided that in the case of any involuntary
filing against any Obligor, such proceeding or appointment shall have continued undismissed and unvacated for at least sixty (60)
days; or


 


vi.


The occurrence of
a default or event of default under the Security Agreement securing this Note after any applicable cure periods set forth in such
Security Agreement; or


 


vii.


Any lien or security
interest granted by Black Diamond and its subsidiaries under the Security Agreement shall, in any material manner, be avoided,
terminated, revoked or declared void or invalid, or lose its applicable priority or perfected status; or


 


viii.


Any representation
or warranty made by Makers or any of their subsidiaries or affiliates in this Note or the Security Agreement, or by any of their
officers in a writing furnished in connection with this Note or the Security Agreement, which are false in any material respect
on the date made; or


 


ix.


Any occurrence of
whatsoever nature (including, without limitation, any adverse determination in any litigation, arbitration, or governmental investigation
or proceeding) which could reasonably be expected to materially and adversely affect (a) the financial condition or operation of
any Obligor, (b) the ability of any Obligor to perform their material obligations under this Note or the Security Agreement, or
any writing executed pursuant thereto, (c) the validity or enforceability of the material obligations of any Obligor under this
Note or the Security Agreement, or any writing executed pursuant thereto, (d) the rights and remedies of the Payee against any
Obligor with respect to the Obligations (as defined in the Security Agreement), or (e) the timely payment of the principal of and
interest on this Note or other amounts payable by the Makers hereunder.


 


d.


“Security
Agreement” shall mean that Security Agreement executed by Black Diamond and certain of its subsidiaries on the date
of this Note, as it may be amended. Restated or otherwise modified from time to time in accordance with its terms.


 


 




    	2



    	 



    

 


2.


Interest. Interest
shall accrue at the rate of 5.0% per annum from and after the date first given above on all outstanding balances until paid in
full. Interest shall be calculated on the basis of actual days elapsed but computed as if each year consisted of 360 days. Interest
on the Note shall be computed by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance is outstanding. Payee shall determine the interest
payable in accordance with this Note, and Payee’s determination thereof shall be conclusive and binding, absent manifest
error. 


 


3.


Payment of Principal
and Interest. All principal and accrued interest shall be paid by Makers in Dollars constituting immediately available funds
on first anniversary of Note. Payment hereunder shall be made without setoff or counterclaim to Payee at Sher Trucking L.L.C. 3111
Bel Air Dr. #21A, Las Vegas, NV 89109, or such other location as Payee shall instruct. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day
and such extension of time, in the case of a payment of principal, shall be included in the computation of any interest on such
principal payment.


 


4.


Default Interest.
In the event an Event of Default shall occur and be continuing, default interest will be due and owing by Makers at the rate otherwise
applicable to this Note plus 13% per annum. Such interest shall be due and payable upon demand. Default interest shall be calculated
on the basis of actual days elapsed but computed as if each year consisted of 360 days. Default interest on this Note shall be
computed by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal balance is outstanding. Payee shall determine the default interest payable
in accordance with this Note, and Payee’s determination thereof shall be conclusive and binding, absent manifest error.


 


5.


Prepayments. Makers
shall have a right to prepay, and Payee shall have an obligation to accept, any tendered payment of all or any part (but in a minimum
amount of $10,000) of the principal of this Note before it is due and any such prepayment shall be without penalty or premium.


 


6.


Security for Payment.
The indebtedness evidenced by this Note is secured by the Security Agreement, which creates legal and valid encumbrances on and
an assignment of all of the Collateral (as defined in the Security Agreement). Payee shall have such rights with respect to the
Collateral as set forth in the Security Agreement.


 


7.


Occurrence of Event of
Default. 


 


a.


If any Event of
Default shall occur for any reason, then and in any such event, in addition to all rights and remedies of Payee under applicable
law or otherwise, all such rights and remedies being cumulative, not exclusive and enforceable alternatively, successively and
concurrently, Payee may, at its option, declare any or all amounts owing under this Note, to be due and payable provided, however,
that upon the occurrence of any Event of Default of the kind described in clauses (iv) or (v) of the definition of Event of Default,
the obligations of Makers hereunder shall automatically become and be due and payable in full, without notice of any kind. Upon
and during the continuance of an Event of Default, Makers shall permit Payee and/or its accountants or other professional advisors
access at reasonable times and on reasonable prior notice to the books, accounts and records of Makers and to meet and discuss
matters with Makers and their advisors.


 




    	3



    	 



    

 


 


8.


Notices. All notices
required or permitted hereunder shall be in writing and shall be deemed to have been given or made as follows: (a) if sent
by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three days after deposit
in the United States postal system by first class mail, postage prepaid; and (c) if sent by overnight courier, upon delivery,
addressed to Makers or Payee at the following respective addresses or such other address as such party may from time to time designate
by written notice to the other:


 


Payee:


Sher Trucking L.L.C.


3111 Bel Air Dr. #21A

Las Vegas, NV 89109


 


Makers:


Legend Oil & Gas, Ltd.


555 North Point Center East

Suite 410


Alpharetta, Georgia 30022


 


and


 


Black Diamond Energy Holdings LLC


555 NorthPoint Center East


Suite 410


Alpharetta, GA 30022


 


9.


Legal Fees. If this
Note is placed in the hands of any attorney for collection, or if it is collected through any legal proceeding at law or in equity
or in bankruptcy, receivership, or other court proceedings, Makers agree to pay all costs of collection including, but not limited
to, court costs and attorneys’ fees.


 


10.


Joint and Several Liability,
Certain Waivers. 


 


a.


BY SIGNING THIS
NOTE, EACH MAKER AGREES THAT IT IS LIABLE, JOINTLY AND SEVERALLY WITH THE OTHER MAKER, FOR THE PAYMENT AND PEFORMANCE OF ALL OBLIGATIONS
UNDER THIS NOTE, AND THAT THE PAYEE CAN ENFORCE SUCH OBLIGATIONS AGAINST ANY MAKER, IN THE PAYEE’S SOLE DISCRETION; PROVIDED,
HOWEVER, THAT EACH MAKER SHALL ONLY BE LIABLE UNDER THIS NOTE FOR THE MAXIMUM AMOUNT OF SUCH LIABILITY THAT CAN BE HEREBY INCURRED
WITHOUT RENDERING ITS OBLIGATIONS UNDER THIS NOTE AVOIDABLE UNDER APPLICABLE LAW RELATING TO FRAUDULENT CONVEYANCE OR FRAUDULENT
TRANSFER, AND NOT FOR ANY GREATER AMOUNT.


 


 




    	4



    	 



    

 


b.


Each Maker thereof
waives the benefit of any and all defenses and discharges available to a guarantor, surety, indorser or accommodation party dependent
on its character as such. Without limiting the generality of the foregoing, to the extent permitted by applicable law, each Maker
waives presentment, demand for payment and notice of nonpayment or protest of any note or other instrument evidencing any of the
obligations under this Note and agrees that such Maker’s liability hereunder and the security interest shall not be affected
or impaired in any way by any of the following acts and things: (i) any sale, pledge, surrender, compromise, settlement, release,
renewal, extension, indulgence, alteration, substitution, exchange, change in modification or other disposition of any of the obligations
under this Note, any evidence thereof or any collateral therefor, (ii) any acceptance or release of collateral for or guarantors
of any of the obligations under this Note; (iii) any failure, neglect, or omission to realize upon or protect any of the obligations
under this Note, to obtain, perfect, enforce or realize upon any collateral therefor or to exercise any lien upon or right of appropriation
of any moneys, credits or property toward the liquidation of any of the obligations under this Note, (iv) any application of payments
or credits upon any of the obligations under this Note, or (v) any irregularity or avoidability of the obligations under this Note
(including any avoidability of the obligations under this Note as fraudulent transfers or fraudulent conveyances under any applicable
law). The Payee shall not be required, before exercising its rights under this Note, to first resort for payment of any of the
obligations under this Note to any other person or entity, its or their properties or estates, or any collateral, property, liens
or other rights or remedies whatsoever. To the extent permitted by applicable law, each Maker agrees not to exercise any right
of contribution, recourse, subrogation or reimbursement available to it against any other person or property, unless and until
all obligations under this Note and all other debts, liabilities and obligations owed by such Maker or Subsidiary to Payee have
been paid and discharged. Each Maker expects to derive benefits from the transactions resulting in the creation of the obligations
under this Note. Payee may rely conclusively on the continuing warranty, hereby made, that each Maker continues to be benefitted
by the Payee’s extension of credit accommodations to the Maker, the Payee shall have no duty to inquire into or confirm the
receipt of any such benefits and this Note shall be effective and enforceable by Payee without regard to the receipt, nature or
value of any such benefits.


 


11.


Interest Laws. Any
provision in this Note, the Security Agreement or any other document executed or delivered in connection herewith, or in any other
agreement or commitment, whether written or oral, expressed or implied, to the contrary notwithstanding, neither Payee nor any
holder hereof shall in any event be entitled to receive or collect, nor shall or may amounts received hereunder be credited, so
that Payee or any holder hereof shall be paid, as interest, a sum greater than the maximum amount permitted by applicable law to
be charged to the person, partnership, firm, or corporation primarily obligated to pay this Note at the time in question. If any
construction of this Note or any document securing this Note, or any and all other papers, agreements, or commitments, indicate
a different right given to Payee or any holder hereof to ask for, demand, or receive any larger sum as interest, such is a mistake
in calculation or wording which this clause shall override and control, it being the intention of the parties that this Note and
any other instruments securing the payment of this Note or executed or delivered in connection herewith shall in all things comply
with applicable law and proper adjustments shall automatically be made accordingly.


 


 




    	5



    	 



    

 


(a)


Choice of Law
and Forum. Except to the extent that the laws of the United States may apply to the terms hereof, the substantive laws of the
State of Utah shall govern the validity, construction, enforcement, and interpretation of this Note, without reference to its conflict
of laws rules and principles. With respect to any legal action or proceeding arising under this Note, each Maker, to the fullest
extent permitted by law, hereby: (i) submits to the jurisdiction of the state and federal courts in the State of Utah; (ii) agrees
that the venue of any such action or proceeding may be laid in Salt Lake County, Utah and waives any claim that the same is an
inconvenient forum; (iii) stipulates that service of process in any such action or proceeding shall be properly made if mailed
by any form of registered or certified mail (airmail if international), postage prepaid, to the address then registered in Secured
Party’s records for Debtor, and that any process so served shall be effective ten (10) Business Days after mailing; (iv)
waives any right to immunity from any such action or proceeding and waives any immunity or exemption of any property, wherever
located, from garnishment, levy, execution, seizure or attachment prior to or in execution of judgment, or sale under execution
or other process for the collection of debts; and (v) waives any right to interpose any set-off or non-compulsory counterclaim
or to plead laches or any statute of limitations as a defense in any such action or proceeding, and waives all provisions and requirements
of law for the benefit of Debtor now or hereafter in force. No provision of this Agreement shall limit Secured Party’s right
to serve legal process in any other manner permitted by law or to bring any such action or proceeding in any other competent jurisdiction.


12.


Successors-in-Interest.
This Note binds and may be enforced against the successors-in-interest of Makers, except as otherwise provided. This Note shall
inure to the benefit of and may be enforced by Payee and its successors and assigns. This Note may not be assigned by Makers without
the prior written consent of Payee. The Payee may at any time sell, assign, transfer, grant participations in, or otherwise dispose
of any portion of this Note and the Security Agreement to any persons or entity.


 


13.


Amendments. This Note
may be amended only by an instrument in writing signed by Payee and Makers.


 


14.


Severability. The
unenforceability of any provision of this Note will not affect the enforceability or validity of any other provision herein.


 


15.


Continuing Obligations.
The obligations and liabilities of Makers under this Note shall be binding upon and enforceable against Makers and their successors
and assigns. The representations, undertakings, and covenants made by the undersigned under this Note are, and shall be deemed
to be, of continuing force and effect until all indebtedness and obligations of the undersigned under this Note have been fully
and finally paid and performed.


 


16.


Authority. Makers
hereby represent and warrant to Payee that, by their execution below, as follows:


 


(i)    Makers have
the full power, authority, and legal right to execute and deliver this Note and that the indebtedness evidenced hereby constitutes
a valid and binding obligation of Makers without exception or limitation, (ii) Makers (A) are duly organized, validly existing
and in good standing under the laws of their state of organization; (B) have all requisite power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted; and (C) are qualified to do business in all jurisdictions
in which the nature of Maker’s business requires that Maker be qualified, and


 




    	6



    	 



    

 


(ii)   The
execution, delivery and performance by each Maker of this Note will not (A) violate any provision of any existing law or regulation,
or any judgment, order or award of any court, arbitrator or governmental authority; (B) violate any provision of Debtor’s
articles of incorporation; or (C) violate, be in conflict with, result in a breach of or constitute a default under any agreement
or instrument to which Debtor is a party or by which Debtor or any of its properties may be bound.


17.


Multiple Counterparts.
This Note may be executed in multiple counterparts, each of which will be deemed an original and all of which shall constitute
one and the same instrument. Facsimile and electronic signatures shall be treated as original signatures for all purposes.


 


18.


Time is of the Essence.
Time is of the essence to all terms and provisions set forth herein.


 


19.


Waiver of Trial by Jury.
EACH MAKER AND THE PAYEE IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS NOTE OR THE SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.


 


 


 


[Signature appears
on following page]


 




    	7



    	 



    

 


 


IN WITNESS HEREOF,
the undersigned have caused this Secured Promissory Note to be duly executed and delivered on the date first given above.


 


	 	MAKERS:
	 	 	 
	 	Legend Oil and Gas, Ltd.
	 	 	 
	 	 	 
	 	By: 	 
	 	Name:  	 
	 	Title:  	 
	 	 	 
	 	 	 
	 	Black Diamond energy holdings llc
	 	 	 
	 	 	 
	 	By: 	 
	 	Name:  	 
	 	Title:  	 


 


 


 


[Signature page
to Secured Promissory Note]