Exhibit 10.5





 







Exhibit 10.5



SECURED PROMISSORY NOTE

 


	
 $2,500,000 



	
 November 6,
2017










 


For
value received, Petro River Oil Corp., a Delaware corporation (the
“Company”),
hereby promises to pay to the order of Petro Exploration Funding
II, LLC or its registered assigns (the “Holder”), at
the address of c/o 20 E 20th Street, New York,
New York, NY 10003, the principal sum of $2,500,000 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. Definitions. Defined terms used herein
but not defined shall have the meaning ascribed in the Securities
Purchase Agreement dated June 13, 2017 (the “Purchase
Agreement”) between the Company and Holder.

 

Section
1.2. 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 New York, New
York.

 


  “Collateral”
shall have the meaning ascribed in the Security
Agreement.

 


“Default Rate”
means 18% 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.

 


 “Maturity
Date” means June 30, 2020.

 


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

 


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

 


 “Proceeds”
has the meaning set forth in the Uniform Commercial Code in the
State of New York.

 


“Security
Agreement” means the Security Agreement dated as of
the date hereof between the Company and Holder.

 


“Transfer” has
the meaning set forth in Section 4.2(b).

 


 




 

-1-








 






 

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.                                Upon
five days’ prior written notice, the Company may make
voluntary prepayments in whole or in part of the unpaid principal
hereunder from time to time at 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. Upon the occurrence and during the continuance
of an Event of Default, which has not been cured, the Company
agrees to pay during the period of the continuance of such Event of
Default interest on the unpaid principal amount of this Note at a
rate per annum equal to the lesser of the Default Rate and the
Maximum Rate.

 

(b) Interest payments
shall be paid on June 1, 2018, and each 6 month anniversary
thereafter until earlier of (i) outstanding principal balance of
this Note shall be paid in full or the Maturity Date.

 

(c) Interest shall be
calculated on the basis of a 365-day year.

 

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. 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, this Note shall be
surrendered to the Company for cancellation and shall not be
reissued.

 

Section
2.5. Security. To secure the indebtedness
evidenced by this Note, all interest hereon, and all other fees and
expenses related to the loan evidenced by this Note, including all
costs and expenses incurred by Holder in the collection of the
foregoing, the Company hereby grants to Holder a security interest
as set forth in the Security Agreement. Notwithstanding anything to
the contrary herein or any other transaction document relating to
this Note, this Note shall be junior to the security interest
created by the promissory note issued to Petro Exploration Funding,
LLC in the aggregate principal amount of $2,000,00 on June 15, 2017
(the “Prior Secured Note”).

 

Section
2.6. Covenants.

 

(a) The Company agrees
to pay all obligations when due and perform fully all of the
Company’s duties under and in connection with this
Note.

 

(b) The Company agrees
to (i) take all actions reasonably requested by Holder to perfect
for Holder a first priority security interest in the Inventory, and
(ii) refrain from encumbering, or, other than in the ordinary
course of business consistent with past practice, selling any of
the Collateral, or permitting the Collateral or any interest in the
Collateral to be encumbered, or seized, or, other than in the
ordinary course of business consistent with past practice,
transferred or otherwise disposed of.

 


 




 

-2-








 






 

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;

 

(b) the Company
defaults in the punctual performance of any other obligation,
covenant, term or provision contained in this Note; or

 

(c) 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(c)) 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(c) shall occur, 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.

 

(c) If any Event of
Default shall have occurred, the Holder may proceed to protect and
enforce its rights either by suit in equity or by action at law, or
both, and take any of the following actions (but it is expressly
agreed and acknowledged that the Holder is under no duty to take
any such actions):

 


(i)           require
the Company to give possession or control of the Collateral to the
Holder;

 


(ii)           take
control of Proceeds (as defined in the Security Agreement) and use
any such cash Proceeds to reduce any part of the indebtedness
evidenced by this Note, all interest hereon or related fees and
expenses;

 


(iii)           sell,
or instruct any agent or broker to sell, all or any part of the
Collateral in a public or private sale and apply all proceeds to
the payment or other satisfaction of the indebtedness evidenced by
this Note, all interest hereon or related fees and expenses in such
order and manner as the Holder shall, in its discretion,
choose;

 


(iv)           take
any action the Company is required to take or any other necessary
or desirable action to obtain, preserve, and enforce this Note, and
to maintain and preserve the Collateral, without notice to the
Company;

 


(v)           transfer
any of the Collateral, or evidence thereof, into the Holder’s
own name or that of its nominee and receive the Proceeds therefrom
and hold the same as security for the indebtedness evidenced by
this Note, interest hereon and related fees and expenses, or apply
the same thereon;

 


(vi)           take
control of funds generated by the Collateral , and use such funds
to reduce any part of the indebtedness evidenced by this Note,
interest hereon or related fees and expenses; and

 


(vii)           exercise
all other rights that a secured creditor may exercise with respect
to any of the Collateral.

 


 




 

-3-








 






 

ARTICLE
4. MISCELLANEOUS.

 

Section
4.1. 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
4.2. 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 Company may not
sell, assign (by operation of law or otherwise), transfer, pledge,
grant a security interest in or delegate (collectively
“Transfer”) any
of its rights or obligations under this Note unless the Holder has
granted its prior written consent and any such purported Transfer
by the Company without obtaining such prior written consent shall
be null and void ab
initio.

 

Section
4.3. Defenses. Except as expressly set forth
herein, 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
4.4. 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 4.4 shall
be dated as of the date of this Note.

 

Section
4.5. 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. Notwithstanding the foregoing, in the
event this Note shall not be paid when due and payable (whether
upon demand, by acceleration or otherwise), the Company shall be
liable for and shall pay to Holder all collection costs and
expenses incurred by Holder, including reasonable attorney’s
fees.

 

Section
4.6. 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 New York.

 

Section
4.7. 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
4.8. 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
4.9. 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.

 


 




 

-4-








 






 

Section
4.10. 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
4.11. 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
4.12. 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 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.

 


Section
4.13. Right of Setoff.
Notwithstanding the terms of this Note or any other agreement or
document, the Holder and each of its affiliates is hereby
authorized at any time and from time to time, to the fullest extent
permitted by law, and without prior notice to the Company, any such
notice being expressly waived by the Company, to set off and
appropriate and apply any and all obligations and indebtedness (in
whatever currency) at any time owing by the Holder or such
affiliate to or for the credit or the account of the Company
against any and all of the obligations of the Company now or
hereafter existing under this Note to the Holder or its affiliates,
whether direct or indirect, absolute or contingent, matured or
unmatured, and irrespective of whether or not the Holder or its
affiliates shall have made any demand under this Note and although
such obligations of the Company are owed to a subsidiary, office or
affiliate of the Holder different from the subsidiary, office or
affiliate obligated on such obligations or indebtedness. The rights
of the Holder and its affiliates under this Section 4.13 are in addition to
other rights and remedies (including other rights of set-off) that
the Holder or such affiliates may have. The Holder agrees to notify
the Company promptly after any such set off and appropriation and
application; provided, however, that the failure to
give such notice shall not affect the validity of such set off and
appropriation and application.


 



[Signature Page Follows]




 

-5-








 






 


EXECUTED as of the
date first written above.

 


	
 

	


PETRO
RIVER OIL CORP.


 


By:_________________________________


Stephen
Brunner


President









 


 


 


The
Holder hereby accepts this Note this 6th day of November,
2017


 


	
 

	
PETRO EXPLORATION
FUNDING II, LLC

 


By:
________________________________


Scot
Cohen


 Manager


 









 


 




SIGNATURE
PAGE TO SECURED PROMISSORY NOTE


 


 

-6-