Exhibit
10.2


 


SECURED PROMISSORY NOTE


 


IN RETURN FOR valuable consideration received, WARREN
E&P, INC., a New Mexico corporation (the “Maker”), whose
address is 100 Oceangate, Suite 950, Long Beach, CA 90802, hereby promises
and agrees to pay to NORAM DRILLING COMPANY,
a Texas corporation, for the benefit of GLOBAL RIG COMPANY ASA, a
Norwegian corporation  (the “Payee”),
whose address is 2000 South Dairy Ashford, Suite 465 Houston, Texas 77077,
the principal sum of THREE MILLION FIVE HUNDRED
THOUSAND AND 00/100 DOLLARS ($3,500,000.00), with no, or zero (-0-)
percent, interest on the outstanding principal balance until this PROMISSORY NOTE (the “Note”) is paid in full, according to
the payment terms set forth below.


 


The principal amount of this Note
shall be due and payable in fifteen (15) equal monthly installments of
$233,333.33 each commencing on September 26, 2010, and continuing
regularly thereafter on the 26th day of each month until the entire principal
amount hereof is paid in full as provided for herein.


 


Time is of the essence in this
Note.  Upon any default in the payment of
the principal due under the terms hereof, the Payee, after giving twenty (20)
days written notice to the Maker within which to cure the default, may, at any
time after said twenty (20) day period and without notice, demand, presentment
or notice of dishonor, accelerate the maturity date of this indebtedness and
declare the entire principal balance hereof due and payable.


 


Maker expressly and severally waives
all notices, demands for payment, presentations for payment, notice of
acceleration of maturity, protest and notice of protest, as to this Note and as
to each, every and all installments hereof, and consents that Payee may at any
time, and from time to time, upon the request of or by agreement with Maker,
extend the date of maturity or change the time or method of payment without
notice to any endorsers, guarantors or sureties, who shall remain liable for
the payment of this Note.


 


Maker hereby binds itself, and its
successors and assignees, and agrees that if this Note is placed in the hands
of an attorney for collection or is collected by and through any character of
judicial proceeding (including probate or bankruptcy proceedings), then the
Maker shall pay, in addition to the other sums payable hereunder, reasonable
attorney’s fees and applicable court and collection costs.


 


This Note is
subject to and secured by those certain UCC-1 Form Financing Statements
executed by and from the Maker to in favor of the Payee of even date herewith,
covering a drilling rig, equipment, components and personal property more
particularly described therein, that will be filed in the California Secretary
of State’s Office and in the Los Angeles County California Recorder’s Office,
which secure the payment obligations contained herein.  The terms, conditions and provisions of such
UCC-1 Form Financing Statements are incorporated herein for all purposes
by this specific reference.


 


This Note is
subject to:


 


1.              That certain
SETTLEMENT AGREEMENT, RELEASE AND  PURCHASE AND SALE AGREEMENT dated
August 26, 2010 between Maker, as the Buyer, and Payee, as the Seller,
which governs the purchase and sale between the Maker to the Payee of a certain
drilling rig, equipment, components and personal property more particularly
described therein; and


 


2.              That certain
BILL OF SALE, TRANSFER AND ASSIGNMENT
dated August 26, 2010, from the Payee, as Seller, to the Maker, as Buyer,
which transfers from the Payee to the Maker a certain drilling rig, equipment,
components and personal property more particularly described therein.


 


The terms,
conditions and provisions of the above-described instruments are incorporated
herein for all purposes by this specific reference.


 


In the event the Payee fails or
refuses to comply with, perform under or in accordance with or defaults under
or pursuant to the SETTLEMENT AGREEMENT,
RELEASE AND PURCHASE AND SALE AGREEMENT or the BILL OF
SALE, TRANSFER AND ASSIGNMENT described above, then the Maker may


 

















 


pay any and all amounts required thereby
for and on behalf of the Payee, and may offset, take credit against and reduce
the amount of, in whole or in part, any subsequent monthly installments due
under the terms of this Note until such time as the Maker has recovered the
value of any and all such payments made for and on behalf of the Payee; at
which time the Maker shall resume paying the monthly installments required
hereby.


 


Neither the Maker nor the Payee may
sell, transfer or assign this Note without first obtaining the prior written
consent of the other party, which shall not be unreasonably withheld.


 


Waiver of any default, or the remedy
of any default, in a reasonable manner by either party, shall not operate as a
waiver of the default as remedied or any prior or subsequent default.


 


This Note shall be construed,
governed, enforced and interpreted under, in accordance with and by the laws
and decisions of the State of Texas.


 


DATED, EXECUTED and EFFECTIVE this 26th day of August, 2010.


 


	
   

  	
   

  	
  Maker:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WARREN E&P, INC.,

  
	
   

  	
   

  	
  a New Mexico corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  ELLIS G. VICKERS

  
	
   

  	
   

  	
   

  	
  ELLIS G. VICKERS,

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED and AGREED TO

  	
   

  	
   

  
	
  on and as of August 26, 2010.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Payee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NORAM DRILLING COMPANY,

  	
   

  	
   

  
	
  a Texas corporation (for the
  benefit of

  	
   

  	
   

  
	
  GLOBAL RIG COMPANY ASA,

  	
   

  	
   

  
	
  a Norwegian corporation)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  BRUCE SEELEY

  	
   

  	
   

  
	
   

  	
  BRUCE SEELEY, President

  	
   

  	
   

  



 


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