Exhibit 10.2

 

THIS AGREEMENT RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION
TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE 1933
ACT) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”). NONE OF THE SECURITIES TO WHICH THIS AGREEMENT RELATES
HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND,
UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN
THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT.

 

USD $            600,000

ARKANOVA ENERGY CORPORATION

10% PROMISSORY NOTE

 

FOR VALUE RECEIVED, Arkanova Energy Corporation, a corporation organized and
existing under the laws of the State of Nevada (the “Company”), promises to pay
to

GLOBAL PROJECT FINANCE AG of Tuerlacherweg 40, Sarnen, Switzerland, CH-6060, the
registered holder hereof (the “Holder”), the principal sum of

SIX HUNDRED THOUSAND ($600,000.00) United States Dollars on the Maturity Date
(as defined below) and to pay interest on the principal sum outstanding from
time to time in arrears at the rate of 10.0 % per annum (computed on the basis
of the actual number of days elapsed and a year of 365 days), accruing from the
date of initial issuance of this Note (the “Issue Date”), until payment in full
of the principal sum has been made or duly provided for (whether before or after
the Maturity Date).

 

This Note is being issued pursuant to the terms of a Purchase Agreement, dated
as of the date hereof (the “Note Purchase Agreement”), to which the Company and
the Holder (or the Holder’s predecessor in interest) are parties. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Note Purchase Agreement.

 

This Note is subject to the following additional provisions:

 

1.                Maturity Date. The term “Maturity Date” means the date
occurring at any time after July 31, 2007 upon which the Holder demands payment
of this Note in writing.

 

 

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2.                Prepayment Provisions. This Note may be prepaid in whole or in
part at any time prior to the Maturity Date, without penalty. Any payment shall
be applied as provided in Section 3. The Company further agrees that in the
event that the Company does a subsequent debt or equity financing for United
States Five Million and 00/100 Dollars (USD $5,000,000.00) or greater before the
Maturity Date, the Company will repay the Note plus accrued interest from the
proceeds of that financing.

 

3.                Application of Payments. Any payment made on account of the
Note shall be applied in the following order of priority: (i) first, to accrued
interest through and including the date of payment, and then (ii) to principal
of this Note.

 

4.                Default. The Company shall be in default hereunder if any
payment is not made in a timely manner, or within five days thereafter.

 

5.                Manner of Payments. All payments contemplated hereby to be
made “in cash” shall be made in immediately available good funds of United
States of America currency by wire transfer to an account designated in writing
by the Holder to the Company (which account may be changed by notice similarly
given). For purposes of this Note, the phrase “date of payment” means the date
good funds are received in the account designated by the notice which is then
currently effective.

 

6.                No Impairment; Direct Obligation. Subject to the terms of the
Note Purchase Agreement, no provision of this Note shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Note at the time, place, and rate, and in
the coin or currency, as herein prescribed. This Note is a direct obligation of
the Company.

 

7.                Limited Recourse. No recourse shall be had for the payment of
the principal of, or the interest on, this Note, or for any claim based hereon,
or otherwise in respect hereof, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.

 

8.                Restrictions on Resale. The Holder of the Note, by acceptance
hereof, agrees that this Note is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Note except under
circumstances which will not result in a violation of the Securities Act of
1933, as amended, or any applicable state blue sky or foreign laws or similar
laws relating to the sale of securities.

 

9.                Notices. Any notice given by any party to the other with
respect to this Note shall be given in the manner contemplated by the Note
Purchase Agreement in the Section entitled “Notices.”

 

 

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10.             Applicable Laws. This Note shall be governed by and construed in
accordance with the laws of the State of Texas. Each of the parties consents to
the exclusive jurisdiction of the Courts of the State of Texas in connection
with any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non coveniens, to the bringing of any such proceeding in such jurisdictions. To
the extent determined by such court, the Company shall reimburse the Holder for
any reasonable legal fees and disbursements incurred by the Holder in
enforcement of or protection of any of its rights under any of this Note.

 

11.             Jury Trial Waiver. The Company and the Holder hereby waive a
trial by jury in any action, proceeding or counterclaim brought by either of the
Parties hereto against the other in respect of any matter arising out of or in
connection with this Note.

 

12.             Events of Default. The following shall constitute an “Event of
Default”:

 

 

(a)

Default in Payment. The Company shall default in the payment of principal or
interest on this Note or any other amount due; or

 

 

(b)

Breach of Representation or Warranty. Any of the representations or warranties
made by the Company herein, in the Note Purchase Agreement or any of the other
Transaction Agreements shall be false or misleading in any material respect at
the time made; or

 

 

(c)

Assignment for Creditors. The Company shall (1) make an assignment for the
benefit of creditors or commence proceedings for its dissolution; or (2) apply
for or consent to the appointment of a trustee, liquidator or receiver for its
or for a substantial part of its property or business; or

 

 

(d)

Appointment of Trustee. A trustee, liquidator or receiver shall be appointed for
the Company or for a substantial part of its property or business without its
consent; or

 

 

(e)

Court Control. Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or control of the
whole or any substantial portion of the properties or assets of the Company; or

 

 

(f)

Bankruptcy Proceedings. Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Company.

 

If an Event of Default shall have occurred, then, or at any time thereafter, and
in each and every such case, unless such Event of Default shall have been waived
in writing by the Holder (which waiver shall not be deemed to be a waiver of any
subsequent

 

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default) at the option of the Holder and in the Holder’s sole discretion, the
Holder may consider this Note immediately due and payable (and the Maturity Date
shall be accelerated accordingly), without presentment, demand, protest or
notice of any kinds, all of which are hereby expressly waived, anything herein
or in any note or other instruments contained to the contrary notwithstanding,
and interest shall accrue on the total amount due (the “Default Amount”) on the
date of the Event of Default (the “Default Date”) at the rate of 16% per annum
or the maximum rate allowed by law, whichever is lower, from the Default Date
until the date payment is made, and the Holder may immediately enforce any and
all of the Holder’s rights and remedies provided herein or any other rights or
remedies afforded by law.

 

13.               Covenants of the Company. The Company covenants and agrees
that, so long as any principal of, or interest on, this Note shall remain
unpaid, unless the Holder shall otherwise consent in writing, it will comply
with the following terms:

 

 

(a)

Reporting Requirements. The Company will furnish to the Holder or make publicly
available:

 

 

(i)

as soon as possible, and in any event within ten (10) days after obtaining
knowledge of the occurrence of (A) an Event of Default, (B) an event which, with
the giving of notice or the lapse of time or both, would constitute an Event of
Default, or (C) a material adverse change in the condition or operations,
financial or otherwise, of the Company, taken as whole, the written statement of
the Chief Executive Officer or the Chief Financial Officer of the Company,
setting forth the details of such Event of Default, event or material adverse
change;

 

 

(ii)

promptly after the commencement thereof, notice of each action, suit or
proceeding before any court or other governmental authority or other regulatory
body or any arbitrator as to which there is a reasonable possibility of a
determination that would (A) materially impact the ability of the Company to
conduct its business, (B) materially and adversely affect the business,
operations or financial condition of the Company, or (C) impair the validity or
enforceability of the Note or the ability of the Company to perform their
obligations under the Note.

 

 

(b)

Compliance with Laws. The Company will comply, in all material respects with all
applicable laws, rules, regulations and orders, except to the extent that
noncompliance would not have a Material Adverse Effect upon the business,
operations or financial condition of the Company taken as a whole.

 

 

(c)

Preservation of Existence. The Company will maintain and preserve its existence.

 

 

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(d)

Maintenance of Properties. The Company will maintain and preserve, all of its
material properties which are necessary in the proper conduct of its business in
good working order and condition, ordinary wear and tear excepted, and comply,
at all times with the provisions of all material leases to which it is a party
as lessee or under which it occupies property, so as to prevent any material
forfeiture or material loss thereof thereunder.

 

 

(e)

Maintenance of Insurance. The Company will maintain, with responsible and
reputable insurers, insurance with respect to its properties and business, in
such amounts and covering such risks, as is carried generally in accordance with
sound business practice by companies in similar businesses in the same
localities in which the Company is situated.

 

 

(f)

Keeping of Records and Books of Account. The Company will keep adequate records
and books of account, with complete entries made in accordance with generally
accepted accounting principles, reflecting all of its financial and other
business transactions.

 

14.             Qualification. In the event for any reason, any payment by or
act of the Company or the Holder shall result in payment of interest which would
exceed the limit authorized by or be in violation of the law of the jurisdiction
applicable to this Note, then ipso facto the obligation of the Company to pay
interest or perform such act or requirement shall be reduced to the limit
authorized under such law, so that in no event shall the Company be obligated to
pay any such interest, perform any such act or be bound by any requirement which
would result in the payment of interest in excess of the limit so authorized. In
the event any payment by or act of the Company shall result in the extraction of
a rate of interest in excess of a sum which is lawfully collectible as interest,
then such amount (to the extent of such excess not returned to the Company)
shall, without further agreement or notice between or by the Company or the
Holder, be deemed applied to the payment of principal, if any, hereunder
immediately upon receipt of such excess funds by the Holder, with the same force
and effect as though the Company had specifically designated such sums to be so
applied to principal and the Holder had agreed to accept such sums as an
interest-free prepayment of this Note. If any part of such excess remains after
the principal has been paid in full, whether by the provisions of the preceding
sentences of this Section or otherwise, such excess shall be deemed to be an
interest-free loan from the Company to the Holder, which loan shall be payable
immediately upon demand by the Company. The provisions of this Section shall
control every other provision of this Note.

 

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IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
by an officer thereunto duly authorized this 15th day of June, 2007.

 

 

ARKANOVA ENERGY CORPORATION

 

 

 

Per:

/s/ Pierre Mulacek

Pierre Mulacek

President & CEO