Exhibit 10.1

 

LOAN CONSOLIDATION AGREEMENT

 

THIS LOAN CONSOLIDATION AGREEMENT (this “Agreement”) is made and entered into as
of, but not necessarily on, the 1st day of October, 2009, by and between
Arkanova Acquisition Corporation, a Delaware corporation (the “Company”), and
Aton Select Funds Limited (the “Investor”).

 

 

BACKGROUND

 

A.                                   The Company is currently indebted to the
Investor in the principal amount of Ten Million Twelve Thousand Five Hundred and
No/100 United States Dollars (US $10,012,500.00) under the following described
promissory notes (collectively, the “Existing Notes”):

 

(i)                                     Promissory Note from the Company to Aton
Select Fund Limited dated September 3, 2008, in the original principal amount of
Nine Million and No/100 United States Dollars (US $9,000,000.00);

 

(ii)                                  Promissory Note from the Company to Aton
Select Fund Limited dated April 29, 2009, in the original principal amount of
Six Hundred Thousand and No/100 United States Dollars (US $600,000); and

 

(iii)                               Promissory Note from the Company to Aton
Select Fund Limited dated April 14, 2009, in the original principal amount of
Four Hundred Twelve Thousand Five Hundred and No/100 United States Dollars (US
$412,500).

 

B.                                     The Company has requested that the
Investor loan an additional One Million One Hundred Sixty-Eight Thousand Seven
Hundred Twenty-Nine and 17/100 United States Dollars (US $1,168,729.17) (the
“Additional Loan Amount”) and consolidate the outstanding principal balances
under the Existing Notes and the Additional Loan Amount into one new promissory
note in the principal amount of Twelve Million and No/100 United States Dollars
(US $12,000,000.00) (the “New Note”), and the Investor has agreed to such new
loan and consolidation of the Existing Notes on the following terms and
conditions.

 

Terms and Conditions

 

In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

1.                                       New Loan Documents.  The Company and
the Investor shall enter into new loan documents in the substantially the form
of the Note Purchase Agreement, Secured Promissory Note, Pledge Agreement and
Guaranty Agreement attached hereto as Annexes “A,” “B,” “C’” and “D” attached
hereto and incorporated herein reference for all purposes (the “New Loan
Documents”).  The New Loan Documents shall provide for the consolidation and
cancellation of the Existing Notes and the loan of the Additional Loan Amount
under a new Secured Promissory Note on the terms set forth therein, which new
Secured Promissory Note will be secured by a pledge of all of the membership
interests of the Company’s wholly owned subsidiary, Provident Energy Associates
of Montana, LLC, a Montana limited liability

 

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company, and the guaranty of the indebtedness set forth therein by the Company’s
parent Corporation, Arkanova Energy Corporation (“AEC”).  Interest on the
Existing Notes shall be paid in full in unregistered shares of the common stock
of AEC at the time of the signing of the New Loan Documents on the terms set
forth therein.  At the time of signing of the new Secured Promissory Note and
the issuance of shares of AEC in payment of the accrued interest thereunder, the
Existing Notes shall be deemed cancelled and consolidated into the new Secured
Promissory Note.

 

2.                                       General Provisions.  The following
general terms and provisions shall apply to this Agreement:

 

(a)                                  Amendment.  This Agreement may not be
modified, altered, amended, or terminated except by the mutual written agreement
of the parties hereto.

 

(b)                                 Severability.  If a court of competent
jurisdiction determines that any provision contained in this Agreement is void,
illegal or unenforceable, the other provisions shall remain in full force and
effect and the provision held to be void, illegal or unenforceable shall be
limited so that it shall remain in effect to the extent permissible by law.

 

(c)                                  Choice of Law and Venue.  THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.  ANY LITIGATION, SPECIAL PROCEEDING OR OTHER PROCEEDING AS BETWEEN THE
PARTIES THAT MAY BE BROUGHT, OR ARISE OUT OF, IN CONNECTION WITH OR BY REASON OF
THIS AGREEMENT SHALL BE BROUGHT IN THE APPLICABLE FEDERAL OR STATE COURT IN AND
FOR HARRIS COUNTY, TEXAS, WHICH COURTS SHALL BE THE EXCLUSIVE COURTS OF
JURISDICTION AND VENUE.

 

(d)                                 Preparation of Agreement.  Each party to
this Agreement acknowledges that:  (i) the party had the advice of, or
sufficient opportunity to obtain the advice of, legal counsel separate and
independent of legal counsel for any other party hereto; (ii) the terms of the
transactions contemplated by this Agreement are fair and reasonable to such
party; and (iii) such party has voluntarily entered into the transactions
contemplated by this Agreement without duress or coercion.  Each party further
acknowledges that such party was not represented by the legal counsel of any
other party hereto in connection with the transactions contemplated by this
Agreement, nor was he or it under any belief or understanding that such legal
counsel was representing his or its interests.  Each party agrees that no
conflict, omission or ambiguity in this Agreement, or the interpretation
thereof, shall be presumed, implied or otherwise construed against any other
party to this Agreement on the basis that such party was responsible for
drafting this Agreement.

 

(e)                                  Nonwaiver.  Unless otherwise expressly
provided herein, no waiver by a party of any provision hereof shall be deemed to
have been made unless expressed in writing and signed by the other party.  No
delay or omission in the exercise of any right or remedy accruing to a party
upon any breach under this Agreement by the other party shall impair such right
or remedy or be construed as a waiver of any such breach theretofore or
thereafter occurring.  The waiver by a party of any breach of any term, covenant
or condition herein stated shall not be deemed to be a waiver of any other
breach, or of a subsequent breach of the same or any other term, covenant or
condition herein contained.

 

(f)                                    Entire Agreement.  This Agreement sets
forth the entire understanding of the parties with respect to the subject matter
hereof and supersedes all prior or contemporaneous

 

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representations, understandings and agreements, oral or written, made between
the parties effecting the subject matter hereof, and all such prior or
contemporaneous representations, understandings and agreements are hereby
terminated.

 

(g)                                 Parties Bound.  This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors, assigns, heirs and personal representatives.

 

(h)                                 Counterpart Execution.  This Agreement may
be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one and the same
instrument.

 

Signatures

 

To evidence the binding effect of the foregoing terms and condition, the parties
have executed and delivered this Agreement as of, but not necessarily on, the
date first above written.

 

 

 

ARKANOVA ACQUISITION CORPORATION

 

 

 

 

 

 

 

By:

/s/Pierre Mulacek

 

 

Pierre Mulacek, President

 

 

 

 

 

 

 

ATON SELECT FUNDS LIMITED

 

 

 

 

 

 

 

By:

/s/David Dawes

 

 

David Dawes, Director

 

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ANNEX “A”

 

Note Purchase Agreement

 

Attached

 

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ANNEX “B”

 

Secured Promissory Note

 

Attached

 

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ANNEX “C”

 

Pledge Agreement

 

Attached

 

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ANNEX “D”

 

Guarantyton Agreement

 

Attached

 

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