Exhibit 10.2
SECURED PROMISSORY NOTE

      Up to U.S. $1,200,000.00   October ___, 2009
New York, New York

     FOR VALUE RECEIVED, CANARGO ENERGY CORPORATION, a corporation organized and
existing under the laws of Delaware and a debtor and debtor-in-possession in a
bankruptcy case commenced under chapter 11 of title 11 of the United States Code
before the United States Bankruptcy Court for the Southern District of New York,
Case No. 09-16453 (AJG) (the “Borrower”), hereby promises to pay to the order of
PERSISTENCY, a company organized and existing under the laws of the Cayman
Islands (the “Lender”), or as the Lender may otherwise direct, the aggregate
principal amount of all Advances (as defined below) advanced by Lender to
Borrower and not repaid, on or before the Maturity Date (as defined below), in
the aggregate principal sum at any time outstanding of up to ONE MILLION TWO
HUNDRED THOUSAND United States Dollars (U.S. $1,200,000.00) (the “Loan”),
together with interest as herein provided, at the offices of the Lender in New
York, New York or such other place as Lender may designate in writing, or by
wire transfer to Lender’s designated bank account.
     1. This secured promissory note (the “Note”) has been issued under, is
secured by, and the Lender is entitled to the benefits of that certain Debtor in
Possession Financing Agreement (the “Financing Agreement “), Security Agreement
(“Security Agreement”) and Pledge Agreements (“Pledge Agreement”), each dated
the date hereof between the Borrower and the Lender, and the Guaranties executed
in favor of the Lender by certain direct and indirect wholly owned subsidiaries
of Borrower each dated the date hereof (collectively, the “Guaranties” and
together with the Financing Agreement, the Security Agreement, the Pledge
Agreement and the Guaranties, collectively, the “Loan Documents”) . Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
or pursuant to the Financing Agreement.
     2. This Note evidences loans to be made from time to time by Lender to or
for the benefit of the Borrower, in accordance with and subject to the
provisions of the Financing Agreement (each, an “Advance” and collectively, the
“Advances”). The principal amount and date of disbursement of each Advance and
any prepayment or payment of principal hereunder shall be endorsed by the Lender
on Schedule A annexed to this Note and made a part hereof, which endorsement
shall constitute prima facie evidence of the accuracy of the information so
endorsed absent manifest error; provided, however, that any failure to endorse
such information on such Schedule shall not in any manner affect the obligation
of the Borrower to make payment of principal and interest in accordance with the
terms of this Note. If this Note or any payment required to be made hereunder
becomes due and payable on a day which is not a day on which banks are open for
the transaction of business in New York, New York (a “Business Day”), the due
date thereof shall be extended until the next following Business Day and
interest shall be payable during such extension at the rate applicable
immediately prior thereto, unless such next following Business Day falls in the
following calendar month, in which case the due date thereof

 

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shall be adjusted to the immediately preceding Business Day. The Loan may be
prepaid only in accordance with the terms and conditions of the Financing
Agreement.
     3. The Borrower shall pay interest on the Loan as provided in the Financing
Agreement. All interest shall accrue and be calculated on the actual number of
days elapsed and on the basis of a 360-day year.
     4. The entire outstanding principal balance of the Loan, together with all
interest, if any, accrued and unpaid through the Maturity Date, and all other
amounts owed pursuant to the Loan Agreements shall be paid on or before the
earlier of (i) January 26, 2010, unless such date is extended as provided in the
Financing Agreement but not beyond February 25, 2010 or (ii) the Conversion of
the Loan as provided in the Financing Agreement (the “Maturity Date”).
     5. Borrower agrees that if it fails to timely make any payment due under
this Note or upon the happening of any Event of Default under the Financing
Agreement, the outstanding amount of all Obligations due and payable upon the
occurrence of an Event of Default and during its continuance, including, without
limitation, reasonable attorneys’ fees, shall immediately become due and payable
at the option of the Lender, notwithstanding the Maturity Date. For purposes
hereof, attorneys’ fees shall include, without limitation, reasonable fees and
disbursements for legal services incurred by the holder hereof in collecting or
enforcing payment hereof whether or not suit is brought, and if suit is brought,
then through all appellate actions. Interest shall accrue and be payable on the
amount of the outstanding Obligations due and payable upon the occurrence of an
Event of Default and during its continuance at the Post-Default Rate.
     6. The Borrower hereby waives presentment, protest, demand for payment,
diligence, notice of dishonor and of nonpayment, and any and all other notices
or demands in connection with the delivery, acceptance, performance, default or
enforcement of this Note, hereby waives and renounces all rights to the benefits
of any statute of limitations and any moratorium, appraisement, exemption and
homestead now provided or which may hereafter be provided by any federal or
state statute, including, without limitation, exemptions provided by any federal
or state statute, including, without limitation, exemptions provided by or
allowed under any federal or state bankruptcy or insolvency laws, both as to
itself and as to all of its property, whether real or personal, against the
enforcement and collection of the obligations evidenced by this Note and any and
all extensions, renewals and modifications hereof and hereby consents to any
extensions of time, renewals, releases of any party this Note, waiver or
modification that may be granted or consented to by the holder of this Note.
     7. The Borrower agrees that its liabilities hereunder are absolute and
unconditional without regard to the liability of any other party and that no
delay on the part of the holder hereof in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right.

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     8. If at any time this transaction would be usurious under applicable law,
then regardless of any provision contained in this Note or any other agreement
made in connection with this transaction, it is agreed that (a) the total of all
consideration which constitutes interest under applicable law that is contracted
for, charged or received upon this Note or any other agreement shall under no
circumstances exceed the maximum rate of interest authorized by applicable law,
if any, and any excess shall be credited to the Borrower and (b) if the Lender
elects to accelerate the maturity of, or if the Borrower prepays the
indebtedness described in this Note, any amounts which because of such action
would constitute interest may never include more than the maximum rate of
interest authorized by applicable law and any excess interest, if any, provided
for in this Note or otherwise, shall be credited to the Borrower automatically
as of the date of acceleration or prepayment.
     9. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN
THE STATE OF NEW YORK EXCEPT AS GOVERNED BY THE BANKRUPTCY CODE AND EXCEPT AS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN AGREEMENT IN RESPECT OF SUCH
OTHER LOAN AGREEMENT.
     10. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE MAY BE BROUGHT
IN THE BANKRUPTCY COURT OR IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY
OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS NOTE, THE BORROWER AND THE
LENDER EACH HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER AND THE
LENDER EACH HEREBY IRREVOCABLY APPOINTS THE SECRETARY OF STATE OF THE STATE OF
NEW YORK AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING AND FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY
OF THE AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
BORROWER OR THE LENDER, AS APPLICABLE, AT ITS ADDRESS FOR NOTICES AS SET FORTH
IN SECTION 8.01 OF THE FINANCING AGREEMENT AND TO THE SECRETARY OF STATE OF THE
STATE OF NEW YORK, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE PARTIES HERETO TO SERVICE
OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST EACH OTHER IN ANY OTHER JURISDICTION. THE PARTIES
HERETO EACH HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

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     11. THE BORROWER AND THE LENDER HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS NOTE,
OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT
DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, OR
ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS NOTE,
AND AGREE THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY. THE BORROWER CERTIFIES THAT NO OFFICER,
REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR
COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. THE BORROWER HEREBY
ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER FOR
MAKING THE LOAN.
     IN WITNESS WHEREOF, each of the Borrower has executed and delivered this
Note on the date and year first above written.

            CANARGO ENERGY CORPORATION
      By           Name:           Title:      

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SCHEDULE A
ADVANCES AND REPAYMENTS

                                                              Unpaid   Date of  
Amount of     Amount of     Amount of     Principal   Advance   Advance    
Principal Paid     Interest Paid     Balance    
 
  U.S.$                          
 
                             

i