THIS SECURED PROMISSORY NOTE ("NOTE") AND THE SHARES OF COMMON STOCK THAT MAY BE
ISSUED UPON CONVERSION OF THE NOTE HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES
ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
(THE "ACT") OR ANY STATE SECURITIES LAW ("BLUE SKY REQUIREMENTS"). NEITHER THIS
NOTE NOR THE SHARES OF COMMON STOCK WHICH THIS NOTE MAY BE CONVERTED MAY BE SOLD
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE
TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT OR BLUE SKY REQUIREMENTS.

                       SECURED CONVERTIBLE PROMISSORY NOTE

$__________________________                                   New York, New York
(Original Principal Amount)                                      _________, 2003

      FOR VALUE RECEIVED, the adequacy of which is hereby acknowledged, the
undersigned, Dune Energy, Inc., a Delaware corporation (the "Maker"), hereby
promises to pay to the order of _____________ (the "Payee" or "Holder"), whose
address is ___________________________, on or before ___________ (the "Maturity
Date"), the principal sum of _____________ dollars ($______). Interest on the
unpaid principal amount hereof shall accrue at a rate of ten per cent (10%) per
annum and shall be payable quarterly in arrears. Payments due hereunder shall be
paid in lawful money of the United States of America (or by wire transfer or
certified check payable in such money) at Payee's address (as given above) or at
such other place as Payee or any other holder of this Note may from time to time
have designated by prior written notice to Maker.

            This Note is issued pursuant to a Subscription Agreement between the
Maker and the Holder and is one of several Notes issued in connection with a
private offering conducted by the Maker and described in Maker's Confidential
Private Offering Memorandum dated April 29, 2003. The rights of the Holder shall
be pari-passu with the rights afforded all other holders of Notes issued by
Maker in its private offering.

            1. Secured Debt. The Maker herein warrants and confirms hereby that
repayment of this Note is secured by a first lien on the Maker's assets and by a
pledge of certain shares of Maker's common stock owned by certain members of
Maker's Board of Directors and select insiders.

            2. Prepayment. Maker shall have the right prior to the Maturity Date
to repay all or any part of the principal amount of this Note.

<PAGE>

            3. Conversion. At any time prior to the Maturity Date, the Holder
may elect to convert all or a portion of the principal amount of the Note and
accrued interest into shares of the Maker's common stock, upon delivering
written notice thereof (the "Conversion Notice") to the Maker. In addition, if
at any time prior to the Maturity Date the Maker shall complete a private
placement of its equity securities (the "Equity Offering"), in which the Maker
(i) realizes gross proceeds of one million dollars ($1,000,000) or more and (ii)
sells shares of its common stock at a price not less than one dollar ($1.00) per
share, then the Maker, in its sole discretion, may elect to convert all or a
portion of the principal amount of the Note and accrued interest into shares of
the Maker's common stock, upon delivering a Conversion Notice to the Holder.

            For conversion purposes, the Board of Directors of the Maker has
attributed a value of $0.45 per share to each share of its common stock (the
"Conversion Price"). Accordingly, if either the Maker or the Holder shall elect
to convert the Note into shares of the Maker's common stock, then the Holder
would receive such number of shares of the Maker's common stock equal to (a) the
face value of this Note, together with interest accrued and unpaid as of the
date of the Conversion Notice divided by (b) $0.45. As an additional "kicker"
for participating in the Maker's private offering, upon conversion, each Holder
will receive an additional number of shares of the Maker's common stock equal to
(c) ten percent (10%) of the face amount of this Note divided by (d) $0.45.

            If neither the Maker nor the Holder have elected to convert this
Note prior to the Maturity Date, then all principal and accrued interest on the
Notes shall be payable by the Company on the Maturity Date.

            4. Allocation. All payments made hereunder (whether in prepayment or
otherwise) shall first be applied against any interest then due hereunder and
shall then be applied against principal.

            5. Events of Default. The following shall constitute Events of
Default:

                  a. Maker shall fail to pay when due, any payment of principal
or interest due under this Note, which failure continues for a period of five
(5) days after delivery of notice of such failure to Maker; or

                  b. Written admission by Maker of its inability to pay its
debts as they become due, an assignment by Maker for the benefit of creditors,
the institution of proceedings by Maker under the Federal Bankruptcy Code or any
state law relating to relief of debtors, or the institution of such proceedings
by another party against Maker which is not subsequently dismissed within ninety
(90) days of the filing of same, or the seizure of substantially all of the
assets of Maker.

<PAGE>

            If an Event of Default should occur, Payee, at its option, may (i)
allow the Note to remain outstanding and continue to accrue interest at the rate
provided for above or (ii) declare the outstanding principal balance of
principal and all accrued but unpaid interest on this Note to be immediately due
and payable without presentment, demand, protest, or notice of any kind, all of
which are hereby expressly waived.

            Further, Maker agrees to pay all fees, costs and expenses, including
reasonable attorneys' fees and legal expenses, incurred by Payee in endeavoring
to collect any amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.

            6. Waiver. No delay or omission of Payee in exercising any right or
power hereunder shall impair such right or power or be a waiver of any default
or an acquiescence therein; and no single or partial exercise of any such right
or power shall preclude other or further exercise thereof, or the exercise of
any other right; and no waiver shall be valid unless in writing signed by Payee,
and then only to the extent specifically set forth in such writing. All remedies
hereunder or by law afforded shall be cumulative and shall be available to Payee
until the principal amount of and all interest on this Note have been paid in
full.

            7. Notices. All notices, requests, demands or other communications
required or permitted hereunder shall be in writing, addressed to the
appropriate party as follows:

      If to Maker, to:

      Dune Energy, Inc.
      c/o Eaton & Van Winkle LLP
      3 Park Avenue
      New York, NY 10016

and to Payee at the address first indicated above or to such other address as
may have been designated in prior notice. Notices may be sent by (a) overnight
courier or (b) registered or certified mail, postage prepaid, return receipt
requested; and shall be deemed given (i) in the case of overnight courier, the
next business day after the day sent and (ii) in the case of mailing, four (4)
business days after being mailed by registered or certified mail, and otherwise
notices shall be deemed to have been given when received.

            8. Successors and Assigns. This Note and the obligations hereunder
shall not be assignable or transferable by the Maker without the prior written
consent of the Payee. Subject to the preceding sentence, all of the terms and
provisions of this Note shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.

<PAGE>

            9. Binding Effect. The terms and provisions of this Note shall be
binding upon Maker and its successors and permitted assigns, and shall inure to
the benefit of Payee and its successors and assigns, and any subsequent holder
of this Note.

            10. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard for the
conflicts of laws principles thereof.

            11. Headings. The section headings contained in this Note are
intended solely for convenience of reference and do not themselves constitute a
part of this Note.

            12. Severability. If any provision of this Note or the application
thereof to any person or circumstance should, for any reason and to any extent,
be invalid or unenforceable, the remainder of this Note and the application of
such provision to other persons or circumstances shall not be affected thereby,
but rather shall be enforced to the greatest extent permitted by law.

            13. Governing Law; Jurisdiction; Venue. This Note shall be governed
by and construed in accordance with the law of the State of New York without
regard to conflict of law provisions. Any legal suit, action or proceeding
arising out of or based upon this Note shall be instituted in any federal or
state court only in the Borough of Manhattan, The City of New York, State of New
York.

            IN WITNESS WHEREOF, Maker has executed this Note as of the date
first above written.

                                           DUNE ENERGY, INC.


                                           By: ___________________________
                                           Name:
                                           Title: