This Loan Agreement involves
Title: LOAN CONSOLIDATION AGREEMENT
Governing Law: Texas Date: 10/7/2009
Industry: Gold and Silver Sector: Basic Materials
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 ”).
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
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