Arkanova Energy Corporation: Exhibit 10.2 - Filed by newsfilecorp.com






THIS AGREEMENT RELATES TO AN OFFERING OF SECURITIES IN AN
OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN
REGULATIONS 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.

AMENDED & RESTATED NOTE PURCHASE AGREEMENT

     THIS AMENDED & RESTATED
NOTE PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of, but not necessarily on, the 1st day of July, 2012, by and between
Arkanova Acquisition Corporation, a Nevada corporation (the
“Company”), and Aton Select Funds Limited (the
“Investor”).

Background

     A. The Company and the Investor
are executing and delivering this Agreement in reliance upon the exemptions from
securities registration afforded by the provisions of Regulation S
(“Regulation S”), as promulgated by the U.S. Securities and Exchange
Commission under the Securities Act of 1933, as amended; and

     B. The Investor wishes to
purchase from the Company, and the Company wishes to sell and issue to the
Investor, upon the terms and conditions stated in this Agreement, an amended
& restated secured promissory note (the “Note”) in the aggregate
principal amount of US$8,315,000.00 (the “Principal Amount”), bearing
interest at the rate of six percent (6.0%) per annum, in the form attached to
the Loan Modification Agreement as Annex “A”.

     C. The Note is being issued by
the Company in exchange for the loan by the Holder to the Company of an
additional US$1,000,000.00 plus the cancellation of that certain secured
promissory note from the Company to Investor dated October 1, 2011, with a
currently outstanding amount of US$7,315,000.00.




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. Definitions. In
addition to those terms defined above and elsewhere in this Agreement, for the
purposes of this Agreement, the following terms shall have the meanings set
forth below:

     (a)
“Affiliate” means, with respect to any Person, any other Person which
directly or indirectly through one or more intermediaries Controls, is
controlled by, or is under common control with, such Person;

     (b)
“Business Day” means a day, other than a Saturday or Sunday, on which
banks in Houston, Texas, are open for the general transaction of business;

     (c)
“Company’s Knowledge” means the actual knowledge of the executive
officers (as defined in Rule 405 under the 1933 Act) of the Company;

     (d)
“Control” (including the terms “controlling”, “controlled
by” or “under common control with”) means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise;

     (e)
“Guaranty” has the meaning set forth in Section 2 hereof;

     (f)
“Material Adverse Effect” means a material adverse effect on (i) the
assets, liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under the Transaction
Documents;

     (g)
“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein;

     (h) “Pledge
Agreement” has the meaning set forth in Section 2 hereof; 

     (i)
“Purchase Price” means the Principal Amount payable as set forth in
Subparagraph C of the Background section of this Agreement;

     (j)
“SEC” means the United States Securities and Exchange Commission;

     (k)
“Subsidiaries” means the wholly-owned or majority owned subsidiaries of
the Company;

     (l)
“Transaction Documents” means this Agreement, the Note, the Pledge
Agreement and the Guaranty;

     (m)
“1933 Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder; and

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     (n)
“1934 Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

     2. Purchase and Sale of the
Note; Security. Subject to the terms and conditions of this Agreement, on
the Closing Date (as defined herein), the Company shall sell and issue to the
Investor, the Note in the Principal Amount in exchange for the additional
principal amount of US$1,000,000. The Company shall also pledge to the Investor,
pursuant to terms of the form of an amended and restated pledge agreement to be
entered into as of the date hereof (the “Pledge Agreement”) attached as
Annex “C” to a loan modification agreement entered into as of the date hereof
(the “Modification Agreement”), all of the membership interests in the
Company’s wholly-owned subsidiary, Provident Energy of Montana, LLC, a Montana
limited liability corporation that owns the Two Medicine Cut Bank Sand Unit in
Pondera and Glacier Counties, Montana, to secure payment of the indebtedness
evidenced by the Note (the “Security Interest”). As an indirect
beneficiary of the Investor’s purchase of the Note and as further security for
payment of the indebtedness evidenced by the Note, the Company’s parent
corporation, Arkanova Energy Corporation (“AEC”), has agreed to guarantee
the payment of the Note by the execution and delivery to the Investor at the
Closing the guaranty to be entered into as of the date hereof (the
“Guaranty”) in the form attached to the Modification Agreement as Annex
“D”. 

     3. Closing. There shall be
no formal closing ceremony with respect to the transactions contemplated by this
Agreement. Instead, the parties shall execute and exchange the Transaction
Documents by facsimile and email and the closing of the transactions
contemplated by this Agreement shall be deemed to have occurred (the
“Closing”) on the date (the “Closing Date”) that the Company
receives the Purchase Price in full.

     4. Representations and
Warranties of the Company. The Company hereby represents and warrants to the
Investor that, except as set forth in any schedules delivered herewith
(collectively, the “Disclosure Schedules”):

     (a)
Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to carry on its business as now conducted and to own its
properties. The Company is duly qualified to do business in the jurisdictions
where it conducts business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property makes such
qualification or leasing necessary unless the failure to so qualify has not and
could not reasonably be expected to have a Material Adverse Effect.

     (b)
Authorization. The Company has full power and authority and, has taken
all requisite action on the part of the Company, its officers, directors and
stockholders necessary for (i) the authorization, execution and delivery of the
Transaction Documents, (ii) authorization of the performance of ail obligations
of the Company hereunder or thereunder, and (iii) the authorization, issuance
and delivery of the Note. The Transaction Documents constitute the legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally.

     (c)
Valid Issuance. The Note has been duly and validly authorized and, when
issued and paid for pursuant to this Agreement, shall be free and clear of all
encumbrances and restrictions (other than those created by the Investor), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws.

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     (d)
Consents. The execution, delivery and performance by the Company of the
Transaction Documents, and the offer, issuance and sale of the Note requires no
consent of, action by or in respect of, or filing with, any Person, governmental
body, agency, or official other than filings that have been made pursuant to
applicable state securities laws, and post-sale filings pursuant to applicable
state and federal securities laws which the Company undertakes to file within
the applicable time periods.

     (e)
Use of Proceeds. The additional principal amount of US$1,000,000.00 shall
be primarily used by the Company primarily for the repayment of debt and for
general working capital. 

     (f) No
Conflict, Breach, Violation or Default. The execution, delivery and
performance of the Transaction Documents by the Company and the issuance and
sale of the Note will not conflict with or result in a breach or violation of
any of the terms and provisions of, or constitute a default under (i) the
Company’s Certificate of Incorporation or the Company’s Bylaws, both as in
effect on the date hereof, or (ii)(a) any statute, rule, regulation or order of
any governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any of its assets or properties, or (b) any
agreement or instrument to which the Company is a party or by which the Company
is bound or to which any of its assets or properties is subject.

     (g)
Litigation. To the Company’s knowledge, there are no disputes or actions
pending or threatened against the Company or its properties.

     (h) No
Directed Selling Efforts or General Solicitation. Neither the Company nor
any Person acting on its behalf has conducted any general solicitation or
general advertising (as those terms are used in Regulation S) in connection with
the offer or sale of the Note.

     (i) No
Integrated Offering. Neither the Company nor any of its Affiliates, nor any
Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any Company security or solicited any offers to buy any
security, under circumstances that would adversely affect reliance by the
Company on Regulation S for the exemption from registration for the transactions
contemplated hereby or would require registration of the Note under the 1933
Act.

     (j)
Private Placement. The offer and sale of the Note to the Investor as
contemplated hereby is exempt from the registration requirements of the 1933
Act.

     5. Representations and
Warranties of the Investor. The Investor hereby represents and warrants to
the Company that:

     (a)
Power. The Investor has the necessary legal capacity (in the case of an
individual person), or has the power and authority (if other than an individual
person) to execute and deliver this Agreement and to perform such Investor’s
obligations hereunder and to consummate all of the transactions contemplated
hereby, including but not limited to, purchase of the Note.

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     (b)
Binding Obligation. This Agreement has been duly executed and delivered
by the Investor and constitutes the legal, valid and binding obligation of such
Investor, enforceable against such Investor in accordance with its terms, except
as such enforceability may be limited by the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally.

     (c)
Absence of Breaches and Defaults. The execution, delivery and performance
by the Investor of this Agreement and the consummation of the transactions
contemplated hereby do not breach or constitute a default under any loan or
purchase agreement, indenture, mortgage, deed of trust, lease, instrument,
contract or other agreement binding on or affecting either such Investor or any
of his property or assets, the breach of which, either individually or in the
aggregate, could reasonably be expected to have a material adverse effect on the
Investor.

     (d)
Purchase Entirely for Own Account. The Note to be received by the
Investor hereunder will be acquired for such Investor’s own account, not as
nominee or agent, and not with a view t the resale or distribution of any part
thereof in violation of the 1933 Act, and such Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same in
violation of the 1933 Act without prejudice, however, to such Investor’s right
at all times to sell or otherwise dispose of all or any part of the Note in
compliance with applicable federal and state securities laws. Nothing contained
herein shall be deemed a representation or warranty by the Investor to hold the
Note for any period of time. The Investor is not a broker-dealer registered with
the SEC under the 1934 Act or an entity engaged in a business that would require
it to be so registered.

     (e)
Investment Experience. The Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Note and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated hereby.

     (f)
Disclosure of Information. The Investor has had an opportunity to receive
all information related to the Company requested by it and to ask questions of
and receive answers from the Company regarding the Company, its business and the
terms and conditions of the offering of the Note. 

     (g) No
Reliance. The Investor has not relied upon the Company or its directors and
officers, or the Company’s legal counsel or advisors for investment, legal or
tax advice, including advice with respect to the hold periods and resale
restrictions imposed upon the Note by the securities legislation in the
jurisdiction in which the Investor resides, and has, if desired, in all cases
sought the advice of the Investor’s own personal investment advisor, legal
counsel and tax advisors, and the Investor is either experienced in or
knowledgeable with regard to the affairs of the Company or, either alone or with
its professional advisors, is capable by reason of knowledge and experience in
financial and business matters in general, and investments in particular, of
evaluating the merits and risks of an investment in the Note, and it is able to
bear the economic risk of an investment in the Note and can otherwise be
reasonably assumed to have the capacity to protect its own interest in
connection with the investment.

     (h)
Further Representations and Acknowledgements. The Investor further
represents and acknowledges that:

     (i) The
Investor is not a “U.S. Person” as that term is defined in Regulation S.

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      (ii)
The Investor is located outside the United States.

     (iii)
The Investor is not aware of any advertisement of any of the Note to be issued
hereunder.

     (iv) The
Investor will not acquire the Note as a result of, and will not itself engage
in, any “directed selling efforts” (as defined in Regulation S under the
1933 Act) in the United States in respect of the Note which would include any
activities undertaken for the purpose of, or that could reasonably be expected
to have the effect of, conditioning the market in the United States for the
resale of the Note; provided, however, that the Investor may sell or otherwise
dispose of the Note pursuant to registration under the 1933 Act and any
applicable state securities laws or under an exemption from such registration
requirements and as otherwise provided herein.

     (v) The
Investor agrees that the Company will refuse to register any transfer of the
Note not made in accordance with the provisions of Regulation S, pursuant to an
effective registration statement under the 1933 Act or pursuant to an available
exemption from the registration requirements of the 1933 Act and in accordance
with applicable state securities laws.

     (vi) The
Investor understands and agrees that offers and sales of any Note prior to the
expiration of a period of one year after the date of transfer of the Note (the
“Distribution Compliance Period”), shall only be made in compliance with
the safe harbor provisions set forth in Regulation S, pursuant to the
registration provisions of the 1933 Act or an exemption therefrom, and that all
offers and sales after the Distribution Compliance Period shall be made only in
compliance with the registration provisions of the 1933 Act or an exemption
therefrom and in each case only in accordance with all applicable securities
laws.

     (i)
Restricted Securities. The Investor understands that the Note is
characterized as “restricted securities” under the U.S. federal securities laws
and have not been registered under the 1933 Act or under any state or “blue sky”
laws of the United States, and is being offered in a transaction not involving
any public offering within the meaning of the 1933 Act, and unless so
registered, may not be offered or sold in the United States or to U.S. Persons
as defined in Regulation S promulgated under the 1933 Act, and in each case only
in accordance with applicable securities laws.

     (j) No
Hedging Transactions. The Investor understands and agrees not to engage in
any hedging transactions involving the Note prior to the end of the Distribution
Compliance Period unless such transactions are in compliance with the provisions
of the 1933 Act.

     (k)
Restrictions on Transfer. The Investor hereby acknowledges and agrees to
the Company making a notation on its records or giving instructions to the
registrar and transfer agent of the Company in order to implement the
restrictions on transfer set forth and described herein.

     (l)
Legends. It is understood that, except as provided below, certificates
evidencing the Note will bear the following or any similar legend, as well as
the legend required by any state authority if required in connection with the
issuance of sale of the Note:

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      THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
      BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
      “U.S. SECURITIES ACT”) OR OTHER APPLICABLE SECURITIES LAWS. THESE
      SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
      DISTRIBUTION OR RESALE AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
      TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATIONS S,
      RULE 901 THROUGH RULE 905, AND PRELIMINARY NOTE UNDER THE U.S. SECURITIES
      ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
      REQUIREMENTS OF THE U.S. SECURITIES ACT OR (3) PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES
      MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.
      




     (m) No
General Solicitation. The Investor did not learn of the investment in the
Note as a result of any public advertising or general solicitation.

     (n)
Brokers and Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company or the Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Investor.

6. Conditions to Closing:

     (a)
Conditions to the Investor’s Obligations. The obligation of the Investor
to purchase the Note at the Closing is subject to the fulfillment to such
Investor’s satisfaction, on or prior to the Closing Date, of the following
conditions, any of which may be waived by the Investor:

     (i) The
representations and warranties made by the Company in Section 4. hereof
qualified as to materiality shall be true and correct at all times prior to and
on the Closing Date, except to the extent any such representation or warranty
expressly speaks as of an earlier date, in which case such representation or
Warranty shall be true and correct as of such earlier date, and, the
representations and warranties made by the Company in Section 4 hereof not
qualified as to materiality shall be true and correct in all material respects
at all times prior to and on the Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct in all material
respects as of such earlier date. The Company shall have performed in all
material respects all obligations and conditions herein required to be performed
or observed by it on or prior to the Closing Date.

     (ii) The
Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation of the
purchase and sale of the Note, and the consummation of the other transactions
contemplated by the Transaction Documents, all of which shall be in full force
and effect.

     (iii) No
judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order of
or by any governmental authority, shall have been issued, and no action or
proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby or in the other Transaction Documents.

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     (b)
Conditions to Obligations of the Company. The Company’s obligation to
sell and issue the Note at the Closing is subject to the fulfillment to the
satisfaction of the Company on or prior to the Closing Date of the following
conditions, any of which may be waived by the Company:

     (i) The
representations and warranties made by the Investor in Section 5 hereof shall be
true and correct in all respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Investor shall have
performed in all material respects all obligations and conditions herein
required to be performed or observed by them on or prior to the Closing
Date.

     (ii) The
Investor shall have paid the additional principal amount of US$1,000,000.00 to
the Company.

(c) Termination of Obligations to
Effect Closing; Effects.

     (i) The
obligations of the Company, on the one hand, and the Investor, on the other
hand, to effect the Closing shall terminate as follows:

     (A) Upon
the mutual written consent of the Company and the Investor;

     (B) By
the Company if any of the conditions set forth in Paragraph 6(b) shall have
become incapable of fulfillment, and shall not have been waived by the
Company;

     (C) By
an Investor (with respect to itself only) if any of the conditions set forth in
Paragraph 6(a) shall have become incapable of fulfillment, and shall not have
been waived by the Investor; or

     (D) By
either the Company or the Investor if the Closing has not occurred on or prior
to August 31, 2012; provided, however, that, except in the case of clause (i)
above, the party seeking to terminate its obligation to effect the Closing shall
not then be in breach of any of its representations, warranties, covenants or
agreements contained in this Agreement or the other Transaction Documents if
such breach has resulted in the circumstances giving rise to such party’s
seeking to terminate its obligation to effect the Closing.

7. Covenants and Agreements of the Company:

     (a)
Reports. The Company will furnish to the Investor and/or their assignees
such information relating to the Company and its Subsidiaries as from time to
time may reasonably be requested by the Investor and/or their assignees;
provided, however, that the Company shall not disclose material nonpublic
information to the Investor, or to advisors to or representatives of the
Investor, unless prior to disclosure of such information the Company identifies
such information as being material nonpublic information and provides the
Investor, such advisors and representatives with the opportunity to accept or
refuse to accept such material nonpublic information for review and the Investor wishing to obtain such information enters into an appropriate confidentiality agreement with the Company with respect thereto.

8




     (b) No
Conflicting Agreements. The Company will not take any action, enter into any
agreement or make any commitment that would conflict or interfere in any
material respect with the Company’s obligations to the Investor under the
Transaction Documents.

     (c)
Compliance with Laws. The Company will comply in all material respects
with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities.

     (d)
Security Interest. The Company shall cooperate with the Investor in all
reasonable respects in connection with the establishment and maintenance of the
Security Interest. The Company agrees to execute such further documents and
instruments and to take such further actions as may be reasonably necessary to
carry out the purposes and intent of the Security Agreement. The Company shall
be responsible for the payment of all costs and expenses reasonably incurred by
the Investor in connection with the preparation of any documents, instruments or
agreements required to create or perfect the Security Interest and for all
filing fees related thereto.

     (e)
Termination of Covenants. The provisions of Sections 7(a), (b), (c) and
(d) above shall terminate and be of no further force and effect on the date on
which the Company’s obligations under the Note terminate.

8. Survival and Indemnification:

     (a)
Survival. The representations, warranties, covenants and agreements
contained in this Agreement shall survive the Closing of the transactions
contemplated by this Agreement until the repayment in full of the Note.

     (b)
Indemnification. The Company agrees to indemnify and hold harmless each
Investor and its Affiliates and their respective directors, officers, employees
and agents from and against any and all losses, claims, damages, liabilities and
expenses (including without limitation reasonable attorney fees and
disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement thereof) (collectively, “Losses”) to which
such Person may become subject as a result of any breach of representation,
warranty, covenant or agreement made by or to be performed on the part of the
Company under the Transaction Documents, and will reimburse any such Person for
all such amounts as they are incurred by such Person.

     (c)
Conduct of Indemnification Proceedings. Promptly after receipt by a
Person (the “Indemnified Person”) of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 8(b), such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided,
however, that the failure of any Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; or (ii) in the reasonable judgment of counsel to such Indemnified Person representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not he unreasonably withheld, but if settled with such consent, or if there be a final judgment for the plaintiff, the Company shall indemnify and hold harmless such Indemnified Person from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such proceeding.

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9. Miscellaneous. The following miscellaneous provisions
shall apply to this Agreement:

     (a)
Successors and Assigns. This Agreement may not be assigned by a party
hereto without the prior written consent of the Company or the Investor, as
applicable, provided, however, that an investor may assign its rights and
delegate its duties hereunder in whole or in part to an Affiliate or to a third
party acquiring the Note in a private transaction without the prior written
consent of the Company, after notice duly given by such Investor to the Company.
The provisions of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

     (b)
Counterparts: Faxes. 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 one and the same instrument. This Agreement may also
be executed via facsimile or other electronic means, which shall be deemed an
original.

     (c)
Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

     (d)
Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given as hereinafter described (i) if given by personal delivery, then such
notice shall be deemed given upon such delivery, (ii) if given by telex,
telecopier or other electronic means, then such notice shall be deemed given
upon receipt of confirmation of complete transmittal, (iii) if given by mail,
then such notice shall be deemed given upon the earlier of (A) receipt of such
notice by the recipient or (B) three days after such notice is deposited in
first class mail, postage prepaid, and (iv) if given by an internationally
recognized overnight air courier, then such notice shall be deemed given one
business day after delivery to such carrier. All notices shall be addressed to
the party to be notified at the address as follows, or at such other address as
such party may designate by ten days’ written notice to the other party:

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	 	If to the Company:
  
	 	 	  
	 	 	Arkanova Acquisition Corporation 
	 	 	305 Camp Craft Rd., Suite 525 
	 	 	Austin, TX 78746 
	 	 	Fax: 888-329-7716 
	 	 	Attention: Pierre Mulacek, President 
	 	 	  
	 	If to the Investor:
  
	 	 	  
	 	 	To the Address for Notice as provided on the
  
	 	 	signature page hereof. 


     (e)
Expenses. The parties hereto shall pay their own costs and expenses in
connection herewith. In the event that legal proceedings are commenced by any
party to this Agreement against another party to this Agreement in connection
with this Agreement or the other Transaction Documents, the party or parties
which do not prevail in such proceedings shall severally, but not jointly, pay
their pro rata share of the reasonable attorneys’ fees and other reasonable
out-of-pocket costs and expenses incurred by the prevailing party in such
proceedings.

     (f)
Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor. Any amendment or waiver
effected in accordance with this Paragraph shall be binding upon each holder of
any Note purchased under this Agreement at the time outstanding, each future
holder of all such Note, and the Company.

     (g)
Publicity. Except as set forth below, no public release or announcement
concerning the transactions contemplated hereby shall be issued by the Company
or the Investor without the prior consent of the Company (in the case of a
release or announcement by the Investor) or the Investor (in the case of a
release or announcement by the Company) (which consents shall not be
unreasonably withheld), except as such release or announcement may be required
by law or the applicable rules or regulations of any securities exchange or
securities market, in which case the Company or the Investor, as the case may
be, shall allow the Investor or the Company, as applicable, to the extent
reasonably practicable in the circumstances, reasonable time to comment on such
release or announcement of such issuance.

     (h)
Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.

     (i)
Entire Agreement. This Agreement, including the exhibits and any
disclosure schedules, and the other Transaction Documents constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

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     (j)
Further Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

     (k)
Governing Law: Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Texas without regard to the choice of law principles thereof. Each
of the parties hereto irrevocably submits to the exclusive jurisdiction of the
Courts of the State of Texas for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Agreement.
Each of the parties hereto irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the laying of venue
of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO
THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO
THIS WAIVER.

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Signatures

     To evidence the binding effect of
the terms and conditions set forth above, the parties have executed this
Agreement or caused their duly authorized officers to execute this Agreement as
of 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 	 



	ADDRESS FOR NOTICE 	 
	  	 	 
	C/o: 	 	 
	Street: 	 	 
	City/State/Zip: 	 	 
	Attention: 	 	 
	Tel: 	 	 
	Fax: 	 	 
	  	 	 
	DELIVERY INSTRUCTIONS 	 
	(if different from above)
	 
	  	 	 
	C/o: 	 	 
	Street: 	 	 
	City/State/Zip: 	 	 
	Attention: 	 	 
	Tel: 	 	 


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