Arkanova Energy Corporation: Exhibit 10.3 - Filed by newsfilecorp.com






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

	USD $8,315,000.00 	July 1, 2012 


ARKANOVA ACQUISITION CORPORATION

AMENDED & RESTATED SECURED PROMISSORY NOTE

     FOR VALUE RECEIVED, Arkanova
Acquisition Corporation, a corporation organized and existing under the laws
of the State of Nevada (the “Company”), promises to pay to Aton Select
Funds Limited, the registered holder hereof (the “Holder”), the
principal sum of US$8,315,000.00 on the Maturity Date (as defined below) and to
pay interest on the principal sum outstanding from time to time in arrears at
the rate of six percent (6.0 %) per annum (computed on the basis of the actual
number of days elapsed and a year of 365 days), accruing from the date of
initial issuance of this amended & restated secured promissory note (the
“Note”), until payment in full of the principal sum has been made or duly
provided for (whether before or after the Maturity Date). This 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. 

     This Note is also being issued
pursuant to the terms of an amended & restated note purchase agreement of
even date herewith (the “NPA”), to which the Company and the Holder (or
the Holder’s predecessor in interest) are parties. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
NPA.

     This Note is subject to the following additional
provisions:

     1. Maturity Date. The term
“Maturity Date” means June 30, 2013. 

     2. Security. The payment
when due of this Note is secured by a pledge of all of the membership interests
in the Company’s wholly owned subsidiary, Provident Energy of Montana, LLC, a
Montana limited liability company, in accordance with the terms and conditions
of an amended & restated pledge agreement of even date herewith.

     3. Manner of Payments of
Principal. All payments of principal on this Note shall be made “in cash” in
immediately available good funds of United States of America currency by wire
transfer to an account designated in writing by the Holder to the Company
(which account may be changed by notice similarly given). For purposes of this
Note, the phrase “date of payment” means the date good funds are received in the
account designated by the notice which is then currently effective.




     4. Payment of Interest.
Interest on this Note shall be paid within ten (10) Business Days following the
Maturity Date in shares of common stock of Arkanova Energy Corporation, the
publicly traded parent corporation of the Company (“AEC”). The number of
shares of common stock of AEC payable as interest on the Note shall be
determined by dividing US$498,900 by the average stock price for AEC’s common
stock over the fifteen (15) Business Day period immediately preceding the
Maturity Date.

     5. Prepayment Provisions.
This Note may be prepaid in whole or in part at any time prior to the Maturity
Date, without penalty, so long as all accrued interest is paid in shares of
common stock AEC as determined in Section 4 above with the date of payment being
substituted for the Maturity Date in making the calculation of the number of
shares to be delivered to the Holder by the Company.

     6. Default. The Company
shall be in default hereunder if payment is not made by the end of the Holder’s
close of business on the tenth (10th) Business Day following the
Maturity Date.

     7. No Impairment; Direct
Obligation. Subject to the terms of the NPA, no provision of this Note shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, and interest on, this Note at the time,
place, and rate, and in the coin or currency, as herein prescribed. This Note is
a direct obligation of the Company.

     8. Limited Recourse. No
recourse shall be had for the payment of the principal of, or the interest on,
this Note, or for any claim based hereon, or otherwise in respect hereof,
against any incorporator, shareholder, officer or director, as such, past,
present or future, of the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

     9. Restrictions on Resale.
The Holder of the Note, by acceptance hereof, agrees that this Note is being
acquired for investment and that such Holder will not offer, sell or otherwise
dispose of this Note except under circumstances which will not result in a
violation of the Securities Act of 1933, as amended, or any applicable
state blue sky or foreign laws or similar laws relating to the sale of
securities.

     10. Notices. Any notice
given by any party to the other with respect to this Note shall be given in the
manner contemplated by the NPA in the Section entitled “Notices.”

     11. Applicable Laws. This
Note shall be governed by and construed in accordance with the laws of the State
of Texas. Each of the parties consents to the exclusive jurisdiction of the
Courts of the State of Texas in connection with any dispute arising under this
Note and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non coveniens, to the bringing of
any such proceeding in such jurisdictions. To the extent determined by such
court, the Company shall reimburse the Holder for any reasonable legal fees and
disbursements incurred by the Holder in enforcement of or protection of any of
its rights under any of this Note.

     12. Jury Trial Waiver. The
Company and the Holder hereby waive a trial by jury in any action, proceeding or
counterclaim brought by either of the Parties hereto against the other in
respect of any matter arising out of or in connection with this Note.

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     13. Events of Default. Each of he following shall
constitute an “Event of Default”:

     (a)
Default in Payment. The Company shall default in the payment of principal
or interest on this Note or any other amount due; or

     (b)
Breach of Representation or Warranty. Any of the representations or
warranties made by the Company herein, in the NPA or any of the other
Transaction Documents shall be false or misleading in any material respect at
the time made; or

     (c)
Change of Management. The occurrence of any event which results in the
current executive officers of the Company no longer serving in their respective
current capacities with the Company; or

     (d)
Assignment for Creditors. The Company shall (i) make an assignment for
the benefit of creditors or commence proceedings for its dissolution; or (ii)
apply for or consent to the appointment of a trustee, liquidator or receiver for
its or for a substantial part of its property or business; or

     (e)
Appointment of Trustee. A trustee, liquidator or receiver shall be
appointed for the Company or for a substantial part of its property or business
without its consent; or

     (f)
Court Control. Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties or assets of
the Company; or

     (g)
Bankruptcy Proceedings. Bankruptcy, reorganization, insolvency or
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Company.

     If an Event of Default shall have
occurred, then, or at any time thereafter, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder’s sole discretion, the Holder may
consider this Note immediately due and payable (and the Maturity Date shall be
accelerated accordingly), without presentment, demand, protest or notice of any
kinds, all of which are hereby expressly waived, anything herein or in any note
or other instruments contained to the contrary notwithstanding, and interest
shall accrue on the total amount due (the “Default Amount”) on the date
of the Event of Default (the “Default Date”) at the rate of 12% per annum
or the maximum rate allowed by law, whichever is lower, from the Default Date
until the date payment is made, and the Holder may immediately enforce any and
all of the Holder’s rights and remedies provided herein or any other rights or
remedies afforded by law.

     14. Covenants of the
Company. The Company covenants and agrees that, so long as any principal of,
or interest on, this Note shall remain unpaid, unless the Holder shall otherwise
consent in writing, it will comply with the following terms:

     (a)
Reporting Requirements. The Company will furnish to the Holder or make
publicly available:

     (i) as
soon as possible, and in any event within ten (10) days after obtaining
knowledge of the occurrence of (A) an Event of Default, (B) an event which, with
the giving of notice or the lapse of time or both, would constitute an Event of
Default, or (C) a material adverse change in the condition or operations, financial or otherwise, of the Company, taken as whole, the written statement of the Chief Executive Officer or the Chief Financial Officer of the Company, setting forth the details of such Event of Default, event or material adverse change; and

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     (ii)
promptly after the commencement thereof, notice of each action, suit or
proceeding before any court or other governmental authority or other regulatory
body or any arbitrator as to which there is a reasonable possibility of a
determination that would (A) materially impact the ability of the Company to
conduct its business, (B) materially and adversely affect the business,
operations or financial condition of the Company, or (C) impair the validity or
enforceability of the Note or the ability of the Company to perform their
obligations under the Note.

     (b)
Compliance with Laws. The Company will comply, in all material respects
with all applicable laws, rules, regulations and orders, except to the extent
that noncompliance would not have a Material Adverse Effect upon the business,
operations or financial condition of the Company taken as a whole.

     (c)
Preservation of Existence. The Company will maintain and preserve its
existence.

     (d)
Maintenance of Properties. The Company will maintain and preserve all of
its material properties which are necessary in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and comply, at all times with the provisions of all material leases (including
oil and gas leases) to which it is a party as lessee or under which it occupies
property, so as to prevent any material forfeiture or material loss thereof
thereunder.

     (e)
Maintenance of Insurance. The Company will maintain, with responsible and
reputable insurers, insurance with respect to its properties and business, in
such amounts and covering such risks, as is carried generally in accordance with
sound business practice by companies in similar businesses in the same
localities in which the Company is situated.

     (f)
Keeping of Records and Books of Account. The Company will keep adequate
records and books of account, with complete entries made in accordance with
generally accepted accounting principles, reflecting all of its financial and
other business transactions.

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     15. Qualification. In the
event for any reason, any payment by or act of the Company or the Holder shall
result in payment of interest which would exceed the limit authorized by or be
in violation of the law of the jurisdiction applicable to this Note, then
ipso facto the obligation of the Company to pay interest or perform such
act or requirement shall be reduced to the limit authorized under such law, so
that in no event shall the Company be obligated to pay any such interest,
perform any such act or be bound by any requirement which would result in the
payment of interest in excess of the limit so authorized. In the event any
payment by or act of the Company shall result in the extraction of a rate of
interest in excess of a sum which is lawfully collectible as interest, then such
amount (to the extent of such excess not returned to the Company) shall, without
further agreement or notice between or by the Company or the Holder, be deemed
applied to the payment of principal, if any, hereunder immediately upon receipt
of such excess funds by the Holder, with the same force and effect as though the
Company had specifically designated such sums to be so applied to principal and
the Holder had agreed to accept such sums as an interest-free prepayment of this
Note. If any part of such excess remains after the principal has been paid in
full, whether by the provisions of the preceding sentences of this Section or
otherwise, such excess shall be deemed to be an interest-free loan from the
Company to the Holder, which loan shall be payable immediately upon demand by
the Company. The provisions of this Section shall control every other provision
of this Note.

Signature

     To evidence the binding effect of
the foregoing provisions, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized as of, but not necessarily on,
the date first above written.

	 	ARKANOVA ACQUISITION
      CORPORATION 
	 	 	  
	 	 	  
	 	 	  
	 	 	  
	 	By:	/s/Pierre Mulacek 
	 	 	Pierre Mulacek, President 


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