Arkanova Energy Corporation: Exhibit 10.38 - Filed by newsfilecorp.com





LOAN MODIFICATION AGREEMENT

     THIS LOAN MODIFICATION
AGREEMENT (this “Agreement”) is made and entered into as of, but not
necessarily on, the 6th day of February, 2013 (the “Effective Date”), by
and between Arkanova Acquisition Corporation, a Nevada corporation (the
“Company”), and Aton Select Funds Limited (the
“Investor”).

Background

     A. The Company is currently
indebted to the Investor in the principal amount of US$8,315,000.00 under that
certain amended and restated secured promissory note from the Company to
Investor entered into as of July 1, 2012 (the "Old Note"); and

     B. The Company and the Investor
have reached an agreement whereby the Investor shall: (i) loan to the Company an
additional US$1,500,000.00 (the “Additional Loan Amount”); and (ii)
consolidate the outstanding principal balance under the Old Note including
accrued interest equal to US$291,025 thereon and the Additional Loan Amount into
one new amended & restated promissory note in the principal amount of
US$10,106,025.00 (the “New Note”) with a new maturity date of March 31,
2014, and

     C. The Company and the Investor
now desire to formalize the terms and conditions of their agreement.

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. Modified Loan. At the
Effective Date the Investor shall increase the outstanding balance of its loan
to the Company under the Old Note from US$8,606,025.00 to US$10,106,025.00 by
wire transfer to the account of the Company at its bank in Austin, Texas, an
additional US$1,500,000.00, and extend the loan maturity date to March 31, 2014.
The combined new principal balance of the loan from the Investor to the Company
shall be evidenced by the New Note in substantially the form attached hereto as
Annex "A" made a part hereof for all purposes.

     2. Amended Loan Documents.
At the Effective Date, the Company and the Investor shall also enter into, or
cause to be entered into, amendments to the loan documents presently securing
the Old Note, specifically the amended and restated note purchase agreement
entered into as of July 1, 2012, the amended and restated pledge agreement
entered into as of July 1, 2012 and the amended and restated guaranty agreement
entered into as of July 1, 2012, in substantially the form of the amended &
restated note purchase agreement, amended & restated pledge agreement and
amended & restated guaranty agreement attached hereto as Annexes “B,” “C’”
and “D” respectively (the “Amended & Restated Loan Documents”). At
the time of signing of the New Note, the Old Note shall be deemed cancelled and
the then currently outstanding balance under the Old Note, together with the
amount of the Additional Loan, shall be reflected in the New Note.




     3. General Provisions. The
following general terms and provisions shall apply to this Agreement:

     (a)
Amendment. This Agreement may not be modified, altered, amended, or
terminated except by the mutual written agreement of the parties hereto.

     (b)
Severability. If a court of competent jurisdiction determines that any
provision contained in this Agreement is void, illegal or unenforceable, the
other provisions shall remain in full force and effect and the provision held to
be void, illegal or unenforceable shall be limited so that it shall remain in
effect to the extent permissible by law.

     (c)
Choice of Law and Venue. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. ANY LITIGATION,
SPECIAL PROCEEDING OR OTHER PROCEEDING AS BETWEEN THE PARTIES THAT MAY BE
BROUGHT, OR ARISE OUT OF, IN CONNECTION WITH OR BY REASON OF THIS AGREEMENT
SHALL BE BROUGHT IN THE APPLICABLE FEDERAL OR STATE COURT IN AND FOR TRAVIS
COUNTY, TEXAS, WHICH COURTS SHALL BE THE EXCLUSIVE COURTS OF JURISDICTION AND
VENUE.

     (d)
Preparation of Agreement. Each party to this Agreement acknowledges that:
(i) the party had the advice of, or sufficient opportunity to obtain the advice
of, legal counsel separate and independent of legal counsel for any other party
hereto; (ii) the terms of the transactions contemplated by this Agreement are
fair and reasonable to such party; and (iii) such party has voluntarily entered
into the transactions contemplated by this Agreement without duress or coercion.
Each party further acknowledges that such party was not represented by the legal
counsel of any other party hereto in connection with the transactions
contemplated by this Agreement, nor was he or it under any belief or
understanding that such legal counsel was representing his or its interests.
Each party agrees that no conflict, omission or ambiguity in this Agreement, or
the interpretation thereof, shall be presumed, implied or otherwise construed
against any other party to this Agreement on the basis that such party was
responsible for drafting this Agreement.

     (e)
Nonwaiver. Unless otherwise expressly provided herein, no waiver by a
party of any provision hereof shall be deemed to have been made unless expressed
in writing and signed by the other party. No delay or omission in the exercise
of any right or remedy accruing to a party upon any breach under this Agreement
by the other party shall impair such right or remedy or be construed as a waiver
of any such breach theretofore or thereafter occurring. The waiver by a party of
any breach of any term, covenant or condition herein stated shall not be deemed
to be a waiver of any other breach, or of a subsequent breach of the same or any
other term, covenant or condition herein contained.

     (f)
Entire Agreement. This Agreement sets forth the entire understanding of
the parties with respect to the subject matter hereof and supersedes all prior
or contemporaneous representations, understandings and agreements, oral or
written, made between the parties effecting the subject matter hereof, and all
such prior or contemporaneous representations, understandings and agreements are
hereby terminated.

     (g)
Parties Bound. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors, assigns, heirs and
personal representatives.

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     (h)
Counterpart Execution. 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 but one and the same instrument.

Signatures

     To evidence the binding effect of
the foregoing terms and condition, the parties have executed and delivered this
Agreement as of, but not necessarily on, the date first above written.

	 	ARKANOVA ACQUISITION
      CORPORATION 
	 	 	 
	 	By: 	“Pierre Mulacek” 
	 	 	Pierre Mulacek, President 
	 	 	 
	 	ATON SELECT FUNDS
      LIMITED 
	 	 	 
	 	By: 	“David Dawes” 
	 	 	David Dawes, Director 


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ANNEX “A”

Amended & Restated Secured Promissory Note


Attached

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ANNEX “B”

Amended & Restated Note Purchase Agreement

Attached

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ANNEX “C”

Amended & Restated Pledge Agreement

Attached

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ANNEX “D”

Amended & Restated Guaranty Agreement

Attached

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