Document:

GB-2014.10.03 Exhibit 10.1

                 Exhibit 10.1
                        

September 19, 2014

Dear Michelle:

This letter confirms your resignation of your employment with Greatbatch, Inc. (“Greatbatch” or “Company”) and summarizes our agreement regarding the benefits available to you in connection therewith.
		
	•
	You have resigned your employment with Greatbatch effective January 3, 2015.  In view of your upcoming resignation of employment, you hereby immediately resign from all offices, directorships, and fiduciary positions with the Company, related companies, subsidiaries, and affiliates, and their respective employee benefit plans.

		
	•
	You have agreed to remain employed and available through January 3, 2015 to reasonably assist with the transition of your duties.  During this transition period, there will be no change to your salary, leave accruals or other benefits (annual executive physical exam, etc.).  Although you will not be required to be present on a daily basis, you agree to remain available to Greatbatch and to provide reasonable transition assistance as may be requested by the Company.

		
	•
	You may attend the "Driving for Organizational and Operational Excellence" seminar on October 15-16, 2014, and you will be eligible for reimbursement of travel expenses associated therewith in accordance with Greatbatch policies.  In addition, through January 3, 2015, you may continue to attend training courses for your professional development and you will be eligible for reimbursement of course costs and travel expenses (again, in accordance with Greatbatch policies) to a maximum of $5,000.

		
	•
	Although it is not obligated to do so, Greatbatch will provide you with certain additional separation benefits, in exchange for your promises described in the Separation Agreement and Acknowledgement (“Separation Agreement”) accompanying this letter.  Those additional separation benefits are described in and are subject to terms of the Separation Agreement.  In order to obtain these benefits, you must sign the Separation Agreement after January 3, 2015 and return the Separation Agreement on or before January 9, 2015.  You also must not thereafter revoke the Separation Agreement in the manner permitted therein.  If you do not sign and return the Separation Agreement as described, you will not be entitled to these benefits.  All benefits and perquisites of employment shall end on January 3, 2015 except for those rights you may become entitled to under the Separation Agreement.

		
	•
	As a participant in the 401(k) plan, your elective deferral and employer match cease on January 3, 2015.  The plan administrator will send you paperwork on the distribution options.  To avoid default and payment of taxes and penalties, the balance of any outstanding 401(k) loan must be paid within 60 days of January 3, 2015.  You should speak with your plan administrator for information regarding any 401k loan balance.  Your rights under any employee benefit plans are, of course, subject to the terms of the applicable plan documents.

		
	•
	You have the right to continue medical coverage after January 3, 2015 at your own cost pursuant to COBRA.  Additional information concerning COBRA will be sent to you under separate cover.  Your rights under any employee benefit plans are, of course, subject to the terms of the applicable plan documents.

		
	•
	Subject to the terms of the applicable plan documents, the Executive LTD and Executive Life Insurance policies covering you will remain in effect for the period included in the previously paid premium or January 3, 2015, whichever is longer (the Parties understand that the periods through which premiums are paid are: March 22, 

2015 for your Executive Life insurance policy; February 1, 2015 for the disability policy covering you that is paid monthly; and April 30, 2015 for the disability policy that is paid annually).
		
	•
	Upon the separation of your employment on January 3, 2015, your final paycheck will be issued in accordance with Greatbatch’s ordinary payroll practices, at which point you will have been paid in full for all work performed during your employment.  All accrued and unused PTO, if any, also will be paid to you in a lump sum in the ordinary course following your separation.  Your right to continued payments of any kind, bonus entitlements, and employee benefits will also cease on January 3, 2015, except as specified in the Separation Agreement.

		
	•
	Nothing contained in this letter shall be construed as a waiver of any obligations that you have to Greatbatch or Greatbatch to you.

Michelle, your service to the Company is greatly appreciated.  If you have any questions regarding this letter or the Separation Agreement, please contact me.  Otherwise, please sign below to confirm the terms set forth in this letter.
Sincerely,
Greatbatch, Inc. 
	
		
	By:
	/s/ Timothy G. McEvoy

	 
	Timothy G. McEvoy

	 
	Senior Vice President, General Counsel & Secretary

I hereby confirm my resignation subject to and in accordance with the terms of this letter.

	
			
	/s/ Michelle Graham
	 
	September 19, 2014

	Michelle Graham
	 
	Dated: September 19, 2014

SEPARATION AGREEMENT AND ACKNOWLEDGEMENT

THIS SEPARATION AGREEMENT AND ACKNOWLEDGEMENT (“Agreement”) is entered into between Michelle Graham (“you”) and Greatbatch, Inc. (“Company”) (collectively, the “Parties”).  In consideration of the mutual promises, benefits and covenants herein contained, you and the Company hereby agree as follows:

Employment Separation.  You have resigned your employment with the Company effective on January 3, 2015 (the “Separation Date”).

Separation Payments and Benefits
If you execute, do not revoke, and comply at all relevant times with this Agreement, you will be eligible to receive the following benefits:

		
	1.
	Separation Payment:  The Company will pay you $269,100 in a lump sum as soon as reasonably practicable following the Effective Date (as defined below) but, in any event, by no later than March 15, 2015.

		
	2.
	2014 Greatbatch Growth Bonus Plan (“G2BPlan”): The Company will pay you $188,370 which represents your full bonus target for 2014 under the terms of the G2BPlan, as soon as reasonably practicable after the Effective Date but, in any event, by no later than March 15, 2015.

		
	3.
	Long-Term Equity Awards (“LTI”): As of the Separation Date, you shall be vested in the 2012 LTI Award in accordance with the terms of that plan.  The portion of the outstanding 2013 and 2014 LTI time based Awards held by you that are vested and exercisable as of the Separation Date shall not expire or be forfeited, but shall remain outstanding and shall continue to be eligible for exercise. A pro-rata portion of the outstanding 2013 and 2014 LTI performance based Awards held by you that are not vested or exercisable as of the Separation Date shall not expire or be forfeited, but shall remain outstanding and shall continue to be eligible for vesting and exercisability based on attainment of the Performance Goals applicable to such Awards.  For avoidance of doubt, the number of LTI Awards vested or eligible for vesting and forfeited shall be as follows:

	
						
	 
	 
	LTI Time Options
	LTI Performance RSU's

	LTP Program Year
	Date of Grant
	Shares Vested
	Shares Forfeited
	Shares Eligible for Vesting
	Shares Forfeited

	2012 LTI
	1/2/2012
	17695
	0
	19,513
	0

	2013 LTI
	12/31/2012
	12013
	6005
	12,803
	6,402

	2014 LTI
	1/6/2014
	3041
	6083
	3,398
	6,797

		
	4.
	Medical Insurance: You will receive a lump sum payment equal to the amount the Company would have otherwise contributed toward your group health, prescription, vision and dental coverage premium had your employment continued from January 4, 2015 through December 31, 2015, payable as soon as reasonably practicable after the Effective Date but, in any event, by no later than March 15, 2015.

		
	5.
	Attorney’s Fees: The Company will pay reasonable attorney’s fees to the law(s) firm representing you, incurred by you in connection with the negotiation of this Agreement and related issues and which are incurred by you prior to January 15, 2015 and for which an invoice for payment is provided to the Company by no later than January 31, 2015.  Payment will be made as soon as reasonably practicable after receipt of the invoice but, in any event, by no later than March 15, 2015.

		
	6.
	Outplacement:  You will receive towards payment of outplacement services a lump sum payment in the amount of Twenty-Five Thousand Dollars ($25,000), as soon as reasonably practicable after the Effective Date but, in any event, by no later than March 15, 2015.

Release

In consideration of good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, you hereby release and forever discharge the Company, its current and former agents, parent, related companies, subsidiaries, affiliates, employees, officers, shareholders, directors, attorneys, successors, and assigns (“Released Parties”) from any and all liability, actions, causes of action, demands, damages, and claims of any kind whatsoever, whether known or unknown at this time, arising out of, or in any way connected with, your employment or service with any Released Party, and the separation of such employment or service, including, but not limited to, all matters in law, in equity, in contract (oral or written, express or implied) or in tort, or arising under any employee benefit plan, or pursuant to statute, including but not limited to any claim under the New York Human Rights Law, the Age Discrimination in Employment Act, as amended, Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, Section 1981 of Title 42 of the United States Code, the Family and Medical Leave Act or any other federal, state, or local law, rule, regulation, executive order or public policy, from the beginning of time through the date of this Agreement. You represent and agree that, at the time of your signing of this Agreement, you have no claims, charges, lawsuits or actions pending against any Released Parties in any jurisdiction, including before any state or federal court, or administrative, governmental or quasi-judicial agency or board.  You acknowledge that this is a GENERAL RELEASE and is to be construed in the broadest terms possible consistent with applicable law.

This release also includes claims brought on behalf of any government, federal or state, under any statute that permits an individual to sue on behalf of the government, e.g., False Claims Act, and where the person bringing the claim is eligible to receive compensation or percentage of the award.  By signing this Agreement, you forfeit the right to receive any compensation or reward as a whistleblower’s share in any action brought on behalf of the government against any party released under this Agreement.  You acknowledge that this Agreement does not limit your ability to participate in proceedings before the Equal Employment Opportunity Commission or state or local equivalent agencies, but you forfeit your right to collect any damages or monetary compensation should such agencies bring any action related to your employment.   
In further consideration of your promises and covenants in this Agreement, the Company releases and forever discharges you from any and all liability, actions, causes of action, demands, damages, and claims of any kind whatsoever, whether known or unknown at this time, arising out of, or in any way connected with, your employment or service with the Company.  In addition, nothing in this Agreement shall compromise any rights that you may have to defense or indemnification by the Company in relation to actions or claims against you arising from your service as Sr. Vice-President of Human Resources.  And nothing in this Agreement releases or diminishes any vested monies or other vested benefits to which you may be entitled from, under, or pursuant to any Company retirement, deferred compensation, incentive, stock option, restricted stock, or equity compensation plan or agreement.
Return of all Company Property
You warrant that, on or before the Separation Date, you returned all Company property, including keys, credit cards, security access cards, codes, personal computers, cell phones, memoranda, data, records, notes and other information in your possession or under your control in any form; provided, however, you may retain as your personal property your Company-issued cellular telephone, computer and iPad, provided that the Company shall be entitled to remove all confidential and proprietary information from such devices, to its reasonable satisfaction.  You also must convert your service to a new service plan in your own name.

Confidential and Proprietary Information
You acknowledge and reaffirm the validity of the Inventions and Non-Disclosure Agreement (the “2010 Confidentiality Agreement”) that you signed on December 13, 2010 which is incorporated herein by reference.  By signing this Agreement, you acknowledge and agree that you have had access during your employment with the Company to confidential and proprietary information of Company (“Trade Secrets”), and further acknowledge and agree that the release or disclosure of any of the Company’s Trade Secrets will cause irreparable injury.  By signing this Agreement, you acknowledge that you have not used or disclosed, and agree that you will not at any time use or disclose, directly or indirectly, to any other entity or person, any Trade Secrets of the Company, its affiliates, or any officers, directors or employees.  You also agree that you will not attempt to gain access to such information through restricted means.  You understand that the Company would not provide you with the monies and benefits under this Agreement but for your reaffirmation of the obligations under the 2010 Confidentiality Agreement.  You further understand and agree that a violation of this provision is a material breach of this Agreement and may be enforceable against the person making disclosure by injunctive relief and by an award of damages.  

Non‐Disparagement
Except as required by law, you agree that you will not make, cause  or authorize any statement to any third party that disparages the Company.  The Company agrees that it will not issue, cause or authorize any statement to any third party that disparages you.

Attempts to Compel Disclosure
Nothing in this Agreement shall prohibit any either party from providing truthful testimony or information where required by law.  In the event either you or the Company receive a demand to compel disclosure of any information or statement that is restricted under the Confidentiality or Non-Disparagement sections of this Agreement, the party receiving such demand shall provide the other with notice of such attempts to compel disclosure of such restricted information.  Such notice shall be in writing and delivered to the General Counsel of the Company or to you, as applicable, as soon as reasonably possible after receipt of the demand, and if possible, not less than ten (10) days before compliance with the demand is required.

No Admission
This Agreement shall not in any way be construed as an admission by the Company or by you of any liability or unlawful conduct whatsoever.

Severability
In the event that any provision of this Agreement is found to be illegal or unenforceable, such provision shall be severed or modified to the extent necessary to make it enforceable, and as so severed or modified, the remainder of this Agreement shall remain in full force and effect.  This Agreement shall be governed and construed in accordance with laws of the State of New York.

Tax Issues 
This Agreement will be construed and administered to preserve the exemption from Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”), of payments that qualify as short-term deferrals pursuant to Treas. Reg. § 1.409A-1(b)(4) or that qualify for the two-times compensation separation pay exemption of Treas. Reg. § 1.409A-1(b)(9)(iii).  It is intended that all payments hereunder shall comply with Section 409A and the regulations promulgated thereunder so as not to subject you to payment of interest or any additional tax under Section 409A.  In furtherance thereof, if payment or provision of any amount or benefit hereunder that is subject to Section 409A at the time specified herein would subject such amount or benefit to any additional tax under Section 409A, the payment or provision of such amount or benefit shall be postponed to the earliest commencement date on which the payment or provision of such amount or benefit could be made without incurring such additional tax.  In addition, to the extent that any regulations or other guidance issued under Section 409A (after application of the previous provisions of this Section) would result in you being subject to the payment of interest or any additional tax under Section 409A, the Parties agree, to the extent reasonably possible, to amend this Agreement in order to avoid the imposition of any such interest or additional tax under Section 409A, which amendment shall have the minimum economic effect necessary and be reasonably determined in good faith by the Company and you.  You acknowledge and agree the Company may withhold taxes from payments under this Agreement as required by law, that the Company has made no representation to you as to the tax treatment of any compensation or benefits provided pursuant to this Agreement, and that you remain solely responsible for all taxes that you may owe with respect to such compensation and benefits paid under this Agreement.

To the extent any reimbursements or in-kind benefit payments under this Agreement are subject to Section 409A, such reimbursements and in-kind benefit payments shall be made in accordance with Treasury Regulation §1.409A-3(i)(1)(iv) (or any similar or successor provisions).

Notwithstanding any other provision in this Agreement, to the extent that (i) you are determined to be a “specified employee” with the meaning of Section 409A, (ii) any amounts payable under this Agreement represent amounts that are subject to Section 409A, and (iii) such amounts are payable on your “separation from service,” within the meaning of Section 409A, then such amounts will not be payable to you before the date that is six months after your termination 

of employment.  Payments under this provision to which you would otherwise be entitled during the first six months following your Separation Date will be accumulated and paid on the day that is six months after the Separation Date. 

Entire Agreement
This Agreement, along with the agreements specifically incorporated herein, constitute the entire agreement between you and the Company and may not be modified in any way except by written agreement signed by you and an authorized representative of the Company.  You are not eligible for any other payment or benefits except for those expressly described in this Agreement.

This Agreement supersedes any and all other written and oral agreements and understandings between the parties, provided that the Amended and Restated Change of Control Agreement dated as of August 6, 2011 between you and Greatbatch, Inc. (the “CCA”) shall continue in effect in accordance with its terms and that you shall not forfeit any rights or entitlements under the CCA.  In that regard, however, you agree that the intent is that (a) you will be entitled to receive, in respect of a Change of Control, only such payments under the CCA that, after giving effect to the consideration you are receiving in connection with your separation from employment including under this Agreement, will provide for the greatest amounts and for the longest period of time possible (as between the CCA and the Separation Benefits); and (b) that there is to be no duplication of payment.

Incentive Compensation Recoupment Policy
Notwithstanding anything to the contrary, you acknowledge and agree that any equity award or other payments referenced herein, or previously made by Greatbatch to you, may be subject to forfeiture and/or recoupment to the extent provided for in the Greatbatch, Inc. Incentive Compensation Recoupment Policy, or any similar policy, as in effect from time to time, if it is determined that such recoupment is required under such policy.  In the event such recoupment is required pursuant to any such policy, you agree to forfeit or repay such award, and as necessary, execute any document prepared by the Company to effectuate such recoupment.
 
Acknowledgements
You acknowledge, affirm and agree that:
(a)    You have read the Agreement and understand its legal and binding effect; you are acting voluntarily, knowingly, and willingly, and of your own free will in executing this Agreement;
(b)    The consideration to be provided to you under this Agreement: (i) exceeds anything of value to which you would otherwise be entitled in the absence of this Agreement; (ii) fully and completely settles all claims by you and any attorney you have retained against the Company (including its current and former agents, parents, related companies, subsidiaries, affiliates, employees, officers, directors, shareholders, attorneys, successors, and assigns) for attorneys’ fees, costs, disbursements, and the like; and (iii) is sufficient consideration for your promises under this Agreement.
(c)    You have had the opportunity to seek, and were advised of your opportunity to seek, legal counsel prior to signing this Agreement;
(d)    You have signed this Agreement after your Separation Date and on or before January 9, 2015, and that have been given in excess of 21 days to consider signing this Agreement; and

(e)    You understand that if you sign this Agreement, you can change your mind and revoke your acceptance of this Agreement within 7 calendar days after signing it; any revocation of your acceptance of this Agreement must be in writing and must received by Timothy G. McEvoy, Senior Vice President, General Counsel & Secretary, Greatbatch, Inc., 10000 Wehrle Drive, Clarence, New York 14031, no later than close of business on the 7th calendar day after you 

sign this Agreement; and provided you have executed and not revoked this Agreement as permitted herein, this Agreement will become effective upon expiration of the 7-day revocation period (the “Effective Date”).
.

THIS DOCUMENT MAY NOT BE SIGNED UNTIL AFTER JANUARY 3, 2015, AND MUST BE RETURNED BY JANUARY 9, 2015.

I have read and understand the Agreement and Release set forth above and agree to be bound by the terms.
	
	
	 

	Michelle Graham

	Dated: January __, 2015Arkanova Energy Corporation.: Exhibit 10.1 - Filed by newsfilecorp.com

EXECUTIVE EMPLOYMENT
AGREEMENT 

THIS EMPLOYMENT AGREEMENT (the "Agreement") is
effective October 1, 2014 (the “Effective Date”), by and between
ARKANOVA ENERGY CORPORATION, a Nevada
corporation (the “Company”), and PIERRE G. MULACEK, an individual
and resident of 1208 Marly Way, Austin, Texas 78733 (the "Executive").

WHEREAS, the Company is in the business of locating,
acquiring and exploring oil and gas properties; 

WHEREAS, the Executive has experience in the control and
senior management functions of companies in the oil & gas industry in
particular; and 

WHEREAS, the Executive is currently employed by the
Company and the Executive and the Company seek to enter into this Agreement, to
be effective upon the Effective Date. 

NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties agree as follows: 

1.      Employment. On the
Effective Date, the Executive is hereby employed and engaged to serve the
Company as President and Chief Executive Officer of the Company, and such
additional titles as the Company’s board of directors (the “Board”) may
specify from time to time, and the Executive does hereby accept and agree to
such engagement and employment. 

2.      Employment Term. This
Agreement has a term of one (1) year, beginning on the Effective Date (the
“Employment Term”). Upon expiration of the initial Employment Term, this
Agreement will automatically renew for another one (1) year unless terminated in
writing by either party no less than sixty (60) days prior to the expiration or
by either party pursuant to Section 16 of this Agreement. 

3.      Directorship. Provided
the Executive is not in breach of any terms of this Agreement, and during the
Employment Term, the Company agrees to nominate the Executive for election as a
director of the Company at all meetings of stockholders held for the purpose of
electing directors. 

4.      Duties. The Executive
will be responsible for the overall development and operations of the Company.
In addition, the Executive’s duties will entail: 

	 	(a) 	
      those duties customarily performed by the Chief Executive
      Officer of a company with revenues and number of employees commensurate
      with those of the Company; and

	 	 	 
	 	(b) 	
      such duties and responsibilities as the Board determines,
      assigns or reassigns to the Executive in its sole and absolute
      discretion,

(all of which are collectively the
“Duties”). 

5.      Best Efforts of the
Executive. During his employment hereunder, the Executive must: 

	 	(a) 	
      devote his business time, best efforts, business
      judgment, skill, and knowledge to the advancement of the Company's
      interests and to the discharge of his duties and responsibilities
      hereunder;

	 	 	 
	 	(b) 	
      diligently and faithfully execute and perform the Duties
      and responsibilities, subject to the general supervision and control of
      the Board; and

	 	 	 
	 	(c) 	
      conduct and maintain a professional relationship with all
      parties interacting with the Company with the utmost regard for honesty
      and integrity.

6.      Business Opportunities.
During the Employment Term, the Executive agrees to bring to the attention of
the Board all written business proposals that come to the Executive’s attention
and all business or investment opportunities of an oil and gas nature that are
created or devised by the Executive and that relate to areas in which the
Company conducts business and might reasonably be expected to be of benefit or
interest to the Company or any of its subsidiaries. The Executive may not
participate in or compete within a 25 mile radius of existing projects.

7.      Other Business, etc.
The Company recognizes that the Executive is actively engaged in other
business, investments, and personal pursuits. Nothing in this Agreement
precludes the Executive from devoting reasonable periods required for: 

		(a) 	
      serving as a director or member of a committee of any
      organization or corporation involving no conflict of interest with the
      interests of the Company;

	 	 	 
		(b) 	
      serving as a consultant in his area of expertise (in
      areas other than in connection with the business of the Company), to
      government, industrial, and academic panels where it does not conflict
      with the interests of the Company; and

	 	 	 
		(c) 	
      managing his personal investments or engaging in any
      other business; provided that such activities do not interfere with the
      regular performance of his duties and responsibilities under this
      Agreement as determined by the Company.

	 	 	 
	8.      Compensation
      of the Executive.
	 	 	 
		(a) 	
      As compensation for the services provided by the
      Executive under this Agreement, the Company will pay the Executive an
      annual salary of $240,000.00, to be paid in accordance with the Company's
      usual payroll procedures (the “Salary”).

	 	 	 
		(b) 	
      In addition to the Salary, the Executive may be eligible
      to receive an annual bonus determined by the Board based on the
      performance of the Company.

9.      Stock Option Grant. The
Company may, in its discretion, grant to the Executive incentive stock options
to acquire shares of the Company’s common stock on such terms as are approved by
the Board and in accordance with applicable securities laws. 

2 

10.      Benefits. The
Executive will also be entitled to participate in any and all Company benefit
plans, from time to time, in effect for employees of the Company. Such
participation will be subject to the terms of the applicable plan documents and
generally applicable Company policies. 

11.      Vacation, Sick Leave and
Holidays. The Executive is entitled paid vacation in accordance with Company
policies established and in effect from time to time, with such vacation to be
scheduled and taken in accordance with the Company’s standard vacation policies.
In addition, the Executive is entitled to such sick leave and holidays at full
pay in accordance with the Company’s policies established and in effect from
time to time.

12.      Business Expenses. The
Company must promptly reimburse the Executive for all reasonable out-of-pocket
business expenses incurred in performing the Executive’s duties and
responsibilities hereunder in accordance with the Company's policies, provided
the Executive promptly furnishes to the Company adequate records of such
expenses. 

13.      Location of the
Executive's Activities. The Executive’s principal place of business in the
performance of his duties and obligations under this Agreement will be in either
the Houston or Austin metropolitan areas, as determined by the Company in its
discretion. Notwithstanding the preceding sentence, the Executive will engage in
such travel and spend such time in other places as may be necessary or
appropriate in furtherance of his duties hereunder. 

14.      Confidentiality. The
Executive recognizes that the Company has and will have business affairs,
products, future plans, trade secrets, customer lists, and other vital
information (collectively "Confidential Information") that are valuable
assets of the Company. The Executive agrees that he will not at any time or in
any manner, either directly or indirectly, divulge, disclose, or communicate in
any manner any Confidential Information to any third party without the prior
written consent of the Board. The Executive must protect the Confidential
Information and treat it as strictly confidential. 

15.      Indemnification. The
Company agrees to indemnify the Executive from and against any and all actions,
causes of action, claims, demands or other proceedings made against the
Executive in the course of or as a result of his position as a director and
officer of the Company, provided that the Company will not be liable for any
action for the Executive’s gross negligence or willful neglect. 

16.      Termination. Except as
provided in Section 2 of this Agreement, the Executive’s employment hereunder
will terminate under the following circumstances: 

	 	(a) 	
      Voluntary Termination by the Executive. The
      Executive has the right to voluntarily terminate this Agreement and his
      employment hereunder at any time during the Employment Term upon three
      months’ prior written notice.

	 	 	 
	 	(b) 	
      Voluntary Termination by the Company. The Company
      has the right to voluntarily terminate this Agreement and the Executive’s
      employment hereunder at any time during the Employment Term upon three
      months’ prior written notice.

3 

	 	(c) 	
      Termination for Cause. The Company has the right
      to terminate this Agreement and the Executive’s employment hereunder at
      any time for cause. As used in this Agreement, "cause" means any of
      the following:

	 	 	 	 
	 		(i) 	
      Refusal by the Executive to implement or adhere to lawful
      policies or directives of the Board;

	 	 	 	 
	 		(ii) 	
      Breach of this Agreement by the Executive;

	 	 	 	 
	 		(iii) 	
      The Executive’s conviction of a felony;

	 	 	 	 
	 		(iv) 	
      The Executive’s conviction of a misdemeanor involving
      fraud, theft, deceit, misrepresentation, conspiracy, breach of trust or
      breach of fiduciary duty;

	 	 	 	 
	 		(v) 	
      The Executive receiving a reprimand, suspension, fine or
      other administrative penalty from the United States Securities and
      Exchange Commission or state regulator in a matter that involves fraud,
      theft, deceit, misrepresentation, conspiracy, breach of trust, breach of
      fiduciary duty or insider trading that is made after the date of this
      signed contract; or

	 	 	 	 
	 		(vi) 	
      Breach of fiduciary duty or the misappropriation by the
      Executive of funds from or resources of the Company.

	 	 	 	 
	 		
      “Cause” will not be deemed to exist unless the
      Company has first given the Executive a written notice thereof specifying
      in reasonable detail the facts and circumstances alleged to constitute
      "cause" and, thirty (30) days after such notice has been given, such
      conduct has, or such circumstances have, as the case may be, not entirely
      ceased and not been entirely remedied.

	 	 	 	 
	 	(d) 	
      Termination Upon Death or for Disability. This
      Agreement and the Executive’s employment hereunder, will automatically
      terminate upon:

	 	 	 	 
	 		
      (i) 
	the Executive’s death; or
	 	 	 	 
	 		
      (ii)
	upon written notice to the Executive and certification of the
      Executive’s disability by a qualified physician or a panel of qualified
      physicians if the Executive becomes disabled beyond a period of twelve
      (12) months and is unable to perform the duties contain in this
    Agreement.
	 	 	 	 
	 	(e) 	
      Termination on “Change of Control”.

	 	 	 	 
	 		(i) 	
      “Change of Control Event” means the occurrence of
      any one of the events set out in Subsections A. to C.
  below:

4 

	 	A. 	
      The acquisition, other than from the Company, by any
      individual, entity or group (within the meaning of Section 13(d)(3) or
      14(d)(2) of the Securities Exchange Act of 1934, as amended) of
      beneficial ownership of 50% or more of either the then outstanding shares
      of common stock of the Company or the combined voting power of the then
      outstanding voting securities of the Company entitled to vote generally in
      the election of directors,

	 	 	 
	 	B. 	
      The approval by the stockholders of the Company of a
      reorganization, merger or consolidation of the Company in which the
      individuals and entities who were the respective beneficial owners of the
      common stock and voting securities of the Company immediately prior to
      such reorganization, merger or consolidation do not, following such
      reorganization, merger or consolidation, beneficially own, directly or
      indirectly, more than 50% of, respectively, the then outstanding shares of
      common stock and the combined voting power of the then outstanding voting
      securities entitled to vote generally in the election of directors, as the
      case may be, of the corporation resulting from such reorganization, merger
      or consolidation; or

	 	 	 
	 	C. 	
      A liquidation or dissolution of the Company or the sale
      or disposition of all or substantially all of the assets of the Company,
      which, for greater certainty, is deemed to occur in the event the Company
      sells or disposes of all or substantially all of the assets of a
      subsidiary of the Company.

In the case of the occurrence of any
of the events set forth in this Section 16(e), a Change of Control Event will be
deemed to occur immediately prior to the occurrence of any such events. The
following will not constitute a Change of Control Event: 

	 	D. 	
      If the sole purpose of the event is to change the
      jurisdiction of the Company’s organization or to create a holding Company,
      partnership or trust that will be owned in substantially the same
      proportions by the persons who held the Company’s securities immediately
      before such event; or

	 	 	 
	 	E. 	
      If the Executive is part of a purchasing group that
      consummates the Change of Control Event.

	 	(ii) 	
      If a Change of Control Event occurs with respect to the
      Company, the Executive’s Employment will automatically terminate and the
      Company will pay the Executive an amount equal to the total of:

	 	 	 	 
	 		A. 	
      the Salary for a period of 18 months;
  and

5 

	 	 		B. 	
      the Executive’s cost for a period of 18 months to obtain
      family and/or spousal health insurance that is similar in coverage to that
      provided to the Executive as of the date of the Change of
  Control,

	 	 	 	 	 
	 	 		
      which amount is payable within 30 days of the Change of
      Control Event.

	 	 	 	 	 
	 	(f) 	
      Effect of Termination.

	 	 	 	 	 
	 	 	(i) 	
      In the event that this Agreement and the Executive’s
      employment is terminated for cause pursuant to Section 16(c), all
      obligations of the Company and all duties, responsibilities and
      obligations of the Executive under this Agreement will cease upon the
      effective date of such termination. Upon such termination, the Executive
      will be entitled to receive only the compensation, benefits, and
      reimbursement earned by or accrued to the Executive under the terms of
      this Agreement prior to the date of termination, but will not be entitled
      to any further compensation, benefits, or reimbursement after such
      date.

	 	 	 	 	 
	 	 	(ii) 	
      In the event the Executive or the Company voluntarily
      terminates this Agreement pursuant to Sections 16(a) or 16(b), or in the
      event of the termination of this Agreement upon death or disability of the
      Executive pursuant to Section 16(d), the Executive will be entitled to all
      compensation pursuant to Section 8 of this Agreement for the period
      through the effective termination date, provided that, in the case of
      death or disability, payment may be made to the Executive’s appointed
      trustee.

	 	 	 	 	 
	 	 	(iii) 	
      Other than as set forth above, the Executive will not be
      entitled to any further compensation, benefits, or reimbursement after the
      date of his termination.

	 	 	 	 	 
	 	(g) 		
      Resignation as Director. In the event that the
      Executive’s employment is terminated by the Company for cause, the
      Executive agrees to immediately resign as a director of the Company and
      any related entities. For the purposes of this Section 16, the term “the
      Company” will be deemed to include subsidiaries, parents, and affiliates
      of the Company.

17.      Governing Law,
Jurisdiction and Venue. This Agreement will be governed by and construed in
accordance with the laws of the State of Texas without giving effect to any
applicable conflicts of law provisions. 

18.      The Executive’s
Representations and Warranties. The Executive hereby represents and warrants
that he is not under any contractual obligation to any other company, entity or
individual that would prohibit or impede the Executive from performing his
duties and responsibilities under this Agreement and that he is free to enter
into and perform the duties and responsibilities required by this Agreement. The
Executive hereby agrees to indemnify and hold the Company and its officers,
directors, employees, shareholders and agents harmless in connection with the
representations and warranties made by the Executive in this Section 18. 

6 

19.      Notices. All demands,
notices, and other communications to be given hereunder, if any, must be in
writing and will be sufficient for all purposes if personally delivered, sent by
facsimile or sent by United States mail to the address below or such other
address or addresses as such party may hereafter designate in writing to the
other party as herein provided. 

	 	The Company: 	The Executive: 
	 	Arkanova Energy Corporation 	Pierre G. Mulacek 
	 	305 Camp Craft Road, Suite 525, 	1208 Marly Way, Austin, 
	 	Austin, TX 78746 	Texas 78733 

20.      Entire Agreement. This
Agreement contains the entire agreement of the parties and there are no other
promises or conditions in any other agreement, whether oral or written. This
Agreement supersedes any prior written or oral agreements between the parties.
This Agreement may be modified or amended, if the amendment is made in writing
and is signed by both parties. 

21.      No Assignment of
Agreement. This Agreement is for the unique personal services of the
Executive and is not assignable or delegable, in whole or in part, by the
Executive or the Company. 

22.      Currency. All dollar
amounts referred to in this Agreement are in lawful money of the United States.

23.      Headings. The headings
contained in this Agreement are for reference only and do not in any way affect
the meaning or interpretation of this Agreement. 

24.      Severability. If any
provision of this Agreement is held to be invalid or unenforceable for any
reason, the remaining provisions will continue to be valid and enforceable. 

25.      No Waiver. The failure
of either party to enforce any provision of this Agreement is not be construed
as a waiver or limitation of that party's right to subsequently enforce and
compel strict compliance with every provision of this Agreement. 

26.      Independent Legal
Advice. The Executive acknowledges that he has read and understands this
Agreement, and acknowledges that: 

	 	(a) 	
      he has read and understands this Agreement;

	 	 	 
	 	(b) 	
      Clark Wilson LLP acts solely for the Company with respect
      to the preparation of this Agreement and cannot provide the Executive with
      any advice regarding same; and

	 	 	 
	 	(c) 	
      he has had the opportunity to obtain independent legal
      advice to respect to this Agreement.

27.      Execution in
Counterparts. This Agreement may be executed in two or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument and, in pleading or proving any provision
of this Agreement, it will not be necessary to produce more than one of such
counterparts. 

7 

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written. 

ARKANOVA ENERGY CORPORATION 

	By: /s/ Erich Hofer 	/s/ Pierre G. Mulacek 
	     Erich Hofer,
      Independent Director 	PIERRE G. MULACEK 

8

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