form of subscription agreement

REVIEW the entire subscription form.

COMPLETE the information on page 2 of this Subscription Agreement.

COMPLETE the U.S. Accredited Investor Status Certificate the begins on page 4 to this Subscription Agreement (the “Certificate”).

RETURN this Subscription Agreement together with the subscription proceeds paid by certified cheque or bank draft to Arkanova Energy Corporation at 305 Camp Craft Road, Suite 525, Austin, TX 78746 Attention: Reginald Denny, CFO. The subscription proceeds may also be wired to Arkanova Energy Corporation pursuant to wiring instructions that will be provided to the Subscriber upon request.

All other information must be filled in where appropriate.

US$0.10 per Share for a total purchase price of US$200,000

The Subscriber or the Beneficial Purchaser owns, directly or indirectly, the following securities of the Issuer:

[Check if applicable] The Subscriber or the Beneficial Purchaser is an insider of the Issuer.

Reference date of this Subscription
Agreement  

December ____, 2012 (the “Agreement Date”).

Arkanova Energy Corporation (the “Issuer”).

US$0.10 per Share

There is no minimum or maximum offering.

The United States or offshore (the “Selling Jurisdictions”).

The offering will be made in accordance with the following exemptions:

(a)

the Accredited Investor exemption as provided by Regulation D promulgated under the 1933 Act; and

(b)

such other exemptions as may be available the securities laws of the Selling Jurisdictions.

The Subscriber acknowledges that any resale of any of the Shares will be subject to resale restrictions contained in the securities legislation applicable to the Subscriber or proposed transferee. The Subscriber acknowledges that none of the Shares have been registered under the 1933 Act or the securities laws of any state of the United States. The Securities may not be offered or sold in the United States unless registered in accordance with federal securities laws and all applicable state securities laws or exemptions from such registration requirements are available.

The Subscriber acknowledges that the certificates representing the Shares will bear the following legends:

“THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.”

The Subscriber and any Beneficial Purchaser are advised to consult with their own legal counsel or advisors to determine the resale restrictions that may be applicable to them.

Payment for, and delivery of the Shares, is scheduled to occur on such date as determined by the Company in its sole discretion (the “Closing Date”).

The Issuer is incorporated under the laws of the State of Nevada.

The “Commissions with Jurisdiction Over the Issuer” is the SEC.

The “Securities Legislation Applicable to the Issuer” is the 1933 Act (as defined herein), U.S. Securities Exchange Act of 1934.

a natural person whose individual net worth, or joint net worth with that person’s spouse, at the date of this certificate exceeds $1,000,000, excluding the value of the primary residence of such person(s) and the related amount of indebtedness secured by the primary residence up to its fair market value;

a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

an organization described in Section 501(c)(3) of the Internal Revenue Code (United States), a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of $5,000,000;

a director or executive officer of the Issuer,

a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act; or

an entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories.

“1933 Act” means the United States Securities Act of 1933, as amended;

“Applicable Legislation” means the Securities Legislation Applicable to the Issuer (as defined on page 3) and all legislation incorporated in the definition of this term in other parts of the Subscription Agreement, together with the regulations and rules made and promulgated under that legislation and all administrative policy statements, blanket orders and rulings, notices and other administrative directions issued by the Commissions;

“Beneficial Purchaser” means a person for whom the Subscriber is acting in purchasing the Shares who will be the beneficial owner of the Securities within the meaning attributed to it by Rule 13d-3 adopted by the SEC under the 1934 Act;

“Closing” means the completion of the sale and purchase of the Shares;

“Closing Date” has the meaning assigned in the Terms;

“Commissions” means the Commissions with Jurisdiction over the Issuer (as defined on page 4) and the securities commissions incorporated in the definition of this term in other parts of the Subscription Agreement;

“General Provisions” means those portions of the Subscription Agreement headed “General Provisions” and contained on pages 5 to 12;

“Private Placement” means the offering of the Securities on the terms and conditions of this Subscription Agreement;

“Securities” means the Shares as defined in the Terms;

“Subscription Agreement” means the first (cover) page, the Terms on page 3, the General Provisions on pages 5 to 12 and the other schedules and appendices incorporated by reference; and

“Terms” means those portions of the Subscription Agreement headed “Terms” and contained on page 3.

the Securities have not been registered under the 1933 Act, or under any state securities or “blue sky” laws of any state of the United States, and are being offered only 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, except pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act, and in each case only in accordance with Applicable Legislation;

the Issuer will refuse to register any transfer of the Securities 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, or in a transaction not subject to, the registration requirements of the 1933 Act;

the Subscriber and the Subscriber’s advisor(s) have had a reasonable opportunity to ask questions of and receive answers from the Issuer regarding the Offering, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information contained in the public information which has been filed by the Issuer with the U.S. Securities and Exchange Commission, or any business plan, corporate profile or any other document provided to the Subscriber;

the books and records of the Issuer are available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Subscriber during reasonable business hours at its principal place of business and that all documents, records and books pertaining to this Offering have been made available for inspection by the Subscriber, the Subscriber’s attorney and/or advisor(s);

by execution hereof the Subscriber has waived the need for the Issuer to communicate its acceptance of the purchase of the Securities pursuant to this Subscription Agreement;

the Issuer is entitled to rely on the representations and warranties and the statements and answers of the Subscriber contained in this Subscription Agreement and in the Certificate, and the Subscriber will hold harmless the Issuer from any loss or damage it may suffer as a result of the Subscriber’s failure to correctly complete this Subscription Agreement or the Certificate;

the Subscriber shall indemnify and hold harmless the Issuer and, where applicable, its respective directors, officers, employees, agents, advisors and shareholders from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Subscriber contained herein, the Certificate or in any other document furnished by the Subscriber to the Issuer in connection herewith, being untrue in any material respect or any breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber to the Issuer in connection therewith;

the issuance and sale of the Securities to the Subscriber will not be completed if it would be unlawful or if, in the discretion of the Issuer acting reasonably, it is not in the best interests of the Issuer;

the Subscriber has been advised to consult its own legal, tax and other advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions and it is solely responsible (and the Issuer is not in any way responsible) for compliance with applicable resale restrictions;

the Securities are not listed on any stock exchange or automated dealer quotation system and no representation has been made to the Subscriber that any of the Securities will become listed on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in shares of common stock of the Issuer on the Financial Industry Regulatory Authority’s OTC Bulletin Board;

neither the Commissions or similar regulatory authority has reviewed or passed on the merits of the Securities;

no documents in connection with this Offering have been reviewed by the SEC or any state securities administrators;

there is no government or other insurance covering any of the Securities; and

this Subscription Agreement is not enforceable by the Subscriber unless it has been accepted by the Issuer, and the Subscriber acknowledges and agrees that the Issuer reserves the right to reject any subscription for any reason.

the Subscriber and any Beneficial Purchaser are U.S. Persons;

the Subscriber has received and carefully read this Subscription Agreement;

the Subscriber has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto and, if the Subscriber is an entity, it is duly incorporated or organized and validly subsisting under the laws of its jurisdiction of incorporation or organization and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Subscription Agreement on behalf of the Subscriber;

the Subscriber understands and acknowledges that the Securities have not been registered under the 1933 Act or any state securities laws and that the sale of the Shares contemplated hereby is being made to a limited number of U.S. Accredited Investors in transactions not requiring registration under the 1933 Act; accordingly the Securities are “restricted securities” within the meaning of Rule 144(a)(3) under the 1933 Act;

the Subscriber acknowledges that the Issuer has not registered the offer and sale to the Subscriber of the Securities under the 1933 Act and the Subscriber acknowledges that there may be substantial restrictions on the transferability of, and that it may not be possible to liquidate its investment readily in, the Shares;

the Subscriber is a U.S. Accredited Investor and acknowledges that it is acquiring the Shares as an investment for its own account or for the account of a U.S. Accredited Investor as to which it exercises sole investment discretion and not with a view to any resale, distribution or other disposition of the Shares in violation of the federal or state securities laws of the United States and the Subscriber has concurrently executed and delivered the Certificate;

the Subscriber will only offer, sell or otherwise transfer the Securities pursuant to an effective registration statement under the 1933 Act or pursuant to an exemption from the registration requirements imposed by the 1933 Act and in compliance with applicable state Securities Laws (and, in each case where there is no effective registration statement, only if an opinion of counsel of recognized standing reasonably satisfactory to the Issuer has been provided to the Issuer to that effect, if applicable);

the Subscriber acknowledges and agrees that the Securities will be “restricted securities” within the meaning of Rule 144(a)(3) under the 1933 Act and will remain “restricted securities” notwithstanding any resale within or outside the United States unless the sale is completed pursuant to an effective registration statement under the 1933 Act or is made in compliance with the exemption from registration provided by Rule 144 promulgated under the 1933 Act;

the Subscriber understands and agrees that there may be material tax consequences to it of an acquisition, holding or disposition of the Securities. The Issuer gives no opinion and makes no representation with respect to the tax consequences under United States, state, local or foreign tax law of the acquisition, holding or disposition of such securities, and the Subscriber acknowledges that it is solely responsible for determining the tax consequences of its investment;

the Subscriber understands that none of the Shares may be sold or transferred in the United States or to a U.S. Person unless an exemption is available from the registration requirements of the 1933 Act and any other applicable Securities Laws;

the Subscriber understands that if it decides to offer, sell, pledge or otherwise transfer the Shares, such securities may be offered, sold or otherwise transferred only: (A) to the Issuer; (B) pursuant to an effective registration statement under the 1933 Act, (C) in accordance with Rule 144 under the 1933 Act, if available, and in compliance with applicable state Securities Laws, (D) in accordance with the provisions of Regulation S, if available, or (E) in a transaction that does not otherwise require registration under the 1933 Act or any other applicable Securities Laws and in the case of an offer or sale pursuant to an exemption from the registration requirements of the 1933 Act, the Issuer may require, as a condition of granting its consent, a legal opinion of a firm reasonably acceptable to the Issuer confirming that the sale is not subject to the registration requirements of the 1933 Act;

the purchase of the Shares has not been made through or as a result of any general solicitation or general advertising (as such terms are defined in Rule 502(c) of Regulation D), any press release, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising and the distribution of the Shares has not been accompanied by any advertisement, including, without limitation, in printed public media, radio, television or telecommunications, including electronic display or as part of a general solicitation

the Subscriber and any Beneficial Purchaser are aware that an investment in the Issuer is speculative and involves certain risks, including the possible loss of the investment;

the decision to execute this Subscription Agreement and purchase the Securities agreed to be purchased hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Issuer and such decision is based entirely upon a review of any public information which has been filed by the Issuer with the U.S. Securities and Exchange Commission in compliance, or intended compliance, with applicable securities legislation;

the entering into of this Subscription Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or, if applicable, the constating documents of, the Subscriber, or of any agreement, written or oral, to which the Subscriber may be a party or by which the Subscriber is or may be bound;

the Subscriber has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Subscriber enforceable against the Subscriber;

the Subscriber and any Beneficial Purchaser have the requisite knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Securities and the Issuer, and the Subscriber is providing evidence of such knowledge and experience in these matters through the information requested in the Certificate;

the Subscriber understands and agrees that the Issuer and others will rely upon the truth and accuracy of the acknowledgements, representations and agreements contained in this Subscription Agreement, and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, the Subscriber shall promptly notify the Issuer;

all information contained in the Certificate is complete and accurate and may be relied upon by the Issuer, and the Subscriber will notify the Issuer immediately of any material change in any such information occurring prior to the closing of the purchase of the Securities;

the Subscriber is not an underwriter of, or dealer in, the shares of common stock of the Issuer, nor is the Subscriber participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities;

the Subscriber understands and agrees that none of the Securities have been registered under the 1933 Act, or under any state securities or “blue sky” laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with applicable state securities laws;

the Subscriber has made an independent examination and investigation of an investment in the Securities and the Issuer and has depended on the advice of its legal and financial advisors and agrees that the Issuer will not be responsible in any way whatsoever for the Subscriber’s decision to invest in the Securities of the Issuer;

if the Subscriber is acquiring the Securities as a fiduciary or agent for one or more investor accounts, the investor accounts for which the Subscriber acts as a fiduciary or agent satisfy the definition of an “Accredited Investor”, as the term is defined under Regulation D of the 1933 Act;

if the Subscriber is acquiring the Securities as a fiduciary or agent for one or more investor accounts, the Subscriber has sole investment discretion with respect to each such account, and the Subscriber has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account;

the Subscriber (and, if applicable, others for whom it is contracting hereunder) is not:

a licensed broker or dealer in the United States,

an affiliate of a licensed broker or dealer in the United States,

acting as an underwriter (as that term is defined in Section 2(11) of the 1933 Act) in respect of the Shares, or

an affiliate of any person that is acting as an underwriter (as that term is defined in Section 2(11) of the 1933 Act) in respect of the Shares; and

no person has made to the Subscriber or any Beneficial Purchaser any written or oral representations:

that any person will resell or repurchase any of the Securities;

that any person will refund the purchase price of any of the Securities;

as to the future price or value of any of the Securities; or

that any of the Securities will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Securities of the Issuer on any stock exchange or automated dealer quotation system.