Exhibit 10.1

PROMISSORY NOTE

 

August 21, 2015

 

Up to $1,500,000

 

For value received, TRANSATLANTIC PETROLEUM (USA) CORP., a Delaware corporation
(the “Company”), hereby promises to pay to GARY WEST CRT 2 LLC or its registered
assigns (the “Holder”), the principal sum of ONE MILLION FIVE HUNDRED THOUSAND
DOLLARS AND NO CENTS ($1,500,000.00) or so much as may be advanced hereunder, on
the dates specified herein, with interest as specified herein.

This Note is subject to the following additional provisions, terms and
conditions:

ARTICLE 1

DEFINITIONS

1.1 Certain Definitions.

“Applicable Rate” means 9.0% per annum.

“Asset Sale/Joint Venture/Financing Repurchase Event” means the consummation of
any (i) sale, lease or other transfer in one transaction or a series of related
transactions of Hydrocarbon Interests of the Parent or any Subsidiary for net
cash proceeds of at least $13.75 million (including by means of the sale of all
the capital stock of a Subsidiary or by means of a merger, consolidation or
similar transaction) or (ii) issuance by the Parent of a note, bond or similar
debt security that results in net cash proceeds of at least $13.75 million,
excluding term loans, credit facilities or similar lending arrangements with
commercial banks.

“Bankruptcy Law” means Title 11, United States Code or any similar Bermuda or
United States federal or state law for the relief of debtors.

“Business Day” means any day that is not a Saturday or Sunday or a day on which
banks are required or permitted to be closed in Chicago, Illinois.

“Common Shares” means the common shares, par value $0.10 per share, of the
Parent.

“Collateral” shall mean the Common Shares acquired under the Stock Repurchase
Agreement. The Company will hold the Collateral until this Note is repaid in
full.

“Default Rate” means 15.0% per annum.

“Distribution Event” means any insolvency, bankruptcy, receivership,
liquidation, reorganization or similar proceeding (whether voluntary or
involuntary) relating to the Company or Parent or their property, or any
proceeding for voluntary liquidation, dissolution or other winding up of the
Company or Parent, whether or not involving insolvency or bankruptcy.

“Event of Default” has the meaning given to such term in Section 5.1 of this
Note.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect from time to time.

“Fundamental Change” is an event that shall be deemed to have occurred at such
time after this Note is originally issued that any of the following occurs:

(a) a “person” or “group” within the meaning of Section 13(d) of the Exchange
Act, other than a Permitted Holder, files a Schedule TO or any schedule, form or
report under the Exchange Act disclosing that such person or group has become
the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the
Exchange Act, of the Parent’s common equity representing more than 20% of the
voting power of the Parent’s common equity, provided that such threshold shall
be 35% or more of the voting power of the Parent’s common equity in cases where
a person or group consists of holders who became a person or group as a result
of acting or agreeing to act together as a partnership, limited partnership,
syndicate, or other group for the purpose of acquiring, holding, voting or
disposing of common equity of the Parent held by such persons prior to such
action or agreement;

 

--------------------------------------------------------------------------------

 

(b) the consummation of (A) any recapitalization, reclassification or change of
the Common Shares (other than changes resulting from a subdivision or
combination) as a result of which the Common Shares would be converted into, or
exchanged for, stock, other securities, other property or assets; (B) any share
exchange, consolidation or merger of the Parent pursuant to which the Common
Shares will be converted into cash, securities or other property; (C) any sale,
lease or other transfer in one transaction or a series of transactions of all or
substantially all of the consolidated assets of the Parent and its Subsidiaries,
taken as a whole, to any Person other than the Parent or one of the Parent’s
Subsidiaries; or (D) any sale, lease or other transfer in one transaction or a
series of transactions of all or substantially all of the assets of the Company
to any Person other than the Parent; provided, however, that a transaction
described in clause (B) in which the holders of all classes of the Parent’s
common equity immediately prior to such transaction own, directly or indirectly,
more than 50% of all classes of common equity of the continuing or surviving
corporation or transferee or the parent thereof immediately after such
transaction in substantially the same proportions as such ownership immediately
prior to such transaction shall not be a Fundamental Change;

(c) the shareholders of the Parent approve any plan or proposal for the
liquidation or dissolution of the Parent;

(d) the Common Shares cease to be listed or quoted on any Recognized Exchange;
or

(e) the Company ceases to be a wholly-owned subsidiary of Parent;

provided, however, that a transaction or transactions shall not constitute a
Fundamental Change if at least 90% of the consideration received or to be
received by the common shareholders of the Parent, excluding cash payments for
fractional shares and cash payments made pursuant to dissenters’ appraisal
rights, in connection with such transaction or transactions consists of shares
of common stock that are listed or quoted on any Recognized Exchange or will be
so listed or quoted when issued or exchanged in connection with such transaction
or transactions.

“Funded Debt” means funded indebtedness for money borrowed of the Company that
by its terms will mature or will have mandatory principal repayments in cash
(excluding contingent repayments arising due to asset sales, excess cash flow,
change of control, equity issuances or similar events) on or prior to the
Maturity Date. For the avoidance of doubt, Funded Debt does not include capital
lease obligations, purchase money obligations and other obligations representing
the unpaid purchase price of goods or services, hedging or swap obligations,
obligations in respect of surety or performance bonds or letters of credit,
contingent obligations, and obligations pursuant to operating agreements,
production sharing agreements, mineral leases, royalty interests, working
interests, agreements for the purchase, sale, transportation or exchange of
hydrocarbons, processing agreements, joint venture agreements and other
contracts customarily used in the conduct of the oil and gas business.

“Holder” has the meaning given to such term in the first paragraph of this Note.

“Hydrocarbon Interests” means oil and natural gas fee mineral interests, leases,
licenses, working interests, and concessions.

“Initial Tranche” shall mean $500,000.

“Interest Payment Date” means each of January 1, 2016, April 1, 2016 and
July 1, 2016.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).

“Maturity Date” means October 1, 2016.

“Maximum Rate” means the maximum nonusurious interest rate permitted under
applicable law.

“Note” means this Promissory Note made by the Company payable to the Holder,
together with all amendments and supplements hereto, all substitutions and
replacements herefor, and all renewals, extensions, increases, restatements,
modifications, rearrangements and waivers hereof from time to time.

“Parent” means TransAtlantic Petroleum Ltd., a Bermuda company with limited
liability.

“Permitted Holder” means N. Malone Mitchell, 3rd and any other Person that,
directly or indirectly, is controlled by him.

- 2 -

--------------------------------------------------------------------------------

 

“Permitted Liens” means (a) Liens on property securing Funded Debt that exist at
the time the Company acquires the property, including any acquisition by means
of a merger or consolidation of a Person with or into the Company, but only if
at the time of such acquisition such Liens do not secure Funded Debt in an
aggregate principal amount in excess of the fair market value of the property so
acquired and (b) Liens to secure any refinancing (or successive refinancings) as
a whole, or in part, of Funded Debt secured by any Permitted Lien, but only if
(y) the principal amount of Funded Debt secured by such Lien at such time is not
increased by an amount greater than the amount necessary to pay accrued but
unpaid interest and any fees and expenses, including premiums, related to such
refinancing and (z) the Lien securing such Funded Debt is limited to the same
assets that secured the debt being so refinanced.

“Person” means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

“Recognized Exchange” means the Toronto Stock Exchange, the NYSE MKT, the New
York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market
or any other stock exchange of similar reputation (or any of their respective
successors).

“SEC” means the U.S. Securities and Exchange Commission or any successor to the
rights and duties thereof.

“Stock Repurchase Agreement” means that certain Stock Repurchase Agreement
between National Financial Services LLC and the Company, dated March 30, 2015.

“Subsequent Tranche” shall mean increments of $250,000.

“Subsidiary” means any direct or indirect subsidiary of the Parent. For the
avoidance of doubt, the Company is a Subsidiary of the Parent.

ARTICLE 2

BASIC TERMS

2.1 Principal.

(a) Scheduled Repayment. Except as otherwise provided in this Note, the
principal of this Note shall be due and payable on the Maturity Date.

(b) Optional Prepayment. This Note may be prepaid in whole or in part at any
time, and from time to time, without premium or penalty.

2.2 Interest.

(a) The Company agrees to pay interest in respect of the unpaid principal amount
of this Note at a rate per annum equal to the lesser of the Applicable Rate and
the Maximum Rate. Notwithstanding the preceding sentence, the Company agrees to
pay interest in respect of overdue principal, and, to the extent permitted by
law, overdue interest, at a rate per annum equal to the lesser of the Default
Rate and the Maximum Rate.

(b) Interest on the principal of this Note shall be due and payable (i) on each
Interest Payment Date and the Maturity Date, (ii) upon the payment or
prepayment, in full or in part, of any of the principal of this Note (but only
with respect to the principal of the Note so prepaid), (iii) at the maturity of
this Note (whether by acceleration or otherwise), and (iv) after maturity
(whether by acceleration or otherwise), on demand.

(c)           All computations of interest, both before and after maturity,
shall be made on the basis of a year of 360 days comprised of twelve 30 day
months.

2.3 Payments in General. Whenever any payment to be made under this Note shall
be stated to be due on a day that is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day, and, with respect to
payments of principal, interest thereon shall be payable at the applicable rate
during such extension. Each payment received by the Holder shall be applied (x)
first to all costs and expenses incurred by Holder in enforcing this Note, (y)
second, to the payment of accrued but unpaid interest hereunder, and (z) third,
to the reduction of the unpaid principal balance hereof.

- 3 -

--------------------------------------------------------------------------------

 

2.4 Advances. The initial principal amount of this Note shall equal the Initial
Tranche. Subsequent Tranches may be drawn by delivering written draw requests to
the Holder no less than three (3) Business Days before the requested borrowing
date. No advances shall be made after December 31, 2015.

2.5    Purpose of Loan. The proceeds from the loan are to be used only for the
Company’s purchase of Common Shares under the Stock Repurchase Agreement.

ARTICLE 3

COVENANTS

The Company hereby covenants and agrees with the Holder that, so long as the
principal of or interest on any Note shall be unpaid:

3.1 Compliance with Law. The Company will do or cause to be done all things
necessary (i) to preserve and keep in full force and effect at all times the
Company’s existence, and (ii) to cause the Parent and its Subsidiaries to comply
in all material respects with all applicable laws and all applicable rules,
regulations and orders issued by any governmental authority, noncompliance with
which could reasonably be expected to have a material adverse effect on the
business, operations, assets and/or financial or other condition of the Parent
and its Subsidiaries taken as a whole (but any such noncompliance contested by
the Parent or any Subsidiary in good faith by appropriate proceedings shall not
constitute a breach of this Section 3.1(ii)).

3.2 Performance of Liabilities. The Company will (i) duly pay and discharge all
of its material obligations in a timely manner, other than obligations that the
Company is contesting in good faith by appropriate proceedings, and (ii) duly
pay and discharge all taxes before the same shall become in default, which
taxes, if unpaid, might become a Lien upon any properties of the Company if the
loss of such properties could reasonably be expected to have a material adverse
effect on the business, operations, prospects, assets and/or financial or other
condition of the Company and its Subsidiaries taken as a whole.

3.3 Reporting Requirements. The Company shall furnish to the Holder the
following:

(a) Defaults. Within five business days after obtaining knowledge of the
occurrence of any Event of Default, a statement of an appropriate officer of the
Company setting forth the details of such Event of Default and the action that
the Company has taken or proposes to take with respect thereto.

(b) Financial Statements. As soon as available, a copy of the annual audit
report for each fiscal year for the Parent, including therein the balance sheet
of the Parent as of the end of such fiscal year and related statements of
income, shareholders’ equity and cash flows for such fiscal year; provided, that
the Parent shall not be required to deliver any financial statements of the
Parent to the Holder if the Parent is subject to the periodic reporting
requirements of the Exchange Act.

(c) Litigation. Notification in writing within 10 days after learning thereof,
of any litigation against the Parent or its Subsidiaries involving an amount in
controversy exceeding $10,000,000, whether or not the claim is considered by the
Parent to be covered by insurance.

3.4 Fundamental Change Repurchase. If a Fundamental Change occurs at any time
prior to the Maturity Date, the Company shall repay the principal amount of this
Note, plus accrued and unpaid interest.

3.5 Limitations on Liens.

(a) The Company shall not incur or permit to exist any Lien of any nature
whatsoever on any of its properties, whether owned as of the date hereof or
hereafter acquired, securing Funded Debt, other than Permitted Liens, without
effectively providing that this Note shall be secured equally and ratably with
(or, at the Company’s election, prior to) such Funded Debt for so long as such
Funded Debt is so secured. Any Lien created securing this Note pursuant to the
preceding sentence will be automatically and unconditionally released and
discharged upon (i) the release and discharge of all Liens securing Funded Debt
to which it relates or (ii) any sale or transfer to an independent third party
of the property secured by such Lien (but if the net proceeds of such sale or
transfer are applied towards the repayment of Funded Debt secured by such
property, then the release and discharge of the Lien securing this Note shall
only occur pursuant to this sentence if such net proceeds shall also be applied,
on a pro rata basis, towards the repayment of the principal of this Note).

- 4 -

--------------------------------------------------------------------------------

 

(b) The Company shall not incur or permit to exist any Lien of any nature
whatsoever on the Collateral except in favor of Holder.

3.6 Asset Sale/Joint Venture Event. If an Asset Sale/Joint Venture/Financing
Repurchase Event occurs at any time prior to the Maturity Date, on or
concurrently with the occurrence any such event, the Company will send a notice
to Holder describing the transaction or transactions that constitute the event
and promptly repay the Note in full, including any accrued but unpaid interest.

3.7 Origination Fee. In consideration of Holder making the advances contemplated
by this Note, the Company covenants and agrees to pay Holder a loan origination
fee equal to $15,000 concurrently with the execution of this Note by the
Company.

3.8 Opinion of Counsel. On or prior to the execution of this Note by the
Company, the Company shall deliver an opinion of counsel to the Company, in form
and substance reasonably acceptable to Holder, that the execution, delivery and
performance of the Note and the Guaranty by the Company and Parent,
respectively, will not constitute a breach of or default under the (i)
Indenture, dated as of February 20, 2015, between Parent and U.S. Bank National
Association, as trustee; and (ii) Credit Agreement, dated as of May 6, 2014,
among Amity Oil International Pty Ltd, DMLP, Ltd., Petrogas Petrol Gaz ve
Petrokimya Ürünleri Insaat Sanayi ve Ticaret A.Ş., Talon Exploration, Ltd.,
TransAtlantic Exploration Mediterranean International Pty. Ltd., and
TransAtlantic Turkey, Ltd., as borrowers, Parent, the Company and TransAtlantic
Worldwide, Ltd., as guarantors, the lenders party thereto from time to time, BNP
Paribas (Suisse) SA as coordinating mandated lead arranger, sole bookrunner,
letter of credit issuer, administrative agent, collateral agent and technical
agent, and International Finance Corporation, as mandated lead arranger.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

The Company represents and warrants to the Holder that:

4.1 Execution and Delivery. The execution, delivery, and performance by the
Company of this Note and the consummation of the transactions contemplated
hereby do not and will not (i) violate in any material respect any provision of
federal, state, or local law or regulation applicable the Company, or any order,
judgment, or decree of any court or other governmental authority binding on the
Company, or any of its organizational documents, (ii) result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material agreement to which the Company is a party or bound, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
assets of the Company other than Liens in favor of the Holder, (iv) require any
approval or consent of any third party under any material agreement to which the
Company is a party or bound, other than consents or approvals that have been
obtained and that are still in force and effect, or (v) require any material
registration with, consent, or approval of, or notice to, or other action with
or by, any governmental authority, other than registrations, consents,
approvals, notices, or other actions that have been obtained and that are still
in force and effect. Without limiting the generality of the foregoing, the
Company is not party to any agreement that by its terms would preclude the
Company from paying amounts due under this Note when due.

4.2 Consents and Approvals. No consent, approval, authorization or other order
of any Person and no consent, authorization, approval, or other action by, and
no notice to or filing with, any governmental authority is required for the
execution, delivery or performance of this Agreement by the Company.

4.3 Enforceability. This Note has been duly executed, delivered and authorized
by the Company and constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.

4.4 Litigation. There are no litigation, arbitration, governmental or
administrative proceedings, actions, examinations, claims or demands pending, or
to the knowledge of the Company, threatened that could materially adversely
affect performance by the Company of its obligations under this Note.

4.5 Use of Proceeds. The proceeds of advances made hereunder will be used solely
for the purposes set forth in Section 2.5 hereof.

The representations and warranties set forth in this Article 4 shall survive the
execution and delivery of this Note.

- 5 -

--------------------------------------------------------------------------------

 

ARTICLE 5

DEFAULT AND REMEDIES

5.1 Events of Default. An “Event of Default” occurs if:

(a) the Company defaults in the payment of principal of or interest on this Note
when the same becomes due and payable and, with respect to a default in the
payment of interest, such default continues for 5 business days after the
Company has received written notice thereof;

(b) the Company shall fail to observe or perform any other covenant or agreement
contained in this Note and such default continues for 10 days after the Company
has received written notice thereof;

(c) the Parent or the Company shall fail to make any payment of principal of or
interest on any indebtedness for money borrowed when due after giving effect to
any applicable grace periods (whether due by acceleration or otherwise) and the
aggregate amount of all past-due indebtedness (including indebtedness
accelerated pursuant to the terms thereof) shall be equal to or greater than
$10,000,000;

(d) the Parent or the Company (i) shall commence a voluntary case concerning
itself under any Bankruptcy Law now or hereafter in effect, or any successor
thereof; (ii) is the object of an involuntary case under any Bankruptcy Law; or
(iii) commences any Distribution Event or is the object of an involuntary
Distribution Event; and/or

(e) any representation or warranty set forth in this Note shall prove to be
incorrect in any material respect and such default continues for 10 days after
the Company has received written notice thereof.

5.2 Remedies.

(a) If an Event of Default (other than an Event of Default under Section 5.1(d))
shall occur and be continuing, the Holder may declare by notice in writing given
to the Company, the entire unpaid principal amount of this Note, together with
accrued but unpaid interest thereon, to be immediately due and payable, in which
case this Note shall become immediately due and payable, both as to principal
and interest, without presentment, demand, default, notice of intent to
accelerate and notice of such acceleration, protest or notice of any kind, all
of which are hereby expressly waived, anything herein or elsewhere to the
contrary notwithstanding.

(b) If an Event of Default under Section 5.1(d) shall occur and be continuing,
the entire unpaid principal amount of this Note, together with accrued but
unpaid interest thereon, shall automatically become immediately due and payable,
both as to principal and interest, without presentment, demand, default, notice
of intent to accelerate and notice of such acceleration, protest or notice of
any kind, all of which are hereby expressly waived, anything herein or elsewhere
to the contrary notwithstanding.

(c) If any Event of Default shall have occurred and is continuing, the Holder
may proceed to protect and enforce its rights either by suit in equity or by
action at law, or both. In addition, in such event the Holder shall be entitled
to exercise all of its rights and remedies under the Guaranty (as hereinafter
defined).

ARTICLE 6

SECURITY

6.1 Pledge of Collateral and Guaranty. To secure payment and performance of the
obligations under this Note, the Company hereby grants to the Holder a first
priority Lien and security interest in the Collateral. In addition, this Note is
guaranteed by the Parent pursuant to a Guaranty of even date herewith (the
“Guaranty”).

ARTICLE 7

MISCELLANEOUS

7.1 Amendment. This Note may be amended, modified, superseded or cancelled, and
any of the terms, covenants, or conditions hereof may be waived, only by a
written instrument executed by the Company and the Holder at such time.

7.2 Successors and Assigns.

- 6 -

--------------------------------------------------------------------------------

 

(a) The rights and obligations of the Company and the Holder under this Note
shall be binding upon, and inure to the benefit of, and be enforceable by, the
Company and the Holder, and their respective permitted successors and assigns.

(b) The Holder may not sell, assign (by operation of law or otherwise),
transfer, pledge, grant a Lien on, or otherwise dispose of this Note or any
portion hereof or any rights or obligations hereunder unless the Company has
granted its prior written consent; provided, however, that the Holder may
transfer or assign this Note or any portion thereof to any one or more
affiliates of Holder.

(c) The registered owner of this Note may be treated as the owner of it for all
purposes.

7.3 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. This Note
and the validity and enforceability hereof shall be governed by and construed
and interpreted in accordance with the laws of the State of Illinois without
giving effect to conflict of laws rules or choice of laws rules thereof. The
Company hereby submits itself to non-exclusive jurisdiction in any suit, action
or proceeding with respect to this Note brought in the Courts of the State of
Illinois or in the United States District Court for the Northern District of
Illinois. THE COMPANY AND THE HOLDER, AFTER CONSULTING OR HAVING HAD THE
OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR ANY AMENDMENT,
INSTRUMENT OR DOCUMENT WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN
CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF
DEALING IN WHICH THE HOLDER AND THE COMPANY ARE ADVERSE PARTIES IN CONNECTION
HEREWITH OR THEREWITH, AND EACH AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE HOLDER GRANTING ANY FINANCIAL ACCOMMODATION TO THE COMPANY.

7.4 Waivers. Except as may be otherwise provided herein, the makers, signers,
sureties, guarantors and endorsers, if any, of this Note severally waive demand,
presentment, notice of dishonor, notice of intent to demand or accelerate
payment hereof, notice of acceleration, diligence in collecting, grace, notice,
and protest, and agree to one or more extensions for any period or periods of
time and partial payments, before or after maturity, without prejudice to the
Holder.

7.5 No Waiver by Holder. No failure or delay on the part of the Holder in
exercising any right, power or privilege hereunder and no course of dealing
between the Company and the Holder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.

7.6 Notices. All notices, requests, demands and other communications provided
for hereunder shall be in writing and addressed as follows (i) if to the Holder,
addressed to it at 1603 Orrington Avenue, Suite 810, Evanston, Illinois 60201,
(ii) if to the Company, addressed to it at 16803 Dallas Parkway, Addison, Texas
75001, Attention: Chad Burkhardt, or to such other address as the Company may
have designated in writing to the Holder. All notices addressed as above shall
be deemed to have been properly given: (i) if served in person, upon acceptance
or refusal of delivery; (ii) if mailed by certified or registered mail, return
receipt requested, postage prepaid, on the third (3rd) day following the day
such notice is deposited in any post office station or letter box; (iii) if sent
by recognized overnight courier, on the first (1st) day following the day such
notice is delivered to such carrier or (iv) if given by facsimile or other
electronic transmission, on the day acknowledgment of receipt is received.

7.7 Limitation on Interest. Notwithstanding any other provision of this Note,
interest on the indebtedness evidenced by this Note is expressly limited so that
in no contingency or event whatsoever, whether by acceleration of the maturity
of this Note or otherwise, shall the interest contracted for, charged or
received by the Holder exceed the maximum amount permissible under applicable
law. If from any circumstances whatsoever fulfillment of any provisions of this
Note or of any other document evidencing, securing or pertaining to the
indebtedness evidenced hereby, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity, and if from any such circumstances the Holder shall ever
receive anything of value as interest or deemed interest by applicable law under
this Note or any other document evidencing, securing or pertaining to the
indebtedness evidenced hereby or otherwise an amount that would exceed the
Maximum Rate, such amount that would be excessive interest shall be applied to
the reduction of the principal amount owing under this Note or on account of any
other indebtedness of the Company to the Holder, and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
of this Note and such other indebtedness, such excess shall be refunded to the
Company. In determining whether or not the interest paid or payable with respect
to any indebtedness of the Company to the Holder, under any specific
contingency, exceeds the Maximum Rate, the Company and the Holder shall, to the
maximum extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, (c) amortize, prorate,

- 7 -

--------------------------------------------------------------------------------

 

allocate and spread the total amount of interest throughout the term of such
indebtedness so that the actual rate of interest on account of such indebtedness
does not exceed the Maximum Rate permitted by applicable law, and/or (d)
allocate interest between portions of such indebtedness, to the end that no such
portion shall bear interest at a rate greater than the Maximum Rate. The terms
and provisions of this paragraph shall control and supersede every other
conflicting provision of this Note and all other agreements between the Company
and the Holder.

7.8 Expenses. The Company shall pay the Holder all out-of-pocket fees and
expenses, including, without limitation, reasonable out-of-pocket fees and
expenses of legal counsel, incurred by the Holder in connection with the
enforcement of this Note.

7.9 Interpretation. For purposes of this Note, (a) “or” is not exclusive, (b)
“including” means “including without limitation,” (c) words in the singular
include the plural, and vice versa, and (d) references to “$” and “dollars” mean
lawful money of the United States of America.

7.10 Series of Notes. This Note is one of a series of Promissory Notes (the
“Series Notes”) made in connection herewith in an aggregate principal amount of
up to Three Million Dollars ($3,000,000). Each request for an advance pursuant
to Section 2.4 hereof shall be made pro rata among Holder and the other holders
of the Series Notes. This Note and the other Series Notes shall rank pari passu
as to the payment of principal and interest. Holder agrees that any payments or
prepayments to Holder and to holders of the other Series Notes, whether
principal, interest or otherwise, shall be made pro rata among Holder and the
other holders of the Series Notes based upon the aggregate unpaid principal
amount of this Note and the other Series Notes. None of the Series Notes nor any
term thereof may be amended or waived except by a written instrument signed by
the Company and the holders of Series Notes representing a majority of the
aggregate outstanding principal amounts under the Series Notes, and any such
amendment or waiver shall be binding on all of the holders of Series Notes.
Holder agrees that the exercise of any rights and remedies under this Note or
the Guaranty by Holder or by another holder of a Series Note under such Series
Note or any guaranty thereof by the Parent shall affect and be for the benefit
all holders of the Series Notes on a pro rata basis based upon the aggregate
unpaid principal amount of the Series Note held by such holder.

7.11 Counterpart Execution. This Note may be executed in any number of
counterparts and by different parties hereto on separate counterparts, and all
such counterparts taken together shall be deemed to constitute one instrument.
Delivery of an executed counterpart signature page to this Note by telecopy or
electronically (such as a .pdf file) shall be effective as delivery of manually
executed counterparts of this Note.

EXECUTED as of the date first written above.

 

TRANSATLANTIC PETROLEUM (USA) CORP.

 

 

By:

/s/ Wil F. Saqueton

Name:

Wil F. Saqueton

Title:

Vice President & CFO

 

 

The undersigned agrees to make advances as required pursuant to Section 2.4 of
this Note.

 

GARY WEST CRT 2 LLC

 

 

By:

/s/ Marc D. Harper

Name:

Marc D. Harper

Title:

Vice President

 

 

By:

/s/ Thomas B. Barker

Name:

Thomas B. Barker

Title:

Trustee

 

- 8 -