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NATION ENERGY INC.
Suite F - 1500 West 16th Avenue
Vancouver BC V6H 4B9 Canada
 

June 13, 2015
 

TO:
Paltar Petroleum Limited

1555 Blake Street   Suite 1002
Denver, Colorado  80202 
 
Attention:             Mr. Marc Bruner

Dear Sirs:

RE:           SECOND AMENDED AND RESTATED AGREEMENT regarding Paltar Petroleum
Limited Australia Permits & Applications

This letter sets out the Second Amended and Restated Agreement (“Agreement”)
reached among Nation Energy Inc., as farmee and optionee (“Nation”), and Paltar
Petroleum Limited ("Paltar"), as farmor and optionor, regarding (i) the farmout
to Nation of a portion of the oil and gas exploration permits on Exhibit A and
(ii) the possible later sale to Nation, at Nation’s option, of Paltar’s entire
interest in such permits, the outstanding shares of Officer Petroleum Pty Ltd.
(“Officer”), and various applications for exploration permits on Exhibit A
(collectively, the “Assets”), all on the terms and conditions set forth herein
(collectively, the “Transactions”).  Marc Bruner (“Bruner”) and John Hislop
(“Hislop”), as major shareholders (indirectly or directly) of Paltar and Nation,
respectively, agree to the terms hereof. This Agreement replaces in its entirety
the Amended and Restated Agreement dated November 27, 2014, which was amended by
an amendment dated April 29, 2015.
 
All dollar amounts in this Agreement are expressed in Australian dollars.  Loans
made by Hislop prior to the date of this letter were not always evidenced by
promissory notes (and, in one case, originally cast as an equity purchase, but
later converted to a loan) and were not always made in the same currency.  In
this Agreement, prior Hislop loans are identified by the date loan proceeds were
received by Paltar and principal and interest are always expressed in Australian
dollars, which the parties agree reflect an accurate conversion, where
applicable, from US dollars to Australian dollars.
 
Officer
 
1.  
On the FATA Approval Date (as defined in Paragraph 19 of this Agreement), Hislop
will lend to Paltar Three Hundred Twenty-Five Thousand Dollars (AUD$325,000)
(the “Officer Loan”), which Paltar shall contribute, in its entirety, to the
capital of Officer.  Paltar, as the sole owner of Officer, will cause Officer
promptly to apply the proceeds of the Officer Loan to the satisfaction of rental
and other obligations due under Exploration Permit 468 (“EP 468”).  The Officer
Loan will be evidenced by a single promissory note in the principal amount of
AUD$325,000, which will provide simple interest at a rate of 15% per annum, and
for repayment in one balloon payment of principal and interest on the first
anniversary of the Earn-In Closing. The Officer Loan (and the Payoff Loan
described in Paragraph 6) will be secured by a first ranking charge or mortgage
over either or both of Paltar’s shares in Officer and Officer’s title to EP 468,
at Hislop’s option.  Upon request by Hislop, Paltar shall, and shall cause
Officer to, promptly take such steps and execute such documents as required in
order to grant and create such charge or mortgage and cause it to be registered
or recorded as Hislop considers necessary or prudent under law.

 
 
 

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Farmout
 
2.  
On June 26, 2015 (the “Earn-In Closing Date”) and under seven separate Earning
Agreements (the “Earning Agreements”), Paltar will farm out three specific
graticular blocks in each of the six petroleum exploration permits identified in
Schedule A and will cause Officer to farm out forty blocks in EP 468 in exchange
for Nation’s (i) issuance of an aggregate 600 million Nation common shares (the
“Nation Shares”) to Paltar, with an agreed value of US$.0333 per share, on the
second business day following the Nation Meeting (defined in Paragraph 3,
below), and (ii) payment to Paltar of an aggregate $5,315,000 by December 31,
2015.  Each Earning Agreement will require that Nation Australia perform all
necessary work and make all necessary expenditures to keep each concerned
exploration permit in full force and effect until production licenses have been
granted covering the three blocks identified in that permit, although Nation
Australia may voluntarily terminate the Earning Agreement and surrender any
further earning rights after the end of three permit years.  Upon issuance of a
production license covering one of the blocks, Paltar (or, if applicable,
Officer) will assign its interest in such license, insofar as it covers the
block, to Nation Australia.  Production licenses are granted only where there
has been a petroleum discovery, so there is no assurance that production
licenses will be granted covering any of the blocks.  There has been no
discovery of petroleum on any of the permits and the permits produce no
revenues.

 
3.  
Nation intends to call a shareholder meeting (the “Nation Meeting”) on or about
July 22, 2015 to amend and restate its Articles of Incorporation to increase its
authorized share capital from 100,000,000 to 5,000,000,000 common
shares.  Hislop agrees to vote the Nation shares he owns or controls in favor of
this authorized share increase and, if the Transactions come before the
shareholders, in favor of the Transactions.

 
Options
 
4.  
On the Earn-In Closing Date, Paltar will grant to Nation Australia an
indivisible option (the “Nation Option”), exercisable in the sole discretion of
Nation Australia at any time before July 31, 2018, so long as Nation Australia
has performed its material obligations under all Earning Agreements at the date
of exercise, to purchase (i) all of the Assets (including the right to
exploration permits when applications for such permits are granted) and (ii) all
of the outstanding securities of Officer for an aggregate cash purchase price of
AUD10,000,000.

 
Paltar Repayment of Hislop Advances
 
5.  
Hislop lent Paltar amounts equivalent to $1,100,658.63:

 
$172,040 received by Paltar on October 17, 2013 under a promissory note;
 
$127,960 received by Paltar on November 1, 2013 under a promissory note; and
 
$800,658.63 paid on behalf of Paltar to CR Innovations AG on December 16, 2014.
 
On the Earn-In Closing Date, Paltar will issue, and Hislop will accept, 20
million Paltar common shares in full satisfaction of the principal amount of the
indebtedness described in Paragraph 5.  Accrued interest under this indebtedness
will be satisfied by including the accrued interest amounts in the principal
amount of the new loan (“Payoff Loan”) described in Paragraph 6.  Upon issuance
of the 20 million shares, the Limited Recourse Guaranty and Stock Pledge by
Wotan Group Limited, a guarantor of some of the indebtedness described in
Paragraphs 5 and 6, will be released by Hislop.
 
 
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6.  
Hislop also is lending or has lent Paltar amounts equivalent to $577,650:

 
$81,000 received by Paltar on May 1, 2014 as an advance under a line of credit;
 
$124,000 received by Paltar on September 22, 2014 as an advance under a line of
credit;
 
$230,000 received by Paltar on December 9, 2014, originally anticipated to be
the purchase price for stock but later orally agreed to be a loan; and
 
$142,650, which is the agreed amount of all accrued interest due under the
advances described in Paragraph 5 and the three loans described in the three
preceding subparagraphs of this Paragraph 6.
 
The Payoff Loan will be evidenced by a single promissory note in the principal
amount of $577,650, which will provide simple interest at a rate of 15% per
annum and repayment in one balloon payment of principal and interest on the
first anniversary of the Earn-In Closing.
 
Document Preparation and Closing
 
7.  
The parties agree to instruct their attorneys to co-operate and complete
comprehensive and definitive Earning Agreements, the promissory note and
security described in Paragraph 1, the Nation Option, and such other documents
as required to complete the transactions to be completed at the Earn-In Closing
Date as contemplated by this Agreement (the “Earn-In Closing Documents”).

 
8.  
The Earn-In Closing Documents will be executed and delivered on the Earn-In
Closing Date.

 
9.  
Nation will be required within four days after the Earn-In Closing Date to file
a comprehensive material change report on Form 8-K, and Paltar promises to
provide on a timely basis such information as Nation or its attorneys or
auditors consider necessary to prepare the 8-K.

 
10.  
If the Nation Option is exercised, Nation will be required within four business
days after transfer of the Officer Shares to Nation Australia to file a
comprehensive material change report on Form 8-K and Paltar promises to provide,
and to cause Officer to provide, on a timely basis, such information as Nation
or its attorneys or auditors consider necessary to prepare the 8-K.  On or
before delivery of the Option Shares to Nation Australia, Paltar will provide
audited financial statements regarding Officer and Paltar for the three most
recent fiscal years prepared by a PCAOB approved auditor in US GAAP, and such
additional fiscal period financial statements as may be required under SEC
regulations.

 
11.  
Paltar acknowledges that the Nation Shares will be restricted as to sale by US
securities laws and rules and will carry a restrictive legend indicating such
restrictions, and in addition, Paltar has agreed to a lockup of Nation Shares
such that none may be sold for 3 years after issuance, except as may be
otherwise permitted by resolution of the board of Nation (from which vote
Paltar’s nominees to the Nation Board shall abstain).  Any shares that may be
transferred by Paltar by way of dividend or otherwise to a party where Marc
Bruner is the beneficial owner will be locked up for an additional 2 years (a
total of 5 years).  Paltar will become an “affiliate” of Nation and will be
required to file insider reports and otherwise comply with applicable SEC
rules.  In addition, Paltar acknowledges that Nation is a reporting issuer in
Canada under Multilateral Instrument 51-105, and will remain so for a year after
Closing, and Canadian securities filings will be required during that time.

 
 
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12.  
Paltar and Hislop shall use commercially reasonable efforts to enter into a
shareholder agreement which shall include a covenant that Paltar and Hislop will
each vote their Nation common shares to increase the number of Nation directors
to five and, for five years after the Nation Shares are issued to Paltar, to
elect Hislop (or his nominee), Darrel Causbrook, David Siegel, and Marc Bruner
(or such other nominees as Paltar may nominate from time-to-time), and one other
person as members of Nation’s board of directors, although there may be as many
other directors of Nation as its shareholders may determine.

 
Representations of Nation
 
13.  
Nation represents and warrants to Paltar that:

 
                (a)  
the authorized capital of Nation consists of 100,000,000 common shares with no
par value per share, of which there are presently 16,020,000 common shares
issued and outstanding;

 
 
                (b)  
other than as contemplated under this Agreement, there are no other rights,
warrants or options outstanding pursuant to which any shares of Nation may be
issued and there are no other securities issued and outstanding or issuable
which are or may be convertible or converted into shares of Nation;

 
 
                (c)  
Nation is duly incorporated under the laws of Wyoming; and

 
 
                (d)  
all of Nation’s continuous disclosure filings with the Securities Exchange
Commission of the United States are up to date and were, at the date they were
filed, complete and accurate and, other than as contemplated herein, there are
not and shall not, at each of the Earn-In Closing Date and the Officer Closing
Date be, any material adverse changes in Nation’s business and affairs from that
which was disclosed in Nation’s most recently-filed continuous disclosure
documents.

 
Representations of Paltar
 
14.  
Each of Paltar and Bruner represents and warrants to Nation that:

 
                (a)  
subject to required governmental and other approvals as required by law, which
Paltar will use its best efforts to obtain, Paltar has the full power and
authority to transfer or cause to be transferred the Assets to Nation Australia
free and clear of any charges, encumbrances, liens or claims, other than
royalties and overriding royalties in existence at the date of this Agreement,
including without limitation the overriding royalties referred to in Paragraph
1.1 of the Joint Venture Operating Agreement between Paltar and Sweetpea
Petroleum Pty Limited;

 
                (b)  
other than as contemplated under this Agreement, there are no other rights or
options outstanding pursuant to which any third party has any right or interest
in the Assets;

 
                (c)  
Paltar is duly incorporated and in good standing under the laws of Australia;
and

 
                (d)  
other than liens arising under the Joint Venture Operating Agreement between
Paltar and Sweetpea Petroleum Pty Limited, Paltar’s interest in the Assets is
free and clear of all encumbrances.

 
 
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Covenants
 
15.  
Nation covenants to Paltar:

 
                (a)  
Nation shall promptly call and hold the Nation Meeting, at which Nation’s Board
of Directors shall ask Nation’s shareholders to approve a resolution to amend
and restate Nation’s Articles of Incorporation to effect an increase in Nation’s
authorized share capital from 100,000,000 common shares to 5,000,000,000 common
shares.  In addition, and effective immediately following the increase in its
authorized capital, Nation intends to and shall settle approximately $1,340,000
in debt for shares issued at $0.01 per share.

 
                (b)  
Nation shall conduct its business in the ordinary and normal course and shall
not, without the prior written consent of Paltar, enter into any transaction
which would cause any of its representations or warranties or agreements in this
Agreement to be incorrect or to constitute a breach of any covenant or agreement
of Nation herein;

 
                (c)  
Nation shall not issue or redeem any shares in its capital nor issue any
securities convertible or exchangeable into shares other than as disclosed in
this Agreement.

 
16.  
Paltar covenants to Nation:

 
                (a)  
Paltar shall conduct its business in the ordinary and normal course and shall
not enter into any transaction which would cause any of Paltar’ representations
or warranties in this Agreement to be incorrect or constitute a breach of any
covenant or agreement of Paltar in this Agreement;

 
                (b)  
Within 60 days after receiving the Nation Shares as provided in Paragraph 2,
Paltar shall cause Nation to file (and thereafter diligently pursue until
effective) a registration statement with the SEC seeking registration under the
Securities Act of 1933 of as many of the approximately 145 million shares
anticipated then to be beneficially owned by Hislop as may be permitted by the
SEC.  As soon as practicable after the Earn-In Closing Date the parties will
negotiate and sign a Registration Rights agreement with Hislop which sets out
these rights and provide for penalties if registration does not occur as
contemplated;

 
                (c)  
Paltar will continue to use reasonable efforts consistent with its financial
circumstances after the Earn-In Closing Date to cause all Applications
outstanding as of the date hereof to be converted to Permits;

 
                (d)  
Paltar shall not take any action which would result in any material adverse
change to Paltar or to sell, transfer, encumber or dispose of any of the Assets
or related entitlements, except as permitted in writing by Nation; and

 
                (e)  
Paltar will not, without the prior written consent of Nation, which may be
granted or withheld by Nation in its sole and absolute discretion, transfer any
of the Assets to any other party except in accordance with the terms of this
Agreement.

 
Binding Agreement
 
17.  
Upon acceptance of the terms of this Agreement by all of the parties hereto,
this Agreement shall be deemed to constitute and shall be a legally valid and
binding agreement.

 
 
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Confidentiality
 
18.  
Paltar acknowledges that Nation is a public company and has an obligation to
disclose all material information about its affairs.  Paltar agrees that it will
not trade in the securities of Nation while in possession of, and will ensure
that its management does not so trade, nor will Paltar inform others of (except
on a need to know basis and subject to a non-disclosure agreement), any
non-disclosed material information about Nation.

 
General
 
19.  
The parties acknowledge that any provision of this Agreement that would effect
an acquisition of an interest in Australian urban land [within the meaning of
the Foreign Acquisitions and Takeovers Act 1975 (Cth) (“FATA”)] is subject to
and conditional upon the person making the acquisition not having received any
order or notice under FATA prohibiting the person from making the acquisition or
making the acquisition subject to conditions which are unacceptable to the
person.  The parties further acknowledge that the Nation Option, the Officer
Loan and/or any of the security for the Officer Loan may constitute the
acquisition of an interest in Australian urban land and, accordingly, Nation
Austalia and/or Hislop shall, on or as soon as practicable after the date of
this Agreement make and pursue all necessary applications and notifications
under FATA as required.  The “FATA Approval Date” referred to in Paragraph 1 of
this Agreement shall be the earliest to occur of the following: (i) The date
upon which Nation Australia receives notice that the grant of the Nation Option
is not prohibited under FATA (provided that any conditions placed on the notice
(if any) are acceptable to Nation Australia); (ii) the date upon which a notice
prohibiting the acquisition can no longer be delivered to Nation Australia and /
or Hislop under the FATA; and (iii) the date upon which Nation Australia and /
or Hislop (as applicable) waive this condition in accordance with clause 20.

 
20.  
The obligation to pursue applications and notifications under FATA, and the
receipt of any approvals thereunder, may be waived by Nation Australia or Hislop
(as applicable) in its or his sole and absolute discretion.

 
21.  
Each party will pay its own legal costs, whether or not the transactions
contemplated hereby are completed.

 
22.  
This Agreement shall be governed and interpreted under the laws of the State of
Wyoming.

 
23.  
This Agreement may be executed in counterparts with the same effect as if each
of the parties hereto had signed the same document and all counterparts will be
construed together and constitute one and the same instrument.

 
24.  
This Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, personal representatives,
successors and assigns.

 
25.  
This Agreement represents the entire agreement between the parties regarding the
transactions contemplated herein and supersedes all other prior agreements,
understandings, negotiations and discussions.

 
 
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If the foregoing correctly sets out our agreement, please execute this letter in
the space provided.
 
NATION ENERGY
INC.                                                                                     
PALTAR PETROLEUM LIMITED
 
 
Per:  “/s/ John R.
Hislop”                                                                                      Per:  “/s/
Marc A. Bruner” 
        Authorized
Signatory                                                                                              Authorized
Signatory

 

 
 
AGREED TO AND ACCEPTED THIS 13th DAY OF JUNE, 2015.
 
 
 
“/s/ Julie Bernelot Moens                                 
Witness Signature                                               
                                                                           
                 
 
Julie Bernelot
Moens                                                           “/s/ Marc A.
Bruner”                                                      
Name                                                                                       MARC
A. BRUNER
 
Flat 31 Pattison House, Redcross Way)
London  SE1 1EY                                                
Address                                                   

 
 
“/s/ Julie Bernelot Moens                                                
Witness Signature                                                     
 
Julie Bernelot
Moens                                                           “/s/ John R.
Hislop”                                                      
Name                                                                                 
       JOHN HISLOP
 
Flat 31 Pattison House, Redcross Way)
London  SE1 1EY                                                
Address                                                     

 

 

 
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SCHEDULE A
 

EXPLORATION PERMITS:
 
100% interest in the following permits:

Permits
Holder
Permit Date
EP 231
Paltar
05/09/2012
EP 232
Paltar
03/10/2013
EP 234
Paltar
05/09/2012
EP 237
Paltar
05/09/2012

and,
 
50% interest in Northern Territory Exploration Permits 136 and 143, which are
subject to the Joint Venture Operating Agreement between Paltar and Sweetpea
Petroleum Pty Limited, dated September 16, 2011.
 
APPLICATIONS FOR EXPLORATION PERMITS
 
As to which Paltar will promise to deliver transfer instruments to Nation when
and if exploration permits are issued to Paltar:

Applications
Applicant
Application Date
EP(A) 197
Paltar
 
EP(A) 230
Paltar
19/08/2011
EP(A) 233
Paltar
19/08/2011
EP(A) 235
Paltar
19/08/2011
EP(A) 236
Paltar
19/08/2011
EP(A) 238
Paltar
19/08/2011
EP(A) 239
Paltar
19/08/2011
EP(A) 240
Paltar
19/08/2011
EP(A) 241
Paltar
19/08/2011
EP(A) 242
Paltar
19/08/2011
EP(A) 243
Paltar
19/08/2011
EP(A) 244
Paltar
19/08/2011
EP(A) 245
Paltar
19/08/2011
EP(A) 246
Paltar
19/08/2011
EP(A) 247
Paltar
19/08/2011
EP(A) 248
Paltar
19/08/2011
EP(A) 249
Paltar
19/08/2011
EP(A) 250
Paltar
23/08/2011
EP(A) 251
Paltar
23/08/2011
NTC/P 12
Paltar
23/08/2011
NTC/P 13
Paltar
23/08/2011
EP(A) 266
Paltar
18/10/2011
EP(A) 267
Paltar
18/10/2011
EP(A) 268
Paltar
18/10/2011
EP(A) 269
Paltar
18/10/2011
EP(A) 270
Paltar
18/10/2011
EP(A) 271
Paltar
18/10/2011
EP(A) 272
Paltar
18/10/2011
EP(A) 273
Paltar
18/10/2011
EP(A) 306
Paltar
22/08/2011

 

 
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