Exhibit 10.1
TERM SHEET
Summarizing Terms and Conditions of Employment for
William H. Hastings to serve as CEO, President and Director of
Magellan Petroleum Corporation
December 11, 2008
     This Term Sheet sets forth the principal terms and conditions under which
William H. Hastings (“WHH”) would serve as the President, Chief Executive
Officer and a Director of Magellan Petroleum Corporation (the “Company”).
Although this Term Sheet summarizes the principal terms and conditions under
which WHH would serve in such positions, it is not intended to constitute a
complete statement of such terms and conditions or a legally binding agreement
between the parties. The specific terms and conditions governing the employment
of WHH will be set forth in a mutually acceptable, definitive Employment
Agreement entered into between the parties (a “Definitive Agreement”) as soon as
practicable after the date hereof.

  •   WHH title/responsibilities: Chief Executive Officer, President and
Director of Magellan Petroleum Corporation (MPC). In addition, the Board of MPC
will recommend that WHH be elected a Director of Magellan Petroleum Australia
Limited (MPAL). These roles are full-time commitments. Accordingly, WHH will
devote substantially all of his business time and attention to the business and
affairs of MPC and MPAL.     •   Base Salary: US$300,000 per year, subject to
yearly increase of the greater of 4% or compounded monthly CPI from the prior
year. Said sum to be wired to the WHH account monthly.     •   Term: Five
(5) years.     •   Annual Bonus: None, although in the ordinary course of
business, the Company’s Compensation Committee may consider and pay bonuses
commensurate with WHH’s and the Company’s performance.     •   Severance: If at
any time prior to the end of the 5-year term, the Company terminates WHH’s
employment without Cause or WHH resigns for Good Reason, WHH would be entitled
to continue to receive his then-current base salary for the rest of the 5-year
term, with a minimum severance period of two years.     •   Location: WHH will
be permitted to work remotely from Portland, Maine, with a view toward moving
the Company’s main office and official headquarters to Portland by March 1,
2009.

 

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  •   Stock Options: WHH will be entitled to receive an initial grant of
non-qualified stock options, which shall be subject to shareholder approval,
covering 3.1 million shares of the common stock of the Company at an exercise
price equal to $1.20 per share, the vesting of which shall be as follows:

  §   Options covering 2.1 million shares will vest in three equal annual
installments, commencing twelve months after the effective date of WHH’s
employment with the Company.     §   Options covering an additional 1 million
shares will vest upon the attainment of either of the following mutually
acceptable performance goals: (i) upon monetizing tail gas at a price (or trade
value) acceptable to the Board of Directors of the Company, or (ii) upon the
trading price of the Company’s common stock being greater than $1.50 per share
for a period of sixty consecutive days.

      The options would provide for a cashless exercise using a third party to
execute the transaction pursuant to corporate counsel guidance. The vesting of
the options would accelerate upon: (i) a change of control of the Company,
(ii) upon the termination of WHH’s employment by the Company without Cause, or
(iii) upon WHH’s resignation from the Company for Good Reason. In the event that
shareholder approval of the foregoing options is not obtained, WHH’s base salary
would be adjusted to bring it to the median of a peer group identified and
selected by MPC’s compensation consultant.         Raising capital will be a
primary goal of WHH’s responsibilities as the CEO of MPC. In the event that MPC
consummates a significant capital raising transaction, WHH would be entitled to
receive additional options with a strike price equal to the price at which such
additional capital is issued.     •   Non-Compete: WHH would be bound by a
customary non-compete agreement during his employment with the Company and for
two years after termination of his employment for any reason whether voluntarily
or involuntarily and whether with or without Cause or Good Reason. The
applicable jurisdiction for the non-compete would be everywhere the Company
holds material mineral assets or otherwise is actively engaged in the business
or has definitive plans to do so within the following 12 months.     •   Leased
Automobile: The Company would lease an auto for WHH’s use.

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  •   Business Expenses: The Company would reimburse WHH for his reasonable
travel and other business expenses incurred in connection with his service as
CEO, President and Director of the Company.     •   Advisory Expenses: The
Company will reimburse WHH, on an as-incurred basis, for his out-of-pocket
expenses reasonably incurred by WHH in connection with considering, negotiating
and documenting his employment and compensation arrangements, including the fees
of legal counsel and tax advisors.     •   Vacation: WHH would be entitled to
4 weeks of vacation per year.     •   Director Liability: The Company would
enter into a customary Indemnity Agreement with WHH, whereby the Company would
agree to indemnify WHH to the fullest extent allowed by law for any claims
related to WHH’s service to the Company as CEO, President and/or Director, and
the Company would agree to acquire and maintain appropriate D&O liability
insurance with tail coverage.

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