Loan
Agreement (“Agreement”)


 


Australian
Future Energy Pty Ltd and Synthesis Energy Systems, Inc


 


Provision
of Short-Term Interim Funding


 


	#	 	Section	 	Detail

        

	1	 	Borrower	 	Australian
        Future Energy Pty Ltd (“AFE”)

        Level
        10

        10
        Market Street

        Brisbane
        Qld 4000

         

	2	 	Lender	 	Synthesis
        Energy Systems, Inc (“SES”)

        1
        Riverway

        Houston
        Texas 77056

        United
        States of America

         

	3	 	Background
    and Purpose	 	On
        10 October 2019, SES announced that it had signed a definitive Merger Agreement, whereby AFE, a private company incorporated
        in Brisbane, Australia in 2014, will merge with a wholly owned subsidiary of SES. As a result of the transaction, AFE
        will become a wholly owned subsidiary of SES. SES currently holds approximately 35% of the issued capital of AFE.

         

        In
        connection with the execution of the Merger Agreement, SES issued $US 2,000,000 of 11% senior secured debentures to certain
        accredited investors, along with warrants to purchase $4,000,000 of shares of SES’s common stock.

         

        SES
        shall receive the $2,000,000, less legal and escrow agent fees of approximately $36,000, pursuant to the Merger Debentures
        schedule, beginning seven business days after this announcement and concluding within two business days of stockholder
        approval of the merger.

         

        The
        merger debentures are intended to assist SES and AFE in financing the business through the closing of the merger.

         

        Both
        AFE and SES expect the merger to close in the first quarter of 2020.

         

	4	 	Purpose
    of Loan	 	To
        be used by AFE according to the budget attached in Appendix 1 – Budget and shall not deviate from the Budget by
        more than 25% on any line item and not exceed 10% in aggregate in any month without mutual written agreement of both AFE’s
        and SES’ CEO.

                                                                              

        

        




 









    	 



    	 



    

 





	 	 	 	 	

                                                                                          Commercially
        reasonable efforts shall be made by both AFE and SES to minimize expenses to close the proposed Merger transactions.

                                                                                           

                                                                                          In
        the event that the proposed Reverse Merger transaction does not successfully complete, SES and AFE will work co-operatively
        together to review those costs incurred individually by either of SES or AFE that may have been of benefit to the other
        party, and to reasonably discuss and agree a method for the sharing of payment of such costs. SES and AFE agree that this
        will be likely to predominantly relate to Australian legal costs of King Wood Mallesons.

         

	5	 	Loan
    Amount	 	$US
        350,000.

         

	6	 	Funding
    Date	 	Loan
        Amount to be provided as one lump sum payment in cleared funds to AFE’s normal cash operating account, with Westpac
        Banking Corporation, within 2 business days of signing this Agreement.

         

        Account
        details :

         

        Account
        Name : Australian Future Energy Pty Ltd

        Bank
        : Westpac Banking Corporation

        Customer
        ID Number : 8414 9681

        BSB
        Number : 034-001

        Account
        Number : 346 367

         

	7	 	Term	 	The
        Loan is effective upon signing this agreement and receipt of Loan Amount by AFE and shall be due in full on March 31,
        2020, or 3 months following the vote of the shareholders of SES in relation to the proposed Reverse Merger transaction,
        whichever is the later.

         

        For
        the avoidance of doubt, the Loan Amount plus Interest remains payable in full by AFE to Lender until such time as the
        Repayment Amount is paid in full to Lender.

         

	8	 	Security	 	In
        the event that the Reverse Merger transaction outlined in Section 3 above does not successfully complete, the Loan Amount
        will continue to accrue interest until the Loan Amount is repaid in full.

         

        AFE
        acknowledges and understands that should the Loan Amount not be rapid by the Sunset Date it will be in default of this
        agreement.

         

        The
        Parties shall undertake their commercially reasonable efforts to achieve a mutually agreeable settlement should AFE foresee
        that the Loan Amount cannot be repaid by the Sunset Date.

        

         





    	 



    	 



    

 


	 	 	 	 	The
        Lender’s right to collect shall be in accordance with prevailing law.

         

	9	 	Interest	 	Interest
        will be charged on the Loan Amount on a simple interest basis, at the rate of 11.0% per annum, payable in full on the
        Repayment Date, in conjunction with repayment of the Loan Amount.

         

        Should
        the Loan Amount not be paid in full by the Sunset Date the interest rate shall increase to the Default Interest rate of
        18%.

         

	10	 	Repayment
    Amount	 	Loan
        Amount plus Interest and Default Interest, if any.

         

	11	 	Repayment
    Date	 	The
        earlier of 5 days after completion of the Reverse Merger transaction as outlined in Section 3 above has completed on or
        around 31 March 2020.

         

        Upon
        successful completion of the Reverse Merger transaction the Loan Amount may be repaid in cash or converted to a shareholder
        loan from the SES parent company to AFE.

         

        In
        the event that the Reverse Merger transaction outlined in Section 3 above does not successfully complete, the Loan Amount
        will continue to accrue Interest and Default Interest until the Loan Amount is repaid in full.

         

        Final
        Sunset Date for repayment is the later of March 31, 2020 or 3 months following the vote of the shareholders of SES in
        relation to the proposed Reverse Merger transaction.

        

         

	12	 	Notices	 	AFE
        :

        Mr
        Kerry Parker

        Chief
        Executive Officer

        Australian
        Future Energy Pty Ltd

        Level
        10

        10
        Market Street

        Brisbane
        Qld 4000

        Email
        : k.parker@ausfutureenergy.com.au

         

        Lender
        Name :

        Mr
        Robert Rigdon

        President
        and Chief Executive Officer

        Synthesis
        Energy Systems

        1
        Riverway

        Houston
        Texas 77056

        United
        States of America

        Email
        : robert.rigdon@synthesisenergy.com

         

	13	 	Governing
    Law	 	This
        agreement will be governed by the laws of Queensland, Australia as may apply from time to time.

         

	14	 	Binding
    agreement	 	AFE
        and SES agree that this agreement is legally binding.

        



 




    	 



    	 



    

 


Executed
as An Agreement :


Australian
Future Energy Pty Ltd


ABN
56 168 160 067


Level
10


10
Market Street


Brisbane
Qld 4000


 


	/s/
    Edek Choros	 	/s/
    Kerry Parker
	Edek
    Choros	 	Kerry
    Parker
	Director	 	Company
    Secretary
	Date
    October 25, 2019	 	Date
    October 25, 2019


 


Synthesis
Energy Systems, Inc


1
Riverway


Houston
Texas 77056


United
States of America


 


	/s/
    Robert W. Rigdon	 
	Robert
    W. Rigdon	 
	President
    and Chief Executive Officer	 
	Synthesis
    Energy Systems, Inc	 
	Date
    October 24, 2019