e10-48wtsbamendloanagmt_







EXECUTION VERSION   3918295.1    RESTATED LOAN AGREEMENT                This Restated Loan Agreement (this “Agreement”) dated as of June 30, 2015 (the   “Effective Date”), is entered into by and among WEST TEXAS STATE BANK (“Lender”), the   Borrower and Guarantor.       WHEREAS, Lender, Borrower and Guarantor previously entered into that certain Loan   Agreement dated as of September 17, 2014 (the “Prior Loan Agreement”), which provided   Borrower with a revolving line of credit, and        WHEREAS, Borrower has requested to convert the existing revolving line of credit into a   term loan and Lender has agreed to do so upon and subject to the terms and conditions set forth   in this Agreement.       NOW, THEREFORE, in consideration of the Loan described below and the mutual   covenants and agreements contained herein, and intending to be legally bound hereby, Lender,   Borrower and Guarantor agree as follows:      1. Definitions and Reference Terms.  In addition to any other terms defined herein, the   following terms shall have the meaning set forth with respect thereto:       A. Accounting Terms.  All accounting terms not specifically defined or   specified herein shall have the meanings generally attributed to such terms under   generally accepted accounting principles (“GAAP”), as in effect from time to time, as the   case may be, consistently applied, with respect to the financial statements referenced in   Section 5.A. hereof.       B.         Agreement.  The word “Agreement” means this Loan Agreement, as may   be amended or modified from time to time, together with all exhibits and schedules   attached hereto from time to time.        C. Borrower.  The term “Borrower” means Nautilus Poplar LLC, a   Montana limited liability company.        D. Collateral.  The term “Collateral” shall include without limitation all   property and assets granted as collateral for the Loan, whether real or personal (tangible   or intangible) property, whether granted directly or indirectly, whether granted now or in    the future, and whether granted in the form of a security interest, mortgage, deed of trust,   assignment, pledge or chattel mortgage intended as a security device, or any other   security or lien interest whatsoever, whether created by law, contract, or otherwise,   including, but not limited to, all oil and gas properties and equipment located thereon and   proceeds derived therefrom in the oil and gas properties owned or leased by Borrower,   INSOFAR AND ONLY INSOFAR as to those depths and formations from the surface   down to immediately above the top of the Bakken formation, which is defined as the   stratigraphic equivalent of 7032 feet as shown on the electrical log for the Nautilus EPU   119 well (API No. 25-085-21777), located in the NE/4NE/4, Sec. 31, Twp. 29N, R. 51E,     





 







      2      MPM, Roosevelt County, Montana, being more fully described in the Mortgage   described below.       E. Guarantor.  The term “Guarantor” means Magellan Petroleum   Corporation, a Delaware corporation.       F. Guaranty.  The term “Guaranty” shall mean that certain Amended and   Restated Unlimited Guaranty dated as of the Effective Date executed by Guarantor   described above to or for the benefit of Lender, as such Guaranty may hereafter be   amended, modified, supplemented, renewed and/or extended.         G. Hazardous Materials.  The term “Hazardous Materials” means all   materials defined as hazardous materials  or substances under any local, state or federal   environmental laws, rules or regulations, and petroleum, petroleum products, oil and   asbestos.       H. Loan Documents.  The term “Loan Documents” mean this Agreement,   any and all promissory notes executed by Borrower, the Guaranty executed by Guarantor   in favor of Lender, and all other documents, instruments, guarantees, certificates of   deposit, deeds of trust, assignments of insurance proceeds, security agreements, pledge   agreements and Security Documents described below executed and/or delivered by   Borrower or any third party in connection with the Loan.       I. Loan.  The term “Loan” mean the loan described in Section 2 hereof.      J. Mortgage (whether one or more).  The term “Mortgage” shall mean that   certain Deed of Trust, Mortgage, Security Agreement, Assignment of Production and   Financing Statement dated as of September 17, 2014, as amended by that certain First   Amendment to Deed of Trust, Mortgage, Security Agreement, Assignment of Production   and Financing Statement dated as of June 30, 2015 executed by the Borrower described   above to or for the benefit of Lender, as such Mortgage may hereafter be amended,   modified, supplemented, renewed and/or extended, and all other mortgages and deeds of   trust covering the Mortgaged Property hereafter executed by Borrower to or for the   benefit of Lender securing the Loan.  As used in this Agreement, “Mortgaged Property”   and “Mortgaged Properties” shall have the meanings assigned such terms in the   Mortgage.        K. Note.  The term “Note” shall mean the Note set out in Section 2 together   with any and all renewals, extensions, amendments or rearrangements thereof.        L. Obligations.  The term “Obligations” shall mean all indebtedness,   obligations and/or liabilities owed by Borrower and/or Guarantor to Lender arising under   the terms of the Note and/or Security Documents.      M. Permitted Encumbrances.  The words “Permitted Encumbrances” mean   as applied to the Borrower, all Permitted Encumbrances as set out in Section 2.1 (a) of     





 







      3      the  Mortgage plus (i) any lien and/or security interest in favor of Lender or any Lender   to secure the Obligations hereunder; (ii) liens for taxes, fees, assessments or other charges   by governmental authorities not yet delinquent or being contested in good faith by   appropriate proceedings; (iii) liens of operators, carriers, warehousemen, mechanics,   laborers and materialmen and other similar liens or incident to the exploration,   development, operation and maintenance of oil and gas properties and/or mineral   interests comprising the Collateral, in each case incurred in the ordinary course of   business for sums not yet due and payable or being contested in good faith; (iv)   easements, right-of-way, building codes, zoning, permits, restrictions and other similar   encumbrances on the use of the oil and gas properties comprising the Collateral; (v) liens   created to secure the purchase price of personal property acquired (or existing on the   personal property at the time such personal property is acquired) by Borrower or created   to secure indebtedness; (vi) liens arising from filing Uniform Commercial Code financing   statements for precautionary purposes relating solely to true leases of personal property   permitted by this Agreement under which the Borrower or any of its subsidiaries is a   lessee; (vii) any law or right reserved to or vested in any tribunal to control or regulate   the use of any oil and gas properties comprising the Collateral; (viii) royalties, overriding   royalties, reversionary interests, net profits interests, carried interests, production   payments and similar burdens; (ix) agreements arising in the ordinary course of   Borrower’s business burdening and/or affecting the oil and gas properties comprising the   Collateral including, but not limited to, joint operating agreements and unitization and   pooling agreements; (x) minor defects and irregularities in title to any Property, so long   as such defects and irregularities neither (a) are liens or security interests which secure   other indebtedness or obligations nor (b) materially impair the value of such Property or   the use thereof for the purposes for which such Property is held; (xi) judgment and   attachment liens not giving rise to an Event of Default; (xii) the contracts, agreements,   burdens, encumbrances and other matters set forth in the descriptions of certain of the   Mortgaged Properties on Exhibit A to the Mortgage; (xiii) deposits of cash, securities or   instruments (including payment or performance bonds, but excluding appeal bonds) to   secure the performance of bids, trade contracts, leases, statutory obligations and other   obligations of like nature incurred in the ordinary course of business; (xiv) sales contracts   or other arrangements for the sale of hydrocarbons in the ordinary course of business   which would not deprive Borrower of any material right in respect of the Mortgaged   Property; (xv) liens to secure plugging and abandonment obligations, which do not have a   material adverse effect on the Borrower; and (xvi) pledges or deposits and other liens (a)   in connection with workers’ compensation, unemployment insurance and other social   security legislations and (b) securing liability for reimbursement or indemnification   obligations of (including obligations in respect of letters of credit or bank guarantees for   the benefit of) insurance carriers providing property, casualty or liability insurance to the   Borrower.       N. Pledge Agreement. The term “Pledge Agreement” shall mean that certain   Pledge Agreement dated effective as of September 17, 2014 executed by the Guarantor   described above to or for the benefit of Lender, as such Pledge Agreement may hereafter   be amended, modified, supplemented, renewed and/or extended.         





 







      4       O. Security Documents.  The term “Security Documents” shall mean the   Mortgage and Pledge Agreement described above and any and all accompanying UCC-1   Financing Statements and agreements associated therewith as such Security Documents   may hereafter be amended, modified, supplemented, renewed and/or extended.        2. Loan.       A. Loan.  Subject to the additional provisions of this Section 2.A, as of the   Effective Date, all outstanding amounts owed by Borrower pursuant to the Prior   Agreement shall be deemed due and owing under and pursuant to this Agreement and no   longer due and owing under or pursuant to the Prior Agreement (the “Converted   Amount”).  If the Converted Amount is less than $5,500,000.00, Lender shall advance the   difference between $5,500,000.00 and the Converted Amount to Borrower on the   Effective Date.  If the Converted Amount is greater than $5,500,000.00, Borrower shall   pay Lender the difference between the Converted Amount and $5,500,000.00 on the   Effective Date.  For the avoidance of doubt, after application of the immediately three   preceding sentences, the principal amount of the Loan, as of the Effective Date, shall be   $5,500,000.00.   The Loan shall be evidenced by an Amended and Restated Promissory   Note (together with any and all renewals, extensions and/or rearrangements thereof being   hereinafter referred to sometimes as the “Note”), and shall have a maturity date,   repayment terms and an interest rate as set forth in the Note.  The proceeds from the Loan   will be used for the purposes set out under 5.I. below.           B. Security Documents.  The Loan is secured by the Security Documents   described above.      3. Security.  As indicated above, as security for the Loan, the Borrower has executed and   delivered to Lender the Mortgage described above covering various leasehold, operating,   royalty, mineral and overriding royalty interests held by Borrower along with any   equipment associated therewith and proceeds and revenues derived therefrom located in   Roosevelt County, Montana and Guarantor has previously executed and delivered to   Lender a Pledge Agreement described above covering its membership interest in   Borrower on terms mutually acceptable to the Parties.  When Collateral is mortgaged,   assigned and/or pledged as security for the Loan, Borrower will grant to Lender a first   lien in such Collateral (other than with respect to Permitted Encumbrances or unless   otherwise represented) and agrees to do all things reasonably necessary to perfect the lien   of the Lender in such Collateral.      4. Representations and Warranties.  Borrower, represents and warrants to Lender, as of   the Effective Date, as follows:       A. Good Standing.  Magellan Petroleum Corporation is a Delaware   corporation and Nautilus Poplar LLC is a Montana limited liability company, each of   which is duly organized, validly existing and in good standing under the laws of the   States of Delaware and Montana, respectively, and has the organizational power and   authority to own the Collateral which it owns and to carry on its businesses in each     





 







      5      jurisdiction in which such company does business, except where the failure to qualify   would not have a material adverse effect on such company.       B. Authority and Compliance.  Borrower and Guarantor have full   organizational power and authority to execute and deliver the Loan Documents and to   incur and perform the obligations provided for therein, all of which have been duly   authorized by all proper and necessary action of such party.  No consent or approval of   any public authority or other governmental third party is required as a condition to the   validity of any Loan Document (other than filing of any UCC Financing Statements), and   Borrower is in compliance in all material respects with all laws and regulatory   requirements to which it is subject.       C. Binding Agreement.  This Agreement and the other Loan Documents   executed by Borrower and Guarantor constitute valid and legally binding obligations of   Borrower and Guarantor, as applicable, enforceable in accordance with their terms,   except as enforceability may be limited by applicable bankruptcy, insolvency, or similar   laws affecting the enforcement of creditors’ rights generally or by equitable principles   relating to enforceability.       D. Litigation.  Except as disclosed to Lender in writing, there is no   proceeding against the Borrower and/or Guarantor pending or, to the knowledge of   Borrower and/or Guarantor, threatened in writing before any court or governmental   authority which would reasonably be expected to have a material adverse effect on   Borrower and/or Guarantor, as applicable.       E. No Conflicting Agreements.  There are no governing documents   pertaining to the organization, power or authority of Borrower and/or Guarantor, and no   provision of any existing material agreement, mortgage, indenture or contract binding on   Borrower and/or Guarantor or affecting the Collateral, which would conflict with or in   any way prevent the execution, delivery or carrying out of the terms of this Agreement   and the other Loan Documents.       F. Ownership of Assets.  Borrower and Guarantor have, or will have at the   time of closing, good and defensible title to the Collateral, free and clear of liens, except   Permitted Encumbrances (as defined above) and liens granted to Lender.        G. Taxes.  All material taxes and assessments due and payable by Borrower   and/or Guarantor have been paid except for those taxes being contested in good faith by   one or more of the Borrower and/or Guarantor by appropriate proceedings in a diligent   manner.  Borrower and Guarantor have filed all material tax returns which they are   required to file.       H. Financial Statements.  The financial statements of Borrower and/or   Guarantor heretofore delivered to Lender have been prepared on a consistent basis   throughout the period involved and fairly present such party’s financial condition as of   the date or dates thereof, and there has been no material adverse change in such party’s     





 







      6      financial condition or operations since the dates of such financial statements. All factual   information furnished by Borrower and Guarantor to Lender in connection with this   Agreement and the other Loan Documents is and will be accurate and complete in all   material respects on the date as of which such information is delivered to Lender and is   not and will not be incomplete by the omission of any material fact necessary to make   such information taken as a whole not misleading in any material respect.       I. Place of Business.  Borrower’s principal place of business is located at   1775 Sherman Street, Suite 1950, Denver, Colorado  80203.       J. Environmental.  The conduct of the Borrower’s business operations and   the condition of the Mortgaged Property does not and will not violate in any material   respect any federal laws, rules or ordinances for environmental protection, regulations of   the Environmental Protection Agency, any applicable local or state law, rule, regulation   or rule of common law or any judicial interpretation thereof relating primarily to the   environment or Hazardous Materials subject to the “cure period” set out in Section 5.G.   below.       K. Ownership of Borrower.  Guarantor is the sole member of Borrower.       L. Operations.  Except Permitted Encumbrances or as otherwise disclosed to   Lender in writing, Borrower is the operator of the oil and gas properties comprising the   Collateral.       5. Affirmative Covenants.  Until full payment and performance of all obligations of the   Borrower under the Loan Documents (other than contingent indemnification obligations   to the extent no claim giving rise thereto has been asserted), Borrower will, unless Lender   consents otherwise in writing (and without limiting any requirement of any other Loan   Document):       A. Financial Statements and Other Information.  maintain a system of   accounting reasonably satisfactory to Lender on a consistent basis throughout the period   involved, permit Lender’s officers or authorized representatives to visit and inspect   Borrower’s books of account and other records at such reasonable times, upon prior   reasonable notice, and as often as Lender may desire.  All financial statements called for   below shall be prepared in accordance with GAAP, in form and substance reasonably   acceptable to Lender.       In addition, Borrower will:       (i) Annual Audited Financial Statements (Guarantor).  Provide to Lender   annual audited consolidated financial statements of the Guarantor and its   consolidated subsidiaries, including, without limitation, Borrower, prepared in   accordance with GAAP, accompanied by an unqualified opinion rendered by an   independent accounting firm (“CPA Firm”) acceptable to the Lender (such annual   financial statements to include a balance sheet, profit and loss statement,     





 







      7      statement of cash flow and changes to owner’s equity) reasonably satisfactory to   Lender for each fiscal year of Borrower within 120 days after the close of each   such fiscal year beginning with the fiscal year ending June 30, 2016.        (ii) Quarterly Financial Statements (Guarantor).  Provide to Lender quarterly   the unaudited financial statements from the Guarantor’s Form 10-Q filing with the   Securities and Exchange Commission along with any supporting materials   reasonably requested by Lender within 60 days after the close of each previous   quarter with the first quarterly period ending June 30, 2015.       (iii) Tax Returns (Guarantor).  Provide to Lender, within 15 days after filing,   beginning with the year ending June 30, 2015, copies of the Guarantor’s filed   federal income tax returns for such year.       (iv) Annual Oil and Gas Reserve Evaluation.  Provide to Lender at Borrower’s   expense an engineering report (“Engineering Report”) setting out the engineered   value (“Engineered Value”) of Borrower’s proved developed producing (“PDP”)   oil and gas reserves (“PDP Reserves”) in form and substance reasonably   satisfactory to Lender annually on or before August 1 of each year dated as of   June 30 of such year. Each Engineering Report shall be prepared by a third-party   engineer or engineering firm reasonably acceptable to Lender utilizing economic   and pricing parameters used by the Securities and Exchange Commission as   established from time-to-time together with such other information as Lender   shall deem reasonably necessary to determine the value of Borrower’s PDP   Reserves.        (v) Other Information.  Provide to Lender promptly such additional   information, reports and statements respecting the business operations and   financial condition of Borrower, from time to time, as Lender may reasonably   request.       B. Insurance.  Maintain insurance with responsible insurance companies on   the real or tangible property comprising the Mortgaged Property to the extent customary   in the industry (excluding, for the avoidance of doubt, any surface equipment, surface   facilities or other tangible personal property), in such amounts and against such risks as is   customarily maintained by similar businesses operating in the same vicinity, specifically   to include fire and extended coverage insurance covering all material assets and liability   insurance, all to be with such companies and in such amounts as are reasonably   satisfactory to Lender and providing for at least 30 days’ prior notice to Lender of any   cancellation thereof.  Satisfactory evidence of such insurance will be supplied to Lender   30 days prior to each policy renewal.       C. Existence and Compliance.  Maintain and Guarantor will maintain their   existence, good standing and qualification to do business in the States of Montana and   Delaware, respectively, and where otherwise required except where the failure of such   would not have a material adverse effect on Borrower or Guarantor, as applicable, and     





 







      8      will comply in all material respects with all laws, regulations and governmental   requirements including, without limitation, environmental laws applicable to it or to any   of the Collateral, business operations and transactions.       D. Adverse Conditions or Events.  Promptly advise Lender in writing of (i)   any new condition, event or act which comes to its attention that would reasonably be   expected to materially adversely affect the financial condition or operations of Borrower,   or Lender’s material rights under the Loan Documents, (ii) any material litigation filed   against Borrower, (iii) any event that has occurred that would constitute a default or   Event of Default  under any Loan Document, (iv) any uninsured or partially uninsured   (but only to the extent of such uninsured portion) loss through fire, theft, liability or   property damage in excess of $500,000.00, and (v) any new contingent or actual liability   in excess of $500,000.00.       E. Taxes and Other Obligations.  Pay and Guarantor will pay all of their   respective material taxes, assessments and other obligations owing to any governmental   authority, including, but not limited to taxes, costs or other expenses arising out of this   transaction, as the same become due and payable, except to the extent the same are being   contested in good faith by appropriate proceedings in a diligent manner.       F. Maintenance.  Maintain and Guarantor will maintain all of their   respective material tangible property comprising the Mortgaged Property in good   condition and repair, consistent with past practice and prudent industry standards,   ordinary wear and tear, casualty and condemnation excluded, and make all necessary   replacements thereof, and preserve and maintain all licenses, trademarks, privileges,   permits, franchises, certificates and the like to the extent necessary for the operation of   their respective businesses.        G. Environmental.  To the extent not previously disclosed to Lender in   writing, promptly advise Lender in writing of (i) any and all material enforcement,   cleanup, remedial, removal, or other governmental or regulatory actions instituted,   completed or, to the knowledge of Borrower, threatened in writing pursuant to any   applicable federal, state, or local laws, ordinances or regulations relating to any   Hazardous Materials affecting the Collateral; and (ii) all material claims made or, to the   knowledge of Borrower, threatened in writing by any third party against the Borrower   relating to damages, contribution, cost recovery, compensation, loss or injury resulting   from any Hazardous Materials.  Borrower shall promptly notify Lender of any material   remedial action taken with respect to Hazardous Materials by it with respect to the   Collateral.  Borrower will not use or permit any other party to use any Hazardous   Materials on the oil and gas properties comprising the Collateral except such materials as   are incidental to their normal course of business, maintenance and repairs and which are   handled in material compliance with all applicable environmental laws.  Borrower agrees   to permit Lender, its agents, contractors and employees to enter and inspect any of the oil   and gas properties comprising the Collateral at any reasonable times upon three (3)   business days prior notice for the purposes of conducting an environmental investigation   and audit (on an annual basis) (including taking physical samples) to insure compliance     





 







      9      with this covenant and Borrower shall reimburse Lender on demand for the reasonable   costs of one such environmental investigation and audit per year.    Should Borrower   violate this covenant, the cure period will be 60 days from the receipt of written   notification of Lender.  For purposes of this Section 5.G, the term “material” means any   remedial action and/or claim in an amount in excess of $500,000.00.       H. Deposits.  During the Loan term and any extensions thereof and until   payment in full of the Note (other than contingent indemnification obligations to the   extent no claim giving rise thereto has been asserted), maintain a depository account with   Lender and grant to Lender the right to offset against the account during the continuance   of an Event of Default.  Borrower shall cause all Production Proceeds (as defined in the   Mortgage) payable to Borrower to be deposited into such account.       I. Use of Proceeds.  Use the proceeds of the Loan for purposes of (i)   acquiring oil and gas properties and/or leases, (ii) providing working capital for the   Borrower, and (iii) paying fees, costs and expenses associated with the closing hereunder,   including, without limitation, the Origination Fee (as defined below). In no event will   funds from the Loan be used for the purpose of purchasing or carrying margin stock in   violation of Regulations G, U or X of the Board of Governors of the Federal Reserve   System.         J. Annual Field Inspections.  Upon reasonable advance notice, permit   Lender’s officers, engineers and/or authorized representative to visit and inspect   Borrower’s field operations at such times as Lender may desire, with Borrower to pay all   reasonable expenses of such visits and inspections during the continuance of an Event of   Default.      k.    Subordination Agreement. Cause any operator of the Mortgaged   Property to execute and deliver to Lender a recordable subordination agreement   subordinating any and all indebtedness owed by the Borrower and/or Guarantor to such   operator to the indebtedness owed by Borrower and/or Guarantor to Lender.         6. Negative Covenants.  Until full payment and performance of all obligations of Borrower   under the Loan Documents (other than contingent indemnification obligations to the   extent no claim giving rise thereto has been asserted), Borrower will not, without the   prior written consent of Lender (and without limiting any requirement of any other Loan   Documents):       A. Transfer of Assets or Control.  (i) sell, lease, assign or otherwise dispose   of or transfer any Collateral outside the normal course of its business other than (1)   resulting from any casualty or condemnation, (2) any compulsory pooling or unitization   ordered by a governmental authority with jurisdiction over the oil and gas properties   comprising the Collateral, farmouts of undeveloped acreage to which no proved reserves   are properly attributed and assignments in connection with such farmouts not in the   normal course of its business, (3) sales, transfers and other dispositions of machinery,   equipment and other personal property and fixtures comprising any part of the Collateral     





 







      10      made in connection with a release, surrender or abandonment of an oil and lease or well   in the normal course of its business, (4) sales, transfers and other dispositions of   machinery, equipment and other personal property and fixtures comprising any part of   the Collateral in connection with the abandonment (to which Lender has given its prior   written consent) of an oil and gas lease or well not in the normal course of its business,   and (5) sales, transfers and other dispositions of machinery, equipment and other personal   property and fixtures comprising any part of the Collateral not in the normal course of its   business which are replaced by articles of at least equal suitability and value owned by   Borrower free and clear of all liens except Permitted Encumbrances, or (6) the sale of   production from the oil and gas properties comprising the Collateral, (ii) enter into any   merger or consolidation, (iii) allow the transfer of direct control or ownership of it or   form or acquire any subsidiary, or (iv) issue any new shares or options to acquire any   such shares other than to Guarantor.       B. Liens on Borrower’s Collateral.  Grant, suffer or permit any contractual   or noncontractual lien on or security interest in the Collateral except in favor of Lender or   Permitted Encumbrances, or fail to promptly pay when due all lawful claims, whether for   labor, materials or otherwise other than those being contested in good faith and by proper   proceedings or with the written consent of Lender.        C. Other Indebtedness (Borrower).  Except for the currently outstanding   loans to related entities, to create, incur or have outstanding any indebtedness or   obligation, secured or unsecured, recourse, or non-recourse, other than (i) the Note and   the indebtedness described herein or in any other Loan Document; (ii) accounts payable   incurred in the ordinary course of business with maturities of 60 days or less that are not   delinquent or past due under current industry practices or other accounts payable that are   being contested in good faith; (iii) taxes, fees, assessments or other charges to governmental   authorities of every kind that are not delinquent or that are being contested in good faith   and by proper proceedings; (iv) letters of credit incurred in the ordinary course of   Borrower’s business, including, without limitation, letters of credit in favor of the Bureau   of Land Management and letters of credit to secure corporate credit cards; (v) revenue   suspension payables; (vi) intercompany loans and extensions of credit with related   entities; provided, however, that no repayments by Borrower of any such intercompany   loans or extensions of credit shall be permitted so long as the Loan is outstanding; or (vii)   other unsecured or secured indebtedness incurred by Borrower not to exceed $250,000.00   in the aggregate outstanding at any time.                   D. Character of Business.  Change the general character of its business as   conducted at the date hereof, or engage in any type of business not reasonably related to   its business as presently conducted.       E. [Intentionally Omitted].         F. Transaction of Affiliates.  Borrower will not enter into any loan   transactions with any of its affiliates (except to the extent permitted pursuant to Section     





 







      11      6.C hereof), officers, directors and/or shareholders and/or any relative of such officer,   director and/or shareholders.        7. Default.   The term “Event of Default” as used in this Agreement shall mean the   occurrence of any of the following events:       A. a “default” or “Event of Default” (as defined in any Loan Document other   than this Agreement including, but not limited to, Section 4.1 of the Mortgage and in   each case after giving effect to any applicable cure or grace periods) occurs under any   Loan Document other than this Agreement;    B. the failure of Borrower to comply with Section 5(G) of this Agreement   and such failure is not remedied within sixty (60) days of written notice of said failure to   Borrower from Lender; or   C. the failure of Borrower to timely and properly to observe, keep or perform   any other covenant, agreement, warranty or condition herein required to be observed,   kept or performed not otherwise constituting a default or Event of Default under Section   7.A or 7.B above and such failure is not remedied within twenty (20) days of written   notice of said failure to Borrower from Lender.      8.        Guaranty.  The Note and any renewals, extensions and amendments thereto shall be   guaranteed by the Guaranty of the Guarantor set out above and shall be on written terms   as are reasonably acceptable to Lender and shall be secured by the Pledge Agreement   described above.  Guarantor agrees that its obligations under the terms of the Guaranty   shall not be released, diminished, impaired, reduced or affected by the release and/or   forgiveness of any obligations of Borrower under the terms of the Note.  The maximum   aggregate amount for which Guarantor shall be liable hereunder shall not exceed the   maximum amount for which Guarantor can be liable without rendering the Guaranty or   any other Loan Document, as it relates to  Guarantor, subject to avoidance under   applicable law relating to fraudulent conveyance or fraudulent transfer (including the   Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act and Section   548 of title 11 of the United States Code or any applicable provisions of comparable   laws).       9. Remedies Upon Default.  If an Event of Default shall occur and be continuing, Lender   shall have all rights, powers and remedies available under each of the Loan Documents as   well as all rights and remedies available at law or in equity, including, without limitation,   the right to declare the Note immediately due and payable.      10. Notices.  All notices, requests, consents, demands and other communications required or   permitted hereunder or under any other Loan Document shall be in writing and, unless   otherwise specifically provided in such other Loan Document, shall be deemed   sufficiently given or furnished if delivered by personal delivery, by electronic mail, by   expedited delivery service with proof of delivery, or by registered or certified United   States mail, postage prepaid, at the following addresses (unless changed by similar notice   in writing given by the particular party whose address is to be changed).     





 







      12         Borrower and Guarantor: Magellan Petroleum Corporation        Nautilus Poplar LLC        1775 Sherman Street, Suite 1950        Denver, Colorado   80203   Attn: Mr. Antoine Lafargue, Chief Financial Officer    E-mail: alafargue@magellanpetroleum.com         Lender:                      West Texas State Bank        1501 W. University        Odessa, Texas  79764   Attn: Mr. Les W. Robbins, President-Midland   E-mail: les@wtstatebk.com      Any such notice or communication shall be deemed to have been given either at the time   of personal delivery or, in the case of delivery service or mail, as of the date of first   attempted delivery at the address and in the manner provided herein, or, in the case of   electronic mail, upon receipt; provided that, service of a notice required by Texas   Property Code §51.002, as amended, or any similar statute in any state where any part of   the Mortgaged Properties are located shall be considered complete when the requirements   of the applicable statute for such part of the Mortgaged Properties located in the   respective state are met.       11. Costs, Fees, Expenses and Attorneys’ Fees.  Subject to the limitations set forth in this   Agreement, including, but not limited to, Sections 5.J. and 5.G, Borrower shall pay to   Lender immediately upon demand the full amount of all reasonable costs and expenses   payable to third-parties, including reasonable out-of-pocket attorneys’ fees (i.e., to   include outside counsel fees) and engineering fees, incurred at any time by Lender   (whether before, after or during the loan closing) in connection with the Loan and the   negotiation and preparation of this Agreement and each of the Loan Documents and all   other costs and reasonable out-of-pocket attorneys’ fees incurred by Lender for which   Borrower is obligated to reimburse Lender in accordance with the terms of the Loan   Documents.      12.       Origination Fee.  Borrower shall pay to Lender at closing a non-refundable origination   fee of $50,000.00 (the “Origination Fee”).      13. Subordination.  Borrower and Guarantor subordinate and make junior and inferior (a) all   debts, liabilities and obligations of (i) the Borrower owed to the Guarantor and/or (ii) the   Guarantor owed to the Borrower, now existing or hereafter incurred or arising, whether   principal, interest, fees or expenses, direct, contingent, primary, secondary, joint and   several, joint or several, or otherwise, and irrespective of the manner in which, or the   person or persons in whose favor, such debts, liabilities, or other obligations may at their   inception have been, or may hereafter be, created or the manner in which the Borrower   and/or Guarantor may have acquired rights with respect thereto (“Subordinated   Obligations”) and the payment and enforcement of the Subordinated Obligations to (b)     





 







      13      the Note and all other debts, liabilities and obligations of Borrower and/or Guarantor   owed to Lender now existing or hereafter incurred or arising (“Senior Obligations”) and   the payment and enforcement of the Senior Obligations.  Any liens, charges, security   interests, pledges, assignments or other encumbrances securing the Subordinated   Obligations are, and will at all times prior to the Termination Date, be subject,   subordinate and inferior to all liens, charges, security interests, pledges, assignments and   other encumbrances securing the Senior Obligations. For purposes of this Agreement, the   term “Termination Date” means the date that no further amounts are owing by Borrower   to Lender under the above Note or any Loan Document.      14. Setoff.  Upon the occurrence and during the continuance of any Event of Default, the   Lender is hereby authorized at any time and from time to time, without notice to the   Borrower (any such notice being expressly waived by the Borrower), to set-off and apply   any and all deposits (general or special, time or demand, provisional or final) at any time   held and other indebtedness at any time owing by the Lender to or for the credit or the   account of the Borrower against any and all of the indebtedness of the Borrower under   the Note and the Loan Documents, including this Agreement, irrespective of whether or   not the Lender shall have made any demand under the Loan Documents, including this   Agreement or the Note and although such indebtedness may be unmatured.  Any amount   set-off by the Lender in accordance herewith shall be applied against the Obligations   owed the Lender by the Borrower pursuant to this Agreement and the Note.  The Lender   agrees promptly to notify the Borrower after any such setoff and application, provided   that the failure to give such notice shall not affect the validity of such set-off and   application.  The rights of the Lender under this Section are in addition to other rights and   remedies (including, without limitation, other rights of set-off) which the Lender may   have.      15. Confidential Information.         A. Non-Public Information.  Lender acknowledges and agrees that it may   receive material non-public information (“MNPI”) hereunder concerning Borrower,   Guarantor and their affiliates and agrees to use such information in material compliance   with all relevant policies, procedures and applicable law (including United States federal   and state security laws and regulations).       B. Confidential Information.  Lender agrees to use all reasonable efforts to   maintain, in accordance with its customary practices, the confidentiality of information   obtained by it pursuant to any Loan Document and whether or not designated in writing   by Borrower or Guarantor as confidential, except that such information may be disclosed   (i) with the Borrower’s consent, (ii) to each director, officer, employee, agent, trustee,   representative, attorney, accountant and each insurance, environmental, legal, financial   and other advisor and other consultants and agents (the “Related Persons”) of or to   Lender that are advised of the confidential nature of such information and are instructed   to keep such information confidential in accordance with the terms hereof, (iii) to the   extent such information presently is or hereafter becomes (A) publicly available other   than as a result of a breach of this Section 15 or (B) available to Lender or its Related     





 







      14      Persons, as the case may be, from a source (other than Borrower or Guarantor) not known   by them to be subject to disclosure restrictions, (iv) to the extent disclosure is required by   applicable law or other legal process or requested or demanded by any governmental   authority, (v) (A) to the National Association of Insurance Commissioners or any similar   organization, any examiner or any nationally recognized rating agency or (B) otherwise   to the extent consisting of general portfolio information that does not identify Borrower   or Guarantor, (vi) to current or prospective assignees, participants, any holder of, or   trustee for the benefit of the holders of, the Obligations and to their respective Related   Persons, in each case to the extent such assignees, participants, holders of Obligations or   Related Persons agree to be bound by provisions substantially similar to the provisions of   this Section 15 (and such Person may disclose information to their respective Related   Persons in accordance with clause (ii) above), (vii) to any other party hereto, and (ix) in   connection with the exercise or enforcement of any right or remedy under any Loan   Document, in connection with any litigation or other proceeding to which Lender or its   Related Persons is a party or bound, or to the extent necessary to respond publicly to   public statements or disclosures by Borrower, Guarantor or their respective Related   Persons referring to Lender or its Related Persons.  In the event of any conflict between   the terms of this Section 15 and those of any other contractual obligation entered into   between Lender and Borrower and/or Guarantor (whether or not a Loan Document), the   terms of this Section 15 shall govern.      C. Material Non-Public Information.  Borrower and Guarantor hereby   agree that if either they or any subsidiary has publicly traded equity or debt securities in   the United States, they shall (and shall cause such subsidiary, as the case may be, to) (i)   identify in writing, and (ii) to the extent reasonably practicable, clearly and conspicuously   mark all reports, notices, communications and other information or materials provided or   delivered by, or on behalf of, Borrower and/or Guarantor hereunder (collectively, the   “Borrower Materials”) that contain only information that is publicly available or that is   not material for purposes of U.S. federal and state securities laws as “PUBLIC”.    Borrower and Guarantor agree that by identifying such Borrower Materials as “PUBLIC”   or publicly filing such Borrower Materials with the Securities and Exchange   Commission, then Lender shall be entitled to treat such Borrower Materials as not   containing any MNPI for purposes of U.S. federal and state securities laws.        16. Miscellaneous.  Borrower and Lender further covenant and agree as follows, without   limiting any requirement of any other Loan Document:       A. Cumulative Rights and No Waiver.  Each and every right granted to   Lender under any Loan Document, or allowed it by law or equity shall be cumulative of   each other and may be exercised in addition to any and all other rights of Lender, and no   delay in exercising any right shall operate as a waiver thereof, nor shall any single or   partial exercise by Lender of any right preclude any other or future exercise thereof or the   exercise of any other right.  Borrower expressly waives any presentment, demand, protest   or other notice of any kind, including but not limited to notice of intent to accelerate and   notice of acceleration except such notices as required under the laws of the State of     





 







      15      Texas.  No notice to or demand on Borrower in any case shall, of itself, entitle Borrower   to any other or future notice or demand in similar or other circumstances.       B.  Governing Law.  WITHOUT REGARD TO PRINCIPLES OF   CONFLICTS OF LAW, THIS AGREEMENT AND THE NOTE SHALL BE   CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY   THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE   AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF TEXAS AND THE   LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT   THE LAW OF ANOTHER STATE IN WHICH A PORTION OF THE PROPERTY IS   LOCATED (OR WHICH IS OTHERWISE APPLICABLE TO A PORTION OF THE   PROPERTY) NECESSARILY GOVERNS WITH RESPECT TO PROCEDURAL AND   SUBSTANTIVE MATTERS RELATING TO THE CREATION, PERFECTION AND   ENFORCEMENT OF THE LIENS, SECURITY INTERESTS AND OTHER RIGHTS   AND REMEDIES GRANTED HEREIN, IN WHICH CASE, THE LAW OF SUCH   OTHER STATE SHALL APPLY AS TO THAT PORTION OF THE PROPERTY   LOCATED IN (OR OTHERWISE SUBJECT TO THE LAWS OF) SUCH STATE.        C. Amendment.  No modification, consent, amendment or waiver of any   provision of this Loan Agreement, nor consent to any departure by Borrower and/or   Guarantor therefrom, shall be effective unless the same shall be in writing and signed by   the party against whom enforcement is sought, and then shall be effective only in the   specified instance and for the purpose for which given. This Loan Agreement is binding   upon Borrower and/or Guarantor, their respective heirs, successors and assigns, and   inures to the benefit of Lender, its successors and assigns; however, no assignment or   other transfer of Borrower and/or Guarantor’s rights or obligations hereunder shall be   made or be effective without Lender’s prior written consent, nor shall it relieve Borrower   and/or Guarantor of any obligations hereunder.  There is no third party beneficiary of this   Loan Agreement.       D. [Intentionally Omitted].         E. Partial Invalidity.  The unenforceability or invalidity of any provision of   this Loan Agreement shall not affect the enforceability or validity of any other provision   herein and the invalidity or unenforceability of any provision of any Loan Document to   any person or circumstance shall not affect the enforceability or validity of such   provision as it may apply to other persons or circumstances.       F. Indemnification.  Borrower shall indemnify, defend and hold Lender   and its officers, employees, agents, shareholders, directors, successors and assigns   (each, a “Lender Party”) harmless from and against any and all claims, demands,   suits, losses, damages, assessments, fines, penalties, costs or other expenses   (including reasonable out-of-pocket attorneys’ fees and court costs) arising from or   in any way related to any of the transactions contemplated hereby, including but not   limited to actual or threatened damage to the environment, agency costs of   investigation, personal injury or death, or property damage, due to a release or     





 







      16      alleged release of Hazardous Materials in on or under the Collateral, or gaseous   emissions arising from Borrower’s business operations or any other condition   existing or arising from Borrower’s business operations resulting from the use or   existence of Hazardous Materials, whether such claim proves to be true or false, in   each case, except to the extent resulting from the gross negligence, willful   misconduct or fraud of a Lender Party.  Borrower further agrees that its indemnity   obligations shall include, but are not limited to, liability for damages incurred by   any Lender Party resulting from the personal injury or death of an employee of   Borrower, regardless of whether Borrower has paid the employee under the   workmen’s compensation laws of any state or other similar federal or state   legislation for the protection of employees, in each case, except to the extent   resulting from the gross negligence, willful misconduct or fraud of a Lender Party.    The term “property damage” as used in this paragraph includes, but is not limited   to, damage to any real or personal property of Borrower comprising a portion of the   Mortgaged Property, the Lender, and of any third parties.  The Borrower’s   obligations under this paragraph shall survive the repayment of the Loan and, with   respect to any liability arising prior to any foreclosure on, appointment of a receiver   for, or deed-in-lieu with respect thereto by or on behalf of Noteholder, any deed in   lieu of foreclosure or foreclosure of the Mortgage.       G. WAIVER OF JURY TRIAL. EACH PARTY TO THIS   AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY   JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1)   ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,   DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN   CONNECTION HEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR   RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO   OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER   INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED   IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED   HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR   HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT OR   TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND   CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF   ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND   THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL   COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS   WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO   THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.      H. CHOICE OF FORUM: CONSENT TO SERVICE OF PROCESS   AND JURISDICTION.  THE OBLIGATIONS OF BORROWER UNDER THE LOAN   DOCUMENTS ARE PERFORMABLE IN ECTOR COUNTY, TEXAS. ANY SUIT,   ACTION OR PROCEEDING AGAINST THE BORROWER WITH RESPECT TO THE   LOAN DOCUMENTS OR ANY JUDGMENT ENTERED BY ANY COURT IN   RESPECT THEREOF, MAY BE BROUGHT IN THE COURTS OF THE STATE OF     





 







      17      TEXAS, COUNTY OF ECTOR, OR IN THE UNITED STATES COURTS LOCATED   IN ECTOR COUNTY, TEXAS AND THE BORROWER HEREBY SUBMITS TO THE   NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF   ANY SUCH SUIT, ACTION OR PROCEEDING.  THE BORROWER HEREBY   IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN ANY SUIT, ACTION   OR PROCEEDING IN SAID COURT BY THE MAILING THEREOF BY LENDER   BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE   BORROWER, AS APPLICABLE, AT THE ADDRESS FOR NOTICES AS   PROVIDED ABOVE. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY   OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF   VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR   RELATING TO ANY LOAN DOCUMENT BROUGHT IN THE COURTS LOCATED   IN THE STATE OF TEXAS, COUNTY OF ECTOR, AND HEREBY FURTHER   IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR   PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN   INCONVENIENT FORUM.       I. Survivability.  All covenants, agreements, representations and warranties   made herein or in the other Loan Documents shall survive the making of the Loan and   shall continue in full force and effect so long as the Loan (other than contingent   indemnification obligations to the extent no claim giving rise thereto has been asserted) is   outstanding.       J. Conflict.  If there are any conflicts or inconsistencies between this   Agreement, the Note, any Security Documents and the Guaranty, this Loan Agreement   shall prevail and control.         K. Counterpart.  This Agreement may be executed in a number of separate   counterparts (including by facsimile transmission or by other electronic means showing   execution by a party), each of which for all purposes is to be (a) deemed an original and   (b) as effective as delivery of a manually executed counterpart, but all of which shall   constitute, collectively, one Agreement.                              L.       Amendment and Restatement.  This Agreement amends and restates in   its entirety the Prior Loan Agreement and upon the Effective Date, the terms and   provisions of the Prior Loan Agreement shall, subject to this Section 16.L., be superseded   in all respects hereby.  All references to the “Loan Agreement” contained in the Loan   Documents delivered in connection with the Prior Loan Agreement or this Agreement   shall, and shall be deemed to, refer to this Agreement.  Notwithstanding the amendment   and restatement of the Prior Loan Agreement by this Agreement, the obligations of the   Borrower and the Guarantor outstanding under the Prior Loan Agreement and the other   Loan Documents (as defined in the Prior Agreement) as of the Effective Date shall   remain outstanding and shall constitute continuing obligations under this Agreement and   shall continue as such to be secured by the Collateral.  Such secured Obligations shall in   all respects be continuing and this Agreement shall not be deemed to evidence or result in   a novation or repayment and reborrowing of the obligations under the Prior Loan     





 







      18      Agreement.  The liens securing payment of the obligations under the Prior Loan   Agreement, as amended and restated in the form of this Agreement, shall in all respects   be continuing, securing the payment of all Obligations.                  [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]      (signature page follows)