e10-58magellanwtsbnote







Executed Version   3396720.4    PROMISSORY NOTE   (Revolving Line of Credit Note)   $8,000,000.00 Odessa, Texas September 17, 2014   1. Borrower’s Promise to Pay.  FOR VALUE RECEIVED, NAUTILUS POPLAR LLC, a   Montana limited liability company (hereinafter called “Borrower”), whose principal   address is 1775 Sherman Street, Suite 1950, Denver, Colorado 80203, promises to pay to   the order of WEST TEXAS STATE BANK, (hereinafter called “Lender”) at its banking   house in the City of Odessa, Ector County, Texas the principal sum of   EIGHT MILLION DOLLARS ($8,000,000.00), or so much thereof as may be   advanced hereunder prior to maturity, together with interest from date funded to   Borrower until maturity on the unpaid principal balance thereof from time to time   outstanding at the Stated Rate and with interest on all past due amounts, both principal   and accrued interest, at the Past Due Rate, provided, that for the full term of this Note the   interest rate produced by the aggregate of all sums paid or agreed to be paid to the holder   of this Note for the use, forbearance or detention of the debt evidenced hereby shall not   exceed the Ceiling Rate.   2. Loan Agreement.  This Note and any substitutions, replacements, modifications, renewals   and/or extensions thereof are described in and are subject to the terms and provisions of   that certain Loan Agreement dated as of the date hereof (as amended, restated,   supplemented or otherwise modified from time to time, “Loan Agreement”; terms used   herein but not defined herein shall have the meanings given in the Loan Agreement)   between Lender, Borrower and Magellan Petroleum Corporation (hereinafter called   “Guarantor”).  The Loan Agreement, among other things, contains provisions regarding   the amount that the Lender is required to advance under the terms of this Note and   provisions for the acceleration of the maturity hereof upon the happening or omission of   certain stated events upon the terms and conditions therein specified and the payment of   fees and expenses as set out in the Loan Agreement.   3. Interest.  “Stated Rate” means, on any day, a rate per annum equal to the Index Rate from   time to time in effect, provided that if on any day the Stated Rate shall (a) exceed the   Ceiling Rate for that day, then the Stated Rate shall be fixed at the Ceiling Rate on that   day and on each day thereafter until the total amount of interest accrued at the Stated Rate   on the unpaid balance of this Note equals the total amount of interest which would have   accrued if there were no Ceiling Rate and/or (b) be less than three and one-fourths   percent (3.25%) (the “Floor Rate”), then the Floor Rate shall apply in lieu of the Stated   Rate until such time that the Stated Rate exceeds or is equal to the Floor Rate.   “Index Rate” for purposes of this Note shall mean the current rate of interest per annum   as published in the Wall Street Journal as the Prime Rate in effect until the next Change   Date.  The Prime Rate may change and each change in the Prime Rate shall be effective   on the date of publication of said change (referred to as “Change Date”) until the next   Change Date.  Each change in the Index Rate shall be effective without special notice to   the Borrower or any other person or entity.  The Index Rate is a reference rate and does   not necessarily represent the lowest or best rate actually charged to any customer.  If, for     





 







        any reason, the Index Rate is no longer available at the time of the change, the Lender   will choose a new index based upon a reasonable comparable measure and reasonable   comparable information and Lender will notify Borrower of the substitution of any such   new index.   Interest on the amount of each advance against this Note shall be computed on the   amount of each advance and from the date of each advance.  Interest shall be computed   for the actual number of days elapsed and on the basis of a year consisting of 365 or 366   days, as the case may be.   4. Past Due Rate.  At Lender’s option and without prior notice, upon and during the   continuance of any default or Event of Default under this Note or any related Loan   Documents, Lender may increase the interest rate applicable to this Note to a rate per   annum equal to six percent (6.0%) above the Stated Rate (the “Past Due Rate”), not to   exceed at any time the lesser of 18% or the Ceiling Rate, and said Past Due Rate shall   remain in effect until the default or Event of Default has been cured and that fact has   been communicated to and confirmed by Lender.  Lender shall give written notice to   Borrower of Lender’s imposition of the Past Due Rate.  Lender’s imposition of the Past   Due Rate shall not constitute an election of remedies or otherwise limit Lender’s rights   concerning other remedies available to Lender as a result of the occurrence of an Event of   Default.   5. Late Charges.  If a payment is ten (10) days or more late, Borrower will be charged five   percent (5.0%) of the amount of payment or $125.00, whichever is less.   6. Ceiling Rate.  “Ceiling Rate” means, on any day, the maximum nonusurious rate of   interest permitted for that day by whichever of applicable federal or Texas law permits   the higher interest rate, stated as a rate per annum. On each day, if any, that Chapter 303   (“Chapter 303”) of the Texas Finance Code establishes the “Weekly Ceiling Rate”, the   Ceiling Rate shall be the “indicated rate ceiling” as defined in Chapter 303 for that day.    Lender may from time to time, as to current and future balances, implement any other   ceiling under Chapters 302 or 303 of the Texas Finance Code by notice to Borrower, if   and to the extent permitted by, Chapters 302 and 303.   Without notice to the Borrower or any other person or entity, the Index Rate and the   Ceiling Rate shall each automatically fluctuate upward and downward as and in the   amount by which Lender’s Index Rate and the maximum nonusurious rate of interest,   respectively, fluctuate.   7. Savings.  If, for any reason whatever, the interest paid or received on this Note during the   full term of this Note shall produce a rate which exceeds the Ceiling Rate, the holder of   this Note shall refund to the Borrower or, at the holder’s option, credit against the   principal of this Note such portion of said interest as shall be necessary to cause the   interest paid on this Note to produce a rate equal to the Ceiling Rate.  All sums paid or   forbearance or detention of the indebtedness evidenced hereby shall, to the extent   permitted by applicable law, be amortized, prorated, allocated and spread in equal parts     





 







        throughout the full term of this Note, so that the interest rate is uniform throughout the   full term of this Note.   If any word, phrase, clause, paragraph, part, portion or provision hereof is held to be   invalid, the remainder hereof shall nevertheless be valid as though it had been entered   into without such invalid word, phrase, clause, paragraph, part, portion or provision.   8. Payments.  Principal and accrued interest shall be due and payable as follows:   (a) Interest shall be due and payable quarterly as it accrues on the unpaid principal   balance to the date of each installment, payment beginning December 31, 2014,   and continuing on March 31, 2015 and June 30, 2015.   (b) On September 30, 2015, the remaining balance, including outstanding principal   and accrued but unpaid interest, then remaining unpaid on this Note shall be due   and payable.   This Note is a revolving line of credit promissory note having an original principal   commitment amount of $8,000,000.00.  The unpaid principal balance of this Note at any   time shall be the total of all amounts loaned or advanced by the holder hereof less the   amount of all payments or prepayments of principal made hereon by or for Borrower.    Borrower may use all or any part of the credit provided for herein at any time before   September 30, 2015.  Borrower may borrow, repay and reborrow hereunder and there is   no limitation on the number of advances made hereunder so long as the total unpaid   principal balance, at any time outstanding, does not exceed $8,000,000.00.   Unless otherwise agreed to, in writing, or otherwise required by applicable law, payments   will be applied first to accrued, unpaid interest, and any remaining amount to any unpaid   collection costs, late charges and other charges and the balance to the principal in inverse   order of maturity, provided, however, during the continuance of an Event of Default,   Lender reserves the right to apply payments among principal, interest, late charges,   collection costs and other charges at its discretion.  The Borrower may at any time pay   the full amount or any part of this Note without the payment of any premium or fee.   9. Security.  This Note and any substitutions, replacements, modifications, renewals and/or   extensions thereof is secured by (a) a Deed of Trust, Mortgage, Security Agreement,   Assignment of Production and Financing Statement dated as of the date of this Note from   Borrower for the benefit of Lender (as amended, restated, supplemented or otherwise   modified from time to time, “Deed of Trust”) covering oil and gas leases, lands and other   properties along with equipment located thereon and proceeds derived therefrom located   in Roosevelt County, Montana, (b) a Pledge Agreement dated to be effective as of the   date of this Note from Guarantor for the benefit of Lender (as amended, restated,   supplemented or otherwise modified from time to time, “Pledge Agreement” and when   taken with the Deed of Trust, hereinafter referred to collectively as the    Security Documents”) covering Guarantor’s membership interest in Borrower and (c) an   Unlimited Guaranty dated as of the date of this Note from Guarantor for the benefit of   Lender (“Guaranty”).  Additionally, this Note is subject to the terms and conditions of the     





 







        Loan Agreement as set out above. Failure to describe all or part of the security shall not   be considered as a waiver of such security.   10. Default.  At the option of the owner or holder hereof, all amounts due and unpaid   hereunder shall be accelerated and shall become immediately due and payable upon the   occurrence and during the continuance of any Events of Default under Section 4.1 of the   Deed of Trust.  During the continuance of an Event of Default, Lender may exercise any   other available remedies, and failure to exercise any remedy shall not constitute a waiver   at any other time including, but not limited to, to the extent permitted by applicable law,   the right to setoff all of Borrower’s accounts with Lender (whether checking, savings, or   some other account).   11. Cost and Expenses.  In addition to all outstanding principal and accrued but unpaid   interest on this Note, the Borrower agrees to pay (a) all reasonable costs and expenses   incurred by all owners and holders of this Note in any probate, reorganization,   bankruptcy or any other proceedings for the establishment or collection or any amount   hereunder, or in collecting this Note through any such proceedings, and (b) reasonable   out-of-pocket attorney’s fees when and if this Note is placed in the hands of an attorney   for collection during the continuance of an Event of Default, in each case except to the   extent resulting from the gross negligence, willful misconduct or fraud of Lender.   12. Waiver of Notice.  Except as expressly set forth in any Loan Document, the Borrower    waives notice (including, but not limited to, notice of intent to accelerate and notice of   acceleration), demand, presentment for payment, protest and the filing of suit for the   purpose of fixing liability and consent that the time of payment hereof may be extended   and re-extended from time to time without notice to it, and they agree that its liability on   or with respect to this Note shall not be affected by any release of or change in any   security at any time existing or by any failure to perfect or to maintain perfection of any   lien on or security interest in any such security.   13. Optional Acceleration Upon Transfer.  If all or any part of the property securing this Note   or any interest in it is sold or transferred in violation of the Loan Documents without   Lender’s prior written consent, Lender may, at its option, require immediate payment in   full of all sums secured by the Security Documents securing this Note.  However, this   option shall not be exercised by Lender if exercise is prohibited by state or federal law as   of the date of this Note and the Security Documents.   14. Lender’s Right to Sell.  Lender reserves the right, exercisable in Lender’s sole discretion   and, with respect to participations only, without notice to Borrower or any other person,   to sell participations, to assign its interest or both, in all or any part of this Note or the   debt evidenced by this Note.          





 







        15. Obligations of Borrower Under This Note.  When this instrument is executed by more   than one person, corporation or other legal entity, it shall be construed as though   “Borrower” were written “Borrowers” and as though the pronouns and verbs in their   number were changed to correspond; and in such case, each of the Borrowers shall be   bound jointly and severally with one another to keep, observe and perform the covenants,   agreements, obligations and liabilities imposed by this instrument upon the “Borrower.”   16. Governing Law.  WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW,   THIS 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 BUT IN   ANY EVENT CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH   REGULATES CERTAIN REVOLVING LOAN ACCOUNTS AND REVOLVING   TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THE LOAN EVIDENCED BY   THIS NOTE AND EXCEPT THAT 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, 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. Representations.  The   Borrower warrants and represents to the Lender, and to all other owners and/or holders of   the indebtedness evidenced hereby, that (1) all loans evidenced by this Note are and shall   be “business loans” as such term is used in the Depository Institution Regulation and   Monetary Control Act of 1980 as amended, and (2) such loans are for business,   commercial, investment or similar purposes and not primarily for personal, family,   household or agricultural use as such terms are used in Chapter 1 of the Texas Credit   Code.   THIS LOAN IS PAYABLE IN FULL ON SEPTEMBER 30, 2015, OR UPON   ACCELERATION FOR ANY REASON IN ACCORDANCE WITH THE TERMS OF THE   LOAN DOCUMENTS.  AT MATURITY YOU MUST REPAY THE ENTIRE   OUTSTANDING PRINCIPAL BALANCE OF THE LOAN AND ACCRUED BUT UNPAID   INTEREST THEN DUE.  THE BANK IS UNDER NO OBLIGATION TO REFINANCE THE   LOAN AT THAT TIME.  YOU WILL THEREFORE, BE REQUIRED TO MAKE PAYMENT   OUT OF OTHER ASSETS THAT YOU MAY OWN OR YOU WILL HAVE TO FIND A   LENDER, WHICH MAY BE THE BANK YOU HAVE THIS LOAN WITH, WILLING TO   LEND YOU THE MONEY.  IF YOU REFINANCE THIS LOAN AT MATURITY, YOU MAY   HAVE TO PAY SOME OR ALL OF THE CLOSING COSTS NORMALLY ASSOCIATED   WITH A NEW LOAN EVEN IF YOU OBTAIN REFINANCING FROM THE SAME BANK.          





 







    





 







THIS REVOLVING LINE OF CREDIT NOTE, THE SECURITY D4CUMEI`TTS AND   ACCQMPANYING UCC-1 FINANCING STATEMENTS AND LOAN AGREEMENT   AND/OR ANY AND ALL OTHER DOCUMENTS EXECUTED AT tali NEAR THE   TIME OF EXECUTION OF THIS DOCUMENT CONSTITUTE A "LOAN   AGREEMENT" AS DEFINED IN SECTION 26.02(a) OF THE TEXAS BUSINESS &   CQMMERCE CODE, AND REPRESENTS THE FINAL AGREEMENT BETWEEN THE   PARTIES AND MAY NOT SE CONTRADICTED BY EVIDENCE OF PRIOR,   CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.   THERE ARE NO UNWKITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.   DATED to be effective as of the date set out above, although EXECUTED on the dates   set out below.   EXECUTED on this   day of September, 2014   EXECUTED on this _ 0   day of September, 2014   B012R4WER:   NAUTILUS POPLAR LLC, a Montana limited   liability company   By: Magellan Petroleum Corporation, its manager   By:   Antoine Lafargue, Chief Financial Officer   LENDER: (The Lender's signature is provided   as its acknowledgment of the above as the final   written agreement between the parties.)   WEST TEXAS STATE BANK   Les W. Robbins, President-Midland   [$$,000,000 Promissory Note (Revolving Line of Credit Nate)]   C7