Document:

Exhibit 10.2

 

SKY SOLAR HOLDINGS, LTD.
 2014 EQUITY INCENTIVE PLAN

 

1.              Purpose of the Plan

 

The purpose of the Plan is to aid the Company and its Affiliates in recruiting and retaining key employees, directors or consultants of outstanding ability and to motivate such employees, directors or consultants to exert their best efforts on behalf of the Company and its Affiliates by providing incentives through the granting of Awards.  The Company expects that it will benefit from the added interest which such key employees, directors or consultants will have in the welfare of the Company as a result of their proprietary interest in the Company’s success.

 

2.              Definitions

 

The following capitalized terms used in the Plan have the respective meanings set forth in this Section:

 

(a)                                 Applicable Laws: All laws, statutes, regulations, ordinances, rules or governmental requirements that are applicable to this Plan or any Award granted pursuant to this Plan, including but not limited to applicable laws of the People’s Republic of China, the United States and the Cayman Islands, and the rules and requirements of any applicable national securities exchange.

 

(b)                                 Act:  The U.S. Securities Exchange Act of 1934, as amended, or any successor thereto.

 

(c)                                  Affiliate:  With respect to the Company, any entity directly or indirectly controlling, controlled by, or under common control with, the Company or any other entity designated by the Board in which the Company or an Affiliate has an interest.

 

(d)                                 Award:  An Option, Share Appreciation Right or Other Share-Based Award.

 

(e)                                  Beneficial Owner:  A “beneficial owner”, as such term is defined in Rule 13d-3 under the Act (or any successor rule thereto).

 

(f)                                   Board:  The board of directors of the Company.

 

(g)                                  Change in Control:  The occurrence of any of the following events:

 

(i) the sale or disposition, in one or a series of related transactions, of all or substantially all, of the assets of the Company to any “person” or “group” (as such terms are defined in Sections 13(d)(3) or 14(d)(2) of the Act) other than the Permitted Holders;

 

(ii) any person or group, other than the Permitted Holders, is or becomes the Beneficial Owner (except that a person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the voting share of the Company (or any entity which controls the Company), including by way of merger, consolidation, tender or exchange offer or otherwise; or

 

 

(iii)  during any period of two consecutive years, individuals who at the beginning of such period constituted the Board (together with any new directors whose election by such Board or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the directors of the Company, then still in office, who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board, then in office.

 

(h)                                 Code:  The U.S. Internal Revenue Code of 1986, as amended, or any successor thereto.

 

(i)                                     Committee:  The compensation committee of the Board.

 

(j)                                    Company:  Sky Solar Holdings, Ltd., a company incorporated under the laws of the Cayman Islands.

 

(k)                                 Disability:  Inability of a Participant to perform in all material respects his duties and responsibilities to the Company, or any Subsidiary of the Company, by reason of a physical or mental disability or infirmity which inability is reasonably expected to be permanent and has continued (i) for a period of not less than 90 consecutive days or (ii) such shorter period as the Committee may reasonably determine in good faith.  The Disability determination shall be in the sole discretion of the Committee and a Participant (or his representative) shall furnish the Committee with medical evidence documenting the Participant’s disability or infirmity which is satisfactory to the Committee.

 

(l)                                     Effective Date:  The date the Board approves the Plan, or such later date as is designated by the Board.

 

(m)                             Employment:  The term “Employment” as used herein shall be deemed to refer to (i) a Participant’s employment if the Participant is an employee of the Company or any of its Affiliates, (ii) a Participant’s services as a consultant, if the Participant is consultant to the Company or its Affiliates and (iii) a Participant’s services as an non-employee director, if the Participant is a non-employee member of the Board.

 

(n)                                 Fair Market Value:  On a given date, (i) if there should be a public market for the Shares on such date, the closing price of the Shares as reported on such date on the Composite Tape of the principal national securities exchange on which such Shares are listed or admitted to trading, or (ii) if there should not be a public market for the Shares on such date, the Fair Market Value shall be the value established by the Committee in good faith.

 

(o)                                 ISO:  An Option that is also an incentive share option granted pursuant to Section 6(d) of the Plan.

 

(p)                                 LSAR:  A limited share appreciation right granted pursuant to Section 7(d) of the Plan.

 

(q)                                 Other Share-Based Awards:  Awards granted pursuant to Section 8 of the Plan.

 

(r)                                    Option:  A share option granted pursuant to Section 6 of the Plan.

 

 

(s)                                   Option Price:  The purchase price per Share of an Option, as determined pursuant to Section 6(a) of the Plan.

 

(t)                                    Participant:  An employee, director or consultant who is selected by the Committee to participate in the Plan.

 

(u)                                 Permitted Holder: means, as of the date of determination, (i) the Company or (ii) any employee benefit plan (or trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person of which a majority of its voting power of its voting equity securities or equity interest is owned, directly or indirectly, by the Company,

 

(v)                                 Person:  A “person”, as such term is used for purposes of Section 13(d) or 14(d) of the Act (or any successor section thereto).

 

(w)                               Plan:  This Sky Solar Holdings, Ltd. 2014 Equity Incentive Plan.

 

(x)                                 Shares:  Ordinary Shares of the Company, nominal value US$0.0001  per share.

 

(y)                                 Share Appreciation Right:  A share appreciation right granted pursuant to Section 7 of the Plan.

 

(z)                                  Subsidiary:  A corporation or other entity of which a majority of the outstanding voting shares or voting power is beneficially owned directly or indirectly by the Company.

 

3.              Shares Subject to the Plan

 

The total number of Shares which may be issued under the Plan is               .  The Shares may consist, in whole or in part, of authorized and unissued Shares or Shares held as treasury shares by the Company or otherwise purchased on the open market.  The issuance of Shares or the payment of cash upon the exercise of an Award or in consideration of the cancellation or termination of an Award shall reduce the total number of Shares available under the Plan, as applicable.  Shares which are subject to Awards which terminate or lapse without the payment of consideration may be granted again under the Plan.

 

 

4.              Administration

 

The Plan shall be administered by the Committee, which may delegate its duties and powers in whole or in part to any subcommittee thereof consisting solely of at least two individuals who are intended to qualify as “Non-Employee Directors” within the meaning of Rule 16b-3 under the Act (or any successor rule thereto) and an “independent director” as defined in NYSE Rule 303A.02 (or any successor rule thereto).  Awards may, in the discretion of the Committee, be made under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or its subsidiaries or a company acquired by the Company or with which the Company combines.  The number of Shares underlying such substitute awards shall be counted against the aggregate number of Shares available for Awards under the Plan.  The Committee is authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan.  The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems necessary or desirable.  Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, but not limited to, Participants and their beneficiaries or successors).  The Committee shall have the full power and authority to establish the terms and conditions of any Award consistent with the provisions of the Plan and to waive any such terms and conditions at any time (including, without limitation, accelerating or waiving any vesting conditions).  The Committee shall require payment of any amount it may determine to be necessary to withhold for any applicable taxes as a result of the exercise, grant or vesting of an Award.  Unless the Committee specifies otherwise, the Participant may elect to pay a portion or all of such withholding taxes by (a) delivery in Shares or (b) having Shares withheld by the Company from any Shares that would have otherwise been received by the Participant.

 

5.              Limitations

 

No Award may be granted under the Plan after the tenth anniversary of the Effective Date, but Awards theretofore granted may extend beyond that date.

 

6.              Terms and Conditions of Options

 

Options granted under the Plan shall be, as determined by the Committee, non-qualified or incentive share options for U.S. federal income tax purposes, as evidenced by the related Award agreements, and shall be subject to the foregoing and the following terms and conditions and to such other terms and conditions, not inconsistent therewith, as the Committee shall determine:

 

(a)                                 Option Price.  The Option Price per Share shall be determined by the Committee, unless expressly approved by the Committee, shall not be less than 100% of the Fair Market Value of the Shares on the date an Option is granted.

 

(b)                                 Exercisability.  Options granted under the Plan shall be exercisable at such time and upon such terms and conditions as may be determined by the Committee, but in no event shall an Option be exercisable more than ten years after the date it is granted.

 

(c)                                  Exercise of Options.  Except as otherwise provided in the Plan or in an Award agreement, an Option may be exercised for all, or from time to time any part, of the

 

 

Shares for which it is then exercisable.  For purposes of this Section 6 of the Plan, the exercise date of an Option shall be the later of the date a notice of exercise is received by the Company and, if applicable, the date payment is received by the Company pursuant to clauses (i), (ii), (iii) or (iv) in the following sentence.  The purchase price for the Shares as to which an Option is exercised shall be paid to the Company in full at the time of exercise at the election of the Participant (i) in cash or its equivalent (e.g., by check), (ii) to the extent permitted by the Committee, in Shares having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the Committee; provided, that such Shares have been held by the Participant for no less than six months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment applying generally accepted accounting principles), (iii) partly in cash and, to the extent permitted by the Committee and subject to the other requirements and conditions set forth above in (ii), partly in Shares or (iv) if there is a public market for the Shares at such time, through the delivery of irrevocable instructions to a broker to sell Shares obtained upon the exercise of the Option and to deliver promptly to the Company an amount out of the proceeds of such sale equal to the aggregate Option Price for the Shares being purchased.  No Participant shall have any rights to dividends or other rights of a shareholder with respect to Shares subject to an Option until the Participant has given written notice of exercise of the Option, paid in full for such Shares and, if applicable, has satisfied any other conditions imposed by the Committee pursuant to the Plan.

 

(d)                                 ISOs.  The Committee may grant Options under the Plan that are intended to be ISOs.  Such ISOs shall comply with the requirements of Section 422 of the Code (or any successor section thereto).  No ISO may be granted to any Participant who at the time of such grant, owns more than ten percent of the total combined voting power of all classes of shares of the Company or of any Subsidiary, unless (i) the Option Price for such ISO is at least 110% of the Fair Market Value of a Share on the date the ISO is granted and (ii) the date on which such ISO terminates is a date not later than the day preceding the fifth anniversary of the date on which the ISO is granted.  Any Participant who disposes of Shares acquired upon the exercise of an ISO either (i) within two years after the date of grant of such ISO or (ii) within one year after the transfer of such Shares to the Participant, shall notify the Company of such disposition and of the amount realized upon such disposition.  All Options granted under the Plan are intended to be nonqualified share options, unless the applicable Award agreement expressly states that the Option is intended to be an ISO.  If an Option is intended to be an ISO, and if for any reason such Option (or portion thereof) shall not qualify as an ISO, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a nonqualified share option granted under the Plan; provided that such Option (or portion thereof) otherwise complies with the Plan’s requirements relating to nonqualified share options.  In no event shall any member of the Committee, the Company or any of its Affiliates (or their respective employees, officers or directors) have any liability to any Participant (or any other Person) due to the failure of an Option to qualify for any reason as an ISO.

 

(e)                                  Attestation.  Wherever in this Plan or any agreement evidencing an Award a Participant is permitted to pay the exercise price of an Option or taxes relating to the

 

 

exercise of an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by  presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option.

 

7.              Terms and Conditions of Share Appreciation Rights

 

(a)                                 Grants.  The Committee also may grant (i) a Share Appreciation Right independent of an Option or (ii) a Share Appreciation Right in connection with an Option, or a portion thereof.  A Share Appreciation Right granted pursuant to clause (ii) of the preceding sentence (A) may be granted at the time the related Option is granted or at any time prior to the exercise or cancellation of the related Option, (B) shall cover the same number of Shares covered by an Option (or such lesser number of Shares as the Committee may determine) and (C) shall be subject to the same terms and conditions as such Option except for such additional limitations as are contemplated by this Section 7 (or such additional limitations as may be included in an Award agreement).

 

(b)                                 Terms.  The exercise price per Share of a Share Appreciation Right shall be an amount determined by the Committee but in no event shall such amount be less than the greater of (i) the Fair Market Value of a Share on the date the Share Appreciation Right is granted or, in the case of a Share Appreciation Right granted in conjunction with an Option, or a portion thereof, the Option Price of the related Option and (ii) the minimum amount permitted by Applicable Laws.  Each Share Appreciation Right granted independent of an Option shall entitle a Participant upon exercise to an amount equal to (i) the excess of (A) the Fair Market Value on the exercise date of one Share over (B) the exercise price per Share, times (ii) the number of Shares covered by the Share Appreciation Right.  Each Share Appreciation Right granted in conjunction with an Option, or a portion thereof, shall entitle a Participant to surrender to the Company the unexercised Option, or any portion thereof, and to receive from the Company in exchange therefore an amount equal to (i) the excess of (A) the Fair Market Value on the exercise date of one Share over (B) the Option Price per Share, times (ii) the number of Shares covered by the Option, or portion thereof, which is surrendered.  The date a notice of exercise is received by the Company shall be the exercise date.  Payment shall be made in Shares or in cash, or partly in Shares and partly in cash (any such Shares valued at such Fair Market Value), all as shall be determined by the Committee.  Share Appreciation Rights may be exercised from time to time upon actual receipt by the Company of written notice of exercise stating the number of Shares with respect to which the Share Appreciation Right is being exercised.  No fractional Shares will be issued in payment for Share Appreciation Rights, but instead cash will be paid for a fraction or, if the Committee should so determine, the number of Shares will be rounded downward to the next whole Share.

 

 

(c)                                  Limitations.  The Committee may impose, in its discretion, such conditions upon the exercisability or transferability of Share Appreciation Rights as it may deem fit.

 

(d)                                 Limited Share Appreciation Rights.  The Committee may grant LSARs that are exercisable upon the occurrence of specified contingent events.  Such LSARs may provide for a different method of determining appreciation, may specify that payment will be made only in cash and may provide that any related Awards are not exercisable while such LSARs are exercisable.  Unless the context otherwise requires, whenever the term “Share Appreciation Right” is used in the Plan, such term shall include LSARs.

 

8.              Other Share-Based Awards

 

The Committee, in its sole discretion, may grant or sell Awards of Shares, Awards of restricted Shares and Awards that are valued in whole or in part by reference to, or are otherwise based on the Fair Market Value of, Shares (“Other Share-Based Awards”).  Such Other Share-Based Awards shall be in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive, or vest with respect to, one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives.  Other Share-Based Awards may be granted alone or in addition to any other Awards granted under the Plan.  Subject to the provisions of the Plan, the Committee shall determine to whom and when Other Share-Based Awards will be made, the number of Shares to be awarded under (or otherwise related to) such Other Share-Based Awards; whether such Other Share-Based Awards shall be settled in cash, Shares or a combination of cash and Shares; and all other terms and conditions of such Awards (including, without limitation, the vesting provisions thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable).

 

9.              Adjustments Upon Certain Events

 

Notwithstanding any other provisions in the Plan to the contrary, the following provisions shall apply to all Awards granted under the Plan:

 

(a)                                 Generally.  In the event of any change in the outstanding Shares after the Effective Date by reason of any Share dividend or split, reorganization, recapitalization, merger, consolidation, spin-off, combination, combination or transaction or exchange of Shares or other corporate exchange, or any distribution to shareholders of Shares other than regular cash dividends or any transaction similar to the foregoing, the Committee in its sole discretion and without liability to any person shall make such substitution or adjustment, if any, as it deems to be equitable, as to (i) the number or kind of Shares or other securities issued or reserved for issuance pursuant to the Plan or pursuant to outstanding Awards, (ii) the maximum number of Shares for which Options or Share Appreciation Rights may be granted during a calendar year to any Participant, (iii) the maximum number of Shares for which Other Share-Based Awards may be granted during a calendar year to any Participant, (iv) the maximum amount of an Award that is valued in whole or in part by reference to, or is otherwise based on the Fair Market Value of, Shares that may be granted during a calendar year

 

 

to any Participant, (v) the Option Price or exercise price of any Share Appreciation Right and/or (vi) any other affected terms of such Awards.

 

(b)                                 Change in Control. In the event of a Change of Control after the Effective Date, (i) if determined by the Committee in the applicable Award agreement or otherwise, any outstanding Awards then held by Participants  which are unexercisable or otherwise unvested or subject to lapse restrictions shall automatically be deemed exercisable or otherwise vested or no longer subject to lapse restrictions, as the case may be, as of immediately prior to such Change of Control and (ii) the Committee may, but shall not be obligated to, (A) cancel such Awards for fair value (as determined in the sole discretion of the Committee) which, in the case of Options and Share Appreciation Rights, may equal the excess, if any, of value of the consideration to be paid in the Change of Control transaction to holders of the same number of Shares subject to such Options or Share Appreciation Rights (or, if no consideration is paid in any such transaction, the Fair Market Value of the Shares subject to such Options or Share Appreciation Rights) over the aggregate exercise price of such Options or Share Appreciation Rights, (B) provide for the issuance of substitute Awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted hereunder as determined by the Committee in its sole discretion or (C) provide that for a period of at least 15 days prior to the Change of Control, such Options shall be exercisable as to all Shares subject thereto and that upon the occurrence of the Change of Control, such Options shall terminate and be of no further force and effect.

 

10.       No Right to Employment or Awards

 

The granting of an Award under the Plan shall impose no obligation on the Company or any Subsidiary to continue the Employment of a Participant and shall not lessen or affect the Company’s or Subsidiary’s right to terminate the Employment of such Participant.  No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards.  The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).

 

11.       Successors and Assigns

 

The Plan shall be binding on all successors and assigns of the Company and a Participant, including without limitation, the estate of such Participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors.

 

12.       Nontransferability of Awards

 

Unless otherwise determined by the Committee, an Award shall not be transferable or assignable by the Participant otherwise than by will or by the laws of descent and distribution.  An Award exercisable after the death of a Participant may be exercised by the legatees, personal representatives or distributees of the Participant.

 

 

Notwithstanding the foregoing, no provision herein shall prevent or forbid transfers by will, by the laws of descent and distribution, to a trust that was established solely for tax planning purposes and not for purposes of profit or commercial activity or, to one or more “family members” (as such term is defined in SEC Rule 701 promulgated under the Securities Act of 1933, as amended) by gift or pursuant to a qualified domestic relations order.

 

13.       Amendments or Termination

 

The Board may amend, alter or discontinue the Plan, but no amendment, alteration or discontinuation shall be made, (a) without the approval of the shareholders of the Company, if such action would (except as is provided in Section 9 of the Plan), increase the total number of Shares reserved for the purposes of the Plan or change the maximum number of Shares for which Awards may be granted to any Participant, in each case only to the extent such approval is required by the principal national securities exchange on which the Shares are listed or admitted to trading, or (b) without the consent of a Participant, if such action would diminish any of the rights of the Participant under any Award theretofore granted to such Participant under the Plan; provided, however, that the Committee may amend the Plan in such manner as it deems necessary to permit the granting of Awards meeting the requirements of any Applicable Laws.

 

Without limiting the generality of the foregoing, to the extent applicable, notwithstanding anything herein to the contrary, this Plan and Awards issued hereunder shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date.  Notwithstanding any provision of the Plan to the contrary, in the event that the Committee determines that any amounts payable hereunder will be taxable to a Participant under Section 409A of the Code and related Department of Treasury guidance prior to payment to such Participant of such amount, the Company may (a) adopt such amendments to the Plan and Awards and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Committee determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Plan and Awards hereunder and/or (b) take such other actions as the Committee determines necessary or appropriate to comply with the requirements of Section 409A of the Code.

 

14.                               Multiple Jurisdictions

 

In order to assure the viability of Awards granted to Participants employed in various jurisdictions, the Committee may, in its sole discretion, provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy or custom applicable in the jurisdiction in which the Participant resides or is employed.  Moreover, the Committee may approve such supplements to, amendments, restatements, or alternative versions of the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements or alternative versions shall increase the Share limitation contained in Section 3 hereof.  Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted that would violate any Applicable Laws.

 

15.       Distribution of Shares

 

The obligation of the Company to make payments in Shares pursuant to an Award shall be subject to all Applicable Laws and to any such approvals by government agencies as may be required.  Additionally, in the discretion of the Committee, American depositary shares, or

 

 

ADSs, may be distributed in lieu of Shares in settlement of any Award, provided that the ADSs shall be of equal value to the Shares that would have otherwise been distributed.  If the number of Shares represented by an ADS is other than on a one-to-one basis, the limitations contained in Section 3 shall be adjusted to reflect the distribution of ADSs in lieu of Shares.

 

16.       Taxes

 

No Shares shall be delivered under the Plan to any Participant until such Participant has made arrangements acceptable to the Committee for the satisfaction of any income and  employment tax withholding obligations under any Applicable Laws, in particular, the tax laws, rules, regulations and government orders of the People’s Republic of China or the U.S. federal, state or other local tax laws, as applicable.  The Company and each of its Subsidiaries shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s payroll tax obligations, if any) required to be withheld under any Applicable Laws with respect to any Award issued to the Participant hereunder.  The Committee may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold Shares otherwise issuable under an Award (or allow the return of Shares) having a Fair Market Value equal to the sums required to be withheld.  Notwithstanding any other provision of the Plan, the number of Shares which may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which may be repurchased from the Participant of such Award after such Shares were acquired by the Participant from the Company) in order to satisfy the Participant’s federal, state, local and other income and payroll tax liabilities with respect to the issuance, vesting, exercise or payment of the Award shall, unless specifically approved by the Committee, be limited to the number of Shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state, local and other income tax any payroll tax purposes that are applicable to such taxable income.

 

17.       Choice of Law

 

The Plan shall be governed by and construed in accordance with the laws of the state of New York.

 

18.       Effectiveness of the Plan

 

The Plan shall be effective as of the Effective Date and shall terminate ten years later, subject to earlier termination by the Board pursuant to Section 13 hereof.e10-57magellanwtsbloanag

Executed Version   3396873.6     LOAN AGREEMENT                This Loan Agreement (this “Agreement”) dated as of September 17, 2014 (the   “Effective Date”), is entered into by and among WEST TEXAS STATE BANK (“Lender”),    the Borrower and Guarantor.       In consideration of the Loan or Loans 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,   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 Unlimited   Guaranty dated as of the Effective Date executed by Guarantor described above to or for     

 

      2       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 Loan   Agreement and any and all promissory notes executed by Borrower and 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 any Loan.       I. Loans.  The term “Loans” mean any loans 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 the Effective Date 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 any Loan.        K. Note.  The term “Note” shall mean the Line of Credit 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   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   to 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     

 

      3       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 their 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 (as defined in the Mortgage) 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; (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; and (xvii) only for the thirty (30)   days immediately following the Effective Date, recorded liens in favor of Jonah Bank of   Wyoming.       N. Pledge Agreement. The term “Pledge Agreement” shall mean that certain   Pledge Agreement dated to be effective as of the Effective Date 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.        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. Loans.       A. Line of Credit Commitment.  Lender agrees to make Advances to the   Borrower as follows:      

 

      4           (i) Loan.  Subject to the terms and conditions hereof, Lender hereby   agrees to make a series of loans to Borrower in an aggregate principal amount of   up to $8,000,000.00. The obligation to repay the Loan is evidenced by a   Promissory Note (Revolving Line of Credit Note) dated as of the Effective Date,   having an original principal commitment amount of $8,000,000.00 (together with   any and all renewals, extensions and/or rearrangements thereof being hereinafter   referred to sometimes as “Line of Credit Note” or “Note”) having a maturity date,   repayment terms and an interest rate as set forth in the Line of Credit Note   together with any and all renewals, extensions, amendments or rearrangements   thereof.  The proceeds from said Line of Credit Note will be used for the purposes   set out under 5.I. below.        (ii) Revolving Credit Feature.  The Line of Credit Note provides for a   revolving line of credit feature under which Borrower may from time to time   borrow, repay and reborrow funds, without penalty, premium or fee.  The   aggregate principal amount of funds borrowed under the Line of Credit Note shall   never exceed at any one time outstanding the face amount of the Line of Credit   Note.       (iii)      Request for Advances.  The obligation of Lender to advance funds under   the Line of Credit Note pursuant to this section are subject to Borrower delivering   to Lender a completed request for advance in the form attached hereto as Exhibit   “A,” attached hereto and made a part hereof.        (iv) General Conditions Precedent to Advances.  Lender’s obligation to   make any advances under the Line of Credit Note or to provide any other   financial accommodations to or for the benefit of Borrower hereunder shall be   subject to the conditions precedent that as of the date of such advance or   disbursement and after giving effect thereto [a] all representations and warranties   made to Lender in this Agreement and the Loan Documents shall be true and   correct in all material respects as of and as if made on such date (except to the   extent any such representation or warranty specifically relates to a specific date),   [b] no material adverse change in the financial condition of Borrower and/or   Guarantor since the effective date of the most recent financial statements   furnished to Lender, or in the value of the Mortgaged Properties taken as a whole,   shall have occurred and be continuing, [c] no event has occurred and is   continuing, or would result from the disbursement of the requested advance,   which with notice or lapse of time, or both, would constitute an Event of Default   (as defined in Section 7 of this Agreement), [d] Lender has received all financial   reports, financial statements, tax returns, Reserve Evaluations, as defined below,   and other information (“Financial Information”) required under Section 5.A.   below, appropriately executed by Borrower and/or Guarantor and all other proper   parties, and [e] Lender has received payment of, or shall receive substantially   contemporaneously with the initial funding, a closing fee in the amount of     

 

      5       $40,000 (the “Closing Fee”), which shall be deemed to be fully earned by Lender   on the Effective Date.       (v) Reliance on Request.  Notwithstanding anything to the contrary, any   request for advances communicated to any office of Lender by any person on   behalf of Borrower believed by Lender in good faith to be authorized to make the   request, whether written, verbal, telephonic or electronic, may be acted upon by   Lender, and Borrower will be liable for sums advanced by Lender pursuant to   such request, unless resulting from the gross negligence, willful misconduct or   fraud of Lender.  Such requests for advances shall be deemed authorized by   Borrower, and Lender shall not be liable for such advances made in good faith,   and with respect to advances deposited to the credit of any deposit account of   Borrower, such advances, when so deposited, shall be conclusively presumed to   have been made to or for the benefit of Borrower regardless of the fact that   persons other than those authorized to request advances may have authority to   draw against such account. Borrower agrees to indemnify and hold Lender   harmless from and against all damages, liabilities, costs and expenses (including   reasonable out-of-pocket attorney’s fees) arising out of any claim by Borrower or   any third party against Lender in connection with Lender’s performance of   transfers as described above, unless resulting from the gross negligence, willful   misconduct or fraud of Lender.      (vi)      Conditions Precedent to Initial Advances.  Lender’s obligation to make   an initial advances under the Line of Credit Note or to provide any other financial   accommodations to or for the benefit of Borrower hereunder shall be subject to   Borrower’s delivery to Lender of a revised Exhibit “A” for attachment to the   Deed of Trust containing [a] with respect to at least 80% of the oil and gas leases   and/or oil, gas and mineral leases included therein (“Leases”), the addition of a   reference to the Office of the Recorder Book and Page numbers for said Leases   based on Borrower’s readily available records (and not, for the avoidance of   doubt, based on a full search of the Office of the Recorder’s courthouse records)   and [b] with respect to all Leases, revised versions of the applicable legal   descriptions including the longhand version of the quadrant information included   in the legal description (for example, changing “NENE” to “NE/4NE/4”, as   appropriate).            B. Security Documents.  The Loans are secured by the Security Documents   described above.      3. Security.  As indicated above, as security for the Loans, the Borrower has executed and   delivered to Lender the Mortgage described above covering various leasehold, operating,   royalty, mineral and overriding royalty interest along with any equipment associated   therewith and proceeds and revenues derived therefrom located in Roosevelt County,   Montana and Guarantor agrees to execute and deliver to Lender a Pledge Agreement   described above covering its membership interest in Borrower on terms mutually     

 

      6       acceptable to the Parties.  When Collateral is mortgaged, assigned and/or pledged as   security for the Loans, Borrower will grant to Lender a first lien in the 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   follows:       A. Good Standing.  Magellan Petroleum Corporation is a Delaware   corporation and Nautilus Poplar LLC is a Montana limited liability company and 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   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, 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.        

 

      7        F. Ownership of Assets.  Borrower and Guarantor has or will collectively   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 its 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. Continuation of Representations and Warranties.  All representations   and warranties made under this Agreement shall be deemed to be made at and as of the   Effective Date and at and as of the date of any advance under any Loan.       L. Ownership of Borrower.  Guarantor is the sole member of Borrower.       M. 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     

 

      8       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,   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, 2015.        (ii) Quarterly Financial Statements (Guarantor).  Provide to Lender quarterly   Borrower in-house prepared financial statements prepared on an income tax basis   (which will include a balance sheet and income statement) of Borrower within 60   days after the close of each previous quarter with the first quarterly period ending   December 31, 2014.       (iii) Tax Returns (Guarantor).  Provide to Lender, within 15 days after filing,   beginning with the year ending June 30, 2014, 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.         

 

      9        (v) Other Information.  Provide to Lender promptly such additional   information, reports and statements respecting the business operations and   financial condition of Borrower, respectively, 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   prior to the initial funding under the Loan and 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 Delaware and   Montana, 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   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 or 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,     

 

      10       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 them 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   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.  By material is meant any remedial and/or claim in the 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; provided, however, that Borrower shall not be obligated to have   such account opened and maintained until the first date after the Effective Date which is   available to Borrower (based on Lender’s internal schedule) to open such account.  Once   such account is open, 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 Loans for purposes of (i)   acquiring oil and gas properties and/or leases, (ii) providing working capital for the   Borrower, (iii) funding Letters of Credit issued by Lender and (iv) paying fees, costs and   expenses associated with the closing hereunder, including, without limitation, the Closing   Fee. In no event will funds from the Loans 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.        

 

      11        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   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.         

 

      12        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 there are any then outstanding   Loans; 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   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.        

 

      13       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 this 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).      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     

 

      14       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.  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 (a) the Loan and the negotiation and   preparation of this Agreement and each of the Loan Documents and (b) 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. 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 (ii)   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. By “Termination Date” is meant the   date that no further amounts are owing by Borrower to Lender under the above Note   and/or any and all other indebtedness owed by Borrower to Lender under any Loan   Document.      13. 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     

 

      15       remedies (including, without limitation, other rights of set-off) which the Lender may   have.      14. 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 14 or (B) available to Lender or its Related   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 14 (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 14 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 14 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)     

 

      16       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.        15. 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   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 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 THE 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.        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     

 

      17       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   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.    Borrower further agree 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 it 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     

 

      18       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   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 THEY 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 WAIVE 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     

 

      19       outstanding or the obligation of the Lender to make any advances on the Loan shall not   have expired.       J. Conflict.  If there are any conflicts or inconsistencies between this   Agreement, the Note, and any Security Documents, this Loan Agreement shall prevail   and control.         K. Counterpart.  This Agreement may be executed in a number of identical   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.                                                [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]      (signature page follows)         

 

NOTICE   THIS LOAN AGREEMENT, THE SECURITY DOCUMENTS, THE NOTE, THE   SUBQRDINATION AGREEMENT, IF ANY, AND THE ACCOMPANYING UCC-1   FINANCING STATEMENT AND/DR ANY AND ALL OTHER DOCUMENTS   EXECUTED AT OR NEAR THE TIME 4F THE EXECUTION OF THIS DOCUMENT   CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 2bA2{a} OF THE   TEXAS BUSINESS & COMMERCE CODE, AND REPRESENTS THE FINAL   AGREEMENT BETWEEN TIE FARTIES AND MAY NOT BE G4NTRADICTED ~Y   EVIDENCE O~ PRIOR, CONTEMPQRANEOUS 4R SUBSEQUENT ORAL   AGREEMENTS OF THE PARTIES, THE12E ARE NO UNWRITTEN ORAL   AGREEMENTS BETWEEN THE PARTIES,   IN WITNESS WHEREOF, the panties hereto have caused this Loan Agreement to be   duly executed to be effective as of the date first above written.   EXECUTED oar this ~~   day of September, 2QI4   EXECUTED an this I~ ~   day of September, 2014   EXECUTED on the _   day of September, 2014   BORROWER:   NAUTILUS POPLAR LLC, a Montana limited   liability company   By: Magella Petroleum Coipoz~atio~l, its inanagei•   By:   Antoine Lafargae, Chief Financial Officer   GUARANTOR:   MAGELLAN PETROLEUM CORPORATION,   a Delaware co poration   By:   Ai~toiue Lafargue, Chief ~'inanciai Officer   LENDER:   WEST TEXAS STATE BANK   Les W. Robbins, Presideut~Midland   [i..OAN AGRIiI'sMit~l'1'1    

 

NOTICE   THIS LOAN AGREEMENT, THE SECURITY DOCUMENTS, THE NOTE ANll TFiI;   ACCOMPANYIl`dG UCC-1 FINANCING STATEMENT ANll GUARANTY AND/OR   ANY AND ALL OTHER DOCUMENTS EX~CUT~D AT OR NEAR THE TIME OF   THE ~X~CUTION OI+ THIS DOCUMENT CONSTITUTE A "LOAN AGR~~M~NT"   AS DEFINED IN SECTION 2G.02(a} OF THE TEXAS BUSINESS & CQMM~RC~   CODS, AND REPRESENTS THE FINAL AGR~EM~NT BETWEEN THE PAI2TI~S   AND MAY NOT BE CONTRADICTED SY EVIDENCE OF PRIOR,   CQNT~MPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.   TI3ER~ ARE NO UNWRITTEN ORAL AGR~EM~NTS BETWEEN THE PARTIES.   IN WITNESS WHEREOr, the parties hereto have caused this Loan Agreement to be   duly executed to be effective as of the date first above written.   EXECUTED on this   day of September, 2014   EXECUTED on this   day of September, 2014   EXECUTED on the ~  ~   day of September, 201 ~   BORROWER:   NAUTILUS POPLAR LLC, a Montana limited.   liability company   Sy: Magellan Petroleum Corporation, its manager   Antoine Lafargue, Chief Financial Officer   GUARANTOR:   MAGELLAN PETROLEUM CORPORATION,   a Delaware corporation   Antoine Lafargue, Chief Financial Officer   LENDER:   WEST TEXAS STATE BANK   By:   Les W. Robbins, President-Midland    

 

Page 1 of 2       EXHIBIT "A"   Attached to and made a part of that certain Loan Agreement dated September 17, 2014, by and between WEST TEXAS STATE BANK, NAUTILUS POPLAR LLC and MAGELLAN PETROLEUM CORPORATION.       FORM OF    BORROWING REQUEST   Date:  __________, ____   To:  West Texas State Bank (“Lender”)   Re:  Nautilus Poplar LLC (“Borrower”)    Reference is made to that certain Loan Agreement dated as of September 17, 2014   (as amended, restated, supplemented or otherwise modified from time to time, the “Loan   Agreement”), by and among Lender, Borrower and Magellan Petroleum Corporation.    Capitalized terms used herein without definition are used as defined in the Loan   Agreement.      Borrower hereby gives Lender irrevocable notice, pursuant to Section 2.A(iii) of   the Loan Agreement, of its request for a Loan (the “Proposed Borrowing”) under the   Loan Agreement and, in that connection, sets forth the following information:   1. The date of the Proposed Borrowing is __________, ____ (the “Funding   Date”).   2. The aggregate principal amount of the Proposed Borrowing is   $_________.   The undersigned hereby certifies that[, except as set forth on Schedule A attached   hereto,] the following statements shall be true as of the Funding Date:   (i) all representations and warranties made to Lender in the Loan   Agreement and the other Loan Documents are true and correct in all material   respects (except to the extent any such representation or warranty specifically   relates to a specific date);    (ii) no event has occurred and is continuing, or would result from the   disbursement of the Proposed Borrowing, which with notice or lapse of time, or   both, would constitute an Event of Default;   (iii) no material adverse change in the financial condition of Borrower,   or in the value of the Collateral taken as a whole, has occurred since the effective   date of the most recent financial statements furnished to Lender and is continuing;      

 

Page 2 of 2       (iv) Lender has received all financial reports, financial statements, tax   returns, Reserve Evaluations and other information required to be delivered on or   prior to the Funding Date under Section 5.A. of the Loan Agreement, and each is   appropriately executed by Borrower and all other proper parties; and   (v) after giving effect to the Proposed Borrowing, the aggregate   principal amount of the Loans outstanding does not exceed $8,000,000.      NAUTILUS POPLAR LLC, a Montana   limited liability company   By:  Magellan Petroleum Corporation, its   manager   By: DO NOT SIGN – EXHBIT ONLY    Name: Antoine Lafargue   Title: Chief Financial Officer      [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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