Document:

Master Repurchase Agreement

 Exhibit 10.10 
 MASTER REPURCHASE AGREEMENT 
 Dated as of February 28, 2006 
 Between: 
 BEAR STEARNS MORTGAGE CAPITAL CORPORATION

 and 
 ALESCO LOAN HOLDINGS TRUST 

 

	1.	Applicability 

 From time to time the parties hereto
may enter into transactions in which Alesco Loan Holdings Trust (“Seller”) agrees to transfer to Bear Stearns Mortgage Capital Corporation (“Buyer”) Mortgage Loans against the transfer of funds by Buyer, with a simultaneous
agreement by Buyer to transfer to Seller such Mortgage Loans at a date certain or on demand, against the transfer of funds by Seller. Each such transaction shall be referred to herein as a “Transaction” and shall be governed by this
Agreement, as the same shall be amended from time to time. 
  

	2.	Definitions 

 (a) “Act of
Insolvency”, with respect to either Buyer, Seller or Guarantor, (i) the commencement by such party as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law, or such party
seeking the appointment of a receiver, trustee, custodian or similar official for such party or any substantial part of its property, or (ii) the commencement of any such case or proceeding against such party, or another seeking such an
appointment, or the filing against a party of an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970, which (A) is consented to or not timely contested by such party, (B) results in
the entry of an order for relief, such an appointment, the issuance of such a protective decree or the entry of an order having a similar effect, or (C) is not dismissed within 15 days, (iii) the making by a party of a general assignment
for the benefit of creditors, or (iv) the admission in writing by a party of such party’s inability to pay such party’s debts as they become due; 
 (b) “Additional Purchased Mortgage Loans”, Mortgage Loans provided by Seller to Buyer pursuant to Paragraph 4(a) hereof;

  

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 (c) “Business Day”, any day other than a Saturday, Sunday and any day on which
banks located in the State of New York are authorized or required to close for business; 
 (d) “Buyer’s Margin
Amount”, with respect to any Transaction as of any date, the amount obtained by application of a percentage, agreed to by Buyer and Seller prior to entering into the Transaction and specified in the related Request/Confirmation, to the
Repurchase Price for such Transaction as of such date; 
 (e) “Custodian”, the custodian named in the Custodial
Agreement and any permitted successor thereto; 
 (f) “Custodial Agreement”, the Custodial Agreement among Buyer,
Seller and the Custodian providing for the custody of records relating to the Purchased Mortgage Loans; 
 (g)
“FNMA”, the Federal National Mortgage Association; 
 (h) “FICO Score”, the credit risk scoring model
assessing likelihood of default developed by Fair, Isaac & Co., and used by major credit bureaus such Equifax, Experion and Trans Union; 
 (i) “Freddie Mac”, the entity formerly known as the Federal Home Loan Mortgage Corporation or any successor thereto. 
 (j) “Guarantor”, Alesco Financial Trust. 
 (k) “Guarantee”, the guarantee of Guarantor in the form attached hereto as Exhibit C. 
 (l) “Income”, with respect to any Mortgage Loan at any time, any principal thereof and all interest and other distributions
thereon or proceeds thereof; 
 (m) “Loan Schedule”, a schedule of Mortgage Loans identifying each Mortgage Loan:
(1) in the case of all Mortgage Loans, by Seller’s loan number, Mortgagor’s name and address (including the state and zip code) of the mortgaged property, whether such Mortgage Loan bears a fixed or adjustable interest rate, the
loan-to-value ratio, the outstanding principal amount as of a specified date, the initial interest rate borne by such Mortgage Loan, the original principal balance thereof, the current scheduled monthly payment of principal and interest, the
maturity of the related Note, the property type, the occupancy status, the appraised value, the original term to maturity and whether or not the Mortgage Loan (including the related Note) has been modified; and (2) in the case of adjustable
rate Mortgage Loans, the interest rate borne by such Mortgage Loan on the Purchase Date, the index and applicable determination date for each adjustment period, the gross margin, the payment adjustment period (in months), months to next payment
adjustment, periodic payment adjustment cap, lifetime payment adjustment cap, lifetime payment cap, interest rate adjustment, periodic interest adjustment cap and lifetime interest rate adjustment cap; 
  

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 (n) “Margin Deficit”, the meaning specified in Paragraph 4(a) hereof;

 (o) “Market Value”, with respect to any Mortgage Loans as of any date, the fair market value of such Mortgage
Loans on such date as determined by Buyer in its reasonable business judgment from time to time and at such times as it may elect in its sole discretion; provided, however, that a Market Value of zero shall be assigned to (i) any
Mortgage Loan that has been delinquent for at least sixty (60) days, (ii) any Mortgage Loan that has been subject to this Agreement for more than one hundred and eighty (180) days in aggregate, (iii) any Mortgage Loan with
respect to which there is a breach of a representation or warranty made by Seller in this Agreement or the Custodial Agreement that materially and adversely affects Buyer’s interests hereunder or (iv) any Mortgage Loan with respect to
which the related Mortgagor, by virtue of service in the United States Armed Forces (including, without limitation, the United States Military Reserve and National Guard) by such Mortgagor or by a Person on whom such Mortgagor is dependent, is
entitled by any statute, administrative ruling or court order to delay, defer or reduce any payment of principal or interest that would otherwise be due; 
 (p) “Mortgage”, the mortgage, deed of trust or other instrument creating a first lien on an estate in fee simple interest in real property securing a Note; 
 (q) “Mortgage Loan”, a first lien mortgage, adjustable rate loan on one-to-four family residential property consisting of a Note
secured by a Mortgage; 
 (r) “Mortgaged Property”, The Mortgagor’s real property securing repayment of a
related Mortgage Note, consisting of a fee simple interest in a single parcel of real property improved by a residential dwelling. 
 (s) “Mortgagor”, the obligor on a Note; 
 (t) “Note”, the Note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan; 
 (u) “Price Differential”, with respect to any
Transaction hereunder as of any date, the aggregate amount obtained by daily application of the Pricing Rate for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days during the period
commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of determination (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Transaction);

 (v) “Pricing Rate”, the per annum percentage rate for determination of the Price Differential, which rate shall
be specified in the related Request/Confirmation; 
  

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 (w) “Prime Rate”, the prime rate of U.S. money center commercial banks as
published in The Wall Street Journal; 
 (x) “Purchase Date”, the date with respect to each Transaction on
which Purchased Mortgage Loans are sold by Seller to Buyer hereunder; 
 (y) “Purchase Price”, (i) on the
Purchase Date, the price at which Purchased Mortgage Loans are sold by Seller to Buyer hereunder, and (ii) thereafter, such price decreased by the amount of any cash transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof; 

(z) “Purchased Mortgage Loans”, the Mortgage Loans sold by Seller to Buyer in a Transaction hereunder, and any Mortgage Loans
substituted therefor in accordance with Paragraph 9 hereof. The term “Purchased Mortgage Loans” with respect to any Transaction at any time also shall include Additional Purchased Mortgage Loans delivered pursuant to Paragraph 4(a);

 (aa) “Replacement Mortgage Loans”, the meaning specified in Paragraph 11(e)(ii) hereof; 
 (bb) “Repurchase Date”, the date on which Seller is to repurchase the Purchased Mortgage Loans from Buyer, including any date
determined by application of the provisions of Paragraphs 3(e) or 11 hereof; 
 (cc) “Repurchase Price”, the price
at which Purchased Mortgage Loans are to be resold by Buyer to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price
Differential as of the date of such determination, increased by any amount determined by the application of the provisions of Paragraph 11 hereof; 
 (dd) “Request/Confirmation”, the request and confirmation substantially in the form of Exhibit A hereto delivered pursuant to Paragraph 3 hereof. 
  

	3.	Initiation; Request/Confirmation; Termination; Transactions Optional 

 (a) Any agreement to enter into a Transaction shall be made in writing at the initiation of Seller. In the event that Seller desires to
enter into a Transaction hereunder, Seller shall deliver to Buyer prior to 5:00 p.m., New York City time, on the Business Day prior to the proposed Purchase Date, a Request/Confirmation signed by Seller and complete in every respect except for the
signature of an authorized representative of Buyer. Buyer shall, upon its receipt and approval thereof, promptly execute and return the signed Request/Confirmation to Seller. 
 (b) The Request/Confirmation shall describe the Purchased Mortgage Loans in a manner satisfactory to Buyer (which may be by attaching a
Loan Schedule thereto), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price, 

  

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(iii) the Repurchase Date, unless the Transaction is to be terminable on demand, (iv) the Pricing Rate or Repurchase Price applicable to the
Transaction, (v) the representations and warranties contemplated by Paragraph 10(c) hereof, and (vi) any additional terms or conditions of the Transaction mutually agreeable to Buyer and Seller. 
 (c) Each Request/Confirmation shall be binding upon the parties hereto unless written notice of objection is given by the objecting party
to the other party within one (1) Business Day after Buyer has delivered the completed Request/Confirmation to Seller. 
 (d) In the event of any conflict between the terms of a Request/Confirmation and this Agreement, such Request/Confirmation shall prevail. 
 (e) In the case of Transactions terminable upon demand, such demand shall be made by Buyer or Seller, no later than such time as is customary in accordance with market practice, by telephone or otherwise on or prior
to the Business Day on which such termination will be effective. On the date specified in such demand, or on the date fixed for termination in the case of Transactions having a fixed term, termination of the Transaction will be effected by resale by
Buyer to Seller or its agent of the Purchased Mortgage Loans and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of, Seller hereunder) against the transfer of the
Repurchase Price to an account of Buyer. 
 (f) The adjustment mechanism and the index for any adjustable rate Mortgage Loan
must be satisfactory to Buyer in its sole discretion. 
 (g) Notwithstanding any provision of this Agreement or the Custodial
Agreement to the contrary, the initiation of each Transaction is subject to the approval of Buyer in its sole discretion. Buyer may, in its sole discretion, reject any Mortgage Loan from inclusion in a Transaction hereunder for any reason.

 (h) The representations and warranties provided by Seller to Buyer pursuant to Paragraph 3(b)(v) must be satisfactory to
Buyer in its sole discretion. 
  

	4.	Margin Maintenance 

 (a) If at any
time the aggregate Market Value of all Purchased Mortgage Loans subject to all Transactions hereunder is less than the aggregate Buyer’s Margin Amount for all such Transactions (a “Margin Deficit”), then Buyer may by notice to Seller
require Seller in such Transactions, at Buyer’s option, to transfer to Buyer cash or additional Mortgage Loans reasonably acceptable to Buyer (“Additional Purchased Mortgage Loans”), so that the cash and aggregate Market Value of the
Purchased Mortgage Loans, including any such Additional Purchased Mortgage Loans, will thereupon equal or exceed such aggregate Buyer’s Margin Amount. 
 (b) If the notice to be given by Buyer to Seller under subparagraph (a) above is given at or prior to 10:00 a.m. New York city time on a Business Day, Seller shall 

  

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transfer cash or Additional Purchased Mortgage Loans to Buyer prior to the close of business in New York City on the date of such notice, and if such notice
is given after 10:00 a.m. New York City time, Seller shall transfer cash or Additional Purchased Mortgage Loans prior to the close of business in New York City on the Business Day following the date of such notice. 
 (c) Any cash transferred pursuant to this Paragraph shall be held by Buyer as though it were Additional Purchased Mortgage Loans and,
unless Buyer shall otherwise consent, shall not reduce the Repurchase Price of the related Transaction. 
  

	5.	Income Payments 

 Where a particular
Transaction’s term extends over an Income payment date on the Mortgage Loans subject to that Transaction, all payments and distributions, whether in cash or in kind, made on or with respect to the Purchased Mortgage Loans shall, unless
otherwise mutually agreed by Buyer and Seller and so long as an Event of Default on the part of Seller shall not have occurred and be continuing, be paid directly to Seller or its designee by the related Mortgagor. Buyer shall not be obligated to
take any action pursuant to the preceding sentence to the extent that such action would result in the creation of a Margin Deficit, unless prior thereto or simultaneously therewith Seller transfers to Buyer, at Buyer’s option, cash or
Additional Purchased Mortgage Loans sufficient to eliminate such Margin Deficit. 
  

	6.	Security Interest 

 Although the parties intend that
all Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be loans, Seller shall be deemed to have pledged to Buyer as security for the performance by Seller of its obligations under each such
Transaction, and shall be deemed to have granted to Buyer a security interest in, all of the Purchased Mortgage Loans with respect to all Transactions hereunder and all proceeds thereof. Seller shall pay all fees and expenses associated with
perfecting such security interest including, without limitation, the cost of filing financing statements under the Uniform Commercial Code and recording assignments of mortgage as and when required by Buyer in its sole discretion. 
  

	7.	Payment and Transfer 

 Unless otherwise mutually
agreed, all transfers of funds hereunder shall be in immediately available funds. All Mortgage Loans transferred by one party hereto to the other party shall be transferred in accordance with and subject to the Custodial Agreement by notice to the
Custodian to the effect that the Custodian is now holding for the benefit of the transferee the related documents and assignment forms delivered to it under the Custodial Agreement. 
  

	8.	Segregation of Documents Relating to Purchased Mortgage Loans 

 All documents relating to Purchased Mortgage Loans in the possession of Seller shall be segregated from other documents and securities in its possession and shall be identified as being subject to this Agreement.
Segregation may be accomplished by appropriate identification on 

  

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the books and records of the holder, including a financial or securities intermediary or a clearing corporation. All of Seller’s interest in the
Purchased Mortgage Loans shall pass to Buyer on the Purchase Date and nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Mortgage Loans or otherwise selling, transferring, pledging or
hypothecating the Purchased Mortgage Loans, but no such transaction shall relieve Buyer of its obligations to transfer Purchased Mortgage Loans to Seller pursuant to Paragraph 3, 4 or 11 hereof, or of Buyer’s obligation to credit or pay Income
to, or apply Income to the obligations of, Seller pursuant to Paragraph 5 hereof. 
  

	9.	Substitution 

 Seller may, subject to agreement
with, acceptance by and upon notice to Buyer, substitute Loans substantially similar to the Purchased Loans for any Purchased Loans. If Seller gives notice to the Buyer at or prior to 10:00 a.m. New York City time on a Business Day, Buyer may elect,
by the close of business on the Business Day notice is received or by the close of the next Business Day if notice is given after 10:00 a.m. New York City time on such day, not to accept such substitution. In the event such substitution is accepted
by Buyer, such substitution shall be made by Seller’s transfer to Buyer of such other Loans and Buyer’s transfer to Seller of such Purchased Loans , and after such substitution, the substituted Loans shall be deemed to be Purchased Loans.
In the event Buyer elects not to accept such substitution, Buyer shall offer Seller the right to terminate the Transaction. 
 In the event
Seller exercises its right to substitute or terminate under this Section 9, Seller shall be obligated to pay to Buyer, by the close of the Business Day of such substitution or termination, as the case may be, an amount equal to
(A) Buyer’s actual cost (including all fees, expenses and commissions) of (i) entering into replacement transactions; (ii) entering into or terminating hedge transactions; and/or (iii) terminating transactions or
substituting securities in like transactions with third parties in connection with or as a result of such substitution or termination, and (B) to the extent Buyer determines not to enter into replacement transactions, the loss incurred by Buyer
directly arising or resulting from such substitution or termination. The foregoing amounts shall be solely determined and calculated by Buyer in good faith. 
  

	10.	Representations, Warranties and Covenants 

 (a) Buyer and Seller each represents and warrants, and shall on and as of the Purchase Date of any Transaction be deemed to represent and warrant, to the other that: 
 (i) it is duly authorized to execute and deliver this Agreement, to enter into the Transactions contemplated hereunder and to perform its
obligations hereunder and has taken all necessary action to authorize such execution, delivery and performance; 
 (ii) it
will engage in such Transactions as principal (or, if agreed in writing in advance of any Transaction by the other party hereto, as agent for a disclosed principal); 
 (iii) the person signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed
principal); 
  

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 (iv) it has obtained all authorizations of any governmental body required in connection
with this Agreement and the Transactions hereunder and such authorizations are in full force and effect; and 
 (v) the
execution, delivery and performance of this Agreement and the Transactions hereunder will not violate any law, ordinance, charter, by-law or rule applicable to it or any agreement by which it is bound or by which any of its assets are affected.

 (b) Seller represents and warrants to Buyer, and shall on and as of the Purchase Date of any Transaction be deemed to
represent and warrant, as follows: 
 (i) The documents disclosed by Seller to Buyer pursuant to this Agreement are either
original documents or genuine and true copies thereof; 
 (ii) Seller is a separate and independent corporate entity from the
Custodian, Seller does not own a controlling interest in the Custodian either directly or through affiliates and no director or officer of Seller is also a director or officer of the Custodian; 
 (iii) None of the Purchase Price for any Mortgage Loan will be used either directly or indirectly to acquire any security, as that term is
defined in Regulation T of the Regulations of the Board of Governors of the Federal Reserve System, and Seller has not taken any action that might cause any Transaction to violate any regulation of the Federal Reserve Board; 
 (iv) Seller is a wholly owned subsidiary of Guarantor; 
 (v) Seller shall be at the time it transfers to Buyer any Mortgage Loans for any Transaction the legal and beneficial owner of such
Mortgage Loans, free of any lien, security interest, option or encumbrance; 
 (vi) Seller used no selection procedures that
identified the Mortgage Loans relating to a Transaction as being less desirable or valuable than other comparable assets in Seller’s portfolio on the related Purchase Date; 
 (vii) Within thirty (30) days following the issuance of applicable regulations pursuant to the USA Patriot Act of 2001, or any
similar federal, state or local anti-money laundering laws and regulations (collectively, the “Anti-Money Laundering Laws”), Seller shall have implemented and shall thereafter maintain a compliance program that meets the requirements of
such Anti-Money Laundering Laws; 
 (viii) There is no pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving Seller or relating to the transaction contemplated by this Agreement or the Custodial Agreement which, if adversely determined, would have a material adverse effect on Buyer; and

  

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 (ix) The Guarantee has been duly authorized, executed and delivered by Guarantor and is
in full force and effect. 
 (c) Seller makes the representations and warranties with respect to the Mortgage Loans for each
Transaction as are attached to the related Request/Confirmation. 
 (d) Seller covenants with Buyer, from and after the date
hereof, as follows: 
 (i) Seller shall immediately notify Buyer if an Event of Default shall have occurred; 
 (ii) Seller shall deliver to Buyer a current Loan Schedule with respect to all Mortgage Loans subject to this Agreement with such
frequency as Buyer may require but in no event less frequently than weekly; 
 (iii) No Mortgage Loan shall be subject to this
Agreement for more than one hundred and eighty (180) days in aggregate; 
 (iv) No more than five (5) percent of the
Mortgage Loans at any time subject to this Agreement shall have FICO Scores of less than 660; and 
 (v) Seller will not
directly or indirectly use any of the proceeds from the sale of the Mortgage Loans, or lend, contribute or otherwise make available any such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing
the activities of any person or entity that is subject to sanctions under any program administered by the Office of Foreign Assets Control of the United States Department of the Treasury, including without limitation those implemented by regulations
codified in Subtitle B, Chapter V, of Title 31, Code of Federal Regulations. 
  

	11.	Events of Default; Event of Termination 

 (a) The following events shall constitute events of default (each an “Event of Default”) hereunder with respect to Buyer or Seller, as applicable: 
 (i) Seller fails to repurchase or Buyer fails to transfer Purchased Mortgage Loans upon the applicable Repurchase Date pursuant to the
terms hereof; 
 (ii) Seller or Buyer fails to comply with Paragraph 4 hereof; 
 (iii) An Act of Insolvency occurs with respect to Seller, Buyer or Guarantor or any controlling entity thereof; 
 (iv) Any representation or warranty made by Seller or Buyer shall have been incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated; provided, however, that in the case of representations and warranties made with respect to the Purchased Mortgage Loans, such circumstance shall not constitute an Event of Default if,
after determining the Market Value of the Purchased 

  

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Mortgage Loans without taking into account those Purchased Mortgage Loans with respect to which such circumstance has occurred, no other Event of Default
shall have occurred and be continuing; 
 (v) Any covenant shall have been breached in any material respect; provided,
however, that in the case of covenants made with respect to the Purchased Mortgage Loans, such circumstance shall not constitute an Event of Default if, after determining the Market Value of the Purchased Mortgage Loans without taking into
account the Purchased Mortgage Loans with respect to which such circumstance has occurred, no other Event of Default shall have occurred and be continuing; 
 (vi) Buyer shall have determined in good faith and on a commercially reasonable basis that Seller is or will be unable to meet its commitments under this Agreement, shall have notified Seller of such determination and
Seller shall not have responded with reasonably appropriate information to the contrary to the reasonable satisfaction of Buyer within five (5) Business Days; 
 (vii) This Agreement shall for any reason cease to create a valid, first priority security interest in any of the Purchased Mortgage Loans
purported to be covered hereby; 
 (viii) A final, non-appealable judgment by any competent court in the United States of
America for the payment of money in an amount of at least $100,000 is rendered against Seller or Guarantor, and the same remains undischarged for a period of sixty (60) days during which execution of such judgment is not effectively stayed;

 (ix) Any event of default or any event which with notice, the passage of time or both shall constitute an event of default
shall occur and be continuing under any repurchase or other financing agreement for borrowed funds or indenture for borrowed funds by which Seller is bound or affected shall occur and be continuing; 
 (x) In the commercially reasonable judgment of Buyer, a material adverse change shall have occurred with respect to Seller or Guarantor;
for purposes of this Agreement, a “material adverse change” shall be defined as a reduction in shareholders equity of twenty five percent or more in a twelve month period; 
 (xi) Seller or Guarantor shall be in default of any payment obligation with respect to any normal and customary covenants under any debt
contract or agreement, any servicing agreement or any lease to which it is a party, in excess of $5,000,000, which default results in a material adverse effect on the financial condition of Seller or Guarantor (which covenants include, but are not
limited to, an Act of Insolvency of Seller or Guarantor or the failure of Seller or Guarantor to make required payments under such contract or agreement as they become due); 
 (xii) Seller or Guarantor shall fail to promptly notify Buyer of (i) the acceleration of any debt obligation or the termination of
any credit facility of Seller or Guarantor; (ii) the amount and maturity of any such debt assumed after the date hereof; 

  

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(iii) any adverse developments with respect to pending or future litigation involving Seller or Guarantor; and (iv) any other developments which
might materially and adversely affect the financial condition of Seller or Guarantor; 
 (xiii) Seller shall have failed to
comply in any material respect with its obligations under the Custodial Agreement; 
 (xiv) Guarantor shall have failed to
comply in any material respect with its obligations under the Guarantee; 
 (xv) The Guarantee shall have been determined by
Buyer in its good faith judgment to be unenforceable; or 
 (xvi) Guarantor shall have terminated the Guarantee in accordance
with its provisions and a replacement guarantor satisfactory to Buyer, in its good faith judgment, has not been appointed. 
 (b) If an Event of Default shall have occurred and be continuing, then, at the option of the nondefaulting party (which shall be deemed to be Buyer in the event of an Event of Default contemplated by clauses (xiv), (xv) or (xvi)),
exercised by written notice to the defaulting party (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency), the Repurchase Date for each Transaction hereunder shall
be deemed immediately to occur. 
 (c) In all Transactions in which the defaulting party is Seller, if Buyer is deemed to have
exercised the option referred to in subparagraph (b) of this Paragraph, (i) Seller’s obligations hereunder to repurchase all Purchased Mortgage Loans in such Transactions shall thereupon become immediately due and payable,
(ii) to the extent permitted by applicable law, the Repurchase Price with respect to each such Transaction shall be increased by the aggregate amount obtained by daily application of (x) the greater of the Pricing Rate for such Transaction
and the Prime Rate to (y) the Repurchase Price for such Transaction as of the Repurchase Date as determined pursuant to subparagraph (b) of this Paragraph (decreased as of any day by (A) any amounts retained by Buyer with respect to
such Repurchase Price pursuant to clause (iii) of this subparagraph, (B) any proceeds from the sale of Purchased Mortgage Loans pursuant to subparagraph (e)(i) of this Paragraph, and (C) any amounts credited to the account of Seller
pursuant to subparagraph (f) of this Paragraph) on a 360 day per year basis for the actual number of days during the period from and including the date of the Event of Default giving rise to such option to but excluding the date of payment of
the Repurchase Price as so increased, (iii) all Income paid after such exercise or deemed exercise shall be payable to and retained by Buyer applied to the aggregate unpaid Repurchase Prices owed by Seller, and (iv) Seller shall
immediately deliver or cause the Custodian to deliver to Buyer any documents relating to Purchased Mortgage Loans subject to such Transactions then in Seller’s possession. 
 (d) In all Transactions in which the defaulting party is Buyer, upon tender by Seller of payment of the aggregate Repurchase Prices for
all such Transactions, Buyer’s 

  

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right, title and interest in all Purchased Mortgage Loans subject to such Transactions shall be deemed transferred to Seller, and Buyer shall deliver or
cause the Custodian to deliver all documents relating to such Purchased Mortgage Loans to Seller or its designee. 
 (e) Upon
the occurrence of an Event of Default, the nondefaulting party, without prior notice to the defaulting party may: 
 (i) as to
Transactions in which the defaulting party is Seller, (A) immediately sell on a servicing released or servicing retained basis as Buyer deems desirable, in a recognized market at such price or prices as Buyer may in its sole discretion deem
satisfactory, any or all Purchased Mortgage Loans subject to such Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by Seller hereunder or (B) in its sole discretion elect, in lieu
of selling all or a portion of such Purchased Mortgage Loans, to give Seller credit for such Purchased Mortgage Loans in an amount equal to the Market Value therefor on such date against the aggregate unpaid Repurchase Prices and any other amounts
owing by Seller hereunder; and 
 (ii) as to Transactions in which the defaulting party is Buyer, (A) purchase mortgage
loans (“Replacement Mortgage Loans”) having substantially the same outstanding principal amount, maturity and interest rate as any Purchased Mortgage Loans that are not transferred by Buyer to Seller as required hereunder or (B) in
its sole discretion elect, in lieu of purchasing Replacement Mortgage Loans, to be deemed to have purchased Replacement Mortgage Loans at the price therefor on such date, calculated as the average of the prices obtained from three
(3) nationally recognized registered broker/dealers that buy and sell comparable mortgage loans in the secondary market. 
 (f) As to Transactions in which the defaulting party is Buyer, Buyer shall be liable to Seller (i) with respect to Purchased Mortgage Loans (other than Additional Purchased Mortgage Loans), for any excess of the price paid (or deemed
paid) by Seller for Replacement Mortgage Loans therefor over the Repurchase Price for such Purchased Mortgage Loans and (ii) with respect to Additional Purchased Mortgage Loans, for the price paid (or deemed paid) by Seller for the Replacement
Mortgage Loans therefor. In addition, Buyer shall be liable to Seller for interest on such remaining liability with respect to each such purchase (or deemed purchase) of Replacement Mortgage Loans from the date of such purchase (or deemed purchase)
until paid in full by Buyer. Such interest shall be at a rate equal to the greater of the Pricing Rate for such Transaction or the Prime Rate. 
 (g) For purposes of this Paragraph 11, the Repurchase Price for each Transaction hereunder in respect of which the defaulting party is Buyer shall not increase above the amount of such Repurchase Price for such
Transaction determined as of the date of the exercise or deemed exercise by Seller of its option under subparagraph (b) of this Paragraph. 
  

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 (h) The defaulting party shall be liable to the nondefaulting party for the amount of all
reasonable legal or other expenses incurred by the nondefaulting party in connection with or as a consequence of an Event of Default, together with interest thereon at a rate equal to the greater of the Pricing Rate for the relevant Transaction or
the Prime Rate. Expenses incurred in connection with an Event of Default shall include without limitation those costs and expenses incurred by the nondefaulting party as a result of the early termination of any repurchase agreement or reverse
repurchase agreement entered into by the nondefaulting party in connection with the Transaction then in default. 
 (i) The
nondefaulting party shall have, in addition to its rights hereunder, any rights otherwise available to it under any other agreement or applicable law. 
 (j) At the option of Buyer, exercised by written notice to Seller, the Repurchase Date for any or all Transactions shall be deemed to immediately occur in the event that the senior debt obligations or short-term debt
obligations of Bear Stearns & Co. Inc. shall be rated below the four highest generic grades (without regard to any pluses or minuses reflecting gradations within such generic grades) by any nationally recognized statistical rating
organization. 
 (k) The exercise by any party of remedies after the occurrence of an Event of Default shall be conducted in a
commercially reasonable manner. 
  

	12.	Servicing of the Purchased Mortgage Loans 

 (a) The parties hereto agree and acknowledge that, notwithstanding the purchase and sale of the Purchased Mortgage Loans contemplated hereby, Seller shall service or cause to be serviced the Purchased Mortgage Loans for the benefit of Buyer
and, if Buyer shall exercise its rights to sell the Purchased Mortgage Loans pursuant to this Agreement prior to the related Repurchase Date, Buyer’s assigns; provided, however, that the obligation of Seller to service or cause to
be serviced Purchased Mortgage Loans for the benefit of Buyer as aforesaid shall cease upon the payment to Buyer of the Repurchase Price therefor. 
 (b) Seller shall service (or cause to be serviced) and administer the Purchased Mortgage Loans and shall have full power and authority, acting alone, to do any and all things in connection with such servicing which
Seller may deem necessary or desirable and consistent with the terms of this Agreement, and shall retain all principal prepayments and Income received by Seller with respect to such Purchased Mortgage Loans pursuant to the terms hereof. Seller, in
administering and servicing the Purchased Mortgage Loans, shall employ procedures (including collection procedures) and exercise the same care it customarily employs and exercises in servicing and administering mortgage loans for its own account, in
accordance with accepted mortgage loan servicing practices of prudent lending institutions and giving due consideration to Buyer’s reliance on Seller. Seller will provide Buyer with monthly reports, substantially identical in form to
FNMA’s standard form of remittance report with respect to all Purchased Mortgage Loans then involved in any Transaction hereunder. Seller may contract with another entity to service the 

  

 C-13 

 
Purchased Mortgage Loans so long as such entity is reasonably acceptable to Buyer. If Seller causes another entity to service the Purchased Mortgage Loans as
aforesaid, Seller shall nonetheless remain liable to Buyer for such servicing as though the Purchased Mortgage Loans were serviced by Seller directly. 
 (c) Buyer may, in its sole discretion if an Event of Default shall have occurred and be continuing, without payment of any termination fee or any other amount to Seller, (i) sell the Mortgage Loans on a servicing
released basis or (ii) terminate Seller as the servicer of the Purchased Mortgage Loans with or without cause. 
  

	13.	Single Agreement 

 Buyer and Seller acknowledge
that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in
consideration of each other. Accordingly, each of Buyer and Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default
by it in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions
hereunder and (iii) that payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other
Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted. 
  

	14.	Notices and Other Communications 

 Except as
otherwise expressly provided herein, all such notices or communications shall be in writing (including, without limitation, telegraphic, facsimile or telex communication) or confirmed in writing and such notices and other communications shall, when
mailed, telegraphed, communicated by facsimile transmission or telexed, be effective when received at the address for notices for the party to whom such notice or communications is to be given as follows: 
 if to Seller: 
 Alesco Loan Holdings Trust

 1818 Market Street, 28th Floor 
 Philadelphia, Pennsylvania 19103

 Attention: John Longino 
 Telephone: (215) 861-7717 
 Telecopy: (215) 861-7878 
  

 C-14 

 if to Buyer: 
 Bear Stearns Mortgage Capital Corporation 
 383 Madison Avenue 
 New York, New York 10179 
 Attention: Eileen
Albus 
 Telephone: (212) 272-7502 
 Telecopy: (212) 272-2053 
 Notwithstanding the foregoing, however, that a facsimile transmission shall be deemed to be received when
transmitted so long as the transmitting machine has provided an electronic confirmation of such transmission, and provided further, however, that all financial statements delivered shall be hand-delivered or sent by first-class mail.
Either party may revise any information relating to it by notice in writing to the other party, which notice shall be effective on the third business day following receipt thereof. 
  

	15.	Payment of Expenses 

 Seller shall pay on demand all
fees and expenses (including, without limitation, the fees and expenses for legal services of any kind whatsoever) incurred by Buyer or the Custodian in connection with this Agreement and the Custodial Agreement and the transactions contemplated
hereby and thereby, whether or not any Transactions are entered into hereunder, including, by way of illustration and not by way of limitation, the fees and expenses incurred in connection with (i) the preparation, reproduction and distribution
of this Agreement and the Custodial Agreement and any opinions of counsel, certificates of officers or other documents contemplated by the aforementioned agreements and (ii) any Transaction under this Agreement; provided, however,
that Seller shall not be required to pay the fees and expenses of Buyer incurred as a result of Buyer’s default under this Agreement. The obligation of Seller to pay such fees and expenses incurred prior to or in connection with the termination
of this Agreement shall survive the termination of this Agreement. 
  

	16.	Opinions of Counsel 

 Seller shall, no later than
ten (10) Business Days after the Purchase Date of the first Transaction hereunder and, upon the request of Buyer, on the Purchase Date of any subsequent Transaction, cause to be delivered to Buyer, with reliance thereon permitted as to any
person or entity that purchases the Mortgage Loans from Buyer in a repurchase transaction, a favorable opinion of counsel with respect to the matters set forth in Exhibit B hereto, in form and substance acceptable to Buyer and its counsel.

  

	17.	Further Assurances; Additional Information 

 (a) Seller shall promptly provide such further assurances or agreements as Buyer may request in order to effect the purposes of this Agreement. 
  

 C-15 

 (b) At any reasonable time, Seller shall permit Buyer, its agents or attorneys, to
inspect and copy any and all documents and data in its possession pertaining to each Purchased Mortgage Loan that is the subject of such Transaction. Such inspection shall occur upon the request of Buyer at a mutually agreeable location during
regular business hours and on a date not more than two (2) Business Days after the date of such request. 
 (c) Seller
agrees to provide Buyer or its agents, from time to time, with such information concerning Seller of a financial or operational nature as Buyer may reasonably request. 
 (d) Seller shall provide Buyer or its agents, with copies of all filings made by or on behalf of Seller or any entity that controls
Seller, with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, promptly upon making such filings. 
  

	18.	Buyer as Attorney-in-Fact 

 Buyer is hereby
appointed the attorney-in-fact of Seller for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments that Buyer may deem necessary or advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, Buyer shall have the right and power during the occurrence and continuation of any Event of Default to receive, endorse
and collect all checks made payable to the order of Seller representing any payment on account of the principal of or interest on any of the Purchased Mortgage Loans and to give full discharge for the same. 
  

	19.	Wire Instructions 

 (a) Any amounts
to be transferred by Buyer to Seller hereunder shall be sent by wire transfer in immediately available funds to the account of Seller at: 
 Bank: Commerce Bank, N.A. 
 Account Name: Alesco Financial Trust 
 Acct. No.: 367 564 390 
 ABA No.: 036 001 808 
 (b) Any amounts to be transferred by Seller to Buyer hereunder shall
be sent by wire transfer in immediately available funds to the account of Buyer at: 
 Bank: Bank One 
 Acct.: Bear Stearns MBS 
 Acct. No.: 5801230 
 ABA No.: 071-000-013 
 Attn.: Eileen Albus 
 Reference: Alesco 
  

 C-16 

 (c) Amounts received after 3:00 p.m., New York City time, on any Business Day shall be
deemed to have been paid and received on the next succeeding Business Day. 
  

	20.	Entire Agreement; Severability 

 This Agreement
shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement
herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. 
  

	21.	Non-assignability; Termination 

 (a)
The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by either party without the prior written consent of the other party. Subject to the foregoing, this Agreement and any Transactions shall
be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. 
 (b) This
Agreement and all Transactions outstanding hereunder shall terminate automatically without any requirement for notice on the date occurring three hundred and sixty (360) days after the date as of which this Agreement is entered into; provided,
however, that this Agreement and any Transaction outstanding hereunder may be extended by mutual agreement of Buyer and Seller; and provided further, however, that no such party shall be obligated to agree to such an extension. 
  

	22.	Counterparts 

 This Agreement may be executed in any
number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. 
  

	23.	Governing Law 

 This Agreement shall be governed by
the laws of the State of New York. 
  

	24.	No Waivers, Etc. 

 No express or implied waiver of
any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or
waiver of any provision of this Agreement and no consent by any party to a departure herefrom shall be effective unless and until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing,
the failure to give a notice pursuant to subparagraph 4(a) hereof will not constitute a waiver of any right to do so at a later date. 
  

 C-17 

	25.	Use of Employee Plan Assets 

 (a) If
assets of an employee benefit plan subject to any provision of the Employee Retirement Income Security Act of 1974 (“ERISA”) are intended to be used by either party hereto (the “Plan Party”) in a Transaction, the Plan Party shall
so notify the other party prior to the Transaction. The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may
proceed in reliance thereon but shall not be required so to proceed. 
 (b) Subject to the last sentence of subparagraph
(a) of this Paragraph, any such Transaction shall proceed only if Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its
financial condition. 
 (c) By entering into a Transaction pursuant to this Paragraph, Seller shall be deemed (i) to
represent to Buyer that since the date of Seller’s latest such financial statements, there has been no material adverse change in Seller’s financial condition which Seller has not disclosed to Buyer, and (ii) to agree to provide Buyer
with future audited and unaudited statements of its financial condition as they are issued, so long as it is a Seller in any outstanding Transaction involving a Plan Party. 
  

	26.	Intent 

 (a) The parties intend and
acknowledge that each Transaction is a “repurchase agreement” as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Mortgage Loans subject to such Transaction or the
term of such Transaction would render such definition inapplicable), and a “securities contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended. 
 (b) It is understood that either party’s right to liquidate Mortgage Loans delivered to it in connection with Transactions hereunder
or to exercise any other remedies pursuant to Paragraph 11 hereof, is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the United States Code, as amended. 
  

	27.	Disclosure Relating to Certain Federal Protections 

 The parties acknowledge that they have been advised that: 
 (a) in the case of Transactions in which one of the
parties is a broker or dealer registered with the Securities and Exchange Commission (“SEC”) under Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection Corporation has taken the
position that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any Transaction hereunder; 
  

 C-18 

 (b) in the case of Transactions in which one of the parties is a government securities
broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and 
 (c) in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant
to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable. 

 

 C-19 

							
	BEAR STEARNS MORTGAGE CAPITAL CORPORATION	 	ALESCO LOAN HOLDINGS TRUST
				
	By:	 	 /s/ Paul M. Friedman
	 	By:	 	 /s/ John J. Longino

				
	Title:	 	SENIOR VICE PRESIDENT	 	Title:	 	CFO AND TREASURER
				
	Date:	 	February 28, 2006	 	Date:	 	February 28, 2006

  

 C-20Purchase Agreement

 Exhibit 10.31 
 370,000 Shares 
 Transmeridian Exploration Incorporated 
 15% Senior Redeemable Convertible Preferred Stock 
 Purchase Agreement 
 November 28, 2006 
 JEFFERIES & COMPANY, INC. 
 520 Madison Avenue 
 New York, New York 10022 
 Ladies and Gentlemen: 
 Transmeridian Exploration Incorporated, a Delaware corporation (the “Company”), proposes to issue and sell to you, as the initial
purchaser (the “Initial Purchaser”) 370,000 shares (the “Securities”) of its 15% senior redeemable convertible
preferred stock, par value $0.0006 per share. The Securities will be in certain circumstances convertible into shares (the “Underlying Securities”) of common stock of the Company, par
value $0.0006 per share (the “Common Stock”). 
 The Securities and the
Underlying Securities will be offered without being registered under the Securities Act of 1933, as amended (together with the rules and regulations promulgated there under, the “Securities
Act”), only to “qualified institutional buyers” (as defined in the Securities Act) in compliance with the exemption from registration provided by Rule 144A under the Securities Act. 
 The Initial Purchaser and its direct and indirect transferees will be entitled to the benefits of a Registration Rights Agreement dated as of the Closing
Date (as defined below) among the Company and the Initial Purchaser (the “Registration Rights Agreement”). 
 In connection with the sale of the Securities, the Company has prepared a preliminary offering memorandum (including the documents incorporated by
reference therein, the “Preliminary Memorandum”) and will prepare a final offering memorandum (including the documents incorporated by reference therein, the
“Final Memorandum” and, together with the Preliminary Memorandum, the “Offering Memorandum”) for the information of
the Initial Purchaser and for delivery to prospective purchasers of the Securities. The time when sales of Securities are first made or confirmed by the Initial Purchaser to qualified institutional buyers is referred to as the
“Time of Sale,” and the Preliminary Memorandum, together with the other information referenced on Schedule I hereto, is referred to as the “Time of Sale
Information.” 
 The Company hereby agrees with the Initial Purchaser as follows: 

 1. Agreements to Sell and Purchase. The Company agrees to issue and sell the Securities to the
Initial Purchaser as hereinafter provided, and the Initial Purchaser, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees to purchase, from the Company the Securities at a
purchase price of $94.50 per share (the “Purchase Price”). 
 The Company
acknowledges and agrees that the Initial Purchaser is acting solely in the capacity of an arm’s length contractual counterparty to the Company with respect to the offering of Securities contemplated hereby (including in connection with
determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company or any other person. Additionally, the Initial Purchaser is not advising the Company or any other person as to any legal, tax,
investment, accounting or regulatory matters in any jurisdiction. The Company shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions
contemplated hereby, and the Initial Purchaser shall have no responsibility or liability to the Company with respect thereto. Any review by the Initial Purchaser of the Company, the transactions contemplated hereby or other matters relating to such
transactions will be performed solely for the benefit of the Initial Purchaser and shall not be on behalf of the Company. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against the Initial
Purchaser with respect to any breach or alleged breach of any fiduciary or similar duty in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions. 
 2. Terms of the Offering. The Company understands that the Initial Purchaser intends (i) to offer and sell the Securities privately pursuant
to Rule 144A under the Securities Act as soon after this Agreement has become effective as in the judgment of the Initial Purchaser is advisable and (ii) initially to offer and sell the Securities upon the terms set forth in the Final
Memorandum. 
 The Company confirms that it has authorized the Initial Purchaser, subject to the restrictions set forth below, to distribute
copies of the Offering Memorandum in connection with the offering of the Securities. The Initial Purchaser hereby makes to the Company the following representations, warranties and agreements: 
 (i) it is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act; 
 (ii) offers and sales of the Securities will be made only by it or its affiliates thereof qualified to do so in the jurisdictions in which
such offers or sales are made; and 
 (iii) (A) it has not solicited offers for, or offered or sold, and will not solicit
offers for, or offer to sell, the Securities by means of any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act (“Regulation
D”)) or in any manner involving a public offering within the meaning of Section 4(2) of 

  

 2 

 
the Securities Act and (B) it has solicited and will solicit offers for the Securities only from, and has offered or sold and will offer, sell or
deliver the Securities only to persons whom it reasonably believes to be “qualified institutional buyers” within the meaning of Rule 144A under the Securities Act that in purchasing the Securities are deemed to have represented and agreed
as provided in the Offering Memorandum. 
 With respect to offers and sales of the Securities to “qualified institutional buyers” within the
meaning of Rule 144A, as described in clause (iii)(B) above, the Initial Purchaser hereby represents and agrees with the Company that prior to or contemporaneously with the purchase of the Securities, the Initial Purchaser will take reasonable steps
to inform, and cause each of its affiliates to take reasonable steps to inform, persons acquiring Securities from the Initial Purchaser or affiliate, as the case may be, that the Securities (A) are being sold to them in reliance on Rule 144A
under the Securities Act, (B) have not been and, except as described in the Offering Memorandum, will not be registered under the Securities Act, and (C) may not be offered, sold or otherwise transferred except as described in the Offering
Memorandum. 
 3. Payment for Securities. Payment for the Securities shall be made to the Company in Federal or other funds
immediately available in New York City against delivery of such Securities for the account of the Initial Purchaser at 10:00 a.m., New York City time, on December1, 2006 or at such other time on the same or such other date, not later than
December 5, 2006, as shall be designated in writing by you. The time and date of such payment are hereinafter referred to as the “Closing Date.” 
 The Securities to be purchased by the Initial Purchaser hereunder will be represented by one or more definitive global certificates in book-entry form
which will be deposited by or on behalf of the Company with The Depository Trust Company (“DTC”) or its designated custodian. The Company will deliver the Securities on the Closing
Date to Jefferies & Company, Inc., against payment by Jefferies & Company, Inc. of the purchase price therefor by wire transfer to the account of the Company of same day funds, by causing DTC to credit the Securities to the account
of Jefferies & Company, Inc. at DTC. 
 4. Representations and Warranties. The Company represents and warrants to the Initial
Purchaser that: 
 (a) the Preliminary Memorandum did not, as of its date, the Time of Sale Information, did not, as of the Time of Sale and,
will not, as of the Closing Date, and the Final Memorandum did not, as of its date, and will not, as of the Closing Date, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information
furnished to the Company in writing by the Initial Purchaser expressly for use therein; 
  

 3 

 (b) the documents incorporated by reference in the Time of Sale Information and the Final Memorandum,
when they were filed with the Securities and Exchange Commission (the “Commission”), conformed in all material respects to the requirements of the Securities Exchange Act of 1934, as amended and the applicable rules and regulations
of the Commission thereunder (collectively the “Exchange Act”), and none of such documents contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Final Memorandum, when such documents are filed with the Commission, will conform in all material respects to
the requirements of the Exchange Act, and will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not
misleading; 
 (c) the financial statements, and the related notes thereto, of the Company included or incorporated by reference in the Time
of Sale Information and the Final Memorandum present fairly, in all material respects, the consolidated financial position of the Company and its consolidated subsidiaries as of the dates indicated and the results of their operations and the changes
in their consolidated cash flows for the periods specified; and said financial statements have been prepared in conformity with United States generally accepted accounting principles and practices applied on a consistent basis, except as described
in the notes to such financial statements; and the other financial and statistical information and any other financial data set forth in the Time of Sale Information and the Final Memorandum present fairly, in all material respects, the information
purported to be shown thereby at the respective dates or for the respective periods to which they apply and, to the extent that such information is set forth in or has been derived from the financial statements and accounting books and records of
the Company, have been prepared on a basis consistent with such financial statements and the books and records of the Company; 
 (d) none of
the Company or any of its subsidiaries has sustained since the date of the latest audited financial statements included in the Time of Sale Information any material loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Time of Sale Information; and, since the respective dates as of which
information is given in the Time of Sale Information, there has not been any material change in the capital stock, shares or options issued pursuant to equity incentive plans or purchase plans approved by the Company’s Board of Directors and
repurchases of shares or options pursuant to repurchase plans already approved by the Company’s Board of Directors, material increase in long-term debt or any material decreases in consolidated net current assets or stockholders’ equity of
the Company, or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, stockholders’ equity, business condition (financial or
otherwise), properties or results of operations of the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”), subject, with respect to a development involving a prospective material adverse change, to
the knowledge of the Company’s management; 
  

 4 

 (e) The Company and each of its subsidiaries have good and indefeasible title with respect to all of
their respective real property, and have good and marketable title to all of their respective properties and assets (other than real property), reflected as owned in the financial statements included in the Time of Sale Information and the Final
Memorandum, subject in each case to liens in favor of holders of the Company’s debt securities or other lenders or as set forth in the Time of Sale Information and the Final Memorandum. The Company and each of its respective subsidiaries holds
its leased properties under valid and binding leases, with such exceptions as are not materially significant in relation to the business of the Company and its respective subsidiaries taken as a whole. The description of the rights, licenses and
agreements of the Company and its subsidiaries related to its Kazakhstan operations contained in the Time of Sale Information and the Final Memorandum accurately describes such operations rights, licenses and agreements in all material respects;

 (f) the Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, with
the corporate power and authority to own its own properties and conduct its business as described in the Time of Sale Information and the Final Memorandum, and is qualified to do business as a foreign corporation in each jurisdiction in which such
qualification is required, except where failure to so qualify would not reasonably be expected to have a Material Adverse Effect. Except as set forth in the Time of Sale Information and the Final Memorandum, each subsidiary is a direct or indirect
wholly-owned subsidiary of the Company. Each subsidiary is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, with the corporate power and authority to own its own properties and
conduct its business as described in the Time of Sale Information and the Final Memorandum, and is qualified to do business as a foreign entity in each jurisdiction in which such qualification is required, except where failure to so qualify would
not reasonably be expected to have a Material Adverse Effect; 
 (g) this Agreement has been duly authorized, executed and delivered by the
Company; 
 (h) the Company had, at the date indicated in the Time of Sale Information and the Final Memorandum, a duly authorized, issued
and outstanding capitalization as set forth in the Time of Sale Information and the Final Memorandum under the caption “Capitalization”; all of the issued and outstanding shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable, have been issued in compliance with all federal and state securities laws, were not issued in violation of any preemptive rights or other rights to subscribe for or purchase securities and
conform in all material respects to the description thereof contained in the Time of Sale Information and the Final Memorandum; there are no outstanding options to purchase, or any rights or warrants to subscribe for, or any securities or
obligations convertible into, or any contracts or commitments to issue or sell, any shares of Common Stock, any shares of capital stock of any subsidiary, or any 

  

 5 

 
such warrants, convertible securities or obligations, except as set forth in the Time of Sale Information and the Final Memorandum and except for options
granted under, or contracts or commitments pursuant to, the Company’s previous or currently existing stock option and other similar officer, director or employee benefit plans; the description of the Company’s stock, stock bonus and other
stock plans or arrangements and the options or other rights granted and exercised thereunder set forth in the Time of Sale Information and the Final Memorandum accurately presents in all material respects all material information with respect to
such plans, arrangements, options and rights; all the issued and outstanding shares of capital stock or other equity interests of each subsidiary of the Company have been duly authorized and validly issued, are fully paid and nonassessable, are
owned by the Company or a direct or indirect subsidiary of the Company, have been issued in compliance with applicable federal and state securities laws and were not issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and there are no outstanding options to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of capital stock or other equity interests of any subsidiary of the Company; 
 (i) none of the transactions
contemplated by this Agreement (including, without limitation, the use of the proceeds from the sale of the Securities) will violate or result in a violation of Section 7 of the Exchange Act, or any regulation promulgated thereunder, including,
without limitation, Regulations T, U, and X of the Board of Governors of the Federal Reserve System; 
 (j) prior to the date hereof, neither
the Company nor any of its affiliates has taken any action which is designed to or which has constituted or which might have been expected to cause or result in stabilization or manipulation of the price of any security of the Company in connection
with the offering of the Securities; 
 (k) the Securities have been duly authorized by the Company, and, when issued and delivered as
provided in this Agreement will be duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company; and the Securities will conform, in all material respects, to the descriptions thereof in
the Time of Sale Information and the Final Memorandum; 
 (l) upon issuance and delivery of the Securities in accordance with the Agreement,
the Securities will be convertible at the option of the holder thereof into shares of the Underlying Securities in accordance with the terms of the Securities; the Underlying Securities reserved for issuance upon conversion of the Securities have
been duly authorized and reserved and, when issued upon conversion of the Securities in accordance with the terms of the Securities, will be validly issued, fully paid and non assessable, and the issuance of the Underlying Securities will not be
subject to any preemptive or similar rights; 
 (m) the Registration Rights Agreement has been duly authorized by the Company and, when duly
executed and delivered by the Company, shall constitute the valid and legally binding obligation of the Company, enforceable against the Company in 

  

 6 

 
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance, moratorium, reorganization and
laws of general applicability relating to or affecting creditors’ rights and general equity principles (regardless of whether enforceability is considered in a proceeding in equity or at law); and except that rights to indemnification
thereunder may be limited by federal or state securities laws or public policy relating thereto; and the Registration Rights Agreement will conform, in all material respects, to the description thereof in the Time of Sale Information and the Final
Memorandum; 
 (n) except as disclosed in the Time of Sale Information and the Final Memorandum, neither the Company nor any of its
respective subsidiaries is in violation or default of any provision of its certificate of incorporation, bylaws or equivalent organizational documents, or in breach of or in default with respect to any provision of any agreement, judgment, decree,
order, lease, franchise, license, permit or other instrument to which it is a party or by which it or any of its properties are bound which would reasonably be expected to have a Material Adverse Effect, and there does not exist any state of facts
which, with notice or lapse of time or both, would constitute an event of default on the part of the Company or any of its respective subsidiaries as defined in such documents and which would reasonably be expected to have a Material Adverse Effect;

 (o) the statements set forth in the Time of Sale Information and the Final Memorandum under the captions “Description of Capital
Stock” and “U.S. Federal Income Tax Considerations”, insofar as they constitute summaries of the legal matters, documents or proceedings referred to therein, fairly present, in all material respects, the information called for with
respect to such legal matters, documents or proceedings; 
 (p) except as disclosed in the Time of Sale Information and the Final Memorandum,
neither the Company nor any of its subsidiaries has been advised, nor has reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting its
business, including, without limitation, all applicable local, state and federal environmental laws and regulations, except where failure to be so in compliance would not reasonably be expected to have a Material Adverse Effect; 
 (q) neither the Company nor any affiliate (as defined in Rule 501(b) of Regulation D) of the Company has directly, or through any agent, sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) which is or will be integrated with the sale of the Securities in a manner that would require the registration under the
Securities Act of the offering contemplated by the Time of Sale Information and the Final Memorandum; 
 (r) none of the Company, any
affiliate of the Company or any person acting on its or their behalf (other than the Initial Purchaser for whom we make no representation) has offered or sold the Securities by means of any general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act; 
  

 7 

 (s) the Securities satisfy the requirements set forth in Rule 144A(d)(3) under the Securities Act;

 (t) the issue and sale of the Securities, the issuance by the Company of the Underlying Securities upon conversion of the Securities and
the compliance by the Company with all of the provisions of the Securities, the Registration Rights Agreement and this Agreement and the consummation of the transactions herein and therein contemplated (A) will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, lease, license, permit or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject and will not result in the creation of any lien, charge, security interest or
encumbrance upon any assets of the Company pursuant to the terms or provisions thereof, except such conflict, breach or violation as would not have a Material Adverse Effect, (B) will not result in any violation of the provisions of the
Certificate of Incorporation or bylaws of the Company or equivalent organizational documents of any of the Company’s subsidiaries, and (C) will not result in the violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, except such violations as would not have a Material Adverse Effect; and except as disclosed in the Time of Sale Information and
the Final Memorandum, no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the consummation by the Company of the
transactions contemplated by this Agreement, except for the filing and effectiveness of a registration statement by the Company with the Commission pursuant to the Securities Act and the Registration Rights Agreement, and such consents, approvals,
authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Initial Purchaser in the manner contemplated by this Agreement, the
Time of Sale Information and the Final Memorandum and except for such consents the failure to obtain would not have a Material Adverse Effect. Upon the execution and delivery of this Agreement, and assuming the valid execution thereof by the Initial
Purchaser, this Agreement will constitute a valid and binding obligation of the Company enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or
at law) and except as the indemnification agreements of the Company in Section 7(a) hereof may be limited by federal or state securities laws or the public policy underlying such laws. 
 (u) the Company is not and, after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in
the Time of Sale Information and the Final Memorandum, will not be required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended (the “Investment Company
Act”); 
  

 8 

 (v) UHY Mann Frankfort Stein & Lipp CPAs, LLP and the firm of John A. Braden & Company,
P.C., who have certified the audited consolidated financial statements of the Company and its subsidiaries, are independent public accountants as required under the Securities Act and the rules and regulations of the Commission thereunder;

 (w) when the Securities are issued and delivered pursuant to this Agreement, no Securities will be of the same class (within the meaning
of Rule 144A under the Securities Act) as securities which are listed on a national securities exchange registered under Section 6 of the Exchange Act, or quoted in a U.S. automated inter-dealer quotation system; 
 (x) the Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
and is eligible to register resales of the Securities and the Underlying Securities on a registration statement on Form S-3 under the Act. There exist no facts or circumstances (including without limitation any required approvals or waivers or any
circumstances that may delay or prevent the obtaining of accountant’s consents) that reasonably would be expected to prohibit or delay the preparation and filing of a registration statement on Form S-3 that will be available to register resales
of the Securities or the Underlying Securities under the Act; 
 (y) the Company and its subsidiaries own or possess adequate licenses or
other rights to use all trademarks, service marks, trade names and know-how necessary to conduct the businesses now or proposed to be operated by them as described in the Time of Sale Information and the Final Memorandum, and neither the Company nor
any of its subsidiaries has received any notice of conflict with (or knows of any such conflict with) asserted rights of others with respect to any trademarks, service marks, trade names or know-how which, if such assertion of conflict were
sustained, would individually or in the aggregate have a Material Adverse Effect; 
 (z) the Company and its subsidiaries have all
franchises, licenses, certificates and other authorizations from such federal, state or local government or governmental agencies, departments or bodies that are currently required for the operation of the business of the Company and its
subsidiaries as currently conducted, except where the failure to possess currently such franchises, licenses, certificates and other authorizations would not reasonably be expected to have a Material Adverse Effect. The Company and its subsidiaries
have not received any notice of proceedings relating to the revocation or modification of any such franchise, license, certificate or other authorization which, if the subject of an unfavorable decision, ruling or finding, would reasonably be
expected to have a Material Adverse Effect; 
 (aa) the Company and its subsidiaries have filed all necessary federal, state and foreign
income and franchise tax returns and has paid or accrued all taxes shown as due thereon, except where the failure to so file or to so pay or accrue would not reasonably be expected to have a Material Adverse Effect, and neither the Company nor any
of its subsidiaries has knowledge of a tax deficiency which has been or might be asserted or threatened against it which would reasonably be expected to have a Material Adverse Effect. 
  

 9 

 (bb) except as otherwise disclosed in the Time of Sale Information and the Final Memorandum,
(i) there are no legal or governmental actions, suits, proceedings, investigations or inquiries pending and (ii) to the Company’s knowledge, there are no legal or governmental actions, suits or proceedings threatened, to which the
Company or any of its subsidiaries is or may be a party or of which property owned or leased by the Company or any of its subsidiaries is or may be the subject, or related to environmental or discrimination matters, which actions, suits or
proceedings, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect; and no labor disturbance by the employees of the Company exists or, to the Company’s knowledge, is imminent which would reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any of its respective subsidiaries is party to or subject to the provisions of any injunction, judgment, decree or order of any court, regulatory body, administrative agency or
other governmental body which would reasonably be expected to have a Material Adverse Effect. 
 (cc) the Company and its subsidiaries
maintain insurance of the types and in the amounts that the Company reasonably believes are adequate for their respective businesses, including, but not limited to, insurance covering commercial liability, directors’ and officers’
liability and all real and personal property owned or leased by the Company and its subsidiaries against damage and destruction, all of which insurance is in full force and effect; 
 (dd) neither the Company nor any of its subsidiaries has any liability for any prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing, 401(k) plan or other plan which is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), to which the Company or any of its
subsidiaries makes or ever has made a contribution and in which any employee of the Company or any of its subsidiaries is or has ever been a participant, except for such liabilities which would not individually or in the aggregate have a Material
Adverse Effect; and with respect to such plans, the Company and each of its subsidiaries are in compliance in all material respects with all applicable provisions of ERISA; 
 (ee) the Company maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) that
complies with the requirements of the Exchange Act and has been designed by the Company’s principal executive officer and principal financial officer, or under their supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and except as disclosed in the Time of Sale Information and the Final Memorandum, the Company’s
internal control over financial reporting is effective, and the Company is not aware of any material weaknesses in its internal control over financial reporting; 
  

 10 

 (ff) since the date of the latest audited financial statements included in the Time of Sale Information,
there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; 
 (gg) the Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) of the Exchange Act) that comply with the
requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that material information relating to the Company and its subsidiaries is made known to the Company’s principal executive officer and
principal financial executive officer by others within those entities; and except as disclosed in the Time of Sale Information and the Final Memorandum, such disclosure controls and procedures are effective; 
 (hh) to the best of the Company’s knowledge, the statistical and market related data included in the Time of Sale Information and the Final
Memorandum are based on or derived from sources which are reliable and accurate in all material respects; 
 (ii) except as otherwise
disclosed in the Time of Sale Information and the Final Memorandum and except for the indemnity agreements by and between the Company and each of the officers and directors of the Company, the Company and its subsidiaries have no material contracts.
Any contracts described in the Time of Sale Information and the Final Memorandum that are material to the Company and its subsidiaries are in full force and effect on the date hereof; and neither the Company nor any of its subsidiaries is, nor, to
the Company’s knowledge, is any other party in breach of or in default under any of such contracts which would reasonably be expected to have a Material Adverse Effect; 
 (jj) the Company covenants that it will not knowingly or recklessly, and that it will use its reasonable best efforts to ensure that each director,
officer, agent or employee of the Company will not knowingly or recklessly, use any part of the net proceeds from the sale of the Securities for any payments to: (a) any individual or entity listed on the Specially Designated Nationals and
Blocked Persons List administered by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and/or any other similar lists administered by OFAC pursuant to any authorizing statute,
Executive Order or regulation; (b) the government of any country subject to an OFAC Sanctions Program; (c) any individual or entity included on any list of terrorists or terrorist organizations maintained by the United Nations, the
European Union and or the countries in which the Company operates; or (d) any governmental official or employee, political party, official of a political party, candidate for political office, anyone else acting in an official capacity, or any
agent of any such individual or entity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the FCPA (as defined below); 
 (kk) no transaction has occurred between or among the Company, any of its subsidiaries and their affiliates, officers or directors or any affiliate or affiliates of any such officer or director that is required to
have been described under applicable securities laws in the Company’s Exchange Act filings and is not so described in such filings; 
  

 11 

 (ll) there is no transaction, arrangement or other relationship between the Company and an unconsolidated
or other off-balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings and is not so disclosed or that otherwise would reasonably be expected to have a Material Adverse Effect; 
 (mm) the Company is in compliance in all material respects with all requirements of the American Stock Exchange, and has not received any notice from the
American Stock Exchange that the listing of the Common Stock is in any way threatened. The Company shall comply with all requirements of the American Stock Exchange with respect to the issuance of the Securities. The Company will use its reasonable
best efforts to (i) permit the Securities to be designated PORTAL securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. relating to trading in the Private Offerings, Resales and
Trading through Automated Linkages market and (ii) permit the Securities to be eligible for clearance and settlement through DTC; 
 (nn) the Company is not obligated to pay any brokers, finders or financial advisory fees or commissions to any underwriter, broker, agent or other representative in connection with the transactions contemplated hereby. The Company will
indemnify and hold harmless the Initial Purchaser from and against any claim by any such underwriter, broker, agent or other representative alleging that the Initial Purchaser is obligated to pay any such brokers, finders or financial advisory fees
or commissions in connection with the transactions contemplated hereby; and 
 (oo) to the best of the Company’s knowledge, neither the
Company nor any director, officer, agent or employee of the Company has made, directly or indirectly, any payment or promise to pay, or gift or promise to give, or authorized such a promise or gift, of any money or anything of value, directly or
indirectly, to (i) any foreign official (as such term is defined in the United States Foreign Corrupt Practices Act of 1977 (as amended, the “FCPA”)) for the purpose of influencing any official act or decision of such
official or inducing him or her to use his or her influence to affect any act or decision of a governmental authority, or (ii) any foreign political party or official thereof or candidate for foreign political office for the purpose of
influencing any official act or decision of such party, official or candidate or inducing such party, official or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority, in the case of both
(i) and (ii) above, in order to assist the Company to obtain or retain business for, or direct business, and under circumstances which would subject the Company to liability under the FCPA or any corresponding foreign laws. To the best of
the Company’s knowledge, the Company has not made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment of funds or received or retained any funds in violation of any law, rule or regulation. 
  

 12 

 5. Covenants of the Company. The Company covenants and agrees with the Initial Purchaser as
follows: 
 (a) the Company will deliver to the Initial Purchaser as many copies of the Preliminary Memorandum and the Final Memorandum
(including all amendments and supplements thereto) as the Initial Purchaser may reasonably request; 
 (b) before distributing any amendment
or supplement to the Time of Sale Information or the Final Memorandum, the Company will furnish to the Initial Purchaser a copy of the proposed amendment or supplement for review and not distribute any such proposed amendment or supplement to which
the Initial Purchaser may reasonably disapprove after reasonable notice thereof; 
 (c) if, at any time prior to the completion of the
initial placement of the Securities by the Initial Purchaser, any event shall occur as a result of which it is necessary in the opinion of the Initial Purchaser to amend or supplement the Time of Sale Information or the Final Memorandum in order
that the Time of Sale Information or the Final Memorandum will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances when the Time of
Sale Information or the Final Memorandum is delivered to a purchaser, not misleading, or if it is necessary to amend or supplement the Time of Sale Information or the Final Memorandum to comply with applicable law, the Company will forthwith prepare
and furnish, at the expense of the Company, to the Initial Purchaser and to the dealers (whose names and addresses the Initial Purchaser will furnish to the Company) to which Securities may have been sold by the Initial Purchaser on behalf of the
Initial Purchaser and to any other dealers upon request, such amendments or supplements to the Time of Sale Information or the Final Memorandum as may be necessary to correct such untrue statement or omission or so that the statements in the Time of
Sale Information or the Final Memorandum as so amended or supplemented will comply with applicable law; 
 (d) the Company will endeavor to
qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Initial Purchaser shall reasonably request and to continue such qualification in effect so long as reasonably required for distribution of
the Securities and to pay all fees and expenses (including fees and disbursements of counsel to the Initial Purchaser) reasonably incurred in connection with such qualification and in connection with the determination of the eligibility of the
Securities for investment under the laws of such jurisdictions as the Initial Purchaser may designate; provided, however, that the Company shall not be required to file a general consent to service of process in any jurisdiction or to qualify
as a foreign corporation in any jurisdiction in which it is not so qualified; 
 (e) without the prior written consent of the Initial
Purchaser, the Company will not, during the period ending 90 days after the date of the Final Memorandum (the “Lock-up Period”), (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or 

  

 13 

 
indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock or (iii) file with the Commission a registration statement under the Securities Act relating to any additional
shares of Common Stock or securities convertible into, or exchangeable for, any shares of Common Stock, or publicly disclose the intention to effect any transaction described in clause (i), (ii) or (iii), whether any such transaction described
in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise; provided, however, that the foregoing shall not apply to (A) the sale of the Securities under this
Agreement or the issuance of the Underlying Securities, (B) the grant by the Company of employee or director stock options, restricted stock awards or restricted stock unit awards in the ordinary course of business, the issuance by the Company
of any shares of Common Stock of the Company upon the exercise of an option or upon the sale by the Company of shares of Common Stock pursuant to the Company’s employee stock purchase plan, (C) any transfer of shares of Common Stock
pursuant to the Company’s 401(k) plan, if any, (D) the filing by the Company of any registration statement with the Commission on Form S-8 relating to the offering of securities pursuant to the terms of the Company’s existing
incentive plan or employee stock purchase plan, (E) the conversion or exercise of a security outstanding on the date hereof and (F) filing of any registration statement in respect of the Securities and the Underlying Securities;

 (f) the Company will use the net proceeds received by the Company from the sale of the Securities pursuant to this Agreement in the manner
specified in the Time of Sale Information and the Final Memorandum under the caption “Use of Proceeds”; 
 (g) during the period
from the Closing Date until two years after the Closing Date, without the prior written consent of the Initial Purchaser, the Company will not, and will not permit any of its “affiliates” (as defined in Rule 144 under the Securities Act)
to, resell any of the Securities or Underlying Securities which constitute “restricted securities” under Rule 144 that have been reacquired by any of them; 
 (h) whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Company will pay or cause to be paid all costs and expenses incident to the performance of its
obligations hereunder, including without limiting the generality of the foregoing, all fees, costs and expenses (i) incident to the preparation, issuance, execution, authentication and delivery of the Securities, (ii) incident to the
preparation, printing and distribution of the Time of Sale Information and the Final Memorandum (including in each case all exhibits, amendments and supplements thereto), (iii) incurred in connection with the registration or qualification and
determination of eligibility for investment of the Securities under the laws of such jurisdictions as the Initial Purchaser may designate (including reasonable fees of counsel for the Initial Purchaser and their disbursements), (iv) in
connection with the admission for trading of the Securities on any securities exchange or inter-dealer quotation system (as well as in connection with the admission of the Securities for trading in the Private Offerings, Resales and Trading through
Automatic Linkages (“PORTAL”) system of the 

  

 14 

 
National Association of Securities Dealers, Inc. or any appropriate market system), (v) related to any filing with the National Association of
Securities Dealers, Inc., (vi) in connection with the printing (including word processing and duplication costs) and delivery of this Agreement and the furnishing to Initial Purchaser of copies of the Preliminary Memorandum and the Final
Memorandum, including mailing and shipping, as herein provided, (vii) in connection with the listing of the Underlying Securities on the American Stock Exchange, (viii) any expenses incurred by the Company in connection with a “road
show” presentation to potential investors, (ix) reasonable legal fees and other expenses incurred by the Initial Purchaser in connection with the transaction contemplated by this Agreement and (x) any other fees and expenses payable
to the Initial Purchaser under the engagement letter between the Company and the Initial Purchaser; 
 (i) while the Securities remain
outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Company will, during any period in which it is not subject to Section 13 or 15(d) under the Exchange Act, make available to
the purchasers and any holder of Securities in connection with any sale thereof and any prospective purchaser of Securities and securities analysts, in each case upon request, the information specified in, and meeting the requirements of, Rule
144A(d)(4) under the Securities Act (or any successor thereto); 
 (j) the Company will not take any action prohibited by Regulation M under
the Exchange Act, in connection with the distribution of the Securities contemplated hereby; 
 (k) none of the Company, any of its
affiliates (as defined in Rule 501(b) under the Securities Act) or any person acting on behalf of the Company or such affiliate will solicit any offer to buy or offer or sell the Securities or the Underlying Securities by means of any form of
general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or
radio; and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising; 
 (l) none
of the Company, any of its affiliates (as defined in Rule 501(b) under the Securities Act) or any person acting on behalf of the Company or such affiliate will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as defined in the Securities Act) which will be integrated with the sale of the Securities or the Underlying Securities in a manner which would require the registration under the Securities Act of the Securities or Underlying
Securities, and the Company will use its reasonable best efforts to assure that its offerings of other securities will not be integrated for purposes of the Securities Act with the offering contemplated hereby; 
 (m) the Company will execute and deliver the Registration Rights Agreement in the form previously agreed upon and will comply with the provisions and
obligations of the Registration Rights Agreement as required herein; 
  

 15 

 (n) the Company will use its reasonable best efforts to cause the Securities to be eligible for trading
on PORTAL; 
 (o) the Company will reserve and keep available at all times, free of pre-emptive rights, shares of Common Stock for the
purpose of enabling the Company to satisfy all obligations to issue the Underlying Securities upon conversion of the Securities; 
 (p)
except for such documents that are publicly available on the Commission’s Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”), the Company shall furnish to the
holders of the Securities as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders’ equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the date of the Final Memorandum), to make available to
its security holders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail; 
 (q) the Company shall comply with all agreements set forth in the representation letter of the Company to DTC relating to the approval of the Securities by DTC for “book-entry” transfer; and 
 (r) the Company shall advise the Initial Purchaser promptly, and, if requested by the Initial Purchaser, confirm such advice in writing, of the issuance
by any state securities commission of any stop order suspending the qualification or exemption of any of the Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for such purpose by any state securities commission
or other regulatory authority, and shall use its reasonable best efforts to prevent the issuance of any stop order or order suspending the qualification or exemption of any of the Securities under any state securities or Blue Sky laws, and if, at
any time, any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption of any of the Securities under any state securities or Blue Sky laws, the Company shall use its reasonable best
efforts to obtain the withdrawal or lifting of such order at the earliest possible time. 
 6. Conditions to the Initial Purchaser’s
Obligations. The obligations of the Initial Purchaser hereunder to purchase the Securities on the Closing Date are subject to the performance by the Company of its obligations hereunder and to the following additional conditions: 
 (a) the representations and warranties of the Company contained herein are true and correct on and as of the Closing Date as if made on and as of the
Closing Date and the Company shall have complied with all agreements on its part to be performed or satisfied hereunder at or prior to the Closing Date; 
  

 16 

 (b) No injunction, restraining order or order of any nature by a governmental authority shall have been
issued as of the Closing Date that would prevent or materially interfere with the consummation of the transactions contemplated by this Agreement; and no stop order suspending the qualification or exemption from qualification of any of the
Securities in any jurisdiction shall have been issued and no proceeding for that purpose shall have been commenced or, to the knowledge of the Company after due inquiry, be pending or contemplated as of the Closing Date. No action shall have been
taken and no law shall have been enacted, adopted or issued that would, as of the Closing Date, prevent the consummation of the Offering or any of the transactions contemplated under this Agreement. No proceeding by a governmental authority shall be
pending or, to the knowledge of the Company after due inquiry, threatened other than proceedings that (i) if adversely determined would not, individually or in the aggregate, adversely affect the issuance or marketability of the Securities, and
(ii) would not, individually or in the aggregate, have a Material Adverse Effect. 
 (c) Subsequent to the respective dates as of which
data and information is given in the Time of Sale Information and the Final Memorandum, there shall not have been (i) any Material Adverse Effect, (ii) any material change in the capital stock or long-term debt of the Company, or any of
its subsidiaries or any change, or any development involving a prospective material change, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the Company, and its subsidiaries,
taken as a whole, otherwise than as set forth or contemplated in the Time of Sale Information and the Final Memorandum, or (iii) the suspension or material limitation of trading in the Common Stock of the Company on the American Stock Exchange,
the effect of which , in any case described in clause (i) or (ii), in the judgment of the Initial Purchaser makes it impracticable or inadvisable to proceed with the offering or the delivery of the Securities on the Closing Date on the terms
and in the manner contemplated in the Time of Sale Information and the Final Memorandum; 
 (d) the Initial Purchaser shall have received on
and as of the Closing Date a certificate of an executive officer of the Company, with specific knowledge about the Company’s financial matters, reasonably satisfactory to the Initial Purchaser to the effect set forth in Sections 6(a) and 6(b)
and to the further effect that to the best of such officer’s knowledge there has not occurred any material adverse change, or any development involving a prospective material adverse change, in or affecting the business, financial position,
stockholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Time of Sale Information and the Final Memorandum; 
 (e) Akin Gump Strauss Hauer & Feld LLP, outside counsel for the Company, shall have furnished to the Initial Purchaser their written opinion,
dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchaser, to the effect that: 
 (i) the
Company is validly existing as a corporation in good standing under the laws of the State of Delaware, with all requisite corporate power to enter into and perform its obligations under this Agreement and the Registration Rights Agreement;

  

 17 

 (ii) this Agreement and the Registration Rights Agreement have been duly authorized,
executed and delivered by the Company and, assuming the due authorization, execution and delivery of the other parties thereto, each constitutes a valid and binding obligation of the Company, enforceable against the Company, in accordance with its
terms under the laws of the State of New York, except as limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, moratorium, reorganization and other similar laws of general application affecting the rights and remedies
of creditors and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and, as to rights of indemnification, to principles of public policy or federal or state securities laws
relating thereto; 
 (iii) the Securities have been duly authorized, issued and delivered by the Company and constitute valid
and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, moratorium, reorganization and other similar laws of
general application affecting the rights and remedies of creditors and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law); 
 (iv) the Underlying Securities reserved for issuance upon conversion of the Securities have been duly authorized and reserved and, when
issued upon conversion of the Securities in accordance with the terms of the Securities, will be validly issued, fully paid and non-assessable and the issuance of the Underlying Securities will not be subject to any preemptive or similar rights
under the Company’s Certificate of Incorporation or Bylaws or under the Delaware General Corporation Law; and the Underlying Securities conform in all material respects to the descriptions thereof in the Time of Sale Information and the Final
Memorandum; 
 (v) no consent, approval, authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Securities, the issuance by the Company of the Underlying Securities upon conversion of the Securities or the consummation by the Company of the transactions contemplated by this
Agreement or the Registration Rights Agreement, except (A) if applicable, the shelf registration statement required to become effective with the Commission be filed under the Registration Rights Agreement and (B) such as have been obtained
and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws or by the rules and regulations of the National Association of Securities Dealers, Inc. in connection with the
purchase and distribution of the Securities by the Initial Purchaser and except where failure to obtain such consent, approval, authorization, order, registration or 

  

 18 

 
qualification would not have a Material Adverse Effect (such counsel need express no opinion in this subparagraph (v) as to compliance with the
registration provisions of the Securities Act in relation to the Securities); 
 (vi) assuming the accuracy of the
representations and warranties in this Agreement and the compliance by the Company and the Initial Purchaser with their respective covenants and agreements contained therein, no registration of the Securities or the Underlying Securities under the
Securities Act is required for (A) the offer, sale and delivery of the Securities to the Initial Purchaser pursuant to this Agreement or (B) the initial resale of the Securities by the Initial Purchaser in the manner contemplated by this
Agreement and the Time of Sale Information; 
 (vii) when the Securities are issued and delivered pursuant to this Agreement,
none of the Securities will be of the same class (within the meaning of Rule 144A under the Securities Act) as securities of the Company that are listed on a national securities exchange registered under Section 6 of the Exchange Act or that
are quoted in a United States automated inter-dealer quotation system; 
 (viii) the statements set forth in the Time of Sale
Information and the Final Memorandum under the captions “Description of Capital Stock” and “U.S. Federal Income Tax Considerations,” insofar as they constitute a summaries of the legal matters, documents or proceedings referred
to therein, fairly present, in all material respects, the information called for with respect to such legal matters, documents or proceedings; 
 (ix) the issue and sale of the Securities and the compliance by the Company with all of the provisions of the Securities, the Registration Rights Agreement and this Agreement with respect to the Securities and the
consummation of the transactions contemplated herein and therein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument which is attached or incorporated by reference as an exhibit to the Company’s annual report on Form 10-K for the year ended December 31, 2005 or any amendment thereto on Form 10-K/A (the
“Annual Report”), any subsequent quarterly report on Form 10-Q, or any Item 1.01 of any Form 8-K filed subsequent to the Annual Report or (ii) result in any violation of the
provisions of the Certificate of Incorporation or Bylaws of the Company, or (iii) result in a violation of, to the knowledge of such counsel, any order of any court or governmental agency or body having jurisdiction over the Company or any of
their subsidiaries or any of their properties (except that such counsel need express no opinion with respect to compliance with the anti-fraud or similar provisions of any law, rule or regulation), except in the case of clauses (i) and
(iii) for such breaches or violations that could not reasonably be expected to have a Material Adverse Effect or that could violate public policy relating thereto; and 
  

 19 

 (x) each document incorporated by reference in the Time of Sale Information and the Final
Memorandum (other than the financial statements, including the notes thereto, and financial statement schedules and other financial, statistical and accounting information included therein, as to which such counsel need express no opinion), when
they became effective or were filed with the Commission, as the case may be, appear on their face to be appropriately responsive in all material respects to the requirements of the Exchange Act; 
 In addition, such counsel’s opinion shall include a statement (but not an opinion) as to the following: 
 Because the primary purpose of such counsel’s professional engagement was not to establish or confirm factual matters or financial, accounting or
statistical information, and because many determinations involved in the preparation of the Time of Sale Information and the Final Memorandum are of a wholly or partially non-legal character, other than in subparagraph (viii), such counsel is not
passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Time of Sale Information and the Final Memorandum, and such counsel makes no representation that it has independently
verified the accuracy, completeness or fairness of such statements. 
 However, in the course of such counsel’s acting as counsel to the
Company in connection with the preparation of the Time of Sale Information and the Final Memorandum, such counsel has reviewed the Time of Sale Information and the Final Memorandum and has participated in conferences and telephone conversations with
representatives of the Company, representatives of the Initial Purchaser’s counsel, representatives of the independent public accountants for the Company and representatives of the Initial Purchaser, during which conferences and conversations
the contents of the Time of Sale Information and the Final Memorandum and related matters were discussed. 
 Based on such counsel’s
participation in such conferences and conversations, such counsel’s review of the documents described above, such counsel’s understanding of the U.S. federal securities laws and the experience such counsel has gained in its practice
thereunder, such counsel shall advise the Initial Purchaser that it has no reason to believe that (i) the Final Memorandum, or any amendment or supplement thereto, as of its date or as of the Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (ii) the Time of Sale Information, as of the date of this Agreement or as
of the Closing Date, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; it being
understood that such counsel expresses no opinion as to the financial statements or other financial data or statistical data (including, without limitation, statistical data with respect to oil and gas reserves or production data) contained in the
Time of Sale Information or the Final Memorandum. 
  

 20 

 (f) Nicolas J. Evanoff, Esq., Vice President and General Counsel of the Company, shall have furnished to
the Initial Purchaser his written opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchaser, to the effect that: 
 (i) the Company has all requisite corporate power and authority to own its properties and conduct its business as described in the Time of
Sale Information and Final Memorandum; 
 (ii) the Company has an authorized capitalization as set forth in the Time of Sale
Information and Final Memorandum and all of the issued shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non assessable; 
 (iii) the Company has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure to be so qualified or in good standing in any such jurisdiction would not have a Material Adverse
Effect; 
 (iv) except as set forth in the Time of Sale Information and the Final Memorandum, all of the issued and
outstanding membership or other equity interests of each material subsidiary of the Company are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims; and 
 (v) to such counsel’s knowledge and other than as set forth in the Time of Sale Information, the Final Memorandum or the documents
incorporated by reference therein, there are no legal or governmental proceedings pending to which the Company, or any of its subsidiaries is a party or to which any property of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect; and, to such counsel’s knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others; 
 (g) on the date hereof and also on the Closing Date, UHY Mann Frankfort Stein & Lipp CPAs,
LLP and the firm of John A. Braden & Company, P.C. shall have furnished to the Initial Purchaser letters, dated the respective dates of delivery thereof, in form and substance reasonably satisfactory to you, containing statements and
information of the type customarily included in accountants “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Preliminary Memorandum and the Final Memorandum;

 (h) the Initial Purchaser shall have received on and as of the Closing Date an opinion of
Vinson & Elkins L.L.P., counsel to the Initial Purchaser, in form and substance reasonably satisfactory to it; 
 (i) the
“lock-up” agreements, each substantially in the form of Exhibit A hereto, between you and the officers and directors of the Company identified on Exhibit A-1 relating to sales and certain other dispositions of shares of Common Stock or
certain other securities shall be in full force and effect on the Closing Date; 
 (j) the Underlying Securities shall have been approved for
listing on the American Stock Exchange, to the extent required by such exchange, subject only to notice of issuance; 
 (k) the Securities
shall have been approved for trading on PORTAL, subject only to notice of issuance at or prior to the time of purchase; 
 (l) the Initial
Purchaser shall have received a counterpart of the Registration Rights Agreement that shall have been executed and delivered by a duly authorized officer of the Company; 
 (m) on or prior to the Closing Date the Company shall have furnished to the Initial Purchaser such further certificates and documents as the Initial Purchaser or its counsel shall reasonably request; 
 (n) on or prior to the Closing Date, the Company shall have consummated its concurrent private placement of 70,000 shares of its 15% Senior Redeemable
Convertible Preferred Stock; and 
 (o) on the Closing Date, the Company shall have paid to the Initial Purchaser a fee in the amount equal
to 5.5% of the gross purchase price of Securities sold in a private placement conducted concurrently with the offering contemplated by this Agreement, which fee may be paid in whole or in part with the proceeds of the sale of the Securities
hereunder, and shall have delivered to the Initial Purchaser warrants in the name of the Initial Purchaser to purchase 110,000 shares of the Company’s Common Stock at an exercise price equal to $3.23 per share and otherwise containing terms to
which the Initial Purchaser and the Company shall have agreed, consistent with the terms described in the engagement letter between the Company and the Initial Purchaser. 
 7. Indemnification and Contribution. 
 (a) The Company agrees to indemnify and hold harmless the
Initial Purchaser, its directors, officers and employees, and each person, if any, who controls the Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any losses, claims,
damages or liabilities of any kind to which the Initial Purchaser, or such director, officer, employee or controlling person may become subject under the Securities Act, the Exchange Act or otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of the Company, which may not be unreasonably withheld, delayed or conditioned), insofar as any such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are
based upon: 
  

 22 

 (i) any untrue statement or alleged untrue statement of any material fact contained in
the Time of Sale Information, or the Final Memorandum (in each case, including the documents incorporated by reference therein), or any amendment or supplement thereto or in any other materials or information provided to investors by, or with the
written approval of, the Company in connection with the Offering, including any road show or investor presentations made to investors by the Company (whether in person or electronically) (“Marketing
Materials”); 
 (ii) the omission or alleged omission to state, in the Time of Sale
Information or the Final Memorandum (in each case, including the documents incorporated by reference therein) or any amendment or supplement thereto, or in any Marketing Materials, a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; or 
 (iii) any breach by the Company of any representation,
warranty or agreement set forth herein or breach of applicable law. 
 (b) and, subject to the provisions hereof, will reimburse, as
incurred, the Initial Purchaser, and each such director, officer, employee and controlling person for any legal or other expenses incurred by the Initial Purchaser or such controlling person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim, damage, liability or action in respect thereof; provided, however, the Company will not be liable in any such case to the extent (but only to the extent) that a court
of competent jurisdiction shall have determined by a final, unappealable judgment that such loss, claim, damage or liability resulted solely from any untrue statement or alleged untrue statement or omission or alleged omission made in the Time of
Sale Document or the Final Memorandum or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by the Initial Purchaser specifically for use therein, it being understood and agreed
that the only such information furnished by the Initial Purchaser to the Company consists of the information described in subsection (c) below. The indemnity agreement set forth in this Section 7 shall be in addition to any liability that
the Company may otherwise have to the indemnified parties. 
 (c) The Initial Purchaser agrees to indemnify and hold harmless each of the
Company, its directors, officers and employees and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any losses, claims, damages or liabilities to
which the Company or any such director, officer, employee or controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as a court of competent jurisdiction shall have determined by a final, unappealable
judgment that such losses, claims, damages or liabilities (or actions in respect thereof) have resulted solely 

  

 23 

 
from (i) any untrue statement or alleged untrue statement of any material fact contained in the Time of Sale Information or the Final Memorandum or any
amendment or supplement thereto or (ii) the omission or the alleged omission to state therein a material fact required to be stated in the Time of Sale Information or the Final Memorandum or any amendment or supplement thereto or necessary to
make the statements therein not misleading, in each case to the extent (but only to the extent) that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company or its agents by the Initial Purchaser specifically for use therein; and will reimburse, as incurred, any legal or other expenses incurred by the Company or any such director, officer, employee or controlling
person in connection with any such loss, claim, damage, liability or action in respect thereof. The Company hereby acknowledges that the only information that the Initial Purchaser has furnished to the Company or its agents specifically for use in
the Time of Sale Information or the Final Memorandum or any amendment or supplement thereto, are the statements set forth in the fourth and sixth (third and fourth sentences only) paragraphs under the caption “Plan of Distribution” in the
Preliminary Memorandum and the Final Memorandum. This indemnity agreement will be in addition to any liability that the Initial Purchaser may otherwise have to the indemnified parties. 
 (d) As promptly as reasonably practicable after receipt by an indemnified party under this Section 7 of notice of the commencement of any action for
which such indemnified party is entitled to indemnification under this Section 7, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7, notify the indemnifying party
of the commencement thereof in writing; but the omission to so notify the indemnifying party (i) will not relieve such indemnifying party from any liability under subsection (a) or (b) above unless and only to the extent it is
materially prejudiced as a result thereof and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in subsection (a) and
(b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may
elect, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the defendants in any such action include both the indemnified party and the indemnifying party, and the indemnified party shall have
concluded that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be one or more legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to the indemnifying party, or (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after receipt by the indemnifying party of notice of the institution of such action, then, in each such case, the indemnifying party shall not have the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to select separate counsel to defend such action on behalf of 

  

 24 

 
such indemnified party or parties at the expense of the indemnifying party. After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by such indemnified party (acting reasonably) of counsel appointed to defend such action, the indemnifying party will not be liable to such indemnified party under this Section 7 for any
legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have employed separate counsel in accordance
with the proviso to the immediately preceding sentence (it being understood, however, that in connection with such action the indemnifying party shall not be liable for the expenses of more than one separate counsel (in addition to local counsel) in
any one action or separate but substantially similar actions in the same jurisdiction arising out of the same general allegations or circumstances, designated by the Initial Purchaser in the case of subsection (a) of this Section 7 or the
Company in the case of subsection (b) of this Section 7, representing the indemnified parties under such subsection (a) or subsection (b), as the case may be, who are parties to such action or actions), (ii) the indemnifying
party has authorized in writing the employment of counsel for the indemnified party at the expense of the indemnifying party or (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party and shall be paid as they are
incurred. After such notice from the indemnifying party to such indemnified party, the indemnifying party will not be liable for the costs and expenses of any settlement of such action effected by such indemnified party without the prior written
consent of the indemnifying party (which consent shall not be unreasonably withheld), unless such indemnified party waived in writing its rights under this Section 7, in which case the indemnified party may effect such a settlement without such
consent. 
 (e) No indemnifying party shall be liable under this Section 7 for any settlement of any claim or action (or threatened
claim or action) effected without its written consent, which shall not be unreasonably withheld, but if a claim or action is settled with its written consent, or if there be a final judgment for the plaintiff with respect to any such claim or
action, each indemnifying party jointly and severally agrees, subject to the exceptions and limitations set forth above, to indemnify and hold harmless each indemnified party from and against any and all losses, claims, damages or liabilities (and
legal and other expenses as set forth above) incurred by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any
settlement or compromise of any pending or threatened proceeding in respect of which the indemnified party is or could have been a party, or indemnity could have been sought hereunder by the indemnified party, unless such settlement
(i) includes an unconditional written release of the indemnified party, in form and substance reasonably satisfactory to the indemnified party, from all liability on claims that are the subject matter of such proceeding and (ii) does not
include any statement as to an admission of fault, culpability or failure to act by or on behalf of the indemnified party. 
  

 25 

 (f) In circumstances in which the indemnity agreement provided for in the preceding subsections of this
Section 7 is unavailable to, or insufficient to hold harmless, an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof), each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties, on the one hand, and the indemnified party, on the other, from the transaction contemplated by this Agreement or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the relative fault of the indemnifying party or parties, on the one hand, and the indemnified party, on the other, in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof). The relative benefits received by the Company, on the one hand, and the Initial Purchaser, on the other, shall be deemed to be in
the same proportion as the total proceeds from the transaction contemplated by this Agreement (before deducting expenses) received by the Company bear to the total discounts and commissions received by the Initial Purchaser. The relative fault of
the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on
the one hand, or the Initial Purchaser, on the other, the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission or alleged statement or omission, and any other equitable
considerations appropriate in the circumstances. 
 (g) The Company and the Initial Purchaser agree that it would not be equitable if the
amount of such contribution determined pursuant to the immediately preceding subsection (f) were determined by pro rata or per capita allocation or by any other method of allocation that does not take into account the equitable considerations
referred to in the first sentence of the immediately preceding subsection (f). Notwithstanding any other provision of this Section 7, the Initial Purchaser shall not be obligated to make contributions hereunder that in the aggregate exceed the
total discounts, commissions and other compensation received by such Initial Purchaser under this Agreement, less the aggregate amount of any damages that such Initial Purchaser has otherwise been required to pay by reason of the untrue or alleged
untrue statements or the omission or alleged omission to state a material fact. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of the immediately preceding subsection (f), each person, if any, who controls the Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the Initial Purchaser, and each director, officer and employee of the Company and each person, if any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, shall have the same rights to contribution as the Company. 
  

 26 

 8. Effectiveness; Defaulting Initial Purchaser. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto. 
 If, on the Closing Date the Initial Purchaser fails or refuses to purchase the
Securities, this Agreement shall terminate. The Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Final Memorandum or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not relieve the Initial Purchaser from liability in respect of any default under this Agreement. 
 9. Termination. The Initial Purchaser may terminate this Agreement at any time prior to the Closing Date by written notice to the Company if any of the following has occurred: 
 (a) since the date hereof, any Material Adverse Effect or development expected to result in a prospective Material Adverse Effect that could, in the
Initial Purchaser’s reasonable judgment, be expected to make it impracticable or inadvisable to proceed with the offering or delivery of the Securities on the terms and in the manner contemplated in the Time of Sale Information and the Final
Memorandum; 
 (b) the failure of the conditions contained in Section 6 hereof to be satisfied on or prior to the Closing Date;

 (c) any outbreak or escalation of hostilities or other national or international calamity or crisis, including acts of terrorism, or
material adverse change or disruption in economic conditions in, or in the financial markets of, the United States (it being understood that any such change or disruption shall be relative to such conditions and markets as in effect on the date
hereof), if the effect of such outbreak, escalation, calamity, crisis, act or material adverse change in the economic conditions in, or in the financial markets of, the United States could be reasonably expected to make it, in the Initial
Purchaser’s judgment, impracticable or inadvisable to market or proceed with the offering or delivery of the Securities on the terms and in the manner contemplated in the Time of Sale Information and the Final Memorandum; 
 (d) trading in the Company’s Common Stock shall have been suspended by the Commission or the American Stock Exchange or the suspension or limitation
of trading generally in securities on the New York Stock Exchange, the American Stock Exchange or the NASDAQ Stock Market or any setting of limitations on prices for securities on any such exchange; 
 (e) the enactment, publication, decree or other promulgation after the date hereof of any applicable law that in the Initial Purchaser’s
counsel’s reasonable opinion materially and adversely affects, or could be reasonably expected to materially and adversely affect, the properties, business, prospects, operations, earnings, assets, liabilities or condition (financial or
otherwise) of the Company and its subsidiaries, taken as a whole; 
  

 27 

 (f) any securities of the Company shall have been downgraded or placed on any “watch list” for
possible downgrading by any “nationally recognized statistical rating organization,” as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; or 
 (g) the declaration of a banking moratorium by any governmental authority; or the taking of any action by any governmental authority after the date
hereof in respect of its monetary or fiscal affairs that in the Initial Purchaser’s opinion could reasonably be expected to have a material adverse effect on the financial markets in the United States or elsewhere. 
 10. Reimbursement. If this Agreement shall fail to close because of a condition not being met because of any failure or refusal on the part of the
Company to comply with the terms of this Agreement or if for any reason the Company shall be unable to perform its obligations under this Agreement or any condition of the Initial Purchaser’s obligations cannot be fulfilled, the Company agrees
to reimburse the Initial Purchaser for all out of pocket expenses (including the reasonable fees and expenses of its counsel) incurred in connection with this Agreement or the offering contemplated hereunder. 
 11. Parties. This Agreement shall inure to the benefit of and be binding upon the Company, the Initial Purchaser, any controlling persons referred
to herein and their respective successors and assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision herein contained. No purchaser of Securities from the Initial Purchaser shall be deemed to be a successor by reason merely of such purchase. 
 12. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial Purchaser shall be given to Jefferies & Company, Inc., 520 Madison Avenue, New York, New York 10022. Notices to the Company shall be given to it at Transmeridian
Exploration Incorporated, Attention: Nicolas J. Evanoff, 397 N. Sam Houston Parkway E., Suite 300, Houston, Texas 77060. 
 13. Survival
of Representations and Indemnities. The representations and warranties, covenants, indemnities and contribution and expense reimbursement provisions and other agreements, representations and warranties of the Company set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect, and will survive, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of the Initial Purchaser and
(ii) acceptance of the Securities, and payment for them hereunder. 
 14. Governing Law. THE VALIDITY AND
INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. 
  

 28 

 THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY (I) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND STATE COURTS SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY; AND (II) WAIVES (A) ITS RIGHT TO A TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE INITIAL PURCHASER AND FOR ANY COUNTERCLAIM
RELATED TO ANY OF THE FOREGOING AND (B) ANY OBLIGATION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. 
 15. Counterparts. This Agreement may be signed in counterparts, each of which shall be an original and
all of which together shall constitute one and the same instrument. Delivery of a signed counterpart of this Agreement by facsimile transmission shall be effective as delivery of the original thereof. 
  

 29 

 If the foregoing is in accordance with your understanding, please sign and return seven counterparts
hereof. 
  

			
	Very truly yours,
	
	TRANSMERIDIAN EXPLORATION
INCORPORATED
		
	By:	 	 /s/ Earl W. McNiel

		 	Earl W. McNiel
		 	 Vice President and
 Chief Financial
Officer

 The foregoing Purchase Agreement 
 is hereby confirmed and accepted 
 as of the date first above written. 
  

			
	JEFFERIES & COMPANY, INC.
		
	By:	 	JEFFERIES & COMPANY, INC.
		
	By:	 	 /s/ David H. Pritchard

	Name:	 	David H. Pritchard
	Title:	 	Managing Director – Equity Capital Markets

  

 30 

 SCHEDULE I 
 Time of Sale Information 
 The Final Offering Memorandum, dated as of the date hereof, and delivered
to prospective purchasers of the Securities prior to the Time of Sale. 
  

 31 

 EXHIBIT A 
 [FORM OF LOCK-UP LETTER] 
 November 28, 2006 
 Jefferies & Company, Inc. 
 520 Madison Avenue 
 New York, NY 10022 
 Dear Sirs: 
 The undersigned understands that Jefferies & Company, Inc.
(“Jefferies”) proposes to enter into a Purchase Agreement (“Purchase Agreement”) with Transmeridian
Exploration Incorporated, a Delaware corporation (the “Company”), providing for the offering (the
“Offering”) by Jefferies (the “Initial Purchaser”), of Senior Redeemable Convertible Preferred Stock (the
“Securities”). The Securities will be convertible into shares of common stock of the Company, par value $0.0006 per share (the “Common
Stock”). 
 To induce the Initial Purchaser in the Offering to continue its efforts in connection with the
Offering, the undersigned hereby agrees that, without the prior written consent of the Initial Purchaser, it will not, during the period commencing on the date hereof and ending 90 days after the date of the final offering memorandum relating to the
Offering (the “Final Memorandum”), (1) offer, pledge, sell contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (2) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. 
 The restrictions set forth in the immediately preceding paragraph shall not apply to
(a) transfers of Common Stock by bona fide gift, will or intestacy, including without limitation transfers by gift, will or intestacy to family members of the undersigned or to a settlement or trust, established under the laws of any country
for the direct or indirect benefit of the undersigned, (b) transfers or sales of Common Stock pursuant to a plan complying with Rule 10b5-1 of the Regulations of the Securities Exchange Act of 1934, as amended, that has been entered into by the
undersigned prior to the date of this Letter Agreement or (c) the delivery by the undersigned of any shares of Common Stock to satisfy any margin call under any financing arrangement to which the undersigned is a party at the date hereof;
provided, however, that in the event of any transfer pursuant to clause (a), the transferee shall enter into a lock-up agreement substantially in the form of this Letter Agreement covering the remainder of the 90-day period referred to
herein. In 

  

 A-1 

 
addition, the undersigned agrees that, without the prior written consent of the Initial Purchaser, it will not, during the period commencing on the date
hereof and ending 90 days after the date of the Final Memorandum, make any demand for or exercise any right with respect to, the registration of any shares of Common Stock or any security convertible into or exercisable or exchangeable for Common
Stock. The undersigned hereby further agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this Letter Agreement during the restricted period, it will give notice thereof to the Chief Financial
Officer and the Chief Executive Officer of the Company (the “Authorized Officers”) and will not consummate such transaction or take any such action unless it has received written confirmation from one of the Authorized
Officers that such action is permitted under this Letter Agreement. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the
undersigned’s shares of Common Stock except in compliance with the foregoing restrictions. 
 The undersigned understands that the
Company and the Initial Purchaser are relying upon this Letter Agreement in proceeding toward consummation of the Offering. The undersigned further understands that this Letter Agreement is irrevocable and shall be binding upon the
undersigned’s heirs, legal representatives, successors and assigns. 
 This Letter Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Delivery of a signed copy of this letter by facsimile transmission shall be effective as delivery of the original hereof. 
 Whether or not the Offering actually occurs depends on a number of factors, including market conditions. Any offering will only be made pursuant to a
Purchase Agreement, the terms of which are subject to negotiation between the Company and the Initial Purchaser. 
  

	
	Very truly yours,
	
	  

	(Name)
	
	  

	(Address)

  

 A-2 

 EXHIBIT A-1 
 PERSONS SUBJECT TO LOCK-UP 
 Each Director and Executive Officer of the Company. 
  

 A-1-1

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