Document:

ex101psaseriesa

Execution Version      SERIES A CONVERTIBLE PREFERRED STOCK   PURCHASE AGREEMENT   between   MAGELLAN PETROLEUM CORPORATION   and   ONE STONE HOLDINGS II LP   dated as of May 10, 2013   US 1835333v.12     

 

    i   TABLE OF CONTENTS   Page   ARTICLE I   DEFINITIONS   Section 1.01 Definitions ....................................................................................................... 1   Section 1.02 Accounting Procedures and Interpretation ........................................................ 7   ARTICLE II   AGREEMENT TO SELL AND PURCHASE   Section 2.01 Sale and Purchase............................................................................................. 7   Section 2.02 Closing............................................................................................................. 7   Section 2.03 Corporation Closing Deliverables ..................................................................... 7   Section 2.04 Purchaser Closing Deliverables ........................................................................ 9   ARTICLE III   REPRESENTATIONS AND WARRANTIES OF THE CORPORATION   Section 3.01 Formation and Qualification ............................................................................. 9   Section 3.02 Ownership of Subsidiaries ................................................................................ 9   Section 3.03 No Other Subsidiaries .................................................................................... 10   Section 3.04 Authorization; Enforceability; Valid Issuance ................................................ 10   Section 3.05 No Preemptive Rights, Registration Rights or Options ................................... 11   Section 3.06 Capitalization ................................................................................................. 11   Section 3.07 No Breach ...................................................................................................... 11   Section 3.08 No Approvals ................................................................................................. 12   Section 3.09 No Default ..................................................................................................... 12   Section 3.10 Corporate Records .......................................................................................... 12   Section 3.11 Corporation SEC Documents; Corporation Financial Statements .................... 12   Section 3.12 Books and Records; Sarbanes-Oxley Compliance .......................................... 13   Section 3.13 No Material Adverse Change ......................................................................... 14   Section 3.14 Title to Real Property ..................................................................................... 14   Section 3.15 Reserve Engineers; Reserve Estimates ........................................................... 15   Section 3.16 Insurance ........................................................................................................ 15   Section 3.17 Litigation ....................................................................................................... 15   Section 3.18 Employee Matters .......................................................................................... 15   Section 3.19 Tax Returns .................................................................................................... 16   Section 3.20 Environmental Compliance ............................................................................ 16   Section 3.21 Permits ........................................................................................................... 17   Section 3.22 Foreign Corrupt Practices Act; Money Laundering ......................................... 17   Section 3.23 NASDAQ Listing ........................................................................................... 17   Section 3.24 Related Party Transactions ............................................................................. 18   Section 3.25 Business Combinations .................................................................................. 18   Section 3.26 Investment Company...................................................................................... 18   Section 3.27 Certain Fees ................................................................................................... 18   Section 3.28 Form S-3 Eligibility ....................................................................................... 18     

 

    ii   Section 3.29 Private Placement ........................................................................................... 18   Section 3.30 Required Stock Vote ...................................................................................... 18   Section 3.31 Exclusivity of Representations ....................................................................... 18   ARTICLE IV   REPRESENTATIONS AND WARRANTIES OF THE PURCHASER   Section 4.01 Existence ........................................................................................................ 19   Section 4.02 Authorization; Enforceability ......................................................................... 19   Section 4.03 No Breach ...................................................................................................... 19   Section 4.04 Certain Fees ................................................................................................... 19   Section 4.05 Unregistered Securities................................................................................... 19   Section 4.06 Short Selling .................................................................................................. 21   Section 4.07 Exclusivity of Representations ....................................................................... 21   ARTICLE V   COVENANTS   Section 5.01 Stockholder Vote with Respect to Conversion ................................................ 21   Section 5.02 Standstill Obligation ....................................................................................... 22   Section 5.03 Section 16(b) Matters ..................................................................................... 23   Section 5.04 Further Assurances; NASDAQ Listing ........................................................... 23   ARTICLE VI   INDEMNIFICATION, COSTS AND EXPENSES   Section 6.01 Indemnification by the Corporation ................................................................ 24   Section 6.02 Indemnification by the Purchaser ................................................................... 24   Section 6.03 Indemnification Procedure ............................................................................. 25   Section 6.04 Limits on Indemnification .............................................................................. 26   Section 6.05 Tax Matters .................................................................................................... 27   ARTICLE VII   MISCELLANEOUS   Section 7.01 Fees and Expenses ......................................................................................... 27   Section 7.02 Interpretation .................................................................................................. 27   Section 7.03 Survival of Provisions .................................................................................... 28   Section 7.04 No Waiver; Modifications in Writing ............................................................. 28   Section 7.05 Binding Effect; Assignment ........................................................................... 29   Section 7.06 Communications ............................................................................................ 29   Section 7.07 Entire Agreement ........................................................................................... 30   Section 7.08 Governing Law; Submission to Jurisdiction ................................................... 30   Section 7.09 Waiver of Jury Trial ....................................................................................... 31   Section 7.10 Execution in Counterparts .............................................................................. 31   ARTICLE VIII   CLOSING CONDITIONS   Section 8.01 Conditions to the Purchaser’s Obligations at Closing...................................... 31   Section 8.02 Conditions to the Corporation’s Obligations at Closing .................................. 32     

 

    iii   ARTICLE IX   TERMINATION   Section 9.01 Termination of the Agreement Prior to Closing .............................................. 33   Section 9.02 Effect of Termination Prior to Closing ........................................................... 33         EXHIBITS, ANNEXES AND SCHEDULES      Exhibit A  – Form of Certificate of Designations   Exhibit B  – Form of Registration Rights Agreement   Exhibit C  – Form of Director Indemnification Agreement   Exhibit D  – Form of Opinion of Counsel for the Corporation   Annex I  – Corporation Domestic Entities   Annex II  – Corporation Foreign Entities   Schedule 3.01  – Foreign Qualifications   Schedule 3.02  – Ownership of Subsidiaries   Schedule 3.05  – No Preemptive Rights, Registration Rights or Options   Schedule 3.06  – Capitalization   Schedule 3.11(b) – Internal Accounting Controls   Schedule 3.11(c) – Auditors Reports and Accounting Management Letters   Schedule 3.15  – Reserve Estimates   Schedule 3.17  – Litigation   Schedule 3.18  – Employee Matters   Schedule 3.20  – Environmental Compliance   Schedule 3.21  – Permits   Schedule 3.23  – NASDAQ Listing   Schedule 3.24  – Related Party Transactions   Schedule 3.27  – Certain Fees   Schedule 7.01  – Fees and Expenses           

 

    1   SERIES A CONVERTIBLE PREFERRED STOCK   PURCHASE AGREEMENT   This SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT   (this “Agreement”) is entered into as of May 10, 2013 by and between Magellan Petroleum   Corporation, a Delaware corporation (the “Corporation”), and One Stone Holdings II LP, a   Delaware limited partnership (the “Purchaser”).   RECITALS   WHEREAS, immediately prior to the Closing (as defined below), the Corporation shall   have created from the fifty million (50,000,000) shares of preferred stock, par value $0.01 per   share, authorized to be issued by the Corporation pursuant to the Certificate of Incorporation, a   series of shares of preferred stock designated as “Series A Convertible Preferred Stock”, par   value $0.01 per share (the “Preferred Stock”) having the rights, preferences and privileges set   forth in the Certificate of Designations of Series A Convertible Preferred Stock of the   Corporation in the form attached hereto as Exhibit A (the “Certificate of Designations”); and   WHEREAS, at the Closing, the Corporation desires to issue and sell to the Purchaser, and   the Purchaser desires to purchase from the Corporation, 19,239,734 shares of Preferred Stock   (the “Purchased Stock”) upon the terms and subject to the conditions set forth in this   Agreement.   AGREEMENTS   NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth   herein and for good and valuable consideration, the receipt and sufficiency of which is hereby   acknowledged, the parties to this Agreement hereby agree as follows:   ARTICLE I   DEFINITIONS   Section 1.01 Definitions.  As used in this Agreement, the following terms shall have the   following meanings:   “Affiliate” shall mean, with respect to a specified Person, any other Person, whether now   in existence or hereafter created, directly or indirectly controlling, controlled by or under direct   or indirect common control with such specified Person.  For purposes of this definition,   “control” (including, with correlative meanings, “controlling”, “controlled by” and “under   common control with”) shall mean the power to direct or cause the direction of the management   and policies of such Person, directly or indirectly, whether through the ownership of voting   securities, by contract or otherwise; provided, however, that “Affiliate” shall not be deemed to   include any portfolio company in which the Purchaser or any of its investment fund Affiliates   have made a debt or equity investment.   “Agreement” shall have the meaning set forth in the preamble to this Agreement.     

 

    2   “Allen & Crouch” shall have the meaning set forth in Section 3.15.   “Basket” shall have the meaning set forth in Section 6.04(a)(ii).   “Board of Directors” shall mean the board of directors of the Corporation.   “Business Day” shall mean any day other than a Saturday, Sunday or other day on which   commercial banks in New York, New York are authorized or required by law or executive order   to close.   “Bylaws” shall mean the bylaws of the Corporation, as amended from time to time prior   to the date hereof and as further amended or restated from time to time.   “Certificate of Designations” shall have the meaning set forth in the recitals to this   Agreement.   “Certificate of Incorporation” shall mean the Restated Certificate of Incorporation of   the Corporation, as amended from time to time prior to the date hereof, as modified by the   Certificate of Designations and as further amended or restated from time to time in accordance   with applicable law and the Certificate of Designations.   “Closing” shall have the meaning set forth in Section 2.02.   “Closing Date” shall have the meaning set forth in Section 2.02.   “Code” shall mean the Internal Revenue Code of 1986, as amended.   “Common Stock” shall mean the common stock, par value $0.01 per share, of the   Corporation.   “Contract” shall mean any contract, agreement, indenture, note, bond, mortgage, deed of   trust, loan, instrument, lease, license, commitment or other arrangement, understanding,   undertaking, commitment or obligation, whether written or oral.   “Conversion Stock” shall mean the Common Stock issuable upon conversion of the   Purchased Stock in accordance with the Transaction Documents.   “Corporation” shall have the meaning set forth in the preamble to this Agreement.   “Corporation Domestic Entities” shall mean, collectively, the entities listed on Annex I   to this Agreement.   “Corporation Entities” shall mean the Corporation Domestic Entities and the   Corporation Foreign Entities.   “Corporation Entity Organizational Documents” shall mean the articles or certificate   of incorporation, formation or organization, as the case may be, bylaws, limited liability   company agreement, limited partnership agreement and other similar organizational documents,     

 

    3   as the case may be, of each of the Corporation Entities other than the Corporation, each as   amended to date.   “Corporation Financial Statements” shall have the meaning set forth in   Section 3.11(a).   “Corporation Foreign Entities” shall mean, collectively, the entities listed on Annex II   to this Agreement.   “Corporation Indemnified Liabilities” shall have the meaning set forth in Section 6.01.   “Corporation Organizational Documents” shall mean the Certificate of Incorporation   and the Bylaws.   “Corporation Related Parties” shall have the meaning set forth in Section 6.02.   “Corporation SEC Documents” shall have the meaning set forth in Section 3.11(a).   “De Minimis Amount” shall have the meaning set forth in Section 6.04(a)(i).   “Director Indemnification Agreement” shall mean an Indemnification Agreement   dated as of the Closing Date, by and between the Corporation and each of the Purchaser’s   designees to the Board of Directors, in the form attached hereto as Exhibit C.   “Environmental Law” shall mean any Law, Environmental Permit, and other legally   enforceable requirements applicable to the Corporation Entities or the operation of their business   in any way relating to the protection of human health and safety (to the extent such health or   safety relate to exposure to Hazardous Materials), the environment and natural resources   (including, without limitation, any natural resource damages, any generation, manufacture,   processing, use, storage, treatment, disposal, release, threatened release, discharge, or emission   of Hazardous Materials into the environment, and any exposure to Hazardous Materials),   including, without limitation, the Comprehensive Environmental Response, Compensation and   Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.   App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.),   the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the   Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Occupational Safety and Health   Act (29 C.F.R. part 24 et seq.), and the Federal Insecticide, Fungicide, and Rodenticide Act (7   U.S.C. § 136 et seq.).   “Environmental Permits” shall mean all permits, approvals, identification numbers,   registrations, consents, licenses, exemptions, variances and authorizations required under or   issued pursuant to any applicable Environmental Law.   “Equity Securities” shall mean any capital stock of the Corporation (including the   Common Stock and the Preferred Stock) or any options, warrants or other securities that are   directly or indirectly convertible into, or exercisable or exchangeable for, any capital stock of the   Corporation (including the Common Stock and the Preferred Stock).     

 

    4   “ERISA” shall have the meaning set forth in Section 3.18(a).   “ERISA Affiliate” shall have the meaning set forth in Section 3.18(a).   “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the   rules and regulations promulgated thereunder.   “FCPA” shall have the meaning set forth in Section 3.22.   “GAAP” shall mean generally accepted accounting principles in the United States of   America as of the date hereof.   “Governmental Authority” shall mean, with respect to a particular Person, any state,   county, city and political subdivision of the United States in which such Person or such Person’s   Property is located or which exercises valid jurisdiction over any such Person or such Person’s   Property, and any court, agency, department, commission, board, bureau or instrumentality of   any of them that exercises valid jurisdiction over any such Person or such Person’s Property.    Unless otherwise specified, all references to Governmental Authority herein with respect to the   Corporation shall mean a Governmental Authority having jurisdiction over the Corporation, its   Subsidiaries or any of their respective Properties.   “Hazardous Material” shall mean any substance regulated by or as to which liability   might arise under any applicable Environmental Law including any: (a) chemical, product,   material, substance or waste defined as “hazardous substance”, “hazardous material”, “hazardous   waste”, “restricted hazardous waste”, “extremely hazardous waste”, “solid waste”, “toxic waste”,   “extremely hazardous substance”, “toxic substance”, “toxic pollutant”, “contaminant”,   “pollutant” or words of similar meaning or import found in any applicable Environmental Law;   (b) petroleum hydrocarbons, petrochemical or petroleum products, petroleum substances, natural   gas and crude oil or any components, fractions or derivatives thereof; and (c) asbestos containing   materials, polychlorinated biphenyls, urea formaldehyde foam insulation, or radon gas.   “Indemnified Party” shall have the meaning set forth in Section 6.03(b).   “Indemnifying Party” shall have the meaning set forth in Section 6.03(b).   “Knowledge of the Corporation” shall mean the actual knowledge of any of J. Thomas   Wilson, Antoine Lafargue or C. Mark Brannum, in each case after reasonable investigation.   “Law” shall mean any applicable federal, state or local order, writ, injunction, judgment,   settlement, award, decree, statute, law (including common law), rule or regulation.   “Lien” shall mean any interest in Property securing an obligation owed to, or a claim by,   a Person other than the owner of the Property, whether such interest is based on the common   law, statute or contract, and whether such obligation or claim is fixed or contingent, and   including the lien or security interest arising from a mortgage, encumbrance, pledge, security   agreement, conditional sale or trust receipt or a lease, consignment or bailment for security   purposes.  For purposes of this Agreement, a Person shall be deemed to be the owner of any   Property that it has acquired or holds subject to a conditional sale agreement, or leases under a     

 

    5   financing lease or other arrangement pursuant to which title to the Property has been retained by   or vested in some other Person in a transaction intended to create a financing.   “Material Adverse Effect” shall mean any material and adverse effect on (a) the assets,   liabilities, financial condition, business, results of operations or affairs of the Corporation   Entities, taken as a whole, or (b) the ability of the Corporation to timely consummate the   transactions contemplated by any Transaction Document to which it is a party or perform its   obligations thereunder; provided, however, that any such material and adverse effect resulting or   arising from or relating to any change, development, occurrence or event generally affecting the   businesses or industries in which the Corporation Entities operate in the United States shall not   be considered when determining whether a Material Adverse Effect has occurred or would   reasonably be expected to occur (except if such change, development, occurrence or event   disproportionately and adversely impacts the assets, liabilities, financial condition, business,   results of operations or affairs of the Corporation Entities, taken as a whole, compared to that or   those, as applicable, of companies in the industry in which the Corporation Entities operate in the   United States).   “Money Laundering Laws” shall have the meaning set forth in Section 3.22.   “NASDAQ” shall mean the NASDAQ Stock Market.   “Oil and Gas Interests” shall have the meaning set forth in Section 3.14.   “Organizational Documents” shall mean, collectively, the Corporation Organizational   Documents and the Corporation Entity Organizational Documents, each as amended to date.   “Permits” shall have the meaning set forth in Section 3.21.   “Permitted Liens” shall have the meaning set forth in Section 3.14.   “Person” shall mean any individual, corporation, general partnership, limited   partnership, limited liability partnership, joint venture, association, joint-stock company, trust,   limited liability company, unincorporated organization, Governmental Authority or any agency   or political subdivision thereof.   “Preferred Stock” shall have the meaning set forth in the recitals to this Agreement.   “Property” or “Properties” shall mean any interest in any kind of property or asset,   whether real, personal or mixed, or tangible or intangible (including intellectual property rights).   “Proposal” shall have the meaning set forth in Section 5.01(a).   “Purchase Price” shall mean $23,501,216.00.   “Purchased Stock” shall have the meaning set forth in the recitals to this Agreement.   “Purchaser” shall have the meaning set forth in the preamble to this Agreement.     

 

    6   “Purchaser Indemnified Liabilities” shall have the meaning set forth in Section 6.02.   “Purchaser Related Parties” shall have the meaning set forth in Section 6.01.   “Registration Rights Agreement” shall mean the Registration Rights Agreement dated   as of the Closing Date, by and between the Corporation and the Purchaser, in the form attached   hereto as Exhibit B.   “Representatives” shall mean, with respect to a specified Person, the officers, directors,   managers, employees, agents, counsel, accountants, investment bankers, and other   representatives of such Person and, when used with respect to the Purchaser, also includes the   Purchaser’s direct and indirect stockholders, partners, members, subsidiaries, parent companies   and other Affiliates.   “Sales Transaction” shall have the meaning set forth in Section 5.02(b).   “SEC” shall mean the United States Securities and Exchange Commission.   “Securities” shall have the meaning set forth in Section 5.02(a)(i).   “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and   regulations promulgated thereunder.   “Short Sales” shall mean all “short sales” as defined in Rule 200 promulgated under   Regulation SHO under the Exchange Act, whether or not against the box, and forward sale   contracts, options, puts, calls, short sales, “put equivalent positions” (as defined in Rule 16a-1(h)   under the Exchange Act) and similar arrangements, and sales and other transactions through non-   U.S. broker dealers or foreign regulated brokers.   “Significant Event” shall mean the entry by the Corporation into an agreement providing   for a sale of all or substantially all of the Corporation’s assets or a merger or other business   combination transaction that will result in the Corporation’s then current Stockholders owning   less than 50% of the outstanding Equity Securities of the combined Person following such sale,   merger or other business combination transaction.   “Standstill Termination Date” shall have the meaning set forth in Section 5.02(a).   “Stockholders” shall mean the holders of Common Stock.   “Subsidiary” shall mean, with respect to any Person, any corporation or other entity of   which: (a) such Person or a Subsidiary of such Person is a general partner or manager; (b) at least   a majority of the outstanding equity interest having by the terms thereof ordinary voting power to   elect a majority of the board of directors or similar governing body of such corporation or other   entity (irrespective of whether or not at the time any equity interest of any other class or classes   of such corporation or other entity shall have or might have voting power by reason of the   happening of any contingency) is at the time directly or indirectly owned or controlled by such   Person or one or more of its Subsidiaries; or (c) any corporation or other entity as to which such   Person consolidates for accounting purposes.     

 

    7   “Third Party Claim” shall have the meaning set forth in Section 6.03(b).   “Transaction Documents” shall mean, collectively, this Agreement, the Certificate of   Designations and the Registration Rights Agreement.   Section 1.02 Accounting Procedures and Interpretation.  Unless otherwise specified in   this Agreement, all accounting terms used herein shall be interpreted, all determinations with   respect to accounting matters under this Agreement shall be made, and all financial statements   and certificates and reports as to financial matters required to be furnished to the Purchaser under   this Agreement shall be prepared, in accordance with GAAP applied on a consistent basis during   the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited   financial statements, as permitted by Form 10-Q promulgated by the SEC) and in compliance as   to form in all material respects with applicable accounting requirements and with the published   rules and regulations of the SEC with respect thereto.   ARTICLE II   AGREEMENT TO SELL AND PURCHASE   Section 2.01 Sale and Purchase.  Pursuant to the terms of this Agreement, at the   Closing: (a) the Corporation hereby agrees to issue and sell to the Purchaser, and the Purchaser   hereby agrees to purchase from the Corporation, the Purchased Stock; and (b) as consideration   for the issuance and sale of the Purchased Stock to the Purchaser, the Purchaser hereby agrees to   pay the Corporation the Purchase Price.   Section 2.02 Closing.  Pursuant to the terms of this Agreement, the consummation of   the purchase and sale of the Purchased Stock hereunder (the “Closing”) shall take place on the   latest to occur of (a) May 15, 2013, (b) the next Business Day following the fulfillment or waiver   of the last condition in Article VIII to be fulfilled or waived (other than those conditions in   Article VIII to be fulfilled on the Closing Date) or (c) such other date as may be mutually agreed   by the Corporation and the Purchaser (any such date, the “Closing Date”).  The Closing under   this Agreement shall take place at the offices of Vinson & Elkins L.L.P., 1001 Fannin, Houston,   Texas 77002.  The parties to this Agreement agree that the Closing may occur via delivery of   electronic copies of the Transaction Documents and the closing deliverables contemplated   hereby and thereby.  Unless otherwise provided herein, all proceedings to be taken and all   documents to be executed and delivered by all parties to this Agreement at the Closing will be   deemed to have been taken and executed simultaneously, and no proceedings will be deemed to   have been taken nor documents executed or delivered until all have been taken.    Section 2.03 Corporation Closing Deliverables.  Upon the terms and subject to the   conditions of this Agreement, at or prior to the Closing, the Corporation shall deliver (or cause to   be delivered) to the Purchaser each of the following:   (a) a certificate or certificates (bearing the legend set forth in the Certificate of   Designations) representing the Purchased Stock and meeting the requirements of the Corporation   Organizational Documents, registered in such name(s) as the Purchaser has designated (which   shall be limited to Purchaser and its Affiliates);     

 

    8   (b) a certificate of the Secretary or Assistant Secretary of the Corporation dated as of   the Closing Date, certifying as to and attaching: (i) the Certificate of Incorporation, as filed with   the Delaware Secretary of State, (ii) the Bylaws, (iii) resolutions of the Board of Directors   authorizing and approving the Transaction Documents and the transactions contemplated   thereby, including (A) the issuance of the Purchased Stock to the Purchaser, (B) the amendment   of Article III, Section 1(a) of the Bylaws to clarify that the Purchaser’s designees to the Board of   Directors shall not be classified pursuant to such section, and (C) the appointment of the   Purchaser’s designees to the Board of Directors as contemplated by the Certificate of   Designations, in each case as of the Closing, and (iv) the incumbency of the officers executing   the Transaction Documents;   (c) copies of the certificate or articles of incorporation, formation or organization or   other similar organizational document, as the case may be, and all amendments thereto, of each   of the Corporation Entities, certified by the Secretary of State or other similar official of its   jurisdiction of incorporation, formation or organization, each dated as of a recent date;   (d) certificates issued by the Secretary of State or other similar official of the   jurisdiction of incorporation, formation or organization, as the case may be, of each of the   Corporation Domestic Entities evidencing that such Corporation Domestic Entity is validly in   existence and in good standing, each dated as of a recent date;   (e) certificates issued by the Secretary of State or other similar official in each of the   jurisdictions listed on Schedule 3.01 evidencing the qualification and good standing of each of   the Corporation Entities as a foreign limited liability company, foreign limited partnership,   foreign corporation or other foreign Person, as the case may be, each dated as of a recent date to   the extent available with respect to the Corporation Foreign Entities;   (f) the Certificate of Designations, which shall have been duly executed by the   Corporation and filed with the Delaware Secretary of State;   (g) the Registration Rights Agreement, which shall have been duly executed by the   Corporation;   (h) a Director Indemnification Agreement in favor of each of the Purchaser’s   designees to the Board of Directors, which shall have been duly executed by the Corporation;   (i) a written opinion of outside counsel for the Corporation in the form attached   hereto as Exhibit D; and   (j) an annual budget for the Corporation and its Subsidiaries for the 2013 fiscal year,   together with a schedule detailing the anticipated use of proceeds of the Purchase Price.   Notwithstanding anything to the contrary contained in this Agreement, in the event that the other   conditions to the Corporation’s obligation to consummate the transactions contemplated by this   Agreement have been fulfilled or waived pursuant to Section 8.02, the Corporation hereby agrees   to deliver or cause to be delivered, and not to unreasonably withhold or cause to be withheld or   to delay or cause to be delayed the delivery of, each of the items contemplated by this   Section 2.03.     

 

    9   Section 2.04 Purchaser Closing Deliverables.  Upon the terms and subject to the   conditions of this Agreement, at or prior to the Closing, the Purchaser shall deliver (or cause to   be delivered) to the Corporation each of the following:   (a) the Purchase Price in immediately available funds;   (b) the Registration Rights Agreement, which shall have been duly executed by the   Purchaser; and   (c) a Director Indemnification Agreement in favor of each of the Purchaser’s   designees to the Board of Directors, which shall have been duly executed by each such designee.   Notwithstanding anything to the contrary contained in this Agreement, in the event that the other   conditions to the Purchaser’s obligation to consummate the transactions contemplated by this   Agreement have been fulfilled or waived pursuant to Section 8.01, the Purchaser hereby agrees   to deliver or cause to be delivered, and not to unreasonably withhold or cause to be withheld or   to delay or cause to be delayed the delivery of, each of the items contemplated by this   Section 2.04.   ARTICLE III   REPRESENTATIONS AND WARRANTIES OF THE CORPORATION   The Corporation represents and warrants to the Purchaser, on and as of the date of this   Agreement and as of the Closing Date, as follows:   Section 3.01 Formation and Qualification.     (a) Each of the Corporation Entities has been duly incorporated, formed or otherwise   organized, as the case may be, is validly existing and is in good standing under the Laws of its   jurisdiction of incorporation, formation or organization.   (b) Each of the Corporation Entities is duly registered or qualified to do business and   is in good standing as a foreign entity in each jurisdiction in which its ownership or lease of   property or the conduct of its businesses requires such registration or qualification, which   jurisdictions are listed on Schedule 3.01, except where the failure to be in good standing or to   register or qualify, in each case as a foreign entity, would not reasonably be expected to have a   Material Adverse Effect, in each case with respect to the Corporation Foreign Entities to the   extent such concepts apply under applicable Law.     (c) Each of the Corporation Entities has all requisite organizational power and   authority necessary to own or lease its Properties currently owned or leased and to conduct its   business as currently conducted.   Section 3.02 Ownership of Subsidiaries.  Schedule 3.02 sets forth a true and complete   list that accurately reflects all of the owners of the issued and outstanding Equity Securities of   each of the Corporation Entities other than the Corporation and all such Equity Securities owned   by each such owner.  Such Equity Securities have been duly authorized and validly issued and   are fully paid and non-assessable, were not issued in violation of, and are not subject to, any     

 

    10   preemptive rights, rights of first refusal, rights of first offer, purchase options, call options or   other similar rights of any Person and are owned by the respective owner thereof set forth on   Schedule 3.02 free and clear of all Liens and restrictions on transfer, in each case other than   restrictions on transfer that may be imposed by applicable Law or the Corporation Entity   Organizational Documents or as set forth on Schedule 3.02.  No such Equity Securities have   been offered, issued, sold or transferred by the Corporation in violation of any applicable Laws,   including the Securities Act.  There are no Equity Securities of any of the Corporation Entities   other than the Corporation issued or outstanding other than as set forth on Schedule 3.02.   Section 3.03 No Other Subsidiaries.  Other than the Equity Securities of the   Corporation Entities other than the Corporation, the Corporation does not own, directly or   indirectly, any equity or long-term debt securities of any other Person that, individually or in the   aggregate, would be deemed to be a “significant subsidiary” as such term is defined in Rule 405   of the Securities Act.   Section 3.04 Authorization; Enforceability; Valid Issuance.   (a) The Corporation has all requisite corporate power and authority to issue and sell   the Purchased Stock, in accordance with and upon the terms and conditions set forth in the   Transaction Documents, and no further corporate consent or authorization is required.   (b) The Transaction Documents to which the Corporation is a party have been or will   be duly authorized and validly executed and delivered by the Corporation and, assuming due   authorization, execution and delivery by the Purchaser or its Affiliate, as applicable (if either the   Purchaser or its Affiliate is a party thereto), constitute or will constitute valid and binding   obligations of the Corporation; provided that the enforceability thereof may be limited by   bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating   to or affecting creditors’ rights generally and by general principles of equity (regardless of   whether such enforceability is considered in a proceeding in equity or at law).   (c) The Purchased Stock has been duly authorized in accordance with the   Corporation Organizational Documents and, when issued and delivered against payment therefor   in accordance with this Agreement, will be validly issued, fully paid and non-assessable and will   be free of any and all Liens and restrictions on transfer, other than restrictions on transfer that   may be imposed by state or federal securities laws and the Transaction Documents.  The issuance   of the Purchased Stock shall not give rise to any preemptive rights, rights of first refusal, rights   of first offer, purchase options, call options or other similar rights of any Person.   (d) Upon issuance in accordance with this Agreement and the Corporation   Organizational Documents, the Conversion Stock will be duly authorized, validly issued, fully   paid and non-assessable and will be free of any and all Liens and restrictions on transfer, other   than restrictions on transfer that may be imposed by state or federal securities laws and the   Transaction Documents.  The issuance of the Conversion Stock shall not give rise to any   preemptive rights, rights of first refusal, rights of first offer, purchase options, call options or   other similar rights of any Person.     

 

    11   (e) The Corporation has made available to the Purchaser true and correct copies of   the Corporation Entity Organizational Documents as in effect on the date hereof, and all such   documents shall have been duly authorized, approved and adopted under applicable Law.   Section 3.05 No Preemptive Rights, Registration Rights or Options.  There are no   preemptive rights, rights of first refusal, rights of first offer, purchase options, call options or   other similar rights of any Person with respect to or, except as set forth on Schedule 3.05, under   applicable Law or under the Corporation Entity Organizational Documents, any restriction upon   the voting or transfer of any Equity Securities of any of the Corporation Entities, except for   options, stock appreciation rights, phantom stock or similar awards granted pursuant to the   Corporation’s employee benefit or other compensation plans as such plans are described in the   Corporation SEC Documents.  Except as contemplated by the Transaction Documents or as set   forth on Schedule 3.05, the Corporation Entities have not granted registration rights for or   relating to the registration of any Common Stock or any other securities of the Corporation   Entities.  Schedule 3.05 sets forth a summary of certain awards under the Corporation’s 2012   Omnibus Incentive Compensation Plan.   Section 3.06 Capitalization.  As of the date of this Agreement, (a) the issued and   outstanding Common Stock of the Corporation consists of 44,642,983 shares of Common Stock   and (b) the Corporation has issued and outstanding (i) currently vested and exercisable options   with an exercise or strike price less than $1.22 covering an aggregate of 174,729 shares of   Common Stock on a “net exercise” basis (such options in the aggregate having a weighted   average exercise or strike price of $1.11 per share) and (ii) restricted stock units covering an   aggregate of 75,000 shares of Common Stock, in each case pursuant to the Corporation’s   employee benefit or other compensation plans.  Except as described above or reflected in the   Corporation’s SEC Documents as of the date of this Agreement or as set forth on Schedule 3.06,   there are no Equity Securities of the Corporation issued or outstanding.  All of the issued and   outstanding shares of Common Stock have been duly authorized and validly issued in   accordance with the Corporation Organizational Documents and are fully paid and non-   assessable and were not issued in violation of any preemptive rights, rights of first refusal, rights   of first offer, purchase options, call options or other similar rights of any Person.   Section 3.07 No Breach.  None of the issuance and sale by the Corporation of the   Purchased Stock, the contemplated issuance of the Conversion Stock pursuant to the Transaction   Documents, the execution, delivery and performance of the Transaction Documents or the   consummation of any other transaction contemplated hereby or thereby (a) conflicts or will   conflict with or constitutes or will constitute a violation of any of the Organizational Documents,   (b) requires or will require any consent, approval or notice under or results in a breach or   violation of, or constitutes or will constitute a default (or an event that, with notice or lapse of   time or both, would constitute such a default) under, any Contract to which any of the   Corporation Entities is a party or by which any of them or any of their respective Properties may   be bound (other than conflicts, breaches, violations or defaults that have been waived or cured),   (c) violates or will violate any Law of any Governmental Authority or (d) results or will result in   the creation or imposition of any Lien, charge or encumbrance upon any property or assets of   any of the Corporation Entities, except, in the cases of clauses (b), (c) and (d), for such consents,   approvals, notices, breaches, defaults, violations and Liens that would not, individually or in the   aggregate, reasonably be expected to have a Material Adverse Effect.     

 

    12   Section 3.08 No Approvals.  Except for (a) the approvals required by the SEC in   connection with any registration statement filed pursuant to the Registration Rights Agreement   and the resolution of any comments of the staff of the SEC on the proxy statement relating to the   Proposal, (b) filings or other public disclosures regarding the Transaction Documents required   under the Exchange Act and applicable NASDAQ rules, (c) any notices, filings or approvals   under applicable state securities laws, (d) such consents that have been obtained prior to the   Closing and (e) such consents, approvals, authorizations or orders that, if not obtained, would   not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect,   no consent, approval, authorization or order of, or filing or registration with, any Governmental   Authority is required in connection with the issuance and sale by the Corporation of the   Purchased Stock, the contemplated issuance of the Conversion Stock pursuant to the Transaction   Documents, the execution, delivery and performance of each of the Transaction Documents to   which the Corporation is a party or the consummation by the Corporation of the transactions   contemplated by the Transaction Documents.   Section 3.09 No Default.  None of the Corporation Entities (a) is in violation of its   applicable Organizational Documents, (b) is in default (and no event has occurred which, with   notice or lapse of time or both, would constitute such a default) in the due performance or   observance of any term, covenant or condition contained in any Contract to which it is a party or   by which it is bound or to which any of its properties or assets is subject or (c) is in violation of   any Law of any Governmental Authority, except, in the cases of clauses (b) and (c), for such   defaults or violations that would not, individually or in the aggregate, reasonably be expected to   have a Material Adverse Effect.  To the Knowledge of the Corporation, all third parties to any   Contract to which any of the Corporation Entities is a party or by which any of them is bound or   to which any of their properties or assets is subject are in compliance with all terms, covenants   and conditions contained in each such Contract, except where the failure to be in compliance   would not, individually or in the aggregate, reasonably be expected to have a Material Adverse   Effect.   Section 3.10 Corporate Records.  The minute books of each of the Corporation Entities   for the last three years have been made available to the Purchaser, and such books (a) reflect all   meetings and actions of the board of directors (including each board committee) and   stockholders (or analogous governing bodies or interest holders) of each of the Corporation   Entities during such period and through the date of the latest meeting and action (except for   redactions relating to the process resulting in the negotiation of the Transaction Documents), and   (b) accurately in all material respects reflect all actions taken at such meetings and other actions   in such minutes (except for redactions relating to the process resulting in the negotiation of the   Transaction Documents).   Section 3.11 Corporation SEC Documents; Corporation Financial Statements.    (a) The Corporation has filed or furnished with the SEC all reports, schedules, forms,   statements and other documents (including exhibits and other information incorporated therein)   required to be filed or furnished by it under the Exchange Act or the Securities Act since   January 1, 2011 (all such documents, collectively, the “Corporation SEC Documents”).  The   Corporation SEC Documents, including any audited or unaudited financial statements and any   notes thereto or schedules included therein (the “Corporation Financial Statements”), at the     

 

    13   time filed or furnished (except to the extent corrected by a subsequently filed or furnished   Corporation SEC Document filed or furnished prior to the date hereof) (i) did not contain any   untrue statement of a material fact or omit to state a material fact required to be stated therein or   necessary in order to make the statements therein (in the light of the circumstances under which   they were made in the case of any prospectus) not misleading, (ii) complied in all material   respects with the applicable requirements of the Exchange Act and the Securities Act, as   applicable, (iii) complied as to form in all material respects with applicable accounting   requirements and with the published rules and regulations of the SEC with respect thereto, (iv) in   the case of the Corporation Financial Statements, were prepared in accordance with GAAP   applied on a consistent basis during the periods involved (except as may be indicated in the notes   thereto or, in the case of unaudited statements, as permitted by Form 10-Q promulgated by the   SEC) and (v) in the case of the Corporation Financial Statements, fairly present (subject in the   case of unaudited statements to normal, recurring and year-end audit adjustments) in all material   respects the financial condition, results of operations and cash flows of the Corporation and its   Subsidiaries as of the dates and for the periods indicated.  Ehrhardt Keefe Steiner & Hottman PC   and Deloitte & Touche LLP are independent registered public accounting firms with respect to   the Corporation and have not resigned or been dismissed as independent registered public   accountants of the Corporation as a result of or in connection with any disagreement with the   Corporation on any matter of accounting principles or practices, financial statement disclosure or   auditing scope or procedures.   (b) To the Knowledge of the Corporation, Ehrhardt Keefe Steiner & Hottman PC and   Deloitte & Touche LLP are in compliance with the applicable requirements relating to the   qualification of accountants under Rule 2-01 of Regulation S-X.  Except as disclosed in the   Corporation SEC Documents or as set forth on Schedule 3.11(b), since January 1, 2011, (i) the   Corporation has not been advised of (A) any significant deficiency or material weakness in the   design or operation of internal controls that could adversely affect the Corporation’s internal   controls or (B) any fraud, whether or not material, that involves management or other employees   who have a significant role in the Corporation’s internal controls, and (ii) there have been no   changes in internal controls or in other factors that could materially affect internal controls,   including any corrective actions with regard to any significant deficiency or material weakness.   (c) The Corporation has made available to the Purchaser copies of all issued auditors’   reports and any accounting management letters received since January 1, 2011, in each case to   the extent relating to the business of the Corporation Entities and the operation thereof.  Except   as set forth on Schedule 3.11(c), since January 1, 2011, none of the Corporation Entities nor, to   the Knowledge of the Corporation, any director, officer, employee, auditor, accountant or   representative of any of the Corporation Entities has received any complaint, allegation, assertion   or claim, in each case believed by an officer of the Corporation to be significant and based on   reasonably specific allegations, whether written or oral, regarding the accounting or auditing   practices, procedures, methodologies or methods of the Corporation Entities or their respective   internal accounting controls, including any such complaint, allegation, assertion or claim that any   Corporation Entity has engaged in questionable accounting or auditing practices.   Section 3.12 Books and Records; Sarbanes-Oxley Compliance.  Each of the   Corporation Entities (i) makes and keeps materially accurate books and records and   (ii) maintains and has maintained during all periods in which doing so has been required under     

 

    14   applicable Law internal control over financial reporting (as defined in Rule 13a-15 under the   Exchange Act) and a system of internal accounting controls designed to provide reasonable   assurance that (A) transactions are executed in accordance with management’s general or   specific authorizations, (B) transactions are recorded as necessary to permit preparation of the   Corporation's consolidated financial statements in conformity with GAAP and to maintain   accountability for its assets, (C) access to the Corporation Entities’ assets is permitted only in   accordance with management’s general or specific authorization and (D) the recorded   accountability for the Corporation Entities’ assets is compared with existing assets at reasonable   intervals and appropriate action is taken with respect to any differences, and management has   concluded that such controls are effective as disclosed in the Corporation SEC Documents.  To   the Knowledge of the Corporation, there are not any failures with respect to such internal   accounting controls that are material or that would be required to be disclosed pursuant to any   applicable Law.  The Corporation has established and maintains disclosure controls and   procedures (as such term is defined in Rule 13a-15 under the Exchange Act), such disclosure   controls and procedures are designed to ensure that the information required to be disclosed by   the Corporation in the reports it files or submits under the Exchange Act is accumulated and   communicated to management of the Corporation, including its principal executive officers and   principal financial officers, as appropriate, to allow timely decisions regarding required   disclosure to be made and management has concluded that such controls and procedures are   effective, as disclosed in the Corporation SEC Documents, in alerting the Corporation in a timely   manner to material information required to be disclosed in the Corporation’s reports filed with   the SEC.  To the Knowledge of the Corporation, each of the Corporation and its directors or   officers, in their capacities as such, have complied in all material respects with the provisions of   the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection   therewith.   Section 3.13 No Material Adverse Change.  Except as described in the Corporation   SEC Documents, since January 1, 2011, there has not been (a) any material adverse change, or   any development involving a prospective material adverse change, in the business, Properties,   management, financial condition or results of operations of the Corporation Entities, taken as a   whole, (b) any transaction that is material to the Corporation Entities, taken as a whole, (c) any   obligation or liability, direct or contingent (including any off-balance sheet obligations), incurred   by any of the Corporation Entities that is material to the Corporation Entities, taken as a whole,   (d) any change in any equity securities or outstanding indebtedness of any of the Corporation   Entities that is material to the Corporation Entities, taken as a whole or (e) any dividend or   distribution of any kind declared, paid or made on or in respect of any equity securities of the   Corporation Entities, except for dividends or distributions made or paid to the Corporation   Entities.   Section 3.14 Title to Real Property.  Each of the Corporation Entities has good and   marketable title to all Property described in the Corporation SEC Documents as currently owned   by such Corporation Entity, free and clear of all Liens except (A) as described, and subject to the   limitations contained, in the Corporation SEC Documents, (B) such as do not materially affect   the value of such Properties, taken as a whole, (C) such as do not materially interfere with the   use of such Properties, taken as a whole as they have been used in the past and are proposed to   be used in the future as described in the Corporation SEC Documents, or (D) Liens arising from   the terms of the leases and other instruments creating such title or interest (collectively, the     

 

    15   “Permitted Liens”); provided that with respect to any real property and buildings held under   lease by any of the Corporation Entities, such real property and buildings are held under valid   and subsisting and enforceable leases with such exceptions as do not materially interfere with the   use of the Properties of the Corporation Entities, taken as a whole as they have been used in the   past as described in the Corporation SEC Documents and are proposed to be used in the future as   described in the Corporation SEC Documents.  The foregoing representations shall not be   deemed to apply to oil and gas leasehold interests (or equivalent interests in oil and gas   properties under applicable laws of Australia and the United Kingdom) (the “Oil and Gas   Interests”).  Notwithstanding the foregoing, the Corporation Entities have record title to all of   the Oil and Gas Interests evaluated to generate the most recent reserve reports included in the   Corporation SEC Documents and free and clear of all Liens, other than Permitted Liens.   Section 3.15 Reserve Engineers; Reserve Estimates.  Allen & Crouch Petroleum   Engineers, Inc. (“Allen & Crouch”), who issued a report with respect to the Corporation   Entities’ oil and natural gas reserves at July 18, 2012, has represented to the Corporation that it   is, and to the Knowledge of the Corporation is, an independent petroleum engineer with respect   to the Corporation.  The oil and gas reserve estimates of the Corporation Entities included in the   Corporation’s most recently-filed Form 10-K, as amended, have been prepared by independent   reserve engineers in accordance with SEC guidelines, and the Corporation has no reason to   believe that such estimates do not fairly reflect the oil and gas reserves of the Corporation   Entities as of the dates indicated as defined under SEC rules.  Other than normal production of   the reserves and intervening market commodity price fluctuations, and except as set forth on   Schedule 3.15, the Corporation is not aware of any facts or circumstances that would result in a   material adverse change in the aggregate net reserves, or the aggregate present value of future net   cash flows therefrom, as described in the Corporation’s most recently-filed Form 10-K, as   amended.   Section 3.16 Insurance.  The Corporation Entities maintain insurance covering their   respective Properties, operations, personnel and businesses against such losses and risks and in   such amounts as is customary for companies engaged in similar businesses in similar industries.    In all material respects, such insurance is in full force and effect, there has been no written notice   of any cancellation or any threatened cancellation of any material policy with respect to such   insurance, and a Corporation Entity is a named insured or loss payee, as applicable, under each   such policy.  There are no material claims by any Corporation Entity pending under any of such   policies or bonds as to which coverage has been questioned, denied or disputed by the   underwriters of such policies or bonds.   Section 3.17 Litigation.  Except as set forth on Schedule 3.17, there are no material   actions, suits, claims, investigations or proceedings pending or, to the Knowledge of the   Corporation, threatened, to which any of the Corporation Entities is or would be a party or of   which any of their respective Properties is or would be subject at law or in equity, before or by   any Governmental Authority, or before or by any self-regulatory organization or other non-   governmental regulatory authority (including NASDAQ).   Section 3.18 Employee Matters.     

 

    16   (a) Schedule 3.18 sets forth a true, accurate and complete list of each plan,   agreement, contract, trust or other arrangement that provides for any termination payment   (whether of severance pay or otherwise), accelerated vesting or payment, forgiveness of   indebtedness, distribution, increase in compensation, payments or benefits or obligation to fund   benefits with respect to any current or former employee or director of any of the Corporation   Entities upon a change of control. Except as set forth on Schedule 3.18, the execution and   delivery of the Transaction Documents, and performance of the transactions contemplated   thereby, will not trigger any such provision.  None of the Corporation Entities or any of their   respective ERISA Affiliates has or, to the Knowledge of the Corporation, could reasonably be   expected to have any direct or indirect liability under Title IV of the Employee Retirement   Income Security Act of 1974, as amended (“ERISA”).  As used in the preceding sentence, the   term “ERISA Affiliate” means, with respect to any entity, any entity, trade or business that is a   member of a group described in Section 414(b), (c), (m) or (o) of the Code, or Section   4001(b)(1) of ERISA that includes the first entity, or that is a member of the same “controlled   group” as the first entity pursuant to Section 4001(a)(14) of ERISA.   (b) Except as set forth on Schedule 3.18, no labor dispute with the employees of any   of the Corporation Entities exists or, to the Knowledge of the Corporation, is imminent.   Section 3.19 Tax Returns.  Each of the Corporation Entities has filed (or has obtained   extensions with respect to) all material federal, state and local income and franchise tax returns   and all non-U.S. tax returns required to be filed, which returns are correct and complete in all   material respects, and has timely paid all taxes due, whether or not associated with such a return,   other than those that are being contested in good faith and for which adequate reserves have been   established in accordance with GAAP.  There are no Liens on any assets of the Corporation   Entities that arose in connection with any failure (or alleged failure) to pay any tax.  The   Corporation has not constituted either a “distributing corporation” or a “controlled corporation”   in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the   Code, in the two years prior to the date of this Agreement or in a distribution that could   otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of   Section 355(e) of the Code) in conjunction with the transactions contemplated by this   Agreement.   Section 3.20 Environmental Compliance.  Except as set forth on Schedule 3.20, the   Corporation Entities (a) are in compliance in all material respects with any and all Environmental   Laws, (b) have received all Environmental Permits required of them under applicable   Environmental Laws to conduct their respective businesses as they are currently being   conducted, (c) are in compliance in all material respects with all terms and conditions of any   such Environmental Permits, (d) since January 1, 2011, have not received any notice from or   been the subject of any suit, proceeding, investigation, claim or action by any Governmental   Authority or other third party that would reasonably be expected to result in any material liability   to or obligation of the Corporation Entities alleging or asserting any violation of Environmental   Law or any liability under Environmental Law, which notice, suit, proceeding, investigation,   claim or action has not been resolved to the satisfaction of the party giving or asserting it and   (e) do not, to the Knowledge of the Corporation, have any material liability in connection with   the release into the environment of any Hazardous Material.     

 

    17   Section 3.21 Permits.  Other than any Environmental Permits, each of the Corporation   Entities has such permits, consents, licenses, franchises, certificates and authorizations of   governmental or regulatory authorities (“Permits”) as are necessary to own its Properties and to   conduct its business in the manner described in the Corporation SEC Documents, subject to such   qualifications as may be set forth therein and except for (a) such Permits that, if not obtained,   would not reasonably be expected to have, individually or in the aggregate, a Material Adverse   Effect and (b) Permits to be obtained in connection with oil and gas development activities in the   ordinary course of the Corporation’s business.  Except as set forth on Schedule 3.21, each of the   Corporation Entities has fulfilled and performed all its material obligations with respect to such   Permits which are or will be due to have been fulfilled and performed by such date and no event   has occurred that would prevent the Permits from being renewed or reissued or which allows, or   after notice or lapse of time would allow, revocation or termination thereof or results in any   impairment of the rights of the holder of any such Permit, except for such non-renewals, non-   issues, revocations, terminations and impairments that would not reasonably be expected to have,   individually or in the aggregate, a Material Adverse Effect.  Except as set forth on Schedule 3.21,   none of such Permits contains any restriction that is not customary in the oil and gas industry and   is materially burdensome to the Corporation Entities considered as a whole.   Section 3.22 Foreign Corrupt Practices Act; Money Laundering.  None of the   Corporation Entities, and, to the Knowledge of the Corporation, no director, officer, agent,   employee or other Person acting on behalf of the Corporation Entities, has taken any action,   directly or indirectly, that would result in a violation by such Persons of the FCPA (as defined   below), including, without limitation, making use of the mails or any means or instrumentality of   interstate commerce corruptly in furtherance of an offer, payment, promise to pay or   authorization of the payment of any money, or other property, gift, promise to give, or   authorization of the giving of anything of value to any “foreign official” (as such term is defined   in the FCPA) or any foreign political party or official thereof or any candidate for foreign   political office, in contravention of the FCPA and to the Knowledge of the Corporation, the   Corporation Entities have conducted their businesses in compliance with the FCPA and have   instituted and maintain policies and procedures designed to ensure, and which are reasonably   expected to continue to ensure, continued compliance therewith.  “FCPA” shall mean Foreign   Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.  The   operations of the Corporation Entities are and have been conducted at all times in compliance in   all material respects with applicable financial recordkeeping and reporting requirements of the   Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering   statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules,   regulations or guidelines, issued, administered or enforced by any Governmental Authority   (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before   any court or governmental agency, authority or body or any arbitrator involving the Corporation   Entities with respect to the Money Laundering Laws is pending or, to the Knowledge of the   Corporation, threatened.   Section 3.23 NASDAQ Listing.  The Common Stock is listed on NASDAQ, and the   Corporation has not received any notice of delisting except as set forth on Schedule 3.23.  The   issuance and sale of the Purchased Stock does not and the issuance of Conversion Stock will not   contravene NASDAQ rules and regulations.     

 

    18   Section 3.24 Related Party Transactions.  Except as set forth on Schedule 3.24, to the   Knowledge of the Corporation, no relationship, direct or indirect, exists between or among the   Corporation Entities on the one hand, and the directors, officers, stockholders, customers or   suppliers of the Corporation Entities, on the other hand, that is required to be disclosed in the   Corporation SEC Documents and is not so described.   Section 3.25 Business Combinations.  The Corporation has taken all necessary action to   cause Section 203 of the Delaware General Corporation Law to not apply to the transactions   contemplated by the Transaction Documents, including the issuance and sale of the Purchased   Stock.   Section 3.26 Investment Company.  None of the Corporation Entities is now, or after   the sale of the Purchased Stock to be sold by the Corporation to the Purchaser hereunder will be,   an “investment company” or a company “controlled by” an “investment company” within the   meaning of the Investment Company Act of 1940, as amended.   Section 3.27 Certain Fees.  Except as set forth on Schedule 3.27, no fees or   commissions are or will be payable by the Corporation to brokers, finders or investment bankers   with respect to the sale of the Purchased Stock or the consummation of the transactions   contemplated by the Transaction Documents.  The Corporation agrees that it will indemnify and   hold harmless the Purchaser from and against any and all claims, demands or liabilities for   broker’s, finder’s, placement or other similar fees or commissions incurred by the Corporation or   alleged to have been incurred by the Corporation in connection with the sale of the Purchased   Stock or the consummation of the transactions contemplated by the Transaction Documents.   Section 3.28 Form S-3 Eligibility.  The Corporation is eligible and qualifies to use   Form S-3 promulgated under the Securities Act for secondary offerings.   Section 3.29 Private Placement.  Assuming the accuracy of the representations and   warranties set forth in Article IV, the offer and sale of the Purchased Stock to the Purchaser as   contemplated herein is exempt from the registration requirements of the Securities Act.   Section 3.30 Required Stock Vote.  The majority of the total votes cast by the holders   of Common Stock (with the exception of the Purchased Stock and the Conversion Stock, which   are not entitled to vote according to the rules of NASDAQ) is the only approval required to   approve the Proposal.   Section 3.31 Exclusivity of Representations.  The representations and warranties made   by the Corporation in the Transaction Documents are the exclusive representations and   warranties made by the Corporation.  The Corporation hereby disclaims any other express or   implied representations or warranties.   ARTICLE IV   REPRESENTATIONS AND WARRANTIES OF THE PURCHASER   The Purchaser hereby represents and warrants to the Corporation with respect to itself, on   and as of the date of this Agreement and as of the Closing Date, as follows:     

 

    19   Section 4.01 Existence.  The Purchaser has been duly formed, is validly existing and is   in good standing under the Laws of the State of Delaware.  The Purchaser has all requisite   organizational power and authority necessary to own its Properties currently owned and to   conduct its business as currently conducted.   Section 4.02 Authorization; Enforceability.   (a) The Purchaser has all requisite organizational power and authority to purchase the   Purchased Stock, in accordance with and upon the terms and conditions set forth in the   Transaction Documents, and no further organizational consent or authorization is required.   (b) The Transaction Documents to which the Purchaser is a party have been or will be   duly authorized and validly executed and delivered by the Purchaser and, assuming due   authorization, execution and delivery by the Corporation, constitute or will constitute valid and   binding obligations of the Purchaser; provided that the enforceability thereof may be limited by   bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating   to or affecting creditors’ rights generally and by general principles of equity (regardless of   whether such enforceability is considered in a proceeding in equity or at law).   Section 4.03 No Breach.  The execution, delivery and performance of the Transaction   Documents and the consummation by the Purchaser of the transactions contemplated thereby   does not and will not (a) conflict with or constitute a violation of the organizational documents of   the Purchaser, (b) require any consent, approval or notice under or result in a breach or violation   of, or constitute a default (or an event that, with notice or lapse of time or both, would constitute   such a default) under, any material agreement to which the Purchaser is a party or by which the   Purchaser or any of its Properties may be bound (other than conflicts, breaches, violations or   defaults that have been waived or cured) or (c) violate any Law of any Governmental Authority,   except, in the case of clauses (b) and (c), for such consents, approvals, notices, breaches, defaults   and violations that would not, individually or in the aggregate, reasonably be expected to prevent   the consummation of the transactions contemplated by the Transaction Documents.   Section 4.04 Certain Fees.  No fees or commissions are or will be payable by the   Purchaser to brokers, finders or investment bankers with respect to the purchase of any of the   Purchased Stock or the consummation of the transactions contemplated by the Transaction   Documents.  The Purchaser agrees that it will indemnify and hold harmless the Corporation from   and against any and all claims, demands or liabilities for broker’s, finder’s, placement or other   similar fees or commissions incurred by the Purchaser or alleged to have been incurred by the   Purchaser in connection with the purchase of the Purchased Stock or the consummation of the   transactions contemplated by the Transaction Documents.   Section 4.05 Unregistered Securities.   (a) Accredited Investor Status; Sophisticated Purchaser.  The Purchaser is an   “accredited investor” within the meaning of Rule 501 under the Securities Act and is able to bear   the risk of its investment in the Purchased Stock and the Conversion Stock.  The Purchaser has   such knowledge and experience in financial and business matters that it is capable of evaluating   the merits and risks of the purchase of the Purchased Stock and the Conversion Stock.     

 

    20   (b) Information.  The Purchaser or its Representatives have been furnished with   materials relating to the business, finances and operations of the Corporation and relating to the   offer and sale of the Purchased Stock and Conversion Stock that have been requested by the   Purchaser.  The Purchaser or its Representatives has been afforded the opportunity to ask   questions of the Corporation or its Representatives.  Neither such inquiries nor any other due   diligence investigations conducted at any time by the Purchaser or its Representatives shall   modify, amend or affect the Purchaser’s right (i) to rely on the Corporation’s representations and   warranties contained in Article III or (ii) to indemnification or any other remedy based on, or   with respect to the accuracy or inaccuracy of, or compliance with, the representations,   warranties, covenants and agreements in this Agreement.  The Purchaser understands and   acknowledges that its purchase of the Purchased Stock involves a high degree of risk and   uncertainty.  The Purchaser has sought such accounting, legal and tax advice as it has considered   necessary to make an informed investment decision with respect to its investment in the   Purchased Stock.   (c) Cooperation.  The Purchaser shall cooperate reasonably with the Corporation to   provide any information required to be included in the Corporation’s securities filings.   (d) Purchaser Representation.  The Purchaser is purchasing the Purchased Stock for   its own account and not with a view to distribution in violation of any securities laws.  The   Purchaser understands and acknowledges that there is no public trading market for the Purchased   Stock and that none is expected to develop.  The Purchaser has been advised and understands   and acknowledges that neither the Purchased Stock nor the Conversion Stock have been   registered under the Securities Act or under the “blue sky” laws of any jurisdiction and may be   resold only if registered pursuant to the provisions of the Securities Act (or if eligible, pursuant   to the provisions of Rule 144 promulgated under the Securities Act or pursuant to another   available exemption from the registration requirements of the Securities Act) and any applicable   state laws.  The Purchaser has been advised of and is aware of the provisions of Rule 144   promulgated under the Securities Act.   (e) Legends.  The Purchaser understands and acknowledges that, until such time as   the Purchased Stock and Conversion Stock have been registered pursuant to the provisions of the   Securities Act, or the Purchased Stock and Conversion Stock are eligible for resale pursuant to   Rule 144 promulgated under the Securities Act without any restriction as to the number of   securities as of a particular date that can then be immediately sold, the Purchased Stock and   Conversion Stock will bear the restrictive legend contemplated by the Certificate of   Designations.   (f) Reliance Upon the Purchaser’s Representations and Warranties.  The Purchaser   understands and acknowledges that the Purchased Stock is being offered and sold in reliance on   a transactional exemption from the registration requirements of federal and state securities laws,   and that the Corporation and Davis Graham & Stubbs LLP, outside counsel for the Corporation,   are relying in part upon the truth and accuracy of the representations, warranties, agreements,   acknowledgments and understandings of the Purchaser set forth in this Agreement in   (i) concluding that the issuance and sale of the Purchased Stock is a “private offering” and, as   such, is exempt from the registration requirements of the Securities Act, and (ii) determining the     

 

    21   applicability of such exemptions with respect to the Purchaser’s purchase of the Purchased   Stock.   Section 4.06 Short Selling.  The Purchaser represents and warrants that it (a) has not,   nor has any person acting on behalf of or pursuant to an understanding with the Purchaser,   entered into any Short Sales of the Common Stock owned by it between the time it first began   discussions with the Corporation about the transactions contemplated by this Agreement and the   date hereof and (b) will not, nor will any person acting on behalf of or pursuant to an   understanding with the Purchaser, enter into any Short Sales of the Common Stock owned by it   from and after the date hereof until such time as it no longer holds any shares of Preferred Stock.   Section 4.07 Exclusivity of Representations.  The representations and warranties made   by the Purchaser in the Transaction Documents are the exclusive representations and warranties   made by the Purchaser.  The Purchaser hereby disclaims any other express or implied   representations or warranties.   ARTICLE V   COVENANTS   Section 5.01 Stockholder Vote with Respect to Conversion.   (a) As soon as practicable, but in no event later than 90 days after the Closing Date,   the Corporation shall, in accordance with applicable Law and the Corporation Organizational   Documents, take all action necessary to convene a meeting of its Stockholders (other than any   holder of shares of Common Stock issued upon conversion of any shares of Preferred Stock,   including Preferred Stock that may be paid as PIK Dividends (as that term is defined in the   Certificate of Designations) for the purpose of considering and voting upon (i) the full voting   power with respect to all shares of Preferred Stock notwithstanding the limitation set forth in   Section 4(a)(ii) of the Certificate of Designations and (ii) the full convertibility of all shares of   Preferred Stock (including PIK Dividends) into shares of Common Stock notwithstanding the   limitation set forth in Section 7(b) of the Certificate of Designations, in each case in accordance   with NASDAQ Listing Rule 5635 (the “Proposal”).  Subject to fiduciary duties under applicable   Law, the Board of Directors shall, in connection with such meeting, recommend approval of the   Proposal and shall take all other lawful action to solicit the approval of the Proposal by the   Stockholders (other than any holder of shares of Common Stock issued upon conversion of any   shares of Preferred Stock), except that the Corporation may, but shall not be required to, hire any   proxy solicitation firm in connection with such meeting.   (b) (i) If the Proposal is not approved by the Stockholders (other than any holder of   shares of Common Stock issued upon conversion of any shares of Preferred Stock) at the special   meeting contemplated by Section 5.01(a), then the Corporation shall be obligated to include the   Proposal to be voted upon at the next annual meeting of such Stockholders following the Closing   Date, (ii) if the Proposal is not approved by the Stockholders (other than any holder of shares of   Common Stock issued upon conversion of any shares of Preferred Stock) at the annual meeting   contemplated by clause (i), then the Corporation shall be obligated to convene a meeting of the   Stockholders (other than any holder of shares of Common Stock issued upon conversion of any   shares of Preferred Stock) to vote upon the Proposal no later than 180 days after such annual     

 

    22   meeting and (iii) if the Proposal is not approved by the Stockholders (other than any holder of   shares of Common Stock issued upon conversion of any shares of Preferred Stock) at the special   meeting contemplated by clause (ii), then the Corporation shall be obligated to include the   Proposal to be voted upon at the next annual meeting of its Stockholders following such second   interim meeting and, in each case the Board of Directors shall again be obligated to take the   actions set forth in Section 5.01(a) with respect to such meeting.   Section 5.02 Standstill Obligation.   (a) For a period beginning on the date hereof and ending on the second anniversary of   the date hereof (the “Standstill Termination Date”), without the prior written consent of the   Corporation, the Purchaser agrees that it shall not, nor shall it permit any of its Affiliates to, nor   shall the Purchaser agree, advise, assist, provide information or provide financing to others, or   permit its Affiliates to agree, advise, assist, provide information or provide financing to others,   to, individually or collectively, directly or indirectly:   (i) acquire or offer to acquire or agree to acquire from any Person, directly or   indirectly, by purchase or merger, through the acquisition of control of another Person, by   joining a partnership, limited partnership or other “group” (within the meaning of   Section 13(d)(3) of the Exchange Act) or otherwise, beneficial ownership of any Equity   Securities of the Corporation, or direct or indirect rights (including convertible securities)   or options to acquire such beneficial ownership (collectively, the “Securities”) (or   otherwise act in concert with respect to any such Securities with any Person that so   acquires, offers to acquire or agrees to acquire); provided, however, that no such   acquisition, offer to acquire or agreement to acquire shall be deemed to occur solely due   to: (A) the issuance of the Purchased Stock (including the issuance of any Conversion   Stock underlying the Purchased Stock), (B) a stock split, reverse stock split,   reclassification, reorganization or other transaction by the Corporation affecting any class   of the outstanding Equity Securities of the Corporation generally or (C) a dividend of   stock or other pro rata distribution by the Corporation to holders of its outstanding   Equity Securities;   (ii) make, or in any way participate in, directly or indirectly, any “solicitation”   of “proxies” to vote (as such terms are used in the Regulation 14A promulgated under the   Exchange Act), become a “participant” in, or encourage, support or aid any other Person   to become a “participant” in any “election contest” (as such terms are defined in Rule   14a-11 promulgated under the Exchange Act) or initiate, propose or otherwise solicit   Stockholders of the Corporation for the approval of any Stockholder proposals, in each   case with respect to the Corporation;   (iii) form, join, in any way participate in, or encourage the formation of, a   “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to   any voting securities of the Corporation;   (iv) deposit any securities of the Corporation into a voting trust, or subject any   securities of the Corporation to any agreement or arrangement with respect to the voting   of such securities, or other agreement or arrangement having similar effect;     

 

    23   (v) alone or in concert with others, seek, or encourage, support or aid any   effort, to influence or control the management, Board of Directors, business, policies,   affairs or actions of the Corporation; or   (vi) request the Corporation (or any directors, officers, employees or agents of   the Corporation), directly or indirectly to amend, waive or modify any provision of this   Section 5.02.   The foregoing provisions of this Section 5.02(a) shall not apply to the Purchaser with respect to a   Significant Event after the Corporation enters into a definitive agreement that results in the   occurrence of the Significant Event.  Subject to fiduciary duties under applicable Law, the   foregoing provisions of Section 5.02(a)(v) shall not apply to any person who is a director of the   Corporation acting in his capacity as a director of the Corporation in the ordinary course and   within the process of the Board of Directors.   (b) If, prior to the Standstill Termination Date, the Corporation or its Affiliates (other   than the Purchaser or any of its Affiliates) conduct a process with two or more potential bidders   relating to a sale of all or substantially all of the Corporation’s assets or a merger or other   business combination transaction involving the Corporation that would reasonably be expected   to result in the Corporation’s then current Stockholders owning less than 50% of the outstanding   Equity Securities of the combined Person following such sale, merger or other business   combination transaction (each, a “Sales Transaction”), then the Corporation agrees that it shall   provide the Purchaser with an invitation to bid, using substantially the same invitation to bid sent   to other potential bidders in such process, and shall provide to the Purchaser substantially the   same information relating to the Corporation Entities that the Corporation provided in such   process to such other potential bidders, subject to a confidentiality agreement acceptable to the   Corporation containing confidentiality restrictions no more restrictive in the aggregate than those   in the confidentiality agreement entered into by any other potential bidder in connection with   such process, and the restrictions set forth in Section 5.02(a) shall not apply to any process or   transaction described in this Section 5.02(b) for the limited purpose of allowing the Purchaser to   bid, negotiate and, with the approval and recommendation of the Board of Directors, complete a   Sales Transaction as contemplated by this paragraph.  If the Corporation elects not to pursue a   Sales Transaction with the Purchaser following the process described in this Section 5.02(b),   then the restrictions in Section 5.02(a) shall continue to apply to the Purchaser.   (c) Notwithstanding anything to the contrary in this Section 5.02, prior to the   Standstill Termination Date, at the Corporation’s request, the Purchaser shall be permitted to   provide strategic advice to the Corporation from time to time.   Section 5.03 Section 16(b) Matters.  The Corporation shall take, or shall have taken,   such commercially reasonable actions as may be advisable in order to cause the payment of   interest in kind, if any, under the Certificate of Designations to be exempt under Section 16(b) of   the Exchange Act to the extent practicable.   Section 5.04 Further Assurances; NASDAQ Listing.  From time to time prior to and   after the Closing Date, without further consideration, the Corporation and the Purchaser shall use   their commercially reasonable efforts to take, or cause to be taken, all actions necessary or     

 

    24   appropriate to consummate the transactions contemplated by the Transaction Documents.    Without limiting the foregoing, the Corporation shall (a) file with NASDAQ the proper form or   other notification and required supporting documentation, and provide to NASDAQ any other   requested information, related to the Conversion Stock and (b) ensure that the issuance of the   Preferred Stock and Conversion Stock is in compliance with applicable NASDAQ rules and   regulations.  If the Corporation applies to have its Common Stock or other securities traded on   any principal stock exchange or market other than NASDAQ, it shall include in such application   the Conversion Stock and will take such other action as is necessary to cause such Conversion   Stock to be so listed.   ARTICLE VI   INDEMNIFICATION, COSTS AND EXPENSES   Section 6.01 Indemnification by the Corporation.  Subject to Section 6.04, the   Corporation agrees to indemnify the Purchaser and its Representatives (collectively,   the “Purchaser Related Parties”) from, and hold each of them harmless against, any and all   losses, actions, suits, proceedings (including any investigations, litigation or inquiries), demands   and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse   each of them for all reasonable costs, losses, liabilities, damages or expenses of any kind or   nature whatsoever (including the reasonable fees and disbursements of counsel and all other   reasonable expenses incurred in connection with investigating, defending or preparing to defend   any such matter, but excluding costs of investigating any matter initiated by the Purchaser   Related Parties where such investigation is undertaken without a reasonable and good faith belief   that a Corporation Indemnified Liability exists), whether or not involving a Third Party Claim, as   a result of, arising out of or related to any of the following (collectively, the “Corporation   Indemnified Liabilities”): (a) the failure of any of the representations or warranties made by the   Corporation contained herein to be true and correct (disregarding any references to “material”,   “materially”, “material respects”, “Material Adverse Effect” and all other similar materiality   qualifications therein, except for any such references or qualifications set forth in Section 3.13);   or (b) the breach of any of the covenants or obligations of the Corporation contained herein;   provided that in the case of the immediately preceding clause (a), such claim for indemnification   relating to a breach of any representation or warranty is made prior to the expiration of such   representation or warranty; provided, however, that for purposes of determining when an   indemnification claim has been made, the date upon which a Purchaser Related Party shall have   given notice (stating in reasonable detail the basis of the claim for indemnification) to the   Corporation shall constitute the date upon which such claim has been made; and provided,   further, that in no event shall the Corporation be required to make payments in respect of   Corporation Indemnified Liabilities that exceed in the aggregate the Purchase Price.   Section 6.02 Indemnification by the Purchaser.  Subject to Section 6.04, the Purchaser   agrees to indemnify the Corporation and its Representatives (collectively, the “Corporation   Related Parties”) from, and hold each of them harmless against, any and all losses, actions,   suits, proceedings (including any investigations, litigation or inquiries), demands and causes of   action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them   for all reasonable costs, losses, liabilities, damages or expenses of any kind or nature whatsoever   (including the reasonable fees and disbursements of counsel and all other reasonable expenses   incurred in connection with investigating, defending or preparing to defend any such matter, but     

 

    25   excluding costs of investigating any matter initiated by the Corporation Related Parties where   such investigation is undertaken without a reasonable and good faith belief that a Purchaser   Indemnified Liability exists), whether or not involving a Third Party Claim, as a result of, arising   out of or related to any of the following (collectively, the “Purchaser Indemnified Liabilities”):   (a) the failure of any of the representations or warranties made by the Purchaser contained herein   to be true and correct (disregarding any references to “material”, “materially”, “material   respects” and all other similar materiality qualifications therein); or (b) the breach of any of the   covenants or obligations of the Purchaser contained herein; provided that in the case of the   immediately preceding clause (a), such claim for indemnification relating to a breach of any   representation or warranty is made prior to the expiration of such representation or warranty;   provided, however, that for purposes of determining when an indemnification claim has been   made, the date upon which a Corporation Related Party shall have given notice (stating in   reasonable detail the basis of the claim for indemnification) to the Purchaser shall constitute the   date upon which such claim has been made; and provided, further, that in no event shall the   Purchaser be required to make payments in respect of Purchaser Indemnified Liabilities that   exceed in the aggregate the Purchase Price.   Section 6.03 Indemnification Procedure.   (a) A claim for indemnification for any matter not involving a Third Party Claim may   be asserted by notice to the party from whom indemnification is sought; provided, however, that   failure to so notify the indemnifying party shall not preclude the indemnified party from any   indemnification that it may claim in accordance with this Article VI, except as otherwise   provided in Sections 6.01 and 6.02 and except to the extent that the Indemnifying Party is   materially prejudiced by such failure.   (b) Promptly after any Corporation Related Party or Purchaser Related Party (each,   an “Indemnified Party”) has received notice of any indemnifiable claim hereunder, or the   commencement of any action, suit or proceeding by a third Person, which the Indemnified Party   believes in good faith is an indemnifiable claim under this Agreement (each, a “Third Party   Claim”), the Indemnified Party shall give the indemnitor hereunder (each, an “Indemnifying   Party”) written notice of such Third Party Claim but failure to so notify the Indemnifying Party   will not relieve the Indemnifying Party from any liability it may have to such Indemnified Party   hereunder except to the extent that the Indemnifying Party is materially prejudiced by such   failure.  Such notice shall state the nature and the basis of such Third Party Claim to the extent   then known.  The Indemnifying Party shall have the right to defend and settle, at its own expense   and by its own counsel, any such matter as long as the Indemnifying Party pursues the same   diligently and in good faith.  If the Indemnifying Party undertakes to defend or settle such Third   Party Claim, it shall promptly, and in no event later than five (5) days, notify the Indemnified   Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying   Party and its counsel in all commercially reasonable respects in the defense thereof and/or the   settlement thereof.  Such cooperation shall include, but shall not be limited to, furnishing the   Indemnifying Party with any books, records and other information reasonably requested by the   Indemnifying Party and in the Indemnified Party’s possession or control.  Such cooperation of   the Indemnified Party shall be at the cost of the Indemnifying Party.  After the Indemnifying   Party has notified the Indemnified Party of its intention to undertake to defend or settle any such   asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, the     

 

    26   Indemnifying Party shall not be liable for any additional legal expenses incurred by the   Indemnified Party in connection with any defense or settlement of such asserted liability;   provided, however, that the Indemnified Party shall be entitled (i) at its expense, to participate in   the defense of such asserted liability and the negotiations of the settlement thereof and (ii) if   (A) the Indemnifying Party has, within fifteen (15) Business Days of when the Indemnified Party   provides written notice of a Third Party Claim, failed (y) to assume the defense or settlement of   such Third Party Claim and employ counsel and (z) notify the Indemnified Party of such   assumption, or (B) if the defendants in any such action include both the Indemnified Party and   the Indemnifying Party and counsel to the Indemnified Party shall have concluded that there may   be reasonable defenses available to the Indemnified Party that are different from or in addition to   those available to the Indemnifying Party or if the interests of the Indemnified Party reasonably   may be deemed to conflict with the interests of the Indemnifying Party, then the Indemnified   Party shall have the right to select a separate counsel and to assume such settlement or legal   defense and otherwise to participate in the defense of such action, with the reasonable expenses   and fees of such separate counsel and other expenses related to such participation to be   reimbursed by the Indemnifying Party as incurred.  Notwithstanding any other provision of this   Agreement, the Indemnifying Party shall not settle any indemnified claim without the consent of   the Indemnified Party, which consent shall not be unreasonably delayed, withheld or denied,   unless the settlement thereof imposes no liability or obligation on, and includes a complete   release from liability of, and does not contain any admission of wrongdoing by, the Indemnified   Party.   Section 6.04 Limits on Indemnification.   (a) Notwithstanding anything to the contrary contained in Section 6.01 or   Section 6.02, in no event shall any amount be recovered from the Corporation pursuant to   Section 6.01(a) for any Corporation Indemnified Liabilities or the Purchaser pursuant to   Section 6.02(a) for any Purchaser Indemnified Liabilities, as applicable, in each case until (i) the   individual amount of any Corporation Indemnified Liability or Purchaser Indemnified Liability,   as applicable, exceeds $25,000 (the “De Minimis Amount”) and (ii) the aggregate amount of   Corporation Indemnified Liabilities or Purchaser Indemnified Liabilities, as applicable, that   exceed the De Minimis Amount exceeds $350,000 (the “Basket”), at which time the Corporation   or the Purchaser, as applicable, will be liable with respect to each Corporation Indemnified   Liability or Purchaser Indemnified Liability, as applicable, that exceeds the De Minimis Amount,   regardless of the Basket; provided, however, that the Corporation’s liability for any such   Corporation Indemnified Liability shall not be limited as set forth in this Section 6.04(a) if such   Corporation Indemnified Liability relates to a breach of any representation or warranty contained   in Sections 3.01(a) and (c), Sections 3.02 through 3.06 (inclusive), 3.26, 3.27 or 3.30.   (b) Except as otherwise provided in Section 6.04(c) and except with respect to any   claim arising out of actual fraud or criminal conduct on the part of the Corporation or the   Purchaser, from and after the Closing, indemnification under Sections 6.01 or 6.02, as   applicable, shall be the sole and exclusive remedy available to any Purchaser Related Party or   any Corporation Related Party, as applicable, for any claims arising out of or based upon the   matters set forth in this Agreement and the transactions contemplated hereby, and neither shall   any Purchaser Related Party seek relief against any Corporation Related Party other than     

 

    27   pursuant to Section 6.01 nor shall any Corporation Related Party seek relief against any   Purchaser Related Party other than pursuant to Section 6.02.   (c) Each of the parties to this Agreement acknowledges and agrees that the other   party would be damaged irreparably in the event that any of the provisions of this Agreement are   not performed in accordance with their specific terms or otherwise are breached.  Accordingly,   each of the parties to this Agreement agrees that the other party shall be entitled to an injunction   or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically   this Agreement and the terms and provisions of this Agreement in any action instituted in any   court of the United States or any State thereof having jurisdiction over the parties to this   Agreement and the matter, in addition to any other remedy to which they may be entitled, at law   or in equity.   Section 6.05 Tax Matters.  All indemnification payments under this Article VI shall be   adjustments to the Purchase Price, except as otherwise required by applicable Law.   ARTICLE VII   MISCELLANEOUS   Section 7.01 Fees and Expenses.  In the amounts specified on Schedule 7.01 and   simultaneously with the Closing, the Corporation shall pay out of the proceeds received from the   consummation of the transactions contemplated by this Agreement the reasonable out-of-pocket   fees and expenses incurred by the Purchaser in connection with the transactions contemplated by   the Transaction Documents, including without limitation, legal, accounting, advisory and other   reasonable out-of-pocket fees and expenses.   Section 7.02 Interpretation.  Article, Section, Exhibit, Annex and Schedule references   in this Agreement are references to the corresponding Article, Section, Exhibit, Annex and   Schedule to this Agreement, unless otherwise specified.  All Exhibits, Annexes and Schedules to   this Agreement are hereby incorporated and made a part hereof as if set forth in full herein and   are an integral part of this Agreement.  All references to instruments, documents, Contracts and   agreements are references to such instruments, documents, Contracts and agreements as the same   may be amended, supplemented and otherwise modified from time to time, unless otherwise   specified.  The word “including” shall mean “including, without limitation,” and shall not be   construed to limit any general statement that it follows to the specific or similar items or matters   immediately following it.  Whenever the Corporation has an obligation under the Transaction   Documents, the expense of complying with that obligation shall be an expense of the   Corporation unless otherwise specified.  Any reference in this Agreement to “$” shall mean U.S.   dollars.  Whenever any determination, consent or approval is to be made or given by the   Purchaser, such action shall be in the Purchaser’s sole discretion, unless otherwise specified in   this Agreement.  If any provision in the Transaction Documents is held to be illegal, invalid, not   binding or unenforceable, (a) such provision shall be fully severable and the Transaction   Documents shall be construed and enforced as if such illegal, invalid, not binding or   unenforceable provision had never comprised a part of the Transaction Documents, and the   remaining provisions shall remain in full force and effect and (b) the parties to this Agreement   shall negotiate in good faith to modify the Transaction Documents so as to effect the original   intent of such parties as closely as possible in an acceptable manner in order that the transactions     

 

    28   contemplated hereby are consummated as originally contemplated to the greatest extent possible.    When calculating the period of time before which, within which or following which any act is to   be done or step taken pursuant to the Transaction Documents, the date that is the reference date   in calculating such period shall be excluded.  If the last day of such period is a non-Business   Day, the period in question shall end on the next succeeding Business Day.  Any words   imparting the singular number only shall include the plural and vice versa.  The words such as   “herein”, “hereinafter”, “hereof” and “hereunder” refer to this Agreement as a whole and not   merely to a subdivision in which such words appear unless the context otherwise requires.  The   provision of a Table of Contents, the division of this Agreement into Articles, Sections, Exhibits,   Annexes and Schedules and other subdivisions and the insertion of headings are for convenience   of reference only and shall not affect or be utilized in construing or interpreting this Agreement.   Section 7.03 Survival of Provisions.  The representations and warranties set forth in   Sections 3.01(a) and (c), 3.02, 3.03, 3.04, 3.05, 3.06, 3.26, 3.27, 3.30, 4.01, 4.02, 4.04 and 4.05   hereunder shall survive the execution and delivery of this Agreement indefinitely, the   representations and warranties set forth in Sections 3.19, 3.20 and 3.22 shall survive until the   date that is 90 days after the expiration of any applicable statute of limitation regardless of any   investigation made by or on behalf of the Purchaser, and the other representations and warranties   set forth herein shall survive for a period of eighteen (18) months following the Closing Date   regardless of any investigation made by or on behalf of the Corporation or the Purchaser.  The   covenants made in this Agreement or any other Transaction Document shall survive the Closing   and remain operative and in full force and effect regardless of acceptance of any of the   Purchased Stock and payment therefor and repayment, conversion or repurchase thereof.    Regardless of any purported general termination of this Agreement, the provisions of Article VI   and all indemnification rights and obligations of the Corporation and the Purchaser thereunder,   and this Article VII shall remain operative and in full force and effect as between the   Corporation and the Purchaser, unless the Corporation and the Purchaser execute a writing that   expressly (with specific references to the applicable Section or subsection of this Agreement)   terminates such rights and obligations as between the Corporation and the Purchaser.   Section 7.04 No Waiver; Modifications in Writing.   (a) Delay.  No failure or delay on the part of any party in exercising any right, power   or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of   any such right, power or remedy preclude any other or further exercise thereof or the exercise of   any other right, power or remedy.  The remedies provided for herein are cumulative and are not   exclusive of any remedies that may be available to a party at law or in equity or otherwise.   (b) Specific Waiver.  Except as otherwise provided herein, no amendment, waiver,   consent, modification or termination of any provision of this Agreement or any other Transaction   Document shall be effective unless signed by each of the parties to this Agreement affected by   such amendment, waiver, consent, modification or termination.  Any amendment, supplement or   modification of or to any provision of this Agreement or any other Transaction Document, any   waiver of any provision of this Agreement or any other Transaction Document and any consent   to any departure by any party from the terms of any provision of this Agreement or any other   Transaction Document shall be effective only in the specific instance and for the specific purpose   for which made or given.  Except where notice is specifically required by this Agreement, no     

 

    29   notice to or demand on any party in any case shall entitle such party to any other or further notice   or demand in similar or other circumstances.  Any investigation by or on behalf of any party   shall not be deemed to constitute a waiver by the party taking such action of compliance with   any representation, warranty, covenant or agreement contained herein.   Section 7.05 Binding Effect; Assignment.   (a) Binding Effect.  This Agreement shall be binding upon the Corporation, the   Purchaser and their respective successors and permitted assigns.  Except as expressly provided in   this Agreement, this Agreement shall not be construed so as to confer any right or benefit upon   any Person other than the parties to this Agreement and their respective successors and permitted   assigns.   (b) Assignment of Rights.  The Purchaser’s rights and obligations hereunder   (including the right to seek indemnification) may be transferred or assigned in whole or in part   by the Purchaser to any Affiliate of the Purchaser without the consent of the Corporation.  Upon   any such permitted transfer or assignment, references in this Agreement to the Purchaser (as they   apply to the transferor or assignor, as the case may be) shall thereafter apply to such transferee or   assignee of the Purchaser unless the context otherwise requires.  Without the written consent of   the Corporation, which consent shall not be unreasonably withheld, no portion of the rights and   obligations of the Purchaser under this Agreement may be assigned or transferred by the   Purchaser or such a transferee of Purchased Stock to a Person that is not an Affiliate of the   Purchaser.  No portion of the rights and obligations of the Corporation under this Agreement   may be transferred or assigned without the prior written consent of the Purchaser, which consent   shall not be unreasonably withheld.  Any assignment or transfer in violation of the foregoing   provisions of this Section 7.05(b) shall be void.     Section 7.06 Communications.  All notices and demands provided for hereunder shall   be in writing and shall be given by hand delivery, email, registered or certified mail, return   receipt requested, regular mail or air courier guaranteeing overnight delivery to the following   addresses:   (a) If to the Purchaser, to:   One Stone Energy Partners, L.P.   720 Fifth Avenue, 10th Floor   New York, New York 10019   Attention: Robert Israel   Email: ri@1stone-llc.com      with a copy to:      Vinson & Elkins LLP   1001 Fannin, Suite 2500   Houston, Texas 77002   Attention: Alan Beck   Email: abeck@velaw.com     

 

    30      (b) If to the Corporation, to:   Magellan Petroleum Corporation   1775 Sherman Street, Suite 1950   Denver, Colorado 80203   Attention: Mark Brannum   Email: mbrannum@magellanpetroleum.com      with a copy to:      Davis Graham & Stubbs LLP   1550 17th Street, Suite 500   Denver, Colorado 80202   Attention: John Elofson   Email: john.elofson@dgslaw.com      or to such other address as the Corporation or the Purchaser may designate in writing.  All   notices and communications shall be deemed to have been duly given: (w) at the time delivered   by hand, if personally delivered; (x) when notice is sent to the sender that the recipient has read   the message, if sent by email; (y) upon actual receipt if sent by registered or certified mail, return   receipt requested, or regular mail, if mailed; and (z) upon actual receipt when delivered to an air   courier guaranteeing overnight delivery.   Section 7.07 Entire Agreement.  This Agreement, the other Transaction Documents and   the other agreements and documents referred to herein are intended by the parties to this   Agreement as a final expression of their agreement and intended to be a complete and exclusive   statement of the agreement and understanding of such parties in respect of the subject matter   contained herein and therein.  There are no restrictions, promises, warranties or undertakings,   other than those set forth or referred to herein or the other Transaction Documents with respect to   the rights granted by the Corporation or any of its Affiliates or the Purchaser or any of their   Affiliates set forth herein or therein.  This Agreement, the other Transaction Documents and the   other agreements and documents referred to herein or therein supersede all prior agreements and   understandings between such parties with respect to such subject matter.   Section 7.08 Governing Law; Submission to Jurisdiction.  This Agreement, and all   claims or causes of action (whether in contract or tort) that may be based upon, arise out of or   relate to this Agreement or the negotiation, execution or performance of this Agreement   (including any claim or cause of action based upon, arising out of or related to any representation   or warranty made in or in connection with this Agreement), will be construed in accordance with   and governed by the laws of the State of New York without regard to principles of conflicts of   laws.  Any action against any party relating to the foregoing shall be brought in any federal or   state court of competent jurisdiction located in New York, New York, and the parties to this   Agreement hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state   court located in New York, New York over any such action.  The parties to this Agreement   hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection that   they may now or hereafter have to the laying of venue of any such dispute brought in such court     

 

    31   or any defense of inconvenient forum for the maintenance of such dispute.  Each of the parties to   this Agreement agrees that a judgment in any such dispute may be enforced in other jurisdictions   by suit on the judgment or in any other manner provided by Law.   Section 7.09 Waiver of Jury Trial.  THE PARTIES TO THIS AGREEMENT EACH   HEREBY WAIVES, AND AGREES TO CAUSE ITS AFFILIATES TO WAIVE, TO THE   FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY   CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THIS   AGREEMENT OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR   INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS   AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE   WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN   CONTRACT, TORT, EQUITY OR OTHERWISE.  THE PARTIES TO THIS AGREEMENT   EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,   ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A   JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL   COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN   EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR   RIGHT TO TRIAL BY JURY.   Section 7.10 Execution in Counterparts.  This Agreement may be executed in any   number of counterparts, each of which, when so executed and delivered, shall be deemed to be   an original and all of which, taken together, shall constitute one and the same agreement.   ARTICLE VIII   CLOSING CONDITIONS   Section 8.01 Conditions to the Purchaser’s Obligations at Closing.  The obligation of   the Purchaser to consummate the transactions contemplated by this Agreement is subject to the   fulfillment (or, to the extent permitted by applicable Law, waiver by the Purchaser) on or before   the Closing of each of the following conditions (any of which may, to the extent permitted by   applicable Law, be waived in writing by the Purchaser, in whole or in part):   (a) the representations and warranties of the Corporation contained in   Sections 3.01(a) and (c), Sections 3.02 through 3.06 (inclusive), 3.26, 3.27 and 3.30 shall be true   and correct on and as of the date of this Agreement and as of the Closing Date in all but de   minimis respects (disregarding any references to “material”, “materially”, “material respects”,   “Material Adverse Effect” and all other similar materiality qualifications therein); provided,   however, that the text of any representation or warranty that refers to a specific date (including   the date of this Agreement) shall be deemed to continue to refer to such date;   (b) the other representations and warranties of the Corporation contained in   Article III shall be true and correct on and as of the date of this Agreement and as of the Closing   Date, except where the failure of such representations and warranties to be so true and correct   would not, individually or in the aggregate, reasonably be expected to have a Material Adverse   Effect (disregarding any references to “material”, “materially”, “material respects”, “Material   Adverse Effect” and all other similar materiality qualifications therein, except for any such     

 

    32   references or qualifications set forth in Section 3.13); provided, however, that the text of any   representation or warranty that refers to a specific date (including the date of this Agreement)   shall be deemed to continue to refer to such date;   (c) the Corporation shall have performed and complied in all material respects with   all agreements, obligations, and conditions contained in this Agreement that are required to be   performed or complied with by it on or before the Closing;   (d) the Corporation shall have delivered to the Purchaser all Transaction Documents,   certificates, instruments and other deliverable items required to be delivered pursuant to   Section 2.03;   (e) (i) no order, writ, injunction, judgment, settlement, award or decree (whether   preliminary or permanent) issued by a court of competent jurisdiction restraining or prohibiting   the consummation of the transactions contemplated by this Agreement or the other Transaction   Documents (brought by any Person that is not an Affiliate of the Purchaser) shall be in effect;   (ii) no action, suit, claim, investigation or proceeding shall have been instituted or threatened by   any Governmental Authority that would reasonably be expected to restrain or prohibit the   consummation of the transactions contemplated by this Agreement or the other Transaction   Documents; and (iii) no Law shall have been promulgated or enacted by any Governmental   Authority that would prevent or make illegal the consummation of the transactions contemplated   by this Agreement or the other Transaction Documents;   (f) (i) the Corporation shall have provided appropriate and timely notice of the   transactions contemplated by the Transaction Documents, including the potential issuance of the   Conversion Stock pursuant to NASDAQ Listing Rule 5250(e)(2), and, in connection therewith,   shall have timely provided any and all information requested by the staff of the NASDAQ   Listing Qualifications Department and (ii) NASDAQ shall not have issued a Public Reprimand   Letter, a Delisting Determination or any other objection or citation with respect to the   transactions contemplated by the Transaction Documents, including the potential issuance of the   Conversion Stock pursuant to NASDAQ Listing Rule 5250(e)(2), within any applicable notice   period in respect thereof; and   (g) the number of individuals constituting the Board of Directors immediately prior to   the Closing shall be no greater than six (6).   Section 8.02 Conditions to the Corporation’s Obligations at Closing.  The obligation of   the Corporation to consummate the transactions contemplated by this Agreement is subject to the   fulfillment (or, to the extent permitted by applicable Law, waiver by the Corporation) on or   before the Closing of each of the following conditions (any of which may, to the extent permitted   by applicable Law, be waived in writing by the Corporation, in whole or in part):   (a) the representations and warranties of the Purchaser contained in Article IV shall   be true and correct as of the Closing Date, except where the failure of such representations and   warranties to be so true and correct would not, individually or in the aggregate, reasonably be   expected to have a material adverse effect on the ability of the Purchaser to perform its   obligations hereunder (disregarding any references to “material”, “materially”, “material     

 

    33   respects” and all other similar materiality qualifications therein); provided, however, that the text   of any representation or warranty that refers to a specific date (including the date of this   Agreement) shall be deemed to continue to refer to such date;   (b) the Purchaser shall have performed and complied in all material respects with all   agreements, obligations, and conditions contained in this Agreement that are required to be   performed or complied with by it on or before the Closing;   (c) the Purchaser shall have delivered to the Corporation all Transaction Documents,   certificates, instruments and other deliverable items required to be delivered pursuant to   Section 2.04; and   (d) (i) no order, writ, injunction, judgment, settlement, award or decree (whether   preliminary or permanent) issued by a court of competent jurisdiction restraining or prohibiting   the consummation of the transactions contemplated by this Agreement or the other Transaction   Documents (brought by any Person that is not an Affiliate of the Corporation) shall be in effect;   (ii) no action, suit, claim, investigation or proceeding shall have been instituted or threatened by   any Governmental Authority that would reasonably be expected to restrain or prohibit the   consummation of the transactions contemplated by this Agreement or the other Transaction   Documents; and (iii) no Law shall have been promulgated or enacted by any Governmental   Authority that would prevent or make illegal the consummation of the transactions contemplated   by this Agreement or the other Transaction Documents.   ARTICLE IX   TERMINATION   Section 9.01 Termination of the Agreement Prior to Closing.  This Agreement may be   terminated at any time prior to the Closing:   (a) by either the Corporation or the Purchaser if the Closing shall not have occurred   by May 31, 2013 through no fault of the party seeking to terminate; or   (b) by the mutual written consent of the Corporation and the Purchaser.   Section 9.02 Effect of Termination Prior to Closing.  In the event of termination of this   Agreement as provided in Section 9.01, this Agreement shall forthwith become void and there   shall be no liability on the part of either party hereto; provided, however, that nothing herein   shall relieve any party from liability for any willful and material breach of this Agreement.   [Signature page follows.]Exhibit 4.01 - 5-13-13

Exhibit 4.01

SUPPLEMENTAL INDENTURE NO. 13
FROM
OKLAHOMA GAS AND ELECTRIC
COMPANY
TO
UMB BANK, N.A.
TRUSTEE
______________
DATED AS OF MAY 1, 2013
___________________________
SUPPLEMENTAL TO INDENTURE
DATED AS OF OCTOBER 1, 1995

	TABLE OF CONTENTS

					
	 
	 
	Page
	 

	 
	 
	 
	 

	Parties
	1
	

	Recitals
	1
	

	 
	 
	 
	 

	ARTICLE ONE

	RELATION TO INDENTURE; DEFINITIONS

	 
	 
	 
	 

	Section 1.01
	Integral Part of Indenture
	3
	

	Section 1.02
	(a)
	Definitions
	3
	

	 
	(b)
	References to Articles and Sections
	3
	

	 
	(c)
	Terms Referring to this Supplemental Indenture
	3
	

	 
	 
	 
	 

	ARTICLE TWO

	3.900% SENIOR NOTES, SERIES DUE MAY 1, 2043

	 
	 
	 
	 

	Section 2.01
	Designation and Principal Amount
	3
	

	Section 2.02
	Stated Maturity Date
	3
	

	Section 2.03
	Interest Payment Dates
	4
	

	Section 2.04
	Office for Payment
	4
	

	Section 2.05
	Redemption Provisions
	4
	

	Section 2.06
	Authorized Denominations
	5
	

	Section 2.07
	Occurrence of Release Date
	5
	

	Section 2.08
	Reopening of Notes
	5
	

	Section 2.09
	Form of 3.900% Senior Notes, Series due May 1, 2043
	5
	

	 
	 
	 
	 

	ARTICLE THREE

	MISCELLANEOUS

	 
	 
	 
	 

	Section 3.01
	Recitals of Fact, Except as Stated, Are Statements of the Company
	6
	

	Section 3.02
	Supplemental Indenture to Be Construed as a Part of the Indenture
	6
	

	Section 3.03
	(a)
	Trust Indenture Act to Control
	6
	

	 
	(b)
	Severability of Provisions Contained in Supplemental Indenture and Notes
	6
	

	Section 3.04
	References to Either Party in Supplemental Indenture Include Successors or Assigns
	6
	

	Section 3.05
	(a)
	Provision for Execution in Counterparts
	6
	

	 
	(b)
	Table of Contents and Descriptive Headings of Articles Not to Affect Meaning
	6
	

	 
	 
	 
	 

	Exhibit A - Form of 3.900% Senior Notes, Series due May 1, 2043

i

SUPPLEMENTAL INDENTURE No. 13, made as of the 1st day of May, 2013 by and between OKLAHOMA GAS AND ELECTRIC COMPANY, a corporation duly organized and existing under the laws of the State of Oklahoma (the “Company”), and UMB BANK, N.A., a national banking association duly organized and existing under the laws of the United States, as trustee (the “Trustee”):
WITNESSETH:
WHEREAS, the Company has heretofore executed and delivered its Indenture (hereinafter referred to as the “Indenture”), made as of October 1, 1995; and
WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 1 dated as of October 16, 1995, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating two series of Notes designated “7.30% Senior Notes, Series due October 15, 2025” and “6.250% Senior Notes, Series due October 15, 2000”; and
WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 2 dated as of July 1, 1997, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating two series of Notes designated “6.65% Senior Notes, Series due October 15, 2027” and “6.50% Senior Notes, Series due July 15, 2017”; and
WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 3 dated as of April 1, 1998, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “61⁄2% Senior Notes, Series due April 15, 2028”; and
WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 4 dated as of October 15, 2000, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “7.125% Senior Notes, Series due October 15, 2005”; and
WHEREAS, the Company, the Trustee and The Bank of New York (the “Prior Trustee”) have heretofore executed and delivered Supplemental Indenture No. 5 dated as of October 24, 2001, providing for the resignation of the Prior Trustee and the acceptance, by the Trustee, of its appointment as trustee and the assumption of all duties and responsibilities of the trustee under the Indenture; and 
WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 6 dated as of August 1, 2004, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “6.50% Senior Notes, Series due August 1, 2034”; and

WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 7 dated as of January 1, 2006, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating two series of Notes designated “5.15% Senior Notes, Series due January 15, 2016” and “5.75% Senior Notes, Series due January 15, 2036”; and
WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 8 dated as of January 15, 2008, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “6.45% Senior Notes, Series due February 1, 2038”; and
WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 9 dated as of September 1, 2008, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “6.350% Senior Notes, Series due September 1, 2018”; and
WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 10 dated as of December 1, 2008, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “8.25% Senior Notes, Series due January 15, 2019”; and
WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 11 dated as of June 1, 2010, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “5.85% Senior Notes, Series due June 1, 2040”; and
WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 12 dated as of May 15, 2011, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “5.25% Senior Notes, Series due May 15, 2041”; and
WHEREAS, Section 2.05 of the Indenture provides that Notes shall be issued in series and that a Company Order shall specify the terms of each series; and
WHEREAS, Boatmen's First National Bank of Oklahoma was formerly the Trustee under the Indenture and NationsBank, N.A. succeeded Boatmen's First National Bank of Oklahoma as Trustee pursuant to Section 9.13 of the Indenture, The Bank of New York subsequently succeeded Boatmen's First National Bank of Oklahoma as Trustee pursuant to Section 9.13 of the Indenture and UMB Bank, N.A., has subsequently succeeded The Bank of New York as Trustee pursuant to Section 9.11 of the Indenture; and

2

WHEREAS, the Company has this day delivered a Company Order setting forth the terms of a series of Notes designated “3.900 % Senior Notes, Series due May 1, 2043” (hereinafter sometimes referred to as the “Senior Notes due 2043”); and
WHEREAS, Section 13.01 of the Indenture provides that the Company and the Trustee may enter into indentures supplemental thereto for the purposes, among others, of establishing the form of Notes or establishing or reflecting any terms of any Note and adding to the covenants of the Company; and
WHEREAS, the execution and delivery of this Supplemental Indenture No. 13 (herein, “this Supplemental Indenture”) have been duly authorized by a resolution adopted by the Board of Directors of the Company;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to set forth the terms and conditions upon which the Senior Notes due 2043 are, and are to be, authenticated, issued and delivered, and in consideration of the premises of the purchase and acceptance of the Senior Notes due 2043 by the Holders thereof and the sum of one dollar duly paid to it by the Trustee at the execution of this Supplemental Indenture, the receipt whereof is hereby acknowledged, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective Holders from time to time of the Senior Notes due 2043, as follows:
ARTICLE ONE
RELATION TO INDENTURE; DEFINITIONS

Section 1.01This Supplemental Indenture constitutes an integral part of the Indenture.

Section1.02For all purposes of this Supplemental Indenture:

(a)Capitalized terms used herein without definition shall have the meanings specified in the Indenture;

(b)All references herein to Articles and Sections, unless otherwise specified, refer to the corresponding Articles and Sections of this Supplemental Indenture; and

(c)The terms “hereof,” “herein,” “hereby,” “hereto,” “hereunder” and “herewith” refer to this Supplemental Indenture.

ARTICLE TWO
3.900% SENIOR NOTES, SERIES DUE MAY 1, 2043

Section 2.01There shall be a series of Notes designated the “3.900 % Senior Notes, Series due May 1, 2043.” The Senior Notes due 2043 shall be limited to $250,000,000 aggregate principal amount except as provided in Section 2.08 hereof.

Section 2.02Except as otherwise provided in Section 2.05 hereof, the principal amount of the Senior Notes due 2043 shall be payable on the stated maturity date of May 1, 2043.

3

Section 2.03The Senior Notes due 2043 shall be dated their date of authentication as provided in the Indenture and shall bear interest from their date at the rate of 3.900% per annum, payable semi-annually on May 1 and November 1 of each year, commencing November 1, 2013. The Regular Record Dates with respect to such May 1 and November 1 interest payment dates shall be April 15 and October 15, respectively. Principal and interest shall be payable to the persons and in the manner provided in Sections 2.04 and 2.12 of the Indenture.

Section 2.04The Senior Notes due 2043 shall be payable at the corporate trust office of the Trustee and at the offices of such paying agents as the Company may appoint by Company Order in the future.

Section 2.05At any time prior to November 1, 2042, the Company, at its option, may redeem the Senior Notes due 2043, in whole or from time to time in part, upon notice as provided in the Indenture, at a “make-whole” redemption price equal to the greater of (i) 100% of the principal amount of the Senior Notes due 2043 being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Senior Notes due 2043 being redeemed (not including any portion of such payments of interest accrued to the date fixed for redemption) discounted to the date fixed for redemption on a semi-annual basis (assuming a 360-day year consisting of 12 30-day months) at the Treasury Rate plus 15 basis points, plus, in each case, accrued and unpaid interest thereon to the date fixed for redemption.  At any time on or after November 1, 2042, the Company, at its option, may redeem the Senior Notes due 2043, in whole or from time to time in part, upon notice as provided in the Indenture, at a redemption price equal to 100% of the principal amount of the Senior Notes due 2043 being redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption.

“Treasury Rate” means, with respect to any date fixed for redemption (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life (as defined below), yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such date fixed for redemption.  The Treasury Rate will be calculated on the third business day preceding the date fixed for redemption.
“Comparable Treasury Issue” means the U.S. Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“Remaining Life”) of the Senior Notes due 2043 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life of the Senior Notes due 2043.

4

“Comparable Treasury Price” means (1) the average of four Reference Treasury Dealer Quotations for such date fixed for redemption, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.
“Independent Investment Banker” means Mitsubishi UFJ Securities (USA), Inc., Mizuho Securities USA Inc., RBS Securities Inc. or another independent investment banking institution of national standing appointed by the Company.
“Reference Treasury Dealer” means (1) each of Mizuho Securities USA Inc., RBS Securities Inc. and a primary U.S. government securities dealer in the United States (a “Primary Treasury Dealer”) selected by Mitsubishi UFJ Securities (USA), Inc., provided, however, that if any of the foregoing ceases to be a Primary Treasury Dealer, the Company will substitute therefor another Primary Treasury Dealer and (2) any other Primary Treasury Dealer selected by the Company after consultation with the Independent Investment Banker.
 “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any date fixed for redemption, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such date fixed for redemption.
The Senior Notes due 2043 shall not be subject to any sinking fund.
Section 2.06The Senior Notes due 2043 shall be issued in fully registered form without coupons in a minimum denomination of $1,000 and multiples of $1,000 in excess thereof.

Section 2.07The Release Date (as defined in the Indenture) occurred on April 6, 1998. Accordingly, the Senior Notes due 2043 shall be issued as unsecured general obligations of the Company. The Senior Notes due 2043, and all other Notes issued or to be issued under the Indenture, will not be secured by First Mortgage Bonds of the Company and will not be entitled to the lien of or the benefits provided by the First Mortgage, which has been extinguished.

Section 2.08The Senior Notes due 2043 may be reopened and additional notes of the Senior Notes due 2043 may be issued in excess of the limitation set forth in Section 2.01, provided that such additional notes will contain the same terms (including the maturity date and interest payment terms) as the other Senior Notes due 2043.  Any such additional Senior Notes due 2043, together with the other Senior Notes due 2043, shall constitute a single series for purposes of the Indenture.

Section 2.09The Senior Notes due 2043 shall initially be in the form attached as Exhibit A hereto.

5

ARTICLE THREE
MISCELLANEOUS

Section 3.01The recitals of fact herein and in the Senior Notes due 2043 (except the Trustee's Certificate) shall be taken as statements of the Company and shall not be construed as made by the Trustee.

Section 3.02This Supplemental Indenture shall be construed in connection with and as a part of the Indenture.

Section 3.03

(a)If any provision of this Supplemental Indenture limits, qualifies or conflicts with another provision of the Indenture required to be included in indentures qualified under the Trust Indenture Act of 1939 (as enacted prior to the date of this Supplemental Indenture) by any of the provisions of Sections 310 to 317, inclusive, of said Act, such required provisions shall control.

(b)In case any one or more of the provisions contained in this Supplemental Indenture or in the notes issued hereunder should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected, impaired, prejudiced or disturbed thereby.

Section 3.04Whenever in this Supplemental Indenture either of the parties hereto is named or referred to, this shall be deemed to include the successors or assigns of such party, and all the covenants and agreements in this Supplemental Indenture contained by or on behalf of the Company or by or on behalf of the Trustee shall bind and inure to the benefit of the respective successors and assigns of such parties, whether so expressed or not.

Section 3.05

(a)This Supplemental Indenture may be simultaneously executed in several counterparts, and all said counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.

(b)The Table of Contents and the descriptive headings of the several Articles of this Supplemental Indenture were formulated, used and inserted in this Supplemental Indenture for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

[Signature page follows]

6

IN WITNESS WHEREOF, OKLAHOMA GAS AND ELECTRIC COMPANY has caused this Supplemental Indenture to be signed by its President or a Vice President, and attested by its Secretary or an Assistant Secretary, and UMB BANK, N.A., as Trustee, has caused this Supplemental Indenture to be signed by its President or Vice President, and attested by a Secretary or an Assistant Secretary, all as of the date first above written.
	
					
	 
	 
	 
	OKLAHOMA GAS AND ELECTRIC

	 
	 
	 
	COMPANY

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	By:
	/s/ Sean Trauschke

	 
	 
	 
	 
	Sean Trauschke

	 
	 
	 
	 
	Vice President and Chief Financial Officer

	 
	 
	 
	 
	 

	ATTEST:
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	By:
	/s/ Patricia D. Horn
	 
	 
	 

	 
	Patricia D. Horn
	 
	 
	 

	 
	Vice President and Corporate Secretary
	 
	 
	 

	 
	 
	 
	 
	 

[Signature Page to Supplemental Indenture No. 13]

	
					
	 
	 
	 
	UMB BANK, N.A., as Trustee

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	By:
	/s/ Anthony P. Hawkins

	 
	 
	 
	 
	Anthony P. Hawkins

	 
	 
	 
	 
	Vice President

	 
	 
	 
	 
	 

	ATTEST:
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	By:
	/s/ Douglas G. Hare
	 
	 
	 

	 
	Douglas G. Hare
	 
	 
	 

	 
	Assistant Secretary
	 
	 
	 

	 
	 
	 
	 
	 

[Signature Page to Supplemental Indenture No. 13]

EXHIBIT A
Form of 3.900% Senior Note, Series due May 1, 2043
	
		
	REGISTERED
	REGISTERED

THIS NOTE IS A GLOBAL NOTE REGISTERED IN THE NAME OF THE DEPOSITARY (REFERRED TO HEREIN) OR A NOMINEE THEREOF AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
OKLAHOMA GAS AND ELECTRIC COMPANY
3.900% SENIOR NOTE, SERIES DUE MAY 1, 2043
	
		
	CUSIP / ISIN:  678858BN0 / US678858BN08
	NUMBER: R-1

	 
	 

	ORIGINAL ISSUE DATE(S):
	PRINCIPAL AMOUNT(S):

	May 13, 2013
	$250,000,000

	 
	 

	INTEREST RATE: 3.900%
	MATURITY DATE: May 1, 2043

OKLAHOMA GAS AND ELECTRIC COMPANY, a corporation of the State of Oklahoma (the “Company”), for value received hereby promises to pay to CEDE & CO. or registered assigns, the principal sum of 
TWO HUNDRED FIFTY MILLION DOLLARS
on the Maturity Date set forth above, and to pay interest thereon from the Original Issue Date (or if this Global Note has two or more Original Issue Dates, interest shall, beginning on each such Original Issue Date, begin to accrue for that part of the principal amount to which that Original Issue Date is applicable) set forth above or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on May 1 and November 1 in each year, commencing on November 1, 2013, at the per annum Interest Rate set forth above, until the principal hereof is paid or made available for payment. No interest shall accrue on the 

Maturity Date, so long as the principal amount of this Global Note is paid on the Maturity Date. The interest so payable and punctually paid or duly provided for on any such Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note is registered at the close of business on the Regular Record Date for such interest, which shall be the April 15 or the October 15, as the case may be, next preceding such Interest Payment Date, provided that the first Interest Payment Date for any part of this Note, the Original Issue Date of which is after a Regular Record Date but prior to the applicable Interest Payment Date, shall be the Interest Payment Date following the next succeeding Regular Record Date; and provided that interest payable on the Maturity Date set forth above or, if applicable, upon redemption, repayment or acceleration, shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture (as defined below), any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and shall be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Noteholders not more than fifteen days or fewer than ten days prior to such Special Record Date. On or before 10:00 a.m., New York City time, or such other time as shall be agreed upon between the Trustee and the Depositary, of the day on which such payment of interest is due on this Global Note (other than maturity), the Trustee shall pay to the Depositary such interest in same day funds. On or before 10:00 a.m., New York City time, or such other time as shall be agreed upon between the Trustee and the Depositary, of the day on which principal, interest payable at maturity and premium, if any, is due on this Global Note, the Trustee shall deposit with the Depositary the amount equal to the principal, interest payable at maturity and premium, if any, by wire transfer into the account specified by the Depositary. As a condition to the payment, on the Maturity Date or upon redemption, repayment or acceleration, of any part of the principal and applicable premium of this Global Note, the Depositary shall surrender, or cause to be surrendered, this Global Note to the Trustee, whereupon a new Global Note shall be issued to the Depositary.
This Global Note is a global security in respect of a duly authorized issue of 3.900% Senior Notes, Series due May 1, 2043 (the “Notes of this Series,” which term includes any Global Notes representing such Notes) of the Company issued and to be issued under an Indenture dated as of October 1, 1995 between the Company and UMB Bank, N.A., as successor trustee (the “Trustee,” which term includes any subsequent successor Trustee under the Indenture) to Boatmen's First National Bank of Oklahoma, and indentures supplemental thereto (collectively, the “Indenture”). Under the Indenture, one or more series of notes may be issued and, as used herein, the term “Notes” refers to the Notes of this Series and any other outstanding series of Notes. Reference is hereby made to the Indenture for a more complete statement of the respective rights, limitations of rights, duties and immunities under the Indenture of the Company, the Trustee and the Noteholders and of the terms upon which the Notes are and are to be authenticated and delivered. This Global Note has been issued in respect of the series designated on the first page hereof.
Each Note of this Series shall be dated and issued as of the date of its authentication by the Trustee and shall bear an Original Issue Date or Dates. Each Note or Global Note issued upon transfer, exchange or substitution of such Note or Global Note shall bear the Original Issue Date or Dates of such transferred, exchanged or substituted Note or Global Note, as the case may be.

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At any time prior to November 1, 2042, the Company, at its option, may redeem this Global Note, in whole or from time to time in part, at a “make-whole” redemption price equal to the greater of (i) 100% of the principal amount of this Global Note being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on this Global Note being redeemed (not including any portion of such payments of interest accrued to the date fixed for redemption) discounted to the date fixed for redemption on a semi-annual basis (assuming a 360-day year consisting of 12 30-day months) at the Treasury Rate plus 15 basis points, plus, in each case, accrued and unpaid interest thereon to the date fixed for redemption. At any time on or after November 1, 2042, the Company, at its option, may redeem this Global Note, in whole or from time to time in part, at a redemption price equal to 100% of the principal amount of this Global Note being redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption.
“Treasury Rate” means, with respect to any date fixed for redemption (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life (as defined below), yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such date fixed for redemption.  The Treasury Rate will be calculated on the third business day preceding the date fixed for redemption.
“Comparable Treasury Issue” means the U.S. Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“Remaining Life”) of the Notes of this Series that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life of the Notes of this Series.
“Comparable Treasury Price” means (1) the average of four Reference Treasury Dealer Quotations for such date fixed for redemption, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.
“Independent Investment Banker” means Mitsubishi UFJ Securities (USA), Inc., Mizuho Securities USA Inc., RBS Securities Inc. or another independent investment banking institution of national standing appointed by the Company.
“Reference Treasury Dealer” means (1) each of Mizuho Securities USA Inc., RBS Securities Inc. and a primary U.S. government securities dealer in the United States (a “Primary 

A-3

Treasury Dealer”) selected by Mitsubishi UFJ Securities (USA), Inc., provided, however, that if any of the foregoing ceases to be a Primary Treasury Dealer, the Company will substitute therefor another Primary Treasury Dealer and (2) any other Primary Treasury Dealer selected by the Company after consultation with the Independent Investment Banker.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any date fixed for redemption, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such date fixed for redemption.
Notice of redemption will be given by mail or by electronic communication (including e-mail) to Holders of Notes of this Series not less than 30 or more than 60 days prior to the date fixed for redemption, all as provided in the Indenture. In the event of redemption of this Global Note in part only, a new Global Note or Notes of like tenor and series for the unredeemed interest hereof will be issued in the name of the Noteholder hereof upon the surrender hereof.
Interest payments for this Global Note shall be computed and paid on the basis of a 360-day year of 12 30-day months. If any Interest Payment Date or date on which the principal of this Global Note is required to be paid is not a Business Day, then payment of principal, premium or interest need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date or date on which the principal of this Global Note is required to be paid and, in the case of timely payment thereof, no interest shall accrue for the period from and after such Interest Payment Date or the date on which the principal of this Global Note is required to be paid.
The Company, at its option, and subject to the terms and conditions provided in the Indenture, will be discharged from any and all obligations in respect of the Notes (except for certain obligations including obligations to register the transfer or exchange of Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and hold monies for payment in trust, all as set forth in the Indenture) if the Company deposits with the Trustee money, U.S. Government Obligations which through the payment of interest thereon and principal thereof in accordance with their terms will provide money, or a combination of money and U.S. Government Obligations, in any event in an amount sufficient, without reinvestment, to pay all the principal of and any premium and interest on the Notes on the dates such payments are due in accordance with the terms of the Notes. 
If an Event of Default shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. 
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modifications of the rights and obligations of the Company and the rights of the Noteholders under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the outstanding Notes. Any such consent or waiver by the Holder of this Global Note shall be conclusive and binding upon such Holder and upon all future Holders of this Global Note and of any Note issued upon the 

A-4

registration of transfer hereof or in exchange therefor or in lieu thereof whether or not notation of such consent or waiver is made upon the Note.
As set forth in and subject to the provisions of the Indenture, no Holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to such Notes, the Holders of not less than a majority in principal amount of the outstanding Notes affected by such Event of Default shall have made written request and offered reasonable indemnity to the Trustee to institute such proceeding as Trustee and the Trustee shall have failed to institute such proceeding within 60 days; provided that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of and any premium or interest on this Note on or after the respective due dates expressed here. 
No reference herein to the Indenture and to provisions of this Global Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Global Note at the times, places and rates and the coin or currency prescribed in the Indenture.
As provided in the Indenture and subject to certain limitations therein set forth, this Global Note may be transferred only as permitted by the legend hereto.
If at any time the Depositary for this Global Note notifies the Company that it is unwilling or unable to continue as Depositary for this Global Note or if at any time the Depositary for this Global Note shall no longer be eligible or in good standing under the Securities Exchange Act of 1934, as amended, or other applicable statute or regulation, the Company shall appoint a successor Depositary with respect to this Global Note. If a successor Depositary for this Global Note is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company's election to issue this Note in global form shall no longer be effective with respect to this Global Note and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Notes of this Series in exchange for this Global Note, will authenticate and deliver individual Notes of this Series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of this Global Note.
The Company may at any time and in its sole discretion determine that all Notes of this Series (but not less than all) issued or issuable in the form of one or more Global Notes shall no longer be represented by such Global Note or Notes. In such event, the Company shall execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Notes of this Series in exchange for such Global Note, shall authenticate and deliver, individual Notes of this Series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of such Global Note or Notes in exchange for such Global Note or Notes.
Under certain circumstances specified in the Indenture, the Depositary may be required to surrender any two or more Global Notes which have identical terms (but which may have differing Original Issue Dates) to the Trustee, and the Company shall execute and the Trustee 

A-5

shall authenticate and deliver to, or at the direction of, the Depositary a Global Note in principal amount equal to the aggregate principal amount of, and with all terms identical to, the Global Notes surrendered thereto and that shall indicate all Original Issue Dates and the principal amount applicable to each such Original Issue Date.
The Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of Oklahoma.
Unless the certificate of authentication hereon has been executed by the Trustee, directly or through an Authenticating Agent by manual signature of an authorized signatory, this Global Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
All terms used in this Global Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture unless otherwise indicated herein.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
	
					
	 
	 
	 
	OKLAHOMA GAS AND ELECTRIC 

	 
	 
	 
	COMPANY

	 
	 
	 
	 
	 

	 
	 
	 
	By:
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	

	 
	Dated:
	 
	Attest:
	

	 
	 
	 
	 
	 

	TRUSTEE'S CERTIFICATE
	 
	 
	 

	OF AUTHENTICATION
	 
	 
	 

	 
	 
	 
	 

	This Note is one of the Notes of the series herein designated, described or provided for in the within-mentioned Indenture.
	 
	 
	 

	 
	 
	 
	 
	 

	UMB BANK, N.A., as Trustee
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	By:
	 
	 
	 
	 

	 
	Authorized Signatory
	 
	 
	 

A-6

ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations.
	
					
	TEN COM - as tenants in common
	UNIF GIFT

	 
	MIN ACT - 
	 
	Custodian
	 

	 
	

	(Cust)
	 
	(Minor)

	 
	 
	 
	 
	 

	TEN ENT - as tenants by the entireties
	Under Uniform Gifts to Minors

	 
	 
	 
	 
	 

	JT TEN - as joint tenants with right of survivor-
	 
	 
	 
	 

	ship and not as tenants in common
	 

	 
	State

Additional abbreviations may also be used
though not in the above list.
__________________

FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER 
IDENTIFYING NUMBER OF ASSIGNEE
	
			
	 

	 

	 

	Please print or typewrite name and address

	including postal zip code of assignee

	 
	 

	the within note and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said note on the books of the Company, with full power of substitution in the premises.
	 

	 
	 
	 

	Dated:
	

	 

	 
	 
	 

	 
	 
	NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.

A-7

	
		
	Signature Guaranteed By:

	 
	 

	 
	 

	 
	 

	

	(Name of Eligible Guarantor Institution as defined by SEC Rule 17 Ad-15 (17 CFR 240.17 Ad-15))

	 
	 

	 
	 

	 
	 

	By:
	

	 
	Name:

	 
	Title:

A-8

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