Document:

Exhibit
4.1

 

SECOND
AMENDMENT TO RIGHTS AGREEMENT

 

This AMENDMENT is dated as of June 3, 2008, to
the Rights Agreement, dated as of April 11, 1989, and amended by the first
amendment thereto dated as of February 24, 1999, by and between CREDO
Petroleum Corporation (the “Company”) and Computershare Trust Company,
N.A., as successor in interest to American Securities Transfer, Incorporated
(as Rights Agent) (as heretofore amended, the “Rights Agreement”).

 

WHEREAS, the Company and the Rights Agent have heretofore
executed and entered into the Rights Agreement; and

 

WHEREAS, pursuant to Section 26 of the Rights
Agreement, the Company and the Rights Agent may from time to time supplement or
amend the Rights Agreement in accordance with the provisions of Section 26
thereof; and

 

WHEREAS, the Company intends to enter into a Company
Stock Purchase Agreement (as it may be amended or supplemented from time to
time, the “Company Stock Purchase Agreement”), dated on or about June 3,
2008, by and between the Company and RCH Energy Opportunity Fund II, LP (the “Purchaser”),
and certain shareholders of the Company intend to enter into a Stock Purchase
Agreement, dated on or about June 3, 2008, by and among such shareholders
and the Purchaser (such agreement, together with the Company Stock Purchase
Agreement, being referred to collectively herein as the “Purchase Agreements”);
and

 

WHEREAS, the Board of Directors of the Company has
determined that the transactions contemplated by the Purchase Agreements are
fair to and in the best interests of the Company and its shareholders; and

 

WHEREAS, the Board of Directors has determined that it
is desirable to amend the Rights Agreement to exempt the Purchase Agreements
and the transactions contemplated thereby from the application of the Rights
Agreement.

 

NOW, THEREFORE, the Company and the Rights Agent
hereby agree as follows:

 

1.             Section 1(a) of the
Rights Agreement is hereby modified and amended by adding the following
sentence at the end thereof:

 

“Notwithstanding the foregoing, neither RCH Energy Opportunity Fund II,
LP (“Purchaser”), nor or any party to either Purchase Agreement (as defined
below) or any of their respective Affiliates, either individually or
collectively, shall be deemed to be an Acquiring Person by virtue of the
execution and delivery of the Company Stock Purchase Agreement, dated on or
about June 3, 2008, by and among the Company and the Purchaser, or the
Stock Purchase Agreement, dated on or about June 3, 2008, by and among
James T. Huffman, William F. Skewes, Richard B. Stevens and the Purchaser (such
agreements being collectively referred to herein as the “Purchase Agreements”)
or as a result of the announcement or consummation of the transactions
contemplated by the Purchase Agreements.”

 

 

 

2.             Section 1(i) of the
Rights Agreement is hereby modified and amended by adding the following
sentence at the end thereof:

 

“Notwithstanding the foregoing, neither the execution and delivery of
the  Purchase Agreements, the
announcement thereof, nor consummation of the transactions contemplated
thereby, nor any communication made in connection therewith, shall constitute
an Offer for the purposes of this Agreement.”

 

3.             Section 1(m) of the
Rights Agreement is hereby modified and amended by adding the following
sentence at the end thereof:

 

“Notwithstanding the foregoing, neither the execution and delivery of
the Purchase Agreements, the announcement thereof, nor consummation of the
transactions contemplated thereby, shall cause a Shares Acquisition Date.”

 

4.             Section 2 of the Rights
Agreement is hereby modified and amended by adding the following language at
the end thereof:

 

“, upon ten (10) days’ prior written
notice to the Rights Agent.  The Rights
Agent shall have no duty to supervise, and shall in no event be liable for, the
acts or omissions of any such Co-Rights Agent.”

 

5.             Section 3(a) of the
Rights Agreement is hereby modified and amended to add the following sentence
immediately following the first sentence thereof:

 

“Notwithstanding the foregoing, neither the execution and delivery of
the Purchase Agreements, the announcement thereof, nor consummation of the
transactions contemplated thereby, shall cause a Distribution Date.”

 

6.             Section 15 of the Rights
Agreement is hereby modified and amended by adding the following sentence at
the end thereof:

 

“Notwithstanding the foregoing, nothing in this Agreement shall be
construed to give any holder of Rights or any other Person any legal or
equitable rights, remedy or claim under this Agreement in connection with any
transactions contemplated by the Purchase Agreements or the execution and
delivery or the announcement thereof.”

 

7.             Section 21 of the Rights
Agreement is hereby modified and amended by adding the following sentence after
the existing first sentence thereof:

 

“In the event the transfer agency
relationship in effect between the Company and the Rights Agent terminates, the
Rights Agent will be deemed to have resigned automatically and be discharged
from its duties under this Agreement as of the effective date of such
termination, and the Company shall be responsible for sending any required
notice.”

 

8.             Section 25 of the Rights
Agreement is hereby modified and amended by deleting the Rights Agent notice
address in its entirety and replacing it with the following:

 

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“Computershare Trust Company, N.A.

350 Indiana Street, Suite 800

Golden, Colorado  80401

Attn: Client Services”

 

9.             The Rights Agreement is hereby
modified and amended by adding the following new Section 33 after the
existing Section 32:

 

“Section 33.  Force Majeure.  Notwithstanding anything to the contrary
contained herein, the Rights Agent shall not be liable for any delays or
failures in performance resulting from acts beyond its reasonable control including,
without limitation, acts of God, terrorist acts, shortage of supply, breakdowns
or malfunctions, interruptions or malfunction of computer facilities, or loss
of data due to power failures or mechanical difficulties with information
storage or retrieval systems, labor difficulties, war, or civil unrest.”

 

10.           Except as expressly set forth herein,
this Amendment shall not by implication or otherwise alter, modify, amend or in
any way affect any of the terms, conditions, obligations, covenants or agreements
contained in the Rights Agreement, all of which are ratified and affirmed in
all respects and shall continue in full force and effect and shall be otherwise
unaffected.

 

11.           This Amendment shall be deemed to be
a contract made under the laws of the State of Colorado and for all purposes
shall be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.

 

12.           This Amendment may be executed in any
number of counterparts and each of such counterpart shall for all purposes be
deemed an original, and all such counterparts shall together constitute but one
and the same instrument.

 

[Remainder of Page Intentionally Left Blank]

 

*                              *                              *

 

3

 

IN WITNESS WHEREOF. this Amendment has been duly
executed by the Company and the Rights Agent as of the day and year first
written above.

 

	
   

  	
  CREDO PETROLEUM
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By.

  	
  /s/ James T.
  Huffman

  
	
   

  	
  Name: James T.
  Huffman

  
	
   

  	
  Title: President,
  Chief Executive Officer and

  
	
   

  	
  Chairman of the
  Board of Directors

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPUTERSHARE
  TRUST COMPANY, N.A.

  
	
   

  	
  (as Rights
  Agent)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By.

  	
  /s/ Kellie Gwinn

  
	
   

  	
  Name: Kellie Gwinn

  
	
   

  	
  Title: Vice
  President

  

 

4Exhibit 10.1

 

Execution
Version

 

COMPANY STOCK PURCHASE AGREEMENT

 

THIS COMPANY
STOCK PURCHASE AGREEMENT (this “Agreement”)
is made as of June 3, 2008, by and between CREDO PETROLEUM CORPORATION,
a Colorado corporation (NASDAQ: CRED) (the “Company”),
and RCH ENERGY OPPORTUNITY FUND II, LP, each a limited partnership organized
under the laws of the State of Delaware (“Purchaser,”
and collectively with the Company, the “Parties”).

 

WHEREAS, the
Board of Directors of the Company (the “Board”) has
deemed it advisable and in the best interests of the Company to issue and sell
to Purchaser, and Purchaser desires to purchase from the Company, 1,150,000
shares of newly-issued common stock, par value $0.10 per share, of the Company
(“Stock”) at a price of $14.50 per share;

 

WHEREAS,
concurrently with and as a condition to the Closing (as hereinafter defined),
Purchaser is purchasing 687,000 shares of Stock from certain directors of the
Company (the “Tranche Two Stock Purchase”);
and

 

WHEREAS, as an
inducement and condition to the Parties entering into this Agreement, Purchaser
and the Company desire to agree to a standstill provision with respect to the
Stock and to certain additional rights for Purchaser with respect Board
positions as further set forth herein;

 

NOW, THEREFORE,
in consideration of the foregoing and the respective representations,
warranties, covenants, agreements and conditions hereinafter set forth, and
intending to be legally bound hereby, the Parties hereto agree as follows:

 

ARTICLE I

PURCHASE AND SALE OF PURCHASED STOCK

 

1.1                                 Sale
of Stock. Upon the terms and subject to the conditions contained herein,
upon (a) execution and delivery of this Agreement by all the Parties
hereto, (b) the execution and delivery by Purchaser and the other parties
thereto of the Stock Purchase Agreement, dated as of the date hereof, among
Purchaser and James T. Huffman, Richard B. Stevens and William F. Skewes (the “Tranche Two Stock Purchase Agreement”)
and (c) payment of the Purchase Price Amount (as hereinafter defined) in
accordance with Section 1.2 hereof, the Company shall sell and transfer to
Purchaser, and Purchaser shall purchase and accept from the Company, 1,150,000
shares of Stock (the “Purchased Stock”).

 

1.2                                 Payment
by Purchaser. Upon the terms and subject to the conditions contained herein
and in payment for the aforesaid sale and transfer of the Purchased Stock by
the Company to Purchaser, Purchaser shall deliver or cause to be delivered at
the Closing to the Company, by wire transfer or other means reasonably
acceptable to the Company, an aggregate sum in cash equal to $14.50 per share,
or $16,675,000 (the “Purchase Price Amount”).

 

1.3                                 Closing.
Upon the terms and subject to the conditions set forth herein, the closing of
the purchase and sale of the Purchased Stock (the “Closing”)
shall be held at 10:00 a.m. Mountain Daylight Time on the second business
day following the satisfaction (or, to the extent permitted, the waiver by the
Parties entitled to the benefits thereof) of the conditions set forth in Article V
(other than any of such conditions that by their nature are to be fulfilled at
Closing, but 

 

 

subject to the
fulfillment or waiver of such conditions), or such other time and date as may
be mutually agreed by the Parties hereto (the “Closing
Date”), at the offices of Davis Graham & Stubbs LLP,
1550 17th Street, Denver, CO 80202, or such other location as may be
mutually agreed to by the Parties hereto.

 

1.4                                 Stock
Certificates. At the Closing, the Company shall deliver one or more
certificates representing the Purchased Stock, each such certificate to be duly
and validly issued in favor of Purchaser and otherwise sufficient to vest in
Purchaser good title to the Purchased Stock.

 

1.5                                 Other
Documents Delivered at Closing. The Parties shall each take all such other
actions required hereby to be performed, and deliver all other documents,
certificates and other items required to be delivered by it, prior to or on the
Closing Date, including, without limitation, satisfying the conditions set
forth in Article V.  All such
documents and instruments delivered to any Party pursuant hereto shall be in
form and substance, and shall be executed in a manner, reasonably satisfactory
to such Party and its counsel.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company
represents and warrants to Purchaser as follows:

 

2.1                                 Organization.
The Company is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Colorado.  The Company has the requisite corporate power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted. 
The Company is qualified to transact business and is in good standing in
each jurisdiction in which the properties owned, leased or operated by it or
the nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing has not had
and would not reasonably be expected to have a Company Material Adverse Effect.  For purposes of this Agreement, “Company Material Adverse Effect” means any result, occurrence, condition,
fact, change, violation, event or effect that, individually or in the aggregate
with any such other results, occurrences, conditions, facts, changes,
violations, events or effects, is, or is reasonably likely to be, materially
adverse to the condition (financial or otherwise), business, assets, or results
of operations of the Company and its subsidiaries taken as a whole; provided, however, that a Company
Material Adverse Effect shall not be deemed to include effects to the extent
resulting from (i) changes after the date of this Agreement in GAAP or
regulatory accounting requirements applicable generally to the Company, (ii) actions
or omissions by the Company taken with the specific prior written and informed
consent of Purchaser, (iii) changes in the prices of crude oil, natural
gas or natural gas products which do not have a materially disproportionate
effect on the Company relative to other industry participants, (iv) changes
in global or national political conditions or general economic or market
conditions which do not have a materially disproportionate effect on the
Company, (v) any loss of employees resulting from the public disclosure of
this Agreement or any related transaction or (vi) any change, in and of
itself (as opposed to the facts underlying such change), in the trading price
or volume of the Company’s capital stock.

 

2

 

2.2                                 Authorization.
The Company has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.  The execution, delivery and performance by
the Company of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board, and no other
corporate action on the part of the Company or its shareholders is necessary to
authorize the execution and delivery by the Company of this Agreement or the
consummation of the purchase and sale of the Purchased Stock.

 

2.3                                 Execution;
Validity of Agreement. This Agreement has been duly executed and delivered
by the Company, and assuming due and valid authorization, execution and
delivery hereof by Purchaser, constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, and (ii) laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.

 

2.4                                 Non-Contravention;
Consents; Filings. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby and
compliance by the Company with any of the provisions hereof do not and will not
(a) conflict with or result in any breach of any provision of the
certificate of incorporation or by-laws of the Company, (b) require any
filing by the Company with, or the issuance or grant to the Company of any
permit, authorization, consent or approval of, (i) any court, arbitrator
or arbitral tribunal, administrative agency or commission or other governmental
or regulatory authority or agency (a “Governmental Entity”)
or (ii) any other natural person, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, or other entity or organization (a “Person”), (c) conflict with or
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to, binding upon or enforceable against the Company or any of its
properties or assets, (d) result in a violation or breach of, constitute
(with or without due notice or lapse of time or both) a default under, or give
rise to any right of termination, amendment, cancellation or acceleration
under, any note, bond, mortgage, indenture, lease, license, contract, agreement
or other instrument or obligation to which the Company is a party or by which
the Company or any of its property or assets are bound or (e) result in
the creation or imposition of any lien, charge, encumbrance, security interest,
claim or right of others of whatever nature (each, a “Lien”)
upon any property or assets of the Company under any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which the Company is a party or by which the Company or any of
its property or assets is bound, except for (x) any filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange
Act of 1934, as amended (the “Exchange Act”),
and state securities or blue sky laws and (y) in the case of clauses (b),
(c), (d) or (e), as would not reasonably be expected to have a Company
Material Adverse Effect.

 

2.5                                 Good
Title Conveyed. At the time of issuance, the Purchased Stock will be duly
authorized, validly issued, fully paid and nonassessable and not subject to any
preemptive rights.  The stock
certificates and other instruments to be executed and delivered by the Company
to Purchaser at the Closing will be valid and binding obligations of the
Company, enforceable in accordance with their respective terms, and will
effectively vest in Purchaser good title to all the 

 

3

 

Purchased
Stock, free and clear of all Liens whatsoever, except restrictions on transfer
arising under the Securities Act or any applicable state securities laws.

 

2.6                                 Capitalization
of the Company. As of May 31, 2008, the authorized capital stock of
the Company consisted of 20,000,000 shares of Stock, of which 9,330,536 shares
were issued and outstanding and 185,610 shares were held in the treasury of the
Company.  The only shares of Stock
reserved for issuance as of such date consisted of 1,234,110 shares that were
reserved or held for issuance pursuant to the Company’s equity compensation
plans.  Except as referred to in the
foregoing sentence, there are no outstanding subscriptions, options, warrants,
rights (including “phantom” stock rights), preemptive rights or other contracts,
commitments, understandings or arrangements, including any right of conversion
or exchange under any outstanding security, instrument or agreement (together, “Options”), obligating
the Company or any of its Subsidiaries to issue or sell any capital stock of
the Company or to grant, extend or enter into any Option with respect thereto.

 

2.7                                 Subsidiaries.
The only material subsidiaries of the Company are SECO Energy Corporation, a
Nevada corporation, and United Oil Corporation, an Oklahoma corporation (each a
“Subsidiary” and together, the “Subsidiaries”).  All of the outstanding capital shares of each
of the Subsidiaries are owned, beneficially and of record, by the Company or a
Subsidiary wholly owned, directly or indirectly, by the Company, free and clear
of all Liens, except as would not reasonably be expected to have a Company
Material Adverse Effect.

 

2.8                                 Redemption
or Repurchase of Stock. As of the date hereof, there are no outstanding
contractual obligations of the Company or either Subsidiary to repurchase,
redeem or otherwise acquire any Stock or any capital shares of either
Subsidiary, or, except as would not reasonably be expected to have a Company
Material Adverse Effect, to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Subsidiary or any
other Person.

 

2.9           SEC
Reports and Financial Statements.

 

(a)                                  Since
January 1, 2005, the Company has filed with the Securities and Exchange
Commission (the “SEC”) all material forms,
reports, schedules, registration statements, and other documents (together with
all amendments thereof and supplements thereto) (as such documents have since
the time of their filing been amended or supplemented, the “Company SEC Reports”) required to be
filed by the Company with the SEC.  As of
their respective dates and giving effect to any amendments or supplements
thereto filed prior to the date of this Agreement, the Company SEC Reports (i) complied
as to form in all material respects with the requirements of the Securities
Act, the rules and regulations thereunder, the Exchange Act and the rules and
regulations thereunder, as the case may be, and (ii) 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
light of the circumstances under which they were made, not misleading.

 

(b)                                 The
audited consolidated financial statements and unaudited interim consolidated
financial statements (including, in each case, the notes, if any, thereto)
included in the Company SEC Reports (the “Company Financial
Statements”) complied as to form in all 

 

4

 

material respects with the published rules and
regulations of the SEC with respect thereto and were prepared in accordance
with United States generally accepted accounting principles in all material
respects.

 

2.10                           Absence
of Certain Changes or Events. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement, since October 31, 2006,
there has not been any change, event or development that had, or would be
reasonably expected to have, individually or when aggregated with any other
change(s), event(s) or development(s), a Company Material Adverse Effect.

 

2.11                           Undisclosed
Liabilities. Except (a) as reflected or otherwise reserved against on
the balance sheet dated contained in the Company’s Form 10-Q for the
quarter ended January 31, 2008, (b) for liabilities incurred since January 31,
2008 in the ordinary course of business consistent with past practice, (c) for
liabilities incurred in the ordinary course under existing contracts (and not
relating to any breach or violation thereof), (d) for liabilities for
investment banking, accounting and legal fees incurred in connection with the
negotiation, execution and delivery of this Agreement, the Tranche Two Stock
Purchase Agreement and other negotiations involving Purchaser, (e) for
liabilities which have been discharged or paid in full, and (f) for liabilities
that have not had, and are not reasonably likely to have, individually or in
the aggregate, a Company Material Adverse Effect, the Company has not incurred
any liabilities (whether accrued, absolute, contingent or otherwise) of any
nature that would be required by generally accepted accounting principles to be
reflected on a consolidated balance sheet of the Company and its consolidated
subsidiaries (including the notes thereto) since January 31, 2008.

 

2.12                           Hedging.
Except pursuant to a hedge agreement covering 80 MMbtus at NYMEX basis
prices, ranging from $10.35 to $10.60 for the production months of December 2008
through March 2009 and except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement or as would not reasonably be
expected to have a Company Material Adverse Effect, (a) the Company and
its Subsidiaries have no obligations as of the date of this Agreement for the
delivery of hydrocarbons attributable to any of the Company’s or either of its
Subsidiary’s properties in the future on account of prepayment, advance
payment, take-or-pay or similar obligations without then or thereafter being
entitled to receive full value for the delivery of such hydrocarbons, and (b) neither
the Company nor either of its Subsidiaries is bound by futures, hedge, swap,
collar, put, call, floor, cap, option or other contracts which are intended to
benefit from or reduce or eliminate the risk of fluctuations in the price of
commodities.

 

2.13                           Legal
Proceedings. Except as disclosed in the Company SEC Reports filed prior to
the date of this Agreement, (a) there are no pending or, to the knowledge of
the Company, threatened actions, suits, arbitrations or proceedings relating to
or affecting the Company, either of its Subsidiaries or any of their respective
assets and properties that, individually or in the aggregate, have had or would
reasonably be expected to have a Company Material Adverse Effect, (b) there
are no pending or, to the knowledge of the Company, threatened Governmental
Entity investigations or audits relating to or affecting the Company, either of
its Subsidiaries or any of their respective assets and properties that,
individually or in the aggregate, have had or would reasonably be expected to
have a Company Material Adverse Effect, and (c) neither the Company nor
either of its Subsidiaries is subject to any orders of any Governmental Entity
that 

 

5

 

are specific
to the Company and that, individually or in the aggregate, have had or would
reasonably be expected to have a Company Material Adverse Effect.

 

2.14                           Permits
and Licenses. The Company and each of its Subsidiaries possess all
licenses, certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, except for any such failures to possess
the same as would not have a Company Material Adverse Effect.  Neither the Company nor either of its
Subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such license, certificate, authorization or permit that,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Company Material Adverse Effect.

 

2.15                           Taxes.
Except as disclosed in the Company SEC Reports filed prior to the date of this
Agreement, (a) the Company and its Subsidiaries have filed all foreign,
federal, state and local tax returns that are required to be filed (or have requested
extensions thereof), except for any failures to file that, individually or in
the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect and (b) the Company and its Subsidiaries
have paid all taxes required to be paid by them and any other assessments,
fines or penalties levied against them, to the extent that any of the foregoing
is or was due and payable, except for any assessments, fines or penalties that
are currently being contested in good faith, and except in the case of (a) or
(b), matters that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse Effect.

 

2.16                           Compliance
with ERISA. Except as disclosed in the Company SEC Reports filed prior to
the date of this Agreement or as would not reasonably be expected to have a
Company Material Adverse Effect, (a) each of the Company and its
Subsidiaries has fulfilled its obligations, if any, under the minimum funding
standards of Section 302 of the United States Employee Retirement Income
Security Act of 1974 (“ERISA”) and
the regulations and published interpretations thereunder with respect to each “plan”
(as defined in Section 3(3) of ERISA and such regulations and
published interpretations) in which its employees are eligible to participate
and each such plan (excluding any multiemployer plan, as defined in Section 3(37)
of ERISA, that is not sponsored or maintained by the Company or its
Subsidiaries) is in compliance with the presently applicable provisions of
ERISA and such regulations and published interpretations and (b) the
Company and its Subsidiaries have not incurred any unpaid liability to the
Pension Benefit Guaranty Corporation (other than for the payment of premiums in
the ordinary course) or to any such plan under Title IV of ERISA.

 

2.17                           Absence
of Violations and Defaults.  None of
the Company and its Subsidiaries is in violation or default of (a) any
provision of its formation or governing documents in any material respect, (b) the
terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant
or instrument to which it is a party, by which it is bound or to which its
property is subject, or (c) any statute, law, rule, regulation, judgment,
order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over it or
any of its properties or assets, as applicable, except, in the case of clauses (b) or
(c), for any violations or defaults that have not had and would not reasonably
be expected to have a Company Material Adverse Effect.

 

6

 

2.18                           Labor
Matters. No labor problem or dispute with the employees of the Company or
its Subsidiaries exists or, to the knowledge of the Company, is threatened or
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its Subsidiaries’ principal
suppliers, contractors or customers, that in any such case has had or would
reasonably be expected have a Company Material Adverse Effect.

 

2.19                           Environmental
Matters. Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement or as would not reasonably be expected to have a Company
Material Adverse Effect, each of the Company and its Subsidiaries (a) is
in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (b) has
received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its respective business and (c) is
in compliance with all terms and conditions of any such permit, license or
approval.  In the ordinary course of its
business, the Company periodically reviews the effect of Environmental Laws on
the business, operations and properties of the Company and its Subsidiaries, in
the course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties).  On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
individually or in the aggregate, have a Company Material Adverse Effect, other
than as disclosed in the Company SEC Reports.

 

2.20                           Insurance.
Except as disclosed in the Company SEC Reports filed prior to the date of this
Agreement or as would not reasonably be expected to have a Company Material
Adverse Effect, (a) each of the Company and its Subsidiaries is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
they are engaged; all policies of insurance insuring the Company, its
Subsidiaries or any of their respective businesses, assets and employees are in
full force and effect; the Company and its Subsidiaries are in compliance with
the terms of such policies and instruments; there are no claims by the Company
or either of its Subsidiaries under any such policy or instrument as to which
any insurance company is denying liability or defending under a reservation of
rights clause; neither the Company nor either Subsidiary has been refused any
insurance coverage sought or applied for; and the Company has no reason to
believe that it will not be able to renew its and the Subsidiaries’ existing
insurance coverage as and when such coverage expires, or to obtain similar
coverage from similar insurers as may be necessary to continue its and their
business, in either case at a cost that would not have a Material Adverse
Effect.

 

2.21                           Intellectual
Property. Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement, the Company and its Subsidiaries own, possess, license
or have other rights to use, on reasonable terms, all material patents, patent
applications, trade and service marks, trade and service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets, technology,
know-how and other intellectual property necessary for the conduct of its or
their business as currently conducted.

 

7

 

2.22                           Adequacy
of Controls. The principal executive officer and principal financial
officer of the Company have made all certifications required by the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”)
and any related rules and regulations promulgated by the SEC, and the
statements contained in each such certification were complete and correct as of
their respective dates; and, except as would not reasonably be expected to have
a Company Material Adverse Effect, the Company’s directors and officers are
each in compliance with all applicable effective provisions of the
Sarbanes-Oxley Act and the rules and regulations of the SEC and the NASDAQ
Stock Market promulgated thereunder.

 

2.23                           Material
Weaknesses.  Except as described in the
Company SEC Reports, the Company is not aware of any circumstances that in its
judgment constitute material weaknesses in its internal control over financial
reporting, and the Company has not received any written notice from its
auditors indicating that they believe a material weakness in the Company’s
internal controls exists, other than as disclosed in the Company SEC Reports.

 

2.24                           Brokers’
and Finders’ Fees. Other than fees payable to Merrill Lynch for its
services as financial advisor, the Company has not entered into any agreement
or arrangement entitling any agent, broker, investment banker, financial
advisor or other firm or person to any broker’s or finder’s fee or any other
commission or similar fee in connection with any of the transactions contemplated
by this Agreement.

 

2.25                           Valid
Private Placement.  Assuming the
accuracy of the representations and warranties of the Purchaser contained in
this Agreement, the sale and issuance of the Purchased Stock pursuant to this
Agreement is exempt from the registration requirements of the Securities Act,
and neither the Company, nor to the knowledge of the Company, any authorized
representative acting on its behalf has taken or will take any action hereafter
that will cause the loss of such exemption.

 

2.26                           Takeover
Matters.

 

(a)                                  Except
for the Rights Agreement, dated April 11, 1989, as amended February 24,
1999, between the Company and American Securities Transfer, Incorporated, as
the original rights agent, (the “Rights Agreement”)
(a correct and complete copy of which, together with all amendments thereto, as
in effect on the date hereof, has been filed by the Company with the SEC)
neither the Company nor any Subsidiary of the Company (as defined in the Rights
Agreement) has in effect any shareholder rights plan, commonly or colloquially
known as a “poison pill” or “anti-takeover” plan, or any similar plan, device
or arrangement, and the Board of Directors of the Company has not adopted or
authorized the adoption of such a plan, device or arrangement.

 

(b)                                 The
Board of Directors of the Company has taken all necessary action under the
Rights Agreement (including having amended such agreement but without redeeming
the Rights (as defined therein)) so that none of the execution, delivery and
performance of this Agreement (including the purchase and sale of the Purchased
Stock pursuant to this Agreement) or any other transaction contemplated hereby
will cause (i) the Rights to become exercisable under the Rights Agreement
or to separate from the stock certificates to which they are attached, 

 

8

 

(ii) a Shares Acquisition Date (as
defined in the Rights Agreement) to occur, or (iii) Purchaser to be deemed
an Acquiring Person (as defined in the Rights Agreement).

 

ARTICLE III

REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER

 

The Purchaser
hereby represents and warrants to and covenants with the Company as follows:

 

3.1                                 Organization;
Authorization; Validity of Agreement. Purchaser is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.  All action on the part of Purchaser for the
authorization, execution and delivery of this Agreement and the performance of
its obligations hereunder have been taken. 
This Agreement has been duly executed and delivered by Purchaser, and
assuming due and valid authorization, execution and delivery hereof by the
Company, constitutes a valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except as such enforceability
may be limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, and (b) laws relating to the availability of
specific performance, injunctive relief or other equitable remedies.

 

3.2                                 Non-Contravention;
Consents; Filings. The execution, delivery or performance of this Agreement
by Purchaser, the consummation by Purchaser of the purchase of the Purchased
Stock and compliance by Purchaser with any of the provisions hereof and thereof
do not and will not (a) conflict with or result in any breach of any
provision of the partnership agreement or certificate of formation of
Purchaser, (b) require any filing by Purchaser with, or the issuance or
grant to Purchaser of any permit, authorization, consent or approval of, any
Governmental Entity, (c) conflict with or violate any order, writ,
injunction, decree, statute, rule or regulation applicable to, binding
upon or enforceable against Purchaser or any of its properties or assets, or (d) result
in a violation or breach of, constitute (with or without lapse of time or both)
a default under, give rise to any right of termination, amendment, cancellation
or acceleration under, or result in the creation or imposition of any Lien upon
any property or assets of Purchaser under, any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Purchaser is a party or by which Purchaser or its property or assets are bound,
except for (i) any failures to make any such filing or obtain any such
permit, authorization, consent or approval, (ii) in the case of clauses (c) and
(d) only, any conflicts, violations, breaches or defaults, and (iii) any
Liens that have not had, and, as would not reasonably be expected to have, a
Purchaser Material Adverse Effect. For purposes of this Agreement, “Purchaser  Material
Adverse Effect” means any result, occurrence, condition, fact,
change, violation, event or effect that, individually or in the aggregate with
any such other results, occurrences, conditions, facts, changes, violations,
events or effects, is, or is reasonably likely to be, materially adverse to the
condition (financial or otherwise), business, assets, or results of operations
of the Purchaser and its affiliates taken as a whole; provided, however, that a Purchaser Material Adverse
Effect shall not be deemed to include effects to the extent resulting 

 

9

 

from (i) changes
after the date of this Agreement in GAAP or regulatory accounting requirements
applicable generally to the Purchaser, (ii) actions or omissions by the
Purchaser taken with the specific prior written and informed consent of
Company, (iii) changes in the prices of crude oil, natural gas or natural
gas products which do not have a materially disproportionate effect on the
Purchaser relative to other industry participants, or (iv) changes in
global or national political conditions or general economic or market
conditions which do not have a materially disproportionate effect on the
Purchaser.

 

3.3           Investment
Experience/Accredited Investor/Restricted Securities. Purchaser is an “accredited
investor” as defined in Regulation D under the Securities Act and able to bear
the economic risk of holding the Purchased Stock for an indefinite period, and
has knowledge and experience in financial and business matters such that it is
capable of evaluating the risks of the investment in the Purchased Stock.  Purchaser understands that shares of the
Purchased Stock are characterized as “restricted securities” under the federal
securities laws and that under such laws and applicable regulations, such
securities may be resold without registration under the Securities Act only in
certain limited circumstances.  In the
absence of an effective registration statement covering the Purchased Stock or
an available exemption from registration under the Securities Act, the
Purchased Stock must be held indefinitely. 
In this connection, Purchaser represents that it is familiar with SEC Rule 144,
as presently in effect, and understands the resale limitations imposed thereby
and by the Securities Act.  Purchaser is
acquiring the Purchased Stock for investment for its own account, not as a
nominee or agent, and not with a view to, or for resale in connection with, any
distribution thereof.

 

3.4           Brokers’
and Finders’ Fees. Except as previously disclosed in writing to the
Company, Purchaser has not entered into any agreement or arrangement entitling
any agent, broker, investment banker, financial advisor or other firm or person
to any broker’s or finder’s fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement.

 

3.5           Ownership
of Stock. As of the date hereof, Purchaser is not the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of any Stock.

 

3.6           Standstill
Provision. Except for the Tranche Two Stock Purchase and the Purchased
Stock, and without in any way limiting the representations set forth above,
Purchaser further agrees that, for a period of twenty-four (24) months from the
Closing, without the prior written consent of the Company, it shall not, nor
shall any of its affiliates (a) acquire, offer to acquire or agree to
acquire (including in the public markets) 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 Stock of the Company, or direct or
indirect rights (including convertible securities) or options to acquire such
beneficial ownership (or otherwise act in concert with respect to any such
securities, rights or options with any Person that so acquires, offers to
acquire or agrees to acquire); provided, however, that no such additional ownership shall be deemed
to have occurred solely due to (i) a stock split, reverse stock split,
reclassification, reorganization or other transaction by the Company affecting
any class of the outstanding capital stock of the Company generally, (ii) a
stock dividend or other pro rata distribution by the Company to holders of its
outstanding capital stock, (iii) any increase 

 

10

 

in the
percentage ownership by Purchaser of outstanding shares of Stock of the Company
resulting from any action taken by the Company, including the repurchase of
shares of Stock of the Company pursuant to any share repurchase or similar
program, or (b) initiate, propose or participate in a solicitation any
proxies or consents with respect to the Company except in conformity with the
recommendations of the Board.

 

ARTICLE IV

BOARD OF DIRECTORS

 

4.1                                 Expansion
of Board. Effective at the Closing, the Board shall cause the Board to be
increased by one (1) additional Class II member, so that the Board
shall consist of a total of seven (7) directors.

 

4.2                                 Purchaser’s
Entitlement to Board Nominees. Effective at the Closing, Purchaser shall be
entitled to designate two (2) members of the Board: one, John A. Rigas, to
fill the existing vacancy in Class III on the Board, and the other, W.
Mark Meyer, to fill the newly-created Board seat in Class II, as set forth
in Section 4.1 (the “Initial  Purchaser Designees”).  Thereafter, (a) for so long as Purchaser
beneficially owns at least fifteen percent (15%) of the outstanding Stock,
Purchaser shall have the right to designate one (1) nominee in Class II
and one (1) nominee in Class III for election to the Board;  and (b) for so long as Purchaser beneficially
own at least ten percent (10%) but less than fifteen percent (15%) of the
outstanding Stock, Purchaser shall be entitled to designate one (1) nominee
in Class III for election to serve on the Board (each individual nominated
by Purchaser pursuant to the procedures set forth in Section 4.3 being a “Nominee” and collectively, the “Nominees”).  Each Nominee must be an individual who may
reasonably be determined by the Board to be independent as defined under both
the NASDAQ rules and the Company’s organizational documents, it being
understood that only the Board may make a definitive determination regarding
the independence of any director, and the Company shall be entitled to request
any reasonable information regarding the Nominee that would bear on the
independence of the Nominee, including information regarding any affiliated
transactions or relationships.  In order
to designate a Nominee, Purchaser shall provide written notice to the Board,
which notice shall contain the names of the Nominee, the information required
by Regulation 14A for each such Nominee and the committee(s), if any, on which
such Nominee is nominated to serve (the “Nomination Notice”).

 

4.3                                 Procedures
for Selection and Election of Nominees. By written notice to the Company, Purchaser
may designate the Initial Purchaser Designees to be nominated for re-election
to the Board at any Board meeting during which director nominees of their
respective classes are approved.  In the
event Purchaser wishes to designate a new Nominee for election in the place of
one or both of the Initial Purchaser Designees or any subsequent Nominees
pursuant to the provisions set forth in Section 4.2, Purchaser shall
provide a Nomination Notice to the Board in accordance with the procedures
described in the proxy statement for the Company’s most recent annual meeting
of shareholders, identifying each Nominee. 
Upon receiving a Nomination Notice, the Board shall take all actions
reasonably necessary to include such Nominee(s) in the Company’s next
election of members of the Board by the shareholders and shall also recommend
that the shareholders of the Company elect such Nominee(s) to the Board,
providing such written recommendation in any proxy materials presented to the
shareholders of the Company for such election.

 

11

 

ARTICLE V

CLOSING CONDITIONS

 

5.1           Conditions to the
Obligation of Each Party. The respective obligations of each Party to
effect the transactions contemplated by this Agreement shall be subject to the
fulfillment or waiver, at or prior to the Closing Date, of the following
conditions:

 

(a)           No
action, suit or proceeding instituted by any Governmental Entity shall be
pending, and no statute, rule, order, decree, regulation, injunction or
judgment of any court or Governmental Entity may be in effect, in each case,
that would prohibit, restrain, enjoin or restrict the consummation of the
transactions contemplated hereby.

 

(b)           Any
necessary approval of or notification to NASDAQ, if required, shall have been
obtained or provided.

 

(c)           The
closing of the Tranche Two Stock Purchase shall have occurred (it being
understood and agreed that such closing shall occur simultaneously with the
Closing hereunder).

 

5.2           Conditions to the
Obligations of Purchaser. The obligation of the Purchaser to effect the
transactions contemplated by this Agreement is subject to the satisfaction (or
waiver by the Purchaser), at or prior to the Closing Date, of the following
conditions:

 

(a)           The
representations and warranties of the Company set forth in Article II of
this Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except to the extent that such representations and warranties
speak as of another date, in which case such representations and warranties
shall be true and correct in all material respects as of such date).

 

(b)           The
Company shall have performed and complied 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 in all material respects.

 

(c)           The
Company shall have delivered stock certificates representing the Purchased
Stock as described herein.

 

(d)           The
Company shall have delivered a duly executed counterpart of the Registration
Rights Agreement, in a customary form to be agreed upon by the Parties prior to
Closing (the “Registration
Rights Agreement”).

 

(e)           Purchaser
shall have received an opinion from legal counsel to the Company in customary
form, dated the Closing date, as to the existence and good standing of the
Company, the valid issuance of the Stock, due authority to enter into this
Agreement and enforceability of this Agreement.

 

5.3           Conditions to the
Obligation of the Company. The obligation of the Company to effect the
transactions contemplated by this Agreement is subject to the satisfaction (or
waiver by the Company), at or prior to the Closing Date, of the following
conditions:

 

12

 

(a)           The
representations and warranties of the Purchaser set forth in Article III
of this Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except to the extent that such representations and warranties
speak as of another date, in which case such representations and warranties
shall be true and correct in all material respects as of such date).

 

(b)           The
Purchaser shall have performed and complied with all agreements, obligations
and conditions contained in this Agreement that are required to be performed or
complied with by each of them on or before the Closing in all material
respects.

 

(c)           Purchaser
shall have paid the Purchase Price Amount.

 

(d)           Purchaser
shall have delivered a duly executed counterpart of the Registration Rights
Agreement between the Parties.

 

ARTICLE VI

INDEMNIFICATION

 

6.1           Survival.  Subject to the limitations and other
provisions of this Agreement, the representations and warranties of the parties
hereto shall survive the Closing until the first anniversary of the Closing
Date, except that the representations and warranties in Section 2.1, Section 2.2,
Section 2.5, Section 2.6 and Section 3.3 shall survive
indefinitely.  Notwithstanding the
foregoing, the representations and warranties of a party will not expire with
respect to any written claims delivered to the other party prior to the
applicable expiration period of any such representations, warranties or
covenants as provided above.

 

6.2           Indemnification.  Each party (the “Indemnifying Party”)
shall indemnify, save and hold the other party and its affiliates, directors,
officers, employees, and their respective agents (each, an “Indemnified Party”),
harmless from and against any and all costs, losses, charges, liabilities,
obligations, damages, punitive damages (but only to the extent that they are
actually awarded in Third-Party Claims), lawsuits, actions, judgments,
deficiencies, demands, fees, claims, settlements and reasonable expenses
(whether arising out of Third-Party Claims or otherwise), including, without
limitation, interest, penalties, costs of litigation, reasonable attorneys’
fees and expenses, all amounts paid in the investigation, defense or settlement
of any of the foregoing, and including consequential damages (but only to the
extent that they are actually awarded in Third-Party Claims) (collectively, “Losses”) incurred in
connection with, arising out of, resulting from or relating or incident to any
inaccuracy or incorrectness of, or any other breach of, any representation or
warranty of or by the Indemnifying Party in or pursuant to this Agreement.  The claims for indemnity by any Indemnified
Person pursuant to this Section 6.2 are referred to as “Claims.”  The indemnification obligations of the
Indemnifying Party pursuant to this Section 6.2 shall be limited to Claims
for Losses as to which written notice is delivered to the Indemnifying Party
prior to the last date of survival of the applicable representation and warranty
as provided in Section 6.1.

 

6.3           Exclusive Remedy.  The indemnification provided for in this Section 6
shall constitute the Indemnified Parties’ sole monetary remedy against the
Indemnifying Party in respect of any breach of any representation or warranty
of the Indemnifying Party set forth 

 

13

 

herein; provided, however, that the
foregoing shall not apply to claims of fraud by the Indemnifying Party in
connection with the transactions contemplated hereby.

 

6.4           Third-Party Claims.  The Indemnified Party shall give written
notice to the Indemnifying Party promptly, but not later than fifteen (15)
days, after such Indemnified Party receives written notice of any claim,
action, suit, proceeding or demand asserted by any person who is not a party
(or a successor to a party) to this Agreement (a “Third-Party Claim”) that is or may give
rise to an indemnification claim, or otherwise becomes aware of the basis for
such a claim; provided, however, that
the failure of the Indemnified Party to give notice as provided in this Section 6.4
shall not relieve any Indemnifying Party of its obligations under Section 6.2,
except to the extent that such failure actually and materially prejudices the
rights of the Indemnifying Party.  The
Indemnifying Party may elect to assume the defense of any Third-Party Claim or
any litigation resulting therefrom; provided,
however, that counsel for the Indemnifying Party, who shall in such
case conduct the defense of such claim, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld), and the Indemnified
Party may participate in such defense at its own expense, and may retain
counsel of its choice at its own expense; provided
further that the Indemnified Party shall have the right to employ,
at the Indemnifying Party’s expense, one firm of counsel of its choice, and
local counsel in each applicable jurisdiction (if more than one jurisdiction is
involved), to represent the Indemnified Party if, in the Indemnified Party’s
reasonable judgment, there exists a conflict of interest between the
Indemnified Party and the Indemnifying Party, or if the Indemnifying Party (a) elects
not to defend, compromise or settle a Third-Party Claim or (b) having
timely elected to defend a Third-Party Claim, fails adequately to prosecute or
pursue such defense, then in each case the Indemnified Party may defend such
Third-Party Claim on behalf of and for the account and risk of the Indemnifying
Party.  The Indemnifying Party, in the
defense of any such litigation or proceeding, shall not, except with the prior
written approval of the Indemnified Party, consent to entry of any judgment or
entry into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to the Indemnified Party of a
release from all liability with respect to such litigation or proceeding.  The Indemnified Party shall not settle or
compromise any such claim without the prior written approval of the
Indemnifying Party, which approval shall not be unreasonably withheld or
delayed.

 

ARTICLE VII

GENERAL PROVISIONS

 

7.1           Further Assurances.
Subject to the terms and conditions of this Agreement, Purchaser and the
Company shall use all reasonable efforts to take or cause to be taken all
actions, and to do or cause to be done all things, necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement.

 

7.2           FIRPTA. If
requested by Purchaser, the Company shall provide to Purchaser, at the Closing,
an affidavit in form and substance reasonably satisfactory to Purchaser, duly
executed and acknowledged, certifying facts that would exempt from any
withholding requirements under Section 1445 of the Internal Revenue Code
of 1986, as amended, any payments for any United States real property interest
being transferred pursuant to this Agreement.

 

14

 

7.3           Entire Agreement;
Amendment and Waiver. Except at provided in this Section 7.3, this Agreement,
including the exhibits hereto, the Tranche Two Stock Purchase Agreement, the
Letter Agreement dated March 26, 2008, and the other documents delivered
pursuant to this Agreement, constitute the full and entire understanding and
agreement among the Parties with regard to the subjects hereof and thereof, and
no Party shall be liable or bound to any other Party in any manner by any
warranties, representations or covenants except as specifically set forth
herein or therein.  RCH Energy
Opportunity Fund II, LP and the Company agree that the Master Agreement dated January 28,
2008, between RCH Energy Opportunity Fund II, LP, Credo Petroleum Corporation
and Hal D. McVey shall automatically terminate upon Closing, except that the “Calliope
Gas Recovery System Confidential Disclosure Agreement” attached as Exhibit “D”
to said Master Agreement shall survive the termination of the Master
Agreement.  In the event of a conflict
between the terms of the Letter Agreement dated March 26, 2008, and the
Calliope Gas Recovery System Confidential Disclosure Agreement, the terms of
the Calliope Gas Recovery System Confidential Disclosure Agreement shall
prevail.  No amendment of any provision
of this Agreement shall in any event be effective unless the same shall be in
writing and signed by all of the Parties. 
Any failure of a Party to comply with any obligation, agreement or
condition hereunder may only be waived in writing by the other Parties, but
such waiver shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.

 

7.4           Notices. Any
notices and other communications required or permitted in this Agreement shall
be effective if in writing and (a) delivered personally or (b) sent (i) by
Federal Express, DHL or UPS or (ii) by registered or certified mail,
postage prepaid, in each case, addressed as follows:

 

If to the
Company:

 

CREDO
Petroleum Corporation

1801 Broadway, Suite 900

Denver, Colorado  80202

Attention:  James T. Huffman

 

with a copy
to:

 

Davis Graham &
Stubbs LLP

1550 17th Street, Suite 500

Denver, CO  80202-1500

Attention:  John Elofson

 

If to
Purchaser:

 

RCH Energy
Opportunity Fund II, LP

21 Waterway, Suite 200

The Woodlands, TX  77380

 

Attn: John A.
Rigas

 

15

 

With a copy
to:

 

Andrews Kurth
LLP

600 Travis, Suite 4200

Houston, Texas  77002

Attention:  Gislar Donnenberg

 

Each of the
Parties hereto shall be entitled to specify a different address by giving
notice as aforesaid to each of the other Parties hereto

 

7.5           Fees and Expenses.
All fees and expenses incurred by the Parties in connection with the
transactions contemplated hereby shall be borne by the Party incurring such
fees and expenses.

 

7.6           Governing Law;
Jurisdiction. This Agreement shall be governed by and be construed in
accordance with the laws of the State of Colorado, without giving effect to the
principles of conflicts of laws thereof. 
Each party to this Agreement submits to the exclusive jurisdiction of
any state or federal court sitting in the State of Colorado in any dispute or
action arising out of or relating to this Agreement and agrees that all claims
in respect of such dispute or action will be heard and determined in any such
court.  Each party also agrees not to
bring any dispute or action arising out of or relating to this Agreement in any
other court.  Each party agrees that a
final judgment in any dispute or action so brought will be conclusive and may
be enforced by dispute or action on the judgment or in any other manner
provided at law (common, statutory or other) or in equity.  Each party waives any defense of inconvenient
forum to the maintenance of any dispute or action so brought and waives any
bond, surety, or other security that might be required of any other party with
respect thereto.  Each Party shall be
entitled to seek to enforce specifically the terms and provisions of this
Agreement against the other Party under any remedy to which they are entitled
at law or in equity, including specific performance.

 

7.7           Counterparts;
Facsimile Signatures. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one instrument. 
Facsimile signatures shall have the same binding effect as original
signatures.

 

7.8           Severability. In
the event that any provision hereof would, under applicable law, be invalid or
unenforceable in any respect, such provision shall be construed by modifying or
limiting it so as to be valid and enforceable to the maximum extent compatible
with, and possible under, applicable law. 
The provisions hereof are severable, and in the event any provision
hereof should be held invalid or unenforceable in any respect, it shall not
invalidate, render unenforceable or otherwise affect any other provision hereof.

 

7.9           Titles and Subtitles.
The titles and subtitles used in this Agreement are used for convenience only
and are not to be considered in construing or interpreting this Agreement.

 

7.10         Successors and Assigns.
Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the Parties.  Nothing in this
Agreement, express or implied, is intended 

 

16

 

to confer upon any party other than the Parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

 

[Signature page follows]

 

17

 

IN WITNESS
WHEREOF, the Parties hereto have executed this Agreement or caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first written above.

 

	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  RCH ENERGY OPPORTUNITY FUND II, LP

  
	
   

  	
  By: RCH
  Energy Opportunity Fund II GP, LP;

  
	
   

  	
  its general partner

  
	
   

  	
  By: RR
  Advisors, LLC; its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ W. Mark Meyer

  
	
   

  	
   

  	
   W. Mark Meyer

  
	
   

  	
   

  	
   President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY

  
	
   

  	
   

  
	
   

  	
  CREDO PETROLEUM CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ James T. Huffman

  
	
   

  	
   

  	
   James T. Huffman

  
	
   

  	
   

  	
   President, Chief Executive Officer
  and 

  
	
   

  	
   

  	
   Chairman of the Board of Directors

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