UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 26, 2013 (June 26, 2013)
Magellan Petroleum Corporation
( Exact name of registrant as specified in its charter)
 
Delaware
(State or other jurisdiction of incorporation)
001-5507
 
06-0842255
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
1775 Sherman Street, Suite 1950, Denver, CO
 
80203
(Address of principal executive offices)
 
(Zip Code)
(720) 484-2400
(Registrant's telephone number, including area code)
 
 
 
(Former name or former address, if changed since last report)
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2.):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 8.01      Other Events.
Magellan Petroleum Corporation (the "Company," or "we," "us," or "our") is filing this report for the purpose of providing the current description of its common stock, par value $0.01 per share, as registered pursuant to Section 12(b) of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), to be incorporated by reference into any Registration Statement on Form S-3 or Form S-8 (or applicable successor forms) that may be filed in the future by the Company with the U.S. Securities and Exchange Commission (the "SEC") under the U.S. Securities Act of 1933, as amended (the "Securities Act"), until and to the extent that such description of common stock is subsequently amended or modified by any amendment or report filed by the Company with the SEC under the Exchange Act for the purpose of updating such description.

DESCRIPTION OF
MAGELLAN PETROLEUM CORPORATION
COMMON STOCK
The rights of the holders of our common stock are governed by the Delaware General Corporation Law, our certificate of incorporation, as amended, and our by-laws, as amended. The following is a summary of the material terms of our common stock, and is qualified in its entirety by reference to the complete text of our certificate of incorporation, as amended, and our by-laws, as amended, each of which is filed with or incorporated by reference as an exhibit to this report as set forth under Item 9.01 below.

Authorized Common Stock
Our certificate of incorporation authorizes us to issue 300,000,000 shares of common stock, par value $0.01 per share.
Our certificate of incorporation also authorizes us to issue 50,000,000 shares of preferred stock, par value $0.01 per share. We may issue preferred stock from time to time in one or more series, without stockholder approval, when and as authorized by our board of directors. Our board of directors' ability to authorize, without stockholder approval, the issuance of preferred stock with voting, conversion, and other rights and preferences superior to the rights associated with the common stock may adversely affect the rights of holders of our common stock. Our board of directors has authorized the issuance of up to 28,000,000 shares of Series A Convertible Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"), 19,239,734 shares of which were issued to One Stone Holdings II LP ("One Stone") on May 17, 2013. The terms of the Series A Preferred Stock, which ranks senior to the common stock with respect to dividend rights and rights on liquidation, winding up, and dissolution, are discussed below under the caption "Series A Preferred Stock." The remaining 22,000,000 shares of preferred stock authorized by our certificate of incorporation are currently undesignated.

Voting Rights
Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. Cumulative voting in the election of directors is not permitted. Section 216 of the Delaware General Corporation Law provides that, generally, unless otherwise provided in our certificate of incorporation or our by-laws or another section of the Delaware General Corporation Law with respect to a specified action, all matters to be voted on by stockholders must be approved by the affirmative vote of the majority of shares present or represented by proxy at the meeting and entitled to vote, or, in the case





of the election of directors, by a plurality of the votes of shares present or represented by proxy at the meeting and entitled to vote, in each case at a meeting at which a quorum is present. With respect to certain matters where the NASDAQ shareholder approval requirements are applicable, NASDAQ rules require approval by a majority of the total votes cast on the proposal.

Dividend and Distribution Rights
Holders of outstanding shares of our common stock are entitled to dividends when, as, and if declared by our board of directors out of funds legally available for the payment of dividends. As a Delaware corporation, we may pay dividends out of surplus or, if there is no surplus, out of net profits for the fiscal year in which a dividend is declared and/or the preceding fiscal year. Section 170 of the Delaware General Corporation Law also provides that dividends may not be paid if capital is less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets. In the event of our liquidation, dissolution, or winding up of our affairs, holders of our common stock will be entitled to receive ratably our net assets available to the stockholders, subject to any preferential liquidation rights of holders of our preferred stock.

No Preemptive, Conversion, or Redemption Rights
Holders of our outstanding common stock have no preemptive, conversion, or redemption rights. All of the issued and outstanding shares of our common stock are duly authorized, validly issued, fully paid, and nonassessable. To the extent that additional shares of our common stock may be issued in the future, the relative interests of the then existing stockholders may be diluted.

Trading Market
Our common stock is listed for trading on the NASDAQ Capital Market under the symbol "MPET".

Registrar and Transfer Agent
Our registrar and transfer agent for all shares of common stock is Broadridge.

Anti-Takeover Provisions in our Certificate of Incorporation and By-Laws
Our certificate of incorporation and by-laws also contain provisions that we describe in the following paragraphs, which may delay, defer, discourage, or prevent a change in control of us, the removal of our existing management or directors, or an offer by a potential acquirer to our stockholders, including an offer by a potential acquirer at a price higher than the market price for the stockholders' shares.
Among other things, our certificate of incorporation and by-laws:
divide our board of directors into three classes serving staggered three-year terms, which could have the effect of increasing the length of time necessary to change the composition of a majority of the board of directors;
provide that the authorized number of directors may be changed only by resolution of the board of directors;





provide that all vacancies on the board of directors, including newly created directorships, may, except as otherwise required by law, be filled by the vote of a majority of directors then in office;
provide our board of directors with the ability to authorize currently undesignated preferred stock. This ability makes it possible for our board of directors to issue, without stockholder approval, preferred stock with voting or other rights or preferences designated by the board that could have the effect of impeding the success of any attempt to change control of us;
establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not less than 60 days prior to the meeting, provided that in the event that less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder must be received not more than 10 days following the date on which such notice of the meeting date was mailed or public disclosure given. Our by-laws specify the requirements as to the form and content of all stockholders' notices. These requirements may preclude stockholders from bringing matters before the stockholders at an annual or special meeting;
provide that stockholders are not permitted to call special meetings of stockholders. Only our chairman of the board, president, and the board of directors are permitted to call a special meeting of stockholders; and
provide that our board of directors may alter, amend, or repeal our by-laws or approve new by-laws without further stockholder approval, and provide that a stockholder amendment to the by-laws requires a favorable vote of 66 2/3 % of the voting power of all outstanding voting stock.

Anti-Takeover Provisions of Delaware Law
We are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.
Section 203 defines a "business combination" as a merger, asset sale, or other transaction resulting in a financial benefit to the interested stockholder. Section 203 defines an "interested stockholder" as a person who, together with affiliates and associates, owns, or, in some cases, within the three prior years, did own, 15% or more of the corporation's voting stock. Under Section 203, a business combination between us and an interested stockholder is subject to the three-year moratorium unless:
our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder prior to the date the person attained that status;
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding, for purposes of determining the number of shares outstanding, shares owned by persons who are directors and also officers and employee stock plans in which employee participants do not have the right to determine confidentially whether shares held under the plan will be tendered in a tender or exchange offer; or





the business combination is approved by our board of directors on or subsequent to the date the person became an interested stockholder and authorized at an annual or special meeting of the stockholders by the affirmative vote of the holders of at least 66 2/3 % of the outstanding voting stock that is not owned by the interested stockholder.
These provisions may have an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging takeover attempts that might result in a premium over the market price for the shares of our common stock. With approval of our stockholders, we could amend our certificate of incorporation in the future to elect not to be governed by these anti-takeover provisions.

Series A Preferred Stock
On May 10, 2013, we entered into a Series A Convertible Preferred Stock Purchase Agreement (the "Series A Purchase Agreement") with One Stone. Pursuant to the terms of the Series A Purchase Agreement, we issued and sold to One Stone 19,239,734 shares of Series A Preferred Stock on May 17, 2013 (the "Closing Date"), at a purchase price of $1.22 per share (the "Purchase Price"). Subject to certain conditions, each share of Series A Preferred Stock and any related unpaid accumulated dividends is convertible into one share of common stock, at an initial conversion price of $1.22 per share (the "Conversion Price").
In order to comply with NASDAQ Stock Market listing rules, the conversion and voting rights of the Series A Preferred Stock discussed below are limited until stockholder approval of the Proposal (as defined below) is obtained. Under such limitations, the shares of Series A Preferred Stock are convertible into an aggregate number of shares of common stock not to exceed 19.99% of the outstanding shares of common stock (calculated immediately prior to the Closing Date) (the "Conversion Cap"), and the aggregate voting power of the Series A Preferred Stock (together with any shares of common stock held by the holders of Series A Preferred Stock), is not greater than 19.99% of the aggregate voting power of the outstanding shares of common stock (calculated immediately prior to the Closing Date) (the "Voting Cap").
Within 90 days of the Closing Date, we are required to cause the holders of our common stock to consider approval of (i) the full convertibility of shares of Series A Preferred Stock into shares of common stock, and (ii) the full voting power of shares of Series A Preferred Stock (clauses (i) and (ii) collectively, the "Proposal"). If the holders of common stock do not approve the Proposal, then we will be obligated, until the Proposal is approved, to (i) seek a vote on the Proposal at the next annual meeting of holders of common stock, (ii) convene another meeting of holders of common stock no more than 180 days thereafter, and (iii) seek a vote on the Proposal at the next annual meeting of holders of common stock thereafter.
The shares of Series A Preferred Stock are also subject to the following key terms under the Series A Purchase Agreement and the related Certificate of Designations of Series A Convertible Preferred Stock and Registration Rights Agreement:
Dividends . Holders of Series A Preferred Stock are entitled to a dividend equivalent to 7.0% per annum on the face value, which is the Purchase Price plus any accumulated unpaid dividends, payable quarterly in arrears. Dividends will generally be payable in cash or in kind (in the form of additional shares of Series A Preferred Stock), at the Company's option.
Conversion . Each share of Series A Preferred Stock is convertible at any time, at One Stone's option, into one share of common stock, subject to the Conversion Cap prior to the approval of





the Proposal by the holders of common stock. The Series A Preferred Stock is entitled to customary anti-dilution protections.
Voting . The Series A Preferred Stock is entitled to vote on an as-converted basis with the common stock, subject to the Voting Cap prior to the approval of the Proposal by the holders of common stock.
Forced Conversion . At any time after the third anniversary of the Closing Date, we have the right to cause One Stone to convert all, but not less than all, of the shares of Series A Preferred Stock into shares of common stock, if, among other conditions: (i) the per share price of common stock equals or exceeds 200% of the Conversion Price for a period of 20 out of 30 consecutive trading days, (ii) the average daily trading volume of shares of common stock exceeds an amount equal to the number of shares of common stock issuable upon the conversion of all outstanding shares of Series A Preferred Stock divided by 45, and (iii) the resale of shares of common stock is covered by an effective shelf registration statement, or such shares can be sold under Rule 144 under the Securities Act.
Redemption . At any time after the third anniversary of the Closing Date, and upon 30 days prior written notice, we may elect to redeem all, but not less than all, shares of Series A Preferred Stock for an amount equal to the greater of (i) the closing sale price of the common stock on the date we deliver such notice multiplied by the number of shares of common stock issuable upon conversion of the outstanding Series A Preferred Stock, and (ii) a cash payment that, when considering all cash dividends already paid, allows One Stone to achieve a 20% annualized internal rate of return on the then outstanding Series A Preferred Stock. One Stone has the right to convert the Series A Preferred Stock into shares of common stock at any time prior to the close of business on the redemption date.
Change in Control . In the event of a Change in Control (as defined) of the Company, holders of Series A Preferred Stock will have the option to (i) convert Series A Preferred Stock into common stock immediately prior to the Change in Control, (ii) in certain circumstances, receive stock or securities in the acquirer of the Company having substantially identical terms as those of the Series A Preferred Stock, or (iii) receive a cash payment that, when considering all cash dividends already paid, allows One Stone to achieve a 20% annualized internal rate of return on the then outstanding Series A Preferred Stock.
Liquidation . Upon a liquidation event, holders of Series A Preferred Stock will be entitled to a non-participating liquidation preference per share of Series A Preferred Stock equal to (i) 115% of the Purchase Price until the second anniversary of the issuance of Series A Preferred Stock, (ii) 110% of the Purchase Price after the second anniversary of issuance until the third anniversary of issuance, (iii) 105% of the Purchase Price after the third anniversary of issuance until the fourth anniversary of issuance, and (iv) thereafter, at the Purchase Price.
Ranking . Series A Preferred Stock ranks senior to common stock with respect to dividend rights and rights on liquidation, winding up, and dissolution.
Board Representation . For so long as One Stone owns at least 15% or 10% of the fully diluted shares of common stock (assuming full conversion of the Series A Preferred Stock), One Stone will have the right to appoint two members or one member, respectively, to our board of directors. These directors will not be subject to director elections by the holders of common stock at the Company's annual meetings of stockholders.






Minority Veto Rights . For so long as One Stone owns at least 10% of the fully diluted common stock (assuming full conversion of the Series A Preferred Stock), One Stone will hold veto rights with respect to (i) capital expenditures greater than $15.0 million that are not provided for in the then-current annual budget; (ii) certain related-party transactions; (iii) changes to our principal line of business; and (iv) an increase in the size of the board of directors to a number greater than 12.
Standstill . For a period of two years following the date of the Series A Purchase Agreement, One Stone is prohibited from (i) acquiring direct or beneficial control of any additional equity securities of the Company or any rights thereto; (ii) participating in or forming any voting group or voting trust with respect to any voting securities of the Company; and (iii) seeking to influence, modify, or control management, the board of directors, or any business, policies, or actions of the Company. Until such time as One Stone no longer holds any Series A Preferred Stock, One Stone is prohibited from engaging, directly or indirectly, in any short selling of the common stock.
Registration Rights . One Stone is entitled to resale registration rights with respect to the shares of common stock issuable upon conversion of the Series A Preferred Stock, pursuant to a Registration Rights Agreement.
The foregoing description of the Series A Preferred Stock does not purport to be complete and is qualified in its entirety by the complete Series A Purchase Agreement, and the related Certificate of Designations of Series A Convertible Preferred Stock and Registration Rights Agreement which are filed with or incorporated by reference into this report as Exhibits 10.1, 3.6, and 4.1, respectively, and are incorporated herein by reference.

Item 9.01      Financial Statements and Exhibits.
(d)    Exhibits. The following exhibits are filed or incorporated by reference as part of this report:
Exhibit
No.              Description
3.1
Restated Certificate of Incorporation as filed on May 4, 1987 with the State of Delaware, as amended by an Amendment of Article Twelfth as filed on February 12, 1988 with the State of Delaware (filed as Exhibit 4.B. to the registrant's Registration Statement on Form S-8 filed on January 14, 1999 (Registration No. 333-70567) and incorporated herein by reference).
3.2
Certificate of Amendment of Restated Certificate of Incorporation as filed on December 26, 2000 with the State of Delaware (filed as Exhibit 3(a) to the registrant's Quarterly Report on Form 10-Q filed on February 13, 2001 and incorporated herein by reference).
3.3
Certificate of Amendment of Restated Certificate of Incorporation related to Articles Twelfth and Fourteenth as filed on October 15, 2009 with the State of Delaware (filed as Exhibit 3.3 to the registrant's Quarterly Report on Form 10-Q filed on February 16, 2010 and incorporated herein by reference).





3.4
Certificate of Amendment of Restated Certificate of Incorporation related to Article Thirteenth as filed on October 15, 2009 with the State of Delaware (filed as Exhibit 3.4 to the registrant's Quarterly Report on Form 10-Q filed on February 16, 2010 and incorporated herein by reference).
3.5
Certificate of Amendment of Restated Certificate of Incorporation related to Article Fourth as filed on December 10, 2010 with the State of Delaware (filed as Exhibit 3.1 to the registrant's Current Report on Form 8-K filed on December 13, 2010 and incorporated herein by reference).
3.6*
Certificate of Designations of Series A Convertible Preferred Stock of Magellan Petroleum Corporation.
3.7*
By-Laws, as amended June 13, 2013.
4.1*
Registration Rights Agreement dated May 17, 2013 between Magellan Petroleum Corporation and One Stone Holdings II LP.
4.2*
Specimen Stock Certificate for Shares of Magellan Petroleum Corporation Common Stock.
10.1
Series A Convertible Preferred Stock Purchase Agreement dated May 10, 2013 between Magellan Petroleum Corporation and One Stone Holdings II LP (filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on May 13, 2013 and incorporated herein by reference).

* Filed herewith.





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
MAGELLAN PETROLEUM CORPORATION
 
 
 
 
 
 
 
By:
/s/ J. Thomas Wilson
 
 
John Thomas Wilson, President and Chief Executive Officer
 
 
(as Principal Executive Officer)
 
 
 
 
 
 
June 26, 2013
 
 




CERTIFICATE OF DESIGNATIONS OF SERIES A CONVERTIBLE PREFERRED STOCK OF MAGELLAN PETROLEUM CORPORATION MAGELLAN PETROLEUM CORPORATION, a Delaware corporation, certifies that pursuant to the authority contained in Article Fourth of its Restated Certificate of Incorporation, as amended from time to time prior to the date hereof, and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, its Board of Directors duly approved and adopted on May 9, 2013 the following resolution, which resolution remains in full force and effect on the date hereof: WHEREAS, the Certificate of Incorporation of the Corporation authorizes the issuance of up to fifty million (50,000,000) shares of preferred stock, par value $0.01 per share, of the Corporation (“Preferred Stock”) in one or more series, and expressly authorizes the Board of Directors, subject to limitations prescribed by law, to provide, out of the unissued shares of Preferred Stock, for series of Preferred Stock, and, with respect to each such series, to establish and fix the number of shares to be included in such series of Preferred Stock and the designation, rights, preferences, powers, restrictions and limitations of the shares of such series; and WHEREAS, the Board desires to establish and fix the number of shares to be included in a new series of Preferred Stock and the designation, rights, preferences and limitations of such new series. RESOLVED, that a series of Preferred Stock be, and hereby is, created, and that the number of shares thereof, the voting powers thereof and the designations, preferences and relative, participating, optional and other special rights thereof and the qualifications, limitations and restrictions thereof be, and hereby are, as follows: SECTION 1. Designation and Amount; Ranking. (a) There shall be created a series of Preferred Stock designated as “Series A Convertible Preferred Stock” (the “Series A Preferred Stock”). The authorized number of shares of Series A Preferred Stock shall be 28,000,000. Shares of Series A Preferred Stock that are converted into shares of Common Stock or other consideration or otherwise acquired by the Corporation shall be retired and cancelled. (b) The Series A Preferred Stock, with respect to dividend rights and rights upon the liquidation, winding up or dissolution of the Corporation, ranks: (i) senior to all Junior Stock; (ii) on a parity, in all respects, with all Parity Stock; and (iii) junior to all Senior Stock, in each case as provided more fully herein. The Corporation’s ability to issue any class or series of Parity Stock or Senior Stock (or any security convertible into Parity Stock or Senior Stock) shall be subject to Section 4(c)(i).


 
2 SECTION 2. Definitions. As used herein, the following terms shall have the following meanings: “Accrued Dividend” shall mean, with respect to any share of Series A Preferred Stock, as of any date of determination, the amount of the accrued and unpaid Dividend on such share from and after the most recent Dividend Payment Date (or, if there has not yet been a Dividend Payment Date, then from and after the Issue Date) through and including such date of determination, computed in accordance with Section 3(a). “Accumulated Dividend” shall mean, with respect to any share of Series A Preferred Stock, as of any date of determination, the aggregate amount of Accrued Dividends on such share that have been added to the Face Amount of such share in accordance with Section 3(b) and not subtracted therefrom in accordance with Section 3(c), in each case through and including such date. “Affiliate” shall have the meaning ascribed to it, on the date hereof, in Rule 405 under the Securities Act. “Antitrust Holders” shall have the meaning set forth in Section 7(k). “Antitrust Laws” shall have the meaning set forth in Section 7(k). “Beneficial Owner” shall have the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act. The terms “Beneficially Owns” and “Beneficially Owned” shall have corresponding meanings. “Board of Directors” shall mean the Board of Directors of the Corporation or, with respect to any action to be taken by the Board of Directors, any committee of the Board of Directors duly authorized to take such action. “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. “Cash Dividend” or “Cash Dividends” shall have the meaning set forth in Section 3(a)(i)(A). “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 this Certificate of Designations and as further amended or restated from time to time in accordance with applicable law and this Certificate of Designations. “Certificated Preferred Stock” shall have the meaning set forth in Section 11(b)(i). “Change in Control” shall mean the occurrence of any of the following events:


 
3 (a) the sale, lease or transfer, in one transaction or a series of related transactions, of all or substantially all of the Corporation’s assets (determined on a consolidated basis) to any person or group (as such terms are defined in Sections 13d and 14d of the Exchange Act) other than a controlled Affiliate; provided that for the avoidance of doubt, the sale, lease or transfer, in one transaction or a series of related transactions, of all or substantially all of the Corporation’s assets located in the United States shall constitute a Change in Control; (b) the consolidation or merger of the Corporation with or into any other Person or the merger of another Person with or into the Corporation, pursuant to which the holders of 100% of the total voting power of the total outstanding capital stock of the Corporation immediately prior to the consummation of such consolidation or merger do not Beneficially Own in the aggregate more than fifty percent (50%) of the total voting power of the total outstanding capital stock of the continuing or surviving Person immediately after such transaction; or (c) the acquisition, directly or indirectly, by any person or group (as such terms are used in Section 13d-3 and 14d of the Exchange Act) of Beneficial Ownership of more than fifty percent (50%) of the total voting power of the total outstanding capital stock of the Corporation; provided that a Change of Control shall not result from any acquisition or transfer of Equity Securities by One Stone Holdings II LP, a Delaware limited partnership, and/or any of its Affiliates. “close of business” shall mean 5:00 p.m. (Denver, Colorado time). “Closing Sale Price” shall mean, with respect to each share of Common Stock, as of any date of determination, the closing sale price per share (or if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) on such date as reported on the NASDAQ Stock Market or, if the Common Stock is not listed on the NASDAQ Stock Market, then on the principal other United States national or regional securities exchange, quotation system or over-the-counter market on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, quotation system or over-the-counter market, then the Closing Sale Price shall be an amount determined in good faith by the Board of Directors to be the fair market value of the Common Stock. “Common Stock” shall mean the common stock, par value $0.01 per share, of the Corporation or any other capital stock of the Corporation into which such common stock shall be reclassified or changed. “Common Stock Deemed Outstanding” means, at any given time, the sum of (a) the number of shares of Common Stock that are actually outstanding at such time plus (b) the number of shares of Common Stock issuable upon conversion, exercise or exchange of any options, warrants or other securities that are directly or indirectly convertible into, or exercisable or exchangeable for, Common Stock, in each case determined on a “net exercise” basis; provided that such securities (i) are then vested, (ii) are then convertible, exercisable or exchangeable and (iii) the exercise, exchange or conversion price of such securities is less than the Closing Sale Price at such time; and provided, further, that Common Stock Deemed Outstanding at any given


 
4 time shall not include shares owned or held by or for the account of the Corporation or any of its controlled Affiliates. “Conversion Date” shall have the meaning set forth in Section 7(a). “Conversion Price” shall mean, with respect to any share of Series A Preferred Stock, as of any date of determination, the Series A Original Issue Price, subject to adjustment as set forth in Section 7(e). “Corporation” shall mean Magellan Petroleum Corporation, a Delaware corporation. “Determination Period” shall have the meaning set forth in Section 8(a)(i). “Directed Opportunity” shall have the meaning set forth in Section 4(h)(i). “Distributable Funds” shall mean, at any time, (a) the amount of cash and other liquid assets of the Corporation on hand at that time (including amounts resulting from borrowings), less (b) the amount of reasonably foreseeable cash expenses of the Corporation and its subsidiaries (including debt service and capital expenditures) net of reasonably foreseeable cash revenues (including amounts that are likely to result from future borrowings), all as determined in good faith by the Board of Directors, and less (c) cash reserves that the Board of Directors determines in good faith to be necessary to satisfy the Corporation’s liabilities and other obligations as they become due, including for anticipated expansion or acquisition opportunities. “Dividend” or “Dividends” shall have the meaning set forth in Section 3(a). “Dividend Payment Date” shall mean each March 31, June 30, September 30 and December 31 after the Issue Date, commencing on June 30, 2013. “Dividend Record Date” shall mean, with respect to any Dividend Payment Date, the March 15, June 15, September 15 or December 15, as applicable, immediately preceding such Dividend Payment Date. “Equity Securities” shall mean any capital stock of the Corporation (including the Common Stock and the Series A 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 Series A Preferred Stock). “Ex-Date” shall mean, with respect to any issuance or distribution on the Common Stock or any other securities, the first date on which the Common Stock or such other securities trade without the right to receive such issuance or distribution. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. “Face Amount” shall mean, with respect to each share of Series A Preferred Stock, as of any date of determination, the Series A Original Issue Price plus any Accumulated Dividends on such share.


 
5 “Forced Conversion Date” shall have the meaning set forth in Section 8(a). “Forced Conversion Notice Date” shall have the meaning set forth in Section 8(a). “Fully Diluted Ownership Percentage” shall mean, with respect to any Holder, as of any date of determination (assuming, for purposes of such determination, that Stockholder Approval shall have occurred prior to such date), an amount, expressed as a percentage, equal to (a) the sum of (i) the number of shares of Common Stock such Holder would be entitled to receive if all of such Holder’s shares of Series A Preferred Stock were converted into shares of Common Stock on such date and (ii) the number of shares of Common Stock, if any, held by such Holder on such date divided by (b) the sum of (i) the aggregate number of shares of Common Stock issuable upon conversion of all shares of Series A Preferred Stock outstanding on such date and (ii) the aggregate number of shares of Common Stock outstanding on such date. “Holder” and, unless the context requires otherwise, “holder” shall each mean a holder of record of a share of Series A Preferred Stock as reflected on the share register maintained by the Transfer Agent. “Holder Representative” shall mean One Stone Holdings II LP, a Delaware limited partnership; provided that the Holder Representative may designate a replacement Holder Representative from among any of the Holders by written notice to the Corporation. “HSR Act” shall have the meaning set forth in Section 7(k). “HSR Filing” shall have the meaning set forth in Section 7(k). “Issue Date” shall mean the original date of issuance of the Series A Preferred Stock, which shall be the date that this Certificate of Designations is filed with the Secretary of State of the State of Delaware. “Junior Stock” shall mean the Common Stock and each other class of capital stock or series of preferred stock established after the Issue Date by the Board of Directors, the terms of which do not expressly provide that such class or series will rank senior to or on a parity with the Series A Preferred Stock as to dividend rights or rights upon the liquidation, winding up or dissolution of the Corporation. “Liquidation Preference” shall mean, with respect to each share of Series A Preferred Stock, as of any date of determination, the sum of (a)(i) after the Issue Date through and including the second anniversary thereof, one hundred fifteen percent (115%) of the Series A Original Issue Price, (ii) after the second anniversary of the Issue Date through and including the third anniversary thereof, one hundred ten percent (110%) of the Series A Original Issue Price, (iii) after the third anniversary of the Original Issue Date through and including the fourth anniversary thereof, one hundred five percent (105%) of the Series A Original Issue Price, or (iv) thereafter, the Series A Original Issue Price, (b) any Accrued Dividends on such share, and (c) any Accumulated Dividends on such share. “Market Value” shall mean the average of the per share volume-weighted average prices of the Common Stock for each day during a ten (10) consecutive Trading Day period ending


 
6 immediately prior to any date of determination, as determined based on information published by the NASDAQ Stock Market or, if the Common Stock is not listed on the NASDAQ Stock Market, then on the principal other United States national or regional securities exchange, quotation system or over-the-counter market on which the Common Stock is traded in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on each such Trading Day (or if such volume-weighted average price is unavailable on any such Trading Day, the Closing Sale Price shall be used for such Trading Day). The per share volume-weighted average price on each such Trading Day shall be determined without regard to after hours trading or any other trading outside of the regular trading session trading hours. “Maximum Voting Power” shall mean, as of the time immediately prior to the Issue Date, the aggregate number of votes that may be cast by all holders of Common Stock entitled to vote on the applicable matter, voting together as a single class and after giving effect to all limitations on voting power set forth in the Certificate of Incorporation. “Officer” shall mean the Chairman of the Board of Directors, the Chief Executive Officer, the President, any Vice President, the Treasurer, the Secretary or any Assistant Secretary of the Corporation. “Outstanding Preferred Investment Amount” shall mean, as of any date of determination, an amount equal to the Preferred Investment Amount multiplied by the quotient obtained by dividing (a) the number of shares of Series A Preferred Stock outstanding on such date (but excluding any shares of Series A Preferred Stock issued as PIK Dividends) by (b) the number of shares of Series A Preferred Stock issued on the Issue Date. “Ownership Notice” shall mean the notice of ownership of capital stock of the Corporation containing the information required to be set forth or stated on certificates pursuant to the Delaware General Corporation Law and, in the case of an issuance of capital stock by the Corporation, in substantially the form attached hereto as Exhibit B. “Parity Stock” shall mean any class of capital stock or series of preferred stock established after the Issue Date by the Board of Directors, the terms of which expressly provide that such class or series will rank on a parity with the Series A Preferred Stock as to dividend rights or rights upon the liquidation, winding up or dissolution of the Corporation. “Permitted Equity Securities” shall mean any Equity Securities issued in connection with or pursuant to (a) any split, subdivision, combination, dividend or recapitalization of the Common Stock (b) any employee equity incentive compensation plan or other arrangement that has been duly approved by the Board of Directors, (c) any issuance of Equity Securities approved by the Holders pursuant to Section 4(c)(i), (d) any conversion, exercise or exchange of any Equity Securities that are convertible into, or exercisable or exchangeable for, Common Stock (including, without limitation, the Series A Preferred Stock), it being acknowledged that the original issuance of such convertible, exercisable or exchangeable Equity Securities shall not constitute Permitted Equity Securities, or (e) any issuance of Equity Securities in connection with any bona fide, arm’s length acquisition of assets or securities of a Person that has been approved by the Board of Directors.


 
7 “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 or government or any agency or political subdivision thereof. “PIK Dividend” or “PIK Dividends” shall have the meaning set forth in Section 3(a)(i)(B). “Preferred Director” shall have the meaning set forth in Section 4(b)(x). “Preferred Investment Amount” shall mean an amount equal to $23,501,216.00. “Preferred Stock” shall have the meaning set forth in the Recitals. “Proposal” shall mean a proposal of the Corporation presented to the holders of Common Stock at a meeting of such holders duly convened by the Corporation for the purpose of considering and voting upon, among other things, (a) the full voting power with respect to all shares of Series A Preferred Stock notwithstanding the limitation set forth in Section 4(a)(ii) and (b) the full convertibility of all shares of Series A Preferred Stock, including PIK Dividends, into shares of Common Stock notwithstanding the limitation set forth in Section 7(b), in each case in accordance with NASDAQ Listing Rule 5635. “Purchased Shares” shall have the meaning set forth in Section 7(e)(iv). “Redemption Date” shall have the meaning set forth in Section 9(c). “SEC” shall mean the United States Securities and Exchange Commission. “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. “Senior Stock” shall mean each class of capital stock or series of preferred stock established after the Issue Date by the Board of Directors, the terms of which expressly provide that such class or series will rank senior to the Series A Preferred Stock as to dividend rights or rights upon the liquidation, winding up or dissolution of the Corporation. “Series A Original Issue Price” shall mean an amount equal to $1.22 per share. “Series A Preferred Stock” shall have the meaning set forth in the Section 1(a). “Shelf Registration Statement” shall mean a shelf registration statement filed with the SEC covering resales of Transfer Restricted Securities by holders thereof. “Specified Indemnitee” shall have the meaning set forth in Section 4(h)(v). “Specified Party” shall have the meaning set forth in Section 4(h)(i). “Sponsor” shall have the meaning set forth in Section 4(h)(i).


 
8 “Stockholder Approval” shall mean the time at which the holders of Equity Securities (excluding the Holders pursuant to Section 4(a)(i)) approve the Proposal. “Trading Day” shall mean a day during which trading in securities generally occurs on the NASDAQ Stock Market or, if the Common Stock is not listed on the NASDAQ Stock Market, then on the principal other United States national or regional securities exchange, quotation system or over-the-counter market on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, quotation system or over-the-counter market, then on the principal other exchange, quotation system or over-the-counter market on which the Common Stock is then traded. If the Common Stock is not so listed or traded, “Trading Day” shall mean a Business Day. “Transfer Agent” shall mean Broadridge Corporate Issuer Solutions, Inc., acting as the Corporation’s duly appointed transfer agent, registrar, conversion agent and dividend disbursing agent for the Series A Preferred Stock. The Corporation may, in its sole discretion, remove the Transfer Agent with ten (10) days’ prior notice to the Transfer Agent; provided that the Corporation shall appoint as its successor a nationally recognized Transfer Agent who shall accept such appointment prior to the effectiveness of such removal. “Transfer Restricted Securities” shall mean each share of Series A Preferred Stock (or the shares of Common Stock into which such share is converted) until (a) the resale of the shares of Common Stock into which such share is converted shall be covered by an effective Shelf Registration Statement or (b) such shares of Common Stock into which such share is converted may be sold or transferred by the Holder thereof under Rule 144 under the Securities Act without any limitation on the volume, timing, recipients or intended methods of distribution. “Transfer Tax” shall mean any stock, stamp, document, filing, recording, registration, authorization and similar taxes, fees and charges. For the avoidance of doubt, “Transfer Tax” shall not shall not mean (a) any taxes based upon, measured by, or calculated with respect to gross or net income, gross or net receipts, or profits (including, but not limited to, income, franchise, capital gains, alternative minimum, net worth or similar taxes) or (b) sales, use, goods and services, real or personal property, real property transfer, real property stamp, real property gains or other similar taxes. “Trigger Event” shall have the meaning set forth in Section 7(e)(viii). SECTION 3. Dividends. (a) Each Holder shall be entitled to receive, with respect to each share of Series A Preferred Stock held by such Holder, out of funds of the Corporation legally available for payment, dividends (each, a “Dividend” and, collectively, “Dividends”) at a per annum rate of seven percent (7%) on the Face Amount of such share immediately after the most recent Dividend Payment Date (or, if there has not yet been a Dividend Payment Date, then immediately after the Issue Date), with the amount of such dividend computed on the basis of a three hundred sixty (360) day year consisting of twelve (12) thirty (30) day months (or, with respect to any date of determination that is not a Dividend Payment Date, the thirty (30) days elapsed over each prior thirty (30) day month and the actual number of days elapsed over the


 
9 current thirty (30) day month, in each case from and after the most recent Dividend Payment Date (or, if there has not yet been a Dividend Payment Date, then from and after the Issue Date)). For the avoidance of doubt, the Face Amount of each share of Series A Preferred Stock immediately after the most recent Dividend Payment Date shall include any Accumulated Dividend added thereto in accordance with Section 3(b) and not subtracted therefrom in accordance with Section 3(c), in each case through and including such date. (i) Subject to Section 3(b), the Dividend with respect to each share of Series A Preferred Stock shall be due from and payable by the Corporation in arrears on each Dividend Payment Date for the three (3) month period ending on such Dividend Payment Date (or, with respect to the first Dividend Payment Date, for the period commencing on the Issue Date and ending on the first Dividend Payment Date) (A) in cash (each, a “Cash Dividend” and, collectively, “Cash Dividends”), (B) at any time following Stockholder Approval, in kind (each, a “PIK Dividend” and, collectively, “PIK Dividends”) by issuing a number of shares of Series A Preferred Stock, subject to Section 10(a), equal to (1) the amount of such Dividend divided by (2) the Series A Original Issue Price, or (C) at any time following Stockholder Approval, a combination of a Cash Dividend and a PIK Dividend for a number of shares of Series A Preferred Stock, subject to Section 10(a), equal to (1) the amount of such Dividend not paid in the form of a Cash Dividend divided by (2) the Series A Original Issue Price, in each case to the Holder of such share as it appears on the Corporation’s stock register at the close of business on the relevant Dividend Record Date. The Corporation’s election to pay Cash Dividends or PIK Dividends pursuant to this Section shall be consistent for all Holders. For the avoidance of doubt, (x) the Board of Directors may not elect for the Corporation to pay any Dividend in the form of a PIK Dividend pursuant to Section 3(a)(i)(B) or Section 3(a)(i)(C) unless, and the Corporation shall be entitled only to pay such Dividend in the form of a Cash Dividend until, Stockholder Approval and (y) at any time following Stockholder Approval, to the extent any Dividend is not paid in the form of a Cash Dividend, such Dividend shall be paid in the form of a PIK Dividend. (ii) If a Dividend Payment Date is not a Business Day, then any Dividend otherwise payable on such Dividend Payment Date shall instead be due and payable on the first Business Day following such Dividend Payment Date. (b) Notwithstanding anything to the contrary in Section 3(a), at any time prior to Stockholder Approval, to the extent the Board of Directors determines in good faith that Distributable Funds are insufficient to pay the entire amount of any Cash Dividend, the Board of Directors may elect not to declare payment of the entire amount of the Accrued Dividend with respect to any share of Series A Preferred Stock that otherwise would be due and payable on any Dividend Payment Date pursuant to Section 3(a). In any such event, immediately after such Dividend Payment Date, the amount that would have been paid to the Holder of such share if the entire amount of such Accrued Dividend had been paid, but was not paid to such Holder on such Dividend Payment Date, shall be accumulated and added to the Face Amount of such share immediately after such Dividend Payment Date. For the avoidance of doubt, neither (x) the accumulation of any such Accrued Dividend to the Face Amount of such share in compliance with this Section 3(b) nor (y) the existence of any such Accrued Dividend or any Accumulated


 
10 Dividend in compliance with this paragraph shall be considered a failure to pay dividends under, or a failure to otherwise comply with, the terms of this Certificate of Designations. (c) If as of any Dividend Payment Date following Stockholder Approval there exists any Accumulated Dividend with respect to any share of Series A Preferred Stock, then the Board of Directors may elect to pay on such Dividend Payment Date all or any portion of the amount of such Accumulated Dividend (i) in cash, (ii) in kind by issuing a number of shares of Series A Preferred Stock, subject to Section 10(a), equal to (A) the amount of such Accumulated Dividend divided by (B) the Series A Original Issue Price or (iii) a combination of cash and PIK Dividends for a number of shares of Series A Preferred Stock, subject to Section 10(a), equal to (A) the amount of such Accumulated Dividend not paid in cash divided by (B) the Series A Original Issue Price, in each case, to the Holder of such share as it appears on the Corporation’s stock register at the close of business on the relevant Dividend Record Date. In such event, immediately after such Dividend Payment Date, the amount of such Accumulated Dividend so paid shall be subtracted from the Face Amount of such share immediately after such Dividend Payment Date. For the avoidance of doubt, in no event shall any such payment have the effect of reducing the Face Amount of any such share below the Series A Original Issue Price. (d) Dividends on the Series A Preferred Stock shall accumulate and become Accrued Dividends on a day-to-day basis, whether or not declared, from and after the most recent Dividend Payment Date (or, if there has not yet been a Dividend Payment Date, then from and after the Issue Date) until (i) prior to Stockholder Approval, Cash Dividends are paid pursuant to Section 3(a)(i)(A) in respect of such Accrued Dividends or such Accrued Dividends are not declared and become Accumulated Dividends pursuant to Section 3(b), or (ii) following Stockholder Approval, Cash Dividends are paid pursuant to Section 3(a)(i)(A) or Section 3(a)(i)(C) or PIK Dividends are paid pursuant to Section 3(a)(i)(B) or Section 3(a)(i)(C) in respect of such Accrued Dividends. (e) Notwithstanding anything to the contrary herein, if any shares of Series A Preferred Stock are converted into shares of Common Stock on a date during the period between the close of business on any Dividend Record Date and the close of business on the corresponding Dividend Payment Date, then at the election of the Corporation, the Accrued Dividends with respect to such shares shall be (i) paid in cash upon conversion of the Series A Preferred Stock or (ii) added to the Face Amount of such shares for purposes of such conversion, in each case pursuant to Section 7(a). For the avoidance of doubt, such Accrued Dividends shall include Dividends accruing from and after the most recent Dividend Payment Date (or, if there has not yet been a Dividend Payment Date, then from and after the Issue Date) through and including the Conversion Date. (f) The Corporation shall be entitled to deduct or withhold from any Dividends paid to or for the benefit of a Holder hereunder any taxes that the Corporation determines are required by applicable law to be deducted or withheld, and the amount of any such taxes so deducted or withheld shall be treated for all purposes of this Certificate of Designations as having been paid to the Holder. If the Corporation determines that it is required by applicable law to deduct or withhold any taxes from or in respect of any PIK Dividends to be paid hereunder by the Corporation to or for the benefit of any Holder, then the Holder shall pay to the Corporation the


 
11 amount of such taxes to the extent not deducted or withheld by the Corporation on the date such PIK Dividend is distributed in accordance with this Certificate of Designations. SECTION 4. Voting; Approval Rights; Business Opportunities. (a) In addition to any other voting rights provided by law or the Certificate of Incorporation, each Holder shall be entitled to one vote for each share of Common Stock such Holder would be entitled to receive if all of such Holder’s shares of Series A Preferred Stock were converted into shares of Common Stock (at the Conversion Price then in effect) on the record date set by the Board of Directors for such vote on all matters submitted to the holders of Common Stock for approval; provided, however, that: (i) the Holders shall not be entitled to cast any votes on the Proposal pursuant to this Section 4(a) with respect to the shares of Series A Preferred Stock or any shares of Common Stock deemed Beneficially Owned by such Holders; and (ii) subject to Section 4(a)(i), prior to Stockholder Approval, the aggregate number of votes entitled to be cast by the Holders at any time and from time to time with respect to any then outstanding shares of Series A Preferred Stock, together with any then outstanding shares of Common Stock deemed Beneficially Owned by such Holders, shall not exceed nineteen and ninety-nine one-hundredths percent (19.99%) of the Maximum Voting Power. Following Stockholder Approval, the foregoing limitation on the aggregate number of votes entitled to be cast by the Holders shall not apply and such Holders thereafter shall be entitled to cast votes with respect to any such shares of Series A Preferred Stock and any such shares of Common Stock in accordance with Section 4(a) without regard to such limitation. If at any time after the Issue Date the rules of the NASDAQ Stock Market or the staff interpretations of such rules are amended or modified such that Stockholder Approval would not be required for the Holders to cast votes with respect to any such shares of Series A Preferred Stock and any such shares of Common Stock in excess of nineteen and ninety-nine one-hundredths percent (19.99%) of the Maximum Voting Power, then on the effective date of any such amendment or modification, the foregoing limitation on the aggregate number of votes entitled to be cast by the Holders shall be deemed modified in order to entitle such Holders thereafter to cast votes with respect to any such shares of Series A Preferred Stock and any such shares of Common Stock in accordance with Section 4(a) to the maximum extent permitted pursuant to such amended or modified rules or staff interpretations. Except as otherwise provided by Delaware law and in addition to any other voting rights provided by law or the Certificate of Incorporation, the shares of Series A Preferred Stock and the shares of Common Stock will vote together as a single class with respect to those matters as to which the shares of Series A Preferred Stock are entitled to vote pursuant to this Section 4(a). The Holders shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Corporation and the Certificate of Incorporation as if they were holders of Common Stock. (b) In addition to the voting rights provided in Section 4(a), Section 4(c), Section 4(e) and Section 4(f), (x) effective as of the Issue Date, the Holders of a majority of the shares of


 
12 Series A Preferred Stock, voting as a single class to the exclusion of the holders of Common Stock, shall be entitled to elect two (2) individuals to serve as members of the Board of Directors (each, a “Preferred Director”) and (y) thereafter, for so long as any shares of Series A Preferred Stock remain outstanding and: (i) the aggregate Fully Diluted Ownership Percentage of the Holders equals or exceeds fifteen percent (15%), the Holders of a majority of the then outstanding shares of Series A Preferred Stock, voting as a single class to the exclusion of the holders of Common Stock, shall continue to be entitled to elect two (2) Preferred Directors; (ii) the aggregate Fully Diluted Ownership Percentage of the Holders is less than fifteen percent (15%) but equals or exceeds ten percent (10%), (A) one such Preferred Director shall be automatically removed without further action by the Corporation, the Board of Directors or any other Person and the number of individuals constituting the Board of Directors shall be automatically decreased to reflect the removal of such Preferred Director and (B) the Holders of a majority of the then outstanding shares of Series A Preferred Stock, voting as a single class to the exclusion of the holders of Common Stock, shall continue to be entitled to elect one Preferred Director; and (iii) the aggregate Fully Diluted Ownership Percentage of the Holders is less than ten percent (10%), all of the Preferred Directors shall be automatically removed without further action by the Corporation, the Board of Directors or any other Person and the number of individuals constituting the Board of Directors shall be automatically decreased to reflect the removal of such Preferred Directors. Notwithstanding anything to the contrary in this Section 4(b), if at any time after the Issue Date the number of individuals constituting the Board of Directors (which is hereby acknowledged to be eight (8) as of the Issue Date) is increased (other than pursuant to the immediately following sentence), then the number of Preferred Directors that the Holders shall be entitled to elect pursuant to Section 4(b) shall be equal to the number set forth in the table below:


 
13 Size of the Board of Directors (including Preferred Directors) Number of Preferred Directors If Fully Diluted Ownership Percentage of the Holders equals or exceeds 25% If Fully Diluted Ownership Percentage of the Holders equals or exceeds 20% but is less than 25% If Fully Diluted Ownership Percentage of the Holders equals or exceeds 15% but is less than 20% If Fully Diluted Ownership Percentage of the Holders equals or exceeds 10% but is less than 15% 8 2 2 2 1 9 2 2 2 1 10 3 2 2 1 11 3 3 2 2 12 3 3 2 2 Subject to Section 4(c)(v), from time to time after the Issue Date, the authorized number of individuals constituting the Board of Directors shall be automatically increased, if necessary, to allow for the election of the number of Preferred Directors that the Holders are entitled at such time to elect pursuant to this Section 4(b). For the avoidance of doubt, the number of individuals at any time constituting the Board of Directors shall be inclusive of the number of Preferred Directors that the Holders are entitled at such time to elect pursuant to this Section 4(b) (e.g., if the number of individuals constituting the Board of Directors as of any date of determination is eleven (11) and the aggregate Fully Diluted Ownership Percentage of the Holders as of such date equals or exceeds fifteen percent (15%) but is less than twenty percent (20%), then the Holders shall be entitled to elect two (2) of such eleven (11) individuals to serve as members of the Board of Directors). If at any time the aggregate Fully Diluted Ownership Percentage falls below a threshold set forth in the table above, then the right of the Holders to elect Preferred Directors commensurate with such ownership level shall lapse and shall not subsequently increase even if the Holders’ Fully Diluted Ownership Percentage shall subsequently increase. If at any time the aggregate Fully Diluted Ownership Percentage of the Holders is less than ten percent (10%), then the right of the Holders to elect Preferred Directors shall automatically terminate and shall not subsequently revive even if the Holders’ Fully Diluted Ownership Percentage shall subsequently increase. In the event the number of Preferred Directors decreases (whether because of a reduction in the size of the Board of Directors or a reduction in the Holders’ Fully Diluted Ownership Percentage), including pursuant to Section 4(b)(ii), the Holders of a majority of the then outstanding shares of Series A Preferred Stock, voting as a single class to the exclusion of the holders of Common Stock, shall identify the Preferred Director or Preferred Directors that shall be removed and such Preferred Director or Preferred Directors shall be automatically removed without further action by the Corporation, the Board of Directors or any other Person and the number of individuals constituting the Board of Directors shall be automatically decreased to


 
14 reflect the removal of such Preferred Director or Preferred Directors. If the Holders of a majority of the outstanding shares of Series A Preferred Stock shall fail to identify which Preferred Director or Preferred Directors shall be removed within ten (10) days following the applicable triggering event, then the Board of Directors shall be entitled to designate which Preferred Director or Preferred Directors shall be removed. Except as otherwise provided in Section 4(b) with respect to the automatic removal of Preferred Directors, any Preferred Director may be removed at any time with or without cause only by the Holders of a majority of the then outstanding shares of Series A Preferred Stock, voting as a single class to the exclusion of the holders of Common Stock. Any vacancy in the office of a Preferred Director shall be filled only by the Holders of a majority of the then outstanding shares of Series A Preferred Stock, voting as a single class to the exclusion of the holders of Common Stock. In order to be eligible for election pursuant to this Section 4(b), each Preferred Director shall satisfy the eligibility requirements applicable to all members of the Board of Directors pursuant to NASDAQ listing standards. (c) In addition to the voting rights provided in Section 4(a), Section 4(b), Section 4(e) and Section 4(f), for so long as any shares of Series A Preferred Stock remain outstanding and the aggregate Fully Diluted Ownership Percentage of the Holders equals or exceeds ten percent (10%), unless a greater percentage shall then be required by law, the Corporation shall not take (or, to the extent applicable, permit any of the Corporation’s controlled Affiliates to take) any of the following actions, or enter into any arrangement or contract to do any of the following actions, without the affirmative vote or consent of the Holders of a majority of the then outstanding shares of Series A Preferred Stock, voting or consenting, as the case may be, separately as a single class to the exclusion of the holders of Common Stock: (i) create, authorize (by way of reclassification, merger, consolidation, subdivision of shares of Equity Securities or other similar reorganization) or issue any Senior Stock or Parity Stock; (ii) enter into, make, amend or conduct any transaction (including making a payment to, purchasing, selling, leasing or exchanging any property or rendering any service), contract, agreement or understanding with or for the benefit of any Affiliate of the Corporation, other than (A) any transaction, contract, agreement or understanding by and among (1) the Corporation or any wholly-owned subsidiary of the Corporation and (2) any wholly-owned subsidiaries of the Corporation, (B) any issuance of Common Stock, or other payments, awards or grants in cash, Common Stock or otherwise pursuant to, or the funding of, employment or severance agreements and other compensation arrangements, options to purchase Common Stock, restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee benefit plans and/or insurance and indemnification agreements provided to or for the benefit of directors, officers and employees, in each case that have been duly approved by the Board of Directors, (C) any transaction pro rata with all shareholders, (D) any transaction, contract, agreement or understanding disclosed in writing to the Holders prior to the Issue Date or (E) de minimis transactions, agreements or understandings;


 
15 (iii) make or commit to make in any twelve (12) month period capital expenditures in an aggregate amount greater than $15,000,000, other than any capital expenditures described in the then current annual budget, if any, that has been duly approved by the Board of Directors; (iv) change the principal line of business or purposes of the Corporation and its controlled Affiliates, taken as a whole, or regularly engage in activities inconsistent with such principal line of business or purposes; or (v) increase the number of individuals constituting the Board of Directors to a number greater than twelve (12). For the avoidance of doubt, if at any time the aggregate Fully Diluted Ownership Percentage of the Holders is less than ten percent (10%), then the right of the Holders to vote upon or consent to the foregoing shall automatically terminate and shall not subsequently revive even if the Holders’ Fully Diluted Ownership Percentage shall subsequently increase. (d) Notwithstanding anything to the contrary in Section 4(b) or Section 4(c), the rights of the Holders set forth therein shall not be exercisable by any Person other than an Affiliate of any such Holder following any transfer of shares of Preferred Stock without the consent of the Corporation, such consent not to be unreasonably withheld, conditioned or delayed. The Fully Diluted Ownership Percentage of any Holder not entitled to exercise the rights set forth in Section 4(b) or Section 4(c) as a result of this Section 4(d) shall not be included in measuring the Holders’ aggregate Fully Diluted Ownership Percentage for purposes of Section 4(b) or Section 4(c). (e) In addition to the voting rights provided in Section 4(a), Section 4(b), Section 4(c) and Section 4(f), for so long as any shares of Series A Preferred Stock remain outstanding, unless a greater percentage shall then be required by law, the Corporation shall not (or, to the extent applicable, permit any of the Corporation’s controlled Affiliates to), without the affirmative vote or consent of the Holders of a majority of the then outstanding shares of Series A Preferred Stock, voting or consenting, as the case may be, separately as a single class to the exclusion of the holders of Common Stock, amend, repeal, modify or alter the articles or certificate of incorporation (including any provision of this Certificate of Designations) or bylaws or other organizational documents of the Corporation or any of its controlled Affiliates (including the Certificate of Incorporation and the bylaws of the Corporation), whether by or in connection with a merger or consolidation or otherwise, so as to adversely affect the specified rights, preferences, privileges or voting rights with respect to the Series A Preferred Stock; provided however, that this Section 4(e) shall not prohibit the issuance of any Junior Securities (or the adoption of a Certificate of Designations related thereto) or any transaction that constitutes a Change in Control. (f) This Certificate of Designations may only be amended, modified or altered with the affirmative vote or consent of the Holders of a majority of the then outstanding shares of Preferred Stock, voting or consenting, as the case may be, separately as a single class to the exclusion of the holders of Common Stock.


 
16 (g) In exercising the voting rights set forth in Section 4(b), Section 4(c), Section 4(e) and Section 4(f), each Holder shall be entitled to one vote for each share of Series A Preferred Stock held by such Holder. In exercising the voting rights set forth in this Section 4, the Holder Representative shall solicit the vote or written consent of the Holders and the Corporation shall be entitled to communicate with and rely solely upon any instruction received from the Holder Representative. (h) Business Opportunities. (i) To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its subsidiaries, renounces any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, business opportunities that are from time to time presented to One Stone Partners L.L.C. (“Sponsor”) or any of its Affiliates (including One Stone Energy Partners GP, L.L.C.) or any of their respective officers, directors, agents, shareholders, members, partners, affiliates and subsidiaries (other than the Corporation and its subsidiaries) (each, a “Specified Party”) or are business opportunities in which a Specified Party participates or desires to participate, even if the opportunity is one that the Corporation or its subsidiaries might reasonably be expected to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and each such Specified Party shall have no duty to communicate or offer such business opportunity to the Corporation and, to the fullest extent permitted by applicable law, shall not be liable to the Corporation or any of its subsidiaries or any stockholder, for breach of any fiduciary or other duty, as a director or officer or controlling stockholder or otherwise, by reason of the fact that such Specified Party pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or its subsidiaries. Notwithstanding the foregoing, a Specified Party who is a director or officer of the Corporation and who is offered a business opportunity in his or her capacity as a director or officer of the Corporation (each, a “Directed Opportunity”) shall be obligated to communicate such Directed Opportunity to the Corporation; provided, however, that all of the protections of this Section 4(h) shall otherwise apply to the Specified Parties with respect to such Directed Opportunity, including, without limitation, the ability of the Specified Parties to pursue or acquire such Directed Opportunity or to direct such Directed Opportunity to another Person. (ii) Neither the amendment nor repeal of this Section 4(h), nor the adoption of any provision of the Certificate of Incorporation or the bylaws of the Corporation, nor, to the fullest extent permitted by Delaware law, any modification of law, shall eliminate, reduce or otherwise adversely affect any right or protection of any Person granted pursuant hereto existing at, or arising out of or related to any event, act or omission that occurred prior to, the time of such amendment, repeal, adoption or modification (regardless of when any proceeding (or part thereof) relating to such event, act or omission arises or is first threatened, commenced or completed). (iii) If any provision or provisions of this Section 4(h) shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason


 
17 whatsoever, then (A) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Section 4(h) (including, without limitation, each portion of any section of this Section 4(h) containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (B) to the fullest extent possible, the provisions of this Section 4(h) (including, without limitation, each such portion of any paragraph of this Section 4(h) containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law. (iv) This Section 4(h) shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director or officer of the Corporation or any Specified Parties under the Certificate of Incorporation, the bylaws of the Corporation or applicable law. Any Person purchasing or otherwise acquiring any interest in any securities of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Section 4(h). (v) Any Specified Party entitled to indemnification or advancement rights under the Certificate of Incorporation, the bylaws of the Corporation or applicable law (each, a “Specified Indemnitee”) may have certain rights to indemnification, advancement and/or insurance provided by one or more Persons with whom or which such Specified Indemnitee may be associated (including, without limitation, any of Sponsor or its Affiliates (including One Stone Energy Partners GP, L.L.C.)). The Corporation hereby acknowledges and agrees that: (A) the Corporation shall be the indemnitor of first resort with respect to any matter with respect to which any Specified Indemnitee may be entitled to indemnification or advancement rights under the Certificate of Incorporation, the bylaws of the Corporation or applicable law with regard to the Corporation; (B) the Corporation shall be primarily liable for all such obligations and any indemnification or advancement rights afforded to any Specified Indemnitee in respect of any such matter law with regard to the Corporation, whether created by law, organizational or constituent documents, contract or otherwise; (C) any obligation of any other Persons with whom or which a Specified Indemnitee may be associated (including, without limitation, any of Sponsor or its Affiliates (including One Stone Energy Partners GP, L.L.C.)) to indemnify such Specified Indemnitee and/or advance expenses to such Specified Indemnitee in respect of any matter with regard to the Corporation shall be secondary to the obligations of the Corporation under this Certificate of Designations, the Certificate of Incorporation, the bylaws of the Corporation and applicable law; (D) the Corporation shall be required to indemnify each Specified Indemnitee and advance expenses to each Specified Indemnitee under the Certificate of Incorporation, the bylaws of the Corporation or applicable law to the fullest extent provided therein without regard to any rights such Specified Indemnitee may have against any other Person with whom or which such Specified Indemnitee may be associated (including, without limitation, any of Sponsor or its Affiliates (including One Stone Energy Partners GP, L.L.C.)) or insurer of any such Person; and (E) the Corporation irrevocably waives, relinquishes and releases any other Person with whom or which a Specified Indemnitee may be associated


 
18 (including, without limitation, any of Sponsor or its Affiliates (including One Stone Energy Partners GP, L.L.C.)) from any claim of contribution, subrogation or any other recovery of any kind in respect of amounts paid by the Corporation with regard to the foregoing, in each case arising out of, relating to or resulting from the Specified Indemnitee’s relationship to the Corporation. SECTION 5. Liquidation. (a) In the event of any liquidation, winding up or dissolution of the Corporation, whether voluntary or involuntary, each Holder shall be entitled to receive, in respect of each share of Series A Preferred Stock held by such Holder, to be paid out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to the stockholders of the Corporation and after satisfaction of all liabilities and obligations to creditors of the Corporation, but before any payment or distribution is made to or set aside for the holders of Junior Stock, payment in full of an amount equal to the greater of (i) the Liquidation Preference of such share as of the date of such liquidation, winding up or dissolution and (ii) the amount that such Holder otherwise would be entitled to receive if all of such Holder’s shares of Series A Preferred Stock were converted into shares of Common Stock (at the Conversion Price then in effect) immediately prior to such liquidation, winding up or dissolution (regardless of whether any such shares of Series A Preferred Stock are not then convertible pursuant to the terms hereof). (b) Neither the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all the assets or business of the Corporation (other than in connection with the liquidation, winding up or dissolution of the Corporation) nor the merger or consolidation of the Corporation into or with any other Person shall be deemed to be a liquidation, winding up or dissolution, voluntary or involuntary, for purposes of this Section 5. (c) After the payment in full to the Holders of all amounts to which such Holders are entitled pursuant to Section 5(a), the Holders as such shall have no right or claim to the remaining assets of the Corporation or proceeds thereof and shall not participate in any payment to holders of Common Stock or other holders of Equity Securities. (d) In the event the assets of the Corporation or proceeds thereof available for distribution to the Holders upon any liquidation, winding up or dissolution of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such Holders are entitled pursuant to Section 5(a), no such distribution shall be made on account of any shares of Parity Stock upon such liquidation, winding up or dissolution unless proportionate distributable amounts shall be paid on account of the shares of Series A Preferred Stock, equally and ratably, in proportion to the full distributable amounts to which the Holders and the holders of any Parity Stock are entitled upon such liquidation, winding up or dissolution.


 
19 SECTION 6. Change in Control. (a) In the event of any Change in Control, the Holders of a majority of the then outstanding shares of Series A Preferred Stock, on behalf of themselves and all other Holders, may elect any of the following: (i) to receive in exchange for all, but not less than all, then outstanding shares of Series A Preferred Stock (and in lieu of any cash payments otherwise payable in connection with such Change in Control in respect of any shares of Series A Preferred Stock and/or any shares of Common Stock issued upon conversion of shares of Series A Preferred Stock), cash payments from the Corporation immediately prior to the effective time of such Change in Control in an aggregate amount that, taking into account all Cash Dividends paid on the Series A Preferred Stock and other cash payments made by the Corporation from and after the Issue Date in respect of shares of Series A Preferred Stock and any shares of Common Stock issued upon conversion of shares of Series A Preferred Stock (but excluding, for the avoidance of doubt, any consideration payable pursuant to such Change in Control in respect of any shares of Series A Preferred Stock and/or any shares of Common Stock issued upon conversion of shares of Series A Preferred Stock), are sufficient to achieve a minimum “cash-on-cash” internal rate of return of twenty percent (20%) on the Outstanding Preferred Investment Amount immediately prior to the effective time of such Change in Control, as calculated using the XIRR function in the most recent version of Microsoft Excel (or if such program is no longer available, such other software program for calculating such internal rate of return proposed by the Holder Representative and reasonably acceptable to the Board of Directors), allocated among such Holders pro rata according to the number of such shares of Series A Preferred Stock held by each of them relative to the aggregate number of all such shares of Series A Preferred Stock; (ii) to convert all then outstanding shares of Series A Preferred Stock into shares of Common Stock immediately prior to the effective time of such Change in Control and receive the consideration payable pursuant such Change in Control in respect of such shares of Common Stock; or (iii) if the definitive agreements with respect to such Change in Control permit, then to receive stock or other securities of the acquirer in such Change in Control having substantially identical terms as those applicable to the Series A Preferred Stock, including, without limitation, with respect to dividend rights, director designation, voting and approval rights, rights on liquidation, winding up or dissolution and rights in the event of any Change in Control. (b) Subject to the Holders agreeing to maintain the confidentiality of any nonpublic information contained in such notice, the Corporation shall deliver written notice to the Holders of its intent to effect a Change in Control as promptly as practicable but not less than thirty (30) days prior to the date on which the Corporation reasonably expects the closing of the transactions contemplated by such Change in Control to occur. Such notice shall set forth (i) the good faith estimate of the Board of Directors of the date on which the closing of the transactions contemplated by such Change in Control will occur (if such a date is such reasonably estimable


 
20 at that time); provided, however, that if after delivering such notice the Corporation reasonably expects such closing to occur on a date other than that set forth in such notice (or, if no such date is set forth such notice), then the Corporation shall as promptly as practicable, but in no event less than fifteen (15) days prior to the date on which such closing occurs, update such notice and deliver the same to the Holders; (ii)(A) the cash purchase price per share of Common Stock proposed to be paid by the counterparty(ies) to such Change in Control or (B) if such Change in Control is to be effected pursuant to one transaction or series of related transactions as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities or other property or assets, in each case other than cash, the form and amount of such stock, other securities or other property or assets; and (iii) an offer to purchase or otherwise acquire all, but not less than all, shares of Series A Preferred Stock in exchange for the cash payments described in Section 6(a)(i), which offer may be made contingent on the completion of such Change in Control. The Holders shall elect among the alternatives set forth in Section 6(a) and the Holder Representative shall notify the Corporation of such election by delivering written notice thereof to the Corporation not less than three (3) Business Days prior to the estimated closing date set forth in the written notice delivered by the Corporation to the Holders pursuant to Section 6(b)(i) (as updated pursuant to Section 6(b)(i), if applicable). In the event the Holder Representative fails to deliver written notice prior to the deadline in the preceding sentence, the Corporation shall be entitled to elect on behalf of all Holders the alternative set forth in Section 6(a) that, as of the effective time of such Change in Control, results in the Holders’ receipt of the highest value of consideration in exchange for their Series A Preferred Stock, as determined in good faith by the Board of Directors. In the event the terms of the proposed Change in Control are materially modified after the Corporation delivers written notice to the Holders of its intent to effect such Change in Control, the Corporation shall deliver written notice to the Holders of such modification as promptly as practicable but not less than fifteen (15) days prior to the date on which the Corporation reasonably expects the closing of the transactions contemplated by such Change in Control to occur. (c) Notwithstanding anything to the contrary in this Section 6, the Holders’ election among the alternatives set forth in Section 6(a) shall be revocable and shall not affect the right of the Holders to change such election, in each case on or before the date that is three (3) Business Days prior to the estimated closing date set forth in the written notice delivered by the Corporation to the Holders pursuant to Section 6(b)(i) (as updated pursuant to Section 6(b)(i), if applicable). For the avoidance of doubt, if the closing of the transactions contemplated by the Change in Control described in the written notice delivered by the Corporation to the Holders pursuant to Section 6(b) (as updated or modified pursuant to Section 6(b), if applicable) does not occur, then the Holders’ election among the alternatives set forth in Section 6(a) shall be automatically revoked and shall be of no further force or effect. (d) In electing among the alternatives set forth in this Section 6, the Holder Representative shall solicit the vote or written consent of the Holders and the Corporation shall be entitled to communicate with and rely solely upon any instruction received from the Holder Representative.


 
21 SECTION 7. Conversion. (a) Subject to Section 7(b), each Holder may at any time and from time to time after the Issue Date elect for all or any number of the then outstanding shares of Series A Preferred Stock held by such Holder to be converted into shares of Common Stock by delivering to the Corporation written notice setting forth (i) that such Holder elects to so convert shares of Series A Preferred Stock and (ii) the number of shares of Series A Preferred Stock such Holder elects to so convert. The Business Day immediately following the date on which the Corporation receives any such written notice is referred to herein as a “Conversion Date”. Subject to the terms and provisions of this Section 7, each share of Series A Preferred Stock shall be convertible into a number of shares of Common Stock, subject to Section 10(b), equal to (x) the sum of (1) the Face Amount of such share as of the applicable Conversion Date plus (2) the amount of the Accrued Dividends with respect to such share as of the applicable Conversion Date divided by (y) the Conversion Price in effect as of such Conversion Date; provided, however, that at the election of the Corporation, the amount of any such Accrued Dividends may be paid in cash on the Conversion Date and not included in the conversion calculation pursuant to the foregoing clause (x)(2). (b) Notwithstanding anything to the contrary herein, prior to Stockholder Approval, the aggregate number of shares of Common Stock issuable at any time and from time to time upon conversion of any or all shares of Series A Preferred Stock, when aggregated with the aggregate number of any then outstanding shares of Common Stock deemed Beneficially Owned by any Holder at such time, shall not exceed nineteen and ninety-nine one-hundredths percent (19.99%) of the aggregate number of shares of Common Stock outstanding immediately prior to the Issue Date. Following Stockholder Approval, the foregoing limitation on the aggregate number of shares of Common Stock issuable at any time and from time to time upon conversion of any or all shares of Series A Preferred Stock shall not apply and any or all such shares of Series A Preferred Stock thereafter shall be convertible into shares of Common Stock in accordance with Section 7(a) without regard to such limitation. If at any time after the Issue Date the rules of the NASDAQ Stock Market or the staff interpretations of such rules are amended or modified such that Stockholder Approval would not be required for the Corporation to issue all or any number of such shares of Common Stock in excess of nineteen and ninety-nine one-hundredths percent (19.99%) of the aggregate number of shares of Common Stock outstanding immediately prior to the Issue Date, then on the effective date of any such amendment or modification, the foregoing limitation on the aggregate number of shares of Common Stock issuable at any time and from time to time upon conversion of any or all shares of Series A Preferred Stock shall be deemed modified in order to provide that any or all such shares of Series A Preferred Stock thereafter shall be convertible into shares of Common Stock to the maximum extent permitted pursuant to such amended or modified rules or staff interpretations. (c) Upon conversion or Forced Conversion, a converting Holder shall surrender to the Corporation the certificates, if any, representing shares of Series A Preferred Stock to be converted during usual business hours at its principal place of business or the offices of its duly appointed Transfer Agent, accompanied by (i) if so required by the Corporation or its duly appointed Transfer Agent, a written instrument or instruments of transfer in form reasonably satisfactory to the Corporation or its duly appointed Transfer Agent, duly executed by the Holder


 
22 or its duly authorized legal representative and (ii) Transfer Tax stamps or funds therefor, if required pursuant to Section 7(j). (d) Immediately prior to the close of business on the Conversion Date or the Forced Conversion Date, as applicable, with respect to a conversion, a converting Holder shall be deemed to be the holder of record of Common Stock issuable upon conversion of such Holder’s shares of Series A Preferred Stock notwithstanding that the share register of the Corporation shall then be closed or that certificates representing such Common Stock shall not then be actually delivered to such Holder. Except to the extent a Holder is not able to convert its shares of Series A Preferred Stock into Common Stock as a result of Section 7(i) or Section 7(k), on the Conversion Date or the Forced Conversion Date, as applicable, dividends shall cease to accrue on the shares of Series A Preferred Stock so converted and all other rights with respect to the shares of Series A Preferred Stock so converted, including the rights, if any, to receive notices, will terminate, except for the rights of Holders thereof to (i) receive, subject to Section 10(b), the number of whole shares of Common Stock into which such shares have been converted; and (ii) exercise the rights to which they are thereafter entitled as holders of Common Stock. As promptly as practical after the conversion of any shares of Series A Preferred Stock into Common Stock, the Corporation shall deliver or shall cause the Transfer Agent to deliver to the applicable Holder an Ownership Notice identifying, subject to Section 10(b), the number of whole shares of Common Stock to which such Holder is entitled. (e) Subject to Section 7(b), the Conversion Price with respect to each then outstanding share of Series A Preferred Stock shall be subject to the following adjustments (except as provided in Section 7(f)): (i) If the Corporation pays a dividend (or other distribution) in shares of Common Stock to all holders of Common Stock, then the Conversion Price in effect immediately following the record date for such dividend (or distribution) shall be equal to the Conversion Price then in effect divided by the following fraction: OS1 OS0 where: OS0 = the number of shares of Common Stock outstanding immediately prior to the record date for such dividend or distribution; and OS1 = the sum of (A) the number of shares of Common Stock outstanding immediately prior to the record date for such dividend or distribution and (B) the aggregate number of shares of Common Stock constituting such dividend. (ii) If the Corporation issues to all holders of shares of Common Stock rights, options or warrants entitling them to subscribe for or purchase shares of Common Stock at less than the Market Value determined on the Ex-Date for such issuance, then the Conversion Price in effect immediately following the close of business on the Ex-Date


 
23 for such issuance shall be equal to the Conversion Price then in effect divided by the following fraction: OS0 + X OS0 + Y where: OS0 = the number of shares of Common Stock outstanding at the close of business on the record date for such issuance; X = the aggregate number of shares of Common Stock issuable pursuant to such rights, options or warrants; and Y = an amount equal to (A) the aggregate price payable to exercise all such rights, options or warrants divided by (B) the Market Value determined as of the Ex-Date for such issuance; provided, however, that if such rights, options or warrants are only exercisable upon the occurrence of certain triggering events, then the Conversion Price shall not be adjusted until such triggering events occur. To the extent such rights, options or warrants are not exercised prior to their expiration or shares of Common Stock otherwise are not delivered pursuant to such rights or warrants upon the exercise of such rights, options or warrants, the Conversion Price shall be readjusted to such Conversion Price that would have then been in effect had the adjustment made upon the issuance of such rights, options or warrants been made on the basis of the delivery of only the number of shares of Common Stock actually delivered. In determining the aggregate offering price payable for such shares, the Transfer Agent shall take into account any consideration received for such rights, options or warrants and the value of such consideration (if other than cash, to be determined by the Board of Directors). (iii) If the Corporation subdivides, combines or reclassifies the shares of Common Stock into a greater or lesser number of shares of Common Stock, then the Conversion Price in effect immediately following the effective date of such share subdivision, combination or reclassification shall be equal to the Conversion Price then in effect divided by the following fraction: OS1 OS0 where: OS0 = the number of shares of Common Stock outstanding immediately prior to such share subdivision, combination or reclassification; and


 
24 OS1 = the number of shares of Common Stock outstanding immediately after such share subdivision, combination or reclassification. (iv) If the Corporation or any of its subsidiaries successfully completes a tender or exchange offer for the Common Stock that involves the payment of consideration with a value per share of Common Stock exceeding the average Closing Sale Price of the Common Stock over the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day immediately succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, then the Conversion Price in effect immediately following the completion of such tender or exchange offer shall be equal to the Conversion Price then in effect divided by the following fraction: AC + (SP0 x OS1) OS0 x SP0 where: SP0 = the average Closing Sale Price over the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day immediately succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer; OS0 = the number of shares of Common Stock outstanding immediately prior to the expiration of the tender or exchange offer, including any shares validly tendered and not withdrawn (such tendered shares, the “Purchased Shares”); OS1 = the number of shares of Common Stock outstanding immediately after the expiration of the tender or exchange offer, less any Purchased Shares; and AC = the aggregate cash and fair market value of the other consideration paid in the tender or exchange offer, as determined by the Board of Directors. In the event the Corporation, or one of its subsidiaries, is obligated to purchase shares of Common Stock pursuant to any such tender offer or exchange offer, but the Corporation, or such subsidiary, is permanently prevented by applicable law from effecting any such purchases, or any of such purchases are rescinded, then the Conversion Price shall be readjusted to be such Conversion Price that would then be in effect if such tender offer or exchange offer had been made only on the number of shares actually tendered or exchanged and for only the amount of consideration actually paid. Except as set forth in the preceding paragraph, if the application of this clause (iv) to any tender offer or exchange offer would result in an increase in the Conversion Price, no adjustment shall be made for such tender offer or exchange offer under this clause (iv).


 
25 (v) If the Corporation distributes to all holders of shares of Common Stock evidences of indebtedness, shares of capital stock (other than Common Stock) or other assets (including securities, but excluding any dividend or distribution referred to in clause (i) above; any rights, options or warrants referred to in clause (ii) above; any consideration payable in connection with a tender or exchange offer made by the Corporation or any of its subsidiaries referred to in clause (iv) above; and any dividend of shares of capital stock of any class or series, or similar equity interests, of or relating to a subsidiary or other business unit in the case of certain spin-off transactions as described below), then the Conversion Price in effect immediately following the close of business on the record date for such distribution shall be equal to the Conversion Price then in effect divided by the following fraction: SP0 SP0 – FMV where: SP0 = the Closing Sale Price on the Trading Day immediately preceding the Ex-Date; and FMV = the fair market value of the portion of the distribution applicable to one share of Common Stock on the Trading Day immediately preceding the Ex-Date as determined by the Board of Directors. In a spin-off, where the Corporation makes a distribution to all holders of shares of Common Stock consisting of capital stock of any class or series, or similar equity interests of, or relating to, a subsidiary or other business unit, the Conversion Price shall be adjusted on the fourteenth Trading Day after the effective date of the distribution by dividing such Conversion Price in effect immediately prior to such fourteenth Trading Day by the following fraction: MP0 + MPS MP0 where: MP0 = the average of the Closing Sale Price over each of the first ten (10) Trading Days commencing on and including the fifth (5th) Trading Day following the effective date of such distribution; and MPS = the average of the closing sale price of the capital stock or equity interests representing the portion of the distribution applicable to one share of Common Stock over each of the first ten (10) Trading Days commencing on and including the fifth (5th) Trading Day following the effective date of such distribution, or as reported on the NASDAQ Stock Market or, if the Common Stock is not listed on the NASDAQ Stock Market, then on the principal other United States national or regional securities exchange, quotation system or over-the-counter market on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or


 
26 regional securities exchange, quotation system or over-the-counter market, then the fair market value of the capital stock or equity interests representing the portion of the distribution applicable to one share of Common Stock on such date as determined by the Board of Directors. In the event such distribution described in this clause (v) is not so made, the Conversion Price shall be readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay such dividend or distribution, to the Conversion Price that would then be in effect if such dividend distribution had not been declared. (vi) If the Corporation issues or sells shares of Common Stock or rights, options or warrants entitling the holders thereof to subscribe for or purchase shares of Common Stock (excluding any dividend or distribution referred to in clause (i) above; any rights, options or warrants referred to in clause (ii) above; any consideration payable in connection with a tender or exchange offer made by the Corporation or any of its subsidiaries referred to in clause (iv) above; any evidences of indebtedness, shares of capital stock (other than Common Stock) or other assets or any dividend of shares of capital stock of any class or series, or similar equity interests, of or relating to a subsidiary or other business unit in the case of certain spin-off transactions, in each case referred to in clause (v) above; and the issuance of any Permitted Equity Securities), at less than the Conversion Price in effect immediately prior to such issuance or sale (or deemed issuance or sale), then immediately following such issuance or sale, the Conversion Price shall be adjusted to a Conversion Price equal to the quotient obtained by dividing: (OS0 x X) + C OS0 + Y where: OS0 = Common Stock Deemed Outstanding immediately prior to such issuance or sale; X = the Conversion Price in effect immediately prior to such issuance or sale; Y = the aggregate number of shares of Common Stock issued or sold (or deemed issued or sold) by the Corporation in such issuance or sale (or deemed issuance or sale); C = the aggregate consideration, if any, received by the Corporation upon such issuance or sale (or deemed issuance or sale). To the extent any such rights, options or warrants are not exercised prior to their expiration or shares of Common Stock otherwise are not delivered pursuant to any such rights or warrants upon the exercise of such rights, options or warrants, the Conversion Price shall be readjusted to such Conversion Price that would have then been in effect


 
27 had the adjustment made upon the issuance of such rights, options or warrants been made on the basis of the delivery of only the number of shares of Common Stock actually delivered. If any such rights, options or warrants are only exercisable upon the occurrence of certain triggering events, then the Conversion Price shall not be adjusted until such triggering events occur. In determining the aggregate price paid in respect of such shares or payable to exercise any such rights, options or warrants, the Transfer Agent shall take into account any consideration received for such rights, options or warrants and the value of such consideration (if other than cash, to be determined by the Board of Directors). (vii) The Corporation reserves the right to make such reductions in the Conversion Price in addition to those required in the foregoing provisions as it considers advisable in order that any event treated for Federal income tax purposes as a dividend of stock or stock rights will not be taxable to the recipients. In the event the Corporation elects to make such a reduction, the Corporation shall comply with the requirements of Rule 14e-1 under the Exchange Act, and any other securities laws and regulations thereunder if and to the extent such laws and regulations are applicable in connection with the reduction of the Conversion Price. (viii) Notwithstanding anything to the contrary in this Section 7(e), rights or warrants distributed by the Corporation to all holders of Common Stock entitling such holders to subscribe for or purchase Equity Securities (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events (“Trigger Event”): (A) are deemed to be transferred with such shares; (B) are not exercisable; and (C) are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of this Section 7(e) (and no adjustment to any such Conversion Price under this Section 7(e) will be required) until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to such Conversion Price shall be made under Section 7(e)(ii). In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to any such Conversion Price under this Section 7(e) was made, (1) in the case of any such rights or warrants that shall all have been redeemed or repurchased without exercise by any holders thereof, such Conversion Price shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and (2) in the case of such rights or warrants that shall have expired or been terminated without exercise thereof, such Conversion Price shall be readjusted as if such expired or terminated rights and warrants had not been issued. To the extent the Corporation has a rights plan or agreement in effect upon conversion of the Series A Preferred Stock, which rights plan provides for rights or warrants of the type described in this clause (viii), then upon conversion of the Series A Preferred Stock, the Holders will receive, in addition to the Common Stock to which they are entitled, a


 
28 corresponding number of rights in accordance with the rights plan, unless a Triggering Event has occurred and the adjustments to the Conversion Price with respect thereto have been made in accordance with the foregoing. In lieu of any such adjustment, the Corporation may amend such applicable stockholder rights plan or agreement to provide that upon conversion of the Series A Preferred Stock the Holders will receive, in addition to the Common Stock issuable upon such conversion, the rights that would have attached to such Common Stock if the Triggering Event had not occurred under such applicable stockholder rights plan or agreement. (f) Notwithstanding anything to the contrary in Section 7(e), no adjustment to the Conversion Price with respect to any then outstanding share of Series A Preferred Stock shall be made with respect to any distribution or other transaction if the Holders are entitled to participate in such distribution or transaction as if they held a number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock immediately prior to such event, without having to convert their shares of Series A Preferred Stock. (g) If the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter (and before the dividend or distribution has been paid or delivered to stockholders) legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment in the Conversion Price then in effect with respect to any then outstanding share of Series A Preferred Stock shall be required by reason of the taking of such record. (h) Upon any increase or decrease in the Conversion Price with respect to any then outstanding share of Series A Preferred Stock, then, and in each such case, the Corporation promptly shall deliver to each Holder a certificate signed by an Officer, setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the increased or decreased Conversion Price then in effect following such adjustment. (i) The Corporation shall at all times reserve and keep available for issuance upon the conversion of the Series A Preferred Stock such number of its authorized but unissued shares of Common Stock as will from time to time be sufficient to permit the conversion of all outstanding shares of Series A Preferred Stock pursuant to any applicable provision of this Certificate of Designations, and shall take all action required (including promptly calling and holding one or more special meetings of the Board of Directors and the stockholders of the Corporation until such increase is approved in accordance with applicable law or regulation and amending the Certificate of Incorporation) to increase the authorized number of shares of Common Stock if at any time there shall be insufficient unissued shares of Common Stock to permit such reservation or to permit the conversion of all outstanding shares of Series A Preferred Stock. Notwithstanding anything to the contrary herein, unless otherwise agreed by the affirmative vote of the Holders of at least a majority of the shares of Series A Preferred Stock at the time outstanding and entitled to vote thereon, all shares of Series A Preferred Stock which would otherwise convert into shares of Common Stock shall remain outstanding and shall continue to accumulate and compound additional dividends pursuant to Section 3 until such time as there are sufficient unissued shares of Common Stock to permit the conversion of all outstanding shares of Series A Preferred Stock.


 
29 (j) The issuance or delivery of certificates for Common Stock upon the conversion of shares of Series A Preferred Stock and the issuance or delivery of any Ownership Notice, whether at the request of a Holder or upon the conversion of shares of Series A Preferred Stock, shall each be made without charge to the Holder or recipient of shares of Series A Preferred Stock for such certificates or Ownership Notice or for any Transfer Tax in respect of the issuance or delivery (but not the ownership) of such certificates or the securities represented thereby or such Ownership Notice or the securities identified therein, and such certificates or Ownership Notice shall be issued or delivered in the respective names of, or in such names as may be directed by, the applicable Holder; provided, however, that the Corporation shall not be required to pay any Transfer Tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of the Holder of the shares of the relevant Series A Preferred Stock and the Corporation shall not be required to issue or deliver any such certificate or Ownership Notice unless or until the Person or Persons requesting the issuance or delivery thereof shall have paid to the Corporation the amount of such Transfer Tax or shall have established to the reasonable satisfaction of the Corporation that such Transfer Tax has been paid. (k) If any Holder or Holders (collectively, the “Antitrust Holders”) reasonably believe that issuance or delivery of any shares of Common Stock upon any conversion of shares of Series A Preferred Stock hereunder (including any forced conversion pursuant to Section 8(a)) held by such Antitrust Holders would require filings with or the approval of any governmental authority under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), or any other U.S. federal or state antitrust laws or requirements (collectively, “Antitrust Laws”), the Antitrust Holders may notify the Corporation of such requirement, and shall state in such notice whether such Antitrust Holders intend to make a filing under the HSR Act. Within fifteen (15) Business Days following receipt of any such notification from such Antitrust Holders that informs the Corporation that such Antitrust Holders intend to make a filing under the HSR Act (the “HSR Filing”), the Corporation and the Antitrust Holders shall each prepare and file with the Department of Justice and the Federal Trade Commission the notification and report form required with respect to such conversion by the HSR Act, and request early termination of the waiting period thereunder. In connection with the HSR Filing, the Antitrust Holders and the Corporation shall respond promptly to any inquiries from the Department of Justice or the Federal Trade Commission concerning such filings and shall comply in all material respects with the filing requirements of the HSR Act. The Antitrust Holders and the Corporation shall cooperate with each other and, subject to entry into applicable confidentiality agreements, shall promptly furnish all information to the other party that is necessary in connection with such parties’ compliance with the HSR Act in connection with the HSR Filing; provided, however, that to the extent the provision of such information requires the participation or cooperation of a Person not under the control of the Antitrust Holder or the Corporation, as applicable, the Antitrust Holders and the Corporation shall only be required to use commercially reasonable efforts to obtain such information. The Antitrust Holders and the Corporation shall keep each other fully advised with respect to any requests from or communications with the Department of Justice or the Federal Trade Commission concerning the HSR Filing and shall consult with each other with respect to all responses thereto. The Antitrust Holders and the Corporation shall use all commercially reasonable efforts to take all actions reasonably necessary in connection with the HSR Act or any other applicable Antitrust Law in order to cause any applicable waiting period to expire and any other required related


 
30 governmental approval to be obtained in connection with the conversion of shares of Series A Preferred Stock hereunder, provided that notwithstanding the foregoing, nothing contained in this Certificate of Designations shall require or obligate the Corporation to (i) commence any litigation against any governmental authority or (ii) agree or consent to any divestitures, licenses, hold separate arrangements or similar matters, including covenants affecting business or operating practices of or with respect to the assets, operations or businesses of the Corporation. The Antitrust Holders shall be responsible for paying the fees due in connection with any HSR Filing and shall reimburse the Corporation and its Affiliates for all out of pocket costs and expenses incurred in making any such filing and for otherwise performing its obligations under this Section 7(k). The Corporation shall not be obligated to issue or deliver shares of Common Stock to any Antitrust Holder, and no such Holder shall be obligated to accept the delivery of shares of Common Stock, to the extent such issuance or delivery to such Holder would constitute a violation of applicable Antitrust Laws. The issuance and delivery of any shares of Common Stock described in the immediately preceding sentence shall be delayed until such time as such issuance and delivery complies with applicable Antitrust Laws and, notwithstanding anything to the contrary herein, the shares of Series A Preferred Stock which would otherwise convert into such shares shall remain outstanding (including after the Forced Conversion Date) and shall continue to accumulate and compound additional dividends pursuant to Section 3 until such time as such shares may be converted into shares of Common Stock in compliance with applicable Antitrust Laws or are redeemed or otherwise cancelled pursuant to the terms hereof. SECTION 8. Forced Conversion. (a) Following Stockholder Approval, at any time after the third (3rd) anniversary of the Issue Date the Corporation may elect to cause all, but not less than all, then outstanding shares of Series A Preferred Stock to be converted into shares of Common Stock; provided, however, that each of the following shall have occurred on or before the Company shall be entitled to exercise such right: (i) the per share volume-weighted average price of the Common Stock for twenty (20) Trading Days during a thirty (30) consecutive Trading Day period ending immediately prior to the Forced Conversion Notice Date (the “Determination Period”), as determined based on information published by NASDAQ in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on each such Trading Day (or if such volume-weighted average price is unavailable on any such Trading Day, the Closing Sale Price shall be used for such Trading Day) (without regard to afterhours trading or any other trading outside of the regular trading session trading hours) shall equal or exceed two hundred percent (200%) of the Series A Original Issue Price; (ii) the average daily trading volume of shares of Common Stock during the Determination Period shall exceed an amount equal to (A) the aggregate number of shares of Common Stock issuable upon conversion of all then outstanding shares of Series A Preferred Stock divided by (B) forty-five (45); and (iii) with respect to shares of Common Stock issuable at any time and from time to time upon conversion of any or all shares of Series A Preferred Stock, (a) the


 
31 resale of the shares of Common Stock into which such share is converted shall be covered by an effective Shelf Registration Statement or (b) such shares of Common Stock into which such share is converted may be sold or transferred by the Holder thereof under Rule 144 under the Securities Act without any limitation on the volume, timing, recipients or intended methods of distribution; provided, however, that any shares of Common Stock that are held by any Holder that is an Affiliate of the Corporation shall not satisfy the conditions of free transferability set forth in clause (b) above unless the Corporation reasonably determines (through delivery of a legal opinion or other reasonable supporting documentation) that the Holder is not an Affiliate. The third (3rd) Business Day immediately following the date on which the Holders receive written notice from the Corporation of its election to exercise its right to cause the conversion of all then outstanding shares of Series A Preferred Stock into shares of Common Stock (the “Forced Conversion Notice Date”) is referred to herein as the “Forced Conversion Date”. Subject to the terms and provisions of Section 7, each share of Series A Preferred Stock shall be convertible into a number of shares of Common Stock, subject to Section 10(b), equal to (x) the sum of (1) the Face Amount of such share as of the Forced Conversion Date plus (2) the amount of the Accrued Dividends with respect to such share as of the Forced Conversion Date divided by (y) the Conversion Price in effect as of the Forced Conversion Date; provided, however, that at the election of the Corporation, the amount of any such Accrued Dividend may be paid in cash on the Forced Conversion Date and not included in the conversion calculation pursuant to the foregoing clause (x)(2). (b) The Corporation shall deliver written notice to the Holders of its election to exercise its right to cause the conversion of all then outstanding shares of Series A Preferred Stock into shares of Common Stock. Such notice shall set forth: (i) the good faith estimate of the Board of Directors of the aggregate number of shares of Common Stock to be issued upon such conversion; (ii) whether the Corporation elects to pay any Accrued Dividends in cash on the Forced Conversion Date; and (iii) that Dividends will cease to accrue on the Forced Conversion Date. (c) Notwithstanding anything to the contrary herein, if the Corporation consummates a Change in Control or enters into a definitive agreement that provides for or would result in a Change in Control, in each case during the period commencing on the Forced Conversion Date and ending six months thereafter, then in connection with such Change in Control, the holders of a majority of the shares of Common Stock into which shares of Series A Preferred Stock have been converted pursuant to Section 8(a), voting as a single class, may elect to receive in exchange for all, but not less than all, such shares of Common Stock (and in lieu of any other payment with respect to such shares in connection with such Change in Control), cash payments from the Corporation immediately prior to the effective time of such Change in Control, subject to Section 8(d), in an aggregate amount that, taking into account all Cash Dividends paid on the Series A Preferred Stock and other cash payments made by the Corporation from and after the Issue Date through and including the Forced Conversion Date in respect of shares of Series A Preferred Stock and any shares of Common Stock issued upon conversion of shares of Series A Preferred Stock (but excluding, for the avoidance of doubt, any consideration payable pursuant to such Change in Control in respect of any shares of Common Stock issued upon conversion of shares of Series A Preferred Stock), are sufficient to achieve a minimum “cash-on-cash” internal


 
32 rate of return of twenty percent (20%) calculated through and including the Forced Conversion Date on the Outstanding Preferred Investment Amount immediately prior to the conversion of any then outstanding shares of Series A Preferred Stock into shares of Common Stock pursuant to Section 8(a), as calculated using the XIRR function in the most recent version of Microsoft Excel (or if such program is no longer available, such other software program for calculating such internal rate of return proposed by the Holder Representative and reasonably acceptable to the Board of Directors). Such aggregate payments shall be allocated among such holders pro rata according to the number of such shares of Common Stock held by each of them relative to the aggregate number of all such shares of Common Stock. (d) In making the election pursuant to Section 8(c), the Holder Representative shall solicit the vote or written consent of the Holders and the Corporation shall be entitled to communicate with and rely solely upon any instruction received from the Holder Representative. The Holder Representative shall notify the Corporation of such election by delivering written notice thereof to the Corporation not less than three (3) Business Days prior to the consummation of the Change in Control. The cash payments, if any, pursuant to Section 8(c) shall be payable by the Corporation to the Holders of shares of Series A Preferred Stock immediately prior to the conversion pursuant to Section 8(a) unless the Corporation has received written notice from any such Holder designating another recipient to which the cash payment otherwise payable to such Holder instead shall be paid. In furtherance of the foregoing, immediately prior to and as a condition of any assignment of the right to elect to receive the cash payment otherwise payable to any Holder pursuant to Section 8(c) in connection with any transfer of shares of Common Stock into which shares of Series A Preferred Stock have been converted pursuant to Section 8(a), (x) such Holder and its assignees shall deliver written notice to the Holder Representative and the Corporation of such assignment and transfer and (y) the recipient thereof and its assignees shall agree to be bound by the terms and conditions of this Certificate of Designations with respect to such right. No payment shall be made to any recipient pursuant to Section 8(c) unless such recipient, together with all such other recipients, shall have tendered to the Corporation shares of Common Stock equal in number to the number of shares received by such Holders upon conversion pursuant to Section 8(a). SECTION 9. Redemption. (a) Following Stockholder Approval, at any time after the third (3rd) anniversary of the Issue Date, upon not less than thirty (30) days’ prior written notice to the Holders, the Corporation may elect to redeem all, but not less than all, shares of Series A Preferred Stock in exchange for cash payments from the Corporation, out of funds of the Corporation legally available for payment in an aggregate amount equal to the greater of (i)(A) the Closing Sale Price of the Common Stock on the date on which the Corporation delivers such written notice, multiplied by (B) the aggregate number of shares of Common Stock issuable upon conversion of all then outstanding shares of Series A Preferred Stock, and (ii) an amount that, taking into account all Cash Dividends paid on the Series A Preferred Stock and other cash payments made by the Corporation from and after the Issue Date in respect of shares of Series A Preferred Stock and any shares of Common Stock issued upon conversion of shares of Series A Preferred Stock, is sufficient to achieve a minimum “cash-on-cash” internal rate of return of twenty percent (20%) on the Outstanding Preferred Investment Amount immediately prior to the effective time of the redemption of any shares of Series A Preferred Stock pursuant to this Section 9(a), as calculated


 
33 using the XIRR function in the most recent version of Microsoft Excel (or if such program is no longer available, such other software program for calculating such internal rate of return proposed by the Holder Representative and reasonably acceptable to the Board of Directors). Such aggregate payments shall be allocated among such Holders pro rata according to the number of such shares of Series A Preferred Stock held by each of them relative to the aggregate number of all such shares of Series A Preferred Stock; provided, however, that the Company shall not be entitled to exercise such right until (a) the resale of the shares of Common Stock into which such share is converted shall be covered by an effective Shelf Registration Statement or (b) such shares of Common Stock into which such share is converted may be sold or transferred by the Holder thereof under Rule 144 under the Securities Act without any limitation on the volume, timing, recipients or intended methods of distribution; provided, however, that any shares of Common Stock that are held by any Holder that is an Affiliate of the Corporation shall not satisfy the conditions of free transferability set forth in clause (b) above unless the Corporation reasonably determines (through delivery of a legal opinion or other reasonable supporting documentation) that the Holder is not an Affiliate. (b) Accrued Dividends pursuant to Section 3 shall accrue through and including the Redemption Date. At the election of the Corporation, the amount of any Accrued Dividends may be paid in cash on the Redemption Date and not included in the conversion calculation pursuant to Section 9(a)(i)(B). (c) The redemption shall be effective at the close of business on the date that is thirty (30) days following the date on which the Holders receive written notice pursuant to Section 9(a) (the “Redemption Date”). Following the Redemption Date, all shares of Series A Preferred Stock shall cease to be outstanding (and shall not be convertible into shares of Common Stock) and shall instead represent the right to receive such Holder’s pro rata share of the redemption payments pursuant to Section 9(a) upon surrender to the Corporation of the certificates representing such shares of Series A Preferred Stock. (d) For the avoidance of doubt, the Corporation’s exercise of its right to redeem all, but not less than all, shares of the Series A Preferred Stock pursuant to Section 9(a) by delivering written notice thereof to the Holders shall not affect the rights of the Holders to convert any such shares of Preferred Stock into shares of Common Stock at any time prior to the close of business on the Redemption Date. SECTION 10. No Fractional Shares. (a) Notwithstanding anything to the contrary in Section 3(a) or Section 3(c), with respect to each share of Series A Preferred Stock held by any Holder, the number of shares of Series A Preferred Stock issuable to such Holder on any Dividend Payment Date pursuant to Section 3(a) or Section 3(c) shall be aggregated with the number of shares of Series A Preferred Stock issuable to such Holder on such Dividend Payment Date pursuant to Section 3(a) or Section 3(c) with respect to all other shares of Series A Preferred Stock held by such Holder to determine the greatest whole number of such shares of Series A Preferred Stock that otherwise would be issuable to such Holder if such number of shares of Series A Preferred Stock were determined on an aggregate, rather than an individual, basis. Such aggregate number of whole shares of Series A Preferred Stock shall be used for purposes of determining the number of


 
34 shares of Series A Preferred Stock to be issued by the Corporation to such Holder pursuant to Section 3(a) or Section 3(c). No fractional shares of Series A Preferred Stock or securities representing fractional shares of Series A Preferred Stock shall be issued pursuant to Section 3(a) or Section 3(c). Instead, the number of shares of Series A Preferred Stock to be issued to such Holder pursuant to Section 3(a) or Section 3(c), as applicable, in the aggregate (and not on a share by share basis), shall be rounded up to the next nearest whole share. (b) Notwithstanding anything to the contrary in Section 7 or Section 8, with respect to each share of Series A Preferred Stock held by any Holder, the number of shares of Common Stock issuable to such Holder upon conversion thereof pursuant to Section 7 or Section 8 shall be aggregated with the number of shares of Common Stock issuable to such Holder upon conversion of all other shares of Series A Preferred Stock held by such Holder that are to be converted pursuant to Section 7 or Section 8 as of the same date to determine the greatest whole number of such shares of Common Stock that otherwise would be issuable to such Holder if such number of shares of Common Stock were determined on an aggregate, rather than an individual, basis. Such aggregate number of whole shares of Common Stock shall be used for purposes of determining the number of shares to be issued by the Corporation to such Holder pursuant to pursuant to Section 7 or Section 8. No fractional shares of Common Stock or securities representing fractional shares of Common Stock shall be issued pursuant to Section 7 or Section 8. Instead, the number of shares of Common Stock to be issued to such Holder pursuant to Section 7 or Section 8, as applicable, in the aggregate (and not on a share by share basis), shall be rounded up to the next nearest whole share. SECTION 11. Uncertificated Shares; Certificated Shares. (a) Uncertificated Shares. (i) Form. Unless otherwise requested in writing by a Holder to the Corporation, the shares of Series A Preferred Stock and any shares of Common Stock issued upon conversion thereof shall be in uncertificated, book entry form as permitted by the bylaws of the Corporation and the Delaware General Corporation Law. Within a reasonable time after the issuance or transfer of uncertificated shares, the Corporation shall send or cause the Transfer Agent to send to the registered owner thereof an Ownership Notice. (ii) Transfer. Transfers of Series A Preferred Stock or Common Stock issued upon conversion thereof held in uncertificated, book-entry form shall be made only upon the transfer books of the Corporation kept at an office of the Transfer Agent upon receipt of proper transfer instructions from the registered owner of such uncertificated shares, or from a duly authorized attorney or from an individual presenting proper evidence of succession, assignment or authority to transfer the stock. The Corporation may refuse any requested transfer until furnished evidence satisfactory to it that such transfer is proper. (iii) Legends. Each Ownership Notice issued with respect to a share of Series A Preferred Stock or any Common Stock issued upon the conversion of Series A Preferred Stock shall bear a legend in substantially the following form:


 
35 “THE SECURITIES IDENTIFIED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE RESTATED CERTIFICATE OF INCORPORATION OF MAGELLAN PETROLEUM CORPORATION (THE “CORPORATION”), AS AMENDED OR RESTATED, INCLUDING THE CERTIFICATE(S) OF DESIGNATIONS INCLUDED THEREIN (AS FURTHER AMENDED OR RESTATED FROM TIME TO TIME, THE “CHARTER”), THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK OR MORE THAN ONE SERIES OF ANY CLASS AND THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. THE SHARES EVIDENCED BY THIS NOTICE ARE SUBJECT TO THE OBLIGATIONS AND RESTRICTIONS STATED IN, AND ARE TRANSFERABLE ONLY IN ACCORDANCE WITH, THE PROVISIONS OF THE CHARTER. THE TERMS OF THE CHARTER ARE HEREBY INCORPORATED INTO THIS NOTICE BY REFERENCE. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.” In addition, Each Ownership Notice issued with respect to a share of Series A Preferred Stock shall bear a legend in substantially the following form: “BY ACCEPTANCE HEREOF, THE HOLDER SHALL BE DEEMED TO HAVE AGREED WITH THE CORPORATION THAT, FOR SO LONG AS THE HOLDER HOLDS THIS SECURITY, THE HOLDER SHALL NOT, AND SHALL CAUSE ITS AFFILIATES NOT TO, DIRECTLY OR INDIRECTLY ENGAGE IN ANY SHORT SALE OF THE COMMON STOCK OF THE CORPORATION.” (b) Certificated Shares. (i) Form and Dating. When Series A Preferred Stock is in certificated form (“Certificated Preferred Stock”), the Series A Preferred Stock certificate and the Transfer Agent’s certificate of authentication shall be substantially in the form set forth in Exhibit A, which is hereby incorporated in and expressly made a part of this Certificate of Designations. The Series A Preferred Stock certificate may have notations, legends or


 
36 endorsements required by law, stock exchange rules, agreements to which the Corporation is subject, if any, or usage; provided that any such notation, legend or endorsement is in a form acceptable to the Corporation. Each Series A Preferred Stock certificate shall be dated the date of its authentication. (ii) Execution and Authentication. Two (2) Officers shall sign each Series A Preferred Stock certificate for the Corporation by manual or facsimile signature. (A) If an Officer whose signature is on a Series A Preferred Stock certificate no longer holds that office at the time the Transfer Agent authenticates the Series A Preferred Stock certificate, the Series A Preferred Stock certificate shall be valid nevertheless. (B) A Series A Preferred Stock certificate shall not be valid until an authorized signatory of the Transfer Agent manually signs the certificate of authentication on the Series A Preferred Stock certificate. The signature shall be conclusive evidence that the Series A Preferred Stock certificate has been authenticated under this Certificate of Designations. (C) The Transfer Agent shall authenticate and deliver certificates for shares of Series A Preferred Stock for original issue upon a written order of the Corporation signed by two (2) Officers or by an Officer and an Assistant Treasurer of the Corporation. Such order shall specify the number of shares of Series A Preferred Stock to be authenticated and the date on which the original issue of the Series A Preferred Stock is to be authenticated. (D) The Transfer Agent may appoint an authenticating agent reasonably acceptable to the Corporation to authenticate the certificates for the Series A Preferred Stock. Unless limited by the terms of such appointment, an authenticating agent may authenticate certificates for the Series A Preferred Stock whenever the Transfer Agent may do so. Each reference in this Certificate of Designations to authentication by the Transfer Agent includes authentication by such agent. An authenticating agent has the same rights as the Transfer Agent or agent for service of notices and demands. (iii) Transfer and Exchange. When Certificated Preferred Stock is presented to the Transfer Agent with a request to register the transfer of such Certificated Preferred Stock or to exchange such Certificated Preferred Stock for an equal number of shares of Certificated Preferred Stock, the Transfer Agent shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Certificated Preferred Stock surrendered for transfer or exchange: (A) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Corporation and the Transfer Agent, duly executed by the Holder thereof or its attorney duly authorized in writing; and


 
37 (B) is being transferred or exchanged pursuant to subclause (1) or (2) below, and is accompanied by the following additional information and documents, as applicable: (1) if such Certificated Preferred Stock is being delivered to the Transfer Agent by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect in substantially the form of Exhibit C hereto; or (2) if such Certificated Preferred Stock is being transferred to the Corporation or to a “qualified institutional buyer” in accordance with Rule 144A under the Securities Act or pursuant to another exemption from registration under the Securities Act, (i) a certification to that effect (in substantially the form of Exhibit C hereto) and (ii) if the Corporation so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 11(b)(iv). (iv) Legends. (A) Each certificate evidencing Certificated Preferred Stock or any Common Stock issued upon the conversion of Series A Preferred Stock shall bear a legend in substantially the following form: “THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE RESTATED CERTIFICATE OF INCORPORATION OF MAGELLAN PETROLEUM CORPORATION (THE “CORPORATION”), AS AMENDED OR RESTATED, INCLUDING THE CERTIFICATE(S) OF DESIGNATIONS INCLUDED THEREIN (AS FURTHER AMENDED OR RESTATED FROM TIME TO TIME, THE “CHARTER”), THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK OR MORE THAN ONE SERIES OF ANY CLASS AND THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. THE SHARES EVIDENCED BY THIS


 
38 NOTICE ARE SUBJECT TO THE OBLIGATIONS AND RESTRICTIONS STATED IN, AND ARE TRANSFERABLE ONLY IN ACCORDANCE WITH, THE PROVISIONS OF THE CHARTER. THE TERMS OF THE CHARTER ARE HEREBY INCORPORATED INTO THIS CERTIFICATE BY REFERENCE. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.” In addition, Each Ownership Notice issued with respect to a share of Series A Preferred Stock shall bear a legend in substantially the following form: “BY ACCEPTANCE HEREOF, THE HOLDER SHALL BE DEEMED TO HAVE AGREED WITH THE CORPORATION THAT, FOR SO LONG AS THE HOLDER HOLDS THIS SECURITY, THE HOLDER SHALL NOT, AND SHALL CAUSE ITS AFFILIATES NOT TO, DIRECTLY OR INDIRECTLY ENGAGE IN ANY SHORT SALE OF THE COMMON STOCK OF THE CORPORATION.” (B) Upon any sale or transfer of a Transfer Restricted Security held in certificated form pursuant to Rule 144 under the Securities Act or another exemption from registration under the Securities Act or an effective registration statement under the Securities Act, the Transfer Agent shall permit the Holder thereof to exchange such Transfer Restricted Security for Certificated Preferred Stock or certificated Common Stock that does not bear a restrictive legend and rescind any restriction on the transfer of such Transfer Restricted Security. (v) Replacement Certificates. If any of the Series A Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the Corporation shall issue, in exchange and in substitution for and upon cancellation of the mutilated Series A Preferred Stock certificate, or in lieu of and substitution for the Series A Preferred Stock certificate lost, stolen or destroyed, a new Series A Preferred Stock certificate of like tenor and representing an equivalent amount of shares of Series A Preferred Stock, but only upon receipt of evidence of such loss, theft or destruction of such Series A Preferred Stock certificate and indemnity, if requested, satisfactory to the Corporation and the Transfer Agent. (vi) Cancellation. In the event the Corporation shall purchase or otherwise acquire Certificated Preferred Stock, the same shall thereupon be delivered to the Transfer Agent for cancellation. The Transfer Agent and no one else shall cancel and destroy all Series A Preferred Stock certificates surrendered for transfer, exchange, replacement or cancellation and deliver a certificate of such destruction to the Corporation unless the Corporation directs the Transfer Agent to deliver canceled Series A Preferred Stock certificates to the Corporation. The Corporation may not issue new


 
39 Series A Preferred Stock certificates to replace Series A Preferred Stock certificates to the extent they evidence Series A Preferred Stock which the Corporation has purchased or otherwise acquired. (c) Certain Obligations with Respect to Transfers and Exchanges of Series A Preferred Stock. (i) To permit registrations of transfers and exchanges, the Corporation shall execute and the Transfer Agent shall authenticate Certificated Preferred Stock as required pursuant to the provisions of this Section 11. (ii) All shares of Series A Preferred Stock, whether or not Certificated Preferred Stock, issued upon any registration of transfer or exchange of such shares shall be the valid obligations of the Corporation, entitled to the same benefits under this Certificate of Designations as the shares of Series A Preferred Stock surrendered upon such registration of transfer or exchange. (iii) Prior to due presentment for registration of transfer of any shares of Series A Preferred Stock, the Transfer Agent and the Corporation may deem and treat the Person in whose name such shares are registered as the absolute owner of such Series A Preferred Stock and neither the Transfer Agent nor the Corporation shall be affected by notice to the contrary. (iv) No service charge shall be made to a Holder for any registration of transfer or exchange of any Series A Preferred Stock or Common Stock issued upon the conversion thereof on the transfer books of the Corporation or the Transfer Agent or upon surrender of any Series A Preferred Stock certificate or Common Stock certificate at the office of the Transfer Agent maintained for that purpose. However, the Corporation may require payment of a sum sufficient to cover any Transfer Tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Series A Preferred Stock or Common Stock if the Person receiving shares in connection with such transfer or exchange is not the holder thereof. (d) No Obligation of the Transfer Agent. The Transfer Agent shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Certificate of Designations or under applicable law with respect to any transfer of any interest in any Series A Preferred Stock other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Certificate of Designations, and to examine the same to determine substantial compliance as to form with the express requirements hereof. SECTION 12. Other Provisions. (a) With respect to any notice to a Holder required to be provided hereunder, neither failure to mail such notice, nor any defect therein or in the mailing thereof, to any particular Holder shall affect the sufficiency of the notice or the validity of the proceedings referred to in such notice with respect to the other Holders or affect the legality or validity of any vote upon any such action (assuming due and proper notice to such other Holders). Any notice which was


 
40 mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the Holder receives the notice. (b) Shares of Series A Preferred Stock that have been issued and reacquired in any manner, including shares of Series A Preferred Stock purchased or redeemed or exchanged or converted, shall (upon compliance with any applicable provisions of the laws of Delaware) upon such reacquisition be automatically cancelled by the Corporation and shall not be reissued. (c) Shares of Series A Preferred Stock shall be issuable only in whole shares. (d) All notice periods referred to herein shall commence: (a) when made, if made by hand delivery, and upon confirmation of receipt, if made by facsimile; (b) one Business Day after being deposited with a nationally recognized next-day courier, postage prepaid; or (c) three (3) Business Days after being sent certified or registered mail, return receipt requested, postage prepaid. Notice to any Holder shall be given to the registered address set forth in the Corporation’s records for such Holder. (e) Any payments required to be made hereunder on any day that is not a Business Day shall be made on the next succeeding Business Day without interest or additional payment for such delay. All payments required hereunder shall be made by wire transfer of immediately available funds in United States Dollars to the Holders in accordance with the payment instructions as such Holders may deliver by written notice to the Corporation from time to time, or, if wire transfer instructions have not been provided, by check to the mailing address set forth in the Corporation’s records. (f) Notwithstanding anything to the contrary herein, whenever the Board of Directors is permitted or required to determine fair market value, (i) such determination shall be made in good faith and (ii) in making any determination of fair market value (but specifically excluding a determination of the fair market value of cash), including (A) determining the fair market value of any non-cash consideration payable in a tender offer or exchange offer pursuant to Section 7(e)(iv) and (B) determining the fair market value of certain distributions pursuant to Section 7(e)(v), then in each case if the proceeds or value of such proposed transaction, issuance or delivery in question exceed $5,000,000 in the aggregate, the Board of Directors shall determine such fair market value after receipt of an appraisal or other valuation from an independent, nationally recognized appraiser, accounting firm or investment bank, at the Corporation’s cost. (g) Notwithstanding any provision in the Certificate of Incorporation or bylaws of the Corporation to the contrary, any action required or permitted to be taken by the Holders may be effected at a duly called special meeting of such Holders or without a meeting, without prior notice, and without a vote, if the requisite Holders entitled to vote and sufficient for the approval of such action execute a consent in writing, setting forth the action so taken. Any such duly and validly approved action, whether effected at such a meeting or by such a written consent, shall be binding upon all such Holders notwithstanding that any of them, individually or collectively, may have voted against, not voted or abstained from voting upon or failed to execute a written consent with respect to such action.


 
41 [Signature page follows.]


 


 
EXHIBIT A-1 EXHIBIT A FORM OF PREFERRED STOCK FACE OF SECURITY THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE RESTATED CERTIFICATE OF INCORPORATION OF MAGELLAN PETROLEUM CORPORATION (THE “CORPORATION”), AS AMENDED OR RESTATED, INCLUDING THE CERTIFICATE(S) OF DESIGNATIONS INCLUDED THEREIN (AS FURTHER AMENDED OR RESTATED FROM TIME TO TIME, THE “CHARTER”), THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK OR MORE THAN ONE SERIES OF ANY CLASS AND THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. THE SHARES EVIDENCED BY THIS NOTICE ARE SUBJECT TO THE OBLIGATIONS AND RESTRICTIONS STATED IN, AND ARE TRANSFERABLE ONLY IN ACCORDANCE WITH, THE PROVISIONS OF THE CHARTER. THE TERMS OF THE CHARTER ARE HEREBY INCORPORATED INTO THIS CERTIFICATE BY REFERENCE. BY ACCEPTANCE HEREOF, THE HOLDER SHALL BE DEEMED TO HAVE AGREED WITH THE CORPORATION THAT, FOR SO LONG AS THE HOLDER HOLDS THIS SECURITY, THE HOLDER SHALL NOT, AND SHALL CAUSE ITS AFFILIATES NOT TO, DIRECTLY OR INDIRECTLY ENGAGE IN ANY SHORT SALE OF THE COMMON STOCK OF THE CORPORATION. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.


 
EXHIBIT A-2 Certificate Number [●] Shares of [●] Series A Convertible Preferred Stock Series A Convertible Preferred Stock of MAGELLAN PETROLEUM CORPORATION MAGELLAN PETROLEUM CORPORATION, a Delaware corporation (the “Corporation”), hereby certifies that [●] (the “Holder”) is the registered owner of [●] fully paid and non-assessable shares of preferred stock, par value $0.01 per share, of the Corporation designated as the Series A Convertible Preferred Stock (the “Series A Preferred Stock”). The shares of Series A Preferred Stock are transferable on the books and records of the Transfer Agent, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Series A Preferred Stock represented hereby are issued and shall in all respects be subject to the provisions of the Certificate of Designations dated [●], 2013, as the same may be amended from time to time (the “Certificate of Designations”). Capitalized terms used herein but not defined shall have the meaning given them in the Certificate of Designations. The Corporation will provide a copy of the Certificate of Designations to a Holder without charge upon written request to the Corporation at its principal place of business. Reference is hereby made to select provisions of the Series A Preferred Stock set forth on the reverse hereof, and to the Certificate of Designations, which select provisions and the Certificate of Designations shall for all purposes have the same effect as if set forth at this place. Upon receipt of this certificate, the Holder is bound by the Certificate of Designations and is entitled to the benefits thereunder. Unless the Transfer Agent’s Certificate of Authentication hereon has been properly executed, these shares of Series A Preferred Stock shall not be entitled to any benefit under the Certificate of Designations or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Corporation has executed this certificate this [●] day of [●], 20[●]. MAGELLAN PETROLEUM CORPORATION By: Name: Title: By: Name: Title:


 
EXHIBIT A-3 TRANSFER AGENT’S CERTIFICATE OF AUTHENTICATION These are shares of the Series A Preferred Stock referred to in the within-mentioned Certificate of Designations. Dated: ______________ [●], as Transfer Agent, By: Authorized Signatory


 
EXHIBIT A-4 REVERSE OF SECURITY Dividends on each share of Series A Preferred Stock shall be payable, when, as and if declared by the Corporation’s Board of Directors out of legally available funds as provided in the Certificate of Designations. The shares of Series A Preferred Stock shall be convertible into the Corporation’s Common Stock upon the satisfaction of the conditions and in the manner and according to the terms set forth in the Certificate of Designations. The Corporation will furnish without charge to each holder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock and the qualifications, limitations or restrictions of such preferences and/or rights.


 
EXHIBIT A-5 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of Series A Preferred Stock evidenced hereby to: _______________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ (Insert assignee’s social security or tax identification number) ______________________________________________________________________________ (Insert address and zip code of assignee) ______________________________________________________________________________ and irrevocably appoints: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ agent to transfer the shares of Series A Preferred Stock evidenced hereby on the books of the Transfer Agent. The agent may substitute another to act for him or her. Date: Signature: (Sign exactly as your name appears on the other side of this Series A Preferred Stock Certificate) Signature Guarantee: 1 1 Signature must be guaranteed by an “eligible guarantor institution” that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Transfer Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Transfer Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.


 
EXHIBIT B-1 EXHIBIT B OWNERSHIP NOTICE THE SECURITIES IDENTIFIED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE RESTATED CERTIFICATE OF INCORPORATION OF MAGELLAN PETROLEUM CORPORATION (THE “CORPORATION”), AS AMENDED OR RESTATED, INCLUDING THE CERTIFICATE(S) OF DESIGNATIONS INCLUDED THEREIN (AS FURTHER AMENDED OR RESTATED FROM TIME TO TIME, THE “CHARTER”), THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK OR MORE THAN ONE SERIES OF ANY CLASS AND THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. THE SHARES EVIDENCED BY THIS NOTICE ARE SUBJECT TO THE OBLIGATIONS AND RESTRICTIONS STATED IN, AND ARE TRANSFERABLE ONLY IN ACCORDANCE WITH, THE PROVISIONS OF THE CHARTER. THE TERMS OF THE CHARTER ARE HEREBY INCORPORATED INTO THIS NOTICE BY REFERENCE. IF THE SECURITIES IDENTIFIED HEREIN ARE SERIES A CONVERTIBLE PREFERRED STOCK OF THE CORPORATION, THEN BY ACCEPTANCE HEREOF, THE HOLDER SHALL BE DEEMED TO HAVE AGREED WITH THE CORPORATION THAT, FOR SO LONG AS THE HOLDER HOLDS THIS SECURITY, THE HOLDER SHALL NOT, AND SHALL CAUSE ITS AFFILIATES NOT TO, DIRECTLY OR INDIRECTLY ENGAGE IN ANY SHORT SALE OF THE COMMON STOCK OF THE CORPORATION. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. This letter confirms and acknowledges that you are the registered owner of the number and the class or series of shares of capital stock of the Corporation listed on Schedule A to this letter. In addition, please be advised that the Corporation will furnish without charge to each stockholder of the Corporation who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock, or series thereof, of


 
EXHIBIT B-2 the Corporation and the qualifications, limitations or restrictions of such preferences and/or rights, which are fixed by the Charter. Any such request should be directed to the Secretary of the Corporation. Dated: ______________ [●], as Transfer Agent, By: Authorized Signatory


 
EXHIBIT C-1 EXHIBIT C CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF PREFERRED STOCK Re: Series A Convertible Preferred Stock (the “Series A Preferred Stock”) of Magellan Petroleum Corporation (the “Corporation”) This Certificate relates to [●] shares of Series A Preferred Stock held by [●] (the “Transferor”) in*/:  book entry form; or  definitive form. The Transferor has requested the Transfer Agent by written order to exchange or register the transfer of Series A Preferred Stock. In connection with such request and in respect of such Series A Preferred Stock, the Transferor does hereby certify that the Transferor is familiar with the Certificate of Designations relating to the above-captioned Series A Preferred Stock and that the transfer of this Series A Preferred Stock does not require registration under the Securities Act of 1933, as amended (the “Securities Act”), because */:  such Series A Preferred Stock is being acquired for the Transferor’s own account without transfer;  such Series A Preferred Stock is being transferred to the Corporation; or  such Series A Preferred Stock is being transferred to a qualified institutional buyer (as defined in Rule 144A under the Securities Act), in reliance on Rule 144A. Such Series A Preferred Stock is being transferred in reliance on and in compliance with another exemption from the registration requirements of the Securities Act (and based on an Opinion of Counsel if the Corporation so requests). [●] By: Date: */ Please check applicable box.


 
MAGELLAN PETROLEUM CORPORATION BY-LAWS OF As Amended June 13, 2013 Exhibit 3.1


 
i TABLE OF CONTENTS ARTICLE I Offices......................................................................................................................... 1 SECTION 1. Registered Office .......................................................................................... 1 SECTION 2. Other Offices ................................................................................................. 1 ARTICLE II Meetings of Stockholders .......................................................................................... 1 SECTION 1. Place of Meetings .......................................................................................... 1 SECTION 2. Annual Meeting............................................................................................. 2 SECTION 3. Notice of Stockholder Nominees .................................................................. 3 SECTION 4. Special Meetings; Notice. ............................................................................. 4 SECTION 5. Notice of Meetings. ....................................................................................... 4 SECTION 6. Quorum. ........................................................................................................ 5 SECTION 7. Voting at Stockholders’ Meetings................................................................. 5 SECTION 8. Proxies and Voting. ....................................................................................... 5 SECTION 9. Manner of Voting. ......................................................................................... 5 SECTION 10. Stock Register. ............................................................................................ 5 SECTION 11. Presiding Officer and Secretary; Conduct of Business. .............................. 6 ARTICLE III Board of Directors .................................................................................................... 6 SECTION 1. Election and Removal of Directors ............................................................... 6 SECTION 2. Quorum ......................................................................................................... 7 SECTION 3. Voting by Proxy ............................................................................................ 7 SECTION 4. Regular Meetings .......................................................................................... 7 SECTION 5. Special Meetings ........................................................................................... 7 SECTION 6. Place of Meeting ........................................................................................... 7 SECTION 7. Compensation................................................................................................ 8


 
ii SECTION 8. Voting Securities Held by the Corporation ................................................... 8 SECTION 9. Indemnification Agreements ......................................................................... 8 ARTICLE IV Officers .................................................................................................................... 8 SECTION 1. Election, Term and Vacancies ...................................................................... 8 SECTION 2. President ........................................................................................................ 9 SECTION 3. Vice Presidents .............................................................................................. 9 SECTION 4. Secretary........................................................................................................ 9 SECTION 5. Treasurer ....................................................................................................... 9 SECTION 6. Assistant Secretary and Assistant Treasurer ............................................... 10 SECTION 7. Oaths and Bonds ......................................................................................... 10 SECTION 8. Signatures .................................................................................................... 10 SECTION 9. Delegation of Duties ................................................................................... 10 ARTICLE V Shares of Stock ........................................................................................................ 10 SECTION 1. Stock Certificates; Uncertificated Stock ..................................................... 10 SECTION 2. Registered Stockholders .............................................................................. 11 SECTION 3. Replacement of Certificates; Lost Certificates ........................................... 11 SECTION 4. Transfer of Shares ....................................................................................... 11 SECTION 5. Addresses of Stockholders .......................................................................... 11 SECTION 6. Transfer Agents; Rules and Regulations ..................................................... 11 SECTION 7. Record Date ................................................................................................. 12 ARTICLE VI Dividends ............................................................................................................... 13 SECTION 1. Dividends and Reserves .............................................................................. 13 SECTION 2. Stock Dividends .......................................................................................... 13 ARTICLE VII Fiscal Year ............................................................................................................ 13 ARTICLE VIII Seal ...................................................................................................................... 13


 
iii ARTICLE IX Amendments .......................................................................................................... 13


 
BY-LAWS OF MAGELLAN PETROLEUM CORPORATION ARTICLE I Offices SECTION 1. Registered Office. The registered office of the corporation shall be at Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, Delaware. SECTION 2. Other Offices. The corporation may also have other offices at such other places within or without the State of Delaware as the board of directors may from time to time determine. ARTICLE II Meetings of Stockholders SECTION 1. Place of Meetings. All meetings of the stockholders of the corporation may be held at the principal office of the corporation in the State of Delaware, or at such other place or places, within or without the State of Delaware, as the board of directors may from time to time determine. The board of directors may, in its sole discretion, determine that stockholder meetings shall not be held at any place, but may instead be held solely by means of remote communication in accordance with Section 211(a)(2) of the Delaware General Corporation Law. If authorized by the board of directors in its sole discretion, and subject to such guidelines and procedures as the board of directors may adopt, stockholders and proxy holders not physically present at a meeting of stockholders may, by means of remote communication (a) participate in a meeting of stockholders; and (b) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (i) the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxy holder; (ii) the corporation shall implement reasonable measures to provide such stockholders and proxy holders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and (iii) if any stockholder or proxy holder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.


 
2 SECTION 2. Annual Meeting. The annual meeting of the stockholders for the election of Directors and for the transaction of such other business as may properly come before the meeting shall be held on such date as the board of directors shall each year fix. The day, place and hour of each annual meeting shall be specified in the notice of annual meeting. The meeting may be postponed or adjourned from time to time and place to place until its business is completed. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a stockholder’s notice must he delivered to or mailed and received at the principal executive offices of the corporation, not less than sixty (60) nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the date on which such notice of the date of the annual meeting was mailed or such public disclosure was made. For purposes of this Section 2.1, public disclosure shall be deemed to have been made to stockholders when disclosure of the date of the meeting is first made in a press release reported by the Dow Jones News Services, Associated Press, Reuters Information Services, Inc. or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended. A stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (b) the name and address, as they appear on the corporation’s books, of the stockholder intending to propose such business; (c) the class and number of shares of the corporation which are beneficially owned by the stockholder; (d) a representation that the stockholder is a holder of record of capital stock of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to present such business; (e) any material interest of the stockholder in such business. Notwithstanding anything in the By-Laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 2.1. The


 
3 presiding officer of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 2.1, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. SECTION 3. Notice of Stockholder Nominees. Only persons who are nominated in accordance with the procedures set forth in these By- Laws shall be eligible for election as directors. Nominations of persons for election to the board of directors of the corporation may be made at a meeting of stockholders (a) by or at the direction of the board of directors or (b) by any stockholder of the corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 2.2. Nominations by stockholders shall be made pursuant to timely notice in writing to the Secretary of the corporation. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy days’ (70) notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. For purposes of this Section 2.2, public disclosure shall be deemed to have been made to stockholders when disclosure of the date of the meeting is first made in a press release reported by the Dow Jones News Services, Associated Press, Reuters Information Services, Inc. or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; and (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the board of directors. To be effective, each notice of intent to make a nomination given hereunder shall be accompanied by the written consent of each nominee to being named in a proxy statement and to serve as a director of the corporation if elected.


 
4 No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in these By-Laws. The presiding officer of the meeting shall, if the facts warrant, determine and declare to the meeting that nomination was not made in accordance with the procedures prescribed by these By-Laws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. SECTION 4. Special Meetings; Notice. Special meetings of the stockholders, other than those required by statute, may be called at any time by the Chairman of the board of directors, or by the President of the corporation, or by the board of directors pursuant to a resolution approved by a majority of the entire board of directors. Notice of every special meeting, stating the time, place and purpose, shall be given by mailing, postage prepaid, at least ten but not more than sixty days before each such meeting, a copy of such notice addressed to each stockholder of the corporation at his post office address as recorded on the books of the corporation. The board of directors may postpone or reschedule any previously scheduled special meeting. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the corporation’s notice of meeting. Nominations of persons for election to the board of directors may be made at a special meeting of stockholders at which directors are to be selected pursuant to the notice of meeting (a) by or at the direction of the board of directors or (b) by any stockholder of the corporation who is a stockholder of record at the time of giving of notice provided for in this By-Law, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this By-Law. Nominations by stockholders of persons for election to the board of directors may be made at such a special meeting of stockholders if the stockholder’s notice required by Article II, Section 2.2 of these By-Laws shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or the 10th day following the day on which public disclosure is first made of the date of the special meeting and of the nominees proposed by the board of directors to be selected at such meeting. For purposes of this Section 3, public disclosure shall be deemed to have been made to stockholders when disclosure of the date of the meeting is first made in a press release reported by the Dow Jones News Services, Associated Press, Reuters Information Services, Inc. or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended. SECTION 5. Notice of Meetings. Notice of the time and place of the annual meeting and of any special meeting of the stockholders shall be mailed or cabled by the Secretary to each stockholder entitled to vote at such meeting, at his last known post office address, at least ten (10) days prior to such meeting. The notice of a special meeting shall also set forth the objects of the meeting. All or any of the stockholders may in writing waive notice of any meeting, before or after the holding of such meeting, and the presence of a stockholder at any meeting, in person or by proxy, shall be deemed waiver of notice thereof by him. Meetings of the stockholders may be held at any time and place and for any purpose, without notice, when all of the stockholders entitled to vote at


 
5 such meetings are present in person or by proxy, or when all of such stockholders waive such notice in writing and consent to the holding of such meetings. SECTION 6. Quorum. The holders for the time being of thirty-three and one third percent (33 1/3 %) of the total number of shares of stock issued and outstanding and entitled to be voted at any meeting, present in person or by proxy, shall constitute a quorum for the transaction of business, unless the representation of a larger number shall be required by law. In the absence of a quorum, the stockholders attending or represented at the time and place at which a meeting shall have been called, may adjourn the meeting from time to time until a quorum shall be present. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted by a quorum of the stockholders at the meeting as originally convened. SECTION 7. Voting at Stockholders’ Meetings. At all meetings of the stockholders, each holder of stock of the corporation having the right to vote at such meeting shall be entitled to one vote for each share standing registered in his name on the record date for such meeting. SECTION 8. Proxies and Voting. At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to this paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. SECTION 9. Manner of Voting. In the election of directors and in voting on any question on which a vote by written ballot is required by law or is demanded by any stockholder, the voting shall be by written ballot; on all other questions, voting may, but need not, be conducted by written ballot. SECTION 10. Stock Register. The officer or agent having charge of the stock register shall keep a complete alphabetical list of the stockholders entitled to vote, together with the residence of each and the number of shares by each, which list and stock register shall be kept on file at any office of the corporation or at the office of any transfer agent or registrar of transfers appointed by the board of directors. The stock register shall be the only evidence as to who are the stockholders entitled to vote at any meeting of the stockholders thereof.


 
6 SECTION 11. Presiding Officer and Secretary; Conduct of Business. Subject to Article IV, Section 2, the president, or in his absence, the vice president, shall call meetings of the stockholders to order and shall act as chairman of the meetings; but in the absence of the president and vice president, the board of directors may appoint any stockholder to act as the chairman of the meeting, and, in default of an appointment by the board of directors of a chairman, the stockholders may elect a chairman to preside at the meeting. The Secretary of the corporation shall act as Secretary of all meetings of the stockholders, but in his absence the presiding officer may appoint any person to act as Secretary of the meeting. The presiding officer of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him or her in order. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting. ARTICLE III Board of Directors SECTION 1. Election and Removal of Directors. (a) Number, Election and Terms. The powers of the corporation shall be exercised by the board of directors, except such as are by law or by the Certificate of Incorporation or by the By-Laws of the corporation reserved to the stockholders. The board of directors shall consist of not less than three (3) members nor more than eight (8) members, with the exact number of members within such range to be fixed from time to time by resolution of the board of directors adopted by the vote of not less than a majority of the directors then in office, but such minimum and maximum number of members of the board of directors may be altered from time to time by an amendment of these By-Laws. At the 1985 Annual Meeting of Stockholders, the directors shall be divided into three classes, as nearly equal in number as possible, with the term of office of the first class to expire at the 1986 Annual Meeting of Stockholders, the term of office of the second class to expire at the 1987 Annual Meeting of Stockholders and the term of office of the third class to expire at the 1988 Annual Meeting of Stockholders, or in each case thereafter when their respective successors are elected and have qualified or upon their earlier death, resignation or removal. At each Annual Meeting of Stockholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding Annual Meeting of Stockholders after their election, or in each case thereafter when their respective successors are elected and have qualified or upon their earlier death, resignation or removal. Notwithstanding the foregoing, Directors elected by holders of Preferred Stock shall not be assigned to classes, but shall be subject to election and removal, and shall have terms of office, as specified in the Certificate of Incorporation, including any relevant Certificate of Designations relating to such Preferred Stock. (b) Newly Created Directorships and Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from an


 
7 increase in the authorized number of directors or any vacancies in the board of directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall only be filled by or in the manner directed by a majority vote of the directors then in office, and directors so chosen shall hold office for a term expiring at the Annual Meeting of Stockholders at which the term of the class to which they have been elected expires. No decrease in the number of directors constituting the board of directors shall shorten the term of any incumbent director. (c) Removal. Notwithstanding any other provision in these By-Laws to the contrary and subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire board of directors, may be removed from office at any time, but only for cause and only by the affirmative vote of at least a majority of the votes cast at a stockholders’ meeting called to consider such removal. SECTION 2. Quorum. A majority of the total number of directors shall constitute a quorum of the board of directors for the conduct of business of the corporation. In the absence of a quorum the director or directors present in person, at the time and place at which the meeting shall have been called, may adjourn the meeting from time to time, and from place to place until a quorum shall be present. The act of a majority of the directors present in person at a meeting at which a quorum is present, shall be the act of the board of directors, except in situations where the Delaware General Corporation Law imposes a different rule. SECTION 3. Voting by Proxy. Directors may not be represented and may not vote by proxy at directors’ meetings. SECTION 4. Regular Meetings. Regular meetings of the board may be held upon such notice, or without notice, as the board of directors may by resolution from time to time determine. SECTION 5. Special Meetings. Special meetings of the board shall be held whenever called by the president, or a majority of the entire board of directors, on two (2) days’ notice to each director, either in person or by mail, telephone or by telegraph. Special meetings of the board may be held for any purpose, without notice, whenever all of the directors are present in person, or shall in writing waive notice of and consent to the holding of such meeting. SECTION 6. Place of Meeting. Any meeting of the board of directors may be held at such place or places as may from time to time be established by resolution of the board, or as may be fixed in the notice of such meeting, or as may be agreed to in writing by all the directors of the corporation.


 
8 SECTION 7. Compensation. The board of directors shall have authority to fix fees of directors in compensation for their service as directors and as members of special or standing committees of the board of directors, including reasonable allowance of expenses actually incurred in connection with their duties. SECTION 8. Voting Securities Held by the Corporation. The directors shall have power to determine who shall be entitled to vote in the name and behalf of the corporation upon, or to assign and transfer, any shares of stock, bonds, or other securities of other companies held by the corporation, and the directors may designate an officer who shall have power to appoint a person or persons to vote, assign or transfer any securities of other companies held by the corporation. SECTION 9. Indemnification Agreements. The corporation shall enter into appropriate agreements with its directors and officers (and with such other employees and agents as the board of directors deems appropriate in its sole and exclusive discretion) both to indemnify such directors and officers (and such other employees and agents, if any) and to advance to such directors and officers (and such other employees and agents, if any) the funds for litigation expenses to the fullest extent permitted by the laws of the State of Delaware, as the same presently exist or may hereafter be amended, changed or modified. Any repeal or modification of the foregoing paragraph shall not adversely affect the rights of any director of officer (or any such employee or agent) of the corporation relating to claims arising in connection with events which took place prior to the date of such repeal or modification. ARTICLE IV Officers SECTION 1. Election, Term and Vacancies. The officers of the corporation shall be a president, a secretary and a treasurer, all of whom shall be elected by the board of directors. The board may also appoint such other officers and agents as it may deem necessary, who shall have such authority and perform such duties as may from time to time be prescribed by the board. Officers elected by the board shall hold office for one year, or until their successors are elected and qualified, provided, that any officer may be removed at any time by the board. Vacancies occurring among the officers of the corporation shall be filled by the board of directors. No officer need be a director and any person may hold two or more offices, except those of president and vice president.


 
9 SECTION 2. President. The president shall be the chief executive officer of the corporation. He shall preside at all meetings of the directors and stockholders at which he is present. He shall have general management of the business of the corporation, subject to the board of directors, and shall see that all orders and resolutions of the board are carried into effect. He shall execute contracts and other obligations authorized by the board, and may, without previous authority of the board, make such contracts as the ordinary business of the corporation shall require. He shall have the usual powers and duties vested in the office of president of a corporation, but may delegate any of his powers to one or more of the vice presidents. He shall have power to select and appoint all necessary officers and servants of the corporation except the vice presidents, secretary and treasurer, and such other officers as may be selected by the board of directors. He shall have power to remove any officers and servants appointed by him, and to make new appointments to fill vacancies in any such offices. SECTION 3. Vice Presidents. The board of directors shall have power at any time to elect one or more vice presidents of the corporation. The vice presidents of the corporation, if any, shall be vested with such powers and duties as the board of directors may from time to time decide. In the absence or inability of the president to serve, the vice president designated by the board of directors shall be vested with all of the powers of the president. SECTION 4. Secretary. The Secretary shall attend all meetings of the stockholders, of the board of directors and of any committees of the board of directors, and record the votes and proceedings of such meetings in books to be kept for that purpose. He shall keep the corporate seal in safe custody and affix it to any instrument requiring the same. He shall attend to the giving and serving of notices of meetings, and shall have charge of such books and papers as properly belong to his office, or as may be committed to his care by the board of directors or executive committee. He shall also perform such other duties as pertain to his office or as may be required by the board of directors, or as may be delegated to him from time to time by the president. SECTION 5. Treasurer. The treasurer shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in banks belonging to the corporation, and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. He shall disburse the funds of the corporation as may be ordered by the board or the president, taking proper vouchers for such disbursements, and shall render to the president or board of directors, whenever they require it, an account of all his transactions as treasurer and of the financial condition of the company.


 
10 SECTION 6. Assistant Secretary and Assistant Treasurer. The board of directors shall have power at any time to elect an assistant secretary and/or an assistant treasurer of the corporation, or may at any time authorize the president to appoint such officers. The assistant secretary shall perform such duties as may be delegated to him by the Secretary, or as may be required by the board of directors or the president, and shall in the absence of the Secretary perform all the functions and have all the duties and responsibilities of Secretary. The assistant treasurer shall perform such duties as may be delegated to him by the treasurer, and shall also perform such other duties as may be required by the board of directors or by the president. In the absence of the treasurer, the assistant treasurer shall have all the powers and all the duties and responsibilities of the treasurer. One person may hold the officers of assistant secretary and assistant treasurer. SECTION 7. Oaths and Bonds. The board of directors may by resolution require any officers, agents or employees of the corporation to give oaths or to furnish bonds for the faithful performance of their respective duties. SECTION 8. Signatures. All checks, drafts or orders for the payment of money, and all acceptances, bills of exchange and promissory notes may be signed by any officer or officers of the corporation, or by any other person designated by resolution of the board of directors. SECTION 9. Delegation of Duties. In the event of death, resignation, retirement, disqualification, disability, sickness, absence, removal from office or refusal to act of any officer or agent of the corporation, or for any reason that the board of directors may deem sufficient, the board of directors may delegate the powers and duties of such officer or agent to any other officer or agent, or to any director, for the time being. ARTICLE V Shares of Stock SECTION 1. Stock Certificates; Uncertificated Stock. The shares of the corporation’s capital stock may be certificated or uncertificated, as provided under the Delaware General Corporation Law. Except as otherwise provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificated shares of the same class and series shall be identical. Each stockholder, upon written request to the corporation, or to the transfer agent or registrar of the corporation, shall be entitled to a certificate of the capital stock of the corporation in such form, not inconsistent with law and the Certificate of Incorporation of the corporation, as may be approved by the board of directors. Certificates shall be signed by or in the name of the corporation by the chairperson or vice-chairperson of the board of directors, or the president or


 
11 vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Any or all the signatures on the certificate may be a facsimile. Certificates shall be consecutively numbered, and the names of the persons owning the shares represented thereby, together with the number of such shares and the date of issue, shall be entered on the books of the corporation. Every certificate for shares of stock which are subject to any restriction on transfer shall contain such legend with respect thereto as is required by law. The corporation shall be permitted to issue fractional shares. SECTION 2. Registered Stockholders. The corporation shall be entitled to treat the holder of record of any share or shares of stock in this company as the holder in fact thereof, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware. SECTION 3. Replacement of Certificates; Lost Certificates. In case of the alleged loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms as the board of directors may prescribe, provided, however, that if such shares have ceased to be certificated, a new certificate shall be issued only upon written request to the corporation or to the transfer agent or registrar of the corporation. Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact, and shall advertise the same in such manner as the board of directors may require, and shall, if the board of directors so requires, give the corporation a bond of indemnity in such sum as they may direct. SECTION 4. Transfer of Shares. Subject to any restrictions on transfer and unless otherwise provided by the board of directors, shares of stock may be transferred only on the books of the corporation, if such shares are certificated, by the surrender to the corporation or its transfer agent of the certificate therefore properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, or upon proper instructions from the holder of uncertificated shares, in each case with such proof of the authenticity of signature as the corporation or its transfer agent may reasonably require. SECTION 5. Addresses of Stockholders. Every stockholder shall furnish the Secretary with an address to which notices of meetings and all other notices may be addressed, but in default thereof, such notices may be sent to stockholders at their last known address or at the principal office of the corporation, except as otherwise provided in these By-Laws. SECTION 6. Transfer Agents; Rules and Regulations. The board of directors may appoint a transfer agent and one or more co-transfer agents and a registrar and one or more co-registrars and may make, or authorize such agents and


 
12 registrars to make, all such rules and regulations as they may deem expedient governing the issue, transfer and registration of the certificates for shares of the capital stock of the corporation. SECTION 7. Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, or to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which record date shall not be more than sixty (60) days nor less than ten (10) days before the date of any meeting of stockholders, nor more than sixty (60) days prior to the time for such other action as hereinbefore described; provided, however, that if no record date is fixed by the board of directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the date next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and, for determining stockholders entitled to receive payment of any dividend or other distribution or allotment of rights or to exercise any rights of change, conversion or exchange of stock or for any other purpose, the record date shall be at the close of business on the day on which the board of directors adopts a resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the board of directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the board of directors to fix a record date. The board of directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the board of directors within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or any officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the board of directors and prior action by the board of directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting


 
13 shall be at the close of business on the date on which the board of directors adopts the resolution taking such prior action. ARTICLE VI Dividends SECTION 1. Dividends and Reserves. Before payment of any dividend or making any distribution of profits, the board of directors may set aside out of the surplus or net profits of the corporation, such sum or sums as in their absolute discretion they may deem proper as a reserve fund for depreciation, renewal, repair and maintenance or for such other purposes as the directors shall think conducive to the interests of the corporation. Dividends upon the issued and outstanding stock of the corporation may be declared at any regular or special meeting of the board of directors. SECTION 2. Stock Dividends. When the directors shall so determine, dividends may be paid in stock of the corporation; provided the stock requisite for such purpose shall be authorized and provided, if such stock has not theretofore been issued, there shall be transferred from surplus to the capital of the corporation an amount at least equal to the minimum amount for which such stock could be lawfully issued. ARTICLE VII Fiscal Year The fiscal year of the corporation shall end on the last day of June in each year. ARTICLE VIII Seal The corporate seal is, and until otherwise ordered and directed by the board of directors shall be, an impression upon paper or wax, bearing the name of the corporation, the year of its organization and the words “Corporate Seal Delaware.” ARTICLE IX Amendments These By-Laws may be altered, amended or repealed by the vote of a majority of the board of directors at any regular or special meeting of the board; provided notice of such proposed alteration, amendment or repeal shall have been included in the notice of such meeting, or shall have been waived in writing by all the directors, or at any regular or special meeting of the board at which all of the directors are present, without such notice or waiver of notice. Notwithstanding any other provision in these By-Laws to the contrary and subject to the rights of


 
14 the holders of any series of Preferred Stock then outstanding, these By-Laws may also be altered, amended or repealed by the stockholders at any regular or special meeting called for that purpose by the favorable vote of sixty-six and two-thirds percent (66 2/3 %) of the voting power of all outstanding voting stock of the corporation generally entitled to vote at such meeting.


 
REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of May 17th, 2013, by and between Magellan Petroleum Corporation, a Delaware corporation (the “Corporation”) and One Stone Holdings II LP, a Delaware limited partnership (the “Purchaser”). The Corporation and the Purchaser are referred to collectively herein as the “Parties.” WHEREAS, pursuant to the Series A Convertible Preferred Stock Purchase Agreement, dated as of May 10, 2013, by and between the Corporation and the Purchaser (the “Purchase Agreement”), the Corporation is agreeing to issue and sell to the Purchaser, and the Purchaser is agreeing to purchase from the Corporation, 19,239,734 shares (the “Purchased Stock”) of the Corporation’s Series A Convertible Preferred Stock, par value $0.01 per share, which is convertible into shares of common stock, par value $0.01 per share, of the Corporation (the “Common Stock”) upon the terms and subject to the conditions set forth in the Certificate of Designations of Series A Convertible Preferred Stock of the Corporation (the “Certificate of Designations”); and WHEREAS, in furtherance of the transactions contemplated by the Purchase Agreement, the Corporation has agreed to provide the registration and other rights set forth in this Agreement with respect to the Common Stock. 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 are hereby acknowledged, the parties to this Agreement hereby agree as follows: 1. Definitions; Construction. Capitalized terms used in this Agreement and not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement. As used in this Agreement, the following terms 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. “Automatic Shelf Registration Statement” shall mean an “automatic shelf registration statement” as defined under Rule 405. “Blackout Period” shall have the meaning set forth in Section 2(a). “Board of Directors” shall mean the board of directors of the Corporation. US 1832721v.13


 
2 Error! Bookmark not defined. “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. “Certificate of Designations” shall have the meaning set forth in the recitals to this Agreement. “Common Stock” shall have the meaning set forth in the recitals to this Agreement. “Conversion Stock” shall mean the Common Stock issuable upon conversion of the Purchased Stock in accordance with the Transaction Documents, including any Common Stock issuable upon conversion of Preferred Stock issued to the Purchaser as payment in kind in accordance with the terms of the Transaction Documents. “Corporation” shall have the meaning set forth in the preamble to this Agreement. “Corporation Indemnified Persons” shall have the meaning set forth in Section 5(b). “Demand Notice” shall have the meaning set forth in Section 2(a). “Demand Registration” shall have the meaning set forth in Section 2(a). “Effective Date” shall mean the time and date that a Registration Statement is first declared effective by the SEC or otherwise becomes effective. “Effectiveness Period” shall have the meaning set forth in Section 2(a). “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). “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder. “Form S-3” shall mean a registration statement on Form S-3 under the Securities Act or such successor forms thereto permitting registration of securities under the Securities Act. “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


 
3 Error! Bookmark not defined. the Corporation, its subsidiaries or any of their respective properties. “Holder” shall mean (i) the Purchaser unless and until the Purchaser ceases to hold the Purchased Stock or any Registrable Securities and (ii) any holder of Registrable Securities to whom registration rights conferred by this Agreement have been transferred in compliance with Section 7(e) hereof; provided that any Person referenced in clause (ii) shall be a Holder only if such Person agrees in writing to be bound by and subject to the terms set forth in this Agreement. “Holder Indemnified Persons” shall have the meaning set forth in Section 5(a). “Holder Representatives” shall have the meaning set forth in Section 3(a). “Initiating Holder” shall have the meaning set forth in Section 2(a). “Losses” shall have the meaning set forth in Section 5(a). “Parties” shall have the meaning set forth in the preamble to this Agreement. “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. “Piggyback Notice” shall have the meaning set forth in Section 2(b). “Piggyback Registration” shall have the meaning set forth in Section 2(b). “Piggyback Request” shall have the meaning set forth in Section 2(b). “Proceeding” shall mean any action, claim, suit, proceeding or investigation (including a preliminary investigation or partial proceeding, such as a deposition) pending or, to the knowledge of the Corporation, threatened. “Prospectus” shall mean the prospectus included in a Registration Statement (including a prospectus that includes any information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A, Rule 430B or Rule 430C promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. “Purchase Agreement” shall have the meaning set forth in the recitals to this Agreement. “Purchased Stock” shall have the meaning set forth in the recitals to this Agreement.


 
4 Error! Bookmark not defined. “Purchaser” shall have the meaning set forth in the preamble to this Agreement. “Registrable Securities” shall mean the Conversion Stock underlying the Purchased Stock; provided, however, that Registrable Securities shall not include: (i) any Conversion Stock that has been registered under the Securities Act and disposed of pursuant to an effective registration statement; (ii) any Conversion Stock that has been sold pursuant to Rule 144; (iii) any Conversion Stock that has been otherwise transferred to a Person who is not entitled to the registration and other rights hereunder; and (iv) any Conversion Stock that ceases to be outstanding (whether as a result of repurchase and cancellation, conversion or otherwise). “Registration Default” shall have the meaning set forth in Section 2(a). “Registration Expenses” shall have the meaning set forth in Section 4. “Registration Statement” shall mean a registration statement in a form that permits the resale of the Registrable Securities under the Securities Act, and including any Prospectus, amendments and supplements to each such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. “Rule 144” shall mean Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule. “Rule 405” shall mean Rule 405 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule. “Rule 415” shall mean Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule. “Rule 424” shall mean Rule 424 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule. “SEC” shall mean the Securities and Exchange SEC or any other federal agency then administering the Securities Act or Exchange Act. “SEC Guidance” shall mean (i) any publicly-available written guidance, comments, requirements or requests of the SEC staff and (ii) the Securities Act. “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. “Selling Expenses” shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder, other than one firm of counsel for the Purchaser.


 
5 Error! Bookmark not defined. “Suspension Notice” shall have the meaning set forth in Section 7(b). “Suspension Period” shall have the meaning set forth in Section 7(b). “Trading Market” shall mean the principal national securities exchange on which the Common Stock is listed. “Transaction Documents” shall mean, collectively, this Agreement, the Certificate of Designations and the Purchase Agreement. “Underwritten Offering” shall have the meaning set forth in Section 3(k). “Underwritten Offering Notice” shall have the meaning set forth in Section 3(k). “VWAP” shall mean, as of a specified date and in respect of the Common Stock, the volume weighted average price for such security on the Trading Market with respect to the Common Stock for the ten (10) trading days immediately preceding, but excluding, such date. “WKSI” shall mean a “well known seasoned issuer” as defined under Rule 405 under the Securities Act. Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms; (b) references to Sections and Annexes refer to Sections of and Annexes to this Agreement; (c) the terms “include”, “includes”, “including” or words of like import shall be deemed to be followed by the words “without limitation”; (d) the terms “hereof”, “herein” or “hereunder” refer to this Agreement as a whole and not to any particular provision of this Agreement; (e) unless the context otherwise requires, the term “or” is not exclusive and shall have the inclusive meaning of “and/or”; (f) defined terms herein will apply equally to both the singular and plural forms and derivative forms of defined terms will have correlative meanings; (g) references to any law or statute shall include all rules and regulations promulgated thereunder, and references to any law or statute shall be construed as including any legal and statutory provisions consolidating, amending, succeeding or replacing the applicable law or statute; (h) references to any Person include such Person’s successors and permitted assigns; and (i) references to “days” are to calendar days unless otherwise indicated. For the avoidance of doubt, where this Agreement refers to allocation of rights on a pro-rata basis to holders of Registrable Securities, such allocation shall be determined considering the Purchased Stock on an as-converted basis. For purposes of this Agreement, holders of the Purchased Stock will be deemed to be holders of the amount of Conversion Stock issuable upon conversion of the Purchased Stock in accordance with the terms of the Transaction Documents. Any limit imposed by the rules of the Trading Market on the amount of Conversion Stock issuable to the Purchaser in accordance with the Transaction Documents will not be taken into account for purposes of this definition.


 
6 Error! Bookmark not defined. 2. Registration. (a) Demand Registration. (i) A Holder or Holders that hold not less than a majority of the then outstanding Registrable Securities (such Holder or group being referred to as the “Initiating Holder”) shall have the option and right, exercisable by delivering a written notice to the Corporation (a “Demand Notice”), to require the Corporation to, pursuant to the terms of and subject to the limitations contained in this Agreement, prepare and file with the SEC a Registration Statement registering the offering and sale of the number and type of Registrable Securities on the terms and conditions specified in the Demand Notice in accordance with the intended timing and method or methods of distribution thereof specified in the Demand Notice, which may include sales on a delayed or continuous basis pursuant to Rule 415 (a “Demand Registration”). The Demand Notice must set forth the number of Registrable Securities that the Initiating Holder intends to include in such Demand Registration. Notwithstanding anything to the contrary herein, in no event shall the Corporation be required to effectuate a Demand Registration for Registrable Securities having an aggregate value of less than $3.5 million based on the VWAP of such Registrable Securities as of the date of the Demand Notice. (ii) Within five Business Days of the receipt of the Demand Notice, the Corporation shall give written notice of such Demand Notice to all Holders and, as soon as reasonably practicable thereafter, but in no event more than 60 days following receipt of the Demand Notice, shall, subject to the limitations of this Section 2(a), file a Registration Statement covering all of the Registrable Securities that the Holders shall in writing request (such request to be given to the Corporation within three days of receipt of such notice of the Demand Notice given by the Corporation pursuant to this Section 2(a)(ii)) to be included in such Demand Registration as promptly as practicable as directed by the Initiating Holder in accordance with the terms and conditions of the Demand Notice and use all commercially reasonable efforts to cause such Registration Statement to become effective under the Securities Act and remain effective under the Securities Act until all Registrable Securities covered by such Registration Statement have been sold or otherwise cease to be Registrable Securities (the “Effectiveness Period”). (iii) Subject to the other limitations contained in this Agreement, the Corporation is not obligated hereunder to effect (A) more than two Demand Registrations in any 12 month period, (B) more than a total of six Demand Registrations pursuant to this Agreement and (C) a subsequent Demand Registration pursuant to a Demand Notice if a Registration Statement covering all of the Registrable Securities held by the Holders providing such Demand Notice shall have become effective under the Securities Act and remains effective under the Securities Act and is sufficient to permit offers and sales of the number and type of Registrable Securities on substantially the terms and conditions specified in the Demand Notice in accordance in all material respects with the intended timing and method or methods of distribution thereof specified in the Demand Notice. In addition, the Corporation will not be required to file a Registration Statement at a time when filing a Registration Statement would be prohibited by the terms of a customary


 
7 Error! Bookmark not defined. “lock-up” or “market stand-off” provision included in an underwriting agreement relating to an Underwritten Offering. (iv) Notwithstanding any other provision of this Section 2(a), the Corporation shall not be required to effect a registration or file a Registration Statement (or any amendment thereto) for a period of up to 60 days, if (A) the Board of Directors determines that a postponement is in the best interest of the Corporation and its stockholders generally due to a pending transaction involving the Corporation, (B) the Board of Directors determines such registration would render the Corporation unable to comply with applicable securities laws or (C) the Board of Directors determines such registration would require disclosure of material information that the Corporation has a bona fide business purpose for preserving as confidential (any such period, a “Blackout Period”); provided, however, that (i) in no event shall any Blackout Period together with any Suspension Period collectively exceed an aggregate of 120 days in any 12 month period, (ii) during any Blackout Period contemplated by Section 2(a)(iv)(B) or any Suspension Period, the Corporation shall not engage in any transaction involving the offer, issuance, sale, or purchase of Equity Securities (whether for the benefit of the Corporation or a third Person), except transactions involving the issuance or purchase of Equity Securities as contemplated by the Corporation employee benefit plans or employee or director arrangements (including with respect to related tax withholding obligations) or in connection with the conversion or exercise of outstanding securities, including the Purchased Stock, and (iii) during any Blackout Period contemplated by Section 2(a)(iv)(B) or (C) or any Suspension Period, the Corporation shall not file a registration statement (or any amendment or supplement thereto) for any other holder of registration rights. Notwithstanding any provision of this Agreement to the contrary, in the event the staff of the SEC indicates to the Corporation that the Corporation is ineligible to file a Registration Statement on Form S-3 due to accrued and unpaid dividends on the Purchased Stock, a Suspension Period will be deemed to occur during the period between the time the Corporation files an Annual Report on Form 10-K and the time the relevant Registration Statement becomes effective under the Securities Act, and such period shall not be counted against the 60-day limit described above or otherwise result in a Registration Default. The Corporation shall use its commercially reasonable efforts to cause such Registration Statement to become effective under the Securities Act as quickly as practicable following the filing of the Annual Report on Form 10-K. (v) Notwithstanding any other provision of this Section 2(a), if (A) any SEC Guidance that definitively applies to an offering of Registrable Securities pursuant to a Registration Statement sets forth a limitation of the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering or (B) the SEC does not permit the Corporation to register all of the Registrable Securities in the Registration Statement as a secondary offering because of the SEC’s application of Rule 415, the number of Registrable Securities to be registered on such Registration Statement will be reduced on a pro-rata basis based on the number of Registrable Securities held by all such Holders (including the Initiating Holders). The Corporation shall use its commercially reasonable efforts to file additional Registration Statements to register the Registrable Securities that were not registered in the initial


 
8 Error! Bookmark not defined. Registration Statement as promptly as possible and, in any event, not later than sixty (60) days after the earliest practicable date permitted under applicable SEC Guidance. (vi) The Corporation may include in any such Demand Registration other Equity Securities for sale for its own account or for the account of any other Person; provided that if the managing underwriter, if any, for any Underwritten Offering effectuated pursuant to such Demand Registration determines that the type or number of Equity Securities proposed to be offered in such offering would likely have an adverse effect in any material respect on the price, timing or distribution of the Registrable Securities proposed to be included in such offering, the Registrable Securities to be sold by the Holders shall be included in such registration before any Equity Securities proposed to be sold for the account of the Corporation or any other Person. (vii) Subject to the limitations contained in this Agreement, the Corporation shall effect any Demand Registration on Form S-3 (except if the Corporation is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such Demand Registration shall be effected on another appropriate form for such purpose pursuant to the Securities Act) and if the Corporation becomes, and is at the time of its receipt of a Demand Notice, a WKSI, the Demand Registration for any offering and selling of Registrable Securities shall be effected pursuant to an Automatic Shelf Registration Statement, which shall be on Form S-3; provided, however, that if at any time a Registration Statement on Form S-3 is effective and a Holder provides written notice to the Corporation that it intends to effect an offering of all or part of the Registrable Securities included on such Registration Statement, the Corporation will amend or supplement such Registration Statement as may be reasonably necessary in order to enable such offering to take place. (viii) Without limiting Section 3, in connection with any Demand Registration pursuant to and in accordance with this Section 2(a), the Corporation shall, (A) promptly prepare and file or cause to be prepared and filed (1) such additional forms, amendments, supplements, prospectuses, certificates, letters, opinions and other documents, as may be reasonably necessary or advisable to register or qualify the securities subject to such Demand Registration, including under the securities laws of such states as the Holders shall reasonably request; provided, however, that no such registration or qualification shall be required in any jurisdiction where, as a result thereof, the Corporation would become subject to general service of process or to taxation or qualification to do business in such jurisdiction solely as a result of registration and (2) such forms, amendments, supplements, prospectuses, certificates, letters, opinions and other documents as may be necessary to apply for listing or to list the Registrable Securities subject to such Demand Registration on the Trading Market and (B) do any and all other acts and things that may be reasonably necessary or appropriate or reasonably requested by the Holders to enable the Holders to consummate a public sale of such Registrable Securities in accordance with the intended timing and method or methods of distribution thereof. (ix) In the event a Holder transfers Registrable Securities included on a Registration Statement and such Registrable Securities remain Registrable Securities


 
9 Error! Bookmark not defined. following such transfer, at the request of such Holder, the Corporation shall amend or supplement such Registration Statement as may be necessary in order to enable such transferee to offer and sell such Registrable Securities pursuant to such Registration Statement; provided that in no event shall the Corporation be required to file a post- effective amendment to the Registration Statement unless (A) such Registration Statement includes only Registrable Securities held by the Holder, Affiliates of the Holder or transferees of the Holder or (B) the Corporation has received written consent therefor from the Persons for whom Equity Securities have been registered on (but not yet sold under) such Registration Statement, other than the Holder, Affiliates of the Holder or transferees of the Holder. (x) In the event that a Registration Statement is not timely filed in accordance with this Section 2(a), or a Blackout Period and/or a Suspension Period exceeds the maximum period permitted under Section 2(a)(iv) (each, a “Registration Default”), the Corporation will pay liquidated damages to the Holders of Registrable Securities with the effect that the interest rate on the Registrable Securities will be increased by 1.00% per annum from such date until the date such Registration Default ends. All liquidated damages will be paid by the Corporation on the next scheduled interest payment date in cash, unless the Initiating Holder otherwise consents in writing, in which case unpaid liquidated damages shall bear interest at a rate of 8% per annum during the pendency of the Registration Default and 7% per annum thereafter. (b) Piggyback Registration. (i) If the Corporation shall at any time propose to effect (whether pursuant to an existing Registration Statement or a new Registration Statement to be filed pursuant to the Securities Act, but excluding any Demand Registration) a public offering of Common Stock for cash (whether in connection with a public offering of Common Stock by the Corporation, a public offering of Common Stock by stockholders, or both, but excluding an offering relating solely to an employee benefit plan, an offering relating to a transaction on Form S-4 or S-8 or an offering on any registration statement form that does not permit secondary sales), the Corporation shall promptly notify all Holders of such proposal reasonably in advance of (and in any event at least five Business Days before) the commencement of the offering or the filing of the Registration Statement, as applicable (the “Piggyback Notice”). The Piggyback Notice shall offer the Holders the opportunity to include for offer and sale or registration, as applicable, in any such Registration Statement the number of Registrable Securities as they may request (a “Piggyback Registration”). The Corporation shall use commercially reasonable efforts to include in each such Piggyback Registration such Registrable Securities for which the Corporation has received written requests within three Business Days after sending the Piggyback Notice (“Piggyback Request”) for inclusion therein. If a Holder decides not to include all of its Registrable Securities in any Piggyback Registration, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent offering or registration statement as may be filed by the Corporation with respect to offerings of Common Stock, all upon the terms and conditions set forth herein.


 
10 Error! Bookmark not defined. (ii) If the Piggyback Registration for which the Corporation gives notice under this Section 2(b) is for an underwritten offering, the Corporation shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to be included in a registration pursuant to this Section 2(b) shall be conditioned upon such Holder’s participation in such underwriting and reasonable cooperation with the Corporation in connection therewith and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Corporation. If the managing underwriter or managing underwriters of such offering advise the Corporation and the Holders in writing that in their reasonable opinion that the inclusion of all of the Holders’ Registrable Securities in the subject Piggyback Registration (or any other Common Stock proposed to be included in such offering) would likely have an adverse effect in any material respect on the price, timing or distribution of Common Stock proposed to be included in such offering, the Corporation shall include in such offering only that number of shares of Common Stock proposed to be included in such offering that, in the reasonable opinion of the managing underwriter or managing underwriters, will not have such effect, with such number to be allocated as follows: (i) first, to the Corporation or other party on whose behalf the Piggyback Registration was filed, (ii) if there remains availability for additional shares of Common Stock to be included in such registration, second pro-rata among all Holders desiring to register Registrable Securities based on the number of Registrable Securities such Holder is entitled to include in such registration and (iii) if there remains availability for additional shares of Common Stock to be included in such registration, third pro rata among all other holders of Common Stock who may be seeking to register such Common Stock based on the number of Common Stock such holder is entitled to include in such registration. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Corporation and the managing underwriter(s) delivered not less than two Business Days prior to the time of the commencement of such offering. Any Registrable Securities withdrawn from such underwriting shall be excluded and withdrawn from the registration. (iii) The Corporation shall have the right to terminate or withdraw any registration initiated by it under this Section 2(b) at any time in its sole discretion whether or not any Holder has elected to include Registrable Securities in such Piggyback Registration. The registration expenses of such withdrawn registration shall be borne by the Corporation in accordance with Section 4 hereof. (iv) All registration rights granted under this Section 2 shall continue to be applicable with respect to any Holder until such securities no longer qualify as Registrable Securities. (c) Future Registration Rights. The Corporation has not entered into and, unless agreed in writing by Holders that hold a majority of the Registrable Securities, on or after the date of this Agreement will not enter into, any agreement which (a) is inconsistent with the rights granted to the Holders with respect to Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof in any material respect or (b) would allow any


 
11 Error! Bookmark not defined. holder of Equity Securities to include Equity Securities in any Registration Statement filed by the Corporation on a basis that is superior or more favorable in any material respect to the rights granted to the Holders hereunder under Section 2 unless the Corporation gives the Initiating Holder, acting on behalf of all of the Holders, the opportunity to amend this Agreement to include such materially superior or more favorable term herein. 3. Registration Procedures. The procedures to be followed by the Corporation and each Holder electing to sell Registrable Securities in a Registration Statement pursuant to this Agreement, and the respective rights and obligations of the Corporation and such Holders, with respect to the preparation, filing and effectiveness of such Registration Statement, are as follows (it being understood and agreed that, notwithstanding any other provision hereof, the Corporation shall not be required to provide any non-public information to any Person hereunder unless such Person agrees to maintain the confidentiality of such information): (a) In connection with a Demand Registration, the Corporation will at least two Business Days prior to the anticipated filing of the Registration Statement and any related Prospectus or any amendment or supplement thereto (other than any filing made under the Exchange Act that is incorporated by reference into the Registration Statement), (i) furnish to the Initiating Holder and, if requested, one counsel on behalf of all Holders (such counsel and the Initiating Holder being referred to collectively as the “Holder Representatives”) copies of all such documents prior to filing and (ii) use commercially reasonable efforts to address in each such document when so filed with the SEC such comments as the Holder Representatives reasonably shall propose prior to the filing thereof. (b) In connection with a Piggyback Registration, the Corporation will at least two days prior to the anticipated filing of the initial Registration Statement that identifies the Holders and any related Prospectus or any amendment or supplement thereto (other than amendments and supplements that do not materially alter the previous disclosure or do nothing more than name Holders and provide information with respect thereto, and except for any filing made under the Exchange Act that is incorporated by reference into the Registration Statement), (i) furnish to the Holder Representatives copies of all Registration Statements that identify the Holders and any related Prospectus or any amendment or supplement thereto (other than amendments and supplements that do not materially alter the previous disclosure or do nothing more than name Holders and provide information with respect thereto, and except for any filing made under the Exchange Act that is incorporated by reference into the Registration Statement) prior to filing and (ii) use commercially reasonable efforts to address in each such document when so filed with the SEC such comments as such Holders reasonably shall propose prior to the filing thereof. (c) The Corporation will use commercially reasonable efforts to as promptly as reasonably practicable (i) prepare and file with the SEC such amendments, including post- effective amendments, and supplements to each Registration Statement and the Prospectus used in connection therewith as may be necessary under applicable law to keep such Registration Statement continuously effective with respect to the disposition of all Registrable Securities covered thereby for its Effectiveness Period and, subject to the limitations contained in this


 
12 Error! Bookmark not defined. Agreement, prepare and file with the SEC such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities held by the Holders; (ii) cause the related Prospectus to be amended or supplemented by any required prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; and (iii) respond to any comments received from the SEC with respect to each Registration Statement or any amendment thereto and, as promptly as reasonably practicable provide the Holder Representatives true and complete copies of all correspondence from and to the SEC relating to such Registration Statement that pertains to the Holders as selling Holders. (d) The Corporation will comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the Registration Statements and the disposition of all Registrable Securities covered by each Registration Statement. (e) The Corporation will notify the Holder Representatives as promptly as reasonably practicable: (i)(A) when a Prospectus or any prospectus supplement or post-effective amendment to a Registration Statement in which such Holder is included has been filed; (B) when the SEC notifies the Corporation whether there will be a “review” of such Registration Statement and whenever the SEC comments in writing on such Registration Statement (in which case the Corporation shall provide true and complete copies thereof and all written responses thereto to the Holders that pertain to the Holders as selling Holders); and (C) with respect to each such Registration Statement or any post-effective amendment thereto, when the same has been declared effective; (ii) of any request by the SEC or any other federal or state governmental authority for amendments or supplements to such Registration Statement or Prospectus or for additional information that pertains to such Holders as sellers of Registrable Securities; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Corporation of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event or passage of time that makes any statement made in such Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided, however, that no notice by the Corporation shall be required pursuant to this clause (v) in the event that the Corporation either promptly files a prospectus supplement to update the Prospectus or a Form 8-K or other appropriate Exchange Act report that is incorporated by reference into the Registration Statement, which in either case, contains the requisite information that results in such Registration Statement no longer containing any untrue statement of material fact or omitting to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading), it being understood and agreed that the Corporation shall notify all Holders of an event contemplated by this clause (v).


 
13 Error! Bookmark not defined. (f) The Corporation will use commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as promptly as reasonably practicable, or if any such order or suspension is made effective during any Blackout Period or Suspension Period, as promptly as reasonably practicable after such Blackout Period or Suspension Period is over. (g) During the Effectiveness Period, the Corporation will furnish to each such Holder, without charge, at least one conformed copy of each Registration Statement and each amendment thereto and all exhibits to the extent requested by such Holder (including those incorporated by reference) promptly after the filing of such documents with the SEC; provided that the Corporation will not have any obligation to provide any document pursuant to this clause that is available on the SEC’s EDGAR system. (h) The Corporation will promptly deliver to each Holder, without charge, as many copies of each Prospectus or Prospectuses (including each form of prospectus) authorized by the Corporation for use and each amendment or supplement thereto as such Holder may reasonably request during the Effectiveness Period. Subject to the terms of this Agreement, including Section 7(b), the Corporation consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto in the manner described therein. (i) The Corporation will cooperate with such Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free of all restrictive legends indicating that the Registrable Securities are unregistered or unqualified for resale under the Securities Act, Exchange Act or other applicable securities laws, and to enable such Registrable Securities to be issued in such denominations and registered in such names as any such Holder may request in writing. In connection therewith, if required by the Corporation’s transfer agent, the Corporation will promptly, after the Effective Date of the Registration Statement, cause an opinion of counsel as to the effectiveness of the Registration Statement to be delivered to and maintained with its transfer agent, together with any other authorizations, certificates and directions required by the transfer agent which authorize and direct the transfer agent to issue such Registrable Securities without any such legend upon sale by the Holder of such Registrable Securities under the Registration Statement. (j) Upon the occurrence of any event contemplated by Section 3(e)(v), subject to Section 2(a)(iv), Section 7(b) and this Section 3(j), as promptly as reasonably practicable, the Corporation will prepare a supplement or amendment, including a post-effective amendment, if required by applicable law, to the affected Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, no Registration Statement nor any Prospectus relating thereto will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.


 
14 Error! Bookmark not defined. (k) Such Holders may distribute the Registrable Securities by means of an underwritten offering; provided that (i) in the case of a Demand Registration, (A) the Initiating Holder provides written notice to the Corporation of its intention to distribute Registrable Securities by means of an underwritten offering, which for the avoidance of doubt may be made at a date later than the original Demand Notice (the “Underwritten Offering Notice” and such underwritten offering being referred to herein as an “Underwritten Offering”) and (B) Holders (including the Initiating Holder) having an aggregate value of at least $3.5 million based on the VWAP of such Registrable Securities as of the date of such Underwritten Offering Notice desire to participate in such Underwritten Offering and, in the case of a Piggyback Registration, the electing Holders must include their Registrable Securities in an underwritten offering if the Piggyback Notice so requires, (ii) the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting, the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein and the reasonable cooperation of the Holder therewith, (iii) the managing underwriter or managing underwriters thereof shall be designated by the Initiating Holder in the case of a Demand Registration (provided, however, that such designated managing underwriter or managing underwriters shall be reasonably acceptable to the Corporation) or by the Corporation in the case of a registration initiated by the Corporation, (iv) each Holder participating in such underwritten offering agrees to enter into an underwriting agreement in customary form and sell such Holder’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled to select the managing underwriter or managing underwriters hereunder and (v) each Holder participating in such underwritten offering completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. The Corporation hereby agrees with each Holder that, in connection with any Underwritten Offering in accordance with the terms hereof, it will negotiate in good faith and execute all customary indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, including using all commercially reasonable efforts to procure customary legal opinions and auditor “comfort” letters. Notwithstanding the foregoing, the Corporation is not obligated to effect more than (A) two Underwritten Offerings in any 12 month period and (B) a total of six Underwritten Offerings pursuant to this Agreement. If, in the case of an Underwritten Offering, the managing underwriter advises the Corporation that the inclusion of all of the Holders’ Registrable Securities in the subject Underwritten Offering would likely have an adverse effect in any material respect on the price, timing or distribution of Registrable Securities proposed to be included in such Underwritten Offering, then the Corporation shall so advise all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the Underwritten Offering shall be allocated to the Holders of such Registrable Securities on a pro-rata basis based on the number of Registrable Securities held by all such Holders (including the Initiating Holders), subject to Section (2)(a)(vi) or Section 2(b)(ii), as applicable. Any Registrable Securities excluded or withdrawn from such Underwritten Offering shall be withdrawn from the Underwritten Offering. In the event that the managing underwriter limits the number of Registrable Securities to be included in the Underwritten Offering pursuant to this Section 3(k) such that more than fifty percent of the aggregate Registrable Securities set forth in such Holders’ written requests pursuant to this Section 3(k) are excluded from the Underwritten Offering, such Underwritten Offering shall not


 
15 Error! Bookmark not defined. be considered to be an Underwritten Offering for purposes of the limitations set forth in this Section 3(k). (l) In the event such Holders seek to complete an Underwritten Offering, for a reasonable period prior to the filing of any Registration Statement and throughout the Effectiveness Period, the Corporation will make available upon reasonable notice at the Corporation’s principal place of business or such other reasonable place for inspection during normal business hours by the managing underwriter or managing underwriters selected in accordance with Section 3(k) such financial and other information and books and records of the Corporation, and cause the officers, employees, counsel and independent certified public accountants of the Corporation to respond to such inquiries, as shall be reasonably necessary (and in the case of counsel, not violate an attorney-client privilege in such counsel’s reasonable belief) to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act. (m) In connection with any Underwritten Offering, the Corporation will use commercially reasonable efforts to cause appropriate officers and employees to be available, on a customary basis and upon reasonable notice, to meet with prospective investors in presentations, meetings and road shows. (n) The Corporation may require the Holder to furnish to the Corporation any other information regarding the Holder and the distribution of such securities as the Corporation reasonably determines is required to be included in any Registration Statement. (o) The Corporation is currently eligible to use Form S-3 and shall use commercially reasonable efforts to remain eligible to use Form S-3, including by timely filing all reports with the SEC and meeting the other requirements of the Exchange Act. 4. Registration Expenses. All Registration Expenses incident to the Parties’ performance of or compliance with its obligations under this Agreement or otherwise in connection with any Demand Registration or Piggyback Registration (in each case, excluding any Selling Expenses) shall be borne by the Corporation, whether or not any Registrable Securities are sold pursuant to a Registration Statement, it being understood and agreed that the Corporation shall be required to pay the reasonable fees and expenses of one firm of counsel for, and other reasonable costs, fees and expenses of, the Purchaser in connection the foregoing, but no costs, fees, or expenses incurred by the other Holders. “Registration Expenses” shall include, without limitation, (i) all registration and filing fees (including fees and expenses (A) with respect to filings required to be made with the Trading Market and (B) in compliance with applicable state securities or “Blue Sky” laws), (ii) printing expenses (including expenses of printing certificates for Corporation Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by a Holder of Registrable Securities included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel, auditors and accountants for the Corporation, (v) Securities Act liability insurance, if the Corporation so desires such insurance, (vi) fees and expenses of all other Persons retained by the Corporation in connection with the consummation of the transactions contemplated by this Agreement and (vii) all expenses relating to marketing the sale of the Registrable Securities, including expenses related to conducting a “road show.” In


 
16 Error! Bookmark not defined. addition, the Corporation shall be responsible for all of its expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including expenses payable to third parties and including all salaries and expenses of their officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on the Trading Market. 5. Indemnification. (a) The Corporation shall indemnify and hold harmless each Holder, its Affiliates and each of their respective officers and directors and any Person who controls any such Holder (within the meaning of the Securities Act) and any agent thereof (collectively, “Holder Indemnified Persons”), to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, joint or several, costs (including reasonable costs of preparation and reasonable attorneys’ fees) and expenses, judgments, fines, penalties, interest, settlements or other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which any Holder Indemnified Person may be involved, or is threatened to be involved, as a party or otherwise, under the Securities Act or otherwise (collectively, “Losses”), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which any Registrable Securities were registered, in any preliminary prospectus (if the Corporation authorized the use of such preliminary prospectus prior to the Effective Date), or in any summary or final prospectus or free writing prospectus (if such free writing prospectus was authorized for use by the Corporation) or in any amendment or supplement thereto (if used during the period the Corporation is required to keep the Registration Statement current), or arising out of, based upon or resulting from the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances in which they were made, not misleading; provided, however, that the Corporation shall not be liable to any Holder Indemnified Person to the extent that any such claim arises out of, is based upon or results from an untrue or alleged untrue statement or omission or alleged omission made in such Registration Statement, such preliminary, summary or final prospectus or free writing prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Corporation by or on behalf of such Holder Indemnified Person or any underwriter specifically for use in the preparation thereof. The Corporation shall notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Corporation is aware in connection with the transactions contemplated by this Agreement. Notwithstanding anything to the contrary herein, this Section 5 shall survive any termination or expiration of this Agreement indefinitely. (b) In connection with any Registration Statement in which a Holder participates, such Holder shall indemnify and hold harmless the Corporation, its Affiliates and each of their respective officers, directors and any Person who controls the Corporation (within the meaning of the Securities Act) and any agent thereof (collectively, the “Corporation Indemnified Persons”), to the fullest extent permitted by applicable law, from and against any and all Losses as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in any such Registration Statement, in any preliminary prospectus (if


 
17 Error! Bookmark not defined. used prior to the Effective Date of such Registration Statement), or in any summary or final prospectus or free writing prospectus or in any amendment or supplement thereto (if used during the period the Corporation is required to keep the Registration Statement current), or arising out of, based upon or resulting from the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances in which they were made, not misleading, but only to the extent that the same are made in reliance and in conformity with information relating to the Holder furnished in writing to the Corporation by such Holder for use therein. (c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim or there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel (in addition to any local counsel) for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party there may be one or more legal or equitable defenses available to such indemnified party that are in addition to or may conflict with those available to another indemnified party with respect to such claim. Failure to give prompt written notice shall not release the indemnifying party from its obligations hereunder except to the extent the indemnifying party is prejudiced thereby. (d) If requested by a Holder, the Corporation shall indemnify and hold harmless each underwriter, if any, engaged in connection with any registration referred to in Section 2 and provide customary representations, covenants, opinions and other assurances to any underwriter in form and substance reasonably satisfactory to such underwriter and the Corporation. 6. Facilitation of Sales Pursuant to Rule 144. To the extent it shall be required to do so under the Exchange Act, the Corporation shall use its commercially reasonable efforts to timely file the reports required to be filed by it under the Exchange Act or the Securities Act (including the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144), and shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable the Holders to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144. Upon the request of any Holder in connection with that Holder’s sale pursuant to Rule 144, the Corporation shall deliver to such Holder a written statement as to whether it has complied with such requirements. 7. Miscellaneous.


 
18 Error! Bookmark not defined. (a) Remedies. In the event of a breach by the Corporation of any of its obligations under this Agreement, each Holder, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement; provided, however that the payment of liquidated damages as contemplated by Section 2(a)(x) shall be the Holder’s exclusive remedy for any Registration Default; provided further that the Corporation shall in no event be liable for any punitive or special damages in the event of any breach by the Corporation or any of its obligations under this Agreement. The Corporation agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. (b) Discontinued Disposition. Each Holder agrees that the Corporation may impose a Suspension Period due to, and each Holder agrees that, upon receipt of a notice from the Corporation of the occurrence of, any event of the kind described in clauses (ii) through (v) of Section 3(e) (a "Suspension Notice"), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder’s receipt of the copies of the supplemental Prospectus or amended Registration Statement as contemplated by Section 3(j) or until it is advised in writing by the Corporation that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement (a “Suspension Period”). The Corporation may provide appropriate stop orders to enforce the provisions of this Section 7(b). (c) Amendments and Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed by the Corporation and Holders that hold a majority of the Registrable Securities as of the date of such waiver or amendment. The Corporation shall provide prior notice to all Holders of any proposed waiver or amendment. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any Party to exercise any right hereunder in any manner impair the exercise of any such right. (d) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile or electronic mail as specified in this Section 7(d) prior to 5:00 p.m. (Denver Time) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile or electronic mail as specified in this Agreement later than 5:00 p.m. (Denver Time) on any date and earlier than 11:59 p.m. (Denver Time) on such date, (iii) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service or (iv) upon actual receipt by the Party to whom such notice is required to be given. The address for such notices and communications shall be as follows:


 
19 Error! Bookmark not defined. If to the Corporation: Magellan Petroleum Corporation 1775 Sherman Street, Suite 1950 Denver, Colorado 80203 Attention: Mark Brannum Email: mbrannum@magellanpetroleum.com If to the Purchaser or any of its Affiliates: One Stone Energy Partners, L.P. 720 Fifth Avenue, 10th Floor New York, New York 10019 Attention: Robert Israel Email: ri@1stone-llc.com If to any other Person who is then a registered Holder: To the address of such Holder as it appears in the applicable register for the Registrable Securities or such other address as may be designated in writing hereafter, in the same manner, by such Person. (e) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns. Except as provided in this Section 7(e), this Agreement, and any rights or obligations hereunder, may not be assigned without the prior written consent of the Corporation and the Purchaser. Notwithstanding anything in the foregoing to the contrary, the registration rights of a Holder pursuant to this Agreement with respect to all or any portion of its Registrable Securities may be assigned without such consent (but only with all related obligations) with respect to such Registrable Securities (and any Registrable Securities issued as a dividend or other distribution with respect to, in exchange for or in replacement of such Registrable Securities) by such Holder to a transferee of such Registrable Securities; provided that (i) the Corporation is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the Registrable Securities with respect to which such registration rights are being assigned and (ii) such transferee or assignee agrees in writing to be bound by and subject to the terms set forth in this Agreement. The Corporation may not assign its respective rights or obligations hereunder without the prior written consent of the Purchaser. Any assignment in violation of this Section 7(e) shall be void. (f) Third Party Beneficiaries. Other than the Holders (other than the Purchaser), there are no third party beneficiaries having rights under or with respect to this Agreement. (g) 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. (h) 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


 
20 Error! Bookmark not defined. 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 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. (i) 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. (j) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the Parties shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the Parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (k) Entire Agreement. This Agreement is 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. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the rights granted by the Corporation or any of its Affiliates or the Purchaser or any of its Affiliates set forth herein. This Agreement supersedes all prior agreements and understandings between such parties with respect to such subject matter.


 
21 Error! Bookmark not defined. [Signature page follows.]


 


 


 
This Certificate is transferable in New York, New York I his certifies that INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE CUSIP SS^D^l 30 I SEE REVERSE FOR CERTAIN DEFINITIONS is tlit1 ie£iM?ret3 kolrlci »i F U L L Y PAID A N D N O N - A S S E S S A B L E S H A R E S O F T H E C O M M O N S T O C K , PAR V A L U E S 01 P E R S H A R E , O F MAGELLAN PETROLEUM CORPORATION (hereinafter the "Company"), transferable on the books of the Company by the holder hereof in perse certificate properly endorsed. This certificate is not valid until countersigned and registered by the Trans W ITNESS the facsimile seal of the Corporation and the facsimile signatures of its duiy authorize! Dated 1 9 6 7 l ? | y ^ y ^ , . ^J**^~~ * " ^fiAWftS* ^ " i J [U-SlL)LNTANCC lrL.F LX i C J : Ol I iCt.R ' " ' m i m ^