Exhibit 10.1

 

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WARRANT PURCHASE AGREEMENT

by and among

Transmeridian Exploration Incorporated, as Issuer and Seller

and

the parties named herein, as Purchasers

with respect to Seller’s

Warrants to Purchase Common Stock

March 15, 2007

 

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Table of Exhibits and Schedules

 

Exhibit A    Form of Warrant Exhibit B    Form of Investor Rights Agreement
Exhibit C    Form of Opinion of Seller’s Counsel Schedule 1    Purchasers,
Amount of Securities Purchased and Purchase Price

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WARRANT PURCHASE AGREEMENT

This Warrant Purchase Agreement (the “Agreement”) is made and entered into as of
March 15, 2007, by and among Transmeridian Exploration Incorporated, a Delaware
corporation (the “Seller”), and each of the persons listed on Schedule 1 hereto
(each is individually referred to as a “Purchaser” and collectively, as the
“Purchasers”).

WHEREAS, each of the Purchasers is willing to purchase from the Seller, and the
Seller desires to sell to the Purchasers, Common Stock Purchase Warrants (the
“Warrants”) entitling the holders thereof to purchase up to 8,500,000 shares of
the Seller’s common stock, $0.0006 par value (the “Common Stock”), as more fully
set forth herein.

NOW THEREFORE, in consideration of the mutual promises and representations,
warranties, covenants and agreements set forth herein, the parties hereto,
intending to be legally bound, hereby agree as follows:

ARTICLE I—PURCHASE AND SALE

1.1 Purchase and Sale.

On the terms and subject to the conditions set forth in this Agreement, at the
Closing (as defined in Section 2.2), the Seller will sell and each of the
Purchasers will purchase Warrants to purchase a number of shares of Common Stock
as set forth on Schedule 1. The shares of Common Stock issuable upon exercise of
the Warrants are referred to herein as the “Warrant Shares.” The Warrants and
Warrant Shares are sometimes collectively referred to herein as the
“Securities”.

1.2 Terms of the Warrants. The terms and provisions of the Warrants are more
fully set forth in the form of Common Stock Purchase Warrant, attached hereto as
Exhibit A.

1.3 Transfers; Legends.

(a)(i) Except as restricted by federal securities laws and the securities law of
any state or other jurisdictions, the Warrants and Warrant Shares may be
transferred, in whole or in part, by any of the Purchasers at any time. Any such
transfer shall be made by a Purchaser in accordance with applicable law. Any
transferee shall agree in writing to be bound by the terms of the Investor
Rights Agreement and this Agreement. The Seller shall reissue certificates
evidencing the applicable Securities upon surrender of certificates evidencing
the Securities being transferred in accordance with this Section 1.3(a).

(ii) In connection with any transfer of Securities other than pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the “Securities Act”), or to the Seller, the Seller may require the transferor
thereof to furnish to the Seller an opinion of counsel selected by the
transferor, such counsel and the form and substance of which opinion shall be
reasonably satisfactory to the Seller and Seller’s counsel, to the effect that
such transfer does not require registration under the Securities Act; provided,
however, that in the case of a transfer pursuant to Rule 144 under the
Securities Act, no opinion shall be required if the transferor provides the
Company with a customary seller’s representation letter, and, if such sale

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is not pursuant to subsection (k) of Rule 144, a customary broker’s
representation letter and Form 144. Notwithstanding the foregoing, the Seller
hereby consents to and agrees to register on the books of the Seller and with
any transfer agent for the securities of the Seller, without any such legal
opinion, any transfer of Securities by a Purchaser to an Affiliate of such
Purchaser, provided that the transferee certifies to the Seller that it is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and
that it is acquiring the Securities solely for investment purposes (subject to
the qualifications hereof) and not with a view to, or for, resale, distribution
or fractionalization thereof in whole or in part in violation of the Securities
Act.

(iii) An “Affiliate” means any Person (as such term is defined below) that,
directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used
in and construed under Rule 144 under the Securities Act. With respect to a
Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser will be
deemed to be an Affiliate of such Purchaser. A “Person” means any individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision of any thereof) or other entity of any kind.

(b) The certificates representing the Securities, unless, with respect to the
Warrant Shares, such shares are eligible for resale without registration
pursuant to Rule 144(k) under the Securities Act or have been sold pursuant to
an effective registration statement under the Securities Act (in which case any
such legend shall be removed), shall bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT UNLESS, IN THE
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, SUCH REGISTRATION IS
NOT REQUIRED.”

ARTICLE II—PURCHASE PRICE AND CLOSING

2.1 Purchase Price. The purchase price (the “Purchase Price”) to be paid by each
of the Purchasers to the Seller to acquire the Warrants shall be as set forth
beside the name of such Purchaser on Schedule 1 hereto.

2.2 The Closing. The closing of the transactions contemplated under this
Agreement (the “Closing”) will take place as promptly as practicable, but no
later than two (2) business days following satisfaction or waiver of the
conditions set forth in Article 5.1(a) and 5.2(a) (other than those conditions
which by their terms are not to be satisfied or waived until the Closing), at
the offices of Wiggin and Dana LLP, 400 Atlantic Street, Stamford, Connecticut
06901. The date on which the Closing occurs is the “Closing Date.”

ARTICLE III—REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants to the Purchasers as follows, as of the date
hereof:

 

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3.1 Corporate Existence and Power; Subsidiaries. The Seller and its Subsidiaries
are corporations or other organizations duly incorporated or organized (as the
case may be) and validly existing, and the Seller is in good standing, in each
case under the laws of the jurisdiction in which they are incorporated or
organized. The Seller and its Subsidiaries have all corporate powers required to
carry on their business as now conducted and are duly qualified to do business
as a foreign corporation in each jurisdiction where the character of the
property owned or leased by them or the nature of their activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not have a Material Adverse Effect on the Seller. For
purposes of this Agreement, the term “Material Adverse Effect” means, with
respect to any person or entity, a material adverse effect on its and its
Subsidiaries’ condition (financial or otherwise), business, properties, assets,
liabilities (including contingent liabilities), results of operations or current
prospects, taken as a whole. True and complete copies of the Seller’s
Certificate of Incorporation, as amended, and Bylaws, as amended, as currently
in effect and as will be in effect on the Closing Date (collectively, the
“Certificate and Bylaws”), have previously been provided or made available to
the Purchasers. For purposes of this Agreement, the term “Subsidiary” or
“Subsidiaries” means, with respect to any entity, any corporation or other
organization of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are directly or indirectly owned by such entity or
of which such entity is a partner or is, directly or indirectly, the beneficial
owner of 50% or more of any class of equity securities or equivalent profit
participation interests.

3.2 Corporate Authorization; Enforceability. The execution, delivery and
performance by the Seller of this Agreement, the Warrants, the Investor Rights
Agreement (as defined below), and each of the other documents executed pursuant
to and in connection with this Agreement (collectively, the “Related
Documents”), and the consummation of the transactions contemplated hereby and
thereby (including, but not limited to, (i) the sale and delivery of the
Warrants and (ii) the subsequent issuance of the Warrant Shares upon exercise of
the Warrants) have been duly authorized, and, other than the preparation, filing
and approval of an additional listing application with the American Stock
Exchange (“AMEX”) with respect to the issuance of the Warrant Shares upon
exercise of the Warrants, no additional corporate or stockholder action is
required pursuant to the rules of any stock exchange, market or bulletin board
on which the Common Stock is traded or otherwise for the approval of this
Agreement, the Related Documents or the consummation of the transactions
contemplated hereby or thereby. The Warrant Shares have been duly reserved for
issuance by the Seller. This Agreement and the Related Documents have been or,
to the extent contemplated hereby or by the Related Documents, will be duly
executed and delivered and constitute the legal, valid and binding agreement of
the Seller, enforceable against the Seller in accordance with their terms,
except as may be limited by bankruptcy, reorganization, insolvency, moratorium
and similar laws of general application relating to or affecting the enforcement
of rights of creditors, and except as enforceability of its obligations
hereunder are subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).

3.3 Regulatory Authorization. Except as otherwise specifically contemplated in
this Agreement and the Related Documents, and except for: (i) the approval by
AMEX of an additional listing application with respect to the issuance of the
Warrant Shares upon exercise of the Warrants; (ii) the filing of the
Registration Statement (as defined in the Investor Rights

 

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Agreement) with the Securities and Exchange Commission (the “SEC” or the
“Commission”); and (iii) any filings required under state or provincial
securities laws that are permitted to be made after the date hereof, the
execution, delivery and performance by the Seller of this Agreement and the
Related Documents, and the consummation of the transactions contemplated hereby
and thereby (including, but not limited to, (i) the sale and delivery of the
Warrants and (ii) the subsequent issuance of the Warrant Shares upon exercise of
the Warrants) by the Seller require no action by or in respect of, or filing
with, any governmental or regulatory body, agency, official or authority.

3.4 Non-Contravention. The execution, delivery and performance by the Seller of
this Agreement and the Related Documents, and the consummation by the Seller of
the transactions contemplated hereby and thereby (including the issuance of the
Warrant Shares) do not and will not (a) contravene or conflict with the
Certificate and Bylaws of the Seller and its Subsidiaries or any material
agreement to which the Seller is a party or by which it is bound; (b) contravene
or conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or applicable to
the Seller or its Subsidiaries; (c) constitute a default (or would constitute a
default with notice or lapse of time or both) under or give rise to a right of
termination, cancellation or acceleration or loss of any benefit under any
material agreement, contract or other instrument binding upon the Seller or its
Subsidiaries or under any material license, franchise, permit or other similar
authorization held by the Seller or its Subsidiaries; or (d) result in the
creation or imposition of any Lien (as defined below) on any asset of the Seller
or its Subsidiaries. For purposes of this Agreement, the term “Lien” means, with
respect to any material asset, any mortgage, lien, pledge, charge, security
interest, claim or encumbrance of any kind in respect of such asset.

3.5 SEC Documents. The Seller is obligated under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), to file reports pursuant to Sections 13
or 15(d) thereof (all such reports filed or required to be filed by the Seller,
including all exhibits thereto or incorporated therein by reference, and all
documents filed by the Seller under the Securities Act hereinafter called the
“SEC Documents”). The Seller has filed all reports or other documents required
to be filed under the Exchange Act. All SEC Documents filed by the Seller
(i) were prepared in all material respects in accordance with the requirements
of the Exchange Act and (ii) did not at the time they were filed (or, if amended
or superseded by a filing prior to the date hereof, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Seller has previously delivered or made available to the
Purchasers a correct and complete copy of each report which the Seller filed
with the Commission under the Exchange Act for any period ending on or after
December 31, 2005 (the “Recent Reports”). None of the information about the
Seller or any of its Subsidiaries which has been disclosed to the Purchasers
herein or in the course of discussions and negotiations with respect hereto
which is not disclosed in the Recent Reports is or was required to be so
disclosed, and no material non-public information has been disclosed to the
Purchasers, except as contemplated by the letter agreement, dated as of
March 14, 2007, by and among the Seller and the Purchasers (the “Letter
Agreement”).

3.6 Financial Statements. Each of (i) Seller’s audited consolidated balance
sheet and related consolidated statements of income, cash flows and changes in
stockholders’ equity

 

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(including the related notes) as of and for the years ended December 31, 2005
and December 31, 2004, as contained in the Recent Reports for such periods and
(ii) the Seller’s unaudited consolidated balance sheet and related consolidated
statements of income and cash flows as of and for the nine months ended
September 30, 2006 as contained in the Recent Reports (both of (i) and (ii),
collectively, the “Seller’s Financial Statements” or the “Financial Statements”)
(x) present fairly in all material respects the financial position of the Seller
and its Subsidiaries on a consolidated basis as of the dates thereof and the
results of operations, cash flows and stockholders’ equity as of and for each of
the periods then ended, except that the unaudited financial statements are
subject to normal year-end adjustments, and (y) were prepared in accordance with
United States generally accepted accounting principals (“GAAP”) applied on a
consistent basis throughout the periods involved, in each case, except as
otherwise indicated in the notes thereto.

3.7 Compliance with Law. The Seller and its Subsidiaries are in compliance and
have conducted their business so as to comply with all laws, rules and
regulations, judgments, decrees or orders of any court, administrative agency,
commission, regulatory authority or other governmental authority or
instrumentality, domestic or foreign, applicable to their operations, except
where the failure to so be in compliance would not have a Material Adverse
Effect on the Seller. There are no judgments or orders, injunctions, decrees,
stipulations or awards (whether rendered by a court or administrative agency or
by arbitration), against the Seller or its Subsidiaries or against any of their
properties or businesses, the impact of which would have a Material Adverse
Effect on the Seller.

3.8 No Undisclosed Liabilities. Except as set forth in the Recent Reports or in
the disclosures provided to the Purchasers pursuant to the Letter Agreement, and
except for liabilities and obligations incurred since December 31, 2005 in the
ordinary course of business, consistent with past practice, as of the date
hereof, (i) the Seller and its Subsidiaries do not have any material liabilities
or obligations (absolute, accrued, contingent or otherwise), and (ii) there has
not been any aspect of the prior or current conduct of the business of the
Seller or its Subsidiaries which may form the basis for any material claim by
any third party which if asserted could result in any such material liabilities
or obligations.

3.9 Preemptive Rights. No Person possesses any right of first refusal,
preemptive rights or similar rights in respect of (i) the Warrants or (ii) the
Warrant Shares to be issued upon exercise of the Warrants.

3.10 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement, based upon any arrangement made by
or on behalf of the Seller, which would make any Purchaser liable for any fees
or commissions.

3.11 Securities Laws. Neither the Seller nor its Subsidiaries, nor any agent
acting on behalf of the Seller or its Subsidiaries, has taken or will take any
action which might cause this Agreement or the Warrants to violate the
Securities Act or the Exchange Act or any rules or regulations promulgated
thereunder, as in effect on the Closing Date. Assuming that all of the
representations and warranties of the Purchasers set forth in Article IV are
true, all offers and sales of the Warrants were conducted and completed in
compliance with the Securities Act. All

 

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shares of capital stock and other securities issued by the Seller and its
Subsidiaries prior to the date hereof have been issued in transactions that were
either registered offerings or were exempt from the registration requirements
under the Securities Act and all applicable state securities or “blue sky” laws
and in compliance with all applicable corporate laws.

3.12 Poison Pill. Except as otherwise provided for in Section 203 of the
Delaware General Corporation Law, the Seller and its Board of Directors have
taken all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Seller’s Certificate of Incorporation (or similar charter documents) or the laws
of its state of incorporation that is or could become applicable to the
Purchasers as a result of the Purchasers and the Seller fulfilling their
obligations or exercising their rights under this Agreement and the Related
Documents, including without limitation the Company’s issuance of the Securities
and the Purchasers’ ownership of the Securities.

ARTICLE IV—REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

Each Purchaser, for itself only, severally and not jointly, hereby represents
and warrants to the Seller as follows, as of the date hereof:

4.1 Existence and Power. The Purchaser, if not a natural person, is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of such Purchaser’s organization. Such Purchaser has all powers
required to bind it to the representations, warranties and covenants set forth
herein.

4.2 Authorization. The execution, delivery and performance by the Purchaser of
this Agreement, the Related Documents to which such Purchaser is a party, and
the consummation by the Purchaser of the transactions contemplated hereby and
thereby have been duly authorized, and no additional action is required for the
approval of this Agreement or such Related Documents. This Agreement and the
Related Documents to which the Purchaser is a party have been or, to the extent
contemplated hereby, will be duly executed and delivered and constitute valid
and binding agreements of the Purchaser, enforceable against such Purchaser in
accordance with their terms, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium and similar laws of general application
relating to or affecting the enforcement of rights of creditors and except that
enforceability of their obligations thereunder are subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

4.3 Investment. The Purchaser is acquiring the securities described herein for
the Purchaser’s own account and not with a view to, or for sale in connection
with, any distribution thereof, nor with the intention of distributing or
reselling the same; provided, however, that by making the representation in this
Section 4.3, the Purchaser does not agree to hold any of the securities for any
minimum or other specific term, and reserves the right to dispose of the
securities at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act. The Purchaser is aware that
none of the securities has been registered under the Securities Act or under
applicable state securities or blue sky laws. The Purchaser is an “Accredited
Investor” as such term is defined in Rule 501 of Regulation D, as promulgated
under the Securities Act.

 

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4.4 Reliance on Exemptions. The Purchaser understands that the Warrants are
being offered and sold to such Purchaser in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Seller is relying upon the truth and accuracy of, and such
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Securities.

4.5 Experience of the Purchaser. The Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. The Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment. The Purchaser has had the opportunity
to request, receive, review and consider all information it deems relevant in
making an informed decision to purchase the Warrants, including but not limited
to the Recent Reports and the disclosures provided to the Purchaser pursuant to
the Letter Agreement. The Purchaser has had an opportunity to discuss its
purchase of the Warrants and related matters with representatives of the Seller
and ask questions of them and has received satisfactory answers and all
information requested.

4.6 General Solicitation. The Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

ARTICLE V—CONDITIONS TO CLOSING

5.1 Conditions to Obligations of Purchasers to Effect the Closing. The
obligations of a Purchaser to effect the Closing and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing, of each of the following conditions, any of which may be waived,
in writing, by a Purchaser:

(a) The Seller shall deliver or cause to be delivered to each of the Purchasers
the following:

1. An original executed Common Stock Purchase Warrant, substantially in the form
of Exhibit A hereto, registered in the name of such Purchaser, pursuant to which
such Purchaser shall be initially entitled to purchase that number of shares of
Common Stock as set forth on Schedule 1.

2. The Investor Rights Agreement, in the form attached hereto as Exhibit B (the
“Investor Rights Agreement”), duly executed by the Seller.

 

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3. A legal opinion or legal opinions from Nicolas J. Evanoff, the Seller’s
General Counsel, and/or Akin Gump Strauss Hauer & Feld LLP, the Seller’s outside
counsel, with respect to the matters set forth in Exhibit C.

4. A certificate of the Secretary of the Seller (the “Secretary’s Certificate”),
in form and substance satisfactory to the Purchasers, certifying as follows:

(i) that the Board of Directors of the Seller has duly authorized the execution,
delivery and performance of this Agreement and the Related Documents,
instruments and certificates required to be executed by it in connection
herewith and duly approved the consummation of the transactions in the manner
contemplated hereby including, but not limited to, the authorization and
issuance of the Warrants and, as of the Closing Date, such authorization and
approval remain in full force and effect;

(ii) the names and true signatures of the officers of the Seller signing this
Agreement and all other documents to be delivered in connection with this
Agreement; and

(iii) such other matters as the Purchasers may reasonably request.

5. A wire transfer representing the Purchasers’ legal fees and other third-party
expenses as described in Section 7.3 hereof.

6. This Agreement, duly executed by the Seller.

7. Such other documents as the Purchasers shall reasonably request.

5.2 Conditions to Obligations of the Seller to Effect the Closing. The
obligations of the Seller to effect the Closing and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, by the Seller:

(a) Each of the Purchasers shall deliver or cause to be delivered to the Seller
(i) payment of the Purchase Price set forth opposite such Purchaser’s name on
Schedule 1, in cash by wire transfer of immediately available funds; (ii) an
executed copy of this Agreement; (iii) an executed copy of the Investor Rights
Agreement; and (iv) such other documents as the Seller shall reasonably request.

ARTICLE VI—INDEMNIFICATION, TERMINATION AND DAMAGES

6.1 Survival of Representations. The representations and warranties of the
Seller and the Purchasers contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing Date and
shall continue in full force and effect for a period of three (3) years from the
Closing Date. The Seller’s and the Purchasers’ warranties and representations
shall in no way be affected or diminished in any way by any investigation of (or
failure to investigate) the subject matter thereof made by or on behalf of the
Seller or the Purchasers.

 

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6.2 Indemnification.

(a) The Seller agrees to indemnify and hold harmless the Purchasers, their
Affiliates, each of their officers, directors, partners, members, employees and
agents and their respective successors and assigns, from and against any losses,
damages, or expenses which are caused by or arise out of (i) any breach or
default in the performance by the Seller of any covenant or agreement made by
the Seller in this Agreement or in any of the Related Documents; (ii) any breach
of warranty or representation made by the Seller in this Agreement or in any of
the Related Documents or (iii) any and all third party actions, suits,
proceedings, claims, demands, judgments, costs and expenses (including
reasonable legal fees and expenses) incident to any of the foregoing.

(b) The Purchasers, severally and not jointly, agree to indemnify and hold
harmless the Seller, its Affiliates, each of their officers, directors,
partners, members, employees and agents and their respective successors and
assigns, from and against any losses, damages, or expenses which are caused by
or arise out of (A) any breach or default in the performance by the Purchasers
of any covenant or agreement made by the Purchasers in this Agreement or in any
of the Related Documents; (B) any breach of warranty or representation made by
the Purchasers in this Agreement or in any of the Related Documents; and (C) any
and all third party actions, suits, proceedings, claims, demands, judgments,
costs and expenses (including reasonable legal fees and expenses) incident to
any of the foregoing; provided, however, that a Purchaser’s liability under this
Section 6.2(b) shall not exceed the Purchase Price paid by such Purchaser
hereunder.

6.3 Indemnity Procedure. A party or parties hereto agreeing to be responsible
for or to indemnify against any matter pursuant to this Agreement is referred to
herein as the “Indemnifying Party” and the other party or parties claiming
indemnity is referred to as the “Indemnified Party”. An Indemnified Party under
this Agreement shall, with respect to claims asserted against such party by any
third party, give written notice to the Indemnifying Party of any liability
which might give rise to a claim for indemnity under this Agreement within
thirty (30) business days of the receipt of any written claim from any such
third party, but not later than twenty (20) days prior to the date any answer or
responsive pleading is due, and with respect to other matters for which the
Indemnified Party may seek indemnification, give prompt written notice to the
Indemnifying Party of any liability which might give rise to a claim for
indemnity; provided, however, that any failure to give such notice will not
waive any rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are materially prejudiced.

The Indemnifying Party shall have the right, at its election, to take over the
defense or settlement of such claim by giving written notice to the Indemnified
Party at least fifteen (15) days prior to the time when an answer or other
responsive pleading or notice with respect thereto is required. If the
Indemnifying Party makes such election, it may conduct the defense of such claim
through counsel of its choosing (subject to the Indemnified Party’s approval of
such counsel, which approval shall not be unreasonably withheld), shall be
solely responsible for the expenses of such defense and shall be bound by the
results of its defense or settlement of the claim. The Indemnifying Party shall
not settle any such claim without prior notice to and consultation with the
Indemnified Party, and no such settlement involving any equitable relief or
which might have an adverse effect on the Indemnified Party may be agreed to
without the

 

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written consent of the Indemnified Party (which consent shall not be
unreasonably withheld). So long as the Indemnifying Party is diligently
contesting any such claim in good faith, the Indemnified Party may pay or settle
such claim only at its own expense and the Indemnifying Party will not be
responsible for the fees of separate legal counsel to the Indemnified Party,
unless the named parties to any proceeding include both parties or
representation of both parties by the same counsel would be inappropriate in the
reasonable opinion of the Indemnified Party, due to conflicts of interest or
otherwise. If the Indemnifying Party does not make such election, or having made
such election does not, in the reasonable opinion of the Indemnified Party
proceed diligently to defend such claim, then the Indemnified Party may (after
written notice to the Indemnifying Party), at the expense of the Indemnifying
Party, elect to take over the defense of and proceed to handle such claim in its
discretion and the Indemnifying Party shall be bound by any defense or
settlement that the Indemnified Party may make in good faith with respect to
such claim. In connection therewith, the Indemnifying Party will fully cooperate
with the Indemnified Party should the Indemnified Party elect to take over the
defense of any such claim. The parties agree to cooperate in defending such
third party claims and the Indemnified Party shall provide such cooperation and
such access to its books, records and properties as the Indemnifying Party shall
reasonably request with respect to any matter for which indemnification is
sought hereunder; and the parties hereto agree to cooperate with each other in
order to ensure the proper and adequate defense thereof.

With regard to claims of third parties for which indemnification is payable
hereunder, such indemnification shall be paid by the Indemnifying Party upon the
earlier to occur of: (i) the entry of a judgment against the Indemnified Party
and the expiration of any applicable appeal period, or if earlier, five (5) days
prior to the date that the judgment creditor has the right to execute the
judgment; (ii) the entry of an unappealable judgment or final appellate decision
against the Indemnified Party; or (iii) a settlement of the claim.
Notwithstanding the foregoing, the reasonable expenses of counsel to the
Indemnified Party shall be reimbursed on a current basis by the Indemnifying
Party. With regard to other claims for which indemnification is payable
hereunder, such indemnification shall be paid promptly by the Indemnifying Party
upon demand by the Indemnified Party.

ARTICLE VII—MISCELLANEOUS

7.1 Further Assurances. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and agreements and to
give such further written assurances as may be reasonably requested by any other
party to better evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement, and further agrees to take promptly, or cause to be taken, all
actions, and to do promptly, or cause to be done, all things necessary, proper
or advisable under applicable law to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents and
approvals, to effect all necessary registrations and filings, and to remove any
injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose of securing to the parties hereto the benefits contemplated by
this Agreement.

7.2 (a) Securities Laws Disclosure; Publicity. The Seller shall within four
business days after the Closing Date, file with the Commission a Current Report
on Form 8-K disclosing

 

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the transactions contemplated hereby, except to the extent the transactions
contemplated hereby are disclosed in the Seller’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2006. Except as provided in the preceding
sentence, neither the Company nor the Purchasers shall make any press release or
other public announcement of the terms of this Agreement or the transactions
contemplated hereby without the prior approval of the other, unless otherwise
required by applicable law or the rules of the Commission or other applicable
regulatory authority.

(b) Listing of Warrant Shares. Seller shall use its best efforts to obtain, as
promptly as practicable, the approval of an application to AMEX for the listing
or qualification of the Warrant Shares for trading thereon.

7.3 Fees and Expenses. The Seller shall be responsible for the payment of the
Purchasers’ actual and reasonable legal fees and other third-party expenses
relating to the preparation, negotiation and execution of this Agreement and the
Related Documents and the consummation of the transactions contemplated herein
and therein.

7.4 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 (a) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:00 p.m. (New York City time) on a business
day, (b) the next business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a business day or later than 5:00 p.m. (New
York City time) on any business day, or (c) the business day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service such
as Federal Express. The address for such notices and communications shall be as
follows:

If to the Purchasers at each Purchaser’s address set forth under its name on
Schedule 1 attached hereto, or with respect to the Seller, addressed to:

 

  Transmeridian Exploration Incorporated     397 N. Sam Houston Pkwy E, Suite
300     Houston, Texas 77060     Attention: Chief Financial Officer    
Facsimile No.: 281-999-9094  

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Seller shall be sent to James L. Rice
III, Akin Gump Strauss Hauer & Feld LLP, 1111 Louisiana Street, 44th Floor,
Houston, Texas 77002-5200, Facsimile No. 713-236-0822, provided, however, that
such copies shall not constitute notice for the purposes of this Agreement or
otherwise. Copies of notices to any Purchaser shall be sent to the addresses, if
any, listed on Schedule 1 attached hereto, provided, however, that such copies
shall not constitute notice for the purposes of this Agreement or otherwise.

 

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Unless otherwise stated above, such communications shall be effective when they
are received by the addressee thereof in conformity with this section. Any party
may change its address for such communications by giving notice thereof to the
other parties in conformity with this section.

7.5 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
enforced in accordance with the laws of the State of New York without reference
to the conflicts of laws principles thereof.

7.6 Jurisdiction and Venue. This Agreement shall be subject to the exclusive
jurisdiction of the Federal District Court, Southern District of New York and if
such court does not have proper jurisdiction, the State Courts of New York
County, New York. The parties to this Agreement agree that any breach of any
term or condition of this Agreement shall be deemed to be a breach occurring in
the State of New York by virtue of a failure to perform an act required to be
performed in the State of New York and irrevocably and expressly agree to submit
to the jurisdiction of the Federal District Court, Southern District of New York
and if such court does not have proper jurisdiction, the State Courts of New
York County, New York for the purpose of resolving any disputes among the
parties relating to this Agreement or the transactions contemplated hereby. The
parties irrevocably waive, to the fullest extent permitted by law, any objection
which they may now or hereafter have to the laying of venue of any suit, action
or proceeding arising out of or relating to this Agreement, or any judgment
entered by any court in respect hereof brought in New York County, New York, and
further irrevocably waive any claim that any suit, action or proceeding brought
in Federal District Court, Southern District of New York and if such court does
not have proper jurisdiction, the State Courts of New York County, New York has
been brought in an inconvenient forum. Each of the parties hereto consents to
process being served in any such suit, action or proceeding, by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this Section 7.6 shall affect
or limit any right to serve process in any other manner permitted by law.

7.7 Successors and Assigns. This Agreement is personal to each of the parties
and may not be assigned without the written consent of the other parties;
provided, however, that any of the Purchasers shall be permitted to assign this
Agreement to any Person to whom it assigns or transfers Securities in compliance
with applicable securities laws. Any assignee must be an “accredited investor”
as defined in Rule 501(a) promulgated under the Securities Act.

7.8 Severability. If any provision of this Agreement, or the application
thereof, shall for any reason or to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other persons
or circumstances shall continue in full force and effect and in no way be
affected, impaired or invalidated.

7.9 Entire Agreement. This Agreement, the Related Documents and the other
agreements and instruments referenced herein constitute the entire understanding
and agreement of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings.

 

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7.10 Other Remedies. Except as otherwise provided herein, any and all remedies
herein expressly conferred upon a party shall be deemed cumulative with and not
exclusive of any other remedy conferred hereby or by law, or in equity on such
party, and the exercise of any one remedy shall not preclude the exercise of any
other.

7.11 Amendment and Waivers. Any term or provision of this Agreement may be
amended, the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
and this Agreement may be amended or supplemented only by a writing signed by
the Seller and the holders of Warrants representing at least a majority of the
aggregate number of Warrant Shares purchaseable pursuant to all Warrants then
outstanding, and such waiver or amendment, as the case may be, shall be binding
upon all Purchasers. The waiver by a party of any breach hereof or default in
the performance hereof shall not be deemed to constitute a waiver of any other
default or any succeeding breach or default. No amendment shall be effected to
impact a holder of Warrants in a disproportionately adverse fashion without the
consent of such individual holder of Warrants.

7.12 No Waiver. The failure of any party to enforce any of the provisions hereof
shall not be construed to be a waiver of the right of such party thereafter to
enforce such provisions.

7.13 Counterparts; Interpretation. This Agreement may be executed in any number
of counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories. In the event that any
signature is delivered by electronic means, including electronic mail or
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof. Headings used in this Agreement are for convenience
only, and will not affect the interpretation of this Agreement. Any form of the
word “include” used in this Agreement shall be deemed to be followed by the
phrase “without limitation.”

7.14 No Third Party Beneficiary. Nothing expressed or implied in this Agreement
is intended, or shall be construed, to confer upon or give any person other than
the parties hereto and their respective heirs, personal representatives, legal
representatives, successors and permitted assigns, any rights or remedies under
or by reason of this Agreement.

7.15 Waiver of Trial by Jury. THE PARTIES HERETO IRREVOCABLY WAIVE TRIAL BY JURY
IN ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

7.16 Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under this Agreement or any Related Documents are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any such agreement. Nothing contained herein or in any Related
Documents, and no action taken by any Purchaser pursuant thereto, shall be
deemed to constitute the Purchasers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Purchasers
are in any way

 

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acting in concert or as a group with respect to such obligations or the
transactions contemplated by such agreement. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement or out of the other Related Documents, and
it shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose. Each Purchaser represents that it has
been represented by its own separate legal counsel in its review and negotiation
of this Agreement and the Related Documents. For reasons of administrative
convenience only, the Purchasers acknowledge and agree that they and their
respective counsel have chosen to communicate with the Company through Wiggin
and Dana LLP, but Wiggin and Dana LLP does not represent any of the Purchasers
in this transaction other than North Sound Capital LLC.

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

SELLER:

 

TRANSMERIDIAN EXPLORATION INCORPORATED By:  

/s/ Lorrie T. Olivier

Name:   Lorrie T. Olivier Title:   President & CEO

 

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PURCHASERS:

Print Exact Name: North Sound Legacy Institutional Fund LLC

 

By:  

/s/ Thomas Mcauley

Name:   Thomas Mcauley Title:   Chief Investment Officer Address:   North Sound
Capital LLC   20 Horseneck Lane   Greenwich, CT 06830 Telephone:   203.340.5700
Facsimile:   203.340.5701 Email:  

 

Amount of Investment:$2,000,000

[Omnibus Transmeridian Exploration Incorporated Warrant Purchase Agreement
Signature Page]

 

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PURCHASERS:

Print Exact Name: North Sound Legacy Institutional Fund LLC

 

By:  

/s/ Thomas Mcauley

Name:   Thomas Mcauley Title:   Chief Investment Officer Address:   North Sound
Capital LLC   20 Horseneck Lane   Greenwich, CT 06830 Telephone:   203.340.5700
Facsimile:   203.340.5701 Email:  

 

Amount of Investment:$6,000,000

[Omnibus Transmeridian Exploration Incorporated Warrant Purchase Agreement
Signature Page]

 

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Schedule 1

to Warrant Purchase Agreement

Purchasers, Amount of Securities Purchased and Purchase Price

 

Name, Address and Fax Number of Purchaser and
Registration Instructions

  

Copies of Notices to

   Common
Stock
Underlying
Warrants    Purchase
Price

North Sound Legacy Institutional Fund LLC

c/o North Sound Capital LLC

20 Horseneck Lane

Greenwich, CT 06830

Attn: Andrew David

Tel:(203) 340-5784

Fax: (203) 340-5701

Email: andrew.david@northsound.com

  

Wiggin and Dana LLP

400 Atlantic Street

Stamford, CT 06901

Attn: Michael Grundei

Tel: (203) 363-7630

Fax: (203) 363-7676

mgrundei@wiggin.com

   2,125,000    $ 2,000,000

North Sound Legacy International Ltd.

c/o North Sound Capital LLC

20 Horseneck Lane

Greenwich, CT 06830

Attn: Andrew David

Tel: (203) 340-5784

Fax: (203) 340-5701

Email: andrew.david@northsound.com

  

Wiggin and Dana LLP

400 Atlantic Street

Stamford, CT 06901

Attn: Michael Grundei

Tel: (203)363-7630

Fax: (203)363-7676

mgrundei@wiggin.com

   6,375,000    $ 6,000,000 Totals:       8,500,000    $ 8,000,000