Exhibit 10.1

 

Kenmont Special Opportunities Master Fund, L.P.    Whitebox Convertible
Arbitrage Partners, LP Man Mac Miesque 10B Ltd.    Whitebox Hedged High Yield
Partners, LP c/o Kenmont Investments Management, L.P.    Pandora Select
Partners, LP 711 Louisiana, Suite 1750    Whitebox Intermarket Partners, LP
Houston, TX 77002    3033 Excelsior Boulevard, Suite 300    Minneapolis, MN
55416-4675 Fursa Master Global Event Driven Fund, LP    Guggenheim Portfolio
Company XXXI, LLC 444 Merrick Road, Suite 104    GPC LIX, LLC Lynbrook, NY 11563
   135 East 57th Street, 11th Floor    New York, NY 10022

CONFIDENTIAL

June 18, 2007

Transmeridian Exploration Incorporated

397 N. Sam Houston Pkwy. E., Suite 300

Houston, Texas 77060

Attention: Earl W. McNiel, Chief Financial Officer

20% Junior Redeemable Convertible Preferred Stock

Amended and Restated Commitment Letter

Ladies and Gentlemen:

You have advised the various investors set forth on the signature pages hereto
(collectively, the “Initial Investors”) that you (the “Company”) propose to
authorize, issue and sell, in a transaction exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”), 400,000 shares of the
Company’s 20% Junior Redeemable Convertible Preferred Stock (the “Securities”),
for a purchase price of $100.00 per share. The material terms of the Securities
and certain other material matters with respect to the Transaction are described
in the term sheet attached hereto as Exhibit A (the “Term Sheet”).

In that connection, you have requested that the Initial Investors commit to
purchase the Securities (the “Transaction”) subject only to satisfaction of the
conditions precedent set forth in Paragraph 3 below.

1. Commitments.

By delivery of this letter, the Initial Investors are pleased to inform you of
their several commitments to purchase the Securities from you, upon the terms
and subject only to the conditions set forth or referred to in this letter
(including the Term Sheet, this “Commitment Letter”). The several commitments of
the Initial Investors are as set forth below:

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Number of

Securities

  

Commitment

Amount

Kenmont Special Opportunities Master Fund, L.P.

   120,000    $ 12,000,000

Man Mac Miesque 10B Ltd.

   80,000      8,000,000

Fursa Master Global Event Driven Fund, LP

   100,000      10,000,000

Whitebox Convertible Arbitrage Partners, LP

   36,000      3,600,000

Whitebox Hedged High Yield Partners, LP

   35,000      3,500,000

Pandora Select Partners, LP

   10,000      1,000,000

Whitebox Intermarket Partners, LP

   10,000      1,000,000

Guggenheim Portfolio Company XXXI, LLC

   4,000      400,000

GPC LIX, LLC

   5,000      500,000            

Total:

   400,000    $ 40,000,000

; provided, however, that each Initial Investor’s Commitment Amount shall be
reduced pro rata by the number of shares of the Securities purchased by others
multiplied by $100.00.

Subject to satisfaction of the conditions precedent set forth in Paragraph 3
below, the Company shall have the right to draw down respective commitments in
accordance with the schedule set forth below:

 

Aggregate Securities to be

Purchased

   Earliest Date of Transaction 100,000 (“Tranche 1”)    June 18, 2007
300,000 (“Tranche 2”)    June 25, 2007

2. Additional Return.

As consideration for the Initial Investors’ respective commitments hereunder,
you agree to pay each Initial Investor certain additional returns, as set forth
in the letter agreement dated the date hereof and delivered herewith with
respect to your respective commitments to purchase the Securities (the “Letter
Agreement”).

3. Conditions Precedent.

The Initial Investors’ respective commitments hereunder to purchase each of
Tranche 1 and Tranche 2 of the Securities as described herein are subject only
to (a) other than matters previously disclosed to us, whether orally or in
writing (including, without limitation, (i) the Company’s failure to have made
the June 15, 2007 regularly scheduled interest payment on the Company’s 12%
Senior Secured Notes due 2010; (ii) the aging past their respective due dates of
payables to certain key vendors and the possibility of commencement of legal
action by one or more such vendors to collect overdue amounts; and (iii) the
possibility of adverse consequences arising from the disposition of (A) the
legal and accounting comments of the staff (the “Staff”) of the Securities and
Exchange Commission (the “SEC”) set forth in the Staff’s letter to the Company
dated April 24, 2007 relating to the Company’s Registration Statement on
Form S-3, File No. 333-141610, originally filed with the SEC on March 28, 2007
(the “S-3”)

 

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and the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2006, File No. 01-32457, originally filed with the SEC on March 16,
2007 (the “10-K”), and the Company’s response thereto set forth in a letter from
Company counsel to the Staff dated June 7, 2007 and (B) the engineering comments
of the Staff set forth in the Staff’s letter to the Company dated May 2, 2007
relating to the S-3 and the 10-K, and the Company’s proposed response thereto
set forth in letter from counsel to the SEC to be dated June 18, 2007 (the
“Engineering Comments Response”)), there not having occurred any event, change
or condition since the date of the most recent audited financial statements of
the Company and its subsidiaries, on a consolidated basis, that, individually or
in the aggregate, has had, or could reasonably be expected to have, a material
adverse effect on the business, assets, liabilities, operations, condition
(financial or otherwise), operating results, or prospects of the Company and its
subsidiaries, taken as a whole (excluding (x) events, developments or
circumstances generally affecting the industry in which the Company and its
subsidiaries operate or arising from changes in general business, political or
economic conditions, so long as the foregoing do not disproportionately
adversely affect the Company or its subsidiaries, and (y) market disruption from
whatever causes); (b) (1) acceptance by the Delaware Secretary of State of the
filing of a Certificate of Designations for the Securities consistent with the
Term Sheet and otherwise in form acceptable to the Initial Investors, acting
reasonably (the “Certificate”); (2) execution and delivery by the Company of a
registration rights agreement with respect to the Securities substantially in
the form of Exhibit B attached hereto (the “Registration Rights Agreement”);
(3) delivery of an opinion of outside counsel to the Company with respect to
such matters as are customarily covered by opinions of counsel in private
placement transactions similar to the Transaction (it being understood such
counsel need not express any opinion with regard to Section 13 of the
Certificate of Designations for the Company’s 15% Senior Redeemable Convertible
Preferred Stock); (4) delivery of a certificate of an executive officer of the
Company with respect to such matters as are customarily covered by officer’s
certificates in private placement transactions similar to the Transaction;
(5) the filing with the SEC of the Engineering Comments Response; and
(6) delivery of the Securities to the respective Initial Investors against
receipt of the aggregate purchase price therefor and (c) your compliance with
the terms of this Commitment Letter and the Letter Agreement. In addition, with
respect to the Initial Investors’ respective commitments hereunder to purchase
Tranche 2 of the Securities, such commitments are subject to satisfaction of the
following additional conditions precedent: (a) the Company shall have filed the
preliminary proxy materials described in subsection (a) of Paragraph 6 and
(b) the escrow agreement described in subsection (b) of Paragraph 6 shall have
been executed and delivered by the Company, the Initial Investors and the escrow
agent party thereto.

For avoidance of doubt, the respective commitments of each Initial Investor are
not subject to any further due diligence review.

4. Representations, Warranties and Covenants of the Initial Investors Each
Initial Investor, as to and for itself only, represents and warrants to, and
covenants with, the Company that:

(a) (i) such Initial Investor is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
securities representing an investment decision similar to that involved in the
purchase of the Securities and has had the opportunity to request, receive,
review and consider all information it deems relevant in making an informed
decision to commit to purchase the Securities; (ii) such Initial Investor shall
acquire the Securities that it purchases hereunder in the ordinary course of its
business and for its own account for investment only and with no present
intention of distributing any of the Securities or entering into any arrangement
or understanding with any other persons regarding the distribution of such
securities; provided, however, that by making the representations in this clause
(ii), such Initial Investor does not agree to hold any of the Securities, or its
commitment hereunder to purchase the Securities, for any minimum or other
specific term and the representations in this

 

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clause (ii) shall in no way limit such Initial Investor’s right to sell the
Securities pursuant to the registration statement described in the Term Sheet in
compliance with the Securities Act, or to assign its commitment hereunder, in
whole or in part, to the extent permitted by Paragraph 9; (iii) such Initial
Investor will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the Securities, nor will such Initial
Investor engage in any short sale that results in a disposition of any of the
Securities by such Initial Investor, except in compliance with the Securities
Act and any applicable state securities laws; (iv) such Initial Investor has, in
connection with its decision to commit to purchase the number of Securities set
forth under the heading “Number of Securities” in the table appearing in
Paragraph 1, relied solely upon the information contained in the Company’s
Preliminary Offering Memorandum dated June 12, 2007, as supplemented by
Supplement No. 1 thereto dated June 17, 2007 and Supplement No. 2 thereto dated
June 18, 2007 (superseding Supplement No. 1), a copy of which is attached hereto
as Exhibit C (as so supplemented, the “Information Memorandum”) and the
documents included therein or incorporated by reference therein; (v) such
Initial Investor has had an opportunity to discuss its commitment to make an
investment in the Securities with representatives of the Company and ask
questions of them and has received satisfactory answers and all information
requested; (vi) such Initial Investor is an “accredited investor” within the
meaning of Rule 501(a) of Regulation D promulgated under the Securities Act; and
(vii) such Initial Investor agrees to notify the Company immediately of any
change in any of the foregoing information until such time as such Initial
Investor has sold all of its Securities.

(b) Such Initial Investor understands that the Securities are being offered and
sold to it in reliance upon specific exemptions from the registration
requirements of the Securities Act, the rules and regulations promulgated by the
SEC thereunder and applicable state securities laws and that the Company is
relying upon the truth and accuracy of, and such Initial Investor’s compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of such Initial Investor set forth herein in order to determine
the availability of such exemptions and the eligibility of such Initial Investor
to acquire the Securities.

(c) Such Initial Investor understands that an investment in the Securities
(including the shares of the Company’s common stock, par value $0.0006 per share
(the “Common Stock”) into which the Securities are convertible) involves a
significant degree of risk, including a risk of total loss of such Initial
Investor’s investment. Such Initial Investor has full cognizance of and
understands all the risk factors set forth in the section “Risk Factors” in the
Information Memorandum. Such Initial Investor understands that the market price
of the Common Stock has been volatile and that no representation is being made
as to the future value of the Common Stock. Such Initial Investor understands
that there is no established trading market for the Securities. Such Initial
Investor has the knowledge and experience in financial and business matters so
as to be capable of evaluating the merits and risks of an investment in the
Securities and has the ability to bear the economic risks of an investment in
the Securities. Such Initial Investor acknowledges that Jefferies & Company,
Inc., financial advisor to the Company, has undertaken no duty to perform any
due diligence or similar investigation with respect to the Company and such
Initial Investor represents that it has not relied on any analysis,
investigation or advice prepared or made by Jefferies & Company, Inc. in making
its investment decision. The parties agree that Jefferies & Company, Inc. may
rely on the representations, warranties and covenants of such Initial Investor
contained in this Paragraph 4 as a third party beneficiary.

(d) Such Initial Investor understands that no United States federal or state
agency or any other government or governmental agency has passed upon or made
any recommendation or endorsement of the Securities.

 

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(e) Such Initial Investor understands that the Securities will bear a
restrictive legend in substantially the following form:

“The securities evidenced by this certificate have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or the securities
laws of any state or other jurisdiction. The securities may not be offered,
sold, pledged or otherwise transferred except (1) pursuant to an exemption from
registration under the Securities Act or (2) pursuant to an effective
registration statement under the Securities Act, in each case in accordance with
all applicable securities laws of the states and other jurisdictions, and in the
case of a transaction exempt from registration, unless the Issuer has received
an opinion of counsel reasonably satisfactory to it that such transaction does
not require registration under the Securities Act and such other applicable
laws.”

5. Representations and Warranties of the Company. The Company represents and
warrants to the Initial Investors that:

(a) The financial statements, and the related notes thereto, of the Company
included or incorporated by reference in the Information Memorandum present
fairly, in all material respects, the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates indicated and the
results of their operations and the changes in their consolidated cash flows for
the periods specified; and said financial statements have been prepared in
conformity with United States generally accepted accounting principles and
practices applied on a consistent basis, except as described in the notes to
such financial statements; and the other financial and statistical information
and any other financial data set forth in the Information Memorandum present
fairly, in all material respects, the information purported to be shown thereby
at the respective dates or for the respective periods to which they apply and,
to the extent that such information is set forth in or has been derived from the
financial statements and accounting books and records of the Company, have been
prepared on a basis consistent with such financial statements and the books and
records of the Company.

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

(c) The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is qualified to do business
as a foreign corporation in each jurisdiction in which such qualification is
required, except where failure to so qualify would not reasonably be expected to
have a material adverse effect. For purposes of this Paragraph 5, the term
“material adverse effect” shall mean a material adverse effect upon the
business, condition (financial or otherwise), properties or results of
operations of the Company and its subsidiaries, taken as a whole, or the ability
of the Company to satisfy its obligations

 

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under this Commitment Letter, the Letter Agreement, the Registration Rights
Agreement or any of the other agreements entered into by the Company in
connection with the Transaction (a “Material Adverse Effect”).

(d) Except as disclosed in Paragraph 3 hereof or in the Information Memorandum,
none of the Company or any of its subsidiaries has sustained a Material Adverse
Effect since the date of the latest audited financial statements included in the
Information Memorandum.

(e) As of the date hereof, the Company is authorized to issue up to 205,000,000
shares of capital stock, including up to 200,000,000 shares of the Common Stock
and up to 5,000,000 shares of preferred stock, par value of $0.0006 per share.
As of May 31, 2007, the Company had (i) 108,684,080 shares of the Common Stock
outstanding, (ii) 58.093 shares of its Series A Cumulative Convertible Preferred
Stock and (iii) 461,998 shares of its 15% Senior Redeemable Convertible
Preferred Stock outstanding. All the issued and outstanding shares of the
Company’s capital stock have been duly authorized and validly issued, are fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, were not issued in violation of any preemptive rights or
other rights to subscribe for or purchase securities, and conform in all
material respects to the description thereof contained in the Information
Memorandum. Except as disclosed in the Information Memorandum as of the date set
forth therein or in the Company’s filings with the SEC, the Company does not
have outstanding any options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible securities or
obligations. The description of the Company’s capital stock, stock bonus and
other stock plans or arrangements and the options or other rights granted and
exercised thereunder set forth in the Information Memorandum or in the Company’s
filings with the SEC accurately and fairly presents all material information
with respect to such plans, arrangements, options and rights.

(f) The Securities have been duly and validly authorized for issuance by the
Company and, when issued in accordance with the terms and conditions contained
herein, the Securities will be duly authorized, validly issued, fully paid and
non-assessable and, except to the extent that Section 13 of the Certificate of
Designations for the Company’s 15% Senior Redeemable Convertible Preferred Stock
may be applicable, will not be subject to any preemptive or similar rights. The
shares of Common Stock into which the Securities are convertible have been duly
reserved for issuance in accordance with the terms of the Securities.

(g) All the issued and outstanding shares of capital stock or other equity
interests of each subsidiary of the Company have been duly authorized and
validly issued, are fully paid and nonassessable, are owned by the Company or a
direct or indirect subsidiary of the Company, have been issued in compliance
with applicable federal and state securities laws and were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities, and there are no outstanding options to purchase, or
any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of capital stock or other equity interests of any
subsidiary of the Company.

(h) Upon issuance and delivery of the Securities in accordance with the
Commitment Letter, the Securities will be convertible at the option of the
holder thereof into shares of the Common Stock in accordance with the terms of
the Securities; the Common Stock reserved for issuance upon conversion of the
Securities has been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the Securities,
will be validly issued, fully paid and non assessable, and the issuance of the
Common Stock will not be subject to any preemptive or similar rights.

 

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(i) The Company has the full legal right, corporate power and authority to enter
into this Commitment Letter, the Letter Agreement, the Registration Rights
Agreement and the other documents pertaining to the Transaction to which it is
(or will become) a party and perform the transactions contemplated hereby and
thereby, and this Commitment Letter, the Letter Agreement, the Registration
Rights Agreement and such other documents have been (or will have been) duly
authorized, executed and delivered by the Company. The execution, delivery and
performance of this Commitment Letter, the Letter Agreement, the Registration
Rights Agreement and such other documents by the Company and the consummation of
the transactions herein and therein contemplated will not violate any provision
of the certificate of incorporation or bylaws of the Company and will not result
in the creation of any lien, charge, security interest or encumbrance upon any
assets of the Company pursuant to the terms or provisions thereof, and will not
conflict with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under (i) any
agreement, lease, franchise, license, permit or other instrument to which the
Company is a party or by which the Company or any of its properties may be bound
or affected and in each case, which would reasonably be expected to have a
Material Adverse Effect; or (ii) any statute or any judgment, decree, order,
rule or regulation of any court or any regulatory body, administrative agency or
other governmental body applicable to the Company or any of its properties. No
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution
and delivery of this Commitment Letter, the Letter Agreement, the Registration
Rights Agreement or any of the other documents entered into by the Company in
connection with the Transaction, or the consummation of the transactions
contemplated by this Commitment Letter, the Letter Agreement, the Registration
Rights Agreement or any of the other documents entered into by the Company in
connection with the Transaction, except for compliance with the blue sky laws
and federal securities laws applicable to the offering of the Securities. Upon
the execution and delivery of this Commitment Letter, the Letter Agreement and
the Registration Rights Agreement and assuming the valid execution thereof by
the Initial Investors, each of this Commitment Letter, the Letter Agreement and
the Registration Rights Agreement will constitute a valid and binding obligation
of the Company enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Company in the Registration Rights Agreement may be limited by federal or
state securities laws or the public policy underlying such laws.

(j) Except as disclosed in Paragraph 3, in the Information Memorandum or in the
Company’s filings with the SEC (i) neither the Company nor any of its
subsidiaries is in violation or default of any provision of its certificate of
incorporation, bylaws or equivalent organizational documents, or in breach of or
in default with respect to any provision of any agreement, judgment, decree,
order, lease, franchise, license, permit or other instrument to which it is a
party or by which it or any of its properties are bound which would reasonably
be expected to have a Material Adverse Effect, and (ii) there does not exist any
state of facts which, with notice or lapse of time or both, would constitute an
event of default on the part of the Company or its subsidiaries as defined in
such documents and which would reasonably be expected to have a Material Adverse
Effect.

 

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(k) Except as otherwise disclosed in Paragraph 3, in the Information Memorandum
or in the Company’s filings with the SEC, (i) there are no legal or governmental
actions, suits, proceedings, investigations or inquiries pending and (ii) to the
Company’s knowledge, there are no legal or governmental actions, suits or
proceedings threatened, to which the Company or any of its subsidiaries is or
may be a party or of which property owned or leased by the Company or any of its
subsidiaries is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings, individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect;
and no labor disturbance by the employees of the Company exists or, to the
Company’s knowledge, is imminent which would reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries is
party to or subject to the provisions of any injunction, judgment, decree or
order of any court, regulatory body, administrative agency or other governmental
body which would reasonably be expected to have a Material Adverse Effect.

(l) Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D) of the Company has directly, or through any agent, sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be integrated with
the sale of the Securities in a manner that would require the registration under
the Securities Act of the offering contemplated by the Information Memorandum.

(m) Neither the Company nor any affiliate of the Company nor any person acting
on its or their behalf has in the past or will hereafter take any action to
sell, offer for sale or solicit offers to buy any securities of the Company by
means of any general solicitation or general advertising, or by means which
would otherwise subject the offer, issuance or sale of the Securities, as
contemplated by this Commitment Letter, to the registration requirements of
Section 5 of the Securities Act.

(n) The Company maintains a system of internal control over financial reporting
(as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of
1934, as amended and the applicable rules and regulations of the SEC thereunder
(collectively, the “Exchange Act”)) that complies with the requirements of the
Exchange Act and has been designed by the Company’s principal executive officer
and principal financial officer, or under their supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles; and except as disclosed in the
Information Memorandum, the Company’s internal control over financial reporting
is effective, and the Company is not aware of any material weaknesses in its
internal control over financial reporting.

(o) The Company covenants that it will not knowingly or recklessly, and that it
will use its reasonable best efforts to ensure that each director, officer,
agent or employee of the Company will not knowingly or recklessly, use any part
of the net proceeds from the sale of the Securities for any payments to: (a) any
individual or entity listed on the Specially Designated Nationals and Blocked
Persons List administered by the United States Department of the Treasury’s
Office of Foreign Assets Control (“OFAC”) and/or any other similar lists
administered by OFAC pursuant to any authorizing statute, Executive Order or
regulation; (b) the government of any country subject to an OFAC Sanctions
Program; (c) any individual or entity included on any list of terrorists or
terrorist organizations maintained by the United Nations, the European Union and
or the countries in which the Company operates; or (d) any governmental official
or employee, political party, official of a political party, candidate for
political office, anyone else acting in an official capacity, or any agent of
any such individual or entity, in order to obtain, retain or direct business or
obtain any improper advantage, in violation of the FCPA (as defined below).

 

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(p) To the best of the Company’s knowledge, neither the Company nor any
director, officer, agent or employee of the Company has made, directly or
indirectly, any payment or promise to pay, or gift or promise to give, or
authorized such a promise or gift, of any money or anything of value, directly
or indirectly, to (i) any foreign official (as such term is defined in the
United States Foreign Corrupt Practices Act of 1977 (as amended, the “FCPA”))
for the purpose of influencing any official act or decision of such official or
inducing him or her to use his or her influence to affect any act or decision of
a governmental authority, or (ii) any foreign political party or official
thereof or candidate for foreign political office for the purpose of influencing
any official act or decision of such party, official or candidate or inducing
such party, official or candidate to use his, her or its influence to affect any
act or decision of a foreign governmental authority, in the case of both (i) and
(ii) above, in order to assist the Company to obtain or retain business for, or
direct business, and under circumstances which would subject the Company to
liability under the FCPA or any corresponding foreign laws. To the best of the
Company’s knowledge, the Company has not made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment of funds or received or
retained any funds in violation of any law, rule or regulation.

(q) The documents incorporated by reference in the Information Memorandum, when
they were filed with the SEC, conformed in all material respects to the
requirements of the Exchange Act.

(r) The information contained in the Information Memorandum, other than the
information in the documents filed with the SEC that form a part of the
Information Memorandum, does not, as of the date of the Information Memorandum,
include 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.

The information contained in the following documents that form part of the
Information Memorandum does not, as of their respective dates of filing with the
SEC, include 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:

(i) The Company’s Annual Report on Form 10-K for the year ended December 31,
2006 filed on March 16, 2007;

(ii) The Company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2007 filed on May 10, 2007;

(iii) The Company’s Current Reports on Form 8-K dated March 16, 2007 (filed on
March 16, 2007), March 23, 2007 (filed on March 26, 2007), March 26, 2007 (filed
on March 27, 2007), April 2, 2007 (filed on April 12, 2007), April 16, 2007
(filed on April 17, 2007), April 25, 2007 (filed on May 2, 2007), May 17, 2007
(filed on May 23, 2007) and May 29, 2007 (filed on June 4, 2007); and

(iv) The description of the Common Stock contained in the Company’s registration
statement on Form 8-A filed on March 15, 2005.

 

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6. Covenants of the Company.

The Company covenants and agrees with the Initial Investors, promptly following
the purchase of Tranche 1 of the Securities, and in the case of subsection (d),
on or prior to 5:30 p.m. EDT on the date that Tranche 1 of the Securities is
issued, (a) to file preliminary proxy materials with the SEC with respect to the
solicitation of proxies for a meeting to be held for the purpose of voting on a
proposal to approve the issuance of shares of Common Stock in excess of 19.99%
of the outstanding shares of Common Stock at the date hereof upon conversion or
redemption of, or in payment of dividends on, the Securities, and to use its
reasonable best efforts to secure such approval at the earliest practicable
date; (b) to commence promptly good faith negotiations with the Initial
Investors with a view toward execution at the earliest practicable date of an
escrow agreement with respect to the Transaction as it relates to 200,000 of the
Securities included in Tranche 2 of the Securities, in each case consistent with
the Term Sheet and otherwise in customary form; (c) to use its reasonable best
efforts to comply with all requirements of the American Stock Exchange with
respect to the issuance of the Securities and the shares of Common Stock
issuable upon the conversion or redemption thereof, or in payment of dividends
thereon; (d) (1) file with the SEC a Current Report on Form 8-K disclosing the
material terms of this Commitment Letter and the Letter Agreement, and the
material issues raised by the SEC comment letters referenced in Section 3
hereof, and (2) deliver to the holders of the Company’s 15% Senior Redeemable
Convertible Preferred Stock the “Issuance Notice” described in Section 13(i) of
the Certificate of Designations therefor, and with respect to which report and
notice to use its reasonable commercial efforts to afford each Initial Investor
the opportunity to review and comment thereon prior to the filing and delivery,
respectively, thereof; and (e) cause the composition of the Company’s Board of
Directors to change in accordance with, at the times contemplated by, and
subject to the conditions set forth in, the Certificate. The Company further
covenants and agrees that it will not, without the prior written consent of the
Initial Investors, during the period ending 90 days after the date of the
Information Memorandum, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock or
(iii) file with the SEC a registration statement under the Securities Act
relating to any additional shares of Common Stock or securities convertible
into, or exchangeable for, any shares of Common Stock, or publicly disclose the
intention to effect any transaction described in clause (i), (ii) or (iii),
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise; provided, however, that the foregoing shall not apply to (A) the sale
of the Securities under this Commitment Letter or the issuance of the Common
Stock upon conversion of the Securities, (B) the grant by the Company of
employee or director stock options, restricted stock awards or restricted stock
unit awards in the ordinary course of business, the issuance by the Company of
any shares of Common Stock of the Company upon the exercise of an option or upon
the sale by the Company of shares of Common Stock pursuant to the Company’s
employee stock purchase plan, (C) any transfer of shares of Common Stock
pursuant to the Company’s 401(k) plan, if any, (D) the filing by the Company of
any registration statement with the Commission on Form S-8 relating to the
offering of securities pursuant to the terms of the Company’s existing incentive
plan or employee stock purchase plan, (E) the conversion or exercise of a
security outstanding on the date hereof and (F) filing of any registration
statement in respect of the Securities and the Common Stock.

 

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7. Indemnification; Expenses.

You agree (a) to indemnify and hold harmless each of us and our respective
officers, directors, employees, agents, advisors, controlling persons, members
and successors and assigns (each, an “Indemnified Person”) from and against any
and all losses, claims, damages, liabilities and expenses, joint and several, to
which any such Indemnified Person may become subject arising out of or in
connection with any action instituted against any Indemnified Person by any
stockholder of the Company who is not an affiliate of such Indemnified Person
with respect to this Commitment Letter, the Letter Agreement, the Transaction or
any related transaction (unless such action is based upon a breach of the
applicable Initial Investor’s representations, warranties or covenants set forth
herein or under any other documentation executed in connection with the
Transaction or any agreements or understandings the applicable Initial Investor
may have with any such stockholder or any violations by such Initial Investor of
state or federal securities laws or any conduct by such Initial Investor which
constitutes fraud, gross negligence, willful misconduct or malfeasance) and to
reimburse each such Indemnified Person upon demand for any reasonable legal or
other expenses incurred in connection with investigating or defending any of the
foregoing; provided, however, that in no event shall the Company be liable for
any indirect, incidental, special or consequential damages or damages for loss
of profits incurred by an Indemnified Person, whether in an action in contract
or tort, even if the Company shall have been advised of the possibility of such
damages; and (b) to (i) reimburse each of us, from time to time, on demand, for
all reasonable and documented out-of-pocket expenses (including but not limited
to reasonable expenses of our due diligence investigation, consultants’ fees,
syndication expenses, travel expenses and reasonable fees, disbursements and
other charges of counsel), in each case, incurred in connection with the
Transaction and the preparation, negotiation and enforcement of this Commitment
Letter, the Letter Agreement, the other definitive documentation for the
Transaction and any ancillary documents in connection therewith and (ii) to pay
or cause to be paid any fees and expenses payable to Jefferies & Company under
the engagement letter, dated May 4, 2007, between the Company and Jefferies &
Company.

Notwithstanding any other provision of this Commitment Letter, no Indemnified
Person shall be liable for any indirect, special, punitive or consequential
damages in connection with its activities related to the Transaction.

8. Sharing Information; Absence of Fiduciary Relationship; Affiliate Activities.

You acknowledge that either of us may be providing debt financing, equity
capital or other services (including financial advisory services) to other
companies in respect of which you may have conflicting interests. Neither of us
will use confidential information obtained from you by virtue of the Transaction
contemplated hereby or our other relationships with you in connection with the
performance by either of us of services for other companies, and neither of us
will furnish any such information to other companies. You also acknowledge that
we do not have any obligation to use in connection with the Transaction
contemplated hereby, or to furnish to you, confidential information obtained by
us from other companies.

You further acknowledge and agree that (a) no fiduciary, advisory or agency
relationship between you and either of us is intended to be or has been created
in respect of any of the transactions contemplated by this Commitment Letter,
irrespective of whether we have advised or are advising you on other matters,
(b) we, on the one hand, and you, on the other hand, have an arms-length
business relationship that does not directly or indirectly give rise to, nor do
you rely on, any fiduciary duty on the part of either of us, (c) you have been
advised that each of us is engaged in a broad range of transactions that may
involve interests that differ from your interests and that neither of us has any
obligation to disclose such interests and transactions to you by virtue of any
fiduciary, advisory or agency relationship, and (d) you waive, to the fullest
extent permitted by law, any claims you may have against either of us for breach
of fiduciary duty or alleged breach of fiduciary duty and agree that neither of
us shall have any

 

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liability (whether direct or indirect) to you in respect of such a fiduciary
duty claim or to any person asserting a fiduciary duty claim on behalf of or in
right of you, including your stockholders, employees or creditors.

9. Assignments, Amendments, Governing Law, Etc.

This Commitment Letter shall not be assignable by you without the prior written
consent of each Initial Investor (and any attempted assignment without such
consent shall be null and void), is intended to be solely for the benefit of the
parties hereto (and Indemnified Persons), and is not intended to confer any
benefits upon, or create any rights in favor of, any person other than the
parties hereto (and Indemnified Persons). Each Initial Investor may assign its
commitment hereunder to one or more prospective institutions reasonably
acceptable to you, whereupon the assignor shall be released from the portion of
its commitment hereunder so assigned; provided, however, no such assignment
shall be effective unless and until the assignee shall have delivered to the
Company a written joinder agreement or other instrument in form reasonably
satisfactory to the Company for the purpose of acknowledging that such assignee
(i) makes and confirms, with respect to itself, the representations and
warranties applicable to each Initial Investor set forth in Paragraph 4 hereof
and (ii) agrees to be bound by and perform the obligations of the assignor
hereunder to the extent of the portion of the assignor’s commitment hereunder so
assigned.

This Commitment Letter amends, restates and supersedes in its entirety that
certain commitment letter among the Initial Investors and the Company, dated
June 18, 2007, regarding the matters addressed herein. This Commitment Letter
may not be amended or any provision hereof waived or modified except by an
instrument in writing signed by each of us and you. This Commitment Letter may
be executed in any number of counterparts, each of which shall be an original
and all of which, when taken together, shall constitute one agreement. Delivery
of an executed counterpart of a signature page of this Commitment Letter by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. Paragraph headings used herein are for convenience of
reference only, are not part of this Commitment Letter and are not to affect the
construction of, or to be taken into consideration in interpreting, this
Commitment Letter. This Commitment Letter and the Letter Agreement supersede all
prior understandings, whether written or oral, between us with respect to the
Facilities. THIS COMMITMENT LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

10. Jurisdiction.

Each of the parties hereto hereby irrevocably and unconditionally (a) submits,
for itself and its property, to the exclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Commitment Letter, the Letter Agreement or the
transactions contemplated hereby or thereby, and agrees that all claims in
respect of any such action or proceeding may be heard and determined only in
such New York State court or, to the extent permitted by law, in such Federal
court, (b) waives, to the fullest extent it may legally and effectively do so,
any objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Commitment Letter,
the Letter Agreement or the transactions contemplated hereby or thereby in any
New York State court or in any such Federal court, (c) waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court, and (d) agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

 

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11. Waiver of Jury Trial.

EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY
RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE TRANSACTION
CONTEMPLATED HEREBY.

12. Confidentiality.

This Commitment Letter is delivered to you on the understanding that neither
this Commitment Letter nor the Letter Agreement nor any of their terms or
substance shall be disclosed, directly or indirectly, to any other person except
(a) to your officers, directors, employees, attorneys, accountants and advisors
on a confidential and need-to-know basis or (b) as required by applicable law or
compulsory legal process (in which case you agree to inform us promptly
thereof); provided, however, that you may include this Commitment Letter and the
Letter Agreement and summarize the contents hereof in a Current Report or Form
8-K filed with the SEC; provided further, however, that you shall use your
reasonable commercial efforts to afford each of us the opportunity to review and
comment thereon prior to the filing thereof.

13. Surviving Provisions.

The compensation, reimbursement, indemnification, confidentiality, jurisdiction,
governing law and waiver of jury trial provisions contained herein and in the
Letter Agreement shall remain in full force and effect regardless of whether
definitive purchase documentation shall be executed and delivered and
notwithstanding the termination of this Commitment Letter or our commitments
hereunder.

14. Acceptance and Termination.

If the foregoing correctly sets forth our agreement with you, please indicate
your acceptance of the terms of this Commitment Letter and of the Letter
Agreement by returning to each of us executed counterparts hereof and of the
Letter Agreement.

Remainder of this page intentionally left blank

 

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We are pleased to have been given the opportunity to assist you in connection
with the financing described above.

 

Very truly yours, KENMONT SPECIAL OPPORTUNITIES MASTER FUND, L.P. By   Kenmont
Investments Management, L.P. By  

/s/ John Harkrider

Name:   John Harkrider Title:   Managing Director & CFO MAN MAC MIESQUE 10B LTD.
By   Kenmont Investments Management, L.P. By  

/s/ John Harkrider

Name:   John Harkrider Title:   Managing Director & CFO FURSA MASTER GLOBAL
EVENT DRIVEN FUND, LP By  

/s/ Mickey Harley

Name:   Mickey Harley Title:   President & CIO WHITEBOX CONVERTIBLE ARBITRAGE
PARTNERS, LP By  

/s/ Jonathan Wood

Name:   Jonathan Wood Title:   Director - COO
WHITEBOX HEDGED HIGH YIELD PARTNERS, LP By  

/s/ Jonathan Wood

Name:   Jonathan Wood Title:   Director - COO

Amended and Restated Commitment Letter Signature Page

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PANDORA SELECT PARTNERS, LP By  

/s/ Jonathan Wood

Name:   Jonathan Wood Title:   Director - COO WHITEBOX INTERMARKET PARTNERS, LP
By  

/s/ Jonathan Wood

Name:   Jonathan Wood Title:   Director - COO GUGGENHEIM PORTFOLIO COMPANY XXXI,
LLC By   /s/ Jonathan Wood Name:   Jonathan Wood Title:   Director - COO GPC
LIX, LLC By  

/s/ Jonathan Wood

Name:   Jonathan Wood Title:   Director - COO

 

Accepted and agreed to as of

the date first above written:

TRANSMERIDIAN EXPLORATION INCORPORATED By:   

/s/ Earl W. McNiel

         Earl W. McNiel          Vice President and Chief Financial Officer   

Amended and Restated Commitment Letter Signature Page