Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of February 1,
2011, by and among Voyager Oil & Gas, Inc., a Delaware corporation (the
“Company”), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and collectively, the
“Purchasers”).

 

RECITALS

 

A.            The Company and each Purchaser is executing and delivering this
agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission under the Securities Act.

 

B.            The Company desires to issue and sell up to 12,500,000 units (the
“Units”), with each unit consisting of (i) one share of the Company’s common
stock, par value $0.001 per share (the “Common Stock”) (which shares of Common
Stock shall be referred to herein as the “Shares”), and (ii) one-half of a
warrant exercisable for one share of Common Stock, in substantially the form
attached hereto as Exhibit A (which warrants shall be collectively referred to
herein as the “Warrants”).

 

C.            Each Purchaser, severally and not jointly, wishes to purchase, and
the Company wishes to sell, upon the terms and conditions stated in this
Agreement, (i) that aggregate number of Shares set forth below such Purchaser’s
name on the signature page of this Agreement, and (ii) Warrants to acquire up to
that number of additional shares of Common Stock equal to 50.0% of the number of
Shares purchased by such Purchaser (the shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants, the “Warrant Shares”).

 

D.            The Company has engaged Canaccord Genuity Inc. as lead agent and
representative of the syndicate of placement agents (the “Placement Agents”) for
the offering of the Shares and the Warrants on a “best efforts” basis.

 

E.             Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as Exhibit B (the “Registration Rights
Agreement”), pursuant to which, among other things, the Company will agree to
provide certain registration rights with respect to the Shares under the
Securities Act and applicable state securities laws.  The Warrants will also
include certain demand registration rights.

 

NOW, THEREFORE, IN CONSIDERATION of the premises and the mutual promises,
representations, warranties, covenants, conditions and agreements contained in
this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers hereby
agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1     Definitions.  In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms shall have
the meanings indicated in this Section 1.1:

 

“Action” means any action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or investigation pending
or, to the Company’s Knowledge,

 

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threatened in writing against or affecting the Company or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, local or
foreign), stock market, stock exchange or trading facility.

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 144.  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.

 

“Agents’ Representative” means Canaccord Genuity Inc., as representative of the
Placement Agents.

 

“Board of Directors” has the meaning set forth in Section 2.2(a)(vi).

 

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

 

“Certificate of Incorporation” has the meaning set forth in Section 2.2(a)(vi).

 

“Closing” means the closing of the purchase and sale of the Shares and the
Warrants pursuant to this Agreement.

 

“Closing Date” means the Business Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all of the
conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied, or
such other date as the parties may agree.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” has the meaning set forth in the Recitals, and also includes any
securities into which the Common Stock may hereafter be reclassified or changed.

 

“Company Counsel” means Fredrikson & Byron, P.A.

 

“Company Deliverables” has the meaning set forth in Section 2.2(a).

 

“Company’s Knowledge” means with respect to any statement made to the knowledge
of a party, that the statement is based upon the actual knowledge, after
reasonable inquiry, of the executive officers of such party having
responsibility for the matter or matters that are the subject of the statement.

 

“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Delaware Courts” means the state and federal courts sitting in the City of
Wilmington, State of Delaware.

 

“Disclosure Materials” means the Confidential Private Placement Memorandum and
the SEC Reports, together with this Agreement and the Schedules to this
Agreement (if any).

 

“DTC” has the meaning set forth in Section 4.1(c).

 

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“Effective Date” means the date on which the initial Registration Statement
required by Section 2(a) of the Registration Rights Agreement is first declared
effective by the Commission.

 

“Environmental Laws” has the meaning set forth in Section 3.1(l).

 

“Equity Incentive Plan” means (i) any equity incentive, stock option or similar
plan and (ii) any other agreement, arrangement, understanding or other document
pursuant to which the Company is obligated to grant or issue Common Stock,
including any securities or instruments convertible into, exchangeable for or
that otherwise entitles the holder thereof to receive Common Stock, to current
or former employees in connection with their services to the Company, in each
case adopted or approved by a majority of the non-employee members of the board
of directors of the Company or a majority of the members of a committee of
non-employee directors established.

 

“Escrow Agent” has the meaning set forth in Section 2.1(b).

 

“Escrow Amount” has the meaning set forth in Section 2.1(b).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

 

“GAAP” means U.S. generally accepted accounting principles, as applied by the
Company on a consistent basis during the financial periods involved.

 

“Grant Date” has the meaning set forth in Section 3.1(gg).

 

“Intellectual Property” has the meaning set forth in Section 3.1(r).

 

“Irrevocable Transfer Agent Instructions” means, with respect to the Company,
the Irrevocable Transfer Agent Instructions, in the form of Exhibit E, executed
by the Company and delivered to and acknowledged in writing by the Transfer
Agent.

 

“Lien” means any lien, charge, claim, encumbrance, security interest, right of
first refusal, or preemptive right.

 

“Material Adverse Effect” means any of (i) a material and adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material and adverse effect on the results of operations, assets, business or
financial condition of the Company and the Subsidiary or (iii) any material
adverse impairment to the Company’s ability to perform in any material respect
on a timely basis its obligations under any Transaction Document; except any
adverse effect related to or resulting from (A) general business or economic
conditions affecting the industry in which the Company or the Subsidiary
operates, (B) national or international political or social conditions,
including the engagement by the United States in hostilities or the escalation
thereof, whether or not pursuant to the declaration of a national emergency or
war, or the occurrence or the escalation of any military or terrorist attack
upon the United States, or any of its territories, possessions, or diplomatic or
consular offices or upon any military installation, equipment or personnel of
the United States, (C) financial, banking, or securities markets (including any
disruption thereof and any decline in the price of any security or any market
index), (D) changes in GAAP, (E) changes in laws, rules, regulations, orders, or
other binding directives issued by any governmental entity, (F) the taking of
any action contemplated by this Agreement or the other agreements contemplated
hereby or the announcement of this Agreement, the other agreements contemplated
hereby or the transactions contemplated hereby or thereby or (G) any existing
event, occurrence, or circumstance with respect to which Purchaser has knowledge
as of the date hereof (including any matter set forth in the Schedules to this
Agreement).

 

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“Material Permits” has the meaning set forth in Section 3.1(p).

 

“Outside Date” means five Business Days following the date of this Agreement.

 

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

 

“Press Release” has the meaning set forth in Section 4.7.

 

“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the date of this
Agreement and the Closing Date, shall be the OTC Bulletin Board.

 

“Purchase Price” means $4.00 per Unit, for an aggregate Purchase Price of
$50,000,000.

 

“Purchaser Deliverables” has the meaning set forth in Section 2.2(b).

 

“Registration Rights Agreement” has the meaning set forth in the Recitals.

 

“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Registrable Securities (as defined in the Registration Rights
Agreement).

 

“Required Approvals” has the meaning set forth in Section 3.1(e).

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Schedules” has the meaning set forth in Section 3.1.

 

“SEC Reports” has the meaning set forth in Section 3.1(h).

 

“Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(vii).

 

“Securities” mean the Shares, the Warrants and the Warrant Shares issued
pursuant to this Agreement.

 

“Securities Act” has the meaning set forth in the recitals.

 

“Short Sales” include, without limitation, all “short sales” as defined in
Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not
against the box, and all types of direct and indirect stock pledges, forward
sale contracts, options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar
arrangements (including on a total return basis), and sales and other
transactions through non-U.S. broker dealers or foreign regulated brokers.

 

“Subscription Amount” means with respect to each Purchaser, the aggregate amount
to be paid for the Shares and the related Warrants purchased hereunder as
indicated on such Purchaser’s signature page to this Agreement next to the
heading “Purchase Price (Subscription Amount)”.

 

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“Subsidiary” means Plains Energy Investments, Inc., a Nevada corporation, and
any other entity in which the Company, directly or indirectly owns equity or
similar interests.

 

“Trading Affiliate” has the meaning set forth in Section 3.2(g).

 

“Trading Market” means whichever of the New York Stock Exchange, the NYSE Amex
Equities Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market,
the NASDAQ Capital Market or the OTC Bulletin Board on which the Common Stock is
listed or quoted for trading on the date in question.

 

“Transaction Documents” means this Agreement, the Schedules and exhibits
attached hereto, the Warrants, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions and any other documents or agreements
executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent” means Wells Fargo Shareowner Services or any successor transfer
agent for the Company.

 

“Warrants” has the meaning set forth in the recitals to this Agreement.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1     Closing.  (a)  Subject to the terms and conditions set forth in this
Agreement, at the Closing, the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly, purchase from the Company,
such number of Shares of Common Stock equal to the quotient resulting from
dividing (i) the Subscription Amount for such Purchaser, as indicated below such
Purchaser’s name on the signature page of this Agreement by (ii) the Purchase
Price, rounded down to the nearest whole Share. In addition, each Purchaser
shall receive a Warrant to purchase a number of Warrant Shares equal to 50.0% of
the number of Shares purchased by such Purchaser, as indicated below such
Purchaser’s name on the signature page of this Agreement, rounded down to the
nearest whole Warrant Share. The Warrants shall have an exercise price equal to
150% of the Purchase Price and a call option providing the Company the right to
call the Warrants for cancellation (and providing for a 10-day exercise period)
in the event the closing price per share of the Company’s Common Stock on the
Company’s Principal Trading Market equals or exceeds 200% of the exercise price
for 10 consecutive Business Days.

 

(b)           Each Purchaser must complete and return a duly executed, unaltered
copy of this Agreement (including without limitation the completed Accredited
Investor Questionnaire and the Stock Certificate Questionnaire included as
Exhibits C-1 and C-2 hereto, respectively) to the Agents’ Representative. The
Company retains complete discretion to accept or reject any subscription unless
and until the Company executes a counterpart to this Agreement that includes
such Purchaser’s signature.  On the Closing Date and prior receipt of stock
certificates and warrant certificates, each Purchaser shall deposit the amount
of readily available funds equal to such Purchaser’s Subscription Amount by wire
transfer of immediately available funds to the Company pursuant to the Company’s
written wire instructions.

 

(c)           The Closing shall be held at a date and time designated by the
Company and the Placement Agents prior to 11:59 p.m. prevailing Eastern time on
the Outside Date.  The Closing shall occur at the offices of the Company
Counsel, located at 200 South Sixth Street, Suite 4000, Minneapolis, Minnesota
or at such other locations or remotely by facsimile transmission or other
electronic means as the parties may mutually agree.

 

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2.2           Closing Deliveries.   (a)       On or prior to the Closing, the
Company shall issue, deliver or cause to be delivered to each Purchaser the
following (the “Company Deliverables”):

 

(i)            prior to Closing, certificates representing the Shares;

 

(ii)           this Agreement, duly executed by the Company;

 

(iii)          the Registration Rights Agreement, duly executed by the Company;

 

(iv)          a Warrant, executed by the Company and registered in the name of
such Purchaser as set forth on the Stock Certificate Questionnaire included as
Exhibit C-2 hereto, pursuant to which such Purchaser shall have the right to
acquire such number of Warrant Shares equal to 50.0% of the number of Shares
issuable to such Purchaser pursuant to Section 2.1(a), rounded down to the
nearest whole Warrant Share, on the terms set forth therein;

 

(v)           a legal opinion of Company Counsel, in the form attached hereto as
Exhibit D, executed by such counsel and addressed to the Purchasers and the
Placement Agents;

 

(vi)          duly executed Irrevocable Transfer Agent Instructions acknowledged
in writing by the Transfer Agent;

 

(vii)         a certificate of the Secretary of the Company (the “Secretary’s
Certificate”), dated as of the Closing Date, (a) certifying the resolutions
adopted by the board of directors of the Company (the “Board of Directors”)
approving the transactions contemplated by this Agreement and the other
Transaction Documents and the issuance of the Securities, (b) certifying the
current versions of the certificate of incorporation and by-laws of the Company,
(c) certifying the current versions of the certificate of incorporation and
by-laws of the Subsidiary, each as amended to date, and (d) certifying as to the
signatures and authority of persons signing the Transaction Documents and
related documents on behalf of the Company;

 

(viii)        the Compliance Certificate referred to in Section 5.1(h);

 

(ix)           a certificate evidencing the formation and good standing of
(i) the Company in the State of Delaware issued by the Secretary of State (or
comparable office), as of a date within three (3) days of the Closing Date; and

 

(x)            a certificate evidencing the formation and good standing of
(i) the Subsidiary in the State of Nevada issued by the Secretary of State (or
comparable office), as of a date within three (3)  days of the Closing Date; and

 

(xi)           a certified copy of the certificate of Incorporation of the
Company as certified by the Secretary of State of the State of Delaware within
three (3) days of the Closing Date.

 

(xii)          a certified copy of the certificate of incorporation of the
Subsidiary as certified by the Secretary of State of the State of Delaware
within three (3)  days of the Closing Date.

 

(b)           At Closing, each Purchaser shall deliver or cause to be delivered
to the Company the following (the “Purchaser Deliverables”):

 

(i)            this Agreement, duly executed by such Purchaser;

 

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(ii)           upon prior receipt of stock certificates and warrants, its
Subscription Amount, in United States dollars and in immediately available
funds, in the amount set forth as the “Purchase Price (Subscription Amount)”
indicated below such Purchaser’s name on the applicable signature page hereto by
wire transfer to an account designated in writing by the Company for such
purpose, as set forth on Exhibit F attached hereto;

 

(iii)          the Registration Rights Agreement, duly executed by such
Purchaser;

 

(iv)          a fully completed and duly executed Selling Security Holder Notice
and Questionnaire in the form attached as Annex B to the Registration Rights
Agreement; and

 

(v)           a fully completed and duly executed Accredited Investor
Questionnaire and Stock Certificate Questionnaire in the forms attached hereto
as Exhibits C-1 and C-2, respectively (or such other form as reasonably
acceptable to the Company).

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1     Representations and Warranties of the Company.  The Company hereby
represents and warrants to the Purchasers and to the Placement Agents that,
except as set forth in the Company’s disclosure schedules delivered herewith
(the “Schedules”):

 

(a)           Organization and Qualification.  Each of the Company and the
Subsidiary is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own or lease and use its properties and assets and to carry on its
business as currently conducted.  Each of the Company and the Subsidiary is not
in violation of any of the provisions of its Certificate of Incorporation,
by-laws or other organizational or charter documents.  The Company owns all of
the issued and outstanding equity interests of the Subsidiary. Other than with
respect to the Subsidiary, the Company does not directly or indirectly own any
security or beneficial interest in any other Person (including through joint
venture or partnership agreements) or have any interest in any other Person.
Each of the Company and the Subsidiary is duly qualified to conduct business and
is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not have or reasonably
be expected to have, individually or in the aggregate, resulted in a Material
Adverse Effect, and no Action has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.

 

(b)           Authorization; Enforcement; Validity.  The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents to which it is a
party and otherwise to carry out its obligations hereunder and thereunder.  The
execution and delivery of each of the Transaction Documents to which it is a
party by the Company and the consummation by it of the transactions contemplated
hereby and thereby (including, but not limited to, the sale and delivery of the
Shares and the Warrants and the subsequent issuance of the Warrant Shares upon
exercise of the Warrants) have been duly authorized by all necessary corporate
action on the part of the Company, and no further corporate action is required
by the Company, its Board of Directors or its stockholders in connection
therewith other than in connection with the Required Approvals.  Each of the
Transaction Documents to which it is a party has been (or upon delivery will
have been) duly executed by the Company and is, or when delivered in accordance
with the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization,

 

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moratorium, liquidation or similar laws relating to, or affecting generally the
enforcement of, creditors’ rights and remedies or by other equitable principles
of general application. There are no stockholder agreements, voting agreements,
or other similar arrangements with respect to the Company’s capital stock to
which the Company is a party.

 

(c)           No Conflicts.  The execution, delivery and performance by the
Company of the Transaction Documents to which it is a party and the consummation
by the Company of the transactions contemplated hereby or thereby (including,
without limitation, the issuance of the Shares and the reservation for issuance
and issuance of the Warrant Shares) do not and will not (i) conflict with or
violate any provision of the Company’s certificate of incorporation, by-laws or
other organizational or charter documents, (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the properties or
assets of the Company or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a Company
debt or otherwise) to which the Company is a party or by which any property or
asset of the Company is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including federal and
state securities laws and regulations and the rules and regulations, assuming
the correctness of the representations and warranties made by the Purchasers
herein, of any self-regulatory organization to which the Company or its
securities are subject, including all applicable Trading Markets), or by which
any property or asset of the Company is bound or affected, except in the case of
clauses (ii) and (iii), such as would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect.

 

(d)           Filings, Consents and Approvals.  The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents
(including the issuance of the Securities), other than (i) the filing with the
Commission of one or more Registration Statements in accordance with the
requirements of the Registration Rights Agreement, (ii) filings required by
applicable state securities laws, (iii) the filing of a Notice of Sale of
Securities on Form D with the Commission under Regulation D, (iv) the filing of
any requisite notices and/or application(s) to the Principal Trading Market for
the issuance and sale of the Shares and the Warrants and the listing of the
Shares and Warrant Shares for trading or quotation, as the case may be, thereon
in the time and manner required thereby (except as disclosed on Schedule
3.1(d)), (v) the filings required in accordance with Section 4.7 of this
Agreement and (vi) those that have been made or obtained prior to the date of
this Agreement (collectively, the “Required Approvals”).

 

(e)           Issuance of the Securities.  The Shares have been duly authorized
and, when issued and paid for in accordance with the terms of the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens, other than restrictions on transfer provided for in the
Transaction Documents or imposed by applicable securities laws, and shall not be
subject to preemptive or similar rights of stockholders.  The Warrants have been
duly authorized and, when issued and paid for in accordance with the terms of
the Transaction Documents, will be duly and validly issued, free and clear of
all Liens, other than restrictions on transfer provided for in the Transaction
Documents or imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights of stockholders. The Warrant Shares issuable upon
exercise of the Warrants have been duly authorized and, when issued and paid for
in accordance with the terms of the Transaction Documents and the Warrants, will
be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens, other than restrictions on transfer provided for in the Transaction
Documents or imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights of stockholders.  Assuming the accuracy of the
representations and warranties of the

 

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Purchasers in this Agreement, the Securities will be issued in compliance with
applicable federal and state securities laws.  The Company shall, so long as any
of the Warrants are outstanding, take all action reasonably necessary to reserve
and keep available out of its authorized and unissued capital stock, solely for
the purpose of effecting the exercise of the Warrants, all of the Warrant Shares
issuable upon exercise of the Warrants.

 

(f)            Capitalization. The authorized capital stock of the Company
consists of 100,000,000 shares of its Common Stock and 20,000,000 shares of its
preferred stock, par value $0.001 per share (the “Preferred Stock”) As of the
date hereof, the issued and outstanding shares of capital stock of the Company
consisted of 45,344,431 shares of Common Stock and no shares of Preferred
Stock.  All of the outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and non-assessable, have been issued in
compliance in all material respects with all applicable federal and state
securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase any capital
stock of the Company.  Except as specified in the most recent SEC Report on
Form 10-K or 10-Q or as contemplated by the Transaction Documents: (i) no shares
of the Company’s capital stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company, or contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional shares of capital stock of the Company or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares of capital stock of the Company; (iii) there are no
outstanding securities or instruments of the Company or which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
redeem a security of the Company; (iv) the Company does not have any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement; and (v) the Company has no liabilities or obligations required to
be disclosed in the SEC Report but not so disclosed in the SEC Report, other
than those incurred in the ordinary course of the Company’s businesses and
which, individually or in the aggregate, do not or would not have a Material
Adverse Effect.

 

(g)           SEC Reports.  The Company is a publicly held company, subject to
the reporting obligations of Section 13 or 15(d) of the Exchange Act, and its
Common Stock is registered pursuant to Section 12(g) of the Exchange Act. The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it under the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or
such shorter period as the Company was required by law or regulation to file
such material) on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any such
extension. All reports of the Company filed with the Commission pursuant to the
Securities Act or Exchange Act (including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the
“SEC Reports”) complied in all material respects with the requirements of the
Securities Act and Exchange Act, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted 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.

 

(h)           Financial Statements.  The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing (or to the extent corrected
by a subsequent restatement).  Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all

 

9

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footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, year-end audit adjustments. No other
information provided by or on behalf of the Company to the Purchasers which is
not included in the SEC Reports contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made, not
misleading.

 

(i)            Tax Matters.                             The Company (i) has
accurately and timely prepared and filed all foreign, federal and state income
and all other tax returns, reports and declarations required by any jurisdiction
to which it is subject, (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith, with respect to which adequate reserves have been set aside on the
books of the Company and (iii) has set aside on its books provisions reasonably
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply, except, in the case of
clauses (i) and (ii) above, where the failure to so pay or file any such tax,
assessment, charge or return would not result in a Material Adverse Effect. 
There are no unpaid taxes in any material amount claimed to be due by the
Company by the taxing authority of any jurisdiction.

 

(j)            Material Changes.  Since the date of the latest audited financial
statements included within the SEC Reports and except as disclosed in a
subsequent SEC Report filed prior to the date of this Agreement, (i) there have
been no events, occurrences or developments that have had or that could
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables, accrued expenses and
other liabilities incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting or the manner in which it keeps its accounting books and records,
(iv) the Company has not declared or made any dividend or distribution of cash
or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock (other than in
connection with repurchases of unvested stock issued to employees of the
Company) and (v) the Company has not issued any equity securities to any
executive officer, director or Affiliate, except pursuant to an Equity Incentive
Plan or executive and director corporate arrangements disclosed in the SEC
Reports and (vi) there has not been any material change or amendment to, or any
waiver of any material right under, any contract under which the Company or any
of their assets is bound or subject. Except for the issuance of the Securities
contemplated by this Agreement, no event, liability or development has occurred
or exists with respect to the Company or its business, properties, operations or
financial condition that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made that has not
been publicly disclosed at least one Business Day prior to the date that this
representation is made.

 

(k)           Environmental Matters.  To the Company’s Knowledge, the Company
and the Subsidiary (i) is not in violation of any statute, rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), (ii) does not own or operate any real property contaminated with any
substance that is in violation of any Environmental Laws, (iii) is not liable
for any off-site disposal or contamination pursuant to any Environmental Laws,
and (iv) is not subject to any claim relating to any Environmental Laws; which
violation, contamination, liability or claim has had or could reasonably be
expected to have a Material Adverse Effect, individually or in the aggregate;
and there is no pending or, to the Company’s Knowledge, threatened investigation
that might lead to such a claim. The Company has not assumed (whether expressly
or by operation of law), undertaken, provided an indemnity with respect to, or
to the Company’s Knowledge, otherwise become subject to, any liability arising
out of

 

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Environmental Laws (including without limitation any obligation for corrective
action, remedial action, or closure) of any other Person.  Except for any
liability that would not reasonably be expected to have a Material Adverse
Effect, whether individually or in the aggregate, there is no liability
(contingent or otherwise) in connection with any release or threatened release
of any hazardous substance or solid waste into the environment as a result of or
with respect to the business, assets or operations of the Company or the
Subsidiary.

 

(l)            Litigation.  There is no Action which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the Securities or (ii) except as specifically disclosed in the SEC
Reports, would, if there were an unfavorable decision, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect.  Neither the Company, nor, to the Company’s Knowledge, any current
director or executive officer thereof (in his or her capacity thereof), is or
has been during the five-year period prior to the Closing Date the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty.  There has not been and,
to the Company’s Knowledge, there is not pending or contemplated, any
investigation by the Commission involving the Company or, to the Company’s
Knowledge, any current or former director or executive officer of the Company
(in his or her capacity as such).  The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company under the Exchange Act or the Securities Act.

 

(m)          Employment Matters.  No material labor dispute exists or, to the
Company’s Knowledge, is imminent with respect to any of the employees of the
Company which could reasonably be expected to result in a Material Adverse
Effect.  None of the Company’s employees is a member of a union that relates to
such employee’s relationship with the Company, the Company is not a party to a
collective bargaining agreement, and the Company believes that its relationship
with its employees is satisfactory.  No executive officer, to the Company’s
Knowledge, is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant, and the continued employment of each such executive
officer does not subject the Company to any liability with respect to any of the
foregoing matters.  To the Company’s Knowledge, the Company is in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The consummation of the transactions contemplated by the
Transaction Documents will not (i) entitle any current or former employee or
other service provider of the Company or the Subsidiary to severance benefits or
any other payment, compensation or benefit (including forgiveness of
indebtedness), or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation or benefit due any such employee or service provider,
alone or in conjunction with any other possible event (including termination of
employment).

 

(n)           Compliance.  The Company is not (i)  in default under or in
violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the Company), nor
has the Company received notice of a claim that it is in default under or that
it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been waived),
(ii) in violation of any order of any court, arbitrator or governmental body
having jurisdiction over the Company or its properties or assets, or (iii) in
violation of, or in receipt of notice that it is in violation of, any statute,
rule or regulation of any governmental authority applicable to the Company,
except in each case as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.

 

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(o)           Regulatory Permits.  The Company possesses all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct its business as described in
the SEC Reports, except where the failure to possess such permits, individually
or in the aggregate, has not and could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and the Company has not received
any notice of proceedings relating to the revocation or modification of any such
Material Permits.

 

(p)           Defensible Title to Properties.  For purposes of this Agreement,
the term “Properties” shall mean all of the right, title and interest of the
Company or the Subsidiary, as applicable, in and to all of the oil, gas and
mineral leases described or referred to on Schedule 3.1(p), attached hereto and
made a part hereof, the leasehold estates created thereby and any other real
property interests described in Schedule 3.1(p), together with all the property
and rights incident and appurtenant thereto, including without limitation the
undivided interests in and to such Properties and the wells or units located
thereon or applicable thereto set forth in Schedule 3.1(p).  The Company and the
Subsidiary, as applicable, own Defensible Title (as hereinafter defined) in and
to each of the Properties.  For purposes of this Agreement, the term “Defensible
Title” means that, subject to and except for the Existing Encumbrances:

 

(i)            The Company and the Subsidiary, as applicable, (X) are entitled
to receive not less than the net revenue interest set forth opposite each well
or unit on Schedule 3.1(p) of all hydrocarbons produced, saved and marketed from
each such well or unit, without reduction, suspension or termination of such
interest throughout the duration of the life of such well or unit, except as
specifically set forth on Schedule 3.1(p), and subject to (1) the effects of
overriding royalty interests and similar payments out of production that burden
the leasehold interest in such Property and that were in existence at the time
of the acquisition of such Property by the Company or the Subsidiary or that
were subsequently created pursuant to the terms of a valid agreement that was in
effect prior to the time of acquisition of such Property by the Company or the
Group Subsidiary, and (B) the effects of pooling or unitization, whether
voluntary or involuntary, and (2) is obligated to bear the costs and expenses
relating to the maintenance, development and operation of such well or unit not
greater than the working interest set forth opposite such well or unit on
Schedule 3.1(p), without increase throughout the duration of the life of such
well or unit, except as specifically set forth on Schedule 3.1(p), and subject
to the effects of pooling or unitization, whether voluntary or involuntary;

 

(ii)           All royalties, rentals, shut-in gas payments and other payments
due with respect to such Property have been properly and timely paid, except for
payments held in suspense for title or other reasons that are customary in the
industry and that will not result in grounds for a cancellation of the rights of
the Company or the Subsidiary in such Property;

 

(iii)          Neither the Company nor the Subsidiary is in default under the
terms of any leases, farmout agreements or other contracts or agreements
respecting such Property that could reasonably be expected to (W) interfere with
the operation or use thereof, (X) result in a material diminution to the value
thereof, (Y) prevent the Company or Subsidiary from receiving the proceeds of
production attributable to their interest therein, or (Z) result in cancellation
of the interest of the Company or the Subsidiary therein; and

 

(iv)          The title of the Company and the Subsidiary in such Property is
free and clear of all liens, encumbrances and defects of any kind whatsoever.

 

(q)           Wells. Neither the Company nor the Subsidiary is an operator of
the wells in which the Company or the Subsidiary has an interest in by virtue of
its ownership of the Properties.  All of the wells in which the Company or the
Subsidiary has an interest by virtue of its ownership of the Properties and for

 

12

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which the Company or the Subsidiary is not the operator thereof, to the
knowledge of the Company, have been drilled and completed within the boundaries
of such Property or within the limits otherwise permitted by contract, pooling
or unit agreement, and by law; and, to the knowledge of the Company, all
drilling and completion of such wells and all development and operations on such
Property have been conducted in compliance in all material respects with all
applicable Laws of any court or governmental agency.  No such well is subject to
penalties on allowables because of any overproduction or any other violation of
applicable applicable laws and regulatory rules or requirements of any court or
governmental agency that would prevent such well from being entitled to its full
legal and regular allowable from and after the Closing Date as prescribed by any
court or Governmental Authority.

 

(r)            Leases.  With respect to the oil, gas and other mineral leases,
unit agreements, pooling agreements, communitization agreements and other
documents creating interests comprising the Properties, to the extent required:
(i) such interests contain no limitations as to depths covered or substances to
which such interests purport to apply; (ii) the Company and the Subsidiary have
fulfilled all requirements for filings, certificates, disclosures of parties in
interest, and other similar matters contained in (or otherwise applicable
thereto by Law) such leases or other documents that the Company or the
Subsidiary is required to fulfill and are fully qualified to own and hold all
such leases or other interests; (iii) there are no obligations to engage in
continuous development operations in order to maintain any such lease or other
interest in force and effect for the areas and depths covered thereby;
(iv) there are no provisions applicable to such leases or other documents that
increase the royalty share of the lessor thereunder except as such increases are
reflected in Schedule 3.1(p); and (v) upon the establishment and maintenance of
production in commercial quantities, the leases and other interests, or that
portion of the lease covered by unit created under a unit agreement or similar
arrangement, are to be in full force and effect over the economic life of the
Property involved and do not have terms fixed by a certain number of years.

 

(s)           Plugging and Abandonment Obligations.  To the Company’s Knowledge,
there is no well located upon any Property owned by the Company the Subsidiary
that the Company or the Subsidiary is currently obligated by law or contract to
plug and abandon and that (whether individually or in the aggregate) would
reasonably be expected to have a Material Adverse Effect.

 

(t)            Title to Assets.  Except for property that is specifically the
subject of, and covered by, other representations and warranties as to ownership
or title contained herein, the Company has good and marketable title in all
personal property owned by it that is material to its business, in each case
free and clear of all Liens, except for Liens as do not materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties.  Any real property and facilities held under lease by the
Company are held by it under valid, subsisting and enforceable leases of which
the Company is in material compliance.

 

(u)           Intellectual Property.  The Company owns, possesses, licenses or
has other rights to use all foreign and domestic patents, patent applications,
trade and service marks, trade and service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, Internet domain
names, know-how and other intellectual property (collectively, the “Intellectual
Property”) necessary for the conduct of its business as now conducted or as
proposed to be conducted.  Except as set forth in the SEC Reports and except
where such violations or infringements would not reasonably be expected to
result, either individually or in the aggregate, in a Material Adverse Effect,
(a) there are no rights of third parties to any such Intellectual Property;
(b) there is no infringement by third parties of any such Intellectual Property;
(c) there is no pending or threatened Action challenging the Company’s rights in
or to any such Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such Action; (d) there is no pending
or threatened Action challenging the validity or scope of any such Intellectual
Property; and (e) there is no pending or threatened Action that the Company
infringes or otherwise violates any patent,

 

13

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trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any other fact which would form a reasonable basis for
any such Action.

 

(v)           Insurance. The Company and the Subsidiary are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary and in accordance with sound business
practice in the businesses and locations in which the Company is engaged.  The
Company and the Subsidiary do not have any knowledge that they will be unable to
renew their existing insurance coverage for the Company and the Subsidiary as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue their business without a significant
increase in cost.  The Company and the Subsidiary have not received any notice
or other communication from any such insurer canceling or materially amending
any of such insurance policies, and no such cancellation is pending or
threatened.

 

(w)          Transactions With Affiliates and Employees.  Except as set forth in
the SEC Reports or reported on a Form 3, 4 or 5 filed with the Commission, in
either case at least ten days prior to the date hereof, and except as disclosed
on Schedule 3.1(w), none of the executive officers, directors or employees of
the Company is presently a party to any transaction with the Company (other than
for ordinary course services as employees, executive officers or directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
executive officer, director or employee or, to the Company’s Knowledge, any
corporation, partnership, trust or other entity in which any such executive
officer, director, or employee has a substantial interest or is an executive
officer, director, trustee or partner.

 

(x)            Internal Accounting Controls.  The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

 

(y)           Sarbanes-Oxley; Disclosure Controls.  The Company is in compliance
in all material respects with all of the provisions of the Sarbanes-Oxley Act of
2002, and any and all applicable rules and regulations promulgated by the
Commission thereunder, which are applicable to it as of the Closing Date.  The
Company maintains disclosure controls and procedures (as such term is defined in
Rule 13a-15(e) under the Exchange Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the
Commission, including, without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the Company’s management, including its principal executive officer or
officers and its principal financial officer or officers, as appropriate, to
allow timely decisions regarding required disclosure.

 

(z)            Certain Fees.  No person or entity will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or a Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company, other than the Placement Agents with
respect to the offer and sale of the Securities.  Such Placement Agent fees and
expenses are described on Schedule 3.1(z) hereto and are being paid by the
Company. The Company shall pay, and hold each Purchaser harmless against, any
liability, loss or expense (including, without limitation, attorneys’ fees and
out-of-pocket expenses) arising in connection with any such right, interest or
claim.

 

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(aa)         Private Placement.  Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2 of this Agreement, no
registration under the Securities Act is required for the offer and sale of the
Securities by the Company to the Purchasers under the Transaction Documents. 
Other than each of the Purchasers (with respect to the Shares and the Warrant
Shares), no Person has any right to cause the Company to effect the registration
under the Securities Act of any securities of the Company other than those
securities which are currently registered on an effective registration statement
on file with the Commission.

 

(bb)         No Directed Selling Efforts or General Solicitation.  Neither the
Company, nor any of its Affiliates, nor any Person acting on its or their behalf
has conducted any “general solicitation” or “general advertising” (as those
terms are used in Regulation D) in connection with the offer or sale of any of
the Securities.

 

(cc)         No Integrated Offering.  Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company,
its Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, at any time within the past six months, made any offers or sales of
any Company security or solicited any offers to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D in connection with the offer and sale by the
Company of the Securities as contemplated hereby or (ii) cause the offering of
the Securities pursuant to the Transaction Documents to be integrated with prior
offerings by the Company for purposes of any applicable law, regulation or
stockholder approval provisions, including, without limitation, under the
rules and regulations of any Trading Market on which any of the securities of
the Company are listed or designated.

 

(dd)         Investment Company          The Company is not, is not an Affiliate
of or “controlled” by, and immediately following the Closing will not be or
controlled by, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

 

(ee)         Rights Agreements.  The Company has not adopted a stockholder
rights plan or similar arrangement relating to accumulations of beneficial
ownership of Common Stock or a change in control of the Company.

 

(ff)           Disclosure.  The Company confirms that neither it nor any of its
executive officers or directors nor any other Person acting on its or their
behalf has provided, and it has not authorized the Placement Agents to provide,
any Purchaser with information that it believes constitutes or could reasonably
be expected to constitute material, non-public information except insofar as the
existence, provisions and terms of the Transaction Documents and the proposed
transactions hereunder may constitute such information, all of which will be
disclosed by the Company in the Press Release as contemplated by Section 4.7
hereof. The Company understands and confirms that the Purchasers will rely on
the foregoing representations in effecting transactions in securities of the
Company.  All disclosure provided to the Purchasers regarding the Company, its
business and the transactions contemplated hereby furnished by the Company or
authorized by the Company and furnished by the Placement Agents on behalf of the
Company (including the Company’s representations and warranties set forth in
this Agreement) are true and correct in all material respects and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.  No event or
circumstance has occurred or information exists with respect to the Company or
its business, properties, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed, except
for the announcement of this Agreement and related transactions.

 

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(gg)         Off Balance Sheet Arrangements.  There is no transaction,
arrangement, or other relationship between the Company and an unconsolidated or
other off balance sheet entity that is required to be disclosed by the Company
in its Exchange Act filings and is not so disclosed or that otherwise would be
reasonably likely to have a Material Adverse Effect.

 

(hh)         No Additional Agreements.  The Company does not have any agreement
or understanding with any Purchaser with respect to the transactions
contemplated by the Transaction Documents other than as specified in the
Transaction Documents and there are no promises or inducements for future
transactions by, among or between the Purchasers and any of their respective
Affiliates, and the Company and any of its Affiliates.

 

(ii)           Use of Form S-3.  The Company meets the registration and
transaction requirements for use of Form S-3 for the registration of the Shares
and the Warrant Shares for resale by the Purchasers, subject to applicable
limitations on the amount of securities that may be registered for resale
without being deemed a primary offering by or on behalf of the Company under
applicable guidelines of the Commission.

 

(jj)           Shell Company Status.  The Company is not on the date this
representation is made, and at no time since its incorporation in the State of
Delaware has been, a “shell company” (as defined in Rule 12b-2 under the
Exchange Act).

 

(kk)         DTC Status.  The Company’s transfer agent is a participant in, and
the Common Stock is eligible for transfer pursuant to, the DTC’s Fast Automated
Securities Transfer Program.

 

(mm)       Stock Options.  With respect to stock options issued pursuant to the
Company’s Equity Incentive Plan(s), (i) each stock option designated by the
Company at the time of grant as an “incentive stock option” under Section 422 of
the Code so qualifies, (ii) except as disclosed in the SEC Reports, including
the financial statements included therein, each grant of a stock option was duly
authorized no later than the date on which the grant of such stock option was by
its terms to be effective (the “Grant Date”) by all necessary corporate action,
including, as applicable, approval by the board of directors of the Company (or
a duly constituted and authorized committee thereof) and any required
stockholder approval by the necessary number of votes or written consents,
(iii) each such grant was made in accordance with the material terms of an
Equity Incentive Plan, the Securities Act and all other applicable laws and
regulatory rules or requirements, and (iv) each such grant was or has now been
properly accounted for in accordance with GAAP in the financial statements
(including the related notes) of the Company and disclosed in the Company’s
filings with the Commission in accordance with the Exchange Act and all other
applicable laws, except, in the cases of clauses (i), (ii), (iii) and (iv), for
any such failure, violation or default that would not be material to the Company
and its subsidiaries taken as a whole.

 

3.2     Representations and Warranties of the Purchasers.  Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company and the Placement Agents
as follows:

 

(a)           Organization; Authority.  If such Purchaser is not a natural
person, (i) such Purchaser is an entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization with the
requisite corporate, limited liability company or partnership power and
authority to enter into and to consummate the transactions contemplated by the
applicable Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder, and (ii) the execution, delivery and performance by
such Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate or, if such Purchaser is not a
corporation, such partnership, limited liability company or other applicable
like action, on the part of such Purchaser.  Each of this Agreement, the Warrant
and the Registration Rights Agreement has been duly executed by such Purchaser,
and when

 

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delivered by such Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Purchaser, enforceable against
it in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.

 

(b)           Investment Intent.  Such Purchaser understands that the Securities
are “restricted securities” and have not been registered under the Securities
Act or any applicable state securities law and is acquiring the Shares and, upon
exercise of the Warrants, will acquire the Warrant Shares issuable upon exercise
thereof as principal for its own account and not with a view to, or for
distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities laws, provided, however,
that by making the representations herein, such Purchaser does not agree to hold
any of the Securities for any minimum period of time and reserves the right,
subject to the provisions of this Agreement and the Registration Rights
Agreement, at all times to sell or otherwise dispose of all or any part of such
Securities or Warrant Shares pursuant to an effective registration statement
under the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws, subject to the
limitations set forth herein or in such securities laws.  Such Purchaser is
acquiring the Securities hereunder in the ordinary course of its business. Such
Purchaser does not presently have any agreement, plan or understanding, directly
or indirectly, with any Person to distribute or effect any distribution of any
of the Securities (or any securities which are derivatives thereof) to or
through any person or entity.  Such Purchaser is not a registered broker-dealer
under Section 15 of the Exchange Act or an entity engaged in a business that
would require it to be so registered as a broker-dealer.

 

(c)           Purchaser Status.  At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and on each date on which it
exercises the Warrants it will be, an “accredited investor” as defined in
Rule 501(a) under the Securities Act.

 

(d)           General Solicitation.  Such 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 advertisement.  Such Purchaser represents that it has a
pre-existing relationship with one of the Placement Agents or with the Company.

 

(e)           Experience of Such Purchaser.  Such 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.  Such 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.

 

(f)            Access to Information.  Such Purchaser acknowledges that it has
had the opportunity to review the Disclosure Materials and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Securities and the merits and risks of
investing in the Securities; (ii) access to information about the Company and
its financial condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment. Neither such
inquiries nor any other investigation conducted by or on behalf of such
Purchaser or its representatives or counsel shall modify, amend or affect such
Purchaser’s right to rely on the Company’s representations and warranties
contained in the Transaction Documents.

 

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(g)           Certain Trading Activities.  Other than with respect to the
transactions contemplated herein, since the time that such Purchaser was first
contacted by the Company, the Placement Agents or any other Person regarding the
transactions contemplated hereby, neither the Purchaser nor any Affiliate of
such Purchaser which (x) had knowledge of the transactions contemplated hereby,
(y) has or shares discretion relating to such Purchaser’s investments or trading
or information concerning such Purchaser’s investments, including in respect of
the Securities, and (z) is subject to such Purchaser’s review or input
concerning such Affiliate’s investments or trading (collectively, “Trading
Affiliates”) has directly or indirectly, nor has any Person acting on behalf of
or pursuant to any understanding with such Purchaser or Trading Affiliate,
effected or agreed to effect any transactions in the securities of the Company
(including, without limitation, any Short Sales involving the Company’s
securities). Notwithstanding the foregoing, in the case of a Purchaser and/or
Trading Affiliate that is, individually or collectively, a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser’s or Trading Affiliate’s assets and the portfolio managers
have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s or Trading Affiliate’s
assets, the representation set forth above shall apply only with respect to the
portion of assets managed by the portfolio manager that have knowledge about the
financing transaction contemplated by this Agreement.  Other than to other
Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).

 

(h)           Brokers and Finders.  Other than the Company’s obligations to the
Placement Agents, no Person will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or
upon the Company or any Purchaser for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or on
behalf of the Purchaser.

 

(i)            Limited Ownership.  The purchase by such Purchaser of the
Securities issuable to it at the Closing will not result in such Purchaser
(individually or together with other Person with whom such Purchaser has
identified, or will have identified, itself as part of a “group” in a public
filing made with the Commission involving the Company’s securities) acquiring,
or obtaining the right to acquire, in excess of 19.99% of the outstanding shares
of Common Stock or the voting power of the Company on a post transaction basis
that assumes that the Closing shall have occurred. Such Purchaser does not
presently intend to, alone or together with others, make a public filing with
the Commission to disclose that it has (or that it together with such other
Persons have) acquired, or obtained the right to acquire, as a result of the
Closing (when added to any other securities of the Company that it or they then
own or have the right to acquire), in excess of 19.99% of the outstanding shares
of Common Stock or the voting power of the Company on a post transaction basis
that assumes that the Closing shall have occurred.

 

(j)            Independent Investment Decision.  Such Purchaser has
independently evaluated the merits of its decision to purchase the Securities
pursuant to the Transaction Documents, and such Purchaser confirms that it has
not relied on the advice of any other Purchaser’s business and/or legal counsel
in making such decision.  Such Purchaser understands that nothing in this
Agreement or any other materials presented by or on behalf of the Company to the
Purchaser in connection with the purchase of the Securities constitutes legal,
tax or investment advice.  Such Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Securities.  Such Purchaser
understands that the Placement Agents have acted solely as the agent of the
Company in this placement of the Securities and such Purchaser has not relied on
the business or legal advice of the Placement Agents or any of their agents,
counsel or Affiliates in making its investment decision hereunder, and confirms
that none of such Persons has made any representations or warranties to such
Purchaser in connection with the transactions contemplated by the Transaction
Documents.

 

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(k)           Reliance on Exemptions.  Such Purchaser understands that the
Securities being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws
and that the Company is relying in part upon the truth and accuracy of, and such
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgements 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.

 

(l)            No Governmental Review.  Such Purchaser understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

(m)          Residency; Foreign Securities Laws.  Unless such Purchaser resides,
in the case of individuals, or is headquartered or formed, in the case of
entities, in the United States, such Purchaser acknowledges that the Company
will not issue any Securities in compliance with the laws of any jurisdiction
outside of the United States and the Company makes no representation or warranty
that any Securities issued outside of the United States have been offered or
sold in compliance with the laws of the jurisdiction into which such Shares were
issued.  Any Purchaser not a resident of or formed in the United States warrants
to the Company that no filing is required by the Company with any governmental
authority in such Purchaser’s jurisdiction in connection with the transactions
contemplated hereby.  If such Purchaser is domiciled or was formed outside of
the United States, such Purchaser has satisfied itself as to the full observance
of the laws of its jurisdiction in connection with the acquisition of the
Securities or any use of this Agreement, including (i) the legal requirements
within its jurisdiction for the purchase of the Securities, (ii) any foreign
exchange restrictions applicable to such purchase, (iii) any governmental or
other consents that may need to be obtained and (iv) the income tax and other
tax consequences, if any, that may be relevant to the purchase, holding,
redemption, sale or transfer of the Securities.  If such Purchaser is domiciled
or was formed outside the United States, such Purchaser’s acquisition of and
payment for, and its continued ownership of the Securities, will not violate any
applicable securities or other laws of his, her or its jurisdiction.

 

(n)           Acknowledgements Regarding Placement Agents.  Such Purchaser
acknowledges that the Placement Agents are acting as the exclusive placement
agents on a “best efforts” basis for the Securities being offered hereby and
will be compensated by the Company for acting in such capacity.  Such Purchaser
further acknowledges that the Placement Agents and their respective directors,
officers, employees, representatives and controlling persons have no
responsibility for making any independent investigation of the SEC Reports and
make no representation or warranty to the Purchaser, express or implied, with
respect to the Company or the Securities or the accuracy, completeness or
adequacy of the SEC Reports or any other publicly available information, nor
shall any of the foregoing persons be liable for any loss or damages of any kind
resulting from the use of the information contained therein or otherwise
supplied to the Purchaser.  In addition, such Purchaser acknowledges that it has
not relied on information provided by any of such persons but has conducted its
own investigation.

 

ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

 

4.1           (a)           Compliance with Laws.  Notwithstanding any other
provision of this Article IV, each Purchaser covenants that the Securities may
be disposed of only pursuant to an effective registration statement under, and
in compliance with the requirements of, the Securities Act, or pursuant to an
available exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, and in compliance with any applicable state
and federal securities laws.  In connection with any transfer of the Securities
other than (i) pursuant to an effective registration statement, (ii) to the
Company, or (iii) to an Affiliate of a Purchaser, (iv) pursuant to Rule 144
(provided that the Purchaser provides the Company with

 

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reasonable assurances (in the form of seller and broker representation letters
or an opinion of counsel, as appropriate) that the Securities may be sold
pursuant to such rule) or Rule 144A, except as otherwise provided herein, the
Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the Company,
the form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act.  As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement and the
Registration Rights Agreement.

 

(b)           Legends.  Certificates evidencing the Securities shall bear any
legend as required by the “Blue Sky” laws of any applicable state and a
restrictive legend in substantially the following form, until such time as they
are not required under Section 4.1(c):

 

[WARRANT: NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF
THESE SECURITIES HAVE BEEN REGISTERED] [SHARES: THESE SECURITIES HAVE NOT BEEN
REGISTERED] WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE
SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY.

 

(c)           Removal of Legends.  The legend set forth in Section 4.1(b) above
will be removed and the Company shall issue a certificate without such legend to
the holder of the Securities upon which it is stamped or issue to such holder by
electronic delivery at the applicable balance account at The Depository Trust
Company (“DTC”), if (i) such Securities are registered for resale under the
Securities Act, (ii) such Securities are sold or transferred pursuant to
Rule 144 (assuming the transferor is not an Affiliate of the Company) or
Rule 144A, or (iii) such Securities are eligible for sale under Rule 144 without
application of the requirements of paragraph (c)(i) thereof.  The Company shall
cause its counsel to issue the legal opinion referred to in the Irrevocable
Transfer Agent Instructions to the Company’s transfer agent on the Effective
Date.  If any portion of the Warrant is exercised at a time when there is an
effective registration statement to cover the resale of the Warrant Shares, or
if such Warrant Shares may be sold under Rule 144 without application of the
requirements of paragraph (c)(i) thereof, then such Warrant Shares shall be
issued free of all legends.  Following the Effective Date, or at such earlier
time as a legend is no longer required for certain Securities, the Company will
no later than three (3) Business Days following the delivery by a Purchaser to
the Company or the Transfer Agent (with notice to the Company) of (i) a legended
certificate representing such Shares or Warrant Shares (endorsed or with stock
powers attached, signatures guaranteed, and otherwise in form necessary to
affect the reissuance and/or transfer) or (ii) an exercise notice in the manner
stated in the Warrants to effect the exercise of such Warrant in accordance with
its terms and an opinion of counsel to the extent required by Section 4.1(a),
deliver or cause to be delivered to such Purchaser a certificate representing
such Securities that is free from all restrictive and other legends.  The
Company may

 

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not make any notation on its records or give instructions to the Transfer Agent
that enlarge the restrictions on transfer set forth in this Section 4.1(c).

 

(d)           Irrevocable Transfer Agent Instructions.  The Company shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue certificates or credit shares to the applicable balance accounts
at DTC, registered in the name of each Purchaser or its respective nominee(s),
for the Shares and the Warrant Shares in such amounts as specified from time to
time by each Purchaser to the Company in the form of Exhibit E attached hereto
(the “Irrevocable Transfer Agent Instructions”).

 

(e)           Acknowledgement.  Each Purchaser hereunder acknowledges its
primary responsibilities under the Securities Act and accordingly will not sell
any of the Securities or any interest therein without complying with the
requirements of the Securities Act.  While a Registration Statement remains
effective, each Purchaser hereunder may sell the shares in accordance with the
plan of distribution contained in such Registration Statement and if it does so
it will comply therewith and with the related prospectus delivery requirements
unless an exemption therefrom is available.  Each Purchaser, severally and not
jointly with the other Purchasers, agrees that if it is notified by the Company
at any time after the date any legend is removed pursuant to
Section 4.1(c) hereof that no Registration Statement is effective or that the
prospectus included in any such Registration Statement no longer complies with
the requirements of Section 10 of the Securities Act, the Purchaser will refrain
from selling such Shares and Warrant Shares until such time as the Purchaser is
notified by the Company that a Registration Statement is effective or such
prospectus is compliant with Section 10 of the Exchange Act, unless such
Purchaser is able to, and does, sell such Shares or Warrant Shares pursuant to
an available exemption from the registration requirements of Section 5 of the
Securities Act.

 

4.2     Reservation of Common Stock.  The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance from and after the Closing Date, no less than 100% of the number of
shares of Common Stock issuable upon exercise of the Warrants issued at the
Closing (without taking into account any limitations on exercise of the Warrants
set forth in the Warrants).

 

4.3     Furnishing of Information.  In order to enable the Purchasers to sell
the Securities under Rule 144, for a period of two years from the Closing, the
Company shall use its commercially reasonable efforts to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act.  During such two year period, if the Company is not required
to file reports pursuant to such laws, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule 144(c) such
information as is required for the Purchasers to sell the Shares and Warrant
Shares under Rule 144.

 

4.4           Reporting Status.  During the two year period from and after the
Closing, the Company shall not terminate its status as an issuer required to
file reports under the Exchange Act even if the Exchange Act would otherwise
permit such termination.

 

4.5           Form D and Blue Sky.  The Company agrees to file a Form D with
respect to the sale of the Shares and Warrants as required under Regulation D. 
The Company, on or before the Closing Date, shall take such action as the
Company shall reasonably determine is necessary in order to obtain an exemption
for or to qualify the Securities for sale to the Purchasers at the Closing
pursuant to this Agreement under applicable securities or “Blue Sky” laws of the
states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to the Agents’
Representative on or prior to the Closing Date.  The Company shall make all
filings and reports relating to the offer and sale of the Securities required
under applicable securities or “Blue Sky” laws of the states of the United
States following the Closing Date.

 

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4.6           No Integration.  The Company shall not, and shall use its best
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that will be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers, or
that will be integrated with the offer or sale of the Securities for purposes of
the rules and regulations of any Trading Market such that it would require
stockholder approval prior to the closing of such other transaction unless
stockholder approval is obtained before the closing of such subsequent
transaction.

 

4.7     Securities Laws Disclosure; Publicity.  By 9:00 a.m. (New York City
time) on the Business Day immediately following the execution of this Agreement,
the Company shall issue a press release (the “Press Release”) reasonably
acceptable to the Agents’ Representative disclosing all material terms of the
transactions contemplated hereby; provided, however, that the Company agrees
that it will not use the name of any Purchaser (or any of the funds or accounts
managed by it or any of its affiliates, or any trade name, trademark, trade
device, service mark, symbol or any abbreviation, contraction or simulation
thereof) in the Press Release without the prior written consent of such
Purchaser.  On or prior to the fourth (4th) Business Day following the date of
this Agreement, the Company will file a Current Report on Form 8-K with the
Commission describing the terms of the Transaction Documents (and including as
exhibits to such Current Report on Form 8-K the material Transaction Documents
(including, without limitation, this Agreement, the form of Warrant and the
Registration Rights Agreement)) provided, however, that such press release,
Form 8-K or other public disclosure shall not include the name of any of the
Purchasers, unless the Purchaser has provided its prior written consent.  . Each
Purchaser, severally and not jointly with the other Purchasers, covenants that
until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company by press release as described in this Section 4.7, such
Purchaser will maintain the confidentiality of all disclosures made to it in
connection with this transaction (including the existence and terms of this
transaction). The parties acknowledge that from and after the issuance of the
Press Release, no Purchaser shall be in possession of any material, nonpublic
information received from the Company, any of its Subsidiaries or any of its
respective officers, directors, employees or agents, with respect to the
transactions contemplated hereby that is not disclosed in the Press Release. 
The Company shall not, and shall cause each of its Subsidiaries and each of
their respective officers, directors, employees and agents, not to, provide any
Purchaser with any such material, nonpublic information regarding the Company or
any of its Subsidiaries from and after the filing of the Press Release without
the express written consent of such Purchaser.

 

4.8           Listing of Securities.  If the Company applies to have its Common
Stock or other securities listed on any other Trading Market than its Principal
Trading Market, it shall include in such application the Shares and the Warrant
Shares and will take such other action as is necessary to cause the Shares, and
the Warrant Shares to be listed on such other Trading Market as promptly as
practicable.

 

4.9           Use of Proceeds.  The Company intends to use the net proceeds from
the sale of the Securities hereunder for working capital and general corporate
purposes, including but not limited to acquisition of acreage and expenses
relating to the development of drilling projects.

 

4.10   Sales and Confidentiality After the Date Hereof.  Such Purchaser shall
not, and shall cause its Trading Affiliates not to, engage, directly or
indirectly, in any transactions in the securities of the Company (including,
without limitation, any Short Sales) during the period from the date hereof
until such time as (i) the transactions contemplated by this Agreement are first
publicly announced in the Press Release as described in Section 4.7 or (ii) this
Agreement is terminated in full pursuant to Section 6.15.  Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed investment vehicle
whereby separate portfolio managers manage separate portions of such Purchaser’s
assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing

 

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other portions of such Purchaser’s assets, the representation set forth above
shall apply only with respect to the portion of assets managed by the portfolio
manager that have knowledge about the financing transaction contemplated by this
Agreement.  Each Purchaser understands and acknowledges, severally and not
jointly with any other Purchaser, that the Commission currently takes the
position that covering a short position established prior to effectiveness of a
resale registration statement with shares included in such registration
statement would be a violation of Section 5 of the Securities Act, as set forth
in Item 65, Section 5 under Section A, of the Manual of Publicly Available
Telephone Interpretations, dated July 1997, compiled by the Office of Chief
Counsel, Division of Corporation Finance.

 

4.11   Equal Treatment of Purchasers.  No consideration shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision
of any of the Transaction Documents unless the same consideration is also
offered to all of the parties to the Transaction Documents.  For clarification
purposes, this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser, and is intended for
the Company to treat the Purchasers as a class and shall not in any way be
construed as the Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Shares or otherwise.

 

4.12   Indemnification.  Subject to the provisions of this Section 4.12, the
Company will indemnify and hold each Purchaser and its directors, officers,
shareholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a
Purchaser, or any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of such Purchaser, with respect to any of
the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of such Purchaser’s representations, warranties or
covenants under the Transaction Documents or any agreements or understandings
such Purchaser may have with any such stockholder or any violations by the
Purchaser of state or federal securities laws or any conduct by such Purchaser
which constitutes fraud, gross negligence, willful misconduct or malfeasance). 
If any action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company will have the right to
assume the defense thereof with counsel of its own choosing reasonably
acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of such
separate counsel, a material conflict on any material issue between the position
of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more
than one such separate counsel.  The Company will not be liable to any Purchaser
Party under this Agreement (i) for any settlement by a Purchaser Party effected
without the Company’s prior written consent, which shall not be unreasonably
withheld; or (ii) to the extent that a loss, claim, damage or liability is
attributable to (A) any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by such Purchaser Party in this
Agreement or in the other

 

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Transaction Documents, (B) any violations by the Purchaser of state or federal
securities laws or (C) any conduct by such Purchaser which constitutes fraud,
gross negligence, willful misconduct or malfeasance.

 

4.13   Efforts to Satisfy Conditions; Further Assurances.  Each party shall use
its commercially reasonable efforts to satisfy each of the conditions to be
satisfied by it as provided in Article V of this Agreement.  Each of the parties
shall execute such documents and other papers and take such further actions as
may be reasonably required or desirable to carry out the provisions hereof and
the transactions contemplated hereby.  Each such party shall use its reasonable
efforts to fulfill or obtain the fulfillment of the conditions to the Closing as
promptly as practicable.

 

ARTICLE V.

CONDITIONS PRECEDENT TO CLOSING

 

5.1     Conditions Precedent to the Obligations of the Purchasers to Purchase
Securities.  The obligation of each Purchaser to acquire Shares and Warrants at
the Closing is subject to the fulfillment to such Purchaser’s satisfaction, on
or prior to the Closing Date, of each of the following conditions, any of which
may be waived by such Purchaser (as to itself only):

 

(a)           Representations and Warranties.  The representations and
warranties of the Company contained herein shall be true and correct in all
material respects (except that representations and warranties that are qualified
by materiality or Material Adverse Effect shall be true and correct in all
respects) as of the date when made and as of the Closing Date, as though made on
and as of such date, except for representations and warranties that speak as of
a specific date which shall be true and correct in all material respects as of
such date;

 

(b)           Performance.  The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by it at or prior to the Closing;

 

(c)           No Injunction.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents;

 

(d)           Consents.  The Company shall have obtained in a timely fashion any
and all consents, permits, approvals, registrations and waivers necessary or
appropriate for consummation of the purchase and sale of the Securities, all of
which shall be and remain so long as necessary in full force and effect;

 

(e)           Adverse Changes.  Since the date of execution of this Agreement,
no event or series of events shall have occurred that has resulted or reasonably
could result in a Material Adverse Effect;

 

(f)            No Suspensions of Trading in Common Stock; Listing.  The Common
Stock (i) shall be designated for quotation or listed on the Principal Trading
Market and (ii) shall not have been suspended, as of the Closing Date, by the
Commission or the Principal Trading Market from trading on the Principal Trading
Market nor shall suspension by the Commission or the Principal Trading Market
have been threatened, as of the Closing Date, either (A) in writing by the
Commission or the Principal Trading Market or (B) by falling below the minimum
listing maintenance requirements of the Principal Trading Market;

 

(g)           Company Deliverables. The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a);

 

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(h)           Compliance Certificate.  The Company shall have delivered to each
Purchaser a certificate, dated as of the Closing Date and signed by its Chief
Executive Officer or its Chief Financial Officer, dated as of the Closing Date,
certifying to the fulfillment of the conditions specified in Sections 5.1(a),
(b), (c), (d), (e)  and (f); and

 

(i)            Termination.          This Agreement shall not have been
terminated as to such Purchaser in accordance with Section 6.15 herein.

 

5.2     Conditions Precedent to the Obligations of the Company to Sell
Securities.  The Company’s obligation to sell and issue the Shares and Warrants
at the Closing is subject to the fulfillment to the satisfaction of the Company
on or prior to the Closing Date of the following conditions, any of which may be
waived by the Company:

 

(a)           Representations and Warranties.  The representations and
warranties made by the Purchasers in Section 3.2 hereof shall be true and
correct in all material respects (except that representations and warranties
that are qualified by materiality or Material Adverse Effect shall be true and
correct in all respects) as of the date when made, and as of the Closing Date as
though made on and as of such date, except for representations and warranties
that speak as of a specific date which shall be true and correct in all material
respects as of such date;

 

(b)           Performance.  The Purchasers shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Purchasers at or prior to the Closing Date;

 

(c)           No Injunction.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents;

 

(d)           Consents.  The Company shall have obtained in a timely fashion any
and all consents, permits, approvals, registrations and waivers necessary or
appropriate for consummation of the purchase and sale of the Securities, all of
which shall be and remain so long as necessary in full force and effect;

 

(e)           Purchasers Deliverables.  Each Purchaser shall have delivered its
Purchaser Deliverables in accordance with Section 2.2(b); and

 

(f)            Termination.  This Agreement shall not have been terminated as to
such Purchaser in accordance with Section 6.15 herein.

 

ARTICLE VI.
MISCELLANEOUS

 

6.1     Fees and Expenses.  The Company and the Purchasers shall each pay the
fees and expenses of their respective advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party in connection
with the negotiation, preparation, execution, delivery and performance of this
Agreement.  The Company shall pay all Transfer Agents’ fees, stamp taxes and
other taxes and duties levied in connection with the sale and issuance of the
Securities to the Purchasers.

 

6.2     Entire Agreement.  The Transaction Documents, together with the Exhibits
and Schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede

 

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all prior agreements, understandings, discussions and representations, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into such documents, exhibits and schedules.  At or after the Closing,
and without further consideration, the Company and the Purchasers will execute
and deliver to the other such further documents as may be reasonably requested
in order to give practical effect to the intention of the parties under the
Transaction Documents.

 

6.3     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 (provided the sender
receives a machine-generated confirmation of successful transmission) 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, (c) the
Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service with next day delivery specified, or
(d) upon actual receipt by the party to whom such notice is required to be
given.  The address for such notices and communications shall be as follows:

 

If to the Company:

 

Voyager Oil & Gas, Inc.

 

 

2812 First Avenue North, Suite 506

 

 

Billings, MT 59101

 

 

Facsimile: 406.245.4914

 

 

 

With a copy (which shall not constitute notice hereunder) to:

 

 

 

 

 

Fredrikson & Byron, P.A.

 

 

200 South Sixth Street, Suite 4000

 

 

Minneapolis, MN 55401

 

 

Attention: Thomas F. Steichen, Esq.

 

 

Facsimile: 612.492.7000

 

 

 

If to a Purchaser:

 

To the address set forth under such Purchaser’s name on the signature
page hereof;

 

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

 

6.4     Amendments; Waivers; No Additional Consideration.  No provision of this
Agreement may be waived or amended except in a written instrument signed, in the
case of an amendment, by the Company and each of the Purchasers or, in the case
of a waiver, by the party against whom enforcement of any such waiver is
sought.  No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such
right.  No consideration shall be offered or paid to any Purchaser to amend or
consent to a waiver or modification of any provision of any Transaction Document
unless the same consideration is also offered to all Purchasers who then hold
Securities.

 

6.5     Construction.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.  The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.  This
Agreement shall be construed as if drafted

 

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jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement or any of the Transaction Documents.

 

6.6     Successors and Assigns.  The provisions of this Agreement shall inure to
the benefit of and be binding upon the parties and their successors and
permitted assigns.  This Agreement, or any rights or obligations hereunder, may
not be assigned by the Company without the prior written consent of the
Purchasers.  Any Purchaser may assign its rights hereunder in whole or in part
to any Person to whom such Purchaser assigns or transfers any Securities in
compliance with this Agreement and applicable law, provided such transferee
shall agree in writing to be bound, with respect to the transferred Securities,
by the terms and conditions of this Agreement that apply to the “Purchasers”.

 

6.7     No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except the Placement Agents are intended third party
beneficiaries of Article III hereof and each Placement Agent may enforce the
provisions of such sections of Article III directly against the parties with
obligations thereunder.

 

6.8     Governing Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof.  Each
party agrees that all Actions concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the Delaware
Courts.  Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the Delaware Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Action, any claim that it is not personally subject to the jurisdiction
of any such Delaware Court, or that such Action has been commenced in an
improper or inconvenient forum.  Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Action by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) 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 contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.  If either party shall commence a Action to
endorse any provisions of a Transaction Document, then the prevailing party in
such Action shall be reimbursed by the other party for its reasonable attorney’s
fees and other reasonable costs and expenses incurred with the investigation
preparation and prosecution of such Action.

 

6.9           Survival. Subject to applicable statute of limitations, the
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Securities.

 

6.10   Execution.  This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.  In the event that any signature is delivered by
facsimile transmission, or by e-mail delivery of a “.pdf” format data file, 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 or e-mail signature page were an original thereof.

 

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6.11   Severability.  If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

6.12   Replacement of Securities.  If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company and the Transfer Agent of such loss, theft or destruction and the
execution by the holder thereof of a customary lost certificate affidavit of
that fact and an agreement to indemnify and hold harmless the Company and the
Transfer Agent for any losses in connection therewith or, if required by the
Transfer Agent, a bond in such form and amount as is reasonably required by the
Transfer Agent.  The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Securities.  If a replacement certificate or
instrument evidencing any Securities is requested due to a mutilation thereof,
the Company may require delivery of such mutilated certificate or instrument as
a condition precedent to any issuance of a replacement.

 

6.13   Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be deemed to be amended to appropriately account for such event.

 

6.14   Independent Nature of Purchasers’ Obligations and Rights.  The
obligations of each Purchaser under any Transaction Document 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 Transaction Document.  The decision of each Purchaser to
purchase Securities pursuant to the Transaction Documents has been made by such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made or
given by any other Purchaser or by any agent or employee of any other Purchaser,
and no Purchaser and any of its agents or employees shall have any liability to
any other Purchaser (or any other Person) relating to or arising from any such
information, materials, statement or opinions.  Nothing contained herein or in
any Transaction Document, 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 acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.  Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Securities or enforcing its rights under the
Transaction Documents.  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 Transaction Documents, and it shall
not be necessary for any other Purchaser to be joined as an additional party in
any proceeding for such purpose.  The Company acknowledges that each of the
Purchasers has been provided with the same Transaction Documents for the purpose
of closing a transaction with multiple Purchasers and not because it was
required or requested to do so by any Purchaser. The Company’s obligations to
each Purchaser under this Agreement are identical to its obligations to each
other Purchaser other than such differences resulting solely from the number of
Securities purchased by such Purchaser, but regardless of whether such
obligations are memorialized herein or in another agreement between the Company
and a Purchaser.

 

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6.15   Termination. This Agreement may be terminated and the sale and purchase
of the Shares and the Warrants abandoned at any time prior to the Closing by
either the Company or any Purchaser (with respect to itself only) upon written
notice to the other, if the Closing has not been consummated on or prior to
5:00 p.m. (New York City time) on the Outside Date; provided, however, that the
right to terminate this Agreement under this Section 6.15 shall not be available
to any Person whose failure to comply with its obligations under this Agreement
has been the cause of or resulted in the failure of the Closing to occur on or
before such time.  Nothing in this Section 6.15 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents.  In the
event of a termination pursuant to this Section, the Company shall promptly
notify all non-terminating Purchasers.  Upon a termination in accordance with
this Section, the Company and the terminating Purchaser(s) shall not have any
further obligation or liability (including arising from such termination) to the
other, and no Purchaser will have any liability to any other Purchaser under the
Transaction Documents as a result therefrom.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

 

VOYAGER OIL & GAS, INC.

 

 

 

 

 

By:

/s/ James Russell J.R. Reger

 

 

Name: James Russell (J.R.) Reger

 

 

Title: Chief Executive Officer

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOR PURCHASERS FOLLOW]

 

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NAME OF PURCHASER:

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

Purchase Price (Subscription Amount): $

 

 

 

 

 

Number of Shares to be acquired:

 

 

Underlying Shares subject to Warrant:

 

 

(50.0% of the number of Shares to be acquired)

 

 

 

Tax ID No. (or Social Security No., if a natural person):

 

 

 

 

 

Address for Notice:

 

 

 

 

 

 

 

 

 

 

 

 

 

Telephone No.:

 

 

 

 

 

Facsimile No.:

 

 

 

 

 

Attention:

 

 

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EXHIBIT A

 

Form of Warrant

 

THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE.  NEITHER SUCH WARRANTS
NOR SUCH SECURITIES MAY BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT SUCH REGISTRATION, EXCEPT UPON DELIVERY TO THE COMPANY OF SUCH EVIDENCE
AS MAY BE SATISFACTORY TO COUNSEL FOR THE COMPANY TO THE EFFECT THAT ANY SUCH
TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OR APPLICABLE STATE
SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.

 

Voyager Oil & Gas, Inc.

 

Warrant for the Purchase

of Shares of Common Stock

 

Warrant No. [   ]

 

Number of Shares: [           ]

 

 

(subject to adjustment)

Original Issue Date: [   ], 2011

 

 

 

FOR VALUE RECEIVED, VOYAGER OIL & GAS, INC., a Delaware corporation (the
“Company”), hereby certifies that [                                    ], its
designee or its permitted assigns (the “Holder”), is entitled to purchase from
the Company, at any time or from time to time commencing on the date hereof and
prior to 5:00 P.M., New York City time, on February       , 2016 [5 years from
the closing of the offering] (the “Exercise Period”) up to
[                    ] ([    ]) fully paid and non-assessable shares of common
stock (subject to adjustment), $.001 par value per share, of the Company for
$7.10 per share (subject to adjustment as provided herein) for an aggregate
purchase price of $[                ].  Hereinafter, (i) said common stock,
$.001 par value per share, of the Company, is referred to as the “Common Stock,”
(ii) the shares of the Common Stock purchasable hereunder or under any other
Warrant (as hereinafter defined) are referred to as the “Warrant Shares,”
(iii) the aggregate purchase price payable for the Warrant Shares purchasable
hereunder is referred to as the “Aggregate Warrant Price,” and (iv) the price
payable for each of the Warrant Shares is referred to as the “Exercise Price.”

 

This Warrant is one of a series of similar warrants issued pursuant to a
Securities Purchase Agreement, dated February 1, 2011, by and among the Company
and the Purchasers identified therein (the “Securities Purchase Agreement”). 
All such warrants, including this Warrant and all warrants hereafter issued in
exchange or substitution for this Warrant and such other similar

 

A-1

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warrants, are collectively referred to herein as the “Warrants.”  The Holder,
together with the holders of all other Warrants, are collectively referred to
herein as the “Holders,” and Holders of more than 50% of the outstanding
Warrants are referred to as the “Majority of the Holders.”

 

1.             Exercise of Warrant.

 

(a)           At the Holder’s option, this Warrant may be exercised, in whole or
in part, at any time or from time to time during the Exercise Period, by the
Holder upon surrender of this Warrant (with the exercise notice attached as
Appendix I hereto duly executed) at the address set forth in
Section 8(a) hereof, together with (i) proper payment of the Aggregate Warrant
Price, or the proportionate part thereof if this Warrant is exercised in part,
with payment for the Warrant Shares made by certified or official bank check
payable to the order of the Company, or (ii) by indicating that this Warrant is
being exercised pursuant to a Cashless Exercise (as defined in Section 1(d)), if
then available under Section 1(d).

 

(b)           If this Warrant is exercised in part, this Warrant must be
exercised for a number of whole shares of Common Stock and the Holder is
entitled to receive a new Warrant covering the Warrant Shares that have not been
exercised and setting forth the proportionate part of the Aggregate Warrant
Price applicable to such Warrant Shares.

 

(c)           Upon surrender of this Warrant, the Company will (i) issue a
certificate or certificates in the name of the Holder for the largest number of
whole shares of the Common Stock to which the Holder shall be entitled and, if
this Warrant is exercised in whole, in lieu of any fractional share of the
Common Stock to which the Holder shall be entitled, pay to the Holder cash in an
amount equal to the fair value of such fractional share (determined in such
reasonable manner as the Board of Directors of the Company shall determine), and
(ii) deliver the other securities and properties receivable upon the exercise of
this Warrant, or the proportionate part thereof if this Warrant is exercised in
part, pursuant to the provisions of this Warrant.  The Company shall, upon
request of the Holder and subsequent to the date on which a registration
statement covering the resale of the Warrant Shares has been declared effective
by the Securities and Exchange Commission, use its reasonable best efforts to
deliver Warrant Shares hereunder electronically through the Depository Trust
Corporation or another established clearing corporation performing similar
functions, if available.

 

(d)           Cashless Exercise.  Notwithstanding anything contained herein to
the contrary, if a Registration Statement (as defined in the Registration Rights
Agreement) covering the Warrant Shares that are the subject of an exercise
notice is not then available for the resale of such Warrant Shares, the Holder
may, in its sole discretion, exercise this Warrant in whole or in part and, in
lieu of making the cash payment otherwise contemplated to be made to the Company
upon such exercise in payment of the Aggregate Warrant Price, elect instead to
receive upon such exercise the “Net Number” of shares of Common Stock determined
according to the following formula (a “Cashless Exercise”):

 

Net Number = (A x B) - (A x C)

 B

 

For purposes of the foregoing formula:

 

A-2

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A = the total number of shares with respect to which this Warrant is then being
exercised.

 

B = the fair market value of one share of Common Stock as provided herein.

 

C = the exercise price for the applicable Warrant Shares at the time of such
exercise.

 

For purposes of the above calculation, the “fair market value” of one share of
Common Stock shall mean (i) the closing sale price of the shares of Common Stock
(as reported by Bloomberg) on the date immediately preceding the date of the
exercise notice or (ii) or, if there is no sales price for such period, the last
sales price reported by Bloomberg for such period, or (iii) if neither of the
foregoing applies, the last sales price of such security in the over-the-counter
market on the pink sheets for such security as reported by Bloomberg, or if no
sales price is so reported for such security, the last bid price of such
security as reported by Bloomberg or (iv) if fair market value cannot be
calculated as of such date on any of the foregoing bases, the fair market value
shall be as determined by the Board of Directors of the Company in the exercise
of its good faith judgment.

 

2.             Reservation of Warrant Shares.  The Company will at all times
reserve and keep available, solely for issuance and delivery upon the exercise
of this Warrant, such number of Warrant Shares and other securities, cash and/or
property, as from time to time shall be issuable upon the exercise of this
Warrant.

 

3.             Protection Against Dilution.

 

(a)           In case the Company shall hereafter (i) pay a dividend or make a
distribution to any holder of its capital stock in shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a greater number of
shares, (iii) combine its outstanding shares of Common Stock into a smaller
number of shares or (iv) issue by reclassification of its Common Stock any
shares of capital stock of the Company, the Exercise Price shall be adjusted to
be equal to a fraction, the numerator of which shall be the Aggregate Warrant
Price and the denominator of which shall be the number of shares of Common Stock
or other capital stock of the Company that the Holder would have owned
immediately following such action had such Warrant been exercised immediately
prior thereto.  An adjustment made pursuant to this Subsection 3(a) shall become
effective immediately after the record date in the case of a dividend or
distribution, and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification.

 

(b)           In case of (i) any merger or consolidation to which the Company is
a party other than a merger or consolidation in which the Company is the
continuing corporation, or (ii) any sale or conveyance to another entity of the
property of the Company as an entirety or substantially as an entirety, or
(iii) any statutory exchange of securities with, or tender offer by, another
corporation (including any exchange effected in connection with a merger of a
third corporation into the Company), or (iv) reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(other than as a result of a subdivision or combination of shares of Common
Stock covered by Section 3(a) above), the Holder of this Warrant shall have the
right thereafter to receive on the exercise of this Warrant the kind and amount
of securities, cash or other property which the Holder would have owned or have
been entitled to receive immediately after such reclassification,

 

 

A-3

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consolidation, merger, statutory exchange, tender offer, sale or conveyance had
this Warrant been exercised immediately prior to the effective date of such
reclassification, consolidation, merger, statutory exchange, tender offer, sale
or conveyance and in any such case, if necessary, appropriate adjustment shall
be made in the application of the provisions set forth in this Section 3 with
respect to the rights and interests thereafter of the Holder of this Warrant to
the end that the provisions set forth in this Section 3 shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, in relation
to any shares of stock or other securities or property thereafter deliverable on
the exercise of this Warrant.  The above provisions of this Section 3(b) shall
similarly apply to successive reclassifications, consolidations, mergers,
statutory exchanges, sales or conveyances.  The Company shall require the issuer
of any shares of stock or other securities or property thereafter deliverable on
the exercise of this Warrant to be responsible for all of the agreements and
obligations of the Company hereunder.  Notice of any such reclassification,
consolidation, merger, statutory exchange, tender offer, sale or conveyance and
of said provisions so proposed to be made, shall be mailed to the Holders of the
Warrants as soon as reasonably practicable prior to such event.  A sale of all
or substantially all of the assets of the Company for a consideration consisting
primarily of securities shall be deemed a consolidation or merger for the
foregoing purposes.

 

(c)           All calculations under this Section 3 shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.  Anything in this
Section 3 to the contrary notwithstanding, the Company shall be entitled to make
such reductions in the Exercise Price, in addition to those required by this
Section 3, as it in its discretion shall deem to be advisable in order that any
stock dividend, subdivision of shares or distribution of rights to purchase
stock or securities convertible or exchangeable for stock hereafter made by the
Company to its stockholders shall not be taxable.

 

(d)           Whenever the Exercise Price is adjusted as provided in this
Section 3 and upon any modification of the rights of a Holder of Warrants in
accordance with this Section 3, the Company shall promptly prepare a brief
statement of the facts requiring such adjustment or modification and the manner
of computing the same and cause copies of such statement to be mailed to the
Holders of the Warrants.

 

(e)           If the Board of Directors of the Company shall declare any
dividend or other distribution with respect to the Common Stock other than a
cash distribution out of earned surplus, the Company shall mail notice thereof
to the Holders of the Warrants not less than 10 days prior to the record date
fixed for determining stockholders entitled to participate in such dividend or
other distribution.

 

(f)            If, as a result of an adjustment made pursuant to this Section 3,
the Holder of any Warrant thereafter surrendered for exercise shall become
entitled to receive shares of two or more classes of capital stock or shares of
Common Stock and other capital stock of the Company, the Board of Directors
(whose determination shall be conclusive and shall be described in a written
notice to the Holder of any Warrant promptly after such adjustment) shall
determine the allocation of the adjusted Exercise Price between or among shares
or such classes of capital stock or shares of Common Stock and other capital
stock.

 

(g)           In case any event shall occur as to which the other provisions of
this Section 3 are not strictly applicable but as to which the failure to make
any adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and

 

A-4

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principles hereof then, in each such case, the Board of Directors of the Company
shall in good faith determine the adjustment, if any, on a basis consistent with
the essential intent and principles established herein, necessary to preserve
the purchase rights represented by the Warrants.  Upon such determination, the
Company will promptly mail a copy thereof to the Holder of this Warrant and
shall make the adjustments described therein.

 

4.             Fully Paid Stock; Taxes.  The shares of the Common Stock
represented by each and every certificate for Warrant Shares delivered upon the
exercise of this Warrant shall at the time of such delivery, be duly authorized,
validly issued and outstanding, fully paid and nonassessable, and not subject to
preemptive rights or rights of first refusal, and the Company will take all such
actions as may be necessary to assure that the par value, if any, per share of
the Common Stock is at all times equal to or less than the then Exercise Price. 
The Company shall pay all documentary, stamp or similar taxes and other similar
governmental charges that may be imposed with respect to the issuance or
delivery of any Warrant Shares upon exercise of the Warrants (other than income
taxes); provided, however, that if the Warrant Shares are to be delivered in a
name other than the name of the Holder, no such delivery shall be made unless
the person requesting the same has paid to the Company the amount of transfer
taxes or charges incident thereto, if any.

 

5.             Investment Intent; Limited Transferability.

 

(a)           The Holder represents that, by accepting this Warrant, it
understands that this Warrant and any securities obtainable upon exercise of
this Warrant have not been registered for sale under Federal or state securities
laws and are being offered and sold to the Holder pursuant to one or more
exemptions from the registration requirements of such securities laws.  In the
absence of an effective registration of such securities or an exemption
therefrom, any certificates for such securities shall bear the legend set forth
on the first page hereof.  The Holder understands that it must bear the economic
risk of its investment in this Warrant and any securities obtainable upon
exercise of this Warrant for an indefinite period of time, as this Warrant and
such securities have not been registered under Federal or state securities laws
and therefore cannot be sold unless subsequently registered under such laws,
unless an exemption from such registration is available.

 

(b)           The Holder, by its acceptance of this Warrant, represents to the
Company that it is acquiring this Warrant and will acquire any securities
obtainable upon exercise of this Warrant for its own account for investment and
not with a view to, or for sale in connection with, any distribution thereof in
violation of the Securities Act.  The Holder agrees that this Warrant and any
such securities will not be sold or otherwise transferred unless (i) a
registration statement with respect to such transfer is effective under the
Securities Act and any applicable state securities laws or (ii) such sale or
transfer is made pursuant to one or more exemptions from the Securities Act.

 

(c)           In addition to the limitations set forth in Section 1, this
Warrant may not be sold, transferred, assigned or hypothecated by the Holder
except in compliance with the provisions of the Securities Act and the
applicable state securities “blue sky” laws, and is so transferable only upon
the books of the Company which it shall cause to be maintained for such
purpose.  The Company may treat the registered Holder of this Warrant as such
Holder appears on the Company’s books at any time as the Holder for all
purposes.  The Company shall permit any Holder of a Warrant or its duly
authorized attorney, upon written request during ordinary business hours, to
inspect and copy or make extracts from its books showing the registered holders
of Warrants.  All

 

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Warrants issued upon the transfer or assignment of this Warrant will be dated
the same date as this Warrant, and all rights of the holder thereof shall be
identical to those of the Holder.

 

(d)           The Holder represents that, by accepting this Warrant, it has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the Warrants or the exercise of the Warrants; and
(ii) the opportunity to request such additional information which the Company
possesses or can acquire without unreasonable effort or expense.

 

(e)           The Holder represents that, by accepting this Warrant, it did not
(i) receive or review any advertisement, article, notice or other communication
published in a newspaper or magazine or similar media or broadcast over
television or radio, whether closed circuit, or generally available; or
(ii) attend any seminar, meeting or investor or other conference whose attendees
were, to such Holder’s knowledge, invited by any general solicitation or general
advertising.

 

(f)            The Holder represents that, by accepting this Warrant, it is an
“accredited investor” within the meaning of Regulation D under the Securities
Act and that such Holder is acquiring the Warrants for its own account and not
with a present view to, or for sale in connection with, any distribution thereof
in violation of the registration requirements of the Securities Act, without
prejudice, however, to such Holder’s right, subject to the provisions of the
Securities Purchase Agreement, at all times to sell or otherwise dispose of all
or any part of such Warrants and Warrant Shares.

 

(g)           Either by reason of such Holder’s business or financial experience
or the business or financial experience of its professional advisors (who are
unaffiliated with and who are not compensated by the Company or any affiliate,
finder or selling agent of the Company, directly or indirectly), such Holder
represents that, by accepting this Warrant, it has the capacity to protect such
Holder’s interests in connection with the transactions contemplated by this
Warrant.

 

6.             Loss, etc., of Warrant.  Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant, and
of indemnity reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant, if mutilated,
the Company shall execute and deliver to the Holder a new Warrant of like date,
tenor and denomination.

 

7.             Warrant Holder Not Stockholder.  This Warrant does not confer
upon the Holder any right to vote on or consent to or receive notice as a
stockholder of the Company, as such, in respect of any matters whatsoever, nor
any other rights or liabilities as a stockholder, prior to the exercise hereof;
this Warrant does, however, require certain notices to Holders as set forth
herein.

 

8.             Communication.  No notice or other communication under this
Warrant shall be effective unless, but any notice or other communication shall
be effective and shall be deemed to have been given if, the same is in writing
and is mailed by first-class mail, postage prepaid, addressed to:

 

(a)           the Company at:

 

Voyager Oil & Gas, Inc.

 

A-6

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2812 First Avenue North, Suite 506

6.16                                         Billings, MT 59101

 

Facsimile: 406.245.4914

 

or such other address as the Company has designated in writing to the Holder, or

 

(b)           the Holder at [             ], Attn:
[                            ] or other such address as the Holder has
designated in writing to the Company.

 

9.             Headings.  The headings of this Warrant have been inserted as a
matter of convenience and shall not affect the construction hereof.

 

10.           Applicable Law.  This Warrant shall be governed by and construed
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law thereof.

 

11.           Amendment, Waiver, etc.  Except as expressly provided herein,
neither this Warrant nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that any provisions hereof may be amended, waived, discharged
or terminated upon the written consent of the Company and the Majority of the
Holders. Notwithstanding the foregoing, (i) this Warrant may be amended and the
observance of any term hereunder may be waived without the written consent of
the Holder only in a manner which applies to all Warrants in the same fashion
and (ii) the number of Warrant Shares subject to this Warrant, the Exercise
Price, and the provisions of Sections 1, 2 and 13 hereof, may not be amended,
and the right to exercise this Warrant may not be waived, without the written
consent of the Holder (it being agreed that an amendment to or waiver under any
of the provisions of Section 3 of this Warrant shall not be considered an
amendment of the number of Warrant Shares or the Exercise Price).  The Company
shall give prompt written notice to the Holder of any amendment hereof or waiver
hereunder that was effected without such Holder’s written consent.  No waivers
of any term, condition or provision of this Warrant, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.

 

*****remainder of page intentionally left blank—signature page to follow*****

 

A-7

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed this
[          ] day of [               ], 2011.

 

 

VOYAGER OIL & GAS, INC.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

A-8

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APPENDIX I

 

Form of Exercise Notice

 

(To be executed by the Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrants)

 

To:         Voyager Oil & Gas, Inc.

2812 First Avenue North, Suite 506

Billings, MT 59101

 

(1)           The undersigned is the Holder of Warrant No.                     
(the “Warrant”) issued by Voyager Oil & Gas, Inc. a Delaware corporation (the
“Company”).  Capitalized terms used herein and not otherwise defined herein have
the respective meanings set forth in the Warrant.

 

(2)           The undersigned hereby exercises its right to purchase
                     Warrant Shares pursuant to the Warrant.

 

(3)           The Holder elects to (indicate one of the following):

 

(i)            pay the sum of $               in immediately available funds to
the Company in accordance with the terms of the Warrant;

 

(ii)           effectuate a “Cashless Exercise” in accordance with the terms of
the Warrant.

 

(4)           Pursuant to this Exercise Notice, the Company shall deliver to the
Holder                            Warrant Shares in accordance with the terms of
the Warrant.

 

(5)           [INCLUDE ONLY IF WARRANT CONTAINS BLOCKER PROVISION AT THE REQUEST
OF THE PURCHASER.] [By its delivery of this Exercise Notice, the undersigned
represents and warrants to the Company that in giving effect to the exercise
evidenced hereby, the Holder will not beneficially own in excess of the number
of shares of Common Stock (as determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934) permitted to be owned under Section 11 of this
Warrant to which this notice relates.]

 

 

Dated:                              ,

 

 

Name of Holder:

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

(Signature must conform in all respects to name of

 

Holder as specified on the face of the Warrant)

 

 

A-9

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ARTICLE VII.ASSIGNMENT

 

FOR VALUE RECEIVED                                hereby sells, assigns and
transfers unto                                          the foregoing Warrant
and all rights evidenced thereby, and does irrevocably constitute and appoint
                                          , attorney, to transfer said Warrant
on the books of Voyager Oil & Gas, Inc.

 

Dated:                              , 20            

Name of Holder:

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant)

 

ARTICLE VIII.PARTIAL ASSIGNMENT

 

FOR VALUE RECEIVED                                hereby assigns and transfers
unto                                          the right to purchase
               shares of Common Stock, par value $.001 per share, of Voyager
Oil & Gas, Inc. covered by the foregoing Warrant, and a proportionate part of
said Warrant and the rights evidenced thereby, and does irrevocably constitute
and appoint                                         , attorney, to transfer such
part of said Warrant on the books of the Company.

 

Dated:                              , 20            

Name of Holder:

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant)

 

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EXHIBIT B

 

Form of Registration Rights Agreement

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (the “Agreement”) is made and entered into as
of February       , 2011 (the “Effective Date”) among Voyager Oil & Gas, Inc., a
Delaware corporation (the “Company”), [the parties set forth Exhibit A hereto]
or [each purchaser identified on the signature pages hereto (each, a “Purchaser”
and collectively, the “Purchasers”).

 

R E C I T A L S:

 

The Purchasers have purchased units from the Company (each, a “Unit”), with each
Unit consisting of one share of Common Stock and one-half of a warrant
exercisable for one share of Common Stock, pursuant to Securities Purchase
Agreements (each, a “Securities Purchase Agreement” and collectively, the
“Securities Purchase Agreements”) by and between the Company and each Purchaser.

 

The Company and the Purchasers desire to set forth the registration rights to be
granted by the Company to the Purchasers.

 

NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants, and conditions set forth herein, in the Securities
Purchase Agreements, or otherwise, the parties mutually agree as follows:

 

A G R E E M E N T:

 

1.             Certain Definitions.  As used in this Agreement, the following
terms shall have the following respective meanings:

 

“Approved Market” means the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market, the New York Stock Exchange, Inc., the NYSE
Amex Equities Exchange, or the OTC Bulletin Board.

 

“Blackout Period” means, with respect to a registration, a period in each case
commencing on the day immediately after the Company notifies the Purchasers and
Canaccord that they are required, pursuant to Section 4(f), to suspend offers
and sales of Registrable Securities during which the Company, in the good faith
judgment of its Board of Directors based on the advice of counsel, determines
(because of the existence of, or in anticipation of, any acquisition, financing
activity, or other transaction involving the Company, or the unavailability for
reasons beyond the Company’s control of any required financial statements,
disclosure of material, nonpublic information which is in its best interest not
to publicly disclose, or any other event or condition of similar significance to
the Company) that the registration and distribution of the Registrable
Securities to be covered by such registration statement, if any, would be
seriously detrimental to the Company and its shareholders and ending on the
earlier of (1) the date upon which the material non-public information
commencing the Blackout Period is disclosed to the public or ceases to be
material and (2) such time as the Company notifies the selling Holders that the
Company will no longer delay such filing of the Registration Statement,
recommence taking steps to make such Registration Statement effective, or allow
sales pursuant to such Registration Statement to resume; provided, however, that
(a) the Company shall limit its use of Blackout Periods, in the aggregate, to 60

 

B-1

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Trading Days in any 12-month period (which need not be consecutive) and (b) no
Blackout Period may commence sooner than 10 days after the end of a prior
Blackout Period.

 

“Business Day” means any day of the year, other than a Saturday, Sunday, or
other day on which the Commission is required or authorized to close.

 

“Closing Date” means February       , 2011, or such other time as is mutually
agreed between the Company and the Purchasers for the closing of the sale
referred to in the recitals above.

 

“Commission” means the Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.

 

“Common Stock” means the common stock, $0.001 par value per share, of the
Company and any and all shares of capital stock or other equity securities of:
(i) the Company which are added to or exchanged or substituted for the Common
Stock by reason of the declaration of any stock dividend or stock split, the
issuance of any distribution or the reclassification, readjustment,
recapitalization, or other such modification of the capital structure of the
Company; and (ii) any other corporation, now or hereafter organized under the
laws of any state or other governmental authority, with which the Company is
merged, which results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of the shares
or assets of the Company, if immediately after such merger, consolidation,
reorganization, or sale, the Company or the stockholders of the Company own
equity securities having in the aggregate more than 50% of the total voting
power of such other corporation.

 

“Equity Securities” means (i) any Common Stock, (ii) any security convertible,
with or without consideration, into any Common Stock (including any option to
purchase such a convertible security), (iii) any security carrying any warrant
or right to subscribe to or purchase any Common Stock, or (iv) any such warrant
or right.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.

 

“Family Member” means (a) with respect to any individual, such individual’s
spouse, any descendants (whether natural or adopted), any trust all of the
beneficial interests of which are owned by any of such individuals or by any of
such individuals together with any organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate
of any such individual, and any corporation, association, partnership, or
limited liability company all of the equity interests of which are owned by
those above described individuals, trusts, or organizations and (b) with respect
to any trust, the owners of the beneficial interests of such trust.

 

“Form S-3” mean such form under the Securities Act as in effect on the date
hereof.

 

“Holder” means each Purchaser, or any successor or Permitted Assignee of a
Purchaser, who acquire rights in accordance with this Agreement with respect to
the Registrable Securities directly or indirectly from a Purchaser, including
from any Permitted Assignee.

 

“Inspector” means any attorney, accountant, or other agent retained by a
Purchaser for the purposes provided in Section 4(j).

 

“Offering Price” means the price per Unit at which the Units have been sold to
the Purchasers pursuant to the Securities Purchase Agreements.

 

B-2

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“Permitted Assignee” means (a) with respect to a partnership, its partners or
former partners in accordance with their partnership interests, (b) with respect
to a corporation, its shareholders in accordance with their interest in the
corporation, (c) with respect to a limited liability company, its members or
former members in accordance with their interest in the limited liability
company, (d) with respect to an individual party, any Family Member of such
party, (e) an entity that is controlled by, controls, or is under common control
with a transferor, (f) with respect to an investment adviser, any client over
which such adviser exercises investment discretion , or (g) a party to this
Agreement.

 

The terms “register,” “registered,” and “registration” refers to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.

 

“Registrable Securities” means the Shares and Warrant Shares excluding (A) any
Registrable Securities that have been publicly sold or may be publicly sold
immediately without registration under the Securities Act either pursuant to
Rule 144(b) of the Securities Act or otherwise; (B) any Registrable Securities
sold by a person in a transaction pursuant to a registration statement filed
under the Securities Act; or (C) any Registrable Securities that are at the time
subject to an effective registration statement under the Securities Act.

 

“Registration Default Date” means the date which is the earlier of: (i) the
60th calendar day following the Closing Date; provided, that, if the Commission
reviews and has written comments to the filed Registration Statement, then the
Registration Default Date under this clause (i) shall be the 90th calendar day
following the Closing Date, and (ii) the fifth (5th) Trading Day following the
date on which the Company is notified by the Commission that the Registration
Statement will not be reviewed or is no longer subject to further review and
comments and the effectiveness of the Registration Statement may be accelerated;
provided, however, that in either case if the Registration Default Date falls on
a Saturday, Sunday or other day that the Commission is closed for business, the
Registration Default Date shall be extended to the next business day on which
the Commission is open for business.

 

“Registration Default Period” means the period following the Registration
Default Date during which any Registration Event occurs and is continuing.

 

“Registration Event” means the occurrence of any of the following events:

 

(a)           the Registration Statement covering Registrable Securities is not
declared effective by the Commission on or before the Registration Default Date;

 

(b)           after the SEC Effective Date, sales cannot be made pursuant to the
Registration Statement for any reason (including without limitation by reason of
a stop order, the Company’s failure to update the Registration Statement, or for
Blackout Periods that extend beyond the time and frequency permitted) but
excluding the inability of any Holder to sell the Registrable Securities covered
thereby due to market conditions or as excused pursuant to Section 3(a) or for
the reasons specified in clause (c); or

 

(c)           the Common Stock generally or the Registrable Securities
specifically are not listed or included for quotation on an Approved Market, or
trading of the Common Stock is suspended or halted on the Approved Market, which
at the time constitutes the principal market for the Common Stock, for more than
ten full, consecutive Trading Days; provided, however, a Registration Event
shall not be deemed to occur if all or substantially all trading in equity

 

B-3

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securities (including the Common Stock) is suspended or halted on the Approved
Market for any length of time.

 

“Registration Statement” means the registration statement required to be filed
by the Company pursuant to Section 3(a).

 

“Securities Act” means the Securities Act of 1933, as amended, or any similar
federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.

 

“SEC Effective Date” means the date the Registration Statement is declared
effective by the Commission.

 

“Shares” means the Company’s Common Stock sold to the Holders pursuant to the
Securities Purchase Agreements.

 

“Trading Day” means a day on which the Approved Market is open for general
trading of securities.

 

“Warrant Shares” means the shares of Common Stock underlying a warrant.

 

2.             Term.  This Agreement shall continue in full force and effect for
a period of two (2) years from the Effective Date, unless terminated sooner
hereunder.

 

3.             Registration.

 

(a)           Registration on Form S-3.  On or prior to the 30th calendar day
following the Closing Date, the Company shall file with the Commission a shelf
registration statement on Form S-3, or, if unavailable, Form S-1 relating to the
resale by the Holders of all of the Registrable Securities; provided, however,
that if the 30th calendar day following the Closing Date falls on a Saturday,
Sunday or other day that the Commission is closed for business, such deadline
shall be extended to the next business day on which the Commission is open for
business.  provided, further,, that the Company shall not be obligated to effect
any such registration, qualification, or compliance pursuant to this
Section 3(a), or keep such registration effective pursuant to Section 4: (i) in
any particular jurisdiction in which the Company would be required to qualify to
do business as a foreign corporation or as a dealer in securities under the
securities or blue sky laws of such jurisdiction or to execute a general consent
to service of process in effecting such registration, qualification, or
compliance, in each case where it has not already done so; or (ii) during any
Blackout Period.

 

(b)           Failure to File and Keep Effective the Registration Statement. If
a Registration Event occurs at any time during the term of this Agreement, then
the Company will make payments to each Purchaser as partial liquidated damages
for the minimum amount of damages to the Purchaser by reason thereof, and not as
a penalty, at a rate equal to one percent (1.0%) of the Offering Price per Unit
held by such Purchaser per month, for each calendar month of the Registration
Default Period (pro rated for any period less than 30 days). Each such payment
shall be due and payable within five days after the end of each calendar month
of the Registration Default Period until the termination of the Registration
Default Period and within five days after such termination.  Such payments shall
be in partial compensation to the Purchaser, and shall not constitute the
Purchaser’s exclusive remedy for such events.  The Registration Default Period
shall terminate upon (i) the SEC Effective Date in the case of clause (a) of the
definition of “Registration Event,” (ii) the ability of the Purchaser to effect
sales pursuant to the Registration Statement

 

B-4

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in the case of clause (b) of the definition of “Registration Event,” and
(iii) the listing or inclusion and/or trading of the Common Stock on an Approved
Market, as the case may be, in the case of clause (c) of the definition of
“Registration Event.” The amounts payable as partial liquidated damages pursuant
to this paragraph shall be payable in lawful money of the United States. 
Amounts payable as partial liquidated damages to each Purchaser hereunder with
respect to each share of Registrable Securities shall cease when the Purchaser
no longer holds such share of Registrable Securities.

 

4.             Registration Procedures.  With respect to any registration
statement filed pursuant to Section 3, the Company will use its commercially
reasonable efforts to:

 

(a)           prepare and file with the Commission with respect to such
Registrable Securities, a registration statement on Form S-3, or any other form
for which the Company then qualifies or which counsel for the Company shall deem
appropriate, and which form shall be available for the sale of the Registrable
Securities in accordance with the intended method(s) of distribution thereof,
and use its commercially reasonable efforts to cause such registration statement
to become effective as soon as possible and remain effective at least for a
period ending with the first to occur of (i) the sale of all Registrable
Securities covered by the registration statement, or (ii) two years after the
Closing Date (in each case, the “Effectiveness Period”); provided that no later
than two business days before filing with the Commission a registration
statement or prospectus or any amendments or supplements thereto, the Company
shall (i) furnish to (A) one special counsel (“Holders’ Counsel”) selected by a
majority of the Holders for the benefit of the Holders, copies of all such
documents proposed to be filed (excluding any exhibits other than applicable
underwriting documents), in substantially the form proposed to be filed, which
documents shall be subject to the review of such Holders’ Counsel, and
(ii) notify each Holder of Registrable Securities covered by such registration
statement of any stop order issued or threatened by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered. Each Holder, severally and not jointly agrees to furnish to the
Company a completed questionnaire in the form attached to this Agreement as
Exhibit B or such other form as reasonably acceptable to the Company (a “Selling
Holder Questionnaire”) not more than ten Trading Days after the Closing Date;

 

(b)           if a registration statement is subject to review by the
Commission, promptly respond to all comments and diligently pursue resolution of
any comments to the satisfaction of the Commission;

 

(c)           prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
during the Effectiveness Period (but in any event at least until expiration of
the 90-day period referred to in Section 4(3) of the Securities Act and
Rule 174, or any successor thereto, thereunder, if applicable), and comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended method(s) of disposition by the sellers thereof set
forth in such registration statement;

 

(d)           upon request by a Holder of Registrable Securities covered by such
registration statement, furnish, without charge, to such Holder (i) one copy of
such registration statement (including any exhibits thereto other than exhibits
incorporated by reference), each amendment and supplement thereto and the
prospectus included in such registration statement (including each preliminary
prospectus and any other prospectus filed under Rule 424 under the Securities
Act); provided the Company shall

 

B-5

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have no obligation to provide any document pursuant to this clause that is
available on the Commission’s EDGAR system, and (ii) the Company hereby consents
to the use of such prospectus and each amendment or supplement thereto by each
of the Holders in accordance with applicable laws and regulations in connection
with the offering and sale of the Registrable Securities covered by such
prospectus and any amendment or supplement thereto;

 

(e)           register or qualify such Registrable Securities under such other
applicable securities or blue sky laws of such jurisdictions as any Holder of
Registrable Securities covered by such registration statement reasonably
requests as may be necessary for the marketability of the Registrable Securities
within the United States (such request to be made by the time the applicable
registration statement is deemed effective by the Commission) and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such Holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such Holder; provided that the Company shall not
be required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (e),
(ii) subject itself to taxation in any such jurisdiction, or (iii) consent to
general service of process in any such jurisdiction;

 

(f)            as promptly as practicable after becoming aware of such event,
notify each Holder of such Registrable Securities at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event which comes to the Company’s attention if as a result of
such event the prospectus included in such registration statement contains an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and the Company shall promptly prepare and furnish to such Holder a supplement
or amendment to such prospectus (or prepare and file appropriate reports under
the Exchange Act) so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an 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 not misleading, unless suspension of
the use of such prospectus otherwise is authorized herein or in the event of a
Blackout Period, in which case no supplement or amendment need be furnished (or
Exchange Act filing made) until the termination of such suspension or Blackout
Period;

 

(g)           comply, and continue to comply during the period that such
registration statement is effective under the Securities Act, in all material
respects with the Securities Act and the Exchange Act and with all applicable
rules and regulations of the Commission with respect to the disposition of all
securities covered by such registration statement, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months, but not more than 18 months,
beginning with the first full calendar month after the SEC Effective Date, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act.

 

(h)           as promptly as practicable after becoming aware of such event,
notify each Holder of Registrable Securities being offered or sold pursuant to
the Registration Statement of the issuance by the Commission of any stop order
or other suspension of effectiveness of the Registration Statement at the
earliest possible time;

 

(i)            permit the Holders of Registrable Securities being included in
the Registration Statement and their legal counsel, at such Holder’s sole cost
and expense (except as otherwise specifically provided in Section 6) to review
and have a reasonable opportunity to comment on the Registration Statement and
all amendments and supplements thereto at least two Business Days prior to their
filing with the Commission;

 

B-6

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(j)            make available for inspection by any Holder and any Inspector
retained by such Holder, at such Holder’s sole expense, all records as shall be
reasonably necessary to enable such Holder to exercise its due diligence
responsibility, and cause the Company’s officers, directors, and employees to
supply all information which such Holder or any Inspector may reasonably request
for purposes of such due diligence; provided, however, that such Holder shall
hold in confidence and shall not make any disclosure of any information which
the Company determines in good faith to be confidential, and of which
determination such Holder is so notified at the time such Holder receives such
information, unless (i) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in the Registration Statement and a
reasonable time prior to such disclosure the Holder shall have informed the
Company of the need to so correct such misstatement or omission and the Company
shall have failed to correct such misstatement of omission, (ii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, or (iii) the information has
been made generally available to the public other than by disclosure in
violation of this agreement.  The Company shall not be required to disclose any
confidential information to any Inspector until and unless such Inspector shall
have entered into a confidentiality agreement with the Company with respect
thereto, substantially in the form of this Section 4(j).  Each Holder agrees
that it shall, upon learning that disclosure of such information is sought in or
by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at the Company’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the information deemed confidential.  The Company shall
hold in confidence and shall not make any disclosure of information concerning a
Holder provided to the Company pursuant to this Agreement unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) disclosure of such information to the Staff of the Division of
Corporation Finance is necessary to respond to comments raised by the Staff in
its review of the Registration Statement, (iii) disclosure of such information
is necessary to avoid or correct a misstatement or omission in the Registration
Statement, (iv) release of such information is ordered pursuant to a subpoena or
other order from a court or governmental body of competent jurisdiction, or
(v) such information has been made generally available to the public other than
by disclosure in violation of this agreement.  The Company agrees that it shall,
upon learning that disclosure of such information concerning a Holder is sought
in or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to such Holder and allow such Holder, at such Holder’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information. The Company further agrees that it
shall not disclose, in any manner whatsoever, the name of any of the Purchasers,
unless the Purchaser has provided its prior written consent;;

 

(k)           use its commercially reasonable efforts to cause all the
Registrable Securities covered by the Registration Statement to be listed or
quoted on the principal securities market on which securities of the same class
or series issued by the Company are then listed or traded;

 

(l)            provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities at all times;

 

(m)          cooperate with the Holders of Registrable Securities being offered
pursuant to the Registration Statement to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to the Registration Statement and
enable such certificates to be in such denominations or amounts as the Holders
may reasonably request and registered in such names as the Holders may request;
and

 

(n)           take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities pursuant to
the Registration Statement.

 

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5.             Suspension of Offers and Sales.  Each Holder of Registrable
Securities agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(f) hereof or of the
commencement of an Blackout Period of, such Holder shall discontinue disposition
of Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4(f) hereof or notice
of the end of the Blackout Period, and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company’s expense) all copies
(including, without limitation, any and all drafts), other than permanent file
copies, then in such Holder’s possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.  In the
event the Company shall give any such notice, the period mentioned in
Section 4(a)(iii) hereof shall be extended by the greater of (i) ten business
days or (ii) the number of days during the period from and including the date of
the giving of such notice pursuant to Section 4(f) hereof to and including the
date when each Holder of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by Section 4(f) hereof.

 

6.             Registration Expenses.  The Company shall pay all expenses in
connection with any registration, including, without limitation, all
registration, filing, stock exchange and FINRA fees, printing expenses, all fees
and expenses of complying with securities or blue sky laws, and the fees and
disbursements of counsel for the Company and of its independent accountants;
provided that, in any underwritten registration, each party shall pay for its
own underwriting discounts and commissions and transfer taxes. In no event shall
the Company shall be responsible for any broker or similar commissions or any
legal or accounting fees or other costs of the Holders.

 

7.             Assignment of Rights. No Holder may assign its rights under this
Agreement to any party without the prior written consent of the Company;
provided, however, that a Holder may assign its rights under this Agreement
without such restrictions to a Permitted Assignee as long as (a) such transfer
or assignment is effected in accordance with applicable securities laws;
(b) such transferee or assignee agrees in writing to become subject to the terms
of this Agreement; and (c) the Company is given written notice by such Holder of
such transfer or assignment, stating the name and address of the transferee or
assignee and identifying the Registrable Securities with respect to which such
rights are being transferred or assigned.

 

8.             Information by Holder.  The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may reasonably request in writing.

 

9.             Delay of Registration.  No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any registration
pursuant to this Agreement as the result of any controversy that might arise
with respect to the interpretation or implementation of this Agreement.

 

10.           Indemnification.

 

(a)           In the event of the offer and sale of Registrable Securities held
by Holders under the Securities Act, the Company shall, and hereby does,
indemnify and hold harmless, to the fullest extent permitted by law, each
Holder, its directors, officers, partners, employees, agents, members,
stockholders, representatives, affiliates, each other person who participates as
an underwriter in the offering or sale of such securities, and each other
person, if any, who controls or is under common control with such Holder

 

B-8

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or any such underwriter within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages, actions or liabilities, joint or several,
and expenses to which the Holder or any such director, officer, partner, or
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities, or expenses (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
shares were registered under the Securities Act, any preliminary prospectus,
final prospectus, or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and the Company shall reimburse the Holder, and each such director, officer,
partner, underwriter, and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating, defending, or
settling any such loss, claim, damage, liability, action, or proceeding;
provided that the foregoing shall not apply to, and the Company shall not be
liable, in any such case (i) to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof), or expense arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment, or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by or on behalf of such Holder
specifically stating that it is for use in the preparation thereof,
(ii) provided that the Company has complied with its obligations hereunder to
furnish such Holder with copies of the applicable prospectus, if the person
asserting any such loss, claim, damage, or liability (or action or proceeding in
respect thereof) who purchased the Registrable Securities that are the subject
thereof did not receive a copy of an amended preliminary prospectus or the final
prospectus (or the final prospectus as amended or supplemented) at or prior to
the written confirmation of the sale of such Registrable Securities to such
person because of the failure of such Holder or underwriter to so provide such
amended preliminary or final prospectus and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact made in such
preliminary prospectus was corrected in the amended preliminary or final
prospectus (or the final prospectus as amended or supplemented), or
(iii) provided that the plan of distribution mechanics described in the
applicable prospectus are, in form and substance, reasonable and customary for
transactions of this type, to the extent that the Holders failed to comply with
the terms of such plan of distribution mechanics. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Holders, or any such director, officer, partner, underwriter, or controlling
person and shall survive the transfer of such shares by the Holder.

 

(b)           As a condition to including any Registrable Securities to be
offered by a Holder in any registration statement filed pursuant to this
Agreement, each such Holder agrees to be bound by the terms of this Section 10
and to indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors and officers, and each other person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act, legal
counsel and accountants for the Company, any underwriter, any other Holder
selling securities in such registration statement, and any controlling person
within the meaning of the Securities Act of any such underwriter or other
Holder, against any losses, claims, damages, or liabilities, joint or several,
to which the Company or any such director or officer or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (i) an untrue
statement or alleged untrue statement in or omission or alleged omission from
such registration statement, any preliminary prospectus, final prospectus, or
summary prospectus contained therein, or any amendment or supplement thereto, if
such statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information about such Holder as a
Holder of the Company furnished to the Company, (ii) provided that the Company
has complied with its obligations hereunder to furnish such Holder with

 

B-9

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copies of the applicable prospectus, if the person asserting any such loss,
claim, damage, or liability (or action or proceeding in respect thereof) who
purchased the Registrable Securities that are the subject thereof did not
receive a copy of an amended preliminary prospectus or the final prospectus (or
the final prospectus as amended or supplemented) at or prior to the written
confirmation of the sale of such Registrable Securities to such person because
of the failure of such Holder or underwriter to so provide such amended
preliminary or final prospectus and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact made in such
preliminary prospectus was corrected in the amended preliminary or final
prospectus (or the final prospectus as amended or supplemented), or
(iii) provided that the plan of distribution mechanics described in the
applicable prospectus are, in form and substance, reasonable and customary for
transactions of this type, to the extent that the Holders failed to comply with
the terms of such plan of distribution mechanics. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Holders, or any such director, officer, partner, underwriter, or controlling
person and shall survive the transfer of such shares by the Holder, and such
Holder shall reimburse the Company, and each such director, officer, legal
counsel and accountants, underwriter, other Holder, and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating, defending, or settling and such loss, claim, damage, liability,
action, or proceeding; provided, however, that such indemnity agreement found in
this Section 10(b) shall in no event exceed the gross proceeds from the offering
received by such Holder.  Such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Company or any such
director, officer, or controlling person and shall survive the transfer by any
Holder of such shares.

 

(c)           Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
Section 10(a) or (b) hereof (including any governmental action), such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the indemnifying party of the
commencement of such action; provided that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under Section 10(a) or (b) hereof, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice.  In
case any such action is brought against an indemnified party, unless in the
reasonable judgment of counsel to such indemnified party a conflict of interest
between such indemnified and indemnifying parties may exist or the indemnified
party may have defenses not available to the indemnifying party in respect of
such claim, the indemnifying party shall be entitled to participate in and to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof, unless in such indemnified party’s reasonable judgment a
conflict of interest between such indemnified and indemnifying parties arises in
respect of such claim after the assumption of the defenses thereof or the
indemnifying party fails to defend such claim in a diligent manner, other than
reasonable costs of investigation.  Neither an indemnified nor an indemnifying
party shall be liable for any settlement of any action or proceeding effected
without its consent.  No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement, which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation.  Notwithstanding anything to
the contrary set forth herein, and without limiting any of the rights set forth
above, in any event any party shall have the right to retain, at its own
expense, counsel with respect to the defense of a claim.

 

(d)           In the event that an indemnifying party does or is not permitted
to assume the defense of an action pursuant to Section 10(c) or in the case of
the expense reimbursement obligation set forth in Section 10(a) and (b), the
indemnification required by Section 10(a) and (b) hereof shall be made by

 

B-10

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periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills received or expenses, losses, damages, or
liabilities are incurred.

 

(e)           If the indemnification provided for in this Section 10 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall (i) contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
as is appropriate to reflect the proportionate relative fault of the
indemnifying party on the one hand and the indemnified party on the other
(determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission relates to information supplied
by the indemnifying party or the indemnified party and the parties’ relative
intent, knowledge, access to information, and opportunity to correct or prevent
such untrue statement or omission), or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, not only the
proportionate relative fault of the indemnifying party and the indemnified
party, but also the relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other, as well as any other relevant
equitable considerations.  No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not guilty
of such fraudulent misrepresentation.

 

(f)            Other Indemnification.  Indemnification similar to that specified
in the preceding subsections of this Section 10 (with appropriate modifications)
shall be given by the Company and each Holder of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation or governmental authority other than the
Securities Act.

 

11.           Miscellaneous.

 

(a)           Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware and the United States of
America, both substantive and remedial. Any judicial proceeding brought against
either of the parties to this agreement or any dispute arising out of this
Agreement or any matter related hereto shall be brought in the state and federal
courts located in the State of Delaware, and by its execution and delivery of
this agreement each party to this Agreement accepts the jurisdiction of such
courts. The foregoing consent to jurisdiction shall not be deemed to confer
rights on any person other than the parties to this Agreement.

 

(b)           Successors and Assigns.  Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, Permitted Assigns, executors, and administrators of the parties
hereto.  In the event the Company merges with, or is otherwise acquired by, a
direct or indirect subsidiary of a publicly traded company, the Company shall
condition the merger or acquisition on the assumption by such parent company of
the Company’s obligations under this Agreement.

 

(c)           Entire Agreement.  This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.

 

(d)           Notices, etc. All notices or other communications which are
required or permitted under this Agreement shall be in writing and sufficient if
delivered by hand, by facsimile transmission, by registered or certified mail,
postage pre-paid, by electronic mail, or by courier or overnight carrier, to the
persons at the addresses set forth below (or at such other address as may be
provided hereunder), and shall be deemed to have been delivered as of the date
so delivered:

 

B-11

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If to the Company:

 

Voyager Oil & Gas, Inc.

 

 

2812 1st Avenue North, Suite 506

 

 

Billings, Montana 58101

 

 

Attention: Mitchell Thompson, Chief Financial Officer

 

 

Telephone: (406) 245-4901

 

 

Facsimile: (406) 245-4914

 

 

E-mail: mitch.thompson@voyageroil.com

 

 

 

With copy to:

 

Fredrickson & Byron, P.A.

 

 

200 Sought Sixth Street, Suite 4000

 

 

Minneapolis, Minnesota 55402

 

 

Attention: Thomas F. Steichen, Esq.

 

 

Telephone: (612) 492-7000

 

 

Facsimile: (612) 492-7077

 

 

E-mail: tsteichen@fredlaw.com

 

 

 

If to the Purchasers:

 

To each Purchaser at the address

 

 

set forth on Exhibit A

 

 

 

with a copy to:

 

Canaccord Genuity Inc.

 

 

Wells Fargo Plaza

 

 

1000 Louisiana, 71st Floor

 

 

Houston, Texas 77002

 

 

Attention: Christian Gibson

 

 

Telephone: (713) 331-9901

 

 

Facsimile: (713) 353-4227

 

 

E-mail: cgibson@canaccordgenuity.com

 

or at such other address as any party shall have furnished to the other parties
in writing.

 

(e)           Delays or Omissions.  No delay or omission to exercise any right,
power, or remedy accruing to any Holder of any Registrable Securities, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power, or remedy of such Holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring.  Any waiver, permit, consent, or approval
of any kind or character on the part of any Holder of any breach or default
under this Agreement, or any waiver on the part of any Holder of any provisions
or conditions of this Agreement, must be in writing and shall be effective only
to the extent specifically set forth in such writing.  All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.

 

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

 

(g)           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.

 

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(h)           Severability. In the case any provision of this Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

 

(i)            Amendments. The provisions of this Agreement may be amended at
any time and from time to time, and particular provisions of this Agreement may
be waived, with and only with an agreement or consent in writing signed by the
Company and by the holders of a majority of the number of shares of Registrable
Securities outstanding as of the date of such amendment or waiver. The
Purchasers acknowledge that by the operation of this Section 12(i), the holders
of a majority of the outstanding Registrable Securities may have the right and
power to diminish or eliminate all rights of the Purchasers under this
Agreement.

 

(j)            Limitation on Subsequent Registration Rights. After the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of at least a majority of the Registrable Shares then outstanding, enter
into any agreement with any holder or prospective holder of any securities of
the Company that would grant such holder registration rights senior to those
granted to the Holder hereunder.

 

(k)           Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.

 

[Signature Page Follows]

 

B-13

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This Registration Rights Agreement is hereby executed as of the date first above
written.

 

 

COMPANY:

 

 

 

VOYAGER OIL & GAS, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

HOLDERS:

 

 

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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