SECURITIES PURCHASE AGREEMENT


      SECURITIES  PURCHASE AGREEMENT (the "Agreement"),  dated as of January __,
2006,  by and  among  NATURAL  GAS  SYSTEMS,  INC.,  a Nevada  corporation  (the
"Company"),  and Rubicon Master Fund, a company  organized under the laws of the
Cayman Islands (the "Buyer").

      WHEREAS:

      A. The Company and the Buyer are 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 "1933 Act"), and Rule 506 of
Regulation D ("Regulation D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the 1933 Act.

      B. The Company and the Buyer entered into that certain Securities Purchase
Agreement (the "Original  Securities  Purchase  Agreement"),  dated as of May 6,
2005 (the "Original Date"), whereby the Company issued and sold to the Buyer 1.2
million shares of common stock,  $0.001 par value (the "Common  Stock"),  of the
Company (collectively, the "Original Securities").

      C.  Contemporaneously  with the  execution  and  delivery of the  Original
Agreement,  the parties  hereto  executed and  delivered a  registration  rights
agreement (the "Original  Registration Rights Agreement")  pursuant to which the
Company has agreed to provide  certain  registration  rights with respect to the
Original Securities under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.

      D. As a condition to the  consummation  of the  transactions  contemplated
hereby  the  Company  and the Buyer  have  agreed to amend  and  restate  in its
entirety the Original Registration Rights Agreement, , substantially in the form
attached  hereto as Exhibit A (as  amended or  modified  from time to time,  the
"Registration  Rights  Agreement"),  pursuant to which the Company has agreed to
provide  certain  registration  rights with  respect to the  Securities  and the
Original Securities under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.

      E. As consideration  for the Buyer's  agreement to execute and deliver the
Registration  Rights  Agreement and Buyer's payment of an aggregate amount equal
to  US$10.00,  the Company  has agreed to sell to the Buyer,  upon the terms and
conditions  stated in this Agreement,  One Hundred and Sixty Thousand  (160,000)
shares of common stock,  $0.001 par value (the "Common  Stock"),  of the Company
(collectively, the "Securities").

      NOW, THEREFORE, the Company and the Buyer hereby agree as follows:

<PAGE>

      1. PURCHASE AND SALE OF SECURITIES.

            (a) Purchase of Securities.

                  (i) Subject to the  satisfaction (or waiver) of the conditions
set forth in  Sections 6 and 7 below,  the  Company  shall issue and sell to the
Buyer,  and the Buyer agrees to purchase the Securities  from the Company on the
Closing Date (the "Closing").

                  (ii)  Closing.  The date and time of the Closing (the "Closing
Date")  shall be 10:00  a.m.,  New York City time,  on the date  hereof (or such
later  date  as is  mutually  agreed  to by the  Company  and the  Buyer)  after
notification  of  satisfaction  (or waiver) of the conditions to the Closing set
forth in Sections 6 and 7 below at the offices of Schulte  Roth & Zabel LLP, 919
Third Avenue, New York, New York 10022.

                  (iii)  Purchase  Price.  The aggregate  purchase price for the
Securities  to be purchased by the Buyer at the Closing (the  "Purchase  Price")
shall be US$10.00.

            (b) Form of Payment.  On the Closing  Date,  (i) the Buyer shall pay
its Purchase  Price to the Company for the  Securities  to be issued and sold to
the Buyer at the Closing,  by wire transfer of  immediately  available  funds in
accordance with the Company's  written wire  instructions,  and (ii) the Company
shall deliver to the Buyer certificates with respect to the Securities which the
Buyer is then purchasing issued in the name of the Buyer or its lawful designee.

      2. BUYER'S REPRESENTATIONS AND WARRANTIES.

      The Buyer represents and warrants that:

            (a) No Public Sale or  Distribution.  The Buyer is (i) acquiring the
Securities  for its own  account and not with a view  towards,  or for resale in
connection  with, the public sale or  distribution  thereof,  except pursuant to
sales  registered or exempted  under the 1933 Act;  provided,  however,  that by
making the  representations  herein, the Buyer does not agree to hold any of the
Securities  for any minimum or other  specific  term and  reserves  the right to
dispose  of the  Securities  at any time in  accordance  with or  pursuant  to a
registration  statement  or an  exemption  under  the  1933  Act.  The  Buyer is
acquiring the Securities  hereunder in the ordinary course of its business.  The
Buyer does not  presently  have any  agreement  or  understanding,  directly  or
indirectly, with any Person to distribute any of the Securities.

            (b)  Accredited   Investor  Status.  The  Buyer  is  an  "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.

            (c)  Reliance  on  Exemptions.   The  Buyer   understands  that  the
Securities  are 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
the  Buyer's  compliance  with,  the  representations,  warranties,  agreements,
acknowledgments  and  understandings  of the Buyer set forth  herein in order to
determine the  availability  of such exemptions and the eligibility of the Buyer
to acquire the Securities.

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            (d)  Information.  The Buyer  and its  advisors,  if any,  have been
furnished with all materials  relating to the business,  finances and operations
of the Company and  materials  relating to the offer and sale of the  Securities
that have been requested by the Buyer. The Buyer and its advisors,  if any, have
been  afforded the  opportunity  to ask  questions of the Company.  Neither such
inquiries nor any other due diligence  investigations  conducted by the Buyer or
its advisors,  if any, or its representatives  shall modify, amend or affect the
Buyer's right to rely on the Company's  representations and warranties contained
herein.  The Buyer understands that its investment in the Securities  involves a
high degree of risk. The Buyer has sought such accounting,  legal and tax advice
as it has  considered  necessary to make an informed  investment  decision  with
respect to its  acquisition  of the  Securities.  Buyer has made the decision to
invest in the Securities solely on the basis of publicly  available  information
about the Company in the  Company's  filings  with the  Securities  and Exchange
Commission  (the  "Public  Information").  Buyer  acknowledges  that no officer,
director, broker-dealer, placement agent, finder or other person affiliated with
the Company has given Buyer any information or made any representations, oral or
written,  other than as provided in the Public  Information,  on which Buyer has
exclusively  relied  upon in  deciding  to invest in the  Securities,  including
without  limitation,  any information  with respect to future  operations of the
Company or the economic  returns which may accrue as a result of the purchase of
the Securities.

            (e) No Governmental  Review.  The Buyer  understands  that no United
States,   federal,   state  or  province  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.

            (f)  Transfer  or  Resale.  The  Buyer  understands  that  except as
provided in the Registration Rights Agreement:  (i) the Securities have not been
and are not being  registered  under the 1933 Act or any state  securities laws,
and may not be  offered  for sale,  sold,  assigned  or  transferred  unless (A)
subsequently  registered  thereunder,  (B) the Buyer shall have delivered to the
Company an opinion of counsel  selected by the Buyer, in a generally  acceptable
form, to the effect that such Securities to be sold, assigned or transferred may
be  sold,   assigned  or   transferred   pursuant  to  an  exemption  from  such
registration,  or (C) the Buyer provides the Company with  reasonable  assurance
(including if reasonably  requested by the Company,  a legal  opinion) that such
Securities  can be sold,  assigned or  transferred  pursuant to Rule 144 or Rule
144A promulgated  under the 1933 Act, as amended,  (or a successor rule thereto)
(collectively,  "Rule 144"); (ii) any sale of the Securities made in reliance on
Rule 144 may be made only in accordance  with the terms of Rule 144 and further,
if Rule 144 is not applicable,  any resale of the Securities under circumstances
in which the seller (or the Person (as defined in Section 3(s)) through whom the
sale is made) may be deemed to be an underwriter (as that term is defined in the
1933 Act) may require compliance with some other exemption under the 1933 Act or
the rules and regulations of the SEC  thereunder;  and (iii) neither the Company
nor any other Person is under any  obligation to register the  Securities  under
the 1933 Act or any  state  securities  laws or to  comply  with the  terms  and
conditions of any exemption thereunder.

            (g)  Legends.  The Buyer  understands  that  until  such time as the
resale of the Securities have been registered under the 1933 Act as contemplated
by the Registration  Rights Agreement,  the stock certificates  representing the

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Securities,  except as set forth below, shall bear any legend as required by the
"blue  sky" laws of any  state and a  restrictive  legend in  substantially  the
following form (and a stop-transfer order may be placed against transfer of such
stock certificates):

      THE  SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN
      REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED,  OR
      APPLICABLE  STATE  SECURITIES  LAWS.  THE  SECURITIES MAY NOT BE
      OFFERED  FOR SALE,  SOLD,  TRANSFERRED  OR  ASSIGNED  (I) IN THE
      ABSENCE  OF (A) AN  EFFECTIVE  REGISTRATION  STATEMENT  FOR  THE
      SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR (B)
      AN OPINION OF COUNSEL  SELECTED  BY THE  HOLDER,  IN A GENERALLY
      ACCEPTABLE  FORM,  THAT  REGISTRATION IS NOT REQUIRED UNDER SAID
      ACT OR THAT THE  SECURITIES  MAY BE SOLD PURSUANT TO RULE 144 OR
      RULE 144A UNDER  SAID ACT.  SUBJECT TO  APPLICABLE  FEDERAL  AND
      STATE   SECURITIES  LAWS,  THE  SECURITIES  MAY  BE  PLEDGED  IN
      CONNECTION  WITH A BONA FIDE  MARGIN  ACCOUNT  OR OTHER  LOAN OR
      FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

The legend  set forth  above  shall be removed  and the  Company  shall  issue a
certificate without such legend to the holder of the Securities upon which it is
stamped,  if,  unless  otherwise  required by state  securities  laws,  (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection with
a sale,  assignment or other transfer,  such holder provides the Company with an
opinion of counsel,  in a  generally  acceptable  form,  to the effect that such
sale,  assignment or transfer of the Securities may be made without registration
under the applicable requirements of the 1933 Act, or (iii) such holder provides
the Company with reasonable  assurance (including if reasonably requested by the
Company,  a  legal  opinion)  that  the  Securities  can be  sold,  assigned  or
transferred pursuant to Rule 144 or Rule 144A.

            (h)  Authorization;  Validity;  Enforcement.  This Agreement and the
Registration  Rights  Agreement to which the Buyer is a party have been duly and
validly  authorized,  executed  and  delivered  on behalf of the Buyer and shall
constitute the legal,  valid and binding  obligations  of the Buyer  enforceable
against the Buyer in  accordance  with their  respective  terms,  except as such
enforceability  may be limited by general  principles of equity or to applicable
bankruptcy,  insolvency,  reorganization,   moratorium,  liquidation  and  other
similar laws relating to, or affecting generally,  the enforcement of applicable
creditors' rights and remedies.

            (i) Residency. The Buyer is a resident of the Cayman Islands.

            (j) No Conflicts.  The  execution,  delivery and  performance of the
Transaction  Documents  by the  Buyer and the  consummation  by the Buyer of the
transactions contemplated hereby and thereby (including, without limitation, the
purchase of the  Securities)  will not result in a violation of any  constituent
document of the Buyer or any of its subsidiaries,

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<PAGE>

            (k)  Prohibited  Transactions.  Prior to the earlier of (i) the time
that the press  release  referred to in Section  4(i) hereof has been issued and
(ii) the fifth  Business Day following  the Closing Date,  neither Buyer nor its
affiliates  will engage,  directly or indirectly,  effect or agree to effect any
short  sale,  whether or not  against  the box,  establish  any "put  equivalent
position" (as defined in Rule  16a-1(h)  under the 1934 Act) with respect to the
Common Stock, grant any other right (including,  without limitation,  any put or
call  option)  with  respect to the Common Stock or with respect to any security
that includes,  relates to or derived any significant part of its value from the
Common Stock or otherwise seek to hedge its position in the Securities.

      3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

      The Company represents and warrants to the Buyer that:

            (a)   Organization   and   Qualification.   The   Company   and  its
"Subsidiaries"  (which for purposes of this Agreement  means any entity in which
the Company,  directly or  indirectly,  owns a  controlling  interest of capital
stock or holds an equity or similar  interest) are entities  duly  organized and
validly  existing in good standing under the laws of the  jurisdiction  in which
they are formed,  and have the requisite  power and  authorization  to own their
properties  and to carry on their business as now being  conducted.  Each of the
Company  and its  Subsidiaries  is duly  qualified  as a  foreign  entity  to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business  conducted by it makes such qualification
necessary,  except to the extent  that the failure to be so  qualified  or be in
good  standing  would  not  have a  Material  Adverse  Effect.  As  used in this
Agreement,  "Material  Adverse Effect" means any material  adverse effect on the
business,  properties,  assets, operations,  results of operations, or condition
(financial or otherwise) of the Company and its Subsidiaries,  taken as a whole,
or on the transactions  contemplated hereby and the other Transaction  Documents
(as defined below) or by the  agreements  and  instruments to be entered into in
connection herewith or therewith,  or on the authority or ability of the Company
to perform its obligations under the Transaction  Documents.  The Company has no
Subsidiaries except as set forth on Schedule 3(a).

            (b)  Authorization;  Enforcement;  Validity.  The  Company  has  the
requisite  power and authority to enter into and perform its  obligations  under
this  Agreement,  the  Registration  Rights  Agreement,  and  each of the  other
agreements   entered  into  by  the  parties  hereto  in  connection   with  the
transactions  contemplated  by this Agreement  (collectively,  the  "Transaction
Documents")  and to issue the Securities in accordance with the terms hereof and
thereof. The execution and delivery of the Transaction  Documents by the Company
and the consummation by the Company of the transactions  contemplated hereby and
thereby,  including,  without limitation,  the issuance of the Securities,  have
been duly  authorized  by the  Company's  Board of  Directors  and  (other  than
securities  filings,   including  the  filing  with  the  SEC  of  one  or  more
Registration  Statements in accordance with the requirements of the Registration
Rights  Agreement) no further filing,  consent,  or authorization is required by
the Company, its Board of Directors or its stockholders.  This Agreement and the
other  Transaction  Documents  have  been duly  executed  and  delivered  by the
Company, and constitute the legal, valid and binding obligations of the Company,
enforceable  against  the Company in  accordance  with their  respective  terms,
except as such  enforceability may be limited by general principles of equity or

                                      -5-
<PAGE>

applicable bankruptcy,  insolvency,  reorganization,  moratorium, liquidation or
similar laws relating to, or affecting generally,  the enforcement of applicable
creditors' rights and remedies.

            (c) Issuance of  Securities.  The issuance of the Securities is duly
authorized  and are free from all taxes,  liens and charges  with respect to the
issue thereof. The offer and issuance by the Company of the Securities is exempt
from registration under the 1933 Act.

            (d) No Conflicts.  The  execution,  delivery and  performance of the
Transaction  Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance  of  the  Securities)  will  not  (i)  result  in a  violation  of  any
certificate  of  incorporation,  certificate  of formation,  any  certificate of
designations  or  other  constituent  documents  of  the  Company  or any of its
Subsidiaries,  any capital  stock of the Company or any of its  Subsidiaries  or
bylaws of the  Company or any of its  Subsidiaries  or (ii)  conflict  with,  or
constitute  a default  (or an event  which with  notice or lapse of time or both
would  become a default)  under,  or give to others  any rights of  termination,
amendment,   acceleration  or  cancellation  of,  any  agreement,  indenture  or
instrument to which the Company or any of its  Subsidiaries is a party, or (iii)
result in a violation of any law, rule,  regulation,  order,  judgment or decree
(including  federal and state  securities laws and regulations and the rules and
regulations of the OTC Bulletin Board or "pink sheets" (the "Principal Market"))
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its  Subsidiaries  is bound or affected,  in each
case as would not have a Material Adverse Effect.

            (e)  Consents.  The Company is not  required to obtain any  consent,
authorization  or order of, or make any filing (other than  securities  filings,
including  filing  with  the  SEC of  one or  more  Registration  Statements  in
accordance  with the  requirements  of the  Registration  Rights  Agreement)  or
registration  with,  any  court,   governmental  agency  or  any  regulatory  or
self-regulatory  agency or any other Person in order for it to execute,  deliver
or perform  any of its  obligations  under or  contemplated  by the  Transaction
Documents,  in each case in  accordance  with the terms  hereof or thereof.  All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain  pursuant to the  preceding  sentence  have been  obtained or
effected on or prior to the Closing Date,  and the Company and its  Subsidiaries
are unaware of any facts or  circumstances  which might prevent the Company from
obtaining or effecting any of the registration,  application or filings pursuant
to the  preceding  sentence.  The  Company is not in  violation  of the  listing
requirements  of the  Principal  Market and has no  knowledge  of any facts that
would  reasonably  lead to  delisting or  suspension  of the Common Stock in the
foreseeable future.

            (f)  Acknowledgment  Regarding  Buyer's Purchase of Securities.  The
Company  acknowledges and agrees that the Buyer is acting solely in the capacity
of arm's length  purchaser  with respect to the  Transaction  Documents  and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company,  (ii) an  "affiliate"  of the Company (as defined in
Rule 144) or (iii) to the knowledge of the Company, a "beneficial owner" of more
than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of
the Securities  Exchange Act of 1934, as amended (the "1934 Act")).  The Company
further acknowledges that no Buyer is acting as a financial advisor or fiduciary
of the Company  (or in any similar  capacity)  with  respect to the  Transaction

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<PAGE>

Documents and the transactions  contemplated hereby and thereby,  and any advice
given by a Buyer or any of its  representatives or agents in connection with the
Transaction  Documents and the transactions  contemplated  hereby and thereby is
merely incidental to the Buyer's purchase of the Securities. The Company further
represents  to the  Buyer  that  the  decision  of the  Company  and each of the
Subsidiaries to enter into the Transaction  Documents,  as applicable,  has been
based solely on the independent  evaluation by the Company, its Subsidiaries and
their representatives.

            (g) No General  Solicitation;  Placement  Agent's Fees.  Neither the
Company,  nor any of its  affiliates,  nor any  Person  acting  on its or  their
behalf, has engaged in any form of general  solicitation or general  advertising
(within the meaning of Regulation D) in connection with the offer or sale of the
Securities.  The Company shall be  responsible  for the payment of any placement
agent's fees,  financial advisory fees, or brokers'  commissions (other than for
persons engaged by the Buyer or its investment  advisor)  relating to or arising
out of the transactions contemplated hereby. The Company shall pay, and hold the
Buyer harmless  against,  any  liability,  loss or expense  (including,  without
limitation,  reasonable  attorney's fees and out-of-pocket  expenses) arising in
connection with any such claim.

            (h) No Integrated Offering. Other than as disclosed on Schedule 2(h)
hereto, none of the Company, its Subsidiaries,  any of their affiliates, and any
Person acting on their behalf has,  directly or  indirectly,  made any offers or
sales of any  security  or  solicited  any  offers  to buy any  security,  under
circumstances that would require registration of any of the Securities under the
1933 Act  (other  than as  disclosed  in  Schedule  3(r)  hereto)  or cause this
offering of the Securities to be integrated  with prior offerings by the Company
for purposes of the 1933 Act or any applicable  stockholder approval provisions,
including,  without limitation,  under the rules and regulations of any exchange
or automated  quotation system on which any of the securities of the Company are
listed or designated.

            (i)  Application  of Takeover  Protections;  Rights  Agreement.  The
Company and its board of directors have taken all necessary  action,  if any, in
order  to  render   inapplicable   any  control  share   acquisition,   business
combination,  poison pill (including any distribution  under a rights agreement)
or other similar anti-takeover  provision under the Certificate of Incorporation
or the laws of the  jurisdiction of its formation or otherwise which is or could
become  applicable to the Buyer as a result of the transactions  contemplated by
this Agreement,  including,  without  limitation,  the Company's issuance of the
Securities  and the Buyer's  ownership  of the  Securities.  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.

            (j) [Intentionally omitted]

            (k) SEC Documents;  Financial Statements. Other than as disclosed on
Schedule 3(k) hereto,  since May 26, 2004,  and subject to applicable  extension
periods for any late  filings,  the Company  has filed all  reports,  schedules,
forms,  statements and other  documents  required to be filed by it with the SEC
pursuant to the reporting  requirements  of the 1934 Act and no such  disclosure
has been made on a confidential  basis that remains  subject to  confidentiality
(all of the foregoing  filed prior to the date hereof and all exhibits  included
therein and  financial  statements,  notes and  schedules  thereto and documents
incorporated  by reference  therein  being  hereinafter  referred to as the "SEC
Documents").   The  Company  has  delivered  to  the  Buyer  or  its  respective
representatives  true,  correct and  complete  copies of the SEC  Documents  not
available on the EDGAR systems.  As of their respective dates, the SEC Documents
complied in all material  respects with the requirements of the 1934 Act and the
rules and  regulations of the SEC promulgated  thereunder  applicable to the SEC
Documents,  and none of the SEC Documents,  at the time they were filed with the

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SEC  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 the light of the  circumstances  under  which they were
made, not misleading.  As of their respective dates, the financial statements of
the Company  included in the SEC  Documents  complied as to form in all material
respects with  applicable  accounting  requirements  and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared  in  accordance   with  generally   accepted   accounting   principles,
consistently  applied,  during  the  periods  involved  (except  (i)  as  may be
otherwise  indicated in such financial  statements or the notes thereto, or (ii)
in the case of  unaudited  interim  statements,  to the extent  they may exclude
footnotes or may be condensed or summary  statements)  and fairly present in all
material respects the financial  position of the Company as of the dates thereof
and the  results of its  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 in writing by or on behalf of the
Company to the Buyer  which is not  included  in the SEC  Documents,  including,
without limitation,  information  referred to in Section 2(d) of this Agreement,
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.

            (l)  Absence of Certain  Changes.  Except as  disclosed  in Schedule
3(l),  since  September 30, 2005 (as disclosed in Form 10-QSB filed November 14,
2005)  there  has  been no  material  adverse  change  and no  material  adverse
development in the business,  properties,  operations,  condition  (financial or
otherwise) or results of operations of the Company or its Subsidiaries, taken as
whole,  other than  continuing  losses.  Since  September  30,  2005,  except as
disclosed  on  Exhibit  3(l),  the  Company  has not (i)  declared  or paid  any
dividends, (ii) sold any assets,  individually or in the aggregate, in excess of
$100,000  outside  of  the  ordinary  course  of  business,  (iii)  had  capital
expenditures,  individually,  in excess of $500,000 or (iv) waived any  material
rights with  respect to any  Indebtedness  or other rights in excess of $100,000
owed to it. The Company has not taken any steps to seek  protection  pursuant to
any  bankruptcy  law nor does the Company have any knowledge  that its creditors
intend to initiate involuntary bankruptcy proceedings or any actual knowledge of
any fact that would  reasonably  lead a creditor to do so. The Company is not as
of the date hereof,  and after  giving  effect to the  transaction  contemplated
hereby,  will not be,  Insolvent.  "Insolvent"  is defined  to be the  condition
wherein (A) the sum of (1) current  assets,  (2)  tangible net assets other than
oil and gas reserves,  (3) other tangible or financial assets, (4) book value of
nonproved oil and gas properties, and (5) the net present value at a ten percent
discount  rate of the future  pretax cash flows from the proved  reserves of the
Company  as  determined  under SEC  rules;  is less than the sum of (6)  current
liabilities,  (7) long term  debt,  (8)  future  obligations  under  capitalized
leases,  and (9) other  obligations  such as  indebtedness  for borrowed  money,
deferred purchase prices,  letters of credit and the like net of set aside funds
and direct contingent obligations (without  duplication);  or (B) the Company is
unable to pay its uncontested  debts and  liabilities  within thirty days of the
time that they come absolute and matured in a material amount.

                                      -8-
<PAGE>

            (m)   No   Undisclosed   Events,   Liabilities,    Developments   or
Circumstances. As of the date hereof, no material event, liability,  development
or circumstance has occurred or exists, or is reasonably  expected to occur with
respect  to the  Company  or its  Subsidiaries  or  their  respective  business,
properties, prospects, operations or financial condition, that would be required
to be  disclosed  by the Company  under  applicable  securities  laws in the SEC
Documents and that has not been disclosed.

            (n) Conduct of Business; Regulatory Permits. Neither the Company nor
its  Subsidiaries  is in  violation  of any  term  of or in  default  under  its
Certificate  of  Incorporation  or Bylaws  or their  organizational  charter  or
certificate of  incorporation or bylaws,  respectively.  Neither the Company nor
any of its Subsidiaries is in violation of any judgment,  decree or order or any
statute,  ordinance,  rule  or  regulation  applicable  to  the  Company  or its
Subsidiaries,  and neither the Company nor any of its Subsidiaries  will conduct
its  business  in  violation  of any  of  the  foregoing,  except  for  possible
violations  which would not,  individually or in the aggregate,  have a Material
Adverse Effect. Without limiting the generality of the foregoing, the Company is
not in  violation  of  any of the  rules,  regulations  or  requirements  of the
Principal Market and has no knowledge of any facts or  circumstances  that would
reasonably  lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. Since September 30, 2005, (i) the Common Stock
has been designated for quotation on the Principal  Market,  (ii) trading in the
Common Stock has not been  suspended by the SEC, the Principal  Market and (iii)
the Company has received no  communication,  written or oral,  from the SEC, the
Principal  Market regarding the suspension or delisting of the Common Stock from
the Principal Market. The Company and its Subsidiaries possess all certificates,
authorizations  and permits  issued by the  appropriate  regulatory  authorities
necessary to conduct their  respective  businesses,  except where the failure to
possess  such   certificates,   authorizations   or  permits   would  not  have,
individually or in the aggregate,  a Material  Adverse  Effect,  and neither the
Company nor any such Subsidiary has received any notice of proceedings  relating
to the revocation or  modification  of any such  certificate,  authorization  or
permit.

            (o) Foreign Corrupt Practices.  Neither the Company,  nor any of its
Subsidiaries,  nor any director, officer, agent, employee or other Person acting
on behalf of the  Company or any of its  Subsidiaries  has, in the course of its
actions for, or on behalf of, the Company (i) used any  corporate  funds for any
unlawful contribution,  gift,  entertainment or other unlawful expenses relating
to political activity;  (ii) made any direct or indirect unlawful payment to any
foreign or domestic  government official or employee from corporate funds; (iii)
violated  or is in  violation  of any  provision  of the  U.S.  Foreign  Corrupt
Practices  Act of 1977,  as amended;  or (iv) made any unlawful  bribe,  rebate,
payoff, influence payment,  kickback or other unlawful payment to any foreign or
domestic government official or employee.

            (p) Sarbanes-Oxley Act.

                  (i) The Company is in compliance  with any and all  applicable
requirements  of the  Sarbanes-Oxley  Act of 2002  that  are  effective  for the
Company as of the date hereof,  and any and all applicable rules and regulations
promulgated by the SEC  thereunder  that are effective for the Company as of the
date hereof, except where such noncompliance would not have,  individually or in
the aggregate, a Material Adverse Effect.

                                      -9-
<PAGE>

                  (ii)  Neither  the  chief  executive  officer  nor  the  chief
financial  officer of the Company shall have failed to provide,  with respect to
any SEC  Document  filed (or  required to be filed) with the SEC on or after the
date of this Agreement,  any necessary  certification in the form required under
(i) Rule  13a-14(a) or Rule  15d-14(a)  promulgated  under the Exchange  Act, as
applicable,  and (ii) Rule 13a-14(b)  promulgated  under the Exchange Act and 18
U.S.C. ss. 1350.

                  (iii) The Company expects to implement such programs and shall
take such steps reasonably  necessary to provide for its future  compliance (not
later than the relevant  statutory and regulatory  deadline  therefore) with all
provisions of Section 404 of the Sarbanes-Oxley Act that shall become applicable
to the Company and has not received, orally or in writing, any notification that
its  auditors  believe that  management  will not likely be able to complete its
assessment before the applicable  reporting deadline,  or if completed,  that it
will not likely be completed in sufficient  time for the auditor to complete its
assessment.

            (q)  Transactions  With  Affiliates.  Other  than  as  disclosed  on
Schedule 3(r) or Schedule 3(q), none of the officers,  directors or employees of
the Company is presently a party to any  transaction  with the Company or any of
its Subsidiaries (other than for ordinary course services as employees, 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  officer,  director or employee or, to the  knowledge  of the Company,  any
corporation,  partnership,  trust or other  entity  in which  any such  officer,
director,  or employee has a  substantial  interest or is an officer,  director,
trustee or partner.

            (r) Equity  Capitalization.  As of the date hereof,  the  authorized
capital stock of the Company consists of (i) 100,000,000 shares of Common Stock,
of which as of the date hereof, 24,788,364 are issued and outstanding, 4,000,000
shares are  reserved  for issuance  pursuant to the  Company's  stock option and
purchase  plans and  2,421,467  shares are  reserved  for  issuance  pursuant to
securities  (other  than  the  Securities  and  stock  options)  exercisable  or
exchangeable for, or convertible into, shares of Common Stock and (ii) 5,000,000
shares of preferred stock, $0.001 par value, of which as of the date hereof none
of which is  issued  and  outstanding  or  reserved  for  issuance.  All of such
outstanding  shares have been, or upon issuance will be,  validly issued and are
fully paid and nonassessable.  Except as disclosed in Schedule 3(r): (i) none of
the Company's share capital is 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 share capital of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements  by which the Company or any of its  Subsidiaries  is or may become
bound  to  issue  additional  share  capital  of  the  Company  or  any  of  its
Subsidiaries  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 share capital of the
Company  or  any of its  Subsidiaries;  (iii)  there  are  no  outstanding  debt
securities,  notes,  credit  agreements,  credit facilities or other agreements,
documents or instruments evidencing Indebtedness (as defined in Section 3(s)) of
the  Company or any of its  Subsidiaries  or by which the  Company or any of its
Subsidiaries  is or may become  bound;  (iv) there are no  financing  statements

                                      -10-
<PAGE>

securing obligations in any material amounts, either singly or in the aggregate,
filed  in  connection  with  the  Company;   (v)  there  are  no  agreements  or
arrangements  under which the Company or any of its Subsidiaries is obligated to
register  the sale of any of their  securities  under the 1933 Act  (except  the
Registration  Rights  Agreement);  (vi) there are no  outstanding  securities or
instruments  of  the  Company  or  any of its  Subsidiaries  which  contain  any
redemption  or  similar  provisions,  and there are no  contracts,  commitments,
understandings  or arrangements by which the Company or any of its  Subsidiaries
is or may  become  bound  to  redeem a  security  of the  Company  or any of its
Subsidiaries;   (vii)  there  are  no  securities  or   instruments   containing
anti-dilution  or similar  provisions  that will be triggered by the issuance of
the Securities;  (viii) the Company does not have any stock appreciation  rights
or "phantom  stock" plans or agreements  or any similar plan or  agreement;  and
(ix)  the  Company  and its  Subsidiaries  have no  liabilities  or  obligations
required to be  disclosed in the SEC  Documents  but not so disclosed in the SEC
Documents,  other than those incurred in the ordinary course of the Company's or
its  Subsidiaries'  respective  businesses  and  which,  individually  or in the
aggregate,  do not or would not have a Material Adverse Effect.  The Company has
furnished  to the Buyer  true,  correct  and  complete  copies of the  Company's
Certificate  of  Incorporation,  as amended  and as in effect on the date hereof
(the "Certificate of  Incorporation"),  and the Company's Bylaws, as amended and
as in effect on the date hereof (the "Bylaws"),  and the terms of all securities
convertible into, or exercisable or exchangeable for, shares of Common Stock and
the material rights of the holders thereof in respect thereto.

            (s)  Indebtedness  and Other  Contracts.  Except as disclosed in the
financial  statements and footnotes thereto on Form 10-QSB filed on November 14,
2005,  and except for trade debt  incurred in the  ordinary  course of business,
neither  the  Company  nor  any of its  Subsidiaries  (i)  has  any  outstanding
Indebtedness (as defined below),  (ii) is a party to any contract,  agreement or
instrument,  the  violation  of which,  or  default  under  which,  by the other
party(ies) to such contract,  agreement or instrument would result in a Material
Adverse  Effect,  (iii) is in violation  of any term of or in default  under any
contract,  agreement or instrument  relating to any  Indebtedness,  except where
such violations and defaults would not result, individually or in the aggregate,
in a Material Adverse Effect,  or (iv) is a party to any contract,  agreement or
instrument  relating  to any  Indebtedness,  the  performance  of which,  in the
judgment  of the  Company's  officers,  has or is  expected  to have a  Material
Adverse  Effect.  Schedule 3(s) provides a description  of the material terms of
any  such  outstanding  Indebtedness.   For  purposes  of  this  Agreement:  (x)
"Indebtedness" of any Person means, without duplication (A) all indebtedness for
borrowed  money,  (B) all  obligations  issued,  undertaken  or  assumed  as the
deferred purchase price of property or services  including,  without limitation,
"capital  leases"  in  accordance  with  U.S.  generally   accepted   accounting
principals  (other than trade  payables  entered into in the ordinary  course of
business),  (C) all reimbursement or payment obligations with respect to letters
of credit,  surety  bonds and other  similar  instruments,  (D) all  obligations
evidenced  by  notes,  bonds,  debentures  or  similar  instruments,   including
obligations  so  evidenced  incurred  in  connection  with  the  acquisition  of
property,  assets or businesses,  (E) all indebtedness  created or arising under
any  conditional  sale or  other  title  retention  agreement,  or  incurred  as
financing,  in either case with respect to any property or assets  acquired with
the  proceeds of such  indebtedness  (even though the rights and remedies of the
seller or bank  under such  agreement  in the event of  default  are  limited to
repossession or sale of such property),  (F) all monetary  obligations under any
leasing or similar  arrangement  which,  in connection  with generally  accepted
accounting principles,  consistently applied for the periods covered thereby, is

                                      -11-
<PAGE>

classified as a capital lease, (G) all  indebtedness  referred to in clauses (A)
through (F) above secured by (or for which the holder of such  Indebtedness  has
an existing  right,  contingent  or  otherwise,  to be secured by) any mortgage,
lien,  pledge,  charge,  security  interest or other  encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person  which owns such  assets or  property  has not assumed or
become  liable for the  payment  of such  indebtedness,  and (H) all  Contingent
Obligations  in respect of  indebtedness  or  obligations of others of the kinds
referred to in clauses (A) through (G) above,  provided that such amounts in (A)
through (G) collectively  exceed $100,000 (y) "Contingent  Obligation" means, as
to any Person,  any direct or indirect  liability,  contingent or otherwise,  of
that  Person  with  respect  to  any  indebtedness,  lease,  dividend  or  other
obligation  of  another  Person if the  primary  purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any  agreements  relating  thereto  will be complied  with,  or that the
holders of such  liability  will be protected (in whole or in part) against loss
with respect thereto; and (z) "Person" means an individual,  a limited liability
company,  a  partnership,   a  joint  venture,   a  corporation,   a  trust,  an
unincorporated  organization  and a  government  or  any  department  or  agency
thereof.

            (t) Absence of  Litigation.  There is no action,  suit,  proceeding,
inquiry or investigation  before or by the Principal Market,  any court,  public
board,  government agency,  self-regulatory  organization or body pending or, to
the knowledge of the Company,  threatened against or affecting the Company,  the
Common Stock or any of the Company's Subsidiaries or any of the Company's or the
Company's  Subsidiaries'  officers  or  directors,  except  as would  not have a
Material Adverse Effect.

            (u) Insurance.  The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such  amounts as  management  of the  Company  believes to be prudent and
customary  in the  businesses  in which the  Company  and its  Subsidiaries  are
engaged.  Neither  the  Company  nor any such  Subsidiary  has been  refused any
insurance  coverage  sought or applied  for and neither the Company nor any such
Subsidiary  has any  reason  to  believe  that it will not be able to renew  its
existing  insurance  coverage  as and when such  coverage  expires  or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its
business at a cost that would not have a Material Adverse Effect.

            (v)  Employee  Relations.  (i)  Neither  the  Company nor any of its
Subsidiaries  is a party to any collective  bargaining  agreement or employs any
member of a union. The Company and its Subsidiaries believe that their relations
with their  employees are good. No executive  officer of the Company (as defined
in Rule  501(f) of the 1933 Act) has  notified  the  Company  that such  officer
intends to leave the Company or otherwise  terminate such  officer's  employment
with the Company.  No executive officer of the Company,  to the knowledge of the
Company,  is in  violation  of any  material  term of any  employment  contract,
confidentiality,    disclosure    or    proprietary    information    agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant to which the Company is a party,  and the continued  employment of each
such executive  officer does not subject the Company or any of its  Subsidiaries
to any liability with respect to any of the foregoing matters.

                                      -12-
<PAGE>

                  (ii) The Company and its  Subsidiaries  are in compliance with
all federal,  state,  local and foreign laws and regulations  respecting  labor,
employment  and  employment  practices  and  benefits,  terms and  conditions of
employment and wages and hours,  except where failure to be in compliance  would
not, either  individually or in the aggregate,  reasonably be expected to result
in a Material Adverse Effect.

            (w) Title. The Company and its Subsidiaries have good and marketable
title in fee simple to all real  property and good and  marketable  title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such 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 any of its Subsidiaries, or as disclosed on Schedule
3(w) or Schedule 3(s). Any real property and facilities  held under lease by the
Company and any of its Subsidiaries are held by them under valid, subsisting and
enforceable  leases  with  such  exceptions  as  are  not  material  and  do not
materially  interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.

            (x) Intellectual  Property Rights.  The Company and its Subsidiaries
own or possess adequate rights or licenses to use all trademarks, service marks,
and all applications and registrations  therefor,  trade names, patents,  patent
rights,  copyrights,  original  works  of  authorship,   inventions,   licenses,
approvals,  governmental  authorizations,  trade secrets and other  intellectual
property  rights  ("Intellectual  Property  Rights")  necessary to conduct their
respective  businesses  as now  conducted.  None of the  Company's  Intellectual
Property  Rights  have  expired  or  terminated,  or are  expected  to expire or
terminate,  within three years from the date of this Agreement. The Company does
not have any  knowledge  of any  material  infringement  by the  Company  or its
Subsidiaries  of  Intellectual  Property  Rights of  others.  There is no claim,
action or proceeding being made or brought,  or to the knowledge of the Company,
being  threatened,  against  the  Company  or  its  Subsidiaries  regarding  its
Intellectual  Property  Rights,  except as would have a Material Adverse Effect.
The Company is unaware of any facts or  circumstances  that would  reasonably be
expected to give rise to any of the foregoing  infringements or claims,  actions
or proceedings.  The Company and its Subsidiaries have taken reasonable security
measures  to  protect  the  secrecy,  confidentiality  and value of all of their
Intellectual Property Rights.

            (y) Environmental  Laws. The Company and its Subsidiaries (i) are in
compliance with any and all Environmental  Laws (as hereinafter  defined),  (ii)
have received all permits,  licenses or other  approvals  required of them under
applicable  Environmental Laws to conduct their respective  businesses and (iii)
are in compliance  with all terms and conditions of any such permit,  license or
approval  where,  in each of the  foregoing  clauses  (i),  (ii) and (iii),  the
failure to so comply could be reasonably  expected to have,  individually  or in
the aggregate,  a Material Adverse Effect. The term  "Environmental  Laws" means
all federal, state, local or foreign laws relating to pollution or protection of
human health or the environment  (including,  without  limitation,  ambient air,
surface  water,  groundwater,  land surface or  subsurface  strata),  including,
without  limitation,  laws  relating  to  emissions,   discharges,  releases  or
threatened  releases  of  chemicals,  pollutants,   contaminants,  or  toxic  or
hazardous substances or wastes  (collectively,  "Hazardous  Materials") into the
environment, or otherwise relating to the manufacture, processing, distribution,

                                      -13-
<PAGE>

use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all  authorizations,  codes,  decrees,  demands  or  demand  letters,
injunctions,  judgments,  licenses,  notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.

            (z)  Subsidiary  Rights.  Except as set forth in Schedule  3(w), the
Company  or one of its  Subsidiaries  has the  unrestricted  right to vote,  and
(subject to  limitations  imposed by  applicable  law) to receive  dividends and
distributions  on, all capital  securities of its  Subsidiaries  as owned by the
Company or such Subsidiary.

            (aa) Tax Status.  The Company and each of its  Subsidiaries  (i) has
made or 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 and (iii) has set aside
on its books  provision  reasonably  adequate  for the  payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim.  No liens have been filed and no  material  claims are
being asserted by or against the Company or any of its Subsidiaries with respect
to any taxes (other than liens for taxes not yet due and  payable).  Neither the
Company nor its  Subsidiaries  has  received  notice of  assessment  or proposed
assessment of any material amount of taxes claimed to be owed by it or any other
Person on its behalf. Neither the Company nor its Subsidiaries is a party to any
tax  sharing or tax  indemnity  agreement  or any other  agreement  of a similar
nature that  remains in effect.  Each of the Company  and its  Subsidiaries  has
complied  in all  material  respects  with  all  applicable  legal  requirements
relating to the payment and withholding of taxes and, within the time and in the
manner  prescribed by law, has withheld from wages,  fees and other payments and
paid over to the proper  governmental  or  regulatory  authorities  all  amounts
required.

            (bb)  Internal  Accounting  Controls.  The  Company  and each of its
Subsidiaries  maintain 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 generally accepted  accounting  principles and to maintain asset
and  liability   accountability,   (iii)  access  to  assets  or  incurrence  of
liabilities  is  permitted  only in  accordance  with  management's  general  or
specific  authorization  and (iv) the  recorded  accountability  for  assets and
liabilities is compared with the existing  assets and  liabilities at reasonable
intervals and appropriate action is taken with respect to any difference.

            (cc) Form SB-2 Eligibility.  The Company is eligible to register the
Securities  for resale by the Buyer using Form SB-2  promulgated  under the 1933
Act.

            (dd)  Manipulation  of  Price.  The  Company  has  not,  and  to its
knowledge  no one acting on its behalf has, (i) taken,  directly or  indirectly,
any action designed to cause or to result in the  stabilization  or manipulation
of the price of any security of the Company to facilitate  the sale or resale of
any  of  the  Securities,  or  (ii)  sold,  bid  for,  purchased,  or  paid  any
compensation for soliciting purchases of, any of the Securities.

                                      -14-
<PAGE>

            (ee) Acknowledgement Regarding Buyer's Trading Activity. Anything in
this Agreement or elsewhere herein to the contrary notwithstanding,  but subject
to  compliance  by  the  Buyer  with   applicable  law,  it  is  understood  and
acknowledged by the Company (i) that the Buyer has not been asked to agree,  nor
has the Buyer agreed,  to desist from purchasing or selling,  long and/or short,
securities of the Company, or "derivative" securities based on securities issued
by the Company or to hold the Securities for any specified  term; (ii) that past
or future open market or other  transactions  by the Buyer,  including,  without
limitation,  short  sales or  "derivative"  transactions,  before  or after  the
closing of this or future private placement transactions,  may negatively impact
the market price of the  Company's  publicly-traded  securities;  (iii) that the
Buyer, and counter parties in "derivative"  transactions to which the Buyer is a
party,  directly or  indirectly,  presently  may have a "short"  position in the
Common  Stock,  and  (iv)  that  the  Buyer  shall  not be  deemed  to have  any
affiliation  with  or  control  over  any  arm's  length  counter-party  in  any
"derivative" transaction.  The Company further understands and acknowledges that
(a) the Buyer may engage in legally  permissible  hedging  activities at various
times during the period that the Securities are outstanding and (b) such hedging
activities (if any) could reduce the value of the existing  stockholders' equity
interests in the Company at and after the time that the hedging  activities  are
being conducted.

            (ff) Disclosure.  The Company confirms that neither it nor any other
Person acting on its behalf has provided the Buyer or its agents or counsel with
any information that constitutes material,  nonpublic  information.  The Company
understands   and   confirms   that  the  Buyer  will  rely  on  the   foregoing
representations  in effecting  transactions  in securities  of the Company.  All
disclosure provided to the Buyer in writing regarding the Company,  its business
and the  transactions  contemplated  hereby,  including  the  Schedules  to this
Agreement, furnished by or on behalf of the Company is true and correct and does
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 the
light of the  circumstances  under which they were made,  not  misleading.  Each
press  release  issued by the Company  since May 27, 2004 did not at the time of
release  contain  any untrue  statement  of a  material  fact or omit to state a
material  fact  required to be stated  therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. No event or circumstance has occurred or information exists with
respect to the  Company  or any of its  Subsidiaries  or its or their  business,
properties,   prospects,   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.

      4. COVENANTS.

            (a) Best  Efforts.  Each party shall use its best efforts  timely to
satisfy each of the  conditions  to be satisfied by it as provided in Sections 6
and 7 of this Agreement.

            (b) Form D and Blue Sky.  The  Company  agrees to file a Form D with
respect to the Securities as required  under  Regulation D and to provide a copy
thereof to the Buyer promptly after such filing. The Company shall, on or before
the Closing Date, 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 Buyer at the Closing  pursuant to this  Agreement  under  applicable
securities  or "Blue Sky" laws of the states of the United  States (or to obtain

                                      -15-
<PAGE>

an exemption from such  qualification),  and shall provide  evidence of any such
action so taken to the Buyer 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.

            (c)  Reporting  Status.  Until the date on which the  Investors  (as
defined in the Registration Rights Agreement) shall have sold all the Securities
(the "Reporting Period"),  the Company shall timely file all reports required to
be filed  with the SEC  pursuant  to the 1934  Act,  and the  Company  shall not
terminate  its status as an issuer  required to file reports  under the 1934 Act
even if the 1934 Act or the rules and  regulations  thereunder  would  otherwise
permit such termination.

            (d) Use of Proceeds.  The Company will not use the proceeds from the
sale of the Securities  primarily for the redemption or repurchase of any equity
securities or for the repayment of any  outstanding  indebtedness of the Company
or its Subsidiaries, other than ordinary course trade payables.

            (e) Financial Information.  The Company agrees to send the following
to each Investor during the Reporting  Period (i) unless the following are filed
with the SEC through  EDGAR and are  available  to the public  through the EDGAR
system,  within one (1)  Business  Day after the filing  thereof with the SEC, a
copy of its Annual  Reports on Form 10-K or 10-KSB,  any interim  reports or any
consolidated balance sheets, income statements,  stockholders' equity statements
and/or  cash flow  statements  for any period  other than  annual,  any  Current
Reports on Form 8-K and any registration  statements (other than on Form S-8) or
amendments  filed  pursuant to the 1933 Act,  and (ii) copies of any notices and
other  information  made available or given to the  stockholders  of the Company
generally,  contemporaneously with the making available or giving thereof to the
stockholders.

            (f) Listing.  The Company shall use  reasonable  efforts to promptly
secure  the  listing of all of the  Registrable  Securities  (as  defined in the
Registration  Rights  Agreement)  upon each  national  securities  exchange  and
automated  quotation  system, if any, upon which the Common Stock is then listed
(subject to official  notice of issuance) and shall maintain such listing of all
Registrable  Securities  from  time to time  issuable  under  the  terms  of the
Transaction   Documents.   The  Company  shall   maintain  the  Common   Stocks'
authorization for quotation on the Principal Market. Neither the Company nor any
of its Subsidiaries  shall take any action that would be reasonably  expected to
result in the  delisting  or  suspension  of the Common  Stock on the  Principal
Market.  The  Company  shall  pay all  fees  and  expenses  in  connection  with
satisfying its obligations under this Section 4(f).

            (g) Fees.  Each party to this Agreement  shall bear its own expenses
and fees  (including but not limited to legal fees) in connection  with the sale
of the Securities to the Buyer.

            (h) Pledge of Securities.  The Company acknowledges and agrees that,
subject to all applicable  securities  laws, the Securities may be pledged by an
Investor (as defined in the Registration  Rights Agreement) in connection with a
bona fide  margin  agreement  or other  loan or  financing  arrangement  that is
secured by the Securities. Subject to all applicable securities laws, the pledge
of  Securities  shall not be deemed to be a transfer,  sale or assignment of the
Securities hereunder,  and no Investor effecting a pledge of Securities shall be

                                      -16-
<PAGE>

required to provide the Company with any notice  thereof or  otherwise  make any
delivery to the  Company  pursuant to this  Agreement  or any other  Transaction
Document,  including, without limitation,  Section 2(f) hereof; provided that an
Investor  and its pledgee  shall be required  to comply with the  provisions  of
Section  2(f)  hereof  in order to  effect a sale,  transfer  or  assignment  of
Securities to such pledgee.  Subject to applicable  securities laws, the Company
hereby  agrees to execute and  deliver  such  documentation  as a pledgee of the
Securities may reasonably  request in connection with a pledge of the Securities
to such pledgee by an Investor.

            (i) Disclosure of Transactions and Other Material Information. On or
before 8:30 a.m., New York Time, on the end of the fourth Business Day following
the Closing,  the Company shall file a Form 8-K in the form required by the 1934
Act  and  attaching  the  material  Transaction  Documents  (including,  without
limitation, this Agreement and the Registration Rights Agreement) as exhibits to
such filing (including all attachments, the "8-K Filing"). As of the date of the
filing of the Form 8-K, the Buyer shall not 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,  that  is not
disclosed in the 8-K Filing.  The Company shall not, and shall cause each of its
Subsidiaries and its and each of their respective officers, directors, employees
and agents, not to, provide the Buyer with any material,  nonpublic  information
regarding  the Company or any of its  Subsidiaries  from and after the filing of
the 8-K Filing with the SEC without the express written consent of the Buyer. In
the event of a breach  of the  foregoing  covenant  by the  Company,  any of its
Subsidiaries, or any of its or their respective officers,  directors,  employees
and  agents,  in  addition  to  any  other  remedy  provided  herein  or in  the
Transaction  Documents,  the Company agrees to file a current report on Form 8-K
that contains the material details of such non-public disclosure (and to provide
Buyer with a reasonable opportunity to review and comment upon such filing prior
to its  filing  with the SEC and to  incorporate  such  comments  therein as the
Company  deems  reasonably  necessary).  Subject to the  foregoing,  neither the
Company  nor the  Buyer  shall  issue  any press  releases  or any other  public
statements  with  respect to the  transactions  contemplated  hereby;  provided,
however,  that the Company shall be entitled,  without the prior approval of the
Buyer, to make any press release or other public disclosure with respect to such
transactions   (i)  in   substantial   conformity   with  the  8-K   Filing  and
contemporaneously  therewith  and  (ii) as is  required  by  applicable  law and
regulations  (provided  that  in the  case of  clause  (i) the  Buyer  shall  be
consulted by the Company in connection  with and given an  opportunity to review
and comment on any such press  release or other public  disclosure  prior to its
release). Notwithstanding the foregoing, the Company shall not publicly disclose
the name of the Buyer,  or include  the name of the Buyer in any filing with the
SEC or any regulatory agency or the Principal Market,  without the prior written
consent of the Buyer,  except  (i) for  disclosure  thereof in the 8-K Filing or
Registration   Statement  or  (ii)  as  required  by  law  or  Principal  Market
regulations  or any order of any court or other  governmental  agency,  in which
case the Company shall provide the Buyer with prior notice of such disclosure.

            (j) [Intentionally omitted].

            (k)  Conduct  of  Business.  The  business  of the  Company  and its
Subsidiaries  shall not be  conducted  in  violation  of any law,  ordinance  or

                                      -17-
<PAGE>

regulation of any  governmental  entity,  except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.

            (l)  Integration.  None  of the  Company,  its  Subsidiaries,  their
affiliates  and any Person  acting on their behalf will take any action or steps
referred  to in  Section  3(h) that  would  require  registration  of any of the
Securities  under the 1933 Act or cause the  offering  of the  Securities  to be
integrated with other offerings, as disclosed on Schedule 2(h) hereto

      5. [Intentionally omitted]

      6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

            (a) Closing Date. The  obligation of the Company  hereunder to issue
and  sell  the  Securities  to  the  Buyer  at the  Closing  is  subject  to the
satisfaction,  at  or  before  the  Closing  Date,  of  each  of  the  following
conditions,  provided that these  conditions  are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by providing
the Buyer with prior written notice thereof:

                  (i) The Buyer  shall  have  executed  each of the  Transaction
Documents to which it is a party and delivered the same to the Company.

                  (ii)  The  Buyer  shall  have  delivered  to the  Company  the
Purchase  Price,  less the amounts  withheld  pursuant to Section 4(g),  for the
Securities  and being  purchased by the Buyer at the Closing by wire transfer of
immediately  available funds pursuant to the wire  instructions  provided by the
Company.

                  (iii) The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date when made and as of the
Closing  Date as  though  made at that  time  (except  for  representations  and
warranties  that  speak  as of a  specific  date),  and  the  Buyer  shall  have
performed,  satisfied and complied in all material  respects with the covenants,
agreements and conditions required by this Agreement to be performed,  satisfied
or complied with by the Buyer at or prior to the Closing Date.

      7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

            (a) Closing Date. The obligation of the Buyer  hereunder to purchase
the Securities at the Closing is subject to the  satisfaction,  at or before the
Closing  Date,  of  each  of  the  following  conditions,  provided  that  these
conditions  are for the Buyer's  sole  benefit and may be waived by the Buyer at
any time in its sole  discretion  by providing  the Company  with prior  written
notice thereof:

                  (i) The Company and, to the extent it is a party thereto, each
of it  Subsidiaries,  shall have executed and delivered to the Buyer (i) each of
the Transaction  Documents and (ii) the Securities (in such denominations as the
Buyer shall  request)  being  purchased by the Buyer at the Closing  pursuant to
this Agreement.

                  (ii)  The  Company  shall  have   delivered  to  the  Buyer  a
certificate,  executed  by the  Secretary  of the  Company  and  dated as of the
Closing Date, as to (i) the resolutions  consistent with Section 3(b) as adopted

                                      -18-
<PAGE>

by the  Company's  Board of Directors  in a form  reasonably  acceptable  to the
Buyer,  (ii) the Certificate of Incorporation  and (iii) the Bylaws,  each as in
effect at the Closing, in the form attached hereto as Exhibit C.

                  (iii) The  representations and warranties of the Company shall
be true and correct in all material respects (except for the representations and
warranties that are qualified by materiality, which shall be true and correct in
all respects) as of the date when made and as of the Closing Date as though made
at that time  (except  for  representations  and  warranties  that speak as of a
specific date) and the Company shall have  performed,  satisfied and complied in
all material respects with the covenants,  agreements and conditions required by
the  Transaction  Documents to be  performed,  satisfied or complied with by the
Company  at or prior to the  Closing  Date.  The Buyer  shall  have  received  a
certificate, executed by the Chief Executive Officer of the Company, dated as of
the Closing Date, in the form attached hereto as Exhibit D.

                  (iv) The Common Stock (I) shall be designated for quotation or
listed on the Principal Market and (II) shall not have been suspended, as of the
Closing  Date,  by the SEC, the  Principal  Market from trading on the Principal
Market  nor  shall  suspension  by the  SEC,  the  Principal  Market  have  been
threatened,  as of the  Closing  Date,  either (A) in  writing  by the SEC,  the
Principal  Market  or (B) by  falling  below  the  minimum  listing  maintenance
requirements of the Principal Market.

                  (v)  The  Company  shall  have   obtained  all   governmental,
regulatory or third party consents and approvals, if any, necessary for the sale
of the Securities.

                  (vi) The Company shall have  delivered to the Buyer such other
documents  relating to the  transactions  contemplated  by this Agreement as the
Buyer or its counsel may reasonably request.

      8.  TERMINATION.  In the event that the Closing shall not have occurred on
or before five (5)  Business  Days from the date hereof due to the  Company's or
the  Buyer's  failure to satisfy  the  conditions  set forth in Sections 6 and 7
above  (and  the  non-breaching   party's  failure  to  waive  such  unsatisfied
condition(s)),  the non-breaching  party shall have the option to terminate this
Agreement with respect to such breaching  party at the close of business on such
date without liability of any party to any other party.

      9. MISCELLANEOUS.

            (a)  Governing  Law;   Jurisdiction;   Jury  Trial.   All  questions
concerning the construction,  validity,  enforcement and  interpretation of this
Agreement  shall be governed by the  internal  laws of the State of  California,
without  giving effect to any choice of law or conflict of law provision or rule
(whether of the State of California or any other jurisdictions) that would cause
the  application  of the  laws of any  jurisdictions  other  than  the  State of
California, except for the mandatorily applicable provisions of Nevada law. Each
party hereby irrevocably submits to the exclusive  jurisdiction of the state and
federal courts sitting in Los Angeles,  California,  for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein,  and hereby  irrevocably  waives,  and agrees not to

                                      -19-
<PAGE>

assert in any suit,  action or  proceeding,  any claim that it is not personally
subject  to the  jurisdiction  of any such  court,  that  such  suit,  action or
proceeding is brought in an  inconvenient  forum or that the venue of such suit,
action or proceeding is improper.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or  proceeding  by mailing a copy  thereof to such party at the address for such
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 HEREBY  IRREVOCABLY  WAIVES ANY RIGHT IT MAY
HAVE,  AND  AGREES NOT TO  REQUEST,  A JURY  TRIAL FOR THE  ADJUDICATION  OF ANY
DISPUTE  HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

            (b)  Counterparts.  This  Agreement  may be  executed in two or more
identical  counterparts,  all of  which  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;  provided  that a facsimile  signature
shall be  considered  due  execution  and shall be  binding  upon the  signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

            (c) Headings.  The headings of this Agreement are for convenience of
reference  and shall not form part of, or affect  the  interpretation  of,  this
Agreement.

            (d)  Severability.  If any  provision  of this  Agreement  shall  be
invalid   or   unenforceable   in   any   jurisdiction,   such   invalidity   or
unenforceability  shall  not  affect  the  validity  or  enforceability  of  the
remainder  of  this   Agreement  in  that   jurisdiction   or  the  validity  or
enforceability of any provision of this Agreement in any other jurisdiction.

            (e) Entire  Agreement;  Amendments.  This  Agreement  supersedes all
other prior oral or written  agreements  between the Buyer,  the Company,  their
affiliates  and  Persons  acting on their  behalf  with  respect to the  matters
discussed  herein,  and this  Agreement and the  instruments  referenced  herein
contain  the entire  understanding  of the parties  with  respect to the matters
covered  herein and therein  and,  except as  specifically  set forth  herein or
therein,  neither the Company nor the Buyer makes any representation,  warranty,
covenant or  undertaking  with  respect to such  matters.  No  provision of this
Agreement may be amended  other than by an  instrument in writing  signed by the
Company  and the  holders  of at least a  majority  of the  aggregate  number of
Registrable Securities issued and issuable hereunder,  and any amendment to this
Agreement  made in conformity  with the provisions of this Section 9(e) shall be
binding on the Buyer and holders of  Securities,  as  applicable.  No  provision
hereof may be waived other than by an instrument in writing  signed by the party
against whom enforcement is sought.  No such amendment shall be effective to the
extent  that it  applies  to less  than  all of the  holders  of the  applicable
Securities then  outstanding.  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  also is offered to
all of the parties to the Transaction  Documents and holders of Securities.  The
Company has not,  directly or  indirectly,  made any  agreements  with the Buyer
relating to the terms or  conditions  of the  transactions  contemplated  by the
Transaction Documents except as set forth in the Transaction Documents.

                                      -20-
<PAGE>

            (f) Notices. Any notices,  consents, waivers or other communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be deemed  to have  been  delivered:  (i) upon  receipt,  when
delivered  personally;  (ii)  upon  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending  party);  or (iii) five  Business Days after deposit
with an overnight courier service,  in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for such communications
shall be:

                           If to the Company:

                                    Natural Gas Systems, Inc.
                                    820 Gessner, Suite 1340
                                    Houston, Texas 77024
                                    Tel: 713-935-0122
                                    Fax: 713-935-0199
                                    Attention:       Robert S. Herlin, President


                                    Copy to:

                                    Troy & Gould Professional Corporation
                                    1801 Century Park East, 16th Floor
                                    Los Angeles, California 90067-2367
                                    Telephone:       (310) 789-1255
                                    Facsimile:       (310) 201-4746
                                    Attention:       Lawrence Schnapp, Esq.

If to a Buyer, to:

                                    Rubicon Master Fund
                                    c/o Rubicon Fund Management LLP
                                    103 Mount St.London W1K2TJ
                                    United Kingdom
                                    Facsimile No.:   +44 207-074 4280
                                    Telephone No.:   +44 207 074 4299
                                    Attn: William Callanan

         with a copy (for informational purposes only) to:

                  Schulte Roth & Zabel LLP
                  919 Third Avenue
                  New York, New York  10022
                  Telephone:        (212) 756-2000
                  Facsimile:        (212) 593-5955
                  Attention:        Peter Halasz, Esq.

                                      -21-
<PAGE>

or to such other address and/or facsimile number and/or to the attention of such
other Person as the  recipient  party has  specified by written  notice given to
each  other  party  five (5) days  prior to the  effectiveness  of such  change.
Written  confirmation  of receipt  (A) given by the  recipient  of such  notice,
consent,  waiver or other  communication,  (B)  mechanically  or  electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile  number  and an  image  of the  first  page of such  transmission  (C)
provided  by an  overnight  courier  service  shall be  rebuttable  evidence  of
personal  service,  receipt by facsimile  or receipt  from an overnight  courier
service in  accordance  with  clause  (i),  (ii) or (iii)  above,  respectively;
provided  however  that the  foregoing  clause  (B) shall  only be valid if such
communication  contained in the  facsimile is delivered by an overnight  courier
service within 24 hours of the transmission of facsimile.

            (g) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any  purchasers of the  Securities.  The Company shall not assign this
Agreement  or any rights or  obligations  hereunder  without  the prior  written
consent of the Buyer.  The Buyer may assign some or all of its rights  hereunder
without the consent of the Company, in which event such assignee shall be deemed
to be a Buyer hereunder with respect to such assigned rights.

            (h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.

            (i) Survival.  Unless this Agreement is terminated  under Section 8,
the  representations  and  warranties of the Company and the Buyer  contained in
Sections 2 and 3 shall  survive for 18 months  following  the  Closing,  and the
agreements  and  covenants  set  forth in  Sections  4 and 9 shall  survive  the
Closing.  The  Buyer  shall be  responsible  only  for its own  representations,
warranties, agreements and covenants hereunder.

            (j) Further Assurances. Each party shall do and perform, or cause to
be done and performed,  all such further acts and things,  and shall execute and
deliver all such other agreements,  certificates,  instruments and documents, as
any other  party may  reasonably  request  in order to carry out the  intent and
accomplish  the  purposes  of  this  Agreement  and  the   consummation  of  the
transactions contemplated hereby.

            (k)  Indemnification.  In consideration of the Buyer's execution and
delivery of the  Transaction  Documents and acquiring the Securities  thereunder
and in addition to all of the Company's other  obligations under the Transaction
Documents,  the Company shall defend,  protect,  indemnify and hold harmless the
Buyer and each other  holder of the  Securities  and all of their  stockholders,
partners,  members,  officers,  directors,  employees  and  direct  or  indirect
investors  and any of the  foregoing  Persons'  agents or other  representatives
(including,   without   limitation,   those  retained  in  connection  with  the
transactions contemplated by this Agreement)  (collectively,  the "Indemnitees")
from and against any and all actions,  causes of action, suits, claims,  losses,
costs,  penalties,  fees,  liabilities  and damages,  and expenses in connection
therewith  (irrespective of whether any such Indemnitee is a party to the action
for  which  indemnification  hereunder  is  sought),  and  including  reasonable
attorneys' fees and disbursements (the "Indemnified  Liabilities"),  incurred by

                                      -22-
<PAGE>

any  Indemnitee  as a result  of,  or  arising  out of, or  relating  to (a) any
misrepresentation  or  breach  of any  representation  or  warranty  made by the
Company in any Transaction Documents, (b) any breach of any covenant,  agreement
or obligation of the Company  contained in any Transaction  Documents or (c) any
cause of action,  suit or claim  brought or made  against such  Indemnitee  by a
third party (including for these purposes a derivative  action brought on behalf
of the  Company)  and  arising  out of or  resulting  from  (i)  the  execution,
delivery,  performance  or enforcement of any  Transaction  Documents,  (ii) any
transaction  financed  or to be  financed  in  whole  or in  part,  directly  or
indirectly,  with the  proceeds  of the  issuance of the  Securities,  (iii) any
disclosure  made by the Buyer  pursuant to Section (i) or (iv) the status of the
Buyer or holder of the Securities as an investor in the Company  pursuant to the
transactions   contemplated   by  the  Transaction   Documents;   provided  that
indemnification  pursuant to clauses (iii), or (iv) above shall not be available
to the extent arising from such Buyer's bad faith, fraud or willful  misconduct.
To the extent that the foregoing undertaking by the Company may be unenforceable
for any reason,  the Company shall make the maximum  contribution to the payment
and  satisfaction  of each of the  Indemnified  Liabilities  that is permissible
under  applicable law.  Except as otherwise set forth herein,  the mechanics and
procedures  with respect to the rights and  obligations  under this Section 9(k)
shall be the same as those set forth in  Section  6 of the  Registration  Rights
Agreement.

            (l) No Strict Construction. 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.

            (m) Remedies. The Buyer and each holder of the Securities shall have
all  rights  and  remedies  set forth in the this  Agreement  and all rights and
remedies  which  such  holders  have been  granted  at any time  under any other
agreement  or contract  and all of the rights  which such holders have under any
law;  provided,  however,  and any other agreement or covenant  notwithstanding,
Section 2 of the  Registration  Rights Agreement  contains certain  limitations,
waivers and release of rights and damages applicable thereto.  Any Person having
any rights under any  provision of this  Agreement  shall be entitled to enforce
such rights specifically (without posting a bond or other security),  to recover
damages  by  reason of any  breach of any  provision  of this  Agreement  and to
exercise all other rights granted by law.  Furthermore,  the Company  recognizes
that in the event that it fails to perform,  observe, or discharge any or all of
its  obligations  under  this  Agreement,  any  remedy  at law may  prove  to be
inadequate  relief to the Buyer.  The  Company  therefore  agrees that the Buyer
shall be entitled to seek temporary and permanent  injunctive relief in any such
case without the necessity of proving actual damages and without  posting a bond
or other security.

            (n)  Payment  Set Aside.  To the  extent  that the  Company  makes a
payment or  payments  to the Buyer  hereunder  or  pursuant  to any of the other
Transaction  Documents or the Buyer enforce or exercises its rights hereunder or
thereunder,  and such payment or payments or the proceeds of such enforcement or
exercise  or any part  thereof  are  subsequently  invalidated,  declared  to be
fraudulent  or  preferential,  set aside,  recovered  from,  disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including,  without limitation,  any
bankruptcy law, foreign,  state or federal law, common law or equitable cause of
action),  then to the  extent of any such  restoration  the  obligation  or part
thereof  originally  intended to be satisfied  shall be revived and continued in

                                      -23-
<PAGE>

full force and effect as if such  payment had not been made or such  enforcement
or setoff had not occurred.

                            [Signature Page Follows]

                                      -24-
<PAGE>

      IN WITNESS WHEREOF, the Buyer and the Company have caused their respective
signature page to this Securities  Purchase  Agreement to be duly executed as of
the date first written above.


                                       COMPANY:

                                       NATURAL GAS SYSTEMS, INC.


                                       By:
                                          --------------------------
                                          Name: Robert S. Herlin
                                          Title:   CEO and President

                [Signature Page to Securities Purchase Agreement]

<PAGE>

      IN WITNESS WHEREOF, the Buyer and the Company have caused their respective
signature page to this Securities  Purchase  Agreement to be duly executed as of
the date first written above.


                                       BUYER:

                                       RUBICON MASTER FUND
                                       By: Rubicon Fund Management, LLP,
                                           its Investment Manager


                                       By:
                                          --------------------------
                                          Name:
                                          Title:

                [Signature Page to Securities Purchase Agreement]

<PAGE>


                                    EXHIBITS

Exhibit A Amended and Restated Registration Rights Agreement