Document:

Unassociated Document

    
      

    

    Exhibit
      10.1

     

    COMMON
      SHARE PURCHASE AGREEMENT

     

    between

     

    GASTAR
      EXPLORATION LTD. 

     

    and

     

    NAVASOTA
      RESOURCES, L.P.

     

    dated
      as of

     

    May
      9, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

     

    
      	 	
              Page

            
	 	 
	
              1.     Purchase
                and
                Sale. 

            	
              4

            
	 	
              1.1     Consideration

            	
              4

            
	 	
              1.2     Authorization

            	
              4

            
	 	
              1.3     Intentionally
                Omitted

            	
              4

            
	 	
              1.4     Registration
                Rights Agreement

            	
              4

            
	 	
              1.5     Intentionally
                Omitted

            	
              4

            
	
              2.     The
                Closing

            	
              4

            
	 	
              2.1     Closing
                Date

            	
              4

            
	 	
              2.2     Payment
                and Delivery

            	
              5

            
	
              3.     Representations
                and Warranties of the Company

            	
              5

            
	 	
              3.1     
                Organization and Existence

            	
              5

            
	 	
              3.2     
                Capitalization: Ownership of Shares: Authorization

            	
              5

            
	 	
              3.3     
No
                Conflicts

            	
              6

            
	 	
              3.4     
                Authority; Enforceability

            	
              6

            
	 	
              3.5     
                Litigation; Contingencies

            	
              6

            
	 	
              3.6     
                Subsidiaries

            	
              7

            
	 	
              3.7     
Title
                to Assets

            	
              7

            
	 	
              3.8     
                Consents

            	
              8

            
	 	
              3.9     
                Proprietary Rights

            	
              8

            
	 	
              3.10    Reports;
                Financial Statements

            	
              8

            
	 	
              3.11    Compliance
                with Laws; OSHA

            	
              9

            
	 	
              3.12    Labor
                Matters

            	
              9

            
	 	
              3.13    ERISA

            	
              10

            
	 	
              3.14    Environmental
                Matters

            	
              10

            
	 	
              3.15    Permits
                and
                Licenses

            	
              11

            
	 	
              3.16    Insurance

            	
              11

            
	 	
              3.17    Taxes

            	
              11

            
	 	
              3.18    Absence
                of
                Certain Developments

            	
              12

            
	 	
              3.19    Brokerage
                Fees

            	
              12

            
	 	
              3.20    Investment
                Company

            	
              12

            
	 	
              3.21    Forward
                Looking Statements

            	
              12

            
	 	
              3.22    Disclosure
                Controls

            	
              13

            
	 	
              3.23    Affiliate
                Transactions

            	
              13

            
	 	
              3.24    Exempt
                Offering

            	
              13

            
	 	
              3.25    HSR
                Exemption

            	
              13

            
	 	
              3.26    Disclosure

            	
              13

            
	 	
              3.27    Acknowledgement

            	
              13

            
	 	
              3.28   
                DISCLAIMERS

            	
              14

            
	
              4.     Representations
                and Warranties of the Purchaser

            	
              14

            
	 	
              4.1     No
                Conflict

            	
              14

            
	 	
              4.2     Authority;
                Enforceability

            	
              14

            
	 	
              4.3     Consents

            	
              14

            
	 	
              4.4     Investment
                Representatives

            	
              15

            
	 	
              4.5     Acknowledgments

            	
              15

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              5.     Nature
                and Survival of Representations and Warranties; Indemnity

            	
              16

            
	 	
              5.1     Survival
                of
                Representations and Warranties

            	
              16

            
	 	
              5.2     Indemnity
                by
                the Company

            	
              16

            
	 	
              5.3     Indemnity
                by
                the Purchaser

            	
              16

            
	 	
              5.4     Limitation
                of
                Liability

            	
              16

            
	 	
              5.5     Exclusive
                Remedy

            	
              17

            
	
              6.     Conditions
                Precedent

            	
              17

            
	 	
              6.1     Certain
                Actions

            	
              17

            
	 	
              6.2     Representations
                and Warranties

            	
              17

            
	 	
              6.3     Related
                Agreements

            	
              17

            
	 	
              6.4     Registration
                Rights Agreement

            	
              17

            
	 	
              6.5     Material
                Adverse Change

            	
              18

            
	 	
              6.6     Company
                Requirements

            	
              18

            
	 	
              6.7     Opinions
                of
                Counsel

            	
              18

            
	 	
              6.8     Delivery
                of
                Shares

            	
              18

            
	 	
              6.9     Evidence
                of
                Authority; Good Standing

            	
              18

            
	
              7.     Miscellaneous

            	
              18

            
	 	
              7.1     
                Financial Statements and Other Information

            	
              18

            
	 	
              7.2     
                Expenses

            	
              18

            
	 	
              7.3     
                Notices

            	
              18

            
	 	
              7.4     
Entire
                Agreement; Amendments

            	
              19

            
	 	
              7.5     
                Assignment

            	
              20

            
	 	
              7.6     
No
                Third Party Rights

            	
              20

            
	 	
              7.7     
                Counterparts

            	
              20

            
	 	
              7.8     
                Headings: Interpretation

            	
              20

            
	 	
              7.9     
                Governing Law

            	
              19

            
	 	
              7.10    Arbitration

            	
              19

            
	 	
              7.11    Attorney
                Fees

            	
              21

            
	 	
              7.12    Severability

            	
              21

            
	 	
              7.13    JOINT
                ACKNOWLEDGMENT

            	
              21

            

    

     

     

    SCHEDULES

     

    
      
        	
                Schedule
                  3.2

              	
                Outstanding
                  Registration Rights

              
	
                Schedule
                  3.5

              	
                Litigation;
                  Contingencies

              
	
                Schedule
                  3.6

              	
                Subsidiaries

              
	
                Schedule
                  3.7

              	
                Liens
                  Against Assets

              
	
                Schedule
                  3.8

              	
                Consents

              
	
                Schedule
                  3.9

              	
                Proprietary
                  Rights

              
	
                Schedule
                  3.10

              	
                Changes
                  to Financial Statements

              
	
                Schedule
                  3.11

              	
                Compliance
                  With Laws

              
	
                Schedule
                  3.13

              	
                ERISA

              
	
                Schedule
                  3.14

              	
                Environmental
                  Matters and Permits

              
	
                Schedule
                  3.17

              	
                Taxes

              
	
                Schedule
                  3.18

              	
                Absence
                  of Certain Developments

              
	
                Schedule
                  3.19

              	
                Brokerage
                  Fees

              
	
                Schedule
                  3.23

              	
                Affiliate
                  Transactions

              

      

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    COMMON
      SHARE PURCHASE AGREEMENT

     

    THIS
      COMMON SHARE PURCHASE AGREEMENT, dated effective as of May 9, 2007
      (“Agreement”), between Navasota Resources, L.P., a [Texas] limited partnerhsip
      (the “Purchaser”) and GASTAR EXPLORATION LTD., an Alberta corporation (the
“Company”).

     

    W I T N E S S E T H:

     

    WHEREAS,
      subject to the terms and conditions of this Agreement, the Company desires
      to
      sell certain leasehold interest for consideration consisting of cash and the
      sale of common shares, and the Purchaser desires to acquire that certain
      leasehold interest; 

     

    NOW,
      THEREFORE, in consideration of the premises and of the representations,
      warranties and covenants herein contained, the parties hereby agree as
      follows:

     

    
      1.           
         Purchase
        and Sale.

       

    

    1.1             Consideration.
      The
      Company hereby agrees to issue and sell to the Purchaser ten million
      (10,000,000) common shares (the “Shares”), without par value, of the Company
      (“Common Shares”), and the Purchaser hereby agrees to purchase the Shares for a
      per share purchase price of USD $2.00 per Share (the “Purchase Price”). The
      Purchase Price will be payable by wire transfer of immediately available funds
      at the closing of the transactions contemplated by this Agreement and the
      Related Agreements (as hereinafter defined) by the parties hereto (the
“Closing”). All references in this Agreement to “dollars” or “$” shall mean the
      lawful money of the United States of America, unless otherwise specifically
      identified as “CDN $” or “Canadian dollars”. 

     

    1.2             Authorization.
      The
      Company agrees that the Shares to be issued and sold to the Purchaser shall
      be
      duly authorized and issued, and shall be fully paid, nonassessable and shall
      not
      be subject to any fees, encumbrances, pledges or “adverse claims” (as Section
      8.102(a)(1) of the Uniform Commercial Code of the State of Oklahoma defines
      that
      term), and upon delivery to the Purchaser will vest full, valid and legal title
      to the Shares in the Purchaser. 

     

    1.3             Intentionally
      Omitted.
       

     

    1.4             Registration
      Rights Agreement.
      The
      Company and the Purchaser will enter into a Registration Rights Agreement which
      will include certain demand and piggy-back registration rights.

     

    1.5             Intentionally
      Omitted.
      

     

    2.             The
      Closing.

     

    2.1             Closing
      Date.
      The
      Closing shall take place as set forth on May 9, 2007 at the office of the
      Company at Houston, Texas as set forth in the Company’s letter to Purchaser
      dated May 7, 2007 (“Preferential Rights Letter”).

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    2.2             Payment
      and Delivery.
      At the
      Closing, the Purchaser shall pay the Purchase Price by transferring immediately
      available funds by wire transfer to the Company. At the Closing, the Company
      will deliver to the Purchaser certificates representing the Shares. The
      certificates for Shares shall be subject to a legend restricting transfer under
      the Securities Act, and referring to restrictions on transfer therein, such
      legend to be substantially as follows:

     

    THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
      HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
      SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
      AN
      OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AS TO THE AVAILABILITY OF AN
      EXEMPTION FROM REGISTRATION THAT SUCH REGISTRATION IS NOT REQUIRED AND THAT
      ANY
      PROSPECTUS DELIVERY REQUIREMENTS ARE NOT APPLICABLE. 

     

    The
      Shares may also include any legend required under the laws of any state,
      province or other jurisdiction and will include a legend required under the
      Canadian Securities Laws, substantially as follows:

     

    UNLESS
      PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
      TRADE THE SECURITY BEFORE [insert
      the date that is 4 months and a day after the distribution
      date].

     

    THE
      SECURITIES HEREIN ARE SUBJECT TO THE RESALE RESTRICTIONS SET OUT IN SECTION
      3.2
      OF ALBERTA SECURITIES COMMISSION RULE 72-501.

     

    The
      foregoing legends will be removed and the Company will issue replacement
      certificates without such legends upon registration of the Shares and in
      accordance with applicable law including the Canadian Securities
      Laws.

     

    3.             Representations
      and Warranties of the Company.
      The
      Company represents and warrants to the Purchaser that, as of the date of this
      Agreement:

     

    3.1             Organization
      and Existence.
      The
      Company is a corporation duly continued and validly existing and in good
      standing under the laws of Alberta, Canada and has all requisite corporate
      power
      to carry on its business as now conducted and is qualified to do business in
      those jurisdictions where its ownership, lease or use of property or the conduct
      of its business requires such qualification. The Company has delivered to the
      Purchaser complete and correct copies of the Articles of Incorporation and
      Bylaws of the Company as in effect on the date hereof. 

     

    3.2             Capitalization:
      Ownership of Shares: Authorization.
      The
      Company has an unlimited number of authorized Common Shares and no authorized
      or
      issued shares of preferred shares. As of the date of this Agreement, the Company
      had (a) 195,341,375 issued and outstanding Common Shares; (b) no treasury
      shares; and (c) $30,000,000 of 9.75% convertible senior unsecured debentures
      outstanding that may be converted into 6,849,315 underlying Common Shares.
      In
      addition as of March 31, 2007, the Company had (i) outstanding warrants to
      purchase up to 2,732,521 Common Shares, and (ii) authority to grant up to
      30,000,000 options exercisable for Common Shares pursuant to stock option plans
      which have been approved by the Company's shareholders, of which 10,699,750
      share options were outstanding. Other than the registration rights granted
      to
      the Purchaser in accordance with the transactions contemplated hereby, the
      Company has granted only the registration rights more particularly described
      in
Schedule
      3.2
      that are
      currently in effect, including demand or piggy-back registration rights. Except
      as set forth in Schedule
      3.2,
      there
      are no options, warrants, rights, conversion rights, phantom rights, preemptive
      rights or any other rights of any party to receive equity of the Company. Upon
      issuance of the Shares to the Purchaser, the Purchaser will be the record and
      beneficial owner of the Shares and the Shares will be duly authorized, validly
      issued and outstanding, fully paid and nonassessable. Except as set forth in
      Schedule 3.2, as a result of the issuance of the Shares, the Company is not,
      nor
      will it become, obligated to issue any additional shares of capital stock
      (preferred or common) to any officer, director, shareholder or other
      party.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    3.3             No
      Conflicts.
      The
      execution and delivery of this Agreement and the Registration Rights Agreement
      by the Company and the execution and delivery of the Related Agreements by
      the
      Company and certain of its subsidiaries, and performance by the Company and
      its
      subsidiaries hereunder and thereunder, will not result in a violation or breach
      of any term or provision of or constitute a default or accelerate the
      performance required under (i) the Articles of Incorporation, Bylaws or other
      governance documents of the Company or any of its subsidiaries or (ii) any
      material indenture, mortgage, deed of trust or other contract or agreement
      to
      which the Company or any of its subsidiaries is a party or by which their
      respective assets are bound, or violate any statute, rule, regulation, order,
      writ, injunction or decree of any court, administrative agency or governmental
      body, except for any violation, breach or default that would not have a Material
      Adverse Effect.

     

    3.4             Authority;
      Enforceability.
      The
      Company has full right, power and authority to execute and deliver this
      Agreement, the Registration Rights Agreement and the Related Agreements and
      to
      consummate the transactions contemplated hereby and thereby. The execution
      and
      delivery of this Agreement, the Registration Rights Agreement and the Related
      Agreements and the consummation of the transactions contemplated hereby to
      be
      performed by the Company have been duly and validly authorized by all necessary
      corporate action on the part of the Company, and no other corporate proceedings
      are necessary to authorize the execution and delivery of this Agreement, the
      Registration Rights Agreement and the Related Agreements by the Company or
      to
      consummate the transactions contemplated hereby to be performed by the Company.
      This Agreement, the Registration Rights Agreement and the Related Agreements
      constitute valid and legally binding obligations of the Company, enforceable
      in
      accordance with their respective terms, except as that enforcement may be
      limited by bankruptcy, insolvency, moratorium or similar laws affecting the
      enforcement of creditors’ rights, by the availability of injunctive relief or
      specific performance and by general principles of equity and, in the case of
      the
      Registration Rights Agreement, any rights to indemnity or contribution
      thereunder may be limited by federal and state securities laws and public policy
      considerations.

     

    3.5             Litigation;
      Contingencies.
      Except
      as described in Schedule
      3.5,
      there
      is no action, suit or proceeding pending or, to the knowledge of the Company,
      threatened against the Company or any of its subsidiaries before any court,
      agency or arbitrator that would result in any Material Adverse Effect or that
      questions the validity of any action taken or to be taken pursuant to or in
      connection with this Agreement, the Registration Rights Agreement or the Related
      Agreements. As used in this Agreement, the term “Material Adverse Effect” shall
      mean an event, circumstance, loss, development or effect that would result
      in a
      material adverse effect on the business, operations, assets, financial condition
      or results of operations of the Company and its subsidiaries.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    3.6             Subsidiaries.
      Except
      for the subsidiaries listed in Schedule
      3.6
      attached
      hereto, the Company has no subsidiaries or any material equity interests in
      any
      other corporation, partnership, limited liability company, joint venture or
      other entity (excluding joint ventures, joint operating or ownership
      arrangements and tax partnerships entered into in the ordinary course of
      business). The Company owns one hundred percent (100%) of all of the issued
      and
      outstanding equity capital of each of the subsidiaries listed Schedule
      3.6.
      Each
      subsidiary of the Company has been duly organized and is in good standing under
      the laws of the jurisdiction of its organization, with the corporate power
      and
      authority to own its properties and conduct its business; and each subsidiary
      of
      the Company is duly qualified to do business and is in good standing in all
      other jurisdictions in which its ownership or lease of property or the conduct
      of its business requires such qualification, except where the failure to be
      so
      qualified or in good standing would not reasonably be expected to individually
      or in the aggregate have a Material Adverse Effect. All of the issued and
      outstanding capital stock or similar equity interests of each subsidiary of
      the
      Company has been duly authorized and validly issued and is fully paid and
      nonassessable; and the capital stock or similar equity interests of each
      subsidiary owned by the Company, directly or through subsidiaries, are owned
      free from liens, encumbrances and defects, except as provided in Schedule
      3.7

     

     

    3.7             Title
      to Assets.
      Except
      as otherwise set forth in Schedule
      3.7,
      the
      Company and its subsidiaries have: (i) defensible title to its oil and gas
      properties, title investigation having been carried out by the Company in
      accordance with the practice in the oil and gas industry in the areas in which
      the Company operates and (ii) good and defensible title to all other material
      real properties and all other material properties and assets owned by them,
      in
      each case, except for Permitted Encumbrances, free from liens, encumbrances
      and
      defects that would materially affect the value thereof taken as a whole or
      materially interfere with the use made or to be made thereof by them as a
      whole.
      The
      Company and its subsidiaries have maintained all their tangible personal
      properties material to the business of the Company and its subsidiaries, taken
      as a whole, in good repair, working order and operating condition, subject
      to
      ordinary wear and tear, and all such assets are suitable for the purposes for
      which they are presently being used, except where the failure to have such
      would
      not be reasonably expected to have a Material Adverse Effect. The
      Company and its subsidiaries have all easements, rights-of-way and similar
      authorizations required for the use of the real properties and all other
      properties and assets owned by them and used in the conduct of the business
      as
      heretofore conducted
      except
      where the failure to have such would not be reasonably expected to have a
      Material Adverse Effect. No material properties or assets of the Company and
      its
      subsidiaries, or any portion thereof, has been condemned or otherwise taken
      by
      any public authority, and neither the Company nor any of its subsidiaries has
      received written notice that any such condemnation or taking is threatened
      or
      contemplated.“Permitted
      Encumbrances” as used herein shall mean any or all of the following: (a)
      encumbrances that arise under operating agreements to secure payment of amounts
      not yet delinquent and are of a type and nature customary in the oil and gas
      industry; (b) encumbrances that arise as a result of pooling and unitization
      agreements, declarations, orders, or laws to secure payment of amounts not
      yet
      delinquent; (c) encumbrances securing payments to mechanics and materialmen
      or
      securing payment of taxes or assessments that are, in either case, not yet
      delinquent; (d) lessor’s royalties, overriding royalties, division orders,
      reversionary interests and other similar burdens that do not operate to
      materially reduce the value of the property affected; (e) easements,
      rights-of-way, servitudes, permits, surface leases, surface use restrictions
      and
      other surface uses and impediments on, over or in respect of any of the assets,
      provided that they do not interfere materially with the ownership, operation,
      value, or use of the property affected; (f) rights reserved to or vested in
      any
      governmental entity, to control or regulate any of the assets in any manner,
      and
      all applicable laws, of any governmental entity; (g) production sales contracts;
      contracts for sale, purchase, exchange, refining or processing of hydrocarbons;
      farm-out or farm-in agreements; participation agreements; unitization and
      pooling designations, declarations, orders and agreements; agreements of
      development; area of mutual interest agreements; gas balancing and deferred
      production agreements; plant agreements; production handling agreements;
      processing agreements; pipeline, gathering and transportation agreements;
      injection, repressuring and recycling agreements; carbon dioxide purchase or
      sale agreements; and salt water or other disposal agreements, (in each case)
      to
      the extent the same are ordinary and customary to the oil, gas and other mineral
      exploration, development, processing or extraction business. 

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    3.8             Consents.
      Except
      as otherwise set forth in Schedule
      3.8,
      the
      Company is not required to obtain any consent from or approval of any court,
      governmental entity or any other person in connection with the execution,
      delivery or performance by it of this Agreement, the Registration Rights
      Agreement or the Related Agreements and the transactions contemplated hereby
      and
      thereby, except such filings as may be required to be made with the Securities
      and Exchange Commission ("SEC"), pursuant to US Securities Laws, the Canadian
      Securities Laws and/or the American Stock Exchange and/or Toronto Stock Exchange
      and with any state or foreign “blue sky” or securities regulatory authority.
      Except as otherwise set forth in Schedule
      3.8,
      the
      consummation of the transactions contemplated by this Agreement will not require
      the approval of any entity or person in order to prevent the termination of
      any
      material right, privilege, license or agreement of the Company.

     

    3.9             Proprietary
      Rights.
      Except
      as set forth on Schedule
      3.9,
      the
      Company and its subsidiaries own or possess adequate licenses or other valid
      rights to use all patents, patent rights, trademarks, trademark rights and
      proprietary information used or held for use in connection with their respective
      businesses as currently being conducted, except where the failure to own or
      possess such licenses and other rights would not have a Material Adverse Effect,
      and there are no assertions or claims challenging the validity of any of the
      foregoing that would have a Material Adverse Effect. The conduct of the
      Company’s and its subsidiaries’ respective businesses as currently conducted
      does not conflict with any patents, patent rights, licenses, trademarks,
      trademark rights, trade names, trade name rights or copyrights of others in
      any
      way that would have a Material Adverse Effect. There is no infringement of
      any
      proprietary right owned by or licensed by or to the Company or any of its
      subsidiaries that would have a Material Adverse Effect.

     

    3.10            Reports;
      Financial Statements.
      The
      Company has filed all reports, schedules, forms, statements and other documents
      required to be filed by it with the SEC pursuant to any applicable reporting
      requirements of the 1934 Act, if any, or to be filed by it under the Canadian
      Securities Laws (all of the foregoing filed after November 4, 2005 and prior
      to
      the date this representation is made (including all exhibits included therein
      and financial statements and schedules thereto and documents incorporated by
      reference therein) being herein referred to as the "Reports"). The Company
      has
      made available to the Purchaser true and complete copies of all Reports. As
      of
      their respective dates, the Reports complied in all material respects with
      the
      requirements of the laws, rules and regulations applicable to thereto. None
      of
      the Reports, at the time they were filed with the SEC or under Canadian
      Securities Laws, as applicable, 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. As of their respective dates, the
      consolidated financial statements of the Company and its subsidiaries included
      in the Reports and in the Company's registration statement on Form S-3 and
      any
      amendment thereto filed with the SEC under the Securities Act (the "Form S-3")
      complied as to form in all material respects with applicable accounting
      requirements and the published securities laws, rules and regulations applicable
      thereto. Such consolidated financial statements have been prepared in accordance
      with U.S. or Canadian generally accepted accounting principles (as applicable),
      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 and its subsidiaries
      as
      of the dates thereof and the results of their operations and cash flows for
      the
      periods then ended (subject, in the case of unaudited statements, to normal
      year-end audit adjustments). Except as set forth on Schedule
      3.10,
      all of
      the financial statements present fairly in all material respects the financial
      position and the results of operations of the Company and its subsidiaries
      as of
      the dates and for the periods shown therein, and to the knowledge of the
      Company, there has been no Material Adverse Effect on the financial condition
      of
      the Company since December 31, 2006. Except as set forth on Schedule
      3.10,
      neither
      the Company nor any of its subsidiaries has any debt, liability or obligation,
      contingent or otherwise, that would have a Material Adverse Effect. The
      accounting firm that has expressed its opinion with respect to the consolidated
      financial statements included in the Company’s most recently filed annual Report
      and the Form S-3 is independent of the Company as required under the Canadian
      Securities Laws or pursuant to the standards promulgated by the SEC in Rule
      2-01
      of Regulation S-X, as applicable, and such firm was otherwise qualified to
      render the audit opinion under applicable laws. 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 the Reports or the Form S-3 that has not been so disclosed. 

     

    
      
        
        

      

      
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    3.11            Compliance
      with Laws; OSHA.
      The
      Company and its subsidiaries are in compliance with all applicable laws,
      ordinances, statutes, rules, regulations and orders promulgated by any court
      or
      federal, state or local governmental body or agency relating to its assets
      and
      business, except for such violations or failures to comply that would not result
      in a Material Adverse Effect. Except as set forth on Schedule
      3.11,
      since
      January 1, 2007, neither the Company nor any of its subsidiaries has received
      any notice, citation, claim, assessment or proposed assessment alleging any
      violation of any federal, state or local safety and health laws, except for
      any
      such violations as would not result in a Material Adverse Effect.

     

    3.12            Labor
      Matters.
      There
      is no labor strike or labor disturbance pending or, to the knowledge of the
      Company, threatened against the Company or any of its subsidiaries. Neither
      the
      Company nor any of its subsidiaries has experienced any work stoppage or other
      material labor disturbance within the past three years. Neither the Company
      nor
      any of its subsidiaries is a party to any collective bargaining agreement with
      respect to its employees and, to the knowledge of the Company, there are no
      current attempts to organize its employees.

     

    
      
        
        

      

      
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    3.13            ERISA.
      Except
      as set forth on Schedule
      3.13
      or in
      reports, schedules, forms, statements or other documents filed by the Company
      with the SEC or pursuant to Canadian Securities Laws, neither the Company nor
      any of its subsidiaries maintains or sponsors: (i) any pension, retirement,
      savings, deferred compensation or profit-sharing plan; (ii) any stock option,
      stock appreciation, stock purchase, performance share, bonus or other incentive
      plan; (iii) severance plan, health, group insurance or other welfare plan;
      or
      (iv) any other similar plan or any “employee benefit plan” within the meaning of
      Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
      (“ERISA”) (the term “plan” shall include any contract, agreement or policy, each
      such plan being hereinafter referred to individually as a “Plan”). Each Plan
      intended to be qualified under Section 401 (a) of the Internal Revenue Code
      of
      1986, as amended (the “Code”), has received or timely applied for a favorable
      determination letter from the Internal Revenue Service regarding such qualified
      status (or is covered by a favorable opinion letter issued by the Internal
      Revenue Service) and since such determination (or opinion letter), no amendments
      to or failure to amend any such Plan or any other circumstances adversely
      affects its tax qualified status. Except for any matter that would not have
      a
      Material Adverse Effect, there has been no prohibited transaction within the
      meaning of Section 4975 of the Code and Section 406 of Title I of ERISA with
      respect to any Plan that is subject to the prohibited transaction requirements
      of the Code or ERISA. Except as set forth on Schedule
      3.13,
      neither
      the Company nor any of its subsidiaries has any liability for any prohibited
      transaction or accumulated funding deficiency (within the meaning of Section
      412
      of the Code) or any complete or partial withdrawal liability (within the meaning
      of Sections 4203 and 4205 of the ERISA, respectively), with respect to any
      pension, profit sharing or other plan which is subject to ERISA, to which the
      Company or any of its subsidiaries makes or ever has made a contribution and
      in
      which any employee of the Company or any subsidiary is or has ever been a
      participant.

     

    3.14            Environmental
      Matters.
      Except
      as would not have a Material Adverse Effect or as set forth on Schedule
      3.14
      (a) the
      Company and each of its subsidiaries have obtained all Environmental Permits
      (as
      defined below) that are required with respect to their respective businesses,
      operations and properties, either owned or leased, and (b) the Company, each
      of
      it subsidiaries, and their respective properties are in compliance with all
      terms and conditions of all applicable Requirements of Environmental Law and
      Environmental Permits. Except as would not have a Material Adverse Effect or
      as
      set forth on Schedule
      3.14,
      there
      are no Environmental Claims pending or, to the knowledge of the Company,
      threatened against the Company or any of its subsidiaries. Neither the Company
      nor any of its subsidiaries has received any notice from any governmental
      authority of any unresolved violation or liability arising under any
      Requirements of Environmental Law or Environmental Permit in connection with
      its
      assets, businesses or operations, except for any such violation or liability
      as
      would not have a Material Adverse Effect.

     

    “Environmental
      Claim” means any third party (including governmental agencies and employees)
      action, lawsuit, claim or proceeding (including claims or proceedings under
      the
      Occupational Safety and Health Act or similar laws relating to safety of
      employees) that seeks to impose liability for (a) pollution or contamination
      of
      the ambient air, surface water, ground water or land; (b) solid, gaseous or
      liquid waste generation, handling, treatment, storage, disposal or
      transportation; (c) exposure to hazardous or toxic substances; (d) the safety
      or
      health of employees; or (e) the transportation, processing, distribution in
      commerce, use or storage of hydrocarbons. An Environmental Claim includes,
      but
      is not limited to, a common law action, as well as a proceeding initiated by
      a
      third party to revoke, modify or terminate an Environmental Permit.

     

    
      
        
        

      

      
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    “Environmental
      Permit” means any permit, license, approval or other authorization under any
      applicable law, regulation and other requirement of the United States or any
      foreign country or of any state, municipality or other political subdivision
      thereof relating to pollution or protection of health or the environment,
      including laws, regulations or other requirements relating to emissions,
      discharges, releases or threatened releases of pollutants, contaminants or
      hazardous substances or toxic materials or wastes into ambient air, surface
      water, ground water or land, or otherwise relating to the manufacture,
      processing, distribution, use, treatment, storage, disposal, transportation
      or
      handling of hydrocarbons or chemical substances, pollutants, contaminants or
      hazardous or toxic materials or wastes.

     

    “Requirements
      of Environmental Law” means all requirements in effect on the Closing Date
      imposed by any applicable law, rule, regulation or order of any federal,
      foreign, state or local executive, legislative, judicial, regulatory or
      administrative agency, board or authority with jurisdiction over the Company
      or
      any of its subsidiaries or any of their respective properties or assets that
      relate to (a) pollution or protection of the ambient air, surface water, ground
      water or land; (b) solid, gaseous or liquid waste generation, treatment,
      storage, disposal or transportation; (c) exposure to hazardous or toxic
      substances; (d) the safety or health of employees; or (e) regulation of the
      processing, distribution in commerce, use or storage of
      hydrocarbons.

     

    3.15            Permits
      and Licenses.
      The
      Company and its subsidiaries have all licenses, permits and other authorizations
      necessary for the conduct of their respective businesses as they are currently
      being conducted, except where the failure to hold any such licenses, permits
      or
      authorizations would not have a Material Adverse Effect.

     

    3.16            Insurance.
      The
      Company and its subsidiaries maintain insurance policies (together with all
      riders and amendments) relating to the assets or the businesses of the Company
      and its subsidiaries with coverage limits in amounts that the Company believes
      are sufficient to protect against any material claim for casualty or property
      damage. Such insurance policies are in full force and effect and all premiums
      due thereon have been paid or accrued on the books of the Company.

     

    3.17            Taxes.
      Each of
      the Company and its subsidiaries (i) has made or filed all foreign, U.S. and
      Canadian federal, state, provincial and territorial income and all other tax
      returns, reports and declarations required by any jurisdiction to which it
      is
      subject (unless and only to the extent that the Company and each of its
      subsidiaries has set aside on its books provisions reasonably adequate for
      the
      payment of all unpaid and unreported taxes), (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
      items set forth on Schedule
      3.17
      being
      contested in good faith and for which the Company has made appropriate reserves
      on its books, 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 (referred to in clause (i) above)
      apply. The charges, accruals and reserves on the books of the Company in respect
      of taxes for all prior fiscal periods are considered adequate by the Company,
      the Company knows of no assessment for additional taxes for any of such fiscal
      years or any basis therefore and there are no unpaid taxes in any material
      amount claimed in writing to be due by the taxing authority of any jurisdiction,
      and to the Company’s knowledge, there is no basis for any such claim. All tax
      returns and reports that have been filed by the Company and its subsidiaries
      are
      complete in all material respects. To the knowledge of the Company, no claim
      has
      been made that the Company or any of its subsidiaries is subject to a tax in
      any
      jurisdiction in which the Company or any of its subsidiaries has not filed
      a
      return and that remains unpaid as of the date hereof. The Company and its
      subsidiaries have withheld and paid all material amounts of taxes required
      to
      have been withheld and paid in connection with amounts previously paid to any
      employee, independent contractor, creditor, stockholder or other third party.
      Neither the Company nor any of its subsidiaries has been the subject of an
      audit
      and neither the Company not any of its subsidiaries has waived any statute
      of
      limitations or agreed to an extension of time with respect to a tax assessment
      or deficiency.

     

    
      
        
        

      

      
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    3.18            Absence
      of Certain Developments.
      Since
      December 31, 2006, there has been no change in the business or operations of
      the
      Company or any of its subsidiaries that would have a Material Adverse Effect,
      except changes in the ordinary course of business. Except as set forth on
Schedule
      3.18,
      the
      Company has not, since the date of the most recent consolidated financial
      statements included in the Form S-3, directly or indirectly, declared or paid
      any dividend or ordered or made any other distribution on account of any shares
      of any class of the capital stock of the Company. The Company has not, since
      such date, directly or indirectly redeemed, purchased or otherwise acquired
      any
      such shares or agreed to do so or set aside any sum or property for any such
      purpose.

     

    3.19            Brokerage
      Fees.
      Except
      as set forth in Schedule 3.19, there are no contracts, agreements or
      understandings between the Company and any person that would give rise to a
      valid claim against the Company or Purchaser for a brokerage commission,
      finder’s fee or other like payment in connection with the transactions
      contemplated by this Agreement and the Related Agreements.

     

    3.20            Investment
      Company.
      The
      Company is not, and after giving effect to the offering and sale of the Shares
      and the application of proceeds thereof, will not be an "investment company"
      as
      defined in the Investment Company Act of 1940.

     

    3.21            Forward
      Looking Statements.
      The
      statistical and market related data and forward looking statements included
      in
      the Reports and the Form S-3 are based on or derived from sources the Company
      believes to be reliable and accurate in all material respects and represents
      the
      Company's good faith estimates that are made on the basis of data derived from
      such sources.

     

    
      
        
        

      

      
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    3.22            Disclosure
      Controls.
      The
      Company has established and maintains disclosure controls and procedures (as
      such term is defined in Rule 13a-15 under the Exchange Act); such disclosure
      controls and procedures are designed to ensure that material information
      relating to the Company and its subsidiaries is made known to the chief
      executive officer and chief financial officer of the Company by others within
      the Company or any subsidiary, and such disclosure controls and procedures
      are
      reasonably effective to perform the functions for which they were established
      subject to the limitations of any such control system. The Company's auditors
      and the audit committee of the board of directors of the Company have been
      advised of: (A) any significant deficiencies in the design or operation of
      internal controls which could adversely affect the Company's ability to record,
      process, summarize and report financial data; and (B) any fraud, whether or
      not
      material, that involves management or other employees who have a role in the
      Company's internal controls. Any material weaknesses in internal controls have
      been identified for the Company's auditors; and since the date of the most
      recent evaluation of such disclosure controls and procedures, there have been
      no
      significant changes in internal controls or in other factors that could
      significantly affect internal controls, including any corrective actions with
      regard to significant deficiencies and material weaknesses. The Company and
      its
      subsidiaries are in material compliance with any provisions of the
      Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder
      to the extent applicable to the Company or any of its subsidiaries.

     

    3.23            Affiliate
      Transactions.
      There
      are no transactions affecting the business of the Company or any of the
      Company's subsidiaries or their respective assets between the Company or any
      subsidiary of the Company and any affiliates of the Company, any subsidiary
      of
      the Company or any officer or director of the Company, except as set forth
      in
      Schedule 3.23.

     

    3.24            Exempt
      Offering.
      Subject
      to the accuracy of the representations and warranties of the Purchaser set
      forth
      in Section 4, the offer, sale and issuance of the Shares pursuant to this
      Agreement are exempt from the registration and prospectus delivery requirements
      of the Securities Act by virtue of Regulation D thereunder and from the
      registration, prospectus delivery or qualification requirements of the Canadian
      Securities Laws and any applicable state securities laws.

     

    3.25            HSR
      Exemption.
      As of
      the date hereof and as of the Closing Date, the Company, considered together
      with all entities it controls, does not hold assets with an aggregate fair
      market value of greater than Fifty Million Dollars ($50,000,000.00) which would
      be considered to be non-exempt assets under the Hart-Scott-Rodino Antitrust
      Improvements Act of 1976, as amended, and the rules and regulations promulgated
      thereunder, including, without limitation, Section 802.4 of Title 16 of the
      Code
      of Federal Regulations. 

     

    3.26            Disclosure.
      No
      representation or warranty of the Company set forth in this Agreement contains,
      or will contain as of the Closing Date, any untrue statement of a material
      fact
      or, to the knowledge of the Company, omits to state a material fact necessary
      in
      order to make the statements contained herein not misleading

     

    3.27            Acknowledgement.
      The
      Company acknowledges and agrees that the Purchaser is acting solely in the
      capacity of an arm’s length purchaser with respect to the Company in connection
      with this Agreement, the Registration Rights Agreement and the Related
      Agreements and the transactions contemplated hereby and thereby. The Company
      further represents to the Purchaser that the Company’s decision to enter into
      this Agreement, the Registration Rights Agreement and the Related Agreements
      has
      been based solely on the independent evaluation by the Company and its
      representatives of all of the terms and conditions of the transactions
      contemplated thereby. The Company does not believe, and has no reasonable
      grounds to believe, that the Purchaser is a resident of Alberta.

     

    
      
        
        

      

      
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    3.28            DISCLAIMERS.    EXCEPT
      AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, THE REGISTRATION RIGHTS
      AGREEMENT AND THE RELATED AGREEMENTS, THE COMPANY (i) MAKES NO REPRESENTATION
      OR
      WARRANTY, EXPRESS, STATUTORY, IMPLIED OR OTHERWISE WITH RESPECT TO THE SHARES,
      THE COMPANY OR ANY OF ITS SUBSIDIARIES OR THEIR RESPECTIVE ASSETS AND (ii)
      DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES ASSOCIATED WITH THE SHARES
      THE COMPANY OR ANY OF ITS SUBSIDIARIES OR THEIR RESPECTIVE ASSETS, EXPRESS,
      STATUTORY, IMPLIED OR OTHERWISE.

     

    4.             Representations
      and Warranties of the Purchaser.
      The
      Purchaser represents and warrants to the Company that, as of the date of this
      Agreement:

     

    4.1             No
      Conflict.
      The
      execution and delivery of this Agreement and the Registration Rights Agreement
      by the Purchaser, and performance by the Purchaser hereunder and thereunder
      will
      not result in a violation or breach of any term or provision of or constitute
      a
      default or accelerate the performance required under the Certificate of
      Incorporation or Bylaws of the Purchaser or any material indenture, mortgage,
      deed of trust or other contract or agreement to which the Purchaser is a party
      or by which its assets are bound, or violate any order, writ, injunction or
      decree of any court, administrative agency or governmental body.

     

    4.2             Authority;
      Enforceability.
      The
      Purchaser has full right, power and authority to execute and deliver this
      Agreement and the Registration Rights Agreement and to consummate the
      transactions contemplated hereby and thereby. The execution and delivery of
      this
      Agreement and the Registration Rights Agreement and the consummation of the
      transactions contemplated hereby and thereby to be performed by the Purchaser
      have been duly and validly authorized by all necessary corporate action on
      the
      part of the Purchaser, and no other corporate proceedings are necessary to
      authorize the execution and delivery of this Agreement and the Registration
      Rights Agreement by the Purchaser or to consummate the transactions contemplated
      hereby to be performed by the Purchaser. This Agreement and the Registration
      Rights Agreement will constitute valid and legally binding obligations of the
      Purchaser, enforceable in accordance with their respective terms, except as
      that
      enforcement may be limited by bankruptcy, insolvency, moratorium or similar
      laws
      affecting the enforcement of creditors’ rights, by the availability of
      injunctive relief or specific performance and by general principles of
      equity.

     

    4.3             Consents.
      The
      Purchaser is not required to obtain any consent from or approval of any court,
      governmental entity or any other person in connection with the execution,
      delivery or performance by it of this Agreement or the Registration Rights
      Agreement and the transactions contemplated hereby. The consummation of the
      transactions contemplated by this Agreement will not require the approval of
      any
      entity or person in order to prevent the termination of any material right,
      privilege, license or agreement of the Purchaser.

     

    
      
        
        

      

      
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    4.4             Investment
      Representatives.
      The
      Purchaser is an “accredited investor” within the meaning of Regulation D
      promulgated by the SEC under the Securities Act, and (by virtue of its
      experience in evaluating and investing in private placement transactions of
      securities in companies similar to the Company) is capable of evaluating the
      merits and risks of its investment in the Company. The Purchaser acknowledges
      that it has had, or will have prior to Closing, the opportunity to ask questions
      of the officers of the Company. The Purchaser is an informed and sophisticated
      purchaser, experienced in the evaluation and purchase of interests in companies
      such as the Company as contemplated hereunder. The Purchaser has or will have
      undertaken such investigation and legal and financial due diligence and has
      or
      will have evaluated such documents and information as it has deemed necessary
      to
      enable it to make an informed and intelligent decision with respect to the
      execution, delivery and performance of this Agreement. In reaching the
      conclusion that it desires to acquire the Shares, the Purchaser has evaluated
      its financial resources and investment position and the risks associated with
      this investment and acknowledges that it is able to bear the economic risks
      of
      this investment. As of the date hereof, the Purchaser represents, warrants
      and
      agrees that it is acquiring the Shares as principal solely for its own account,
      for investment, and not with a view to the distribution or resale thereof.
      The
      Purchaser further represents that its present financial condition is such that
      it is not under any present necessity or constraint to dispose of such Shares
      to
      satisfy any existing or contemplated debt or undertaking and that the investment
      is suitable for the Purchaser upon the basis of the Purchaser’s other security
      holdings, financial situation and needs. The Purchaser acknowledges and
      understands that it must bear the economic risk of this investment for an
      indefinite period of time because the offering of the Shares has not been
      registered under the Securities Act and, accordingly, the Shares must be held
      indefinitely unless subsequently registered under the Securities Act and/or
      the
      Canadian Securities Laws and applicable state and other securities laws or
      unless an exemption from such registration is available. The Purchaser agrees
      that any certificates evidencing the Shares must bear a legend restricting
      the
      transfer thereof as set forth in Section 2.2 and that a notice may be made
      in the records of the Company or to its transfer agent restricting the transfer
      of the Shares in a manner consistent with the foregoing.

     

    4.5             Acknowledgments.
      The
      Purchaser certifies that it is not a resident of Alberta and acknowledges that:
      (a) no securities commission or similar regulatory authority has reviewed or
      passed on the merits of the Shares; (b) there is no government or other
      insurance covering the Shares; (c) there are risks associated with the purchase
      of the Shares and in owning the Shares; (d) there are restrictions on the
      Purchaser's ability to resell the Shares and it is the responsibility of the
      Purchaser to find out what those restrictions are and to comply with them before
      selling the Shares; and (e) the Company has advised the Purchaser that the
      Company is relying upon an exemption from the requirements to provide the
      Purchaser with a prospectus and to sell securities through a person or company
      registered to sell securities under applicable securities legislation and,
      as a
      consequence of acquiring the securities pursuant to this exemption, certain
      protections, rights and remedies provided by applicable securities legislation,
      including statutory rights of rescission or damages, will not be available
      to
      the Purchaser.

     

    
      
        
        

      

      
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    5.            
      Nature
      and Survival of Representations and Warranties;
      Indemnity

     

    5.1             Survival
      of Representations and Warranties.
      All
      covenants, agreements, representations and warranties made hereunder or pursuant
      hereto or in connection with the transactions contemplated hereby shall survive
      the Closing for a period of eighteen (18) months.

     

    5.2             Indemnity
      by the Company.
      The
      Company shall indemnify and hold harmless the Purchaser and the officers,
      directors, managers, agents, affiliates and representatives of the Purchaser
      (the “Purchaser Indemnitees”) from and against, and shall reimburse the
      Purchaser Indemnitees for, any loss, liability, damage or expense, including
      reasonable attorneys’ fees and costs of investigation incurred as a result
      thereof, that the Purchaser shall incur or suffer (collectively, the “Purchaser
      Recoverable Losses”), arising out of or resulting from (a) any misrepresentation
      or breach of any representation or warranty contained in Article 3 hereof on
      the
      part of the Company, or (b) any nonfulfillment or breach of any agreement or
      covenant under or pursuant to this Agreement or the Registration Rights
      Agreement on the part of the Company.

     

    5.3             Indemnity
      by the Purchaser.
      The
      Purchaser shall indemnify and hold harmless the Company and the officers,
      directors, managers, agents, affiliates and representatives of the Company
      (the
“Company Indemnitees”) from and against, and shall reimburse the Company
      Indemnitees for, any loss, liability, damage or expense, including reasonable
      attorneys’ fees and cost of investigation incurred as a result thereof, that the
      Company shall incur or suffer (collectively, the “Company Recoverable Losses”)
      arising out of or resulting from (a) any misrepresentation or breach of any
      representation or warranty contained in Article 4 hereof on the part of the
      Purchaser, or (b) any nonfulfillment or breach of any agreement or covenant
      under or pursuant to this Agreement or the Registration Rights Agreement on
      the
      part of the Purchaser.

     

    5.4             Limitation
      of Liability.

     

    (a)             Notwithstanding
      any liability that the Company or the Purchaser may incur in Sections 5.2 and
      5.3, respectively, above, the Company shall not be obligated for a Purchaser
      Recoverable Loss, and the Purchaser shall not be obligated for a Company
      Recoverable Loss, unless and until such loss, individually, or in the aggregate,
      shall exceed $250,000, in which case the Company or the Purchaser, as the case
      may be, shall be obligated for all amounts in excess thereof. In no event will
      the liability of the Company under this Article 5 with respect to Purchaser
      Recoverable Losses or the Purchaser under this Article 5 with respect to Company
      Recoverable Losses exceed an amount equal to twenty five percent (25%) of the
      Purchase Price.

     

    (b)             Notwithstanding
      any provision in any other Section of this Agreement to the contrary, no
      Purchaser Recoverable Loss or Company Recoverable Loss will include any
      indirect, consequential, exemplary, punitive or treble damage (collectively,
      the
“Excluded Damages”) suffered by the Purchaser Indemnitees or the Company
      Indemnitees. The Purchaser hereby releases the Company, to the fullest extent
      applicable law permits, from liability for all Excluded Damages, and the Company
      hereby releases the Purchaser, to the fullest extent applicable law permits,
      from liability for all Excluded Damages.

     

    
      
        
        

      

      
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    5.5             Exclusive
      Remedy.
      The
      rights to indemnification set forth in this Article 5 shall be the sole and
      exclusive remedy of the Purchaser Indemnitees against the Company and the
      Company Indemnitees against the Purchaser, respectively, in connection with
      the
      surviving representations and warranties (except to the extent that the
      Purchaser Indemnitees or the Company Indemnitees may have any claim against
      the
      other party arising out of or based on fraud).

     

    6.             Conditions
      Precedent.
      The
      obligation of the Purchaser hereunder to purchase the Shares from the Company
      is
      subject to the satisfaction or waiver of each of the following
      conditions:

     

    6.1             Certain
      Actions.
      No
      preliminary or permanent injunction or other order will have been issued by
      any
      court of competent jurisdiction or any regulatory body preventing consummation
      of the transactions contemplated by this Agreement and no action will have
      been
      commenced or threatened against the Company or the Purchaser or any of their
      respective affiliates, associates, officers or directors seeking to prevent
      or
      challenge the transactions contemplated by this Agreement or seeking damages
      arising from the transactions contemplated by this Agreement.

     

    6.2             Representations
      and Warranties.
      All
      representations and warranties of the Company contained herein will be true
      and
      correct in all material respects on and as of the Closing Date as if made on
      and
      as of the Closing Date (except
      to the extent that a representation specifically speaks to an earlier date,
      in
      which case such representation shall continue to remain true and correct as
      of
      the Closing Date with respect to such earlier date), and the Purchaser will
      have
      received a certificate signed by a responsible officer of the Company to such
      effect.

     

    6.3             Related
      Agreements.
      The
      transactions contemplated by this Agreement, the Registration Rights Agreement,
      and related conveyances, documents and agreements contemplated thereby
      (collectively, the “Related Agreements”) among Gastar Exploration Ltd. and
      Purchaser and one or more of their respective subsidiaries are being consummated
      pursuant to the Preferential Rights Letter and that certain Letter of Intent
      dated April 27, 2007 executed between Chesapeake Energy Corporation and the
      Company. The Letter of Intent and the Preferential Rights Letter reflect
      interdependent provisions reflecting the agreement of the parties to the
      purchase of shares and to purchase certain leasehold interests. Consummation
      of
      the entirety of the transactions is a condition precedent under all of the
      Related Agreements. While
      certain values for accounting purposes may be placed on the various components
      of the transaction, the parties acknowledge and agree that the consideration
      attributable to the matters covered in the Related Agreements were not derived
      separately but were negotiated as a whole and that the transactions would not
      be
      consummated without each of the matters covered by the Related Agreements being
      completed.

     

    6.4             Registration
      Rights Agreement.
      The
      Company shall have executed and delivered to the Purchaser the Registration
      Rights Agreement.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    6.5             Material
      Adverse Change.
      There
      shall not have occurred since the date hereof any material adverse change in
      the
      financial condition, results of operations or business of the Company excluding
      any change or effect resulting from general economic conditions, any occurrence
      or condition affecting the oil and gas industry generally or any occurrence
      or
      condition arising out of the transactions contemplated by this Agreement or
      the
      public announcement thereof.

     

    6.6             Company
      Requirements.
      All
      statutory, regulatory, listing agency and other requirements for the valid
      consummation by the Company of the transactions contemplated by this Agreement
      shall have been fulfilled and all authorizations, consents and approvals of
      all
      governmental or other authorities required to be obtained in order to permit
      consummation by the Company of the transactions contemplated by this Agreement
      shall have been obtained. The Company shall have made all filings under all
      applicable U.S. and Canadian federal, state, provincial, territorial and foreign
      securities laws necessary to consummate the issuance of the Shares pursuant
      to
      this Agreement in compliance with such laws. 

     

    6.7             Opinions
      of Counsel.
      If
      requested by the Purchaser, the Purchaser shall have received an opinion of
      Canadian counsel for the Company in form, scope and substance reasonably
      satisfactory to the Purchaser.

     

    6.8             Delivery
      of Shares.
      The
      Company shall have issued and delivered the Shares as directed in writing by
      the
      Purchaser.

     

    6.9             Evidence
      of Authority; Good Standing.
      The
      Company shall have delivered to the Purchaser a secretary’s certificate, dated
      as of the Closing Date attaching certificates of good standing for the Company
      and each of its subsidiaries as of a recent date and certifying the resolutions
      of the board of directors of authorizing the Company to execute deliver and
      perform the transactions contemplated by this Agreement, the Registration Rights
      Agreement and the Related Agreements. 

     

    7.             Miscellaneous.

     

    7.1             Financial
      Statements and Other Information.
      So long
      as the Purchaser owns at least five percent (5%) of the outstanding capital
      stock of the Company at any time upon the written request of the Purchaser,
      the
      Company will provide to the Purchaser copies of all financial statements and
      other information provided to any governmental authority, lender, investor,
      partner, or shareholder.

     

    7.2             Expenses.
      Each of
      the parties will pay their respective costs and expenses (including legal fees)
      in connection with this Agreement as a result of the transactions contemplated
      hereby.

     

    7.3             Notices.
      All
      notices and other communications provided for or permitted hereunder must be
      in
      writing and will be deemed delivered and received (i) if personally
      delivered or if delivered by facsimile or courier service, when actually
      received by the party to whom the notice or communication is sent, or
      (ii) if deposited with the United States postal service (whether actually
      received or not), at the close of business on the third business day next
      following the day when placed in the mail, postage prepaid, certified or
      registered with return receipt requested, addressed to the appropriate party or
      parties at the address of that party set forth or referred to below (or at
      such
      other address as that party may designate by written notice to each other party
      in accordance herewith):

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    (a)             if
      to the
      Company, to:

     

    Gastar
      Exploration Ltd.

    1331
      Lamar, Suite 1080

    Houston,
      Texas 77010

    Attention:
      Mr. J. Russell Porter

    Fax
      No.:
      (713) 739-0458

     

    with
      a
      copy (which will not constitute notice for purposes of this Agreement)
      to:

     

    Vinson
      & Elkins

    2300
      First City Tower

    1001
      Fannin

    Houston,
      Texas 77002

    Attention:
      Mr. T. Mark Kelly

    Fax
      No.:
      (713) 615-5531

     

    (b)             if
      to the
      Purchaser, to:

     

    Navasota
      Resources, L.P.

    15415
      Katy Freeway, Suite 800

    Houston,
      Texas 77094

    Attention:
      Harlan H. Chappelle

    Fax
      No.:
      (281) 530-5278

     

    with
      a
      copy (which will not constitute notice for purposes of this Agreement)
      to:

     

    ____________________

    ____________________

    ____________________

    ____________________

    Attention:
      ___________

    Fax
      No.:
      _____________ 

     

    7.4             Entire
      Agreement;
      Amendments.
      This
      Agreement, the Registration Rights Agreement, the Related Agreements, the
      schedules hereto and thereto and the documents specifically referred to herein
      and therein or executed contemporaneously therewith constitute the entire
      agreement, understanding, representations and warranties of the parties hereto
      related to the subject matter hereof and supersede all prior agreements of
      the
      parties related to the subject matter hereof. This Agreement may be amended
      only
      by an instrument in writing executed by both of the parties hereto.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    7.5             Assignment.
      This
      Agreement may be assigned at any time by the Purchaser to a wholly owned
      subsidiary of the Purchaser without the prior consent of the Company so long
      as
      the party to whom this Agreement is assigned agrees in writing to be bound
      by
      all terms and conditions contained herein. No other assignment may be made
      by
      the Purchaser without the Company’s prior written consent. Subject to the
      provisions of this Section 7.5, this Agreement will inure to the benefit of
      and be binding on the successors and assigns of each of the parties
      hereto.

     

    7.6             No
      Third Party Rights.
      Nothing
      in this Agree-ment, express or implied, is intended to confer upon any person,
      other than the parties hereto and their respective successors and assigns,
      any
      rights or remedies under or by reason of this Agreement or to constitute such
      person a third party beneficiary of this Agreement.

     

    7.7             Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed to be an original instrument, but all of which taken together shall
      constitute one and the same agreement.

     

    7.8             Headings:
      Interpretation.
      The
      headings of the various sections of this Agreement have been inserted for
      convenience of reference only and shall not limit or affect the meaning or
      interpretation of this Agreement. Whenever the context requires, references
      in
      this Agreement to the singular number shall include the plural and vice versa,
      and words denoting gender shall include the masculine, feminine and neuter.
      This
      Agreement uses the words “herein,” “hereof,” “hereto” and “hereunder” and words
      of similar import to refer to this Agreement as a whole and not to any
      particular provision of this Agreement. As used in this Agreement, the word
      “including” (and, with correlative meaning, the word “include”) means including
      without limiting the generality of any description preceding that word, and
      the
      verbs “shall” and “will” are used interchangeably and have the same
      meaning.

     

    7.9             Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Texas, without regard to any principles of conflicts of law thereof
      that would result in the application of the laws of any other
      jurisdiction.

     

    7.10            Arbitration.

     

    (a)             The
      parties shall attempt in good faith to resolve any dispute arising out of or
      relating to this Agreement promptly by negotiation between executives who have
      authority to settle the controversy and who are at a higher level of management
      than the persons with direct responsibility for administration of this
      Agreement. Any party may give the other party written notice of any dispute
      not
      resolved in the normal course of business. Within 15 days after delivery of
      the
      notice, the receiving party shall submit to the other party a written response.
      The notice and response shall include (a) a statement of that party’s position
      and a summary of arguments supporting that position, and (b) the name and title
      of the executive who will represent that party and of any other person who
      will
      accompany the executive. Within 30 days after delivery of the initial notice,
      the executives of both parties shall meet at a mutually acceptable time and
      place, and thereafter as often as they reasonably deem necessary, to attempt
      to
      resolve the dispute. All reasonable requests for information made by one party
      to the other will be honored.
      All
      negotiations pursuant to this clause are confidential and shall be treated
      as
      compromise and settlement negotiations for purposes of applicable rules of
      evidence.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    (b)             If
      the
      dispute has not been resolved by negotiation as provided herein within 45 days
      after delivery of the initial notice of negotiation, the parties shall endeavor
      to settle the dispute by mediation under the CPR Mediation Procedure in effect
      on the date of this Agreement, provided, however, that if one party fails to
      participate in the negotiation as provided herein, the other party can initiate
      mediation prior to the expiration of the 45 days. Unless otherwise agreed,
      the
      parties will select a mediator from the CPR Panels of Distinguished
      Neutrals.

     

    (c)             Any
      dispute arising out of or relating to this Agreement, including the breach,
      termination or validity thereof, that has not been resolved by mediation as
      provided herein within 45 days after initiation of the mediation procedure,
      shall be finally resolved by arbitration in accordance with the CPR Rules for
      Non-Administered Arbitration in effect on the date of this Agreement, by three
      independent and impartial arbitrators, of whom each party shall designate
      one and the two arbitrators shall appoint the third; provided, however, that
      if
      one party fails to participate in either the negotiation or mediation as agreed
      herein, the other party can commence arbitration prior to the expiration of
      the
      time periods set forth above. The arbitration shall be governed by the Federal
      Arbitration Act, 9 U.S.C. §§ 1-16, and judgment upon the award rendered by the
      arbitrators may be entered by any court having jurisdiction thereof. The place
      of arbitration shall be Houston, Texas.
      The
      arbitrators are not empowered to award damages in excess of compensatory damages
      and each party expressly waives and foregoes any right to punitive, exemplary
      or
      similar damages unless a statute requires that compensatory damages be increased
      in a specified manner. 

     

    (d)             Each
      party is required to continue to perform its obligations under this Agreement
      pending final resolution of any dispute arising out of or relating to this
      Agreement, unless to do so would be impossible or impractical.

     

    7.11            Attorney
      Fees.
      Without
      limiting the arbitrators’ right to award costs and/or attorneys’ fees pursuant
      to Section 7.10 hereof, if any action at law or in equity is brought to secure
      injunctive relief, enforce an arbitration award or, subject to Section 7.10
      hereof, enforce or interpret the terms of this Agreement, the prevailing party
      shall be entitled to reasonable attorneys' fees, costs and necessary
      disbursements in addition to any other relief to which it may be
      entitled.

     

    7.12            Severability.
      In case
      any one or more of the provisions contained in this Agreement or any application
      thereof shall be invalid, illegal or unenforceable in any respect, the validity,
      legality and enforceability of the remaining provisions contained herein and
      other applications thereof shall not in any way be affected or impaired
      thereby.

     

    7.13            JOINT
      ACKNOWLEDGMENT.
      THIS
      WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
      NOT
      BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
      AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
      PARTIES.

     

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, this Agreement has been duly executed by the Company and by
      the
      Purchaser by their respective officers duly authorized effective as of the
      date
      first above written.

     

    
      	 	
              THE
                COMPANY:

            
	 	 
	 	
              GASTAR
                EXPLORATION LTD., an Alberta corporation

            
	 	 	 
	 	
              By:

            	
              /s/
                J. RUSSELL PORTER

            
	 	 	
              J.
                Russell Porter, President and CEO

            
	 	 	 
	 	 	 
	 	
              THE
                PURCHASER:

            
	 	 
	 	
              NAVASOTA
                RESOURCES, L.P., a Texas limited partnership 

            
	 	 	 
	 	
              By:

            	
              /s/
                HARLAN H. CHAPPELLE

            
	 	 	
              Harlan
                H. Chappelle

            
	 	 	
              President

            

    

     

     

    -22-Unassociated Document

    
      

    

    Exhibit
      10.2

     

    REGISTRATION
      RIGHTS AGREEMENT 

     

    REGISTRATION
      RIGHTS AGREEMENT (this
      "Agreement"),
      dated
      as
      of May 9, 2007, by and between Gastar Exploration Ltd., an Alberta, Canada
      corporation (the "Company"),
      and
      Navasota Resources, L.P., a [Texas] limited partnership (the "Purchaser").

     

    WHEREAS:

     

    In
      connection with the Common Share Purchase Agreement dated May 9, 2007 by and
      between the parties hereto (the "Purchase
      Agreement"),
      the
      Company has agreed, upon the terms and subject to the conditions of the Purchase
      Agreement, to issue and sell the Shares (as such term is defined in the Purchase
      Agreement) to the Purchaser concurrently with the execution and delivery of
      this
      Agreement.

     

    To
      induce
      the Purchaser to execute and deliver the Purchase Agreement, the Company has
      agreed to provide certain registration rights under the Securities Act of 1933,
      as amended, and the rules and regulations thereunder, or any similar successor
      statute (collectively, the "1933
      Act"),
      and
      applicable state securities laws.

     

    NOW,
      THEREFORE, in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and the Purchaser hereby agree as
      follows:

     

    1.            
      DEFINITIONS.

     

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

    
       

    

    a.    
"Business
      Day"
      means a
      day, other than Saturday, Sunday or other day on which commercial banks in
      Houston, Texas are authorized or required by law to close.

     

    b.    "Canadian
      Securities Laws"
      means
      the securities legislation and regulations of, and the instruments, policies,
      rules, orders, codes, notices and interpretation notes, of the securities
      regulation authorities (including the Toronto Stock Exchange) of any applicable
      jurisdiction, or jurisdictions collectively, in Canada.

     

    c.    "Common
      Shares"
      means
      the common shares of the Company.

     

    d.    "Governmental
      Authority"
      means
      the government of the United States of America, the government of Canada or
      the
      government of any other nation, or any political subdivision thereof, whether
      state, provincial or local, or any agency, authority, instrumentality,
      regulatory body, court, central bank or other entity exercising executive,
      legislative, judicial, taxing, regulatory or administration powers or functions
      of or pertaining to government over the Company or any of its subsidiaries,
      or
      any of their respective properties, assets or undertakings.

     

    e.    "Investor"
      means
      the Purchaser, any transferee or assignee thereof to whom the Purchaser assigns
      its rights under this Agreement and who agrees to become bound by the provisions
      of this Agreement in accordance with Section 10 and any transferee or assignee
      thereof to whom a transferee or assignee assigns its rights under this Agreement
      and who agrees to become bound by the provisions of this Agreement in accordance
      with Section 10.

     

    f.    
"Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a governmental or
      any
      department or agency thereof.

     

    g.    "Register,"
      "registered,"
      and
      "registration"
      refer
      to a registration effected by preparing and filing one or more Registration
      Statements (as defined below) in compliance with the 1933 Act, and the
      declaration or ordering of effectiveness of such Registration Statement(s)
      by
      the United States Securities and Exchange Commission (the "SEC").

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      h.    "Registrable
        Securities"
        means
        (i) the Shares required to be issued on the Closing Date and (ii), any common
        shares issued or issuable with respect to such Shares as a result of any
        share
        split, share dividend, recapitalization, exchange or similar event or otherwise;
        provided, however, that any such Registrable Securities shall cease to be
        Registrable Securities when (a) a Registration Statement with respect to
        the
        sale of such securities becomes effective under the 1933 Act and such securities
        are disposed of in accordance with such Registration Statement, (b) such
        securities are sold in accordance with Rule 144 (as defined in Section 9),
        or
        (c) such securities become transferable without any restrictions in accordance
        with Rule 144(k) (or any similar rule then in effect under the 1933
        Act).

       

      i.    
"Registration
        Statement"
        means a
        registration statement or registration statements of the Company filed under
        the
        1933 Act covering the Registrable Securities.

       

      j.    
"Trading
        Day"
        means
        any day on which the Common Shares are traded on the principal securities
        exchange or securities market in the United States or Canada on which the
        Common
        Shares are then traded; provided that "Trading Day" shall not include any
        day on
        which the Common Shares are scheduled to trade, or actually trade on such
        exchange or market, for less than 4.5 hours.

       

      Capitalized
        terms used herein and not otherwise defined herein shall have the respective
        meanings set forth in the Purchase Agreement.

       

      2.    DEMAND
        REGISTRATION.

       

      a.    Request
        for Registration.
        At any
        time after the earlier of December 31, 2007 or if the Company shall receive
        a
        written request ("Demand
        Notice")
        from
        an Investor holding at least 30% of the Registrable Securities then outstanding
        (the "Initiating
        Investor")
        for
        registration under the 1933 Act (a "Demand
        Registration")
        of all
        or part of its Registrable Securities but not less than 30% of the Registrable
        Securities then outstanding, then the Company shall, within 15 days of the
        receipt thereof, give written notice of such Demand Notice to each Investor.
        Within
        15
        days after receiving such notice, each Investor may make a written request
        to
        the Company that any or all of the Investor's Registrable Securities be included
        in the Demand Registration, which notice shall specify the number of shares
        to
        be so included. Subject to Section 2(e) hereof, the Company shall include
        in the
        Demand Registration (or in a separate Registration Statement filed concurrently
        therewith)
        all Registrable Securities with respect to which the Company has received
        a
        written request for inclusion therein within 15 days after the receipt by
        such
        Investor of
        the
        Company's notice. Each Investor
        shall
        be
        permitted to withdraw all or part of the
        Investor's Registrable
        Securities requested to be included in the Demand Registration at any time
        prior
        to the effective date of such Demand Registration without any liability for
        any
        registration expenses. The
        Demand Notice will specify the number of shares of Registrable Securities
        proposed to be sold and will also specify the intended method of disposition
        thereof
        and the jurisdictions in which registration is reasonably desired. 

       

      b.    Limitation
        on Demand Registration.
        The
        Company shall not be obligated to effect more than one Demand Registration
        under
        this Section 2. Notwithstanding any provision of this Agreement to the contrary,
        the Company shall be entitled to postpone (but not more than once in any
        twelve
        month period), for a reasonable period of time not in excess of 90 days,
        the
        filing of a Registration Statement if the Company delivers to the Investors
        a
        certificate signed by the Chief Executive Officer or Chief Financial Officer
        of
        the Company certifying that, in the good faith judgment of the Board of
        Directors of the Company, such registration and offering would reasonably
        be
        expected to materially adversely affect or materially interfere with any
        bona
        fide material financing of the Company or any material transaction under
        consideration by the Company or would require disclosure of information that
        has
        not been disclosed to the public, the premature disclosure of which would
        materially adversely affect the Company. Such certificate shall contain a
        statement of the reasons for such postponement and an approximation of the
        anticipated delay. The Persons receiving such certificate shall keep the
        information contained in such certificate confidential subject to the same
        terms
        set forth in Section 4(i). If the Company shall so postpone the filing of
        a
        Registration Statement, the Initiating Investor shall have the right to withdraw
        the request for registration by giving written notice to the Company within
        10
        days of the anticipated termination date of the postponement period, as provided
        in the certificate delivered by the Company pursuant hereto, and in the event
        of
        such withdrawal, such request shall not be counted for purposes of the number
        of
        Demand Registrations to which the Investors are entitled pursuant to the
        terms
        of this Agreement.

       

      
        
          
            
            

          

          
            -2-

            
              

            

          

          
            
            

          

        

      

      

      c.    Effective
        Registration.
        A
        registration will not count as a Demand Registration (i) unless a
        Registration Statement with respect thereto has become effective (unless
        the
        Initiating Investor withdraws its shares of Registrable Securities requested
        to
        be included in the Demand Registration), (ii) if after it has become effective,
        such registration is interfered with by any stop order, injunction or other
        order or requirement of the SEC or other governmental agency or court for
        any
        reason not attributable to an Investor and has not thereafter become effective,
        or (iii) if the conditions to closing specified in the underwriting agreement,
        if any, entered into in connection with such registration are not satisfied or
        waived, other than by reason of a failure on the part of an
        Investor. 

       

      d.    No
        Third-Party Piggy-Back on Demand Registrations without Consent.
        Neither
        the Company nor any of its security holders who are not Investors may include
        securities of the Company in any Demand Registration without the prior written
        consent of the Initiating Investor.

       

      e.    Priority
        on Demand Registrations.
        In the
        event an offering pursuant to a Demand Registration shall be in the form
        of an
        underwritten offering pursuant to subsection (f) below, if the managing
        underwriter or underwriters of such offering advise the Company and the
        Investors in writing that, in their good faith judgment, the number of
        Registrable Securities and any other securities requested to be included
        in such
        offering is sufficiently large to adversely affect the success of such offering
        (a "Material
        Adverse Effect"),
        then
        (i)
        the amount of securities to be included in the Demand
        Registration for
        any
        Persons (other than the Company and the Investors) shall first be reduced,
        thereafter the securities to be offered for the account of the Company shall
        be
        reduced, and thereafter the Registrable Securities to be offered for the
        account
        of the Investors shall be reduced so that the total number of securities
        to be
        included in the
        offering
        shall be the recommended
        number by such managing underwriter or underwriters, unless the Investors
        desire to sell a number of Registrable Securities that is less than the total
        amount that they are entitled to sell, in which event
        the
        number of Registrable Securities not so elected to be sold shall be allocated
        first to the Company and then to any other holders of securities of the Company
        permitted
        to include their securities in such Demand Registration pursuant
        to Section 2(d). 

       

      f.    
Manner
        of Offering; Selection of Underwriters.
        If the
        Initiating Investor so requests, the offering of Registrable Securities pursuant
        to a Demand Registration shall be in the form of an underwritten offering
        and
        all Persons electing to participate in such Demand Registration
        shall
        be
        bound by such
        determination. If a Demand Registration is in the form of an underwritten
        offering, the Initiating
        Investor
        shall select the managing underwriter or underwriters to be used in connection
        with the offering; provided,
        however,
        that
        such underwriter or underwriters must be reasonably satisfactory to the
        Company. 

       

      3.    PIGGY-BACK
        REGISTRATION.

       

      a.    Request
        for Registration.
        At any
        time after the date hereof, if the Company proposes to file a registration
        statement under the 1933 Act (other than (i) a registration statement on
        Form
        S-4 or S-8 or any
        successor form that may be adopted by the SEC, (ii) a registration statement
        filed in connection with an exchange offer or offering of securities or debt
        solely to the Company's existing security or debt holders, (iii) a registration
        statement filed as a "shelf" registration pursuant to Rule 415 under the
        1933
        Act or (iv) the Existing Registration Statement (an "Exempt
        Offering"))
        with
        respect to an offering of securities of the same class as the Registrable
        Securities for
        the
        Company's own account
        or
        for
        the
account
        of
        any
        of
        its
        security holders, then the Company shall give written notice of such proposed
        filing to each Investor as soon as practicable (but in no event less than
        20 nor
        more than 60 days before the anticipated filing date). Such notice shall
        offer
        each Investor the opportunity to have all or any of the Registrable Securities
        held by such Investor included in the Registration Statement proposed to
        be
        filed or, at the Company's option, in a separate Registration Statement to
        be
        filed concurrently with such Registration Statement (the "Piggy-Back
        Registration").
        Within 15 days after receiving such notice, each Investor may make a written
        request to the Company that any or all of the Investor's Registrable Securities
        be included in the Piggy-Back Registration, which notice shall specify the
        number of shares to be so included. Subject to Section 3(b) hereof, the Company
        shall include in the Piggy-Back Registration (or in a separate Registration
        Statement filed concurrently therewith)
        all Registrable Securities with respect to which the Company has received
        a
        written request for inclusion therein within 15 days after the receipt by
        such
        Investor of
        the
        Company's notice. The Company may in its discretion withdraw any Registration
        Statement filed pursuant to this Section 3(a) subsequent to its filing without
        liability to any
        Investor
except
        with respect to expenses. Each Investor
        shall
        be
        permitted to withdraw all or part of the
        Investor's Registrable
        Securities requested to be included in a Piggy-Back Registration at any time
        prior to the effective date of such Piggy-Back Registration without any
        liability for any registration expenses. 

       

      
        
          
            
            

          

          
            -3-

            
              

            

          

          
            
            

          

        

      

      

      b.    Priority
        on Piggy-Back Registration.
        If any
        Piggy-Back Registration is to be an underwritten offering, the Company shall
        use
        its reasonable efforts to cause the managing underwriter or underwriters
        to
        permit the shares of Registrable Securities
        requested by each
        Investor to
        be
        included in the Piggy-Back Registration (on the same terms and conditions
        as
        similar securities of the Company included therein to the extent appropriate).
        Notwithstanding the foregoing, if the managing underwriter or underwriters
        of
        such offering advise the Company in writing that, in their good faith judgment,
        the number of Registrable Securities and any other securities requested to
        be
        included in such offering is sufficiently large to have a Material Adverse
        Effect, then (i) if such Piggy-Back Registration is incident to a primary
        registration on behalf of the Company, the amount of securities to be included
        in the Piggy-Back Registration for any Persons (other than the Company) shall
        be
        reduced pro rata so that the total number of securities to be included in
        the
        offering
        shall be the recommended
        number by such managing underwriter or underwriters, unless an Investor desires
        to sell a number of Registrable Securities that is less than the total amount
        that it is entitled to sell, and (ii) if such Piggy-Back Registration is
        incident to a secondary registration on behalf of holders of securities of
        the
        Company, the Company shall include in such Registration Statement (A) first,
        the
        number of securities of such Person(s) on whose behalf the registration is
        being
        made, (B) second, the number of Registrable Securities requested to be
        included in such registration pursuant to this Section 3 and for the account
        of
        all other Persons pursuant to similar piggy-back registration rights in excess
        of the securities such Persons on whose behalf the registration is being
        made
        propose to sell that, in the good faith judgment of such managing underwriters,
        can be sold without causing a Material Adverse Effect on such offering, and
        (C) third, the number of securities requested to be included in such
registration
        by the Company.

       

      c    Legal
        Counsel.
        Subject
        to Section 6 hereof,
        the Purchaser shall have the right to select one legal counsel to review,
        on
        behalf of the Purchaser, any registration pursuant to this Agreement
        ("Legal
        Counsel"), which
        shall be counsel as thereafter designated in writing to the Company by the
        Purchaser or its assignee. The Company shall reasonably cooperate with Legal
        Counsel in performing the Company's obligations under this
        Agreement.

       

      4.    REGISTRATION
        PROCEDURES.

       

      At
        such
        time as the Company is obligated to effect the registration of the Registrable
        Securities with the SEC pursuant to Section 2 or 3 hereof, the Company will
        use
        its reasonable efforts to effect the registration of the Registrable Securities
        in accordance with the intended method of disposition thereof and, pursuant
        thereto, the Company shall have the following obligations:

       

      a.    The
        Company shall promptly prepare and file with the SEC a Registration Statement
        with respect to the applicable Registrable Securities and use its reasonable
        best efforts to cause such Registration Statement to become effective as
        soon as
        practicable after such filing. The Company shall keep each Registration
        Statement effective at all times for a period of at least 120 days after
        the
        effective date thereof or such shorter period in which all Registrable
        Securities included in such Registration Statement have been sold (the
        "Registration
        Period"). Such
        Registration Statement (including any amendments or supplements thereto and
        prospectuses contained therein) shall not contain any untrue statement of
        a
        material fact or omit to state a material fact required to be stated therein,
        or
        necessary to make the statements therein, in light of the circumstances in
        which
        they were made, not misleading. The term "reasonable efforts" shall mean,
        among
        other things, that the Company shall submit to the SEC, within three (3)
        Business Days after the Company learns that no review of a particular
        Registration Statement will be made by the staff of the SEC or that the staff
        has no further comments on the Registration Statement, as the case may be,
        a
        request for acceleration of effectiveness of such Registration Statement
        to a
        time and date not later than 48 hours after the submission of such request;
        provided, however, that, subject to Section 4(t), the Company may delay (an
        "Effectiveness
        Request Grace Period")
        such
        submission of a request for acceleration of effectiveness of such Registration
        Statement if, in the good faith opinion of the Company and its counsel, such
        Effectiveness Request Grace Period is necessary to avoid disclosure of material
        non-public information concerning the Company the disclosure of which at
        the
        time is not, in the good faith opinion of the Board of Directors of the Company
        and its counsel, in the best interest of the Company and, in the opinion
        of
        counsel to the Company, otherwise required; provided that the Company shall
        (i)
        promptly notify the Investor in writing of the existence of material non-public
        information giving rise to such an Effectiveness Request Grace Period (provided
        that in each notice the Company shall not disclose the content of such material
        non-public information to the Investor), (ii) submit such request for
        acceleration of effectiveness as soon as, in the good faith opinion of Company
        and its counsel, such Effectiveness Request Grace Period is no longer necessary
        (subject to Section 4(t)), and (iii) notify the Investor in writing of the
        date
        on which the Effectiveness Request Grace Period ends.

      
        
          
          

        

        
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      b.    The
        Company shall prepare and file with the SEC such amendments (including
        post-effective amendments) to each Registration Statement as may be necessary
        to
        keep such Registration Statement effective at all times during the Registration
        Period, with respect to the disposition of all securities covered by the
        Registration Statement and cause the related Prospectus to be supplemented
        by
        any Prospectus supplement as may be necessary to comply with the provisions
        of
        the 1933 Act with respect to the disposition of the securities of the Company
        covered by such Registration Statement until such time as all of such securities
        shall have been disposed of in accordance with the intended methods of
        disposition by the seller or sellers thereof as set forth in such Registration
        Statement and as so supplemented to be filed pursuant to Rule 424 (or any
        similar provisions then in force) under the 1933 Act. In the case of amendments
        and supplements to a Registration Statement that are required to be filed
        pursuant to this Agreement (including pursuant to this Section 4(b)) by reason
        of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
        analogous report under the Securities Exchange Act of 1934, as amended (the
        "1934
        Act"),
        the
        Company shall have incorporated such report by reference into the Registration
        Statement, if applicable and permitted by law, or shall file such amendments
        or
        supplements with the SEC as soon as practicable after such filing of the
        report;
provided,
        however,
        that
        the Company may delay the filing of any applicable supplement or amendment
        pursuant to Section 4(t) (any such delay, a "Current
        Report Update Grace Period").
        

       

      c.    The
        Company shall (A) permit Legal Counsel to review and comment upon the
        Registration Statement at least five (5) Business Days prior to its filing
        with
        the SEC, The Company shall not submit a request for acceleration of the
        effectiveness of the Registration Statement or any amendment or supplement
        thereto without providing prior notice thereof to Legal Counsel and each
        Investor. The Company shall furnish to Legal Counsel, without charge, (i)
        promptly after the same is prepared and filed with the SEC, one copy of the
        Registration Statement and any amendment(s) thereto, including financial
        statements and schedules, all documents incorporated therein by reference
        that
        have not been filed, or are not immediately available electronically, via
        EDGAR,
        and all exhibits, and (ii) upon the effectiveness of any Registration Statement,
        one copy of the prospectus included in such Registration Statement and all
        amendments and supplements thereto. The Company shall reasonably cooperate
        with
        Legal Counsel in performing the Company's obligations pursuant to this Section
        4. 

       

      d.    The
        Company shall furnish to each Investor whose Registrable Securities are included
        in a Registration Statement, and to any managing underwriter or
        underwriters, without charge, at least one conformed copy of the Registration
        Statement, the Prospectus and Prospectus supplements, if applicable, and
        each
        post-effective amendment thereto, including financial statements (but excluding
        schedules, all documents incorporated or deemed to be incorporated therein
        by
        reference, and all exhibits, unless requested in writing by the Investor
        or the
        managing underwriter or underwriters) and deliver to the Investor, without
        charge, as many copies of the Prospectus or Prospectuses (including each
        form of
        Prospectus) and each amendment or supplement thereto as the Investor may
        reasonably request in connection with the distribution of the Registrable
        Securities.

       

      e.    The
        Company shall use its reasonable efforts to (i) register and qualify, unless
        an
        exemption from registration and qualification applies, the resale by the
        Investor of the Registrable Securities covered by a Registration Statement
        under
        the securities or "blue sky" laws of all the states of the United States,
        (ii)
        prepare and file in those jurisdictions, such amendments (including
        post-effective amendments) and supplements to such registrations and
        qualifications as may be necessary to maintain the effectiveness thereof during
        the Registration Period, (iii) take such other actions as may be necessary
        to
        maintain such registrations and qualifications in effect at all times during
        the
        Registration Period, and (iv) take all other actions reasonably necessary
        or
        advisable to qualify the Registrable Securities for sale in such jurisdictions;
        provided, however, that the Company shall not be required in connection
        therewith or as a condition thereto to (x) qualify to do business in any
        jurisdiction where it would not otherwise be required to qualify but for
        this
        Section 4(e) or (y) subject itself to general taxation in any such jurisdiction.
        The Company shall promptly notify Legal Counsel and each Investor who holds
        Registrable Securities of the receipt by the Company of any notification
        with
        respect to the suspension of the registration or qualification of any of
        the
        Registrable Securities for sale under the securities or "blue sky" laws of
        any
        jurisdiction in the United States or its receipt of actual notice of the
        initiation or threatening of any proceeding for such purpose.

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

      f.    
The
        Company shall notify Legal Counsel and each Investor in writing of the happening
        of any event, as promptly as practicable after becoming aware of such event,
        as
        a result of which the prospectus included in a Registration Statement, as
        then
        in effect, includes an untrue statement of a material fact or omission to
        state
        a material fact required to be stated therein or necessary to make the
        statements therein, in light of the circumstances under which they were made,
        not misleading (provided that in no event shall such notice contain any
        material, nonpublic information), and promptly prepare a supplement or amendment
        to such Registration Statement to correct such untrue statement or omission,
        and
        deliver to each Investor, without charge, as many copies of the Prospectus
        included in such Registration Statement and each amendment or supplement
        thereto
        as such Investor may reasonably request in connection with the distribution
        of
        the Registrable Securities. The Company shall also promptly notify Legal
        Counsel
        and each Investor in writing (i) when a prospectus or any prospectus supplement
        or post-effective amendment has been filed, and when a Registration Statement
        or
        any post-effective amendment has become effective (notification of such
        effectiveness shall be delivered electronically to Legal Counsel and each
        Investor on the same day of such effectiveness and by overnight mail), (ii)
        of
        any request by the SEC for amendments or supplements to a Registration Statement
        or related prospectus or related information, and (iii) of the Company's
        reasonable determination that a post-effective amendment to a Registration
        Statement would be appropriate.

       

      g.    The
        Company shall use its reasonable efforts to prevent the issuance of any stop
        order or other suspension of effectiveness of a Registration Statement, or
        the
        suspension of the qualification of any of the Registrable Securities for
        sale in
        any jurisdiction and, if such an order or suspension is issued, to obtain
        the
        withdrawal of such order or suspension as soon as practicable and to notify
        Legal Counsel and each Investor who holds Registrable Securities being sold
        of
        the issuance of such order and the resolution thereof or its receipt of actual
        notice of the initiation or threat of any proceeding for such
        purpose.

       

      h.    At
        the
        reasonable request (in the context of the securities laws) of any Investor,
        the
        Company shall furnish to such Investor, on the date of the effectiveness
        of the
        Registration Statement and thereafter from time to time on such dates as
        an
        Investor may reasonably request (i) a letter, dated such date, from the
        Company's independent certified public accountants in form and substance
        as is
        customarily given by independent certified public accountants to underwriters
        in
        an underwritten public offering, addressed to the Investor, and (ii) an opinion,
        dated as of such date, of counsel representing the Company for purposes of
        such
        Registration Statement, in form, scope and substance as is customarily given
        in
        an underwritten public offering, addressed to the Investor, provided that
        such
        Investor shall reimburse the Company for its out-of-pocket expenses incurred
        in
        connection with the furnishing of any such letter and opinion. 

       

      i.    
At
        the
        reasonable request (in the context of the securities laws) of any Investor,
        the
        Company shall upon receipt of a waiver of such investor's non-public information
        requirements make available for inspection during regular business hours
        by (i)
        any Investor, (ii) Legal Counsel and (iii) one firm of accountants or other
        agents retained by the Investors (collectively, the "Inspectors"),
        all
        pertinent financial and other records, and pertinent corporate documents
        and
        properties of the Company (collectively, the "Records"),
        as
        shall be reasonably deemed necessary by each Inspector, and cause the Company's
        officers, directors and employees to supply all information that any Inspector
        may reasonably request; provided, however, that each Inspector shall agree
        to
        hold in strict confidence and shall not make any disclosure (except to an
        Investor and Legal Counsel) or use of any Record or other information that
        the
        Company determines in good faith to be confidential, and of which determination
        the Inspectors are so notified, unless (a) the disclosure of such Records
        is
        necessary to avoid or correct a misstatement or omission in any Registration
        Statement or is otherwise required under the 1933 Act, (b) the release of
        such
        Records is ordered pursuant to a final, non-appealable subpoena or order
        from a
        court or government body of competent jurisdiction, or (c) the information
        in
        such Records has been made generally available to the public other than by
        disclosure in violation of this or any other agreement of which the Inspector
        has knowledge. Each Investor agrees that it shall, upon learning that disclosure
        of such Records 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 its expense, to undertake appropriate action to prevent
        disclosure of, or to obtain a protective order for, the Records deemed
        confidential. Each Inspector that exercises its rights under this Section
        4(i)
        shall be obligated to execute a non-disclosure agreement containing such
        reasonable terms as the Company may request. The fees and expenses of the
        Inspectors shall be borne by the applicable Investor or
        Investors.

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

      j.    
The
        Company shall hold in confidence and not make any disclosure of information
        concerning an Investor provided to the Company unless (i) disclosure of such
        information is necessary to comply with federal or state securities laws,
        (ii)
        the disclosure of such information is necessary to avoid or correct a
        misstatement or omission in any Registration Statement, (iii) the release
        of
        such information is ordered pursuant to a subpoena or other final,
        non-appealable order from a court or governmental body of competent
        jurisdiction, or (iv) such information has been made generally available
        to the
        public other than by disclosure in violation of this Agreement or any other
        agreement. The Company agrees that it shall, upon learning that disclosure
        of
        such information concerning an Investor is sought in or by a court or
        governmental body of competent jurisdiction or through other means, give
        prompt
        written notice to such Investor and allow such Investor, at the Investor's
        expense, to undertake appropriate action to prevent disclosure of, or to
        obtain
        a protective order for, such information.

       

      k.    The
        Company shall use its reasonable efforts to (i) maintain the listing of the
        Common Shares on the Toronto Stock Exchange and/or the American Stock Exchange
        (AMEX), (ii) cause all the Registrable Securities covered by a Registration
        Statement to be listed (or quoted, as applicable) on each United States or
        Canadian securities exchange or trading market on which securities of the
        same
        class or series issued by the Company are then listed or traded, and (iii)
        without limiting the generality of the foregoing, to arrange for at least
        three
        market makers to register with the National Association of Securities Dealers,
        Inc. ("NASD")
        as
        such with respect to such Registrable Securities. The Company shall pay all
        fees
        and expenses in connection with satisfying its obligation under this Section
        4(k).

       

      l.    
The
        Company shall cooperate with each Investor who holds Registrable Securities
        being offered and, to the extent applicable, facilitate the timely preparation
        and delivery of certificates (not bearing any restrictive legend) representing
        the Registrable Securities to be offered pursuant to a Registration Statement
        and enable such certificates to be in such denominations or amounts, as the
        case
        may be, as the Investors may reasonably request and registered in such names
        as
        the Investors may request.

       

      m.    The
        Company shall provide a transfer agent and registrar of all such Registrable
        Securities not later than the effective date of the applicable Registration
        Statement.

       

      n.    If
        requested by an Investor, the Company shall (i) as soon as practicable
        incorporate in a prospectus supplement or post-effective amendment such
        information as an Investor requests to be included therein relating to the
        sale
        and distribution of Registrable Securities, including information with respect
        to the number of Registrable Securities being offered or sold, the purchase
        price being paid therefor and any other terms of the offering of the Registrable
        Securities to be sold in such offering; (ii) as soon as practicable make
        all
        required filings of such prospectus supplement or post-effective amendment
        after
        being notified of the matters to be incorporated in such prospectus supplement
        or post-effective amendment; and (iii) as soon as practicable, supplement
        or make amendments to any Registration Statement if reasonably requested
        by an
        Investor of such Registrable Securities.

       

      o.    The
        Company shall use its reasonable efforts to cause the Registrable Securities
        covered by the applicable Registration Statement to be registered with or
        approved by such other governmental agencies or authorities in the United
        States
        and Canada as may be necessary to consummate the disposition of such Registrable
        Securities.

       

      p.    The
        Company shall make generally available to its security holders, as soon as
        practicable, an earnings statement (in form complying with the provisions
        of
        Rule 158 under the 1933 Act) covering a twelve-month period beginning not
        later
        than the first day of the Company's fiscal quarter next following the effective
        date of a Registration Statement.

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

      q.    The
        Company shall otherwise use its reasonable efforts to comply with all applicable
        rules and regulations of the SEC in connection with any registration
        hereunder.

       

      r.    Within
        five (5) Business Days after a Registration Statement that covers applicable
        Registrable Securities is ordered effective by the SEC, the Company shall
        deliver, and shall cause legal counsel for the Company to deliver, to the
        transfer agent for such Registrable Securities (with copies to each Investor
        whose Registrable Securities are included in such Registration Statement)
        confirmation that such Registration Statement has been declared effective
        by the
        SEC, provided that if the Company changes its transfer agent, it shall
        immediately deliver any previously delivered notices under this Section 4(r)
        and
        any subsequent notices to such new transfer agent.

       

      s.    The
        Company shall make such filings with the NASD (including providing all required
        information and paying required fees related thereto) as and when requested
        by
        an Investor and make all other filings and take all other actions reasonably
        necessary to expedite and facilitate disposition by Investors of Registrable
        Securities pursuant to a Registration Statement.

       

      t.    
Notwithstanding
        anything to the contrary in Section 4(f), at any time after the applicable
        Registration Statement has been declared effective by the SEC, the Company
        may
        delay the disclosure of material non-public information concerning the Company
        the disclosure of which at the time is not, in the good faith opinion of
        the
        Board of Directors of the Company and its counsel, in the best interest of
        the
        Company and, in the opinion of counsel to the Company, otherwise required
        (a
"Post-Effectiveness
        Grace Period,"
        and
        along with each Effectiveness Request Grace Period and Current Report Update
        Grace Period, each a "Grace
        Period");
        provided that the Company shall promptly (i) notify the Investor in writing
        of
        the existence of material non-public information giving rise to a
        Post-Effectiveness Grace Period (provided that in each notice the Company
        shall
        not disclose the content of such material nonpublic information to the Investor)
        and the date on which the Post-Effectiveness Grace Period will begin, and
        (ii)
        notify the Investor in writing of the date on which the Post-Effectiveness
        Grace
        Period ends. Notwithstanding anything to the contrary contained herein, no
        Grace
        Period shall exceed 30 consecutive days, any Grace Periods during any 365-day
        period shall not exceed an aggregate of 60 days, and the first day of any
        Grace
        Period must be at least two (2) Trading Days after the last day of any prior
        Grace Period (a Grace Period that satisfies all of the requirements of Sections
        4(a) and 4(b) and this Section 4(t), as applicable, being referred to as
        an
"Allowable
        Grace Period").
        For
        purposes of determining the length of a Post-Effectiveness Grace Period under
        this Section 4(t), the Post-Effectiveness Grace Period shall begin on and
        include the date the holders receive the notice referred to in clause (i)
        and
        shall end on and include the later of the date the holders receive the notice
        referred to in clause (ii) and the date referred to in such notice. The
        provisions of Section 4(f) hereof shall not be applicable during the period
        of
        any Allowable Grace Period. Upon expiration of a Post-Effectiveness Grace
        Period, the Company shall again be bound by the first sentence of Section
        4(f)
        with respect to the information giving rise thereto unless such material
        non-public information is no longer applicable. 

       

      u.    After
        the
        date of this Agreement, the Company shall not, without the prior written
        consent
        of Investors holding a majority of the Registrable Securities 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 Investor hereunder.

       

      5.    OBLIGATIONS
        OF THE INVESTORS.

       

      a.    At
        least
        six (6) Business Days prior to the first anticipated filing date of a
        Registration Statement filed pursuant to Sections 2 or 3 hereof and at least
        five (5) Business Days prior to the filing of any amendment or supplement
        to a
        Registration Statement, the Company shall notify each Investor in writing
        of the
        information, if any, the Company requires from each such Investor if such
        Investor elects to have any of such Investor's Registrable Securities included
        in such Registration Statement or, with respect to an amendment or a supplement,
        if such Investor's Registrable Securities are included in such Registration
        Statement (each an "Information
        Request").
        Provided that the Company shall have complied with its obligations set forth
        in
        the preceding sentence, it shall be a condition precedent to the obligations
        of
        the Company to complete the registration pursuant to this Agreement with
        respect
        to the Registrable Securities of a particular Investor that such Investor
        shall
        furnish to the Company, in response to an Information Request, such information
        regarding itself; the Registrable Securities held by it and the intended
        method
        of disposition of the Registrable Securities held by it as shall be reasonably
        required to effect the registration of such Registrable Securities and shall
        execute such documents in connection with such registration as the Company
        may
        reasonably request.

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

      b.    Each
        Investor, by such Investor's acceptance of the Registrable Securities, agrees
        to
        cooperate with the Company as reasonably requested by the Company in connection
        with the preparation and filing of any Registration Statement hereunder,
        unless
        such Investor has notified the Company in writing of such Investor's election
        to
        exclude all of such Investor's Registrable Securities from such Registration
        Statement.

       

      c.    Each
        Investor agrees that, upon receipt of any notice from the Company of the
        happening of any event of the kind described in Section 4(g) or the first
        sentence of Section 4(f) or written notice from the Company of a Grace Period,
        such Investor will immediately discontinue disposition of Registrable Securities
        pursuant to any Registration Statement(s) covering such Registrable Securities
        until such Investor's receipt of the copies of the supplemented or amended
        prospectus contemplated by Section 4(f) or receipt of notice that no supplement
        or amendment is required or that the Grace Period has ended. Notwithstanding
        anything to the contrary, the Company shall cause its transfer agent to deliver
        unlegended Common Shares to a transferee of an Investor in connection with
        any
        sale of Registrable Securities pursuant to a Registration Statement covering
        such Registrable Securities with respect to which an Investor has entered
        into a
        contract for sale prior to the Investor's receipt of a notice from the Company
        of the happening of any event of the kind described in Section 4(g) or the
        first
        sentence of Section 4(f) and for which the Investor has not yet
        settled.

       

      6.    EXPENSES
        OF REGISTRATION.

       

      All
        reasonable expenses, other than underwriting discounts and commissions, incurred
        in connection with registrations, filings or qualifications pursuant to Sections
        2, 3 and 4, including all registration, listing and qualifications fees,
        printers and accounting fees, and fees and disbursements of counsel for the
        Company shall be paid by the Company, except as provided in Section 4(h).
        The
        Company shall also reimburse the Investor for the reasonable fees and
        disbursements of Legal Counsel in connection with registration, filing or
        qualification pursuant to Sections 2, 3 and 4 of this Agreement, up to a
        maximum
        of $10,000 per Registration Statement.

       

      7.    INDEMNIFICATION.

       

      In
        the
        event any Registrable Securities are included in a Registration Statement
        under
        this Agreement:

       

      a.    To
        the
        fullest extent permitted by law, the Company will, and hereby does, indemnify,
        hold harmless and defend each Investor, the directors, officers, partners,
        employees, agents, representatives of, and each Person, if any, who controls
        any
        Investor within the meaning of the 1933 Act, the 1934 Act or the Canadian
        Securities Laws (each, an "Indemnified
        Person"),
        against any losses, claims, damages, liabilities, judgments, fines, penalties,
        charges, costs, reasonable attorneys' fees, amounts paid in settlement or
        expenses, joint or several (collectively, "Claims")
        incurred in investigating, preparing or defending any action, claim, suit,
        inquiry, proceeding, investigation or appeal taken from the foregoing by
        or
        before any court or governmental, administrative or other regulatory agency
        or
        body (including the SEC or any state or provincial securities commission
        authority or self-regulatory organization, in the United States, Canada or
        anywhere else in the world), whether pending or threatened, whether or not
        an
        indemnified party is or may be a party thereto ("Indemnified
        Damages"),
        to
        which any of them may become subject insofar as such Claims (or actions or
        proceedings, whether commenced or threatened, in respect thereof) arise out
        of
        or are based upon: (i) any untrue statement or alleged untrue statement of
        a
        material fact in a Registration Statement or any post-effective amendment
        thereto or in any filing made in connection with the qualification of the
        offering under the securities or other "blue sky" laws of any jurisdiction
        in
        which Registrable Securities are offered ("Blue
        Sky Filing"),
        or
        the omission or alleged omission to state a material fact required to be
        stated
        therein or necessary to make the statements therein not misleading, (ii)
        any
        untrue statement or alleged untrue statement of a material fact contained
        in any
        preliminary prospectus if used prior to the effective date of such Registration
        Statement, or contained in the final prospectus (as amended or supplemented,
        if
        the Company files any amendment thereof or supplement thereto with the SEC)
        or
        the omission or alleged omission to state therein any material fact necessary
        to
        make the statements made therein, in light of the circumstances under which
        the
        statements therein were made, not misleading, (iii) any violation or alleged
        violation by the Company of the 1933 Act, the 1934 Act, any of the Canadian
        Securities Laws, any other law, including any state, provincial or foreign
        securities law, or any rule or regulation thereunder relating to the offer
        or
        sale of the Registrable Securities pursuant to a Registration Statement or
        (iv)
        any material violation of this Agreement by the Company (the matters in the
        foregoing clauses (i) through (iv) being, collectively, "Violations").
        Subject to Section 7(c), the Company shall reimburse the Indemnified Persons,
        promptly as such expenses are incurred and are due and payable,
        for
        any
        legal fees or other reasonable expenses incurred by them in connection with
        investigating or defending any such Claim. Notwithstanding anything to the
        contrary contained herein, the indemnification agreement contained in this
        Section 7(a): (i) shall not apply to a Claim by an Indemnified Person arising
        out of or based upon a Violation that occurs in reliance upon and in conformity
        with information furnished in writing to the Company by such Indemnified
        Person
        for such Indemnified Person expressly for use in connection with the preparation
        of the Registration Statement or any such amendment thereof or supplement
        thereto, if such prospectus was timely made available by the Company pursuant
        to
        Section 4(d); (ii) with respect to any preliminary prospectus, shall not
        inure
        to the benefit of any such person from whom the person asserting any such
        Claim
        purchased the Registrable Securities that are the subject thereof (or to
        the
        benefit of any person controlling such person) if the untrue statement or
        omission of material fact contained in the preliminary prospectus was corrected
        in the prospectus, as then amended or supplemented, if such prospectus was
        timely made available by the Company pursuant to Section 4(d), and the
        Indemnified Person was promptly advised in writing not to use the incorrect
        preliminary prospectus prior to the use giving rise to a violation and such
        Indemnified Person, notwithstanding such advice, used it; (iii) shall not
        be
        available to the extent such Claim is based on a failure of the Investor
        to
        deliver or to cause to be delivered the prospectus made available by the
        Company, if such prospectus was timely made available by the Company pursuant
        to
        Section 4(d); and (iv) shall not apply to amounts paid in settlement of any
        Claim if such settlement is effected without the prior written consent of
        the
        Company, which consent shall not be unreasonably withheld. Such indemnity
        shall
        remain in full force and effect regardless of any investigation made by or
        on
        behalf of the Indemnified Person and shall survive the transfer of the
        Registrable Securities by the Investor pursuant to Section 10.

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

      b.    In
        connection with any Registration Statement in which an Investor is
        participating, each such Investor agrees to severally and not jointly indemnify,
        hold harmless and defend, to the same extent and in the same manner as is
        set
        forth in Section 7(a), the Company, each of its directors, each of its officers
        who signs the Registration Statement, and each Person, if any, who controls
        the
        Company within the meaning of the 1933 Act, the 1934 Act or the Canadian
        Securities Laws (each an "Indemnified
        Party"),
        against any Claim or Indemnified Damages to which any of them may become
        subject, under the 1933 Act, the 1934 Act, the Canadian Securities Laws or
        otherwise, insofar as such Claim or Indemnified Damages arise out of or are
        based upon any Violation, in each case to the extent, and only to the extent,
        that such Violation occurs in reliance upon and in conformity with written
        information furnished to the Company by such Investor expressly for use in
        connection with such Registration Statement; and, subject to Section 7(c),
        such
        Investor will reimburse, promptly as such expenses are incurred and are due
        and
        payable, any legal or other expenses reasonably incurred by an Indemnified
        Party
        in connection with investigating or defending any such Claim; provided, however,
        that the indemnity agreement contained in this Section 7(b) and the agreement
        with respect to contribution contained in Section 8 shall not apply to amounts
        paid in settlement of any Claim if such settlement is effected without the
        prior
        written consent of such Investor, which consent shall not be unreasonably
        withheld; provided, further, however, that the aggregate liability of the
        Investor in connection with any Violation shall not exceed the net proceeds
        to
        such Investor as a result of the sale of Registrable Securities pursuant
        to the
        Registration Statement giving rise to such Claim. Such indemnity shall remain
        in
        full force and effect regardless of any investigation made by or on behalf
        of
        such Indemnified Party and shall survive the transfer of the Registrable
        Securities by the Investor pursuant to Section 10. Notwithstanding anything
        to
        the contrary contained herein, the indemnification agreement contained in
        this
        Section 7(b) with respect to any preliminary prospectus shall not inure to
        the
        benefit of any Indemnified Party if the untrue statement or omission of material
        fact contained in the preliminary prospectus was corrected on a timely basis
        in
        the prospectus, as then amended or supplemented.

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

      c.    Promptly
        after receipt by an Indemnified Person or Indemnified Party under this Section
        7
        of notice of the commencement of any action or proceeding (including any
        governmental action or proceeding) involving a Claim, such Indemnified Person
        or
        Indemnified Party shall, if a Claim in respect thereof is to be made against
        any
        indemnifying party under this Section 7,
        deliver
        to the indemnifying party a written notice of the commencement thereof, and
        the
        indemnifying party shall have the right to participate in, and, to the extent
        the indemnifying party so desires, jointly with any other indemnifying party
        similarly noticed, to assume control of the defense thereof with counsel
        mutually satisfactory to the indemnifying party and the Indemnified Person
        or
        the Indemnified Party, as the case may be. In any such proceeding, any
        Indemnified Person or Indemnified Party may retain its own counsel, but,
        except
        as provided in the following sentence, the fees and expenses of that counsel
        will be at the expense of that Indemnified Person or Indemnified Party, as
        the
        case may be, unless (i) the indemnifying party and the Indemnified Person
        or
        Indemnified Party, as applicable, shall have mutually agreed to the retention
        of
        that counsel, (ii) the indemnifying party does not assume the defense of
        such
        proceeding in a timely manner or (iii) in the reasonable opinion of counsel
        retained by the indemnifying party, the representation by such counsel for
        the
        Indemnified Person or Indemnified Party and the indemnifying party would
        be
        inappropriate due to actual or potential differing interests between such
        Indemnified Person or Indemnified Party and any other party represented by
        such
        counsel in such proceeding, in which case the Company shall pay reasonable
        fees
        for up to one separate legal counsel for the Investors, and such legal counsel
        shall be selected by the Investor(s) holding at least two-thirds (2/3) in
        interest of the Registrable Securities included in the Registration Statement
        to
        which the Claim relates. The Indemnified Party or Indemnified Person shall
        cooperate fully with the indemnifying party in connection with any negotiation
        or defense of any such action or Claim by the indemnifying party and shall
        furnish to the indemnifying party all information reasonably available to
        the
        Indemnified Party or Indemnified Person which relates to such action or Claim.
        The indemnifying party shall keep the Indemnified Party or Indemnified Person
        fully apprised at all times as to the status of the defense or any settlement
        negotiations with respect thereto. No indemnifying party shall be liable
        for any
        settlement of any action, claim or proceeding effected without its prior
        written
        consent, provided, however, that the indemnifying party shall not unreasonably
        withhold, delay or condition its consent. No indemnifying party shall, without
        the prior written consent of the Indemnified Party or Indemnified Person,
        consent to entry of any judgment or enter into any settlement or other
        compromise with respect to any pending or threatened action or claim in respect
        of which indemnification or contribution may be or has been sought hereunder
        (whether or not the Indemnified Party or Indemnified Person is an actual
        or
        potential party to such action or claim), which does not include as an
        unconditional term thereof the giving by the claimant or plaintiff to such
        Indemnified Party or Indemnified Person of a release from all liability in
        respect to such Claim or litigation. Following indemnification as provided
        for
        hereunder, the indemnifying party shall be subrogated to all rights of the
        Indemnified Party or Indemnified Person with respect to all third parties,
        firms
        or corporations relating to the matter for which indemnification has been
        made.
        The failure to deliver written notice to the indemnifying party within a
        reasonable time of the commencement of any such action shall not relieve
        such
        indemnifying party of any liability to the Indemnified Person or Indemnified
        Party under this Section 7, except to the extent that the indemnifying party
        is
        prejudiced in its ability to defend such action.

       

      d.    The
        indemnification required by this Section 7 shall be made by periodic payments
        of
        the amount thereof during the course of the investigation or defense, as
        and
        when bills are received or Indemnified Damages are incurred.

       

      e.    The
        indemnity agreements contained herein shall be in addition to (i) any cause
        of
        action or similar right of the Indemnified Party or Indemnified Person against
        the indemnifying party or others, and (ii) any liabilities the indemnifying
        party may be subject to pursuant to the law.

       

      8.    CONTRIBUTION.

       

      To
        the
        extent any indemnification by an indemnifying party is prohibited or limited
        by
        law, the indemnifying party agrees to make the maximum contribution with
        respect
        to any amounts for which it would otherwise be liable under Section 7 to
        the
        fullest extent permitted by law; provided, however, that: (i) no Person involved
        in the sale of Registrable Securities which Person is guilty of fraudulent
        misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in
        connection with such sale, shall be entitled to contribution from any Person
        involved in such sale of Registrable Securities who was not guilty of fraudulent
        misrepresentation; and (ii) contribution by any seller of Registrable
        Securities shall be limited to an amount equal to the net amount of proceeds
        received by such seller from the sale of such Registrable Securities pursuant
        to
        the Registration Statement giving rise to such action or claim for
        indemnification less the amount of any damages that such seller has otherwise
        been required to pay in connection with such sale.

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

       

      9.    REPORTS
        UNDER THE 1934 ACT.

       

      With
        a
        view to making available to the Investor the benefits of Rule 144 promulgated
        under the 1933 Act or any other similar rule or regulation of the SEC that
        may
        at any time permit the Investor to sell securities of the Company to the
        public
        without registration ("Rule
        144"),
        after
        the Company first becomes subject to reporting obligations under the 1934
        Act,
        the Company agrees to:

       

      a.    make
        and
        keep public information available, as those terms are understood and defined
        in
        Rule 144;

       

      b.    file
        with
        the SEC all Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
        Current Reports on 8-K (other than Current Reports on Form 8-K that are required
        solely pursuant to Item 1.01, 1.02, 2.03, 2.04, 2.05, 2.06 or 4.02(a) of
        Form
        8-K) and any similar or successor reports required of the Company under the
        1934
        Act so long as the Company remains subject to such requirements and the filing
        of such reports and other documents is required for the applicable provisions
        of
        Rule 144; and

       

      c.    furnish
        to each Investor so long as such Investor owns Registrable Securities, promptly
        upon written request, (i) a written statement by the Company that it has
        complied with the reporting requirements of Rule 144, the 1933 Act and the
        1934
        Act, (ii) a copy of the most recent annual or quarterly report of the Company
        and such other reports and documents so filed by the Company, and (iii) such
        other information as may be reasonably requested to permit the Investor to
        sell
        such securities pursuant to Rule 144 without registration.

       

      10.   ASSIGNMENT
        OF REGISTRATION RIGHTS.

       

      The
        rights under this Agreement shall be automatically assignable by the Purchaser
        to any transferee or assignee of all or any portion of Registrable Securities
        if: (i) the Purchaser agrees in writing with the transferee or assignee to
        assign such rights, and a copy of such agreement is furnished to the Company
        within five (5) Business Days after such transfer or assignment; (ii) the
        Company is, within five (5) Business Days after such transfer or assignment,
        furnished with written notice of (a) the name and address of such transferee
        or
        assignee, and (b) the securities with respect to which such registration
        rights
        are being transferred or assigned; (iii) immediately following such
        transfer or assignment the further disposition of such securities by the
        transferee or assignee is restricted under the 1933 Act or any applicable
        state
        securities laws; (iv) at or before the time the Company receives the written
        notice contemplated by clause (ii) of this sentence, the transferee or assignee
        agrees in writing with the Company to be bound by all of the provisions
        contained herein; and (v) in the case of a transfer or assignment of fewer
        than
        all of the Registrable Securities then held by the Investor to a Person that
        is
        not an affiliate of the Investor, at least 9,000,000 Registrable Securities
        (subject to adjustment for stock splits, stock dividends, stock combinations
        and
        similar transactions after the date of this Agreement) are transferred or
        assigned to the transferee or assignee.

       

      11.   AMENDMENT
        OF REGISTRATION RIGHTS.

       

      Provisions
        of this Agreement may be amended and the observance thereof may be waived
        (either generally or in a particular instance and either retroactively or
        prospectively), only with the written consent of the Company and Investors
        who
        then hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
        or waiver effected in accordance with this Section 11 shall be binding upon
        each
        Investor and the Company. No such amendment shall be effective to the extent
        that it applies to less than all of the holders of the Registrable Securities.
        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 this Agreement unless the
        same
        consideration also is offered to all of the parties to this
        Agreement.

       

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

       

      12.   MISCELLANEOUS.

       

      a.    A
        Person
        is deemed to be a holder of Registrable Securities whenever such Person owns
        or
        is deemed to own of record such Registrable Securities. If the Company receives
        conflicting instructions, notices or elections from two or more Persons with
        respect to the same Registrable Securities, the Company shall act upon the
        basis
        of instructions, notice or election received from the registered owner of
        such
        Registrable Securities.

       

      b.    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) one (1) Business Day after deposit with a nationally recognized
        overnight delivery service, in each case properly addressed to the party
        to
        receive the same. The addresses and facsimile numbers for such communications
        shall be as set forth below, or 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 at least five
        (5) days
        prior to the effectiveness of such change:

       

      If
        to the
        Company:

      

      Gastar
        Exploration Ltd.

      1331
        Lamar Street, Suite 1080

      Houston,
        Texas 77010

      Telephone:
        (713) 739-1800

      Facsimile:
        (713) 739-0458

      Attention:
        Chief Executive Officer

      

      With
        a
        copy to:

      

      Vinson
        & Elkins, L.L.P.

      First
        City Tower

      1001
        Fannin Street, Suite 2300

      Houston,
        Texas 77002-6760

      Telephone:
        (713) 758-2222

      Facsimile:
        (713) 758-2346 

      Attention:
        T. Mark Kelly, Esq.

      

      If
        to the
        Purchaser:

      

      Navasota
        Resources, L.P.

      15415
        Katy Freeway, Suite 800

      Houston,
        Texas 77094

      Attention:
        Harlan H. Chappelle

      Facsimile
        (281) 530-5278

      

      With
        a
        copy to Legal Counsel:

      

      ______________________

      ______________________

      ______________________

      ______________________

      Attention:
        ______________

      Facsimile:
        ______________

      

      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 or (C) provided
        by a
        courier or overnight courier service shall be rebuttable evidence of personal
        service, receipt by facsimile or deposit with a nationally recognized overnight
        delivery service in accordance with clause (i), (ii) or (iii) above,
        respectively.

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

      c.    Failure
        of any party to exercise any right or remedy under this Agreement or otherwise,
        or delay by a party in exercising such right or remedy, shall not operate
        as a
        waiver thereof.

       

      d.    All
        questions concerning the construction, validity, enforcement and interpretation
        of this Agreement shall be governed by the internal laws of the State of
        Texas,
        without giving effect to any choice of law or conflict of law provision or
        rule
        (whether of the State of Texas or any other jurisdictions) that would cause
        the
        application of the laws of any jurisdictions other than the State of Texas.
        Each
        party hereby irrevocably submits to the exclusive jurisdiction of the state
        and
        federal courts sitting in Harris County 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 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. 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. 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 HEREWITH OR ARISING OUT OF THIS
        AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

       

      e.    This
        Agreement, the Purchase Agreement and the other Transaction Documents constitute
        the entire agreement among the parties hereto with respect to the subject
        matter
        hereof and thereof. There are no restrictions, promises, warranties or
        undertakings, other than those set forth or referred to herein and therein.
        This
        Agreement, the Purchase Agreement and the other Transaction Documents supersede
        all prior agreements and understandings among the parties hereto with respect
        to
        the subject matter hereof and thereof.

       

      f.    
Subject
        to the requirements of Section 10, this Agreement shall inure to the benefit
        of
        and be binding upon the permitted successors and assigns of each of the parties
        hereto.

       

      g.    The
        headings in this Agreement are for convenience of reference only and shall
        not
        limit or otherwise affect the meaning hereof.

       

      h.    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 each 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.

       

      i.    
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 arid documents, as the 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.

       

      j.    
All
        consents and other determinations to be made by the Investors pursuant to
        this
        Agreement shall be made, unless otherwise specified in this Agreement, by
        Investors holding at least two-thirds (2/3) of the Registrable Securities,
        determined without regard to any limitations on the issuance of the Shares.
        Any
        consent or other determination approved by Investors as provided in the
        immediately preceding sentence shall be binding on all
        Investors.

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

      k.    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.

       

      l.    
This
        Agreement is intended for the benefit of the parties hereto and their respective
        permitted successors and assigns, and, to the extent provided in Sections
        7(a)
        and 7(b) hereof, each Investor, the directors, officers, partners, employees,
        agents, representatives of, and each Person, if any, who controls any Investor
        within the meaning of the 1933 Act, the 1934 Act or the Canadian Securities
        Laws
        and each of the Company's directors, each of the Company's officers who signs
        the Registration Statement, and each Person, if any, who controls the Company
        within the meaning of the 1933 Act, the 1934 Act or the Canadian Securities
        Laws, and is not for the benefit of, nor may any provision hereof be enforced
        by, any other Person.

       

      m.    Unless
        the context otherwise requires, (a) all references to Sections are to Sections
        contained in or attached to this Agreement, (b) words in the singular or
        plural include the singular and plural and pronouns stated in either the
        masculine, the feminine or neuter gender shall include the masculine, feminine
        and neuter, and (c) the use of the word "including" in this Agreement shall
        be
        by way of example rather than limitation.

       

      IN
        WITNESS WHEREOF,
        the
        parties have caused this Registration Rights Agreement to be duly executed
        as of
        day and year first above written.

       

    

    
      	
              COMPANY:

            	 	
              PURCHASER:

            
	
               

            	 	 	 	 
	
              GASTAR
                EXPLORATION LTD. 

            	 	
              NAVASOTA
                RESOURCES, L.P.

            
	 	 	 	 	 
	 	 	 	 	 
	
              By:

            	
              /s/
                J. RUSSELL PORTER

            	 	
              By:

            	
              /s/
                HARLAN H. CHAPPELLE

            
	 	
              J.
                Russell Porter, President and

            	 	 	
              Harlan
                H. Chappelle

            
	 	
              Chief
                Executive Officer

            	 	 	
              President

            

    

     

     

    -15-

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