Document:

EXHIBIT
      10.15

     

    AMENDED
      AND RESTATED PRE-OPENING FUNDS AGREEMENT

     

    This
      Amended and Restated Pre-Opening Funds Agreement
      (“Agreement”) is entered into as of the 31 day of July 2005 by and among Patria
      Corporation, a corporation organized under the laws of the State of Colorado
      (“Company”), and each of the undersigned individuals (each, an
“Organizer”).

     

    RECITALS

     

    WHEREAS,
      the
      Company and each of the Organizers previously have entered into those certain
      Pre-Opening Funds Agreements, each dated sometime between January 2005 and
      July
      2005, each substantially similar to the other (the “Original Agreements”); and

     

    WHEREAS,
      the
      parties to those Original Agreements now desire to amend and restate each such
      Original Agreement so that the parties are each signatories to the same Amended
      and Restated Pre-Opening Funds Agreement; and

     

    WHEREAS,
      the
      Organizers have the mutual intention and objective to organize a commercial
      bank
      (the “Proposed Bank”) and have established the Company to pay the Proposed
      Bank’s organizational expenses and to enter into agreements in furtherance of
      the organization of the Proposed Bank; and

     

    WHEREAS,
      the
      Organizers desire to take such steps and actions as may be necessary in the
      furtherance of their mutual intentions and objectives, including, but not
      limited to, the filing of regulatory applications (“Applications”) with the
      Federal Reserve, the Federal Deposit Insurance Corporation (“FDIC”), the Office
      of the Comptroller of the Currency (“OCC”) and/or the Colorado Division of
      Banking (“Division”), as applicable (the “Regulators”); and

     

    WHEREAS,
      the
      Organizers further desire by this Agreement to provide for the solicitation
      of
      funds to cover the organizational (pre-incorporation and pre-opening) expenses
      of the Company and the Proposed Bank, to be expended for the purpose of paying
      expenses to be incurred in order to determine the feasibility of the Proposed
      Bank, to prepare the Applications and otherwise to organize the Proposed
      Bank.

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing and the promises, covenants and conditions
      hereinafter set forth, and the contribution of money provided for herein, the
      Company and the Organizers hereto agree as follows:

     

    1.    Payments
      of Funds for Pre-Incorporation Expenses.
      Each
      Organizer, by execution of a counterpart hereof, hereby agrees to contribute
      funds in the amount of $30,000 (“Pre-Opening Funds”) for the purpose of funding
      organizational expenses of the Company and the Proposed Bank. A payment of
      $10,000 shall be made by the Organizer concurrently with the execution of this
      Agreement, and two (2) additional payments of $10,000 shall be due and payable
      within five (5) business days after notice from the Co-Managers (as defined
      below) that the payment is due. Following the date of this Agreement,
      Pre-Opening Funds paid by check shall be made payable to Patria
      Corporation.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.    Account,
      Co-Managers, and Terms Under Which Pre-Opening Funds Shall Be
      Held.
      All
      funds contributed by Organizers shall be deposited in a deposit account (the
      “Account”) established in the name of the Company at a federally-insured
      depository institution domiciled or authorized to do business in Colorado and
      selected by the Co-Managers. No other funds shall be deposited in the Account.
      The Co-Managers or the Organizers (including the Co-Managers), acting by a
      vote
      of at least two-thirds of their number, may transfer the Account to another
      banking organization domiciled or authorized to do business in
      Colorado.

     

    Until
      a
      total of $50,000 has been received in good funds from five (5) Organizers,
      no
      disbursements shall be made from the Account. If for any reason a total of
      $50,000 has not been received by the Co-Managers by the close of business on
      October 1, 2005, then Pre-Opening Funds on deposit as of that date shall be
      returned to each Organizer who contributed such funds within three (3) business
      days thereafter without interest. Pre-Opening Funds may be accepted from a
      proposed Organizer only by the Co-Managers. Funds accepted from an Organizer
      shall not be returned to the Organizer whether upon his or her withdrawal or
      removal, except as expressly provided herein. Funds shall be returned to an
      Organizer who has withdrawn or been removed only after such payment has been
      approved by at least two-thirds of the other Organizers, and if not so approved,
      then the withdrawing or removed Organizer shall be entitled to the return or
      partial return of his or her funds only under the same terms and conditions
      as
      apply to the remaining Organizers. After the initial balance in the Account
      reaches $50,000 (such that disbursements are permitted pursuant to this
      Section), the balance in the Account may be reduced below $50,000.

     

    Unless
      and until changed by a vote of at least two-thirds of the Organizers, James
      C.
      Foster and Bob Fenton are hereby appointed to serve as Co-Managers of the
      Account (the “Co-Managers”), and are authorized to receive, deposit and disburse
      all funds to be collected or paid pursuant to the terms of this Agreement and
      to
      take such other actions as may be contemplated by this Agreement.

     

    3.    Terms
      Under Which Pre-Opening Funds Shall Be Disbursed.
      Disbursements from the Account may be made only upon the order and signature
      of
      both Co-Managers, and only for purpose of paying organizational expenses of
      the
      Company or the Proposed Bank, including but not limited to (i) marketing and
      banking consulting fees, (ii) economic study fees, (iii) pre-opening consulting
      fees to be paid to one or more proposed officers of the Proposed Bank, and
      others (all as approved by a majority of the Organizers), (iv) accounting and
      legal fees, (v) application fees and expenses, and (vi) rent, lease and/or
      option payments and security deposits; provided, however, that no disbursement
      in excess of $1,500 (except reimbursement of out-of-pocket expenses) shall
      be
      made to any Organizer or any affiliated companies of any Organizer, unless
      and
      until such payment or payments have been approved in advance by at least a
      majority of the Organizers who are then parties to this Agreement.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    4.    Additional
      Organizers.
      Upon
      the approval of the Co-Managers, additional Organizers may be added from time
      to
      time, provided that such Organizers ratify and agree to be bound by, and comply
      with the provisions, terms and conditions of, this Agreement. Each additional
      Organizer shall execute a signature page to this Agreement (and such other
      instrument as counsel to the Company shall require), and shall immediately
      contribute funds in the same amount as has been contributed as of such date
      by
      each of the other Organizers.

     

    5.    Records.
      The
      Co-Managers shall keep and maintain records containing:

     

    (a)    With
      respect to each deposit to any Account:

     

    (i) date
      of
      deposit,

    (ii) amount
      deposited, and

    (iii) name
      of
      person from whom such money was accepted.

     

    (b)    With
      respect to each withdrawal from any Account:

     

    (i) date
      of
      withdrawal,

    (ii) amount
      of
      money withdrawn,

    (iii) name
      of
      person or entity to whom such money was paid,

    (iv) description
      of purpose of such payment, and

    (v) any
      invoice or billing relating to such payment.

     

    (c)    The
      Co-Managers or, upon opening, the Proposed Bank, shall preserve the records
      described above for a period of not less than four (4) years after any such
      Account is closed.

     

    (d)    The
      Co-Managers shall, upon request, make the records described above available
      for
      inspection and copying by (i) the Regulators, (ii) any proposed director,
      officer, or organizer of the Company or the Proposed Bank, (iii) any person
      from
      whom Pre-Opening Funds have been accepted, (iv) the Company, or (v) the Proposed
      Bank, if and when organized.

     

    6.    Reports. 

     

    (a)    On
      or
      before the 21st day of each calendar quarter, commencing with the calendar
      quarter after Pre-Opening Funds are first accepted and continuing until Account
      are closed in accordance with this Agreement, the Co-Managers will provide
      to
      each person from whom Pre-Opening Funds have been accepted a report stating,
      with respect to the last calendar quarter:

     

    
      	 	
              1.

            	
              Opening
                balance of the Account.

            

    

     

    
      	 	
              2.

            	
              Total
                amount deposited in the Account during the calendar
                quarter.

            

    

     

    
      	 	
              3.

            	
              Itemized
                schedule of deposits showing, with respect to each deposit, date
                of
                deposit, amount of money deposited, name of person from whom such
                money
                was accepted and aggregate total
                amount.

            

    

     

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    
      	 	
              4.

            	
              Total
                amount disbursed from the Account during the calendar
                quarter.

            

    

     

    
      	 	
              5.

            	
              An
                itemized schedule of disbursements showing, with respect to each
                person to
                whom the amount disbursed, together with amounts previously disbursed
                to
                each person, is $500 or more: name of person, amount disbursed to
                the
                person, description of purpose of such disbursement and aggregate
                total
                amount disbursed to date to the
                person.

            

    

     

    
      	 	
              6.

            	
              Closing
                balance of Account.

            

    

     

    7.    Circumstances
      Under Which Pre-Opening Funds Shall Be Repaid. 

     

    (a)    The
      Organizers understand and agree that the Pre-Opening Funds advanced by the
      Organizers shall be reimbursed to the Organizers if, and only if, one of the
      following events occurs:

     

    (i) The
      Company receives the proceeds of a loan made to the Company to repay the
      Pre-Opening Funds; or 

     

    (ii) The
      Proposed Bank is issued a charter to transact commercial banking business by
      the
      OCC or Division, as applicable, the Proposed Bank receives approval from the
      FDIC of its application for deposit insurance and all subscription funds held
      in
      escrow for Proposed Bank stock have been released to the Proposed
      Bank.

     

    (b)    The
      Co-Managers shall cause the Company, after making all disbursements authorized
      under the terms of this Agreement, pay any and all balances in the Account,
      on a
      pro rata basis, to the Organizers upon the occurrence of any of the following
      events: 

     

    (i) an
      application for authority to organize the Proposed Bank is not filed with the
      OCC or Division within fifteen (15) months after Pre-Opening Funds are first
      accepted by the Co-Managers, or

     

    (ii) an
      application for authority to organize the Proposed Bank filed with the OCC
      or
      Division within such time is denied by the OCC or Division and a reapplication
      for authority to organize the Proposed Bank is not filed with the OCC or
      Division within 90 days after such denial.

     

    (c)    Each
      Organizer acknowledges and agrees that there is no assurance that any of the
      conditions described in this Section will be met and that if the conditions
      described above do not occur, such Organizer shall not be entitled to
      reimbursement of any of the Pre-Opening Funds. Such Organizer further waives
      any
      and all claims against any other Organizers hereto, the Company, the Proposed
      Bank and their respective officers, directors, shareholders, attorneys, agents
      and representatives for reimbursement of his or her share of Pre-Opening Funds
      as a result of the failure to occur of any of the conditions described
      above.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    8.    Application;
      Services.
      The
      Co-Managers are hereby authorized and directed to execute and deliver written
      agreements with attorneys, accountants, economists and banking/fundraising
      consultants, relating to the various applications to be filed with the
      Regulators in connection with the organization of the Proposed Bank, and for
      other services related to the organization of the Company or the Proposed Bank.
      The Co-Managers are hereby authorized and directed to pay, to the extent of
      funds made available by the Organizers as described herein, all amounts agreed
      to in said agreements for all such services rendered. Notwithstanding the
      foregoing, the preparation of Applications shall not commence unless and until
      a
      total of $50,000 has been received from five (5) Organizers. 

     

    9.    Indemnification
      of Co-Managers; Covenant Not to Sue.
      

     

    (a)    The
      Company agrees to indemnify and hold the Co-Managers harmless from any
      liability, obligation, claims or costs (including attorneys, accountants,
      paralegal fees and expenses) incurred by them in their capacities as such or
      in
      the course of their performance of their duties as such, save and except
      liabilities or obligations arising from or out of willful misconduct or gross
      negligence.

     

    (b)    The
      Organizers hereto agree not to institute any action or suit in law or in equity
      against any other Organizer or against the Co-Managers and their respective
      heirs, devisees, legatees and successors-in-interest and agree not to institute,
      prosecute or in any way aid or assist in the institution or prosecution of
      any
      claim, suit, demand, proceeding, or action, except those claims or actions
      based
      on a breach of this Agreement or arising from or out of willful misconduct
      or
      gross negligence.

     

    10.    Removal
      of Organizers.
      An
      Organizer may be removed with or without cause upon the vote of two-thirds
      of
      the then-active Organizers.

     

    11.    Voluntary
      Withdrawal. An
      Organizer may withdraw as an organizer of the Company or the Proposed Bank
      by
      giving written notice to the Co-Managers. Notwithstanding the foregoing, the
      withdrawal of an Organizer shall not affect in any manner any obligation
      incurred by the Organizer pursuant to this Agreement or any other agreement
      entered into by the Organizer.

     

    12.    Unauthorized
      Acts.
      Notwithstanding anything contained herein to the contrary, no party hereto
      shall
      be authorized in any manner or form to perform any act or to render any
      communication or information with regard to the organization of the Company
      or
      the Proposed Bank that is contrary to applicable federal and applicable state
      law, including the rules, regulations and policies of the Federal Reserve,
      Division, OCC and/or FDIC, as applicable. In addition, each Organizer
      acknowledges the following:

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    (a)    that
      the
      Proposed Bank is not being organized for the sole purpose of immediately selling
      to or merging or consolidating with any other financial
      institution;

     

    (b)    that
      such
      Organizer may not indicate, either orally or in writing, that he or she is
      an
      officer or director of the Proposed Bank or that the Proposed Bank is in
      existence prior to receiving the consent of the Regulators, if required at
      such
      time;

     

    (c)    that
      the
      Proposed Bank, upon organization, will not refinance, either directly or
      indirectly, any loan, advance, or credit extension made to any prospective
      shareholder by any existing financial institution or other lender, if such
      loan,
      advance, or credit extension was originally made to the prospective shareholder
      to obtain funds to purchase stock in the Proposed Bank;

     

    (d)    that
      all
      subscription funds for capital stock will be held in escrow subject to the
      order
      of the applicable Regulators and that these funds will be released only after
      all conditions precedent to the commencement of operations at the Proposed
      Bank
      have been satisfied; and

     

    (e)    that
      no
      representations have been made by the Co-Managers, any of the Organizers, any
      of
      the other signatories hereto or attorneys, accountants or any other service
      providers to the Company or the Proposed Bank guaranteeing or representing
      that:
      (a) a charter for the Proposed Bank will be issued and approved by the
      Regulators; (b) approval of the Proposed Bank by the Regulators will occur
      on or
      before any specified date or approximate date, or that such approval will be
      received at all; (c) such Organizer will be approved by the Regulators as an
      organizing director of the Proposed Bank; (d) the Proposed Bank will be able
      to
      successfully sell any amount of its initial capital stock; (e) such Organizer
      will be approved by the Regulators to purchase any specific number of shares
      of
      the capital stock of the Proposed Bank; (f) the Regulators will approve any
      specific stock options or other benefit for such Organizer(s); (g) the Proposed
      Bank will be located in any specific location or city; or (h) the Proposed
      Bank
      will open for business on or before any specific date or approximate
      date.

     

    13.    Borrowings/Guarantees.
      The
      parties understand and agree that it may be necessary for the Company to borrow
      funds or otherwise secure lines of credit for the purpose of obtaining funds
      to
      pay pre-incorporation and pre-opening expenses of the Proposed Bank and that
      lenders may require such financing arrangements to be evidenced by one or more
      notes co-signed or guaranteed by each of the undersigned on a joint or several
      or other basis. An agreement to borrow funds that requires the guarantee of
      an
      Organizer shall require the unanimous written consent of all of the Organizers
      who undertake such guarantee. All funds obtained pursuant to this Section
13
      shall be
      maintained and disbursed by the Co-Managers
      in conformity with the duties set forth in this Agreement.

     

    14.    Termination.
      The
      Agreement shall be effective as of the date first written above and shall
      terminate upon the occurrence of any of the following events:

     

    (a)    by
      mutual
      written consent of a majority of the Organizers who are bound by the terms
      hereof; or

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    (b)    following
      an event described in Section 7(a)
      or
7(b)
      upon the
      reimbursement of funds due to Organizers or upon a determination by the
      Co-Managers that no reimbursement shall be due.

     

    15.    Miscellaneous.

     

    (a)    Notices. Any
      notice required by this Agreement shall be given by telephone and confirmed
      by
      facsimile, express or certified mail to the parties at the addresses heretofore
      furnished by each party hereto or such other address as a party may later
      specify. With respect to notice confirmed by facsimile, notice shall be deemed
      duly given when facsimile confirmation is received. With respect to notice
      confirmed by express or certified mail, notice shall be deemed duly given upon
      the earlier of actual receipt of such confirmation by mail or three (3) business
      days after deposit in the United States mail, postage prepaid. 

     

    (b)    Complete
      Agreement. This
      Agreement contains the entire understanding of the parties and supersedes all
      existing agreements and all other oral, written or other communications between
      the parties concerning its subject matter. There are no agreements, arrangements
      or undertakings, oral or written, between or among the parties hereto relating
      to the subject matter of this Agreement that are not fully expressed
      herein. 

     

    (c)    Governing
      Law. This
      Agreement shall be governed by the laws of Colorado without regard to principles
      of conflicts of laws. Any dispute or controversy arising under, out of or in
      connection with this Agreement, shall be determined and settled by arbitration
      in the City of Denver, State of Colorado, in accordance with the rules of the
      American Arbitration Association. Any decision rendered thereby shall be
      non-appealable, final and binding on the parties and judgment may be entered
      thereon. 

     

    (d)    Assignment. This
      Agreement is personal to the parties hereto and may not be assigned, except
      with
      respect to the Company to a successor corporate entity, which expressly includes
      the Proposed Bank once established.

     

    (e)    Amendment. This
      Agreement may be amended only by a writing signed by a majority of the
      Organizers; provided however, that any action under this Agreement requiring
      the
      approval or consent of more than a majority may be amended only by a writing
      signed by at least the same number of Organizers as would be required to take
      such action under the Agreement.

     

    (f)    Waiver. Failure
      to insist upon strict compliance with any of the terms, covenants or conditions
      hereof shall not be deemed a waiver of such term, covenant, or condition. A
      waiver of any provision of this Agreement must be made in writing, designated
      as
      a waiver, and signed by the party against who its enforcement is sought. Any
      waiver or relinquishment of such right or power at any one or more times shall
      not be deemed a waiver or relinquishment of such right or power at any other
      time or times.

     

    (g)    Illegality,
      Severability. If
      any
      provisions of this Agreement (or any portion thereof) shall be held to be
      invalid, illegal or unenforceable, the validity, legality or enforceability
      of
      the remainder of this Agreement shall not in any way be affected or impaired
      thereby.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    (h)    Counterparts. This
      Agreement may be executed in any number of counterparts and each of such
      counterparts shall be deemed an original, and all such counterparts shall
      together constitute but one and the same instrument. 

     

    (i)    Headings. The
      headings of sections in this Agreement are for convenience of reference only
      and
      are not intended to qualify the meaning of any of the language in this
      Agreement.

     

    (j)    Relationship
      of the Organizers. This
      Agreement shall not be deemed to create a partnership or joint venture among
      the
      Organizers or among the Company and the Organizers. Except with respect to
      the
      authorized acts of the Co-Managers, as expressly described in this Agreement,
      no
      Organizer shall be authorized or have the right to bind or obligate any other
      Organizer to any debt, obligation or liability with any third party without
      the
      prior written consent of all of the other Organizers.

     

    [Remainder
      of Page Intentionally Left Blank]

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    
IN
      WITNESS WHEREOF,
      the
      undersigned parties have executed this Agreement and agree to be bound by the
      terms hereof.

     

    PATRIA
      CORPORATION

     

    By: 
      /s/ 
      James
      Foster

      
        

      

    

    James
      P.
      Foster

    Chairman

     

     

    ORGANIZERS

     

    /s/
      Norma
      R. Akers

      
        

      

    

    Norma
      R.
      Akers

     

    /s/
      Anthony Costa

      
        

      

    

    Anthony
      Costa

     

    /s/
      Rob
      L. Alvarado

    
      

    

    Rob
      L.
      Alvarado

     

    /s/
      Philip Champagne

      

    

    Philip
      Champagne

     

    /s/
      Robert J. Fenton

      

    

    Robert
      J.
      Fenton

     

    /s/
      James
      P. Foster

      

    

    James
      P.
      Foster

     

    /s/
      Robert Gallegos

      

    

    Robert
      Gallegos

     

    /s/
      Steve
      Gutterman

      

    

    Steve
      Gutterman

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    /s/
      Dr.
      Christine Johnson

      

    

    Dr.
      Christine Johnson

     

    /s/
      Marta
      Loachamin

      

    

    Marta
      Loachamin

     

    /s/
      Ronald E. Montoya

      

    

    Ronald
      E.
      Montoya

     

    /s/
      James
      Propp

      

    

    James
      Propp

     

    /s/
      James
      Perea

      

    

    James
      Perea

     

    /s/
      Joel
      Rosenstein

      

    

    Joel
      Rosenstein

     

    /s/
      Basil
      Sabbath

      

    

    Basil
      Sabbath

     

    /s/
      Stan
      Sena

      

    

    Stan
      Sena

     

    /s/
      Larry
      Trujillo

      

    

    Larry
      Trujillo

     

    /s/
      Kent
      C. Veio

      

    

    Kent
      C.
      Veio

     

    
      
         

      

        -10-Exhibit
      10.1

    PURCHASE
      AGREEMENT

    

    THIS
      PURCHASE AGREEMENT (“Agreement”)
      is
      made as of this 30th day of March, 2006 (the “Signing
      Date”)
      by and
      among THE EXPLORATION COMPANY OF DELAWARE, INC., a Delaware corporation (the
      “Company”),
      and
      the several investors named on the signature pages hereto (individually an
      “Investor”
and
      collectively the “Investors”).

     

    Recitals:

     

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

     

    B. Each
      Investor, severally and not jointly, wishes to purchase, and the Company wishes
      to sell, upon the terms and conditions stated in this Agreement (the
“Private
      Placement”),
      that
      aggregate number of shares of the Common Stock, par value $0.01 per share,
      of
      the Company (the “Common
      Shares”),
      equal
      to the quotient obtained by dividing (1) such Investor’s Subscription Amount by
      (2) $10.50 (which aggregate amount for all Investors together shall be
      collectively referred to herein as the “Shares”).

     

    C. The
      Company has engaged A.G. Edwards & Sons, Inc. and Harris Nesbitt Corp. as
      its placement agents (the “Placement
      Agents”)
      for
      the Private Placement on a “best efforts” basis; and

     

    D. Contemporaneously
      with the purchase and sale of the Shares, the parties hereto will enter into
      a
      Registration Rights Agreement, in the form attached hereto as Exhibit
      A
      (the
“Registration
      Rights Agreement”),
      pursuant to which, among other things, the Company will agree to provide certain
      registration rights under the 1933 Act and applicable state securities
      laws.

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual promises made herein and for other good and valuable
      consideration, the receipt and sufficiency of which is hereby acknowledged,
      the
      parties hereto agree as follows:

     

    1.
      Definitions.
      In
      addition to those terms defined above and elsewhere in this Agreement, for
      the
      purposes of this Agreement, the following terms shall have the meanings set
      forth in this Section
      1:

     

    “Affiliate”
means,
      with respect to any Person, any other Person which directly or indirectly
      Controls, is Controlled by, or is under common Control with, such
      Person.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    “Company’s
      Knowledge”
means
      the actual knowledge of the officers of the Company, after reasonable due
      inquiry and investigation. 

     

    “Confidential
      Information”
means
      trade secrets, confidential information and know-how (including but not limited
      to ideas, formulae, compositions, processes, procedures and techniques, research
      and development information, computer software (including, but not limited
      to,
      data, data bases and documentation), performance specifications, support
      documentation, drawings, specifications, designs, business and marketing plans,
      and customer and supplier lists and related information).

     

    “Control”
means
      the possession, direct or indirect, of the power to direct or cause the
      direction of the management and policies of a Person, whether through the
      ownership of voting securities, by contract or otherwise.

     

    “Intellectual
      Property”
means
      all of the following: (i) patents and patent applications, patent disclosures
      and inventions (whether or not patentable and whether or not reduced to
      practice); (ii) trademarks, service marks, trade dress, trade names, corporate
      names, logos, slogans and Internet domain names, together with all goodwill
      associated with each of the foregoing; (iii) copyrights; (iv) registrations,
      applications and renewals for any of the foregoing; and (v) Confidential
      Information.

     

    “Material
      Adverse Effect”
means
      a
      material adverse effect on (i) the assets, liabilities, results of operations,
      condition (financial or otherwise), or business of the Company and its
      Subsidiaries on a consolidated basis; or (ii) the ability of the Company to
      issue and sell the securities contemplated hereby and to perform its obligations
      under the Transaction Documents.

     

    “Material
      Contract”
means
      any contract of the Company or any Subsidiary that was actually filed, or
      required to be filed, as an exhibit to the SEC Filings pursuant to Item
      601(b)(4) or Item 601(b)(10) of Regulation S-K.

     

    “Net
      Escrow Amount”
means
      the Escrow Amount (as defined in Section
      3.1)
      less
      the Cash Placement Agents Fee (as defined in Section
      5.21)
      and the
      Placement Agents’ Counsel Fees (as defined in Section
      10.5).

     

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

     

    “Placement
      Agent Agreements”
      means
      (i)
      that certain Letter Agreement, dated as of March 2, 2006, by and between
      the Company and A.G. Edwards & Sons, Inc.; and (ii) that certain Letter
      Agreement, dated as of February 24, 2006, by and between the Company and
      Harris Nesbitt Corp.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Requisite
      Holders”
      means,
      with respect to any consent, vote or other action, (i) prior to the Closing
      Date
      (as defined in Section
      4),
      the
      Investors who have subscribed to purchase a majority of the Shares; and (ii)
      following the Closing Date, the Investors holding a majority of the Shares.
      

     

    “SEC
      Filings”
has
      the
      meaning set forth in Section
      5.7.

     

    “Securities”
means
      the Shares.

     

    “Shares”
      means
      the Common Shares being purchased by the Investors hereunder.

     

    “Subscription
      Amount”
      means
      with respect to each Investor, the Subscription Amount indicated on such
      Investor’s signature page to this Agreement.

     

    “Subsidiary” of
      any
      Person means another Person, an amount of the voting securities of which, other
      voting ownership or voting partnership interests of which is sufficient to
      elect
      at least a majority of its Board of Directors or other governing body (or,
      if
      there are no such voting interests, 50% or more of the equity interests of
      which), is owned directly or indirectly by such first Person.

     

    “Transaction
      Documents”
means
      this Agreement and the Registration Rights Agreement, together with any
      instrument, certificate or document executed in connection
      herewith.

     

    “1933
      Act”
      means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

     

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

     

    2.
      Purchase
      and Sale of the Shares.
      Subject
      to the terms and conditions of this Agreement, on the Closing Date, each of
      the
      Investors shall severally, and not jointly, purchase, and the Company shall
      sell
      and issue to the Investors, the Shares in the respective amounts set forth
      on
      the signature pages hereto in exchange for the cash consideration set forth
      on
      the signature pages hereto which shall be equal to the product of the number
      of
      shares purchased by an Investor and the per share purchase price.

     

    3. Escrow
      of Purchase Price.
      

     

    3.1. Simultaneously
      with the execution and delivery of a counterpart to this Agreement by an
      Investor, such Investor shall (i) promptly cause a wire transfer of immediately
      available funds (U.S. dollars) in an amount representing such Investor’s
“Aggregate
      Purchase Price”,
      as set
      forth on such Investor’s signature page hereto, to be paid to the non-interest
      bearing escrow account of The Bank of New York (“Escrow
      Agent”),
      set
      forth on Schedule
      I
      affixed
      hereto (the aggregate amounts being held in escrow are referred to herein as
      the
“Escrow
      Amount”);
      and
      (ii) deliver to the Placement Agents and the Company a duly executed counterpart
      to the Registration Rights Agreement. The Escrow Agent shall hold the Escrow
      Amount in escrow until (i) the Escrow Agent receives written instructions from
      the Company and the Placement Agents authorizing the release of the Escrow
      Amount in accordance with Section
      4;
      or (ii)
      the Escrow Agent receives written instructions from the Company and/or the
      Requisite Holders (or a specific terminating Investor pursuant to Section
      7.3(a)(iv))
      that
      the Agreement has been terminated in accordance with Section
      7.3
      in which
      case the Escrow Agent shall return to each Investor (or, in the case of a
      termination of this Agreement by an Investor solely with respect to itself
      pursuant to Section
      7.3(a)(iv),
      such
      terminating Investor), the portion of the Escrow Amount each such Investor
      delivered to the Escrow Agent. The Company and each Investor hereby authorizes
      the Escrow Agent to release from the Escrow Amount, at the Closing (as defined
      in Section
      4),
      without further action or deed (other than receipt of the written instructions
      from the Company and the Placement Agents authorizing the release of the Escrow
      Amount), the (i) Cash Placement Agents Fee (as defined in Section
      5.21)
      to the
      Placement Agents; (ii) Placement Agents’ Counsel Fees (as defined in
Section
      10.5)
      to
      Placement Agents’ Counsel; and (iii) the Net Escrow Amount to the Company.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    3.2. The
      Company and the Investors acknowledge and agree for the benefit of the Escrow
      Agent (which shall be deemed to be a third party beneficiary of this
Section
      3)
      as
      follows: 

     

    (a) The
      Escrow Agent (i) is not responsible for the performance by the Company or the
      Investors of this Agreement or any of the Transaction Documents or for
      determining or compelling compliance therewith; (ii) is only responsible for
      (A)
      holding the Escrow Amount in escrow pending receipt of written instructions
      from
      the Placement Agents and the Company directing the release of the Escrow Amount
      in accordance with Section
      3.1
      and (B)
      disbursing the Escrow Amount in accordance with the written instructions from
      the Company and/or the Requisite Holders in accordance with Section
      3.1,
      each of
      the responsibilities of the Escrow Agent herein is ministerial in nature, and
      no
      implied duties or obligations of any kind shall be read into this Agreement
      against or on the part of the Escrow Agent (collectively, the “Escrow
      Agent Duties”);
      (iii)
      shall not be obligated to take any legal or other action hereunder which might
      in its judgment involve or cause it to incur any expense or liability unless
      it
      shall have been furnished with indemnification acceptable to it, in its sole
      discretion; (iv) may rely on and shall be protected in acting or refraining
      from
      acting upon any written notice, instruction (including, without limitation,
      wire
      transfer instructions, whether incorporated herein or provided in a separate
      written instruction), instrument, statement, certificate, request or other
      document furnished to it hereunder and believed by it to be genuine and to
      have
      been signed or presented by the proper Person, and shall have no responsibility
      for making inquiry as to, or for determining, the genuineness, accuracy or
      validity thereof, or of the authority of the Person signing or presenting the
      same; (v) may consult counsel satisfactory to it, and the written opinion or
      advice of such counsel in any instance shall be full and complete authorization
      and protection in respect of any action taken, suffered or omitted by it
      hereunder in good faith and in accordance with the opinion or advice of such
      counsel; and (vi) shall be authorized to distribute, at the Closing, to
      Placement Agents’ Counsel the Placement Agents’ Counsel Fees. Documents and
      written materials referred to in this Section
      3.2(a)
      include,
      without limitation, e-mail and other electronic transmissions capable of being
      printed, whether or not they are in fact printed; and any such e-mail or other
      electronic transmission may be deemed and treated by the Escrow Agent as having
      been signed or presented by a Person if it bears, as sender, the Person’s e-mail
      address. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b) The
      Escrow Agent shall not be liable to anyone for any action taken or omitted
      to be
      taken by it hereunder in connection with its Escrow Agent Duties, except in
      the
      case of the Escrow Agent’s gross negligence, willful misconduct or bad faith (as
      finally determined by a court of competent jurisdiction) in breach of the Escrow
      Agent Duties. IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE FOR INDIRECT,
      PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGE OR LOSS (INCLUDING BUT NOT LIMITED
      TO
      LOST PROFITS) WHATSOEVER, EVEN IF THE ESCROW AGENT HAS BEEN INFORMED OF THE
      LIKELIHOOD OF SUCH LOSS OR DAMAGE AND REGARDLESS OF THE FORM OF ACTION.

     

    (c) The
      Company and the Investors hereby indemnify and hold harmless the Escrow Agent
      from and against, any and all loss, liability, cost, damage and expense,
      including, without limitation, reasonable counsel fees and expenses, which
      the
      Escrow Agent may suffer or incur by reason of any action, claim or proceeding
      brought against the Escrow Agent arising out of or relating to the performance
      of the Escrow Agent Duties, unless such action, claim or proceeding is the
      result of the gross negligence, willful misconduct or bad faith (as finally
      determined by a court of competent jurisdiction) of the Escrow Agent.

     

    (d) Each
      of
      the Investors acknowledges receipt and review of that Escrow Agreement with
      the
      Escrow Agent and attached as Exhibit C hereto (the “Escrow
      Agreement”).
      The
      Investors hereby agree that, upon execution of this Agreement, each shall be
      deemed a “Depositor” under the terms of the Escrow Agreement and to have
      consented to and affirmed the terms and conditions of the Escrow Agreement
      as if
      and having the same legal consequence as he, she or it were a signatory thereof.
      Each of the Company and the Investors has consulted with its own counsel
      specifically about this Section
      3
      to the
      extent they deemed necessary, and has entered into this Agreement after being
      satisfied with such advice.

     

    4. Closing.
      Upon
      confirmation that the conditions to Closing specified herein have been satisfied
      or duly waived by the Requisite Holders or the Company, as applicable, (i)
      the
      Company shall deliver to the Escrow Agent, in trust, certificates, registered
      in
      such name or names as the Investors may designate, representing the Shares,
      with
      instructions that such Shares are to be held for release to the Investors only
      upon payment in full of the Aggregate Purchase Price to the Escrow Agent by
      all
      the Investors and (ii) following receipt of such certificates, the Company
      and
      the Placement Agents shall jointly instruct the Escrow Agent to release (A)
      the
      Net Escrow Amount to the Company (the date of receipt of the Net Escrow Amount
      by the Company is hereinafter referred to as the “Closing
      Date”),
      (B)
      the Cash Placement Agents Fee to the Placement Agents and (C) the Placement
      Agents’ Counsel Fees to Placement Agents’ Counsel. On the Closing Date, the
      certificates representing the Shares shall be released to the Investors (the
      “Closing”).
      The
      purchase and sale of the Shares in the Closing shall take place at the offices
      of Andrews Kurth LLP, the Placement Agents’ Counsel, 1717 Main Street, Suite
      3700, Dallas, Texas 75201, or at such other location and on such other date
      as
      the Company and the Requisite Holders shall mutually agree.

     

    5. Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to the Investors and the Placement Agents
      that, except as set forth in the schedules delivered herewith (collectively,
      the
“Disclosure
      Schedules”):

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    5.1. Organization,
      Good Standing and Qualification.
      The
      Company and each of its Subsidiaries is a corporation duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      incorporation or organization, as applicable, with the requisite power and
      authority to own and use its properties and assets and to carry on its business
      as currently conducted. The Company and each Subsidiary is duly licensed or
      qualified to do business and is in good standing in each jurisdiction in which
      the conduct of its business or its ownership or leasing of property makes such
      qualification necessary, unless the failure to so qualify would have a Material
      Adverse Effect. 

     

    5.2. Authorization.
      The
      Company has full power and authority and has taken all requisite action on
      the
      part of the Company, its officers, directors and shareholders necessary for
      (i)
      the authorization, execution and delivery of the Transaction Documents; (ii)
      authorization of the performance of all obligations of the Company hereunder
      or
      thereunder; and (iii) the authorization, issuance (or reservation for issuance)
      and delivery of the Securities. The Transaction Documents constitute the legal,
      valid and binding obligations of the Company, enforceable against the Company
      in
      accordance with their respective terms, subject to bankruptcy, insolvency,
      fraudulent transfer, reorganization, moratorium and similar laws of general
      applicability, relating to or affecting creditors’ rights
      generally.

     

    5.3. Capitalization.
      

     

    (a)
      Schedule
      5.3
      sets
      forth (i) the authorized capital shares of the Company on the date hereof,
      (ii)
      the number of capital shares issued and outstanding as of March 30, 2006, (iii)
      the number of capital shares issuable pursuant to the Company’s share plans as
      of December 31, 2005, and (iv) the number of capital shares issuable and
      reserved for issuance pursuant to securities exercisable for, or convertible
      into or exchangeable for any capital shares of the Company as of March 30,
      2006.
      All of the issued and outstanding Company capital shares have been duly
      authorized and validly issued and are fully paid, nonassessable and free of
      pre-emptive rights and, to the Company’s Knowledge, were issued in full
      compliance with applicable law and any rights of third parties. No Person is
      entitled to pre-emptive or similar statutory or contractual rights with respect
      to any securities of the Company. Except as described on Schedule
      5.3,
      there
      are no outstanding warrants, options, convertible securities or other rights,
      agreements or arrangements of any character under which the Company is or may
      be
      obligated to issue any equity securities of any kind and, except as contemplated
      by this Agreement, the Company is not currently in negotiations for the issuance
      of any equity securities of any kind. Except as described on Schedule
      5.3,
      there
      are no voting agreements, buy-sell agreements, option or right of first purchase
      agreements or other agreements of any kind among the Company and any of the
      security holders of the Company relating to the securities of the Company.
      Except as described on Schedule
      5.3,
      the
      Company has not granted any Person the right to require the Company to register
      any securities of the Company under the 1933 Act, whether on a demand basis
      or
      in connection with the registration of securities of the Company for its own
      account or for the account of any other Person, except as contemplated by the
      Registration Rights Agreement. The
      Company has not issued any capital shares since March 30, 2006.

     

    (b)
      Except
      as
      described on Schedule
      5.3,
      the
      issuance and sale of the Securities hereunder will not obligate the Company
      to
      issue Common Shares or other securities to any other Person (other than the
      Investors) and will not result in the adjustment of the exercise, conversion,
      exchange or reset price of any outstanding security.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (c)
      Except
      as
      set forth on Schedule
      5.3,
      the
      Company does not have outstanding shareholder purchase rights or any similar
      arrangement in effect giving any Person the right to purchase any equity
      interest in the Company upon the occurrence of certain events or
      otherwise.

     

    5.4. Subsidiaries.
      Schedule
      5.4
      sets
      forth the direct and indirect Subsidiaries of the Company. The Company owns,
      directly or indirectly, all of the capital stock of each Subsidiary free and
      clear of any and all liens, encumbrances and restrictions, and all the issued
      and outstanding shares of capital stock of each Subsidiary are validly issued
      and are fully paid, non-assessable and free of preemptive and similar rights.
      Neither the Company nor any Subsidiary is party to any material joint venture,
      nor has any ownership interest in any other entity that is material to the
      Company and not disclosed in the SEC Filings.

     

    5.5. Valid
      Issuance.
      The
      Shares have been duly and validly authorized and, when issued and paid for
      pursuant to this Agreement, will be validly issued, fully paid and
      nonassessable, and shall be free and clear of all liens, encumbrances and
      restrictions, except for restrictions on transfer set forth in the Transaction
      Documents or imposed by applicable securities laws. 

     

    5.6. Consents.
      The
      execution, delivery and performance by the Company of the Transaction Documents
      and the offer, issuance and sale of the Securities require no consent of, action
      by or in respect of, or filing with, any Person, governmental body, agency,
      or
      official other than those filings and consents set forth on Schedule
      5.6,
      consents or filings that have already been obtained, the filings with the SEC
      of
      one or more registration statements in accordance with the Registration Rights
      Agreement, filings required by Section
      10.7
      hereof,
      and filings that have been made pursuant to applicable state securities laws
      and
      post-sale filings pursuant to applicable state and federal securities laws
      which
      the Company undertakes to file within the applicable time periods. The
      issuance and sale of the Securities and the other transactions contemplated
      by
      the Transaction Documents do not contravene any laws of the State of Delaware
      or
      the federal laws applicable therein, the Certificate of Incorporation, or the
      terms of any agreement to which the Company or any Subsidiary is
      party.

     

    5.7. Delivery
      of SEC Filings; Business.
      All
      reports and other documents filed or furnished by the Company pursuant to the
      1934 Act through the SEC’s Electronic Data Gathering, Analysis and Retrieval
      (“EDGAR
      Filings”)
      system
      and prior to the date hereof (collectively, the “SEC
      Filings”)
      are
      publicly available for viewing by Investors. The SEC Filings are the only
      filings required of the Company pursuant to the 1934 Act for such period.

     

    5.8. Use
      of
      Proceeds.
      The
      proceeds of the sale of the Shares hereunder shall be used by the Company for
      general corporate and working capital purposes. 

     

    5.9. No
      Material Adverse Change.
      Except
      as identified and described in the SEC Filings or as described on Schedule
      5.9,
      since
      December 31, 2005, there has not been:

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (a) any
      change in the consolidated assets, liabilities, financial condition or operating
      results of the Company and its Subsidiaries from that reflected in the financial
      statements included in the SEC Filings, except for changes in the ordinary
      course of business that would not have a Material Adverse Effect, individually
      or in the aggregate;

     

    (b) any
      declaration or payment of any dividend, or any authorization or payment of
      any
      distribution, on any of the capital shares of the Company, or any redemption
      or
      repurchase of any securities of the Company or any Subsidiary;

     

    (c) any
      material damage, destruction or loss, whether or not covered by insurance to
      any
      assets or properties of the Company or any Subsidiary;

     

    (d) any
      waiver, not in the ordinary course of business, by the Company of a material
      right or of a material debt owed to it;

     

    (e) any
      satisfaction or discharge of any lien, claim or encumbrance or payment of any
      obligation by the Company or any Subsidiary, except in the ordinary course
      of
      business and which would not have a Material Adverse Effect;

     

    (f) any
      change or amendment to the Certificate of Incorporation or Bylaws of the Company
      or any of its Subsidiaries, or change to any Material Contract by which the
      Company or any Subsidiary is bound or to which any of their respective assets
      or
      properties is subject;

     

    (g) any
      material labor difficulties or labor union organizing activities with respect
      to
      employees of the Company or any Subsidiary;

     

    (h) any
      material transaction entered into by the Company or any Subsidiary other than
      in
      the ordinary course of business (other than as contemplated by the Transaction
      Documents); 

     

    (i) the
      loss
      of the services of any key employee, or material change in the composition
      or
      duties of the senior management of the Company or any Subsidiary;

     

    (j) the
      loss
      or threatened loss of any customer which had or would have a Material Adverse
      Effect; or

     

    (k) any
      other
      event or condition of any character (i) that reasonably should be disclosed
      to the Investors pursuant to Regulation D and as part of the Private
      Placement or (ii) that had or would have a Material Adverse Effect;
      provided however, any decline in the market price of the Company’s Common Shares
      as a result of the transactions contemplated by the Transaction Documents,
      the
      public announcement thereof, or change in the general economic or industry
      conditions shall not be deemed to be such a Material Adverse
      Effect.

     

    5.10. SEC
      Filings.
      At the
      time of filing thereof, the SEC Filings complied in all material respects with
      the requirements of the 1934 Act and did not contain any untrue statement of
      a
      material fact or omit to state any material fact necessary in order to make
      the
      statements made therein, in the light of the circumstances under which they
      were
      made, not misleading, except to the extent that information contained in any
      such document has been revised or superseded by a later filed SEC Filing. The
      Company is not (with or without the lapse of time or the giving of notice,
      or
      both) in breach or default of any Material Contract and, to the Company’s
      Knowledge, no other party to any Material Contract is (with or without the
      lapse
      of time or the giving of notice, or both) in breach or default of any Material
      Contract. The Company has not received any notice of the intention of any party
      to terminate any Material Contract.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    5.11. No
      Conflict, Breach, Violation or Default.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the issuance and sale of the Securities will not conflict with or result
      in
      a breach or violation of any of the terms and provisions of, or constitute
      a
      default under (i) the Company’s Certificate of Incorporation, Bylaws or other
      charter documents, each as in effect on the date hereof, or any Subsidiary's
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents, each as in effect on the date hereof; or (ii)(a) any statute,
      rule, regulation or order of any governmental agency or body or any court,
      domestic or foreign, having jurisdiction over the Company, any Subsidiary or
      any
      of their respective assets or properties, or (b) except as set forth on
Schedule
      5.11,
      any
      Material Contract to which the Company or any Subsidiary is a party or by which
      the Company or any Subsidiary is bound or to which any of their respective
      assets or properties are subject. 

     

    5.12. Tax
      Matters.
      The
      Company and each of its Subsidiaries has timely prepared and filed all tax
      returns required to have been filed by the Company and each of its Subsidiaries
      with all appropriate governmental agencies and timely paid all taxes shown
      thereon or otherwise owed by them, except to the extent such taxes are being
      disputed in good faith or to the extent any such non-payment would not have
      a
      Material Adverse Effect. The charges, accruals and reserves on the books of
      the
      Company in respect of taxes for all fiscal periods are adequate in all material
      respects, and there are no material unpaid assessments against the Company
      nor,
      to the Company’s Knowledge, any basis for the assessment of any additional
      taxes, penalties or interest for any fiscal period or audits by any foreign,
      federal, state or local taxing authority except for any assessment that is
      not
      material to the Company. All taxes and other assessments and levies that the
      Company is required to withhold or to collect for payment have been duly
      withheld and collected and paid to the proper governmental entity or third
      party
      when due, except to the extent such taxes are being disputed in good faith
      or to
      the extent any such non-payment would not have a Material Adverse Effect. There
      are no tax liens or claims pending or, to the Company’s Knowledge, threatened
      against the Company, any of its Subsidiaries or any of its assets or property.
      Except as described on Schedule
      5.12,
      there
      are no outstanding tax sharing agreements or other such arrangements between
      the
      Company or any Subsidiary and any other entity and neither the Company nor
      any
      Subsidiary is presently undergoing any audit by a taxing authority, or has
      waived or extended any statute of limitations at the request of any taxing
      authority.

     

    5.13. Title
      to Properties.
      

     

    (a) Except
      as
      disclosed in the SEC Filings, each of the Company and its Subsidiaries has
      good
      title to all real properties and all other properties and assets owned by it,
      in
      each case free from liens, encumbrances and defects, except as would not
      individually or in the aggregate have a Material Adverse Effect; and except
      as
      disclosed in the SEC Filings, the Company and each Subsidiary holds any leased
      real or personal property under valid and enforceable leases with no exceptions
      that would materially interfere with the use made or currently planned to be
      made thereof by them, except as would not individually or in the aggregate
      have
      a Material Adverse Effect.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (b) All
      interests in natural resource properties of the Company and its Subsidiaries
      are
      in all material respects: (i) owned or held by the Company or a Subsidiary
      as
      owner thereof with good title; (ii) in good standing; (iii) valid and
      enforceable; and (iv) free and clear of any liens, charges or encumbrances,
      and
      no royalty is payable in respect of any of them except as disclosed in the
      SEC
      Filings, except as would not individually or in the aggregate have a Material
      Adverse Effect; no other material property rights are necessary for the conduct
      of the Company’s and each Subsidiary’s business, and there are no material
      restrictions on the ability of the Company or any Subsidiary to use, transfer
      or
      otherwise exploit any such property rights except as disclosed in the SEC
      Filings, and, to the Company’s Knowledge, there is no claim or basis for a claim
      that may adversely affect such rights in any material respects except as
      disclosed in the SEC Filings.

     

    5.14. Certificates,
      Authorities and Permits.
      The
      Company and its Subsidiaries possess adequate certificates, authorities or
      permits issued by appropriate governmental agencies or bodies necessary to
      conduct the business now operated by it, and neither the Company nor any of
      its
      Subsidiaries has received any notice of proceedings relating to the revocation
      or modification of any such certificate, authority or permit that, if determined
      adversely to the Company or any Subsidiary, would have a Material Adverse
      Effect, individually or in the aggregate. 

     

    5.15. No
      Labor Disputes.
      No
      material labor dispute with the employees of the Company exists or, to the
      Company’s Knowledge, is likely.

     

    5.16. Intellectual
      Property.

     

    (a) All
      Intellectual Property of the Company is currently in compliance with all legal
      requirements (including timely filings, proofs and payments of fees) and is
      valid and enforceable, except to the extent that any non-compliance would not
      individually or in the aggregate have a Material Adverse Effect. No Intellectual
      Property of the Company that is necessary for the conduct of Company’s business
      as currently conducted or as currently proposed to be conducted has been or
      is
      now involved in any cancellation, dispute or litigation, and, to the Company’s
      Knowledge, no such action is threatened. No patent of the Company has been
      or is
      now involved in any interference, reissue, re-examination or opposition
      proceeding.

     

    (b) All
      of
      the licenses and sublicenses and consent, royalty or other agreements concerning
      Intellectual Property that are necessary for the conduct of the Company’s
      business as currently conducted or as currently proposed to be conducted to
      which the Company is a party or by which any of its assets are bound (other
      than
 generally commercially available, non-custom, off-the-shelf software
      application programs having a retail acquisition price of less than $10,000
      per
      license) (collectively, “License
      Agreements”)
      are
      valid and binding obligations of the Company that are parties thereto and,
      to
      the Company’s Knowledge, of the other parties thereto, enforceable in accordance
      with their terms, except to the extent that enforcement thereof may be limited
      by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
      or
      other similar laws affecting the enforcement of creditors’ rights generally,
      and, to the Company’s Knowledge, there exists no event or condition that would
      result in a material violation or breach of or constitute (with or without
      due
      notice or lapse of time or both) a default by the Company under any such License
      Agreement.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (c) The
      Company owns or has the valid right to use all of the Intellectual Property
      that
      is necessary for the conduct of the Company’s business as currently conducted or
      as currently proposed to be conducted, free and clear of all liens,
      encumbrances, adverse claims or obligations to license all such owned
      Intellectual Property and Confidential Information, other than licenses entered
      into in the ordinary course of the Company’s business, except that any such
      invalidity or liens, encumbrances, or obligations would not have a Material
      Adverse Effect. The Company has a valid and enforceable right to use all third
      party Intellectual Property and Confidential Information used or held for use
      in
      the business of the Company as currently conducted or as currently proposed
      to
      be conducted, except where such invalidity or unenforceable right shall not
      have
      a Material Adverse Effect.

     

    (d) To
      the
      Company’s Knowledge, the conduct of the Company’s business as currently
      conducted and as currently proposed to be conducted does not and will not
      infringe any Intellectual Property rights of any third party or any
      confidentiality obligation owed to a third party. To the Company’s Knowledge,
      the Intellectual Property and Confidential Information of the Company that
      are
      necessary for the conduct of Company’s business as currently conducted or as
      currently proposed to be conducted are not being infringed by any third party.
      There is no litigation or order pending or outstanding or, to the Company’s
      Knowledge, threatened or imminent, that seeks to limit or challenge or that
      concerns the ownership, use, validity or enforceability of any Intellectual
      Property or Confidential Information of the Company and the Company’s use of any
      Intellectual Property or Confidential Information owned by a third party, and,
      to the Company’s Knowledge, there is no valid basis for the same.

     

    (d)
      The
      consummation of the transactions contemplated hereby will not result in the
      alteration, loss, impairment of or restriction on the Company’s ownership or
      right to use any of the Intellectual Property or Confidential Information that
      is necessary for the conduct of the Company’s business as currently conducted or
      as currently proposed to be conducted, except as would not have a Material
      Adverse Effect.

     

    5.17. Environmental
      Matters.
      

     

    (a) The
      Company and each of its Subsidiaries has been and is in material compliance
      with
      all applicable federal, state, municipal and local laws, statutes, ordinances,
      bylaws and regulations and orders, directives and decisions rendered by any
      ministry, department or administrative or regulatory agency, domestic or
      foreign, (“Environmental
      Laws”)
      relating to the protection of the environment, occupational health and safety
      or
      the processing, use, treatment, storage, disposal, discharge, transport or
      handling of any pollutants, contaminants, chemicals or industrial, toxic or
      hazardous wastes or substance except where such non-compliance would not have
      a
      Material Adverse Effect on the Company on a consolidated basis.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (b) The
      Company and each of its Subsidiaries has obtained all material licenses,
      permits, approvals, consents, certificates, registrations and other
      authorizations under Environmental Laws (the “Environmental
      Permits”)
      necessary for the operation of its projects as currently operated and each
      Environmental Permit is valid, subsisting and in good standing and the holders
      of the Environmental Permits are not in default or breach thereof and no
      proceeding is pending or threatened to revoke or limit any Environmental Permit,
      except in each case where the result would not have a Material Adverse Effect
      on
      the Company and its Subsidiaries, on a consolidated basis.

     

    (c) (i)
      neither the Company (including, if applicable, any predecessor companies
      thereof) nor any of its Subsidiaries has been prosecuted for an offence alleging
      material non-compliance with any Environmental Laws and (ii) there are no orders
      or directions relating to environmental matters requiring any material work,
      repairs, construction or capital expenditures to be made with respect to any
      of
      the assets of the Company or its Subsidiaries, nor to the Company’s Knowledge
      has the Company or any of its Subsidiaries received notice of any of the same
      and which orders, directions or notices remain outstanding as
      unresolved.

     

    5.18. Litigation.
      Except
      as disclosed in the SEC Filings, there are no pending investigations, actions,
      suits or proceedings against or affecting the Company, any Subsidiary or any
      of
      their respective properties before or by any court or governmental or regulatory
      agency, authority or body; and except as disclosed in the SEC Filings, to the
      Company’s Knowledge, no such legal, governmental or regulatory investigations,
      actions, suits or proceedings are threatened or contemplated that if adversely
      determined would have a Material Adverse Effect. 

     

    5.19. Financial
      Statements.
      The
      financial statements included in each SEC Filing fairly present the financial
      position of the Company and its Subsidiaries as of the dates shown and its
      results of operations and cash flows for the periods shown, and such financial
      statements have been prepared in conformity with United States generally
      accepted accounting principles applied on a consistent basis; provided,
      however,
      that
      the unaudited financial statements are subject to normal year end and quarter
      end audit adjustments (which are not expected to be material either individually
      or in the aggregate), and do not contain all footnotes required under generally
      accepted accounting principles. Except as set forth in the financial statements
      of the Company and its Subsidiaries included in the SEC Filings, neither the
      Company nor any Subsidiary has incurred any liabilities, contingent or
      otherwise, except those which, individually or in the aggregate, would not
      have
      a Material Adverse Effect.

     

    5.20. Insurance
      Coverage.
      The
      Company and each of its Subsidiaries maintains in full force and effect
      insurance coverage by insurers of recognized financial responsibility against
      losses and risks and in such amounts as are prudent and customary in its
      business; and the Company reasonably believes such insurance coverage is
      adequate.

     

    5.21. Brokers
      and Finders.
      Except
      for the cash commission to be paid (the “Cash
      Placement Agents Fee”)
      to the
      Placement Agents pursuant to the terms of the Placement Agent Agreements, no
      Person will have, as a result of the transactions contemplated by this
      Agreement, any valid right, interest or claim against or upon the Company or
      any
      Investor for any commission, fee or other compensation pursuant to any
      agreement, arrangement or understanding entered into by or on behalf of the
      Company. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

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

     

    5.23. No
      Integrated Offering.
      Neither
      the Company nor any of its Affiliates, nor, to the Company’s Knowledge, any
      Person acting on its or their behalf has, directly or indirectly, made any
      offers or sales of any Company security or solicited any offers to buy any
      security, under circumstances that would adversely affect reliance by the
      Company on Section 4(2) of the 1933 Act for the exemption from the registration
      requirements imposed under Section 5 of the 1933 Act for the transactions
      contemplated hereby or that would require such registration the 1933
      Act.

     

    5.24. Private
      Placement.
      Subject
      to the accuracy of the representations and warranties of the Investors contained
      in Section
      6
      hereof,
      the offer, sale and issuance of the Securities to the Investors as contemplated
      hereby is exempt from the registration requirements of the 1933 Act. The Company
      has not provided to the Investors any information that is, or reasonably could
      be deemed, material, non-public information, other than information regarding
      the existence of the Private Placement itself.

     

    5.25. Foreign
      Corrupt Practices Act.
      Neither
      the Company nor, to the Company’s Knowledge, any of its current or former
      shareholders, directors, officers, employees, agents or other Persons acting
      on
      behalf of the Company has on behalf of the Company or in connection with its
      business,
      taken
      any action, directly or indirectly, that would result in a violation by such
      persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules
      and regulations thereunder (“FCPA”),
      including, without limitation, making use of the mails or any means or
      instrumentality of interstate commerce corruptly in furtherance of an offer,
      payment, promise to pay or authorization of the payment of any money, or other
      property, gift, promise to give, or authorization of the giving of anything
      of
      value to any “foreign official” (as such term is defined in the FCPA) or any
      foreign political party or official thereof or any candidate for foreign
      political office, in contravention of the FCPA and the Company has conducted
      its
      businesses in compliance with the FCPA and have instituted and maintain policies
      and procedures designed to ensure, and which are reasonably expected to continue
      to ensure, continued compliance therewith.

     

    5.26. Transactions
      with Affiliates.
      Except
      as disclosed in SEC Filings made on or prior to the date hereof, none of the
      officers or directors of the Company and, to the Company’s Knowledge, none of
      the employees of the Company is presently a party to any transaction with the
      Company or to a presently contemplated transaction (other than for services
      as
      employees, officers and directors) that would be required to be disclosed
      pursuant to Item 404 of Regulation S-K promulgated under the 1933
      Act.

     

    5.27. Internal
      Controls.
      The
      Company is in material compliance with the provisions of the Sarbanes-Oxley
      Act
      of 2002 currently applicable to the Company. The Company maintains a system
      of
      internal accounting controls sufficient to provide reasonable assurance that
      (i)
      transactions are executed in accordance with management's general or specific
      authorizations; (ii) transactions are recorded as necessary to permit
      preparation of financial statements in conformity with generally accepted
      accounting principles and to maintain asset accountability; (iii) access to
      assets is permitted only in accordance with management's general or specific
      authorization; and (iv) the recorded accountability for assets is compared
      with
      the existing assets at reasonable intervals and appropriate action is taken
      with
      respect to any differences. The Company has established disclosure controls
      and
      procedures (as defined in 1934 Act Rules 13a-15 and 15d-15) for the Company
      and
      has designed such disclosure controls and procedures with the intent of ensuring
      that material information relating to the Company is made known to the
      certifying officers by others within those entities, particularly with respect
      to the period covered by the Company’s most recently filed period report under
      the 1934 Act. Under the supervision and with the participation of the Company's
      management, the Company evaluated the effectiveness of the Company's disclosure
      controls and procedures as of the end of the most recent periodic reporting
      period under the 1934 Act (such date, the “Evaluation
      Date”).
      The
      Company presented in its most recently filed periodic report under the 1934
      Act
      the conclusions of the certifying officers about the effectiveness of the
      disclosure controls and procedures based on their evaluations as of the
      Evaluation Date and such conclusions are accurate in all material respects.
      Since the Evaluation Date, there have been no significant changes in the
      Company's internal controls (as such term is defined in Item 308(c) of
      Regulation S-K) or, to the Company's Knowledge, in other factors that could
      significantly affect the Company's internal controls. The Company maintains
      a
      standard system of accounting established and administered in accordance with
      generally accepted accounting principles and the applicable requirements of
      the
      1934 Act.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    5.28. Listing.
      The
      Common Shares are listed and posted for trading on The NASDAQ Capital Market
      (the “Exchange”)
      and
      the Company has not received any notification (written or oral) from the
      Exchange to the effect that the Company is not in compliance with the listing
      or
      maintenance requirements of such Exchange. The Company will use its commercially
      reasonable efforts to seek and obtain the acceptance for the purchase, sale
      and
      listing of the Securities contemplated by the Transaction Documents from the
      Exchange.

     

    6. Representations
      and Warranties of the Investors.
      Each of
      the Investors hereby severally, and not jointly, represents and warrants to
      the
      Company and the Placement Agents that:

     

    6.1. Organization;
      Authorization.
      For
      each Investor that is an entity, such Investor is duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      organization with the requisite corporate or organizational power and authority
      to enter into and to consummate the transactions contemplated in the Transaction
      Documents and to otherwise carry out its obligations thereunder. The execution,
      delivery and performance by the Investor of the transactions contemplated by
      the
      Transaction Documents to which such Investor is a party have been duly
      authorized and will each constitute the valid and legally binding obligation
      of
      the Investor, enforceable against the Investor in accordance with their
      respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability, relating
      to or affecting creditors’ rights generally.

     

    6.2. Purchase
      Entirely for Own Account.
      The
      Securities to be purchased by the Investor hereunder will be acquired by the
      Investor as principal for the Investor’s own account, not as nominee or agent,
      and not with a view to the resale or distribution of any part thereof in
      violation of the 1933 Act, and the Investor has no present intention of selling,
      granting any participation in, or otherwise distributing the same in violation
      of the 1933 Act. The Investor is not a registered broker dealer or an entity
      engaged in the business of being a broker dealer.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    6.3. Investment
      Experience.
      The
      Investor acknowledges that it can bear the economic risk and complete loss
      of
      its investment in the Securities and has such knowledge and experience in
      financial or business matters that it is capable of evaluating the merits and
      risks of the investment contemplated hereby. The Investor is experienced in
      making private investments in public equities, similar to the purchase of the
      Securities hereunder.

     

    6.4. Disclosure
      of Information.
      The
      Investor has no knowledge of any “material fact” or “material change” in the
      affairs of the Company that has not been generally disclosed to the public,
      other than this particular transaction; the Investor’s decision to tender this
      offer and purchase the Shares has not been made as a result of any verbal or
      written representation as to factual or other matters made by or on behalf
      of
      the Company, or any other Person and is based entirely upon currently available
      public information concerning the Company. The Investor has had an opportunity
      to receive all additional information related to the Company requested by it
      and
      to ask questions of and receive answers from the Company regarding the Company
      and its business, to the extent such information is not material nonpublic
      information, and the terms and conditions of the offering of the Shares. The
      Investor acknowledges its satisfactory review of the SEC Filings. The Investor
      acknowledges that it has been afforded the opportunity to obtain such additional
      information, other than material nonpublic information, that the Company
      possesses or can acquire without unreasonable effort or expense that is
      necessary to make an informed investment decision with respect to the
      investment.

     

    6.5. Restricted
      Securities.
      The
      Investor understands that the Securities are characterized as “restricted
      securities” under the U.S. federal securities laws inasmuch as they are being
      acquired from the Company in a transaction not involving a public offering
      and
      that under such laws and applicable regulations such Securities may not be
      resold unless the Securities are registered pursuant to the 1933 Act, or an
      exemption from registration is available therefrom. In connection with any
      transfer of the Securities other than pursuant to an effective registration
      statement, except as provided for in Section
      8.7,
      the
      Company may require the transferor thereof to provide to the Company an opinion
      of counsel selected by the transferor, the form and substance of which opinion
      shall be reasonably satisfactory to the Company, to the effect that such
      transfer does not require registration of such transferred Securities under
      the
      1933 Act.

     

    6.6. Legends.
      

     

    (a) It
      is
      understood that certificates evidencing the Securities shall bear the following
      legend:

     

    “THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
      AND
      EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
      AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD UNLESS (I) SUCH SECURITIES HAVE
      BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED,
      OR
      (II) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT
      SUCH
      TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT
      OF
      1933, AS AMENDED, OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.”

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (b) If
      required by the authorities of any state in connection with the issuance or
      sale
      of the Securities, the legend required by such state authority.

     

    6.7. Accredited
      Investor.
      Each
      Investor (a) at the time it was offered the Shares was, and at the date hereof
      is, an “accredited investor” as defined in Rule 501(a) of Regulation D, as
      amended, under the 1933 Act and (b) has completed and delivered with this
      Agreement an Accredited Investor Certificate attached as Schedule
      II,
      the
      representations and warranties contained in such certificate being incorporated
      and forming part of this Agreement. 

     

    6.8. No
      General Solicitation.
      In
      connection with the Private Placement, the Investor did not learn of the
      investment in the Securities or make their decision to purchase the Securities
      as a result of any “general advertising” or “general solicitation” as those
      terms are contemplated in Regulation D, as amended, under the 1933
      Act.

     

    6.9. Brokers
      and Finders.
      No
      Person will have, as a result of the transactions contemplated by this
      Agreement, any valid right, interest or claim against or upon the Company,
      or
      any Investor for any commission, fee or other compensation pursuant to any
      agreement, arrangement or understanding entered into by or on behalf of the
      Investor.

     

    6.10. Prohibited
      Transactions.
      Since
      the time the Investor learned of the Private Placement, neither the Investor
      nor
      any Affiliate of such Investor that (i) has or had knowledge of the transactions
      contemplated hereby, (ii) has or shares discretion relating to such Investor’s
      investments or trading or information concerning such Investor’s investments,
      including in respect of the Securities, or (iii) is subject to such Investor’s
      review or input concerning such Affiliate’s investments or trading
      (collectively, “Trading
      Affiliates”)
      has,
      directly or indirectly, effected or agreed to effect any transactions in the
      securities of the Company, including any short sale, whether or not against
      the
      box, established any “put equivalent position” (as defined in Rule 16a-1(h)
      under the 1934 Act) with respect to the Common Shares, granted any other right
      (including, without limitation, any put or call option) with respect to the
      Common Shares or with respect to any security that includes, relates to or
      derived any significant part of its value from the Common Shares (each, a
“Prohibited
      Transaction”).
      Such
      Investor shall
      not, and shall cause its Trading Affiliates not to, engage, directly or
      indirectly, in a Prohibited Transaction
      during
      the period from the date hereof until such time as (i) the transactions
      contemplated by this Agreement are first publicly announced or (ii) this
      Agreement is terminated pursuant to Section
      7.3
      hereof.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    6.11 Limited
      Ownership.
      The
      purchase by such Investor of the Shares issuable to it at the Closing will
      not
      result in such Investor (individually or together with other Persons with whom
      such Investor has identified, or will have identified, itself as part of a
      “group” in a public filing made with the SEC involving the Company’s securities)
      acquiring, or obtaining the right to acquire, in excess of 4.999% of the
      outstanding Common Shares or the voting power of the Company on a post
      transaction basis that assumes that such Closing shall have occurred or
      otherwise becoming a “control person” of the Company as such term is defined
      under applicable securities laws. Such Investor does not presently intend to,
      alone or together with others, make a public filing with the SEC to disclose
      that it has (or that it together with such other Persons have) acquired, or
      obtained the right to acquire, as a result of such Closing (when added to any
      other securities of the Company that it or they then own or have the right
      to
      acquire), in excess of 14.999% of the outstanding Common Shares or the voting
      power of the Company on a post transaction basis that assumes that the Closing
      at issue shall have occurred.

     

    6.12 Independent
      Investment Decision.
      Such
      Investor has independently evaluated the merits of its decision to purchase
      the
      Shares pursuant to the Transaction Documents, and such Investor confirms that
      it
      has not relied on the advice of any other Investor’s business and/or legal
      counsel in making such decision. Such Investor has not relied on the business
      or
      legal advice of the Placement Agents or any of their agents, counsel or
      Affiliates in making its investment decision hereunder. Further, each Investor
      acknowledges that the Placement Agents have not functioned as financial
      advisors, agents or fiduciaries of the Company or the Investors and that the
      Placement Agents may be engaged in a broad range of transactions that involve
      interests that differ from those of the Company and the Investors, and that
      the
      Placement Agents have no obligation to disclose any of such interests by virtue
      of any advisory, agency or fiduciary relationship.

     

    6.13 Use
      of
      Personal Information.
      The
      Investor hereby acknowledges and consents to: (a) the disclosure by the Investor
      and the Company of Personal Information concerning the Investor to a securities
      commission or other regulatory authority (a “Securities
      Commission”),
      or to
      the Exchange and its affiliates, authorized agents, subsidiaries and divisions,
      including the Exchange; and (b) the collection, use and disclosure of Personal
      Information by the Exchange for the following purposes (or as otherwise
      identified by the Exchange, from time to time): (i) to conduct background
      checks; (ii) to verify the Personal Information that has been provided about
      the
      Investor; (iii) to consider the suitability of the Investor as a holder of
      securities of the Company; (iv) to consider the eligibility of the Company
      to
      continue to list on the Exchange; (v) to provide disclosure to market
      participants as the security holdings of the Company’s shareholders, and their
      involvement with any other reporting issuers, issuers subject to a cease trade
      order or bankruptcy, and information respecting penalties, sanctions or personal
      bankruptcies, and possible conflicts of interest with the Company; (vi) to
      detect and prevent fraud; (vii) to conduct enforcement proceedings; and (viii)
      to perform other investigations as required by and to ensure compliance with
      all
      applicable rules, policies, rulings and regulations of the Exchange, securities
      legislation and other legal and regulatory requirements governing the conduct
      and protection of the public markets in the United States. 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    6.14 Present
      Ownership of Securities.
      The
      Investor has fully and accurately disclosed to the Company its present ownership
      of securities of the Company by completing the disclosure statement attached
      as
Schedule
      III
      to this
      Agreement, and acknowledges that the Company will rely on the information
      entered on Schedule
      III
      in
      completing its filings with the Exchange and filing the registration statement
      contemplated by the Registration Rights Agreement.

     

    7. Conditions
      to Closing.

     

    7.1. Conditions
      to the Investors’ Obligations.
      The
      obligation of each Investor to purchase the Securities at the Closing is subject
      to the fulfillment to the Requisite Holders’ reasonable satisfaction, on or
      prior to the Closing Date, of the following conditions, any of which may be
      waived in writing by the Requisite Holders:

     

    (a) The
      representations and warranties made by the Company in Section
      5
      hereof
      qualified as to materiality shall be true and correct at all times prior to
      and
      on the Closing Date, except to the extent any such representation or warranty
      expressly speaks as of an earlier date, in which case such representation or
      warranty shall be true and correct as of such earlier date, and, the
      representations and warranties made by the Company in Section
      5
      hereof
      not qualified as to materiality shall be true and correct in all material
      respects at all times prior to and on the Closing Date, except to the extent
      any
      such representation or warranty expressly speaks as of an earlier date, in
      which
      case such representation or warranty shall be true and correct in all material
      respects as of such earlier date. The Company shall have performed in all
      material respects all obligations and conditions herein required to be performed
      or observed by it on or prior to the Closing Date (including the delivery of
      the
      certificates representing the Shares in accordance with Section
      4
      hereof).

     

    (b) The
      Company shall have executed and delivered the Registration Rights Agreement
      to
      the Placement Agents.

     

    (c) No
      judgment, writ, order, injunction, award or decree of or by any court, or judge,
      justice or magistrate, including any bankruptcy court or judge, or any order
      of
      or by any governmental authority, shall have been issued, and no action or
      proceeding shall have been instituted by any governmental authority, or
      self-regulatory organization enjoining or preventing the consummation of the
      transactions contemplated hereby or in the other Transaction
      Documents.

     

    (d) The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Chief Executive Officer or its Chief Financial Officer, dated as of the
      Closing Date, certifying to the fulfillment of the conditions specified in
      subsections (a), (b), (c) and (h) of this Section
      7.1.

     

    (e) The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Secretary, dated as of the Closing Date, certifying the resolutions adopted
      by the Board of Directors of the Company approving the transactions contemplated
      by this Agreement and the other Transaction Documents and the issuance of the
      Securities, certifying the current versions of the Certificate of Incorporation
      and Bylaws of the Company and certifying as to the signatures and authority
      of
      persons signing the Transaction Documents and related documents on behalf of
      the
      Company.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (f) The
      Company shall have delivered a Certificate of the Secretary of State of the
      State of Delaware, dated a recent date, to the effect that the Company is in
      good standing.

     

    (g) The
      Investors shall have received a legal opinion of Jenkens &
Gilchrist,
      P.C., the
      Company's counsel, dated as of the Closing Date, in the form set forth in
      Exhibit B hereto, executed by such counsel and addressed to the Investors and
      the Placement Agent.

     

    (h) No
      stop
      order or suspension of trading shall have been imposed by any Person with
      respect to public trading in the Common Shares.

     

    7.2. Conditions
      to Obligations of the Company.
      The
      Company's obligation to sell and issue the Securities at the Closing is subject
      to the fulfillment to the reasonable satisfaction of the Company on or prior
      to
      the Closing Date of the following conditions, any of which may be waived by
      the
      Company:

     

    (a) The
      representations and warranties made by the Investors in Section
      6
      hereof
      shall be true and correct in all material respects when made, and shall be
      true
      and correct in all material respects on the Closing Date with the same force
      and
      effect as if they had been made on and as of said date. The Investors shall
      have
      performed in all material respects all obligations and conditions herein
      required to be performed or observed by them on or prior to the Closing
      Date.

     

    (b) The
      Investors shall have executed and delivered the Registration Rights Agreement
      to
      the Placement Agents and the Company at or prior to Closing; provided,
      that,
      this
      condition shall be satisfied with respect to each Investor who has executed
      and
      delivered the Registration Rights Agreement.

     

    (c) Each
      of
      the Investors shall have delivered to the Escrow Agent prior to Closing its
      portion of the Aggregate Purchase Price set forth on the respective signature
      pages hereto. 

     

    (d) No
      judgment, writ, order, injunction, award or decree of or by any court, or judge,
      justice or magistrate, including any bankruptcy court or judge, or any order
      of
      or by any governmental authority, shall have been issued, and no action or
      proceeding shall have been instituted by any governmental authority, or
      self-regulatory organization enjoining or preventing the consummation of the
      transactions contemplated hereby or in the other Transaction
      Documents.

     

    (e) The
      Company shall have received from each of the Investors duly and accurately
      completed disclosures as required under this Agreement in the form specified
      in
Schedule
      III
      to this
      Agreement.

     

    (f) The
      Company shall have received from each of the Investors a duly and accurately
      completed Accredited Investor Certificate in form specified in Schedule
      II.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    7.3. Termination
      of Obligations to Effect Closing; Effects.

     

    (a) The
      obligations of the Company, on the one hand, and the Investors, on the other
      hand, to effect the Closing shall terminate as follows:

     

    (i) Upon
      the
      mutual written consent of the Company and the Requisite Holders;

     

    (ii) By
      the
      Company if any of the conditions set forth in Section
      7.2
      shall
      have become incapable of fulfillment, and shall not have been waived by the
      Company;

     

    (iii) By
      the
      Requisite Holders if any of the conditions set forth in Section
      7.1
      shall
      have become incapable of fulfillment, and shall not have been waived by the
      Requisite Holders; or

     

    (iv) By
      either
      the Company or any Investor (with respect to itself only) if the Closing has
      not
      occurred on or prior to May 1, 2006;

     

    provided,
      however, that, except in the case of clause (i) above, the party seeking to
      terminate its obligation to effect the Closing shall not then be in breach
      of
      any of its representations, warranties, covenants or agreements contained in
      this Agreement or the other Transaction Documents if such breach has resulted
      in
      the circumstances giving rise to such party’s seeking to terminate its
      obligation to effect the Closing.

     

    (b) Nothing
      in this Section
      7.3
      shall be
      deemed to release any party from any liability for any breach by such party
      of
      the terms and provisions of this Agreement or the other Transaction Documents
      or
      to impair the right of any party to compel specific performance by any other
      party of its obligations under this Agreement or the other Transaction
      Documents.

     

    8. Covenants
      and Agreements of the Company.

     

    8.1. Reports.
      The
      Company covenants and agrees that neither it nor any other Person acting on
      its
      behalf will provide any Investor or its agents or counsel with any information
      that the Company believes constitutes material non-public information, unless
      prior thereto such Investor shall have executed a written agreement regarding
      the confidentiality and non-use of such information. The Company is presently
      a
      reporting issuer under the 1934 Act and will use its reasonable efforts to
      remain a reporting issuer under the 1934 Act. The Company understands and
      confirms that each Investor shall be relying on the foregoing representations
      in
      effecting transactions in securities of the Company. 

     

    8.2. No
      Conflicting Agreements.
      The
      Company will not take any action, enter into any agreement or make any
      commitment that would conflict or interfere in any material respect with the
      Company’s obligations to the Investors under the Transaction
      Documents.

     

    8.3. Insurance.
      The
      Company shall not materially reduce the insurance coverages described in
Section
      5.20.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    8.4. Compliance
      with Laws.
      The
      Company will comply in all material respects with all applicable laws, rules,
      regulations, orders and decrees of all governmental authorities.

     

    8.5. Termination
      of Certain Covenants.
      The
      provisions of Section
      8.1
      through
8.4
      shall
      terminate and be of no further force and effect upon the date on which the
      Company’s obligations under the Registration Rights Agreement to register and
      maintain the effectiveness of any registration covering the Registrable
      Securities (as such term is defined in the Registration Rights Agreement) shall
      terminate. 

     

    8.6. Listing
      of Shares and Related Matters.
      Promptly following the date hereof, the Company shall take all necessary action
      to cause the Shares to be approved for inclusion in the Exchange. Further,
      if
      the Company applies to have its Common Shares or other securities traded on
      any
      other principal stock exchange or market, it shall include in such application
      the Shares and will take such other action as is necessary to cause such Common
      Shares to be so listed. The Company will use commercially reasonable efforts
      to
      continue the listing and trading of its Common Shares on the Exchange and,
      in
      accordance, therewith, will use commercially reasonable efforts to comply in
      all
      respects with the Company’s reporting, filing and other obligations applicable
      to issuers whose securities are listed on such Exchange.

     

    8.7. Removal
      of Legends.
      Upon
      the earlier of (i) registration for resale pursuant to the Registration Rights
      Agreement and receipt by the Company of the Investor’s written confirmation that
      the Securities will not be disposed of except in compliance with the prospectus
      delivery requirements of the 1933 Act or (ii) delivery to the Company of a
      representation letter in customary form that Rule 144(k) has become available,
      the Company shall, upon an Investor’s written request, promptly cause
      certificates evidencing the Investor’s Securities to be replaced with
      certificates which do not bear such restrictive legends. When the Company is
      required to cause unlegended certificates to replace previously issued legended
      certificates, if unlegended certificates are not delivered to an Investor within
      three (3) Business Days of submission by that Investor of legended
      certificate(s) to the Company’s transfer agent together with a representation
      letter in customary form, the Company shall be liable to the Investor for
      liquidated damages in an amount equal to 1.0% of the Aggregate Purchase Price
      of
      the Securities evidenced by such certificate(s) for each thirty (30) day period
      (or portion thereof) beyond such three (3) Business Day that the unlegended
      certificates have not been so delivered, which such amount shall be payable
      in
      cash, monthly on the last day of each month; provided, however, that the Company
      shall not be liable to the Investor for any such liquidated damages totaling
      in
      the aggregate more than 10% of the Aggregate Purchase Price.

     

    9. Survival
      and Indemnification.

     

    9.1. Survival.
      All
      representations and warranties contained in this Agreement shall survive the
      Closing Date for a period of twelve (12) months. All covenants and agreements
      contained in this Agreement, including the provisions contained in Section
      8
      hereof,
      shall survive in accordance therewith.

     

    9.2. Indemnification.
      The
      Company agrees to indemnify and hold harmless, each Investor and their
      respective Affiliates and the directors, officers, employees and agents of
      each
      of them and their respective Affiliates, from and against any and all losses,
      claims, damages, liabilities and expenses (including without limitation
      reasonable attorney fees and disbursements and other expenses incurred in
      connection with investigating, preparing or defending any action, claim or
      proceeding, pending or threatened and the costs of enforcement hereof)
      (collectively, “Losses”)
      to
      which such Person may become subject as a result of any breach of
      representation, warranty, covenant or agreement made by, or to be performed
      on
      the part of, the Company under the Transaction Documents, and will reimburse
      any
      such Person for all such amounts as they are incurred by such
      Person.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    9.3. Conduct
      of Indemnification Proceedings.
      Promptly
      after receipt by any Person (the “Indemnified
      Person”)
      of
      notice of any demand, claim or circumstances which would or might give rise
      to a
      claim or the commencement of any action, proceeding or investigation in respect
      of which indemnity may be sought pursuant to Section
      9.2,
      such
      Indemnified Person shall promptly notify the Company in writing and the Company
      shall assume the defense thereof, including the employment of counsel reasonably
      satisfactory to such Indemnified Person, and shall assume the payment of all
      fees and expenses; provided,
      however, that
      the
      failure of any Indemnified Person so to notify the Company shall not relieve
      the
      Company of its obligations hereunder except to the extent that the Company
      is
      actually and materially prejudiced by such failure to notify. In any such
      proceeding, any Indemnified Person shall have the right to retain its own
      counsel, but the fees and expenses of such counsel shall be at the expense
      of
      such Indemnified Person unless: (i) the Company and the Indemnified Person
      shall
      have mutually agreed to the retention of such counsel; or (ii) in the reasonable
      judgment of counsel to such Indemnified Person representation of both parties
      by
      the same counsel would be inappropriate due to actual or potential differing
      interests between them. The Company shall not be liable for any settlement
      of
      any proceeding effected without its written consent, which consent shall not
      be
      unreasonably withheld, delayed or conditioned, but if there be a final judgment
      for the plaintiff, the Company shall indemnify and hold harmless such
      Indemnified Person from and against any Losses by reason of such judgment.
      Without the prior written consent of the Indemnified Person, the Company shall
      not effect any settlement of any pending or threatened proceeding in respect
      of
      which any Indemnified Person is or could have been a party and indemnity could
      have been sought hereunder by such Indemnified Party, unless such settlement
      includes an unconditional release of such Indemnified Person from all liability
      arising out of such proceeding.

     

    10. Miscellaneous.

     

    10.1. Successors
      and Assigns.
      This
      Agreement may not be assigned by a party hereto without the prior written
      consent of the Company or the Investors, as applicable; provided,
      however,
      that an
      Investor may assign its rights and delegate its duties hereunder in whole or
      in
      part to an Affiliate or to a third party, that is an “accredited investor” as
      defined in Rule 501(a) of Regulation D, as amended under the 1933 Act, and
      that
      shall agree in writing to be bound by the terms and conditions of this
      Agreement, including the completion by such assignee of Schedules II and III
      to
      this Agreement. The provisions of this Agreement shall inure to the benefit
      of
      and be binding upon the respective permitted successors and assigns of the
      parties. Except for the Placement Agents, the Escrow Agent and the Indemnified
      Persons, which are express intended third party beneficiaries of this Agreement,
      and except for provisions of this Agreement expressly to the contrary, nothing
      in this Agreement, express or implied, is intended to confer upon any party
      other than the parties hereto or their respective successors and assigns any
      rights, remedies, obligations, or liabilities under or by reason of this
      Agreement.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    10.2. Counterparts;
      Faxes.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument. This Agreement may also be executed via facsimile, which shall
      be
      deemed an original.

     

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

     

    10.4. Notices.
      Unless
      otherwise provided, any notice required or permitted under this Agreement shall
      be given in writing and shall be deemed effectively given as hereinafter
      described on the earlier of (i) if given by personal delivery, then such notice
      shall be deemed given upon such delivery; (ii) if given by facsimile or
      electronic mail, then such notice shall be deemed given upon receipt of
      confirmation of complete transmittal; (iii) if given by mail, then such notice
      shall be deemed given upon the earlier of (A) receipt of such notice by the
      recipient, or (B) three days after such notice is deposited in first class
      mail,
      postage prepaid; (iv) if given by an internationally recognized overnight air
      courier, then such notice shall be deemed given one day after delivery to such
      carrier; and (v) upon actual receipt by the party to whom the notice is required
      to be given. All notices shall be addressed to the party to be notified at
      the
      address as follows, or at such other address as such party may designate by
      ten
      days’ advance written notice to the other party:

     

    If
      to the
      Company:

     

    The
      Exploration Company of Delaware, Inc.

    500
      North
      Loop 1604, East

    Suite
      250

    San
      Antonio, Texas 78232

    Attn:
      M.
      Frank Russell

    Fax:
      (210) 496-3232

     

    With
      a
      copy to:

     

    Jenkens
      & Gilchrist, P.C.

    401
      Congress Avenue

    Suite
      2500

    Austin,
      Texas 78701

    Attn:
      J.
      Rowland Cook

    Fax:
      (512) 499-3810

    

    If
      to any
      of the Investors:

     

    to
      the
      addresses set forth on the signature pages hereto.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    With
      a
      copy to:

     

    A.G.
      Edwards & Sons, Inc.

    1
      North
      Jefferson 

    St.
      Louis, MO 63103

    Attn:
      Albert F. Bender

    Fax:
      (314) 955-6996

    

     

    and
      to:

     

    Harris
      Nesbitt Corp.

    3
      Times
      Square

    New
      York,
      New York 10036

    Attn:
      General Counsel

    Fax:
      (212) 702-1205

    

    and
      to:

     

    Andrews
      Kurth LLP

    1717
      Main
      Street, Suite 3700

    Dallas,
      Texas 75201

    Attn:
      David Washburn

    Fax:
      (214) 659-4891

    

    10.5. Expenses.
      The
      Company shall pay the reasonable fees and expenses of the Placement Agents
      in
      connection with the Private Placement (the “Placement
      Agents’ Fees”),
      which
      Placement Agents’ Fees shall include, without limitation, the legal fees and
      expenses and all other expenses of the Placement Agents, but in no event in
      an
      amount to exceed $50,000. The Placement Agents’ Fees shall be paid to Placement
      Agents at the Closing by release to Placement Agents of the portion of the
      Escrow Amount equal to the Placement Agents’ Fees. Except as set forth above,
      the Company and the Investors shall each bear their own expenses in connection
      with the negotiation, preparation, execution and delivery of this Agreement.
      In
      the event that legal proceedings are commenced by any party to this Agreement
      against another party to this Agreement in connection with this Agreement or
      the
      other Transaction Documents, the party or parties which do not prevail in such
      proceedings shall severally, but not jointly, pay their pro rata share of the
      reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses
      incurred by the prevailing party in such proceedings.

     

    10.6. Amendments
      and Waivers.
      No term
      of this Agreement may be amended and the observance of any term of this
      Agreement shall not be waived (either generally or in a particular instance
      and
      either retroactively or prospectively), without the prior written consent of
      the
      Company and the Requisite Holders; provided,
      however,
      that
      any provision hereof which impairs the rights or increases the obligations
      of a
      specific Investor disproportionately to other Investors shall not be amended
      or
      waived without the prior written consent of the Company and that particular
      Investor; provided,
      further,
      that
      any provision affecting the rights or obligations of the Escrow Agent shall
      not
      be waived or amended without the prior written consent of the Escrow
      Agent. 
      Any
      amendment or waiver effected in accordance with this Section
      10.6
      shall be
      binding upon each holder of any Securities purchased under this Agreement at
      the
      time outstanding, each future holder of all such Securities, and the
      Company.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    10.7. Publicity.
      Except
      as
      set forth below, no public release or announcement concerning the transactions
      contemplated hereby shall be issued by the Company or the Investors without
      the
      prior consent of the Placement Agents (which consent shall not be unreasonably
      withheld), except as such release or announcement may be required by law or
      the
      applicable rules or regulations of any securities exchange or securities market,
      in which case the Company or the Investors, as the case may be, shall allow
      the
      Placement Agents to the extent reasonably practicable in the circumstances,
      reasonable time to comment on such release or announcement in advance of such
      issuance. By 8:30 a.m. (New York City time) on the trading day immediately
      following the Signing Date, the Company shall issue a press release disclosing
      the execution of this Agreement. No later than the fourth Business Day following
      the Signing Date, the Company will file a Form 8-K, as applicable, attaching
      the
      press release described in the foregoing sentence as well as copies of the
      Transaction Documents. By 8:30 a.m. (New York City time) on the trading day
      immediately following the Closing Date, the Company shall issue a press release
      disclosing the consummation of the transactions contemplated by this Agreement.
      No later than the fourth Business Day following the Closing Date, the Company
      will file a Form 8-K, as applicable, attaching the press release described
      in
      the foregoing sentence. In addition, the Company will make such other filings
      and notices in the manner and time required by the SEC. Notwithstanding the
      foregoing, the Company shall not publicly disclose the name of any Investor,
      or
      include the name of any Investor in any filing with the SEC (other than the
      Registration Statement and any exhibits to filings made in respect of this
      transaction in accordance with periodic filing requirements under the 1934
      Act)
      without the prior written consent of such Investor, except to the extent such
      disclosure is required by law or trading market regulations, in which case
      the
      Company shall provide the Investors with prior notice of such disclosure except
      to the extent such prior notice is provided in this Agreement.

     

    10.8. Severability.
      Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof but shall be interpreted as if it were written so as to be
      enforceable to the maximum extent permitted by applicable law, and any such
      prohibition or unenforceability in any jurisdiction shall not invalidate or
      render unenforceable such provision in any other jurisdiction. To the extent
      permitted by applicable law, the parties hereby waive any provision of law
      which
      renders any provision hereof prohibited or unenforceable in any
      respect.

     

    10.9. Entire
      Agreement.
      This
      Agreement, including the Schedules, Exhibits and the Disclosure Schedules,
      and
      the other Transaction Documents, constitute the entire agreement among the
      Company and the Investors with respect to the Private Placement and the subject
      matter hereof and thereof and supersede all prior agreements and understandings,
      both oral and written, between the Company and the Investors with respect to
      the
      Private Placement and the subject matter hereof and thereof; provided however,
      the obligations of an Investor under any nondisclosure agreement (whether
      written or oral) or confidentiality letter entered into by such Investor in
      connection with the offering of the Securities shall continue to apply in
      accordance with the terms thereof. 

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    10.10. Further
      Assurances.
      The
      parties shall execute and deliver all such further instruments and documents
      and
      take all such other actions as may reasonably be required to carry out the
      transactions contemplated hereby and to evidence the fulfillment of the
      agreements herein contained.

     

    10.11. Governing
      Law; Consent to Jurisdiction.
      This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of New York without regard to the choice of law principles
      thereof. Each of the parties hereto irrevocably submits to the exclusive
      jurisdiction of the courts of the State of New York located in New York County
      and the United States District Court for the Southern District of New York
      for
      the purpose of any suit, action, proceeding or judgment relating to or arising
      out of this Agreement and the transactions contemplated hereby. Service of
      process in connection with any such suit, action or proceeding may be served
      on
      each party hereto anywhere in the world by the same methods as are specified
      for
      the giving of notices under this Agreement. Each of the parties hereto
      irrevocably consents to the jurisdiction of any such court in any such suit,
      action or proceeding and to the laying of venue in such court. Each party hereto
      irrevocably waives any objection to the laying of venue of any such suit, action
      or proceeding brought in such courts and irrevocably waives any claim that
      any
      such suit, action or proceeding brought in any such court has been brought
      in an
      inconvenient forum.

     

    10.12.
      Independent
      Nature of Investor's Obligations and Rights.
      The
      obligations of each Investor under any Transaction Document are several and
      not
      joint with the obligations of any other Investor, and no Investor shall be
      responsible in any way for the performance of the obligations of any other
      Investor under any Transaction Document. Nothing contained herein or in any
      other Transaction Document and no action taken by any Investor pursuant hereto
      or thereto, shall be deemed to constitute the Investors as a partnership, an
      association, a joint venture or any other kind of entity, or create a
      presumption that the Investors are in any way acting in concert or as a group
      with respect to such obligations or the transactions contemplated by the
      Transaction Documents and the Company acknowledges that the Investors are not
      acting in concert or as a group with respect to such obligations or the
      transactions contemplated by the Transaction Documents. Each Investor confirms
      that it has independently participated in the negotiation of the transaction
      contemplated hereby with the advice of its own counsel and advisors. Each
      Investor shall be entitled to independently protect and enforce its rights,
      including, without limitation, the rights arising out of this Agreement or
      out
      of any other Transaction Documents, and it shall not be necessary for any other
      Investor to be joined as an additional party in any proceeding for such
      purpose.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the undersigned has executed this Purchase Agreement or caused
      its duly authorized officers to execute this Purchase Agreement as of the date
      first above written.

     

    

    
      	
              THE
                EXPLORATION COMPANY OF DELAWARE,
                INC.

              

              

              By:
                /s/
                James E.
                Sigmon                             
                

              Name:
                James
                E. Sigmon

              Title:
                President

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, the undersigned has executed this Purchase Agreement or caused
      its duly authorized officers to execute this Purchase Agreement as of the date
      first above written.

    

    
      	
              Date:
                ____________________

            	 
	 	 
	
              IF
                AN INDIVIDUAL:

            	
              IF
                A CORPORATION, PARTNERSHIP,

            
	 	
              TRUST,
                ESTATE OR OTHER ENTITY:

            
	
              ____________________________

            	 
	
              (Signature)

            	
              ____________________________

            
	 	
              Print
                name of entity

            
	
              ____________________________

            	 
	
              (Printed
                Name)

            	
              By:__________________________

            
	 	
              Name:________________________

            
	 	
              Title:_________________________

            
	
               

              Address
                for Notices:

              ____________________________

              ____________________________

              ____________________________

            	
               

              Address
                for Notices:

              ____________________________

              ____________________________

              ____________________________

            
	 	 
	
              Address
                for Delivery of Common Shares:

              ____________________________

              ____________________________

              ____________________________

            	
              Address
                for Delivery of Common Shares:

              ____________________________

              ____________________________

              ____________________________

            
	
               

              Taxpayer
                Identification Number:

              ____________________________

            	
               

              Taxpayer
                Identification Number:

              ____________________________

            

    

    

    

    Aggregate
      dollar amount of Common Shares committed 

    to
      be purchased pursuant to the terms of the Agreement: $________________________
      

    

    Number
      of Common Shares committed to be 

    purchased
      pursuant to the terms of the
      Agreement:_______________________________

    

    

    

    
      
        

      

    

    Note:
      Each investor completed a copy of this signature page. A listing of investors
      will be provided to the SEC upon request.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    EXHIBIT
      A

    

    [FORM
      OF
      REGISTRATION RIGHTS AGREEMENT]

    

    

    

    See
      Exhibit 10.2

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      B

    

    OPINION
      OF COMPANY COUNSEL

     

    1. The
      Company is a corporation duly incorporated and validly existing under, and
      by
      virtue of, the laws of the State of Delaware and is in good standing under
      such
      laws. The Company has requisite corporate power to own and operate its
      properties and assets, and to carry on its business as presently conducted.
      

    

    2. The
      Company has all requisite legal and corporate power to execute and deliver
      the
      Agreement and the Transaction Documents, to sell and issue the Common Stock
      under the Agreement and to carry out and perform its obligations under the
      terms
      of the Agreement and the Transaction Documents. 

    

    3. The
      shares of Common Stock have been duly authorized and when issued, delivered
      and
      paid for in accordance with the terms of the Agreement, will be validly issued,
      fully paid and nonassessable. 

    

    4. All
      corporate action on the part of the Company necessary for the authorization,
      execution and delivery of the Agreement and the Transaction Documents by the
      Company, the authorization, sale, issuance and delivery of the Common Stock
      and
      the performance by the Company of its obligations under the Agreement and the
      Transaction Documents has been taken. The Agreement and the Transaction
      Documents have been duly and validly executed and delivered by the Company
      and
      constitute valid and binding obligations of the Company, enforceable against
      the
      Company in accordance with their respective terms. 

    

    5. The
      execution and delivery by the Company of the Agreement and the Transaction
      Documents, the performance by the Company of its obligations under the Agreement
      and the Transaction Documents, and the issuance of the Common Stock do not
      violate any provision of the Certificate of Incorporation or Bylaws, or any
      provision of the Delaware General Corporations Law, any applicable federal
      or
      Delaware state law, or rule or regulation known to us to be customarily
      applicable to transactions of this nature. The execution and delivery by the
      Company of the Agreement and the Transaction Documents, the performance by
      the
      Company of its obligations under the Agreement and the Transaction Documents,
      and the issuance of the Common Stock do not violate, or constitute a default
      under, any contract or agreement filed as an exhibit (or required to be filed
      as
      an exhibit) to the Company’s Form 10-K for the fiscal year ended December 31,
      2005 with the Securities and Exchange Commission pursuant to Item 601(b)(10)
      of
      Regulation S-K to which the Company or any Subsidiary is a party or by which
      the
      Company or any Subsidiary is bound. 

    

    6. No
      consent, approval or authorization of or designation, declaration or filing
      with
      any governmental authority on the part of the Company is required in connection
      with the valid execution
      and delivery of the Agreement or the Transaction Documents, the offer, sale
      or
      issuance of the Common Stock or the consummation by the Company of any other
      transaction contemplated by the Agreement or the Transaction Documents, except
      the filing of a Form D pursuant to Regulation D under the Securities
      Act of 1933, as amended.

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

    

    7. Subject
      to the accuracy of the Investors’ representations in Section 6 of the Agreement,
      the offer, sale and issuance of the Common Stock in conformity with the terms
      of
      the Agreement constitute transactions exempt from the registration requirements
      of Section 5 of the Securities Act of 1933, as amended. 

    

    8. Except
      as
      identified in the Agreement, to our knowledge, there are no actions, suits,
      proceedings or investigations pending against the Company or its properties
      before any court or governmental agency nor, to our knowledge, has the Company
      received any written threat thereof.

     

    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C

    

    [ESCROW
      AGREEMENT]

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I

    

    THE
      ESCROW AGENT WIRE INSTRUCTIONS

    FOR
      ESCROW AMOUNT

    

    

    The
      Bank
      of New York

    ABA#
      021000018

    GLA
      111-565

    TAS
      184152

    Attn:
      John C. Stohlmann-TXCO/AG Edwards Escrow

    

    Please
      include both the GLA & TAS numbers with the wire transfer. If there is only
      one block for an account number, the two numbers can be on the same line but
      should be separated by a slash, dash, or space. The wire may also be formatted
      where the GLA is the account number and the TAS is a further
      credit.

     

     

    
      
        
        

      

      
        I-1

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      II

    

    U.S.
      ACCREDITED INVESTOR CERTIFICATE

    

    As
      required by state and federal securities laws, the following information must
      be
      obtained regarding the Investor’s accredited investor status:

     

    If
      the Investor is an individual, please answer the following
      items:

     

    
      	 	
               ̈

              True

            	
               ̈

              False

            	
              (1)

            	
              The
                Investor is a natural person whose net worth,1 
                either individually or jointly with such Investor’s spouse, exceeds
                $1,000,000.

            
	 	
               ̈

              True

            	
               ̈

              False

            	
              (2)

            	
              The
                Investor is a natural person who had individual income in excess
                of
                $200,000, or joint income with such Investor’s spouse in excess of
                $300,000, in each of 2004 and 2005 and reasonably expects to reach
                the
                same income level in 2006.2 

            
	 	
               ̈

              True

            	
               ̈

              False

            	
              (3)

            	
              The
                Investor is a director or executive officer of the
                Company.

            

    

     

    If
      the Investor is an entity (not an individual), please check each applicable
      statement:

     

    
      	 	 	
               ̈

            	
              (4)

            	
              The
                Investor is a bank as defined in Section 3(a)(2) of the Securities
                Act of
                1933 (the “Securities Act”), or a savings and loan association or other
                institution as defined in Section 3(a)(5)(A) of the Securities Act,
                whether acting in its individual or fiduciary capacity;

            
	 	 	
               ̈

            	
              (5)

            	
              The
                Investor is a broker or dealer registered pursuant to Section 15
                of the
                Securities Exchange Act of 1934;

            
	 	 	
               ̈

            	
              (6)

            	
              The
                Investor is an insurance company as defined in Section 2(13) of the
                Securities Act; 

            
	 	 	
               ̈

            	
              (7)

            	
              The
                Investor is an investment company registered under the Investment
                Company
                Act of 1940 or a business development company as defined in Section
                2(a)(48) of that Act;

            
	 	 	
               ̈

            	
              (8)

            	
              The
                Investor is a Small Business Investment Company licensed by the U.S.
                Small
                Business Administration under Section 301(c) or (d) of the Small
                Business
                Investment Act of 1958;

            

    

     

      
        

      

    

    
      
        1  The
          term
“net
          worth”
means
          the excess of total assets over total liabilities. In calculating “net
          worth,”
the
          Investor may include the estimated fair market value of the Investor’s principal
          residence as an asset.

      

      
        2  In
          determining “income,”
the
          Investor should (i) add to adjusted gross income any amounts attributable
          to tax
          exempt income received, losses claimed as a limited partner in any limited
          partnership, deductions claimed for depletion, contributions to an IRA
          or Keogh
          retirement plan to the extent vested and any amount by which income from
          long-term capital gains has been reduced in arriving at adjusted gross
          income
          and (ii) subtract from adjusted gross income any unrealized capital
          gain.

         

        
          
            
            

          

          
            II-1

            
              

            

          

          
            
            

          

        

      

    

     

     

    
      	 	 	
               ̈

            	
              (9)

            	
              The
                Investor is a plan established and maintained by a state, its political
                subdivisions, or any agency or instrumentality of a state or its
                political
                subdivisions, for the benefit of its employees, and such plan has
                total
                assets in excess of $5,000,000;

            
	 	 	
               ̈

            	
              (10)

            	
              The
                Investor is an employee benefit plan within the meaning of the Employee
                Retirement Income Security Act of 1974 and (i) the investment decision
                is
                made by a plan fiduciary, as defined in Section 3(21) of such Act,
                which
                is either a bank, savings and loan association, insurance company,
                or
                registered investment adviser, or (ii) the employee benefit plan
                has total
                assets in excess of $5,000,000, or (iii) if a self-directed plan,
                the
                investment decisions are made solely by persons that are accredited
                investors;

            
	 	 	
               ̈

            	
              (11)

            	
              The
                Investor is a private business development company as defined in
                Section
                202(a)(22) of the Investment Advisers Act of 1940;

            
	 	 	
               ̈

            	
              (12)

            	
              The
                Investor is an organization described in Section 501(c)(3) of the
                Internal
                Revenue Code, a corporation, a Massachusetts or similar business
                trust, a
                partnership, or a limited liability company, not formed for the specific
                purpose of acquiring Shares in the Company, with total assets in
                excess of
                $5,000,000;

            
	 	 	
               ̈

            	
              (13)

            	
              The
                Investor is a trust, with total assets in excess of $5,000,000, not
                formed
                for the specific purpose of acquiring Shares in the Company, whose
                purchase is directed by a person who has such knowledge and experience
                in
                financial and business matters that such person is capable of evaluating
                the merits and risks of investing in the Shares of the
                Company;

            
	 	 	
               ̈

            	
              (14)

            	
              The
                Investor is an entity in which all of the equity owners qualify as
                an
                “accredited investor” under any of items (1) through (13) above. If the
                Investor qualifies under this “accredited investor” category only, list
                the equity owners of the Investor, their respective percentage interests
                in the Investor and the item number above under which each such equity
                owner qualifies as an “accredited investor” (including categories for
                individuals listed above) and include a completed copy of this Certificate
                for each such equity owner:

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	
              (Continue
                on a separate piece of paper, if
                necessary.)

            

    

     

    
      
        
        

      

      
        II-2

        
          

        

      

      
        
        

      

    

     

     

    THE
      UNDERSIGNED ACKNOWLEDGES AND UNDERSTANDS THAT THE COMPANY IS RELYING ON HIS,
      HER
      OR ITS REPRESENTATIONS AND WARRANTIES SET FORTH ABOVE IN DETERMINING WHETHER
      INVESTOR WILL BE PERMITTED TO INVEST IN THE COMPANY PURSUANT TO THE
      AGREEMENT.

    

    IN
      WITNESS WHEREOF,
      the
      undersigned has/have executed and made effective this Accredited Investor
      Certificate on this ________ day of _________, 2006.

    
 

    
      	
              ACCREDITED
                INVESTOR:

            
	 
	 	
              If
                an entity:

              

              

              By:
                ________________________________

              Name:
                ______________________________

              Title:
                _______________________________

            
	 	 
	 	 
	 	If an
              individual or
              individuals:
	 	 
	 	 
	 	
              (Signature)

            
	 	 
	 	 
	 	
              (Print
                Name)

            
	 	 
	 	 
	 	
              (Signature)

            
	 	 
	 	 
	 	
              (Print
                Name)

            

    

        

    

    
      
        

      

    

    Note:
      Each investor completed a copy of this schedule. A listing of investors will
      be
      provided to the SEC upon request.

     

     

    
      
        
        

      

      
        II-3

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      III

     

    INVESTOR’S
      CERTIFICATE REGARDING PRESENT OWNERSHIP OF SECURITIES 

     

    (to
      be completed by each Investor)

     

    To: [The
      Exploration Company of Delaware, Inc.]

     

    The
      Investor certifies that the information set out in this Certificate below
      accurately describes the Investor’s present ownership of securities of [The
      Exploration Company of Delaware, Inc.]

     

    The
      Investor either [check
      appropriate box]:

     

    
      	o	 	
              owns
                directly or indirectly, or exercises control or direction over, no
                common
                shares in the capital stock of the Company or securities convertible
                into
                common shares in the capital stock of the Company; or

            
	 	 
	o	 	
              owns
                directly or indirectly, or exercises control or direction over, ________
                common shares in the capital stock of the Company and convertible
                securities entitling the Investor to acquire an additional ________
                common shares in the capital stock of the
                Company.

            
	 	 

    

    

    Affiliate
      Status

     

    The
      Investor either [check
      appropriate box]:

     

    
      	o	 	
              is
                an “Affiliate” of the Company as defined in the Securities Exchange Act of
                1934.

            
	o	 	
              is
                not an “Affiliate” of the Company.

            

    

    

     

    EXECUTED
      by the Investor at ________________________________ this
      ___
day
      of
      ___________,
      2006.

     

    
      

      
        	If
                a
                corporation, partnership or other entity:	If
                an
                individual:
	 	 
	 	 
	
                
                  
Print
                  Name of Investor

              	
                
                  

                
Print Name
	 	
                 

              
	 	 
	 	 
	
                
                  

                
Signature of Authorized Signatory	
                
Signature
	 	
                Print
                  name of entity

              
	 	 
	 	 
	
                
                  

                
Name and Position of Authorized
                Signatory	
                
Jurisdiction
                of Residence
	 	
                 

              
	 	 
	 	
                 

              
	
                
Jurisdiction
                of Residence	 

      

      

    

    
      
        

      

    

    Note:
      Each investor completed a copy of this schedule. A listing of investors will
      be
      provided to the SEC upon request.

     

     

    
      
        
        

      

      
        III-1

        
          

        

      

      
        
        

      

    

     

    SCHEDULES
      TO PURCHASE AGREEMENT

    BY
      AND AMONG

    THE
      EXPLORATION COMPANY OF DELAWARE, INC. AND THE INVESTORS

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Schedule
      5.3

    

    Capitalization,
      etc.

    

    Schedule
      5.3(a):

    

    
      	1.	
              Authorized
                capital shares as of March 30,
                2006:

            

    

    Preferred
      Stock, par value $0.01 per share: 10,000,000 authorized

    Common
      Stock, par value $0.01 per share: 50,000,000 authorized

    

    
      	2.	
              Capital
                shares issued and outstanding as of March 30,
                2006:

            

    

    29,862,230
      shares of Common Stock

    

    
      	3.	
              Number
                of shares issuable and reserved for issuance pursuant to the Company’s
                share plans as of December 31,
                2005:

            

    

    

    The
      Company granted options to its officers, directors, and key employees under
      its
      1995 Flexible Incentive Plan (the “1995 Plan”), as amended, in prior years. The
      1995 Plan was replaced during 2005 with the 2005 Stock Incentive Plan (the
“2005
      Plan”). The 2005 Plan allows for the future award of a maximum number of shares
      limited to 10% of the total number of then issued and outstanding shares of
      common stock for issuance, reduced by shares issued under, and outstanding
      grants issued under the 1995 Plan. These shares may be issued as the result
      of
      exercise of options granted or as restricted stock to management, directors,
      and
      key employees. At December 31, 2005, 2,937,990 shares were authorized for grant
      and 981,990 shares remained available for grant. All currently outstanding
      options have 10-year terms that vest and become fully exercisable based on
      the
      specific terms imposed as of the date of grant.

    

    
      	4.	
              Options,
                Warrants and Restricted Stock outstanding as of March 30,
                2006:

            

    

    

    Restricted
      stock: 349,000 (this amount included in Item 2, above)

    Options:
      1,253,750

    Warrants:
      966,500

    

    
      	5.	
              Voting
                agreements, buy-sell agreements, etc.:
                None

            

    

    

    
      	6.	
              Registration
                Rights:

            

    

    

    
      	
            	a.	
              Registration
                Rights Agreement relative to the Company’s May 2004 PIPES
                transaction.

            

    

    
      	
            	b.	
              Registration
                Rights granted to Alan L. Edgar relative to his exercise in January,
                2006
                of warrants for the purchase of 133,333 shares of Common
                Stock.

            

    

    

    Schedule
      5.3(b):
      None

    

    Schedule
      5.3(c):
      None

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Schedule
      5.4

    

    Subsidiaries

     

    

    
      	Parent: The Exploration
              Company of
              Delaware, Inc.
	 
	Subsidiaries (all wholly
              owned):	Eagle Pass Well Service, Inc. 
              PPL
                Operating, Inc.

              Maverick
                Gas Marketing, L.P.

              Maverick
                Dimmit Pipeline, L.P.

              Paloma
                Pipeline, L.P.

              TXCO
                Drilling Corp.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Schedule
      5.6

    

    Consents
      and Filings

    

    None
      other than the filing of a Form D with the Securities and Exchange Commission
      under the Securities Act of 1933 and with
      certain states in which the filing of a Form D is necessary to perfect an
      applicable exemption.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Schedule
      5.9

    

    No
      Material Adverse Effect

    

    On
      March
      20, 2006, the Company purchased a drilling rig at a cost of $4.3
      million.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Schedule
      5.11

    

    Material
      Contracts

    

    None.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Schedule
      5.12

    

    Tax
      Matters

    

    None
      other than an on-going franchise tax audit conducted by the Texas Comptroller
      of
      Public Accounts for 2002, 2003 and 2004.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}]]