Exhibit 10.3
SECURITIES PURCHASE AGREEMENT
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LAURUS MASTER FUND, LTD.
AND
TEXAURUS ENERGY, INC.
DATED: MARCH __, 2006
TABLE OF CONTENTS
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PAGE
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1. Agreement to Sell and Purchase 1
2. Fees, Warrant and Parent Warrant 1
3. Closing, Delivery and Payment. 2
3.1 Closing 2
3.2 Delivery 2
4. Representations and Warranties of the Company 2
4.1 Organization, Good Standing and Qualification 2
4.2 Subsidiaries 3
4.3 Capitalization; Voting Rights. 4
4.4 Authorization; Binding Obligations 4
4.5 Liabilities 5
4.6 Agreements; Action 5
4.7 Obligations to Related Parties 6
4.8 Changes 7
4.9 Title to Properties and Assets; Liens, Etc 8
4.10 Intellectual Property. 9
4.11 Compliance with Other Instruments 9
4.12 Litigation 10
4.13 Tax Returns and Payments 10
4.14 Employees 10
4.15 Voting Rights 11
4.16 Compliance with Laws; Permits 11
4.17 Environmental and Safety Laws 11
4.18 Valid Offering 12
4.19 Full Disclosure 12
4.20 Insurance 12
4.21 Dilution 12
4.22 Patriot Act 12
4.23 ERISA 13
4.24 Registration Rights 13
5. Representations and Warranties of the Purchaser 13
5.1 Requisite Power and Authority 14
5.2 Investment Representations 14
5.3 The Purchaser Bears Economic Risk 14
5.4 Acquisition for Own Account 14
5.5 The Purchaser Can Protect Its Interest 14
5.6 Accredited Investor 15
5.7 Legends. 15
6. Covenants of the Company 16
6.1 Reporting Requirements 16
6.2 Use of Funds 17
6.3 Access to Facilities 17
6.4 Taxes 18
6.5 Insurance 18
6.6 Intellectual Property 19
6.7 Properties 19
6.8 Confidentiality 19
6.9 Required Approvals 19
6.10 Opinion 21
6.11 Margin Stock 21
6.12 Financing Right of First Refusal. 21
6.13 Authorization and Reservation of Shares 22
6.14 Operator Reports 22
7. Covenants of the Purchaser 22
7.1 Confidentiality 22
7.2 Limitation on Acquisition of Common Stock of the Company 22
8. Covenants of the Company and the Purchaser Regarding Indemnification. 22
8.1 Company Indemnification 22
8.2 Purchaser's Indemnification 23
9. Miscellaneous. 23
9.1 Governing Law, Jurisdiction and Waiver of Jury Trial. 23
9.2 Severability 24
9.3 Survival 24
9.4 Successors 25
9.5 Entire Agreement; Maximum Interest 25
9.6 Amendment and Waiver. 25
9.7 Delays or Omissions 25
9.8 Notices 25
9.9 Attorneys' Fees 28
9.10 Titles and Subtitles 28
9.11 Facsimile Signatures; Counterparts 28
9.12 Broker's Fees 28
9.13 Construction 28
LIST OF EXHIBITS
Form of Term Note Exhibit A
Form of Warrant Exhibit B
Form of Parent Warrant Exhibit C
Form of Opinion Exhibit D
Form of Escrow Agreement Exhibit E
LIST OF SCHEDULES
Schedule 4.2 Subsidiaries
Schedule 4.3 Capitalization
Schedule 4.6 Agreements
Schedule 4.7 Obligations to Related Parties
Schedule 4.9 Title to Properties and Assets, Liens, Etc.
Schedule 4.12 Litigation
Schedule 4.13 Tax Returns and Payments
Schedule 4.14 Employees
Schedule 4.15 Voting Rights
Schedule 4.17 Environmental
Schedule 6.9(e) Indebtedness
Schedule 9.12 Brokers
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of March __, 2006, by and between TEXAURUS ENERGY, INC., a Delaware
corporation (the "Company"), and LAURUS MASTER FUND, LTD., a Cayman Islands
company (the "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale to the Purchaser of a Secured
Term Note in the aggregate principal amount of Eight Million Five Hundred
Thousand Dollars ($8,500,000) in the form of Exhibit A hereto (as amended,
modified and/or supplemented from time to time, the "Note");
WHEREAS, the Company wishes to issue to the Purchaser a warrant in the form
of Exhibit B hereto (as amended, modified and/or supplemented from time to time,
the "Warrant") to purchase up to 961 shares of the Company's common stock, $.001
par value per share (the "Common Stock");
WHEREAS, the Purchaser desires to purchase the Note and the Warrant on the
terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Note and the Warrant to
the Purchaser on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Agreement to Sell and Purchase. Pursuant to the terms and
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conditions set forth in this Agreement, on the Closing Date (as defined in
Section 3), the Company shall sell to the Purchaser, and the Purchaser shall
purchase from the Company, the Note. The sale of the Note on the Closing Date
shall be known as the "Offering." The Note will mature on the Maturity Date (as
defined in the Note). Collectively, the Note and the Warrant and Common Stock
issuable upon exercise of the Warrant are referred to as the "Securities."
2. Fees,Warrant and Parent Warrant. On the Closing Date:
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(a) The Company will issue and deliver to the Purchaser the Warrant to
purchase up to 961 shares of Common Stock (subject to adjustment as set
forth therein) in connection with the Offering, pursuant to Section 1
hereof. All the representations, covenants, warranties, undertakings, and
indemnification, and other rights made or granted to or for the benefit of
the Purchaser by the Company are hereby also made and granted for the
benefit of the holder of the Warrant and shares of the Company's Common
Stock issuable upon exercise of the Warrant (the "Warrant Shares").
(b) Texhoma Energy, Inc., the Company's parent (the "Parent"), will
issue and deliver to the Purchaser a warrant in the form of Exhibit C (as
amended, modified and/or supplemented from time to time, the "Parent
Warrant") to purchase up to 10,625,000 shares of Parent's common stock,
$.001 par value per share (the "Parent Common Stock") (subject to
adjustment as set forth therein) (the "Parent Warrant Shares").
(c) Subject to the terms of Section 2(e) below, the Company shall pay
to Laurus Capital Management, LLC, the manager of the Purchaser, a closing
payment in an amount equal to three and one half percent (3.50%) of the
aggregate principal amount of the Note. The foregoing fee is referred to
herein as the "Closing Payment."
(d) The Company shall reimburse the Purchaser for its reasonable
expenses (including legal fees and expenses) incurred in connection with
the preparation and negotiation of this Agreement and the Related
Agreements (as hereinafter defined), and expenses incurred in connection
with the Purchaser's due diligence review of the Company and its
Subsidiaries (as defined in Section 4.2) and all related matters. Amounts
required to be paid under this Section 2(d) will be paid on the Closing
Date.
(e) The Closing Payment and the expenses referred to in the preceding
clause (d) (net of deposits previously paid by the Company) shall be paid
at closing out of funds held pursuant to the Escrow Agreement (as defined
below) and a disbursement letter (the "Disbursement Letter").
3. Closing, Delivery and Payment.
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3.1 Closing. Subject to the terms and conditions herein, the closing
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of the transactions contemplated hereby (the "Closing"), shall take place
on the date hereof, at such time or place as the Company and the Purchaser
may mutually agree (such date is hereinafter referred to as the "Closing
Date").
3.2 Delivery. Pursuant to the Escrow Agreement, at the Closing on the
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Closing Date, the Company will deliver to the Purchaser, among other
things, the Note and the Warrant and the Purchaser will deliver to the
Company, among other things, the amounts set forth in the Disbursement
Letter by certified funds or wire transfer. The Company hereby acknowledges
and agrees that Purchaser's obligation to purchase the Note from the
Company on the Closing Date shall be contingent upon the satisfaction (or
waiver by the Purchaser in its sole discretion) of the items and matters
set forth in the closing checklist provided by the Purchaser to the Company
on or prior to the Closing Date.
4. Representations andWarrantiesof the Company. The Company hereby
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represents and warrants to the Purchaser as follows:
4.1 Organization, Good Standing and Qualification. Each of the Parent,
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Company and each of its Subsidiaries is a corporation, partnership or
limited liability company, as the case may be, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each of the Parent, the Company and each of its Subsidiaries
has the corporate, limited liability company or partnership, as the case
may be, power and authority to own and operate its properties and assets
and, insofar as it is or shall be a party thereto, to (1) execute and
deliver (i) this Agreement, (ii) the Note and the Warrant to be issued in
connection with this Agreement, (iii) the Master Security Agreement dated
as of the date hereof among the Company, the Parent, certain Subsidiaries
of the Company and the Purchaser (as amended, modified and/or supplemented
from time to time, the "Master Security Agreement"), (iv) the two
Restricted Account Agreements dated as of the date hereof among North Fork
Bank, a New York banking corporation, the Company and the Purchaser, (v)
the Mortgage, Security Agreement, Financing Statement and Assignment of
Production dated as of the date hereof made by the Company in favor of the
Purchaser (as amended, modified and/or supplemented from time to time),
(vi) the Parent Warrant to purchase the Parent Warrant Shares, (vii) the
Registration Rights Agreement relating to the Parent Warrant dated as of
the date hereof between the Parent and the Purchaser (as amended, modified
and/or supplemented from time to time, the "Registration Rights
Agreement"), (viii) the Guaranty dated as of the date hereof made by the
Parent in favor of the Purchaser (as amended, modified and/or supplemented
from time to time, the "Parent Guaranty"), (ix) the Guaranty Agreement
dated as of date hereof made by Xxxxxxxxxx Xxxxxx in favor of the Purchaser
(as amended, modified and/or supplemented from time to time), (x) the Stock
Pledge Agreement dated as of the date hereof between the Parent and the
Purchaser (as amended, modified and/or or supplemented from time to time,
the "Stock Pledge Agreement"), (xi) the Funds Escrow Agreement dated as of
the date hereof among the Company, the Purchaser and the escrow agent
referred to therein, substantially in the form of Exhibit E hereto (as
amended, modified and/or supplemented from time to time, the "Escrow
Agreement") and (xii) all other documents, instruments and agreements
entered into in connection with the transactions contemplated hereby and
thereby (the preceding clauses (ii) through (xii), collectively, the
"Related Agreements"); (2) issue and sell the Note; (3) issue and sell the
Warrant, the Parent Warrant, the Warrant Shares and the Parent Warrant
Shares; and (4) carry out the provisions of this Agreement and the Related
Agreements and to carry on its business as presently conducted. Each of the
Parent, the Company and each of its Subsidiaries is duly qualified and is
authorized to do business and is in good standing as a foreign corporation,
partnership or limited liability company, as the case may be, in all
jurisdictions in which the nature or location of its activities and of its
properties (both owned and leased) makes such qualification necessary,
except for those jurisdictions in which failure to do so has not, or could
not reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the business, assets, liabilities, condition
(financial or otherwise), properties, operations or prospects of the
Parent, the Company and its Subsidiaries, taken individually and as a whole
(a "Material Adverse Effect").
4.2 Subsidiaries. Each direct and indirect Subsidiary of the Parent
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and Company, the direct owner of such Subsidiary and its percentage
ownership thereof, is set forth on Schedule 4.2. For the purpose of this
Agreement, a "Subsidiary" of any person or entity means (i) a corporation
or other entity whose shares of stock or other ownership interests having
ordinary voting power (other than stock or other ownership interests having
such power only by reason of the happening of a contingency) to elect a
majority of the directors of such corporation, or other persons or entities
performing similar functions for such person or entity, are owned, directly
or indirectly, by such person or entity or (ii) a corporation or other
entity in which such person or entity owns, directly or indirectly, more
than 50% of the equity interests at such time.
4.3 Capitalization; Voting Rights.
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(a) The authorized capital stock of the (i) Company, as of the date
hereof, consists of 1,000,000 shares, of which 1,000,000 are shares of
Company Common Stock, par value $.001 per share, and 1,000 shares of which
are issued and outstanding and (ii) Parent, as of the date hereof, consists
of 201,000,000 shares, of which 200,000,000 are shares of Common Stock, par
value $.001 per share, 108,812,224 shares of which are issued and
outstanding and 1,000,000 are shares of preferred stock, par value $.001
per share of which no shares of preferred stock are issued and outstanding.
The authorized, issued and outstanding capital stock of each Subsidiary of
the Company is set forth on Schedule 4.3.
(b) Except as disclosed on Schedule 4.3, other than: (i) the shares
reserved for issuance under the Parent's and Company's stock option plans;
and (ii) shares which may be granted pursuant to this Agreement and the
Related Agreements, there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal),
proxy or stockholder agreements, or arrangements or agreements of any kind
for the purchase or acquisition from the Parent and/or Company of any of
its securities. Except as disclosed on Schedule 4.3, neither the offer,
issuance or sale of any of the Note, the Warrant or the Parent Warrant, or
the issuance of any of the Warrant Shares or Parent Warrant Shares, nor the
consummation of any transaction contemplated hereby will result in a change
in the price or number of any securities of the Parent and/or Company
outstanding, under anti-dilution or other similar provisions contained in
or affecting any such securities.
(c) All issued and outstanding shares of the Parent's and Company's
Common Stock: (i) have been duly authorized and validly issued and are
fully paid and nonassessable; and (ii) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities.
(d) The rights, preferences, privileges and restrictions of the shares
of the Common Stock and the Parent Common Stock are as stated in the
Parent's and Company's Certificate of Incorporation, as applicable (the
"Charter"). The Warrant Shares and the Parent Warrant Shares have been duly
and validly reserved for issuance. When issued in compliance with the
provisions of this Agreement, the Parent's and the Company's Charter, as
applicable, the Securities and the Parent Warrant and Parent Warrant Shares
will be validly issued, fully paid and nonassessable, and will be free of
any liens or encumbrances; provided, however, that the Securities and the
Parent Warrant and Parent Warrant Shares may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein or
as otherwise required by such laws at the time a transfer is proposed.
4.4 Authorization; Binding Obligations. All corporate, partnership or
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limited liability company, as the case may be, action on the part of the
Parent, Company and each of its Subsidiaries (including their respective
officers and directors) necessary for the authorization of this Agreement
and the Related Agreements, the performance of all obligations of the
Parent, Company and its Subsidiaries hereunder and under the other Related
Agreements at the Closing and, the authorization, sale, issuance and
delivery of the Note, the Warrant and the Parent Warrant has been taken or
will be taken prior to the Closing. This Agreement and the Related
Agreements, when executed and delivered and to the extent it is a party
thereto, will be valid and binding obligations of each of the Parent,
Company and each of its Subsidiaries, enforceable against each such person
or entity in accordance with their terms, except:
(a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; and
(b) general principles of equity that restrict the availability of
equitable or legal remedies.
The sale of the Note is not and will not be subject to any preemptive rights or
rights of first refusal that have not been properly waived or complied with.
The issuance of the Warrant and the Parent Warrant and the subsequent exercise
of the Warrant for Warrant Shares and the Parent Warrant for Parent Warrant
Shares are not and will not be subject to any preemptive rights or rights of
first refusal that have not been properly waived or complied with.
4.5 Liabilities. Neither the Company nor any of its Subsidiaries has
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any liabilities, except current liabilities incurred in the ordinary course
of business.
4.6 Agreements; Action. Except as set forth on Schedule 4.6:
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(a) there are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the
Company or any of its Subsidiaries is a party or by which it is bound which
may involve: (i) obligations (contingent or otherwise) of, or payments to,
the Company or any of its Subsidiaries in excess of $50,000 (other than
obligations of, or payments to, the Company or any of its Subsidiaries
arising from purchase or sale agreements entered into in the ordinary
course of business); or (ii) the transfer or license of any patent,
copyright, trade secret or other proprietary right to or from the Company
or any of its Subsidiaries (other than licenses arising from the purchase
of "off the shelf" or other standard products); or (iii) provisions
restricting the development, manufacture or distribution of the Company's
or any of its Subsidiaries products or services; or (iv) indemnification by
the Company or any of its Subsidiaries with respect to infringements of
proprietary rights.
(b) Neither the Company nor any of its Subsidiaries has: (i) declared
or paid any dividends, or authorized or made any distribution upon or with
respect to any class or series of its capital stock; (ii) incurred any
indebtedness for money borrowed or any other liabilities (other than
ordinary course obligations) individually in excess of $50,000 or, in the
case of indebtedness and/or liabilities individually less than $50,000, in
excess of $100,000 in the aggregate; (iii) made any loans or advances to
any person or entity not in excess, individually or in the aggregate, of
$100,000, other than ordinary course advances for travel expenses; or (iv)
sold, exchanged or otherwise disposed of any of its assets or rights, other
than the sale of its inventory in the ordinary course of business.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities the Company or any Subsidiary of the Company
has reason to believe are affiliated therewith) shall be aggregated for the
purpose of meeting the individual minimum dollar amounts of such
subsections.
(d) The Company makes and keeps books, records, and accounts, that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the Company's assets. The Company maintains internal
control over financial reporting ("Financial Reporting Controls") designed
by, or under the supervision of, the Company's principal executive and
principal financial officers, and effected by the Company's board of
directors, management, and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles ("GAAP"), including that:
(i) transactions are executed in accordance with management's
general or specific authorization;
(ii) unauthorized acquisition, use, or disposition of the
Company's assets that could have a material effect on the financial
statements are prevented or timely detected;
(iii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that
the Company's receipts and expenditures are being made only in
accordance with authorizations of the Company's management and board
of directors;
(iv) transactions are recorded as necessary to maintain
accountability for assets; and
(v) the recorded accountability for assets is compared with the
existing assets at reasonable intervals, and appropriate action is
taken with respect to any differences.
4.7 Obligations to Related Parties. Except as set forth on Schedule
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4.7, there are no obligations of the Company or any of its Subsidiaries to
officers, directors, stockholders or employees of the Company or any of its
Subsidiaries other than:
(a) for payment of salary for services rendered and for bonus
payments;
(b) reimbursement for reasonable expenses incurred on behalf of the
Company and its Subsidiaries;
(c) for other standard employee benefits made generally available to
all employees (including stock option agreements outstanding under any
stock option plan approved by the Board of Directors of the Company and
each Subsidiary of the Company, as applicable); and
(d) obligations listed in the Company's and each of its Subsidiary's
financial statements.
Except as described above or set forth on Schedule 4.7, none of the officers,
directors or, to the best of the Company's knowledge, key employees or
stockholders of the Company or any of its Subsidiaries or any members of their
immediate families, are indebted to the Company or any of its Subsidiaries,
individually or in the aggregate, in excess of $50,000 or have any direct or
indirect ownership interest in any firm or corporation with which the Company or
any of its Subsidiaries is affiliated or with which the Company or any of its
Subsidiaries has a business relationship, or any firm or corporation which
competes with the Company or any of its Subsidiaries, other than passive
investments in publicly traded companies (representing less than one percent
(1%) of such company) which may compete with the Company or any of its
Subsidiaries. Except as described above, no officer, director or stockholder of
the Company or any of its Subsidiaries, or any member of their immediate
families, is, directly or indirectly, interested in any material contract with
the Company or any of its Subsidiaries and no agreements, understandings or
proposed transactions are contemplated between the Company or any of its
Subsidiaries and any such person. Except as set forth on Schedule 4.7, neither
the Company nor any of its Subsidiaries is a guarantor or indemnitor of any
indebtedness of any other person or entity.
4.8 Changes. Except as disclosed in any Schedule to this Agreement or
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to any of the Related Agreements, there has not been:
(a) any change in the business, assets, liabilities, condition
(financial or otherwise), properties, operations or prospects of the
Company or any of its Subsidiaries, which individually or in the aggregate
has had, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(b) any resignation or termination of any officer, key employee or
group of employees of the Company or any of its Subsidiaries;
(c) any material change, except in the ordinary course of business, in
the contingent obligations of the Company or any of its Subsidiaries by way
of guaranty, endorsement, indemnity, warranty or otherwise;
(d) any damage, destruction or loss, whether or not covered by
insurance, which has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(e) any waiver by the Company or any of its Subsidiaries of a valuable
right or of a material debt owed to it;
(f) any direct or indirect loans made by the Company or any of its
Subsidiaries to any stockholder, employee, officer or director of the
Company or any of its Subsidiaries, other than advances made in the
ordinary course of business;
(g) any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder of the Company or any
of its Subsidiaries;
(h) any declaration or payment of any dividend or other distribution
of the assets of the Company or any of its Subsidiaries;
(i) any labor organization activity related to the Company or any of
its Subsidiaries;
(j) any debt, obligation or liability incurred, assumed or guaranteed
by the Company or any of its Subsidiaries, except those for immaterial
amounts and for current liabilities incurred in the ordinary course of
business;
(k) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets owned by the Company
or any of its Subsidiaries;
(l) any change in any material agreement to which the Company or any
of its Subsidiaries is a party or by which either the Company or any of its
Subsidiaries is bound which either individually or in the aggregate has
had, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(m) any other event or condition of any character that, either
individually or in the aggregate, has had, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect; or
(n) any arrangement or commitment by the Company or any of its
Subsidiaries to do any of the acts described in subsection (a) through (m)
above.
4.9 Title to Properties and Assets; Liens, Etc. Except as set forth on
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Schedule 4.9, each of the Company and each of its Subsidiaries has good and
marketable title to its properties and assets, and good title to its
leasehold interests, in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than:
(a) those resulting from taxes which have not yet become delinquent;
(b) minor liens and encumbrances which do not materially detract from
the value of the property subject thereto or materially impair the
operations of the Company or any of its Subsidiaries, so long as in each
such case, such liens and encumbrances have no effect on the lien priority
of the Purchaser in such property; and
(c) those that have otherwise arisen in the ordinary course of
business, so long as they have no effect on the lien priority of the
Purchaser therein. All facilities, machinery, equipment, fixtures, vehicles
and other properties owned, leased or used by the Company and its
Subsidiaries are in good operating condition and repair and are reasonably
fit and usable for the purposes for which they are being used. Except as
set forth on Schedule 4.9, the Company and its Subsidiaries are in
compliance with all material terms of each lease to which it is a party or
is otherwise bound.
4.10 Intellectual Property.
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(a) Each of the Company and each of its Subsidiaries owns or possesses
sufficient legal rights to all patents, trademarks, service marks, trade
names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes necessary for its business as now
conducted and, to the Company's knowledge, as presently proposed to be
conducted (the "Intellectual Property"), without any known infringement of
the rights of others. There are no outstanding options, licenses or
agreements of any kind relating to the foregoing proprietary rights, nor is
the Company or any of its Subsidiaries bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes of any other person
or entity other than such licenses or agreements arising from the purchase
of "off the shelf" or standard products.
(b) Neither the Company nor any of its Subsidiaries has received any
communications alleging that the Company or any of its Subsidiaries has
violated any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person
or entity, nor is the Company or any of its Subsidiaries aware of any basis
therefor.
(c) The Company does not believe it is or will be necessary to utilize
any inventions, trade secrets or proprietary information of any of its
employees made prior to their employment by the Company or any of its
Subsidiaries, except for inventions, trade secrets or proprietary
information that have been rightfully assigned to the Company or any of its
Subsidiaries.
4.11 Compliance with Other Instruments. Neither the Parent, Company
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nor any of its Subsidiaries is in violation or default of (x) any term of
its Charter or Bylaws, or (y) any provision of any indebtedness, mortgage,
indenture, contract, agreement or instrument to which it is party or by
which it is bound or of any judgment, decree, order or writ, which
violation or default, in the case of this clause (y), has had, or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. The execution, delivery and performance of and
compliance with this Agreement and the Related Agreements to which it is a
party, and the issuance and sale of the Note by the Company and the other
Securities by the Company and the issuance of the Parent Warrant by the
Parent each pursuant hereto and thereto, will not, with or without the
passage of time or giving of notice, result in any such material violation,
or be in conflict with or constitute a default under any such term or
provision, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Parent,
Company or any of its Subsidiaries or the suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization
or approval applicable to the Parent or the Company, its business or
operations or any of its assets or properties.
4.12 Litigation. Except as set forth on Schedule 4.12 hereto, there is
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no action, suit, proceeding or investigation pending or, to the Company's
knowledge, currently threatened against the Parent, Company or any of its
Subsidiaries that prevents the Parent, Company or any of its Subsidiaries
from entering into this Agreement or the other Related Agreements, or from
consummating the transactions contemplated hereby or thereby, or which has
had, or could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect or any change in the current equity
ownership of the Parent, Company or any of its Subsidiaries, nor is the
Company aware that there is any basis to assert any of the foregoing.
Neither the Parent, Company nor any of its Subsidiaries is a party to or
subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. There is no
action, suit, proceeding or investigation by the Parent, Company or any of
its Subsidiaries currently pending or which the Parent, Company or any of
its Subsidiaries intends to initiate.
4.13 Tax Returns and Payments. Each of the Company and each of its
---------------------------
Subsidiaries has timely filed all tax returns (federal, state and local)
required to be filed by it. All taxes shown to be due and payable on such
returns, any assessments imposed, and all other taxes due and payable by
the Company or any of its Subsidiaries on or before the Closing, have been
paid or will be paid prior to the time they become delinquent. Except as
set forth on Schedule 4.13, neither the Company nor any of its Subsidiaries
has been advised:
(a) that any of its returns, federal, state or other, have been or are
being audited as of the date hereof; or
(b) of any adjustment, deficiency, assessment or court decision in
respect of its federal, state or other taxes.
The Company has no knowledge of any liability for any tax to be
imposed upon its properties or assets as of the date of this Agreement that
is not adequately provided for.
4.14 Employees. Except as set forth on Schedule 4.14, neither the
---------
Company nor any of its Subsidiaries has any collective bargaining
agreements with any of its employees. There is no labor union organizing
activity pending or, to the Company's knowledge, threatened with respect to
the Company or any of its Subsidiaries. Except as disclosed on Schedule
4.14, neither the Company nor any of its Subsidiaries is a party to or
bound by any currently effective employment contract, deferred compensation
arrangement, bonus plan, incentive plan, profit sharing plan, retirement
agreement or other employee compensation plan or agreement. To the
Company's knowledge, no employee of the Company or any of its Subsidiaries,
nor any consultant with whom the Company or any of its Subsidiaries has
contracted, is in violation of any term of any employment contract,
proprietary information agreement or any other agreement relating to the
right of any such individual to be employed by, or to contract with, the
Company or any of its Subsidiaries because of the nature of the business to
be conducted by the Company or any of its Subsidiaries; and to the
Company's knowledge the continued employment by the Company and its
Subsidiaries of their present employees, and the performance of the
Company's and its Subsidiaries' contracts with its independent contractors,
will not result in any such violation. Neither the Company nor any of its
Subsidiaries is aware that any of its employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court
or administrative agency that would interfere with their duties to the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has received any notice alleging that any such violation has
occurred. Except for employees who have a current effective employment
agreement with the Company or any of its Subsidiaries, no employee of the
Company or any of its Subsidiaries has been granted the right to continued
employment by the Company or any of its Subsidiaries or to any material
compensation following termination of employment with the Company or any of
its Subsidiaries. Except as set forth on Schedule 4.14, the Company is not
aware that any officer, key employee or group of employees intends to
terminate his, her or their employment with the Company or any of its
Subsidiaries, nor does the Company or any of its Subsidiaries have a
present intention to terminate the employment of any officer, key employee
or group of employees.
4.15 Voting Rights. Except as set forth on Schedule 4.15, to the
--------------
Company's knowledge, no stockholder of the Company or any of its
Subsidiaries has entered into any agreement with respect to the voting of
equity securities of the Company or any of its Subsidiaries.
4.16 Compliance with Laws; Permits. Neither the Parent, Company nor
-------------------------------
any of its Subsidiaries is in violation of any provision of the Sarbanes
Oxley Act of 2002 applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership
of its properties which has had, or could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. No
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required
to be filed in connection with the execution and delivery of this Agreement
or any other Related Agreement and the issuance of any of the Securities or
the Parent Warrant, except such as have been duly and validly obtained or
filed, or with respect to any filings that must be made after the Closing,
as will be filed in a timely manner. Each of the Company and its
Subsidiaries has all material franchises, permits, licenses and any similar
authority necessary for the conduct of its business as now being conducted
by it, the lack of which could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.17 Environmental and Safety Laws. Neither the Parent, Company nor
-------------------------------
any of its Subsidiaries is in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety,
and to its knowledge, no material expenditures are or will be required in
order to comply with any such existing statute, law or regulation. Except
as set forth on Schedule 4.17, no Hazardous Materials (as defined below)
are used or have been used, stored, or disposed of by the Parent, Company
or any of its Subsidiaries or, to the Company's knowledge, by any other
person or entity on any property owned, leased or used by the Parent,
Company or any of its Subsidiaries. For the purposes of the preceding
sentence, "Hazardous Materials" shall mean:
(a) materials which are listed or otherwise defined as "hazardous" or
"toxic" under any applicable local, state, federal and/or foreign laws and
regulations that govern the existence and/or remedy of contamination on
property, the protection of the environment from contamination, the control
of hazardous wastes, or other activities involving hazardous substances,
including building materials; or
(b) any petroleum products or nuclear materials.
4.18 Valid Offering. Assuming the accuracy of the representations and
--------------
warranties of the Purchaser contained in this Agreement, the offer, sale
and issuance of the Securities, the Parent Warrant and the Parent Warrant
Shares will be exempt from the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and will have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all
applicable state securities laws.
4.19 Full Disclosure. Each of the Company and each of its Subsidiaries
---------------
has provided the Purchaser with all information requested by the Purchaser
in connection with its decision to purchase the Note and the Warrant,
including all information the Company and its Subsidiaries believe is
reasonably necessary to make such investment decision. Neither this
Agreement, the Related Agreements, the exhibits and schedules hereto and
thereto nor any other document delivered by the Company or any of its
Subsidiaries to Purchaser or its attorneys or agents in connection herewith
or therewith or with the transactions contemplated hereby or thereby,
contain any untrue statement of a material fact nor omit to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances in which they are made, not
misleading. Any financial projections and other estimates provided to the
Purchaser by the Company or any of its Subsidiaries were based on the
Company's and its Subsidiaries' experience in the industry and on
assumptions of fact and opinion as to future events which the Company or
any of its Subsidiaries, at the date of the issuance of such projections or
estimates, believed to be reasonable.
4.20 Insurance. Each of the Company and each of its Subsidiaries has
---------
general commercial, product liability, fire and casualty insurance policies
with coverages which the Company believes are customary for companies
similarly situated to the Company and its Subsidiaries in the same or
similar business.
4.21 Dilution. The Company specifically acknowledges that its
--------
obligation to issue the shares of Common Stock upon exercise of the Warrant
is binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Company.
4.22 Patriot Act. The Company certifies that, to the best of Company's
-----------
knowledge, neither the Parent, Company nor any of its Subsidiaries has been
designated, nor is or shall be owned or controlled, by a "suspected
terrorist" as defined in Executive Order 13224. The Company hereby
acknowledges that the Purchaser seeks to comply with all applicable laws
concerning money laundering and related activities. In furtherance of those
efforts, the Company hereby represents, warrants and covenants that: (i)
none of the cash or property that the Parent, Company or any of its
Subsidiaries will pay or will contribute to the Purchaser has been or shall
be derived from, or related to, any activity that is deemed criminal under
United States law; and (ii) no contribution or payment by the Parent,
Company or any of its Subsidiaries or to the Purchaser, to the extent that
they are within the Company's and/or its Subsidiaries' and/or the Parent's
control shall cause the Purchaser to be in violation of the United States
Bank Secrecy Act, the United States International Money Laundering Control
Act of 1986 or the United States International Money Laundering Abatement
and Anti-Terrorist Financing Act of 2001. The Company shall promptly notify
the Purchaser if any of these representations, warranties or covenants
ceases to be true and accurate regarding the Company, any of its
Subsidiaries or the Parent. The Company shall provide the Purchaser all
additional information regarding the Company, any of its Subsidiaries or
the Parent that the Purchaser deems necessary or convenient to ensure
compliance with all applicable laws concerning money laundering and similar
activities. The Company understands and agrees that if at any time it is
discovered that any of the foregoing representations, warranties or
covenants are incorrect, or if otherwise required by applicable law or
regulation related to money laundering or similar activities, the Purchaser
may undertake appropriate actions to ensure compliance with applicable law
or regulation, including but not limited to segregation and/or redemption
of the Purchaser's investment in the Company. The Company further
understands that the Purchaser may release confidential information about
the Company, its Subsidiaries and the Parent and, if applicable, any
underlying beneficial owners, to proper authorities if the Purchaser, in
its sole discretion, determines that it is in the best interests of the
Purchaser in light of relevant rules and regulations under the laws set
forth in subsection (ii) above.
4.23 ERISA. Based upon the Employee Retirement Income Security Act of
-----
1974 ("ERISA"), and the regulations and published interpretations
-----
thereunder: (i) neither the Company nor any of its Subsidiaries has engaged
in any Prohibited Transactions (as defined in Section 406 of ERISA and
Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code")); (ii) each of the Company and each of its Subsidiaries has met all
----
applicable minimum funding requirements under Section 302 of ERISA in
respect of its plans; (iii) neither the Company nor any of its Subsidiaries
has any knowledge of any event or occurrence which would cause the Pension
Benefit Guaranty Corporation to institute proceedings under Title IV of
ERISA to terminate any employee benefit plan(s); (iv) neither the Company
nor any of its Subsidiaries has any fiduciary responsibility for
investments with respect to any plan existing for the benefit of persons
other than the Company's or such Subsidiary's employees; and (v) neither
the Company nor any of its Subsidiaries has withdrawn, completely or
partially, from any multi-employer pension plan so as to incur liability
under the Multiemployer Pension Plan Amendments Act of 1980.
4.24 Registration Rights. At such time, if ever, that the Company
--------------------
completes an initial public offering of its securities or is otherwise
publicly traded (i.e. through a reverse merger or otherwise), the shares
underlying the Warrant shall have the same registration rights with respect
to such shares as those contained in the Registration Rights Agreement, the
provisions of which shall be deemed incorporated herein by reference to the
extent necessary to effectuate the purpose and intent of this provision.
5. Representations and Warranties of the Purchaser. The Purchaser
---------------------------------------------------
hereby represents and warrants to the Company as follows (such representations
and warranties do not lessen or obviate the representations and warranties of
the Company set forth in this Agreement):
5.1 Requisite Power and Authority. The Purchaser has all necessary
--------------------------------
power and authority under all applicable provisions of law to execute and
deliver this Agreement and the Related Agreements and to carry out their
provisions. All corporate action on the Purchaser's part required for the
lawful execution and delivery of this Agreement and the Related Agreements
have been or will be effectively taken prior to the Closing. Upon their
execution and delivery, this Agreement and the Related Agreements will be
valid and binding obligations of the Purchaser, enforceable in accordance
with their terms, except:
(a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; and
(b) as limited by general principles of equity that restrict the
availability of equitable and legal remedies.
5.2 Investment Representations. The Purchaser understands that the
---------------------------
Securities are being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon the
Purchaser's representations contained in this Agreement, including, without
limitation, that the Purchaser is an "accredited investor" within the
meaning of Regulation D under the Securities Act of 1933, as amended (the
"Securities Act"). The Purchaser confirms that it has received or has had
full access to all the information it considers necessary or appropriate to
make an informed investment decision with respect to the Note and the
Warrant to be purchased by it under this Agreement and the Warrant Shares
acquired by it upon the exercise of the Warrant, respectively. The
Purchaser further confirms that it has had an opportunity to ask questions
and receive answers from the Company regarding the Company's and its
Subsidiaries' business, management and financial affairs and the terms and
conditions of the Offering, the Note, the Warrant and the Securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Purchaser or to which
the Purchaser had access.
5.3 The Purchaser Bears Economic Risk. The Purchaser has substantial
----------------------------------
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has
the capacity to protect its own interests.
5.4 Acquisition for Own Account. The Purchaser is acquiring the Note,
---------------------------
the Warrant and the Parent Warrant and the Warrant Shares and the Parent
Warrant Shares for the Purchaser's own account for investment only, and not
as a nominee or agent and not with a view towards or for resale in
connection with their distribution.
5.5 The Purchaser Can Protect Its Interest. The Purchaser represents
---------------------------------------
that by reason of its, or of its management's, business and financial
experience, the Purchaser has the capacity to evaluate the merits and risks
of its investment in the Note, the Warrant and the Securities and to
protect its own interests in connection with the transactions contemplated
in this Agreement and the Related Agreements. Further, the Purchaser is
aware of no publication of any advertisement in connection with the
transactions contemplated in the Agreement or the Related Agreements.
5.6 Accredited Investor. The Purchaser represents that it is an
--------------------
accredited investor within the meaning of Regulation D under the Securities
Act.
5.7 Legends.
-------
(a) The Warrant shall bear substantially the following legend: "THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE
COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT OR THE UNDERLYING
SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO TEXAURUS
ENERGY, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."
(b) The Warrant Shares and the Parent Warrant Shares, if not issued by
the Deposit Withdrawal Agent Commission system, shall bear a legend which
shall be in substantially the following form until such shares are covered
by an effective registration statement filed with the Securities and
Exchange Commission:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND
APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO TEXAURUS ENERGY, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."
(c) The Parent Warrant shall bear substantially the following legend:
"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT OR
THE UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO TEXHOMA ENERGY, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."
6. Covenants of the Company. The Company covenants and agrees with the
------------------------
Purchaser as follows:
6.1 Reporting Requirements. The Company will deliver, or cause to be
-----------------------
delivered, to the Purchaser each of the following, which shall be in form
and detail acceptable to the Purchaser:
(a) As soon as available, and in any event within one hundred and five
(105) days after the end of each fiscal year of the Parent and the Company,
each of the Parent's Company's audited financial statements with a report
of independent certified public accountants of recognized standing selected
by the Company and acceptable to the Purchaser (the "Accountants"), which
annual financial statements shall be without qualification and shall
include each of the Parent's and the Company's balance sheet as at the end
of such fiscal year and the related statements of each of the Parent's and
the Company's income, retained earnings and cash flows for the fiscal year
then ended, prepared on a consolidating and consolidated basis to include
the Parent and the Company, all in reasonable detail and prepared in
accordance with GAAP, together with (i) if and when available, copies of
any management letters prepared by the Accountants; and (ii) a certificate
of the Parent's President, Chief Executive Officer or Chief Financial
Officer stating that such financial statements have been prepared in
accordance with GAAP and whether or not such officer has knowledge of the
occurrence of any Event of Default (as defined in the Note) and, if so,
stating in reasonable detail the facts with respect thereto;
(b) As soon as available and in any event within fifty (50) days after
the end of each fiscal quarter of the Parent, an unaudited/internal balance
sheet and statements of income, retained earnings and cash flows of the
Parent and the Company as at the end of and for such quarter and for the
year to date period then ended, prepared on a consolidating and
consolidated basis to include the Parent and the Company, in reasonable
detail and stating in comparative form the figures for the corresponding
date and periods in the previous year, all prepared in accordance with
GAAP, subject to year-end adjustments and accompanied by a certificate of
the Parent's President, Chief Executive Officer or Chief Financial Officer,
stating (i) that such financial statements have been prepared in accordance
with GAAP, subject to year-end audit adjustments, and (ii) whether or not
such officer has knowledge of the occurrence of any Event of Default (as
defined in the Note) not theretofore reported and remedied and, if so,
stating in reasonable detail the facts with respect thereto;
(c) As soon as available and in any event within fifteen (15) days
after the end of each calendar month, an unaudited/internal balance sheet
and statements of income, retained earnings and cash flows of each of the
Parent and the Company as at the end of and for such month and for the year
to date period then ended, prepared on a consolidating and consolidated
basis to include the Parent and the Company, in reasonable detail and
stating in comparative form the figures for the corresponding date and
periods in the previous year, all prepared in accordance with GAAP, subject
to year-end adjustments and accompanied by a certificate of the Parent's
President, Chief Executive Officer or Chief Financial Officer, stating (i)
that such financial statements have been prepared in accordance with GAAP,
subject to year-end audit adjustments, and (ii) whether or not such officer
has knowledge of the occurrence of any Event of Default (as defined in the
Note) not theretofore reported and remedied and, if so, stating in
reasonable detail the facts with respect thereto; and
(d) The Company shall deliver, or cause the applicable Subsidiary of
the Company to deliver, such other information as the Purchaser shall
reasonably request.
6.2 Use of Funds. The Company shall use the proceeds of the sale of
--------------
the Note and the Warrant solely for the purpose of acquiring the oil and
gas properties described in the Sales and Purchase Agreement dated as of
March 27, 2006 between the Company and Kilrush Petroleum, Inc., the sale
and purchase documentation to be entered into on a post-closing basis
between the Company and the seller of the Little White Lake oil and gas
assets and any and all other acquisitions with the prior written approval
of the Purchaser
6.3 Access to Facilities. Each of the Company and each of its
----------------------
Subsidiaries will permit any representatives designated by the Purchaser
(or any successor of the Purchaser), upon reasonable notice and during
normal business hours, at such person's expense and accompanied by a
representative of the Company or any Subsidiary (provided that no such
prior notice shall be required to be given and no such representative of
the Company or any Subsidiary shall be required to accompany the Purchaser
in the event the Purchaser believes such access is necessary to preserve or
protect the Collateral (as defined in the Master Security Agreement) or
following the occurrence and during the continuance of an Event of Default
(as defined in the Note)), to:
(a) visit and inspect any of the properties of the Company or any of
its Subsidiaries;
(b) examine the corporate and financial records of the Company or any
of its Subsidiaries (unless such examination is not permitted by federal,
state or local law or by contract) and make copies thereof or extracts
therefrom; and
(c) discuss the affairs, finances and accounts of the Company or any
of its Subsidiaries with the directors, officers and independent
accountants of the Company or any of its Subsidiaries.
Notwithstanding the foregoing, neither the Company nor any of its
Subsidiaries will provide any material, non-public information to the
Purchaser unless the Purchaser signs a confidentiality agreement and
otherwise complies with Regulation FD, under the federal securities laws.
6.4 Taxes. Each of the Company and each of its Subsidiaries will
-----
promptly pay and discharge, or cause to be paid and discharged, when due
and payable, all taxes, assessments and governmental charges or levies
imposed upon the income, profits, property or business of the Company and
its Subsidiaries; provided, however, that any such tax, assessment, charge
or levy need not be paid currently if (i) the validity thereof shall
currently and diligently be contested in good faith by appropriate
proceedings, (ii) such tax, assessment, charge or levy shall have no effect
on the lien priority of the Purchaser in any property of the Company or any
of its Subsidiaries and (iii) if the Company and/or such Subsidiary shall
have set aside on its books adequate reserves with respect thereto in
accordance with GAAP; and provided, further, that the Company and its
Subsidiaries will pay all such taxes, assessments, charges or levies
forthwith upon the commencement of proceedings to foreclose any lien which
may have attached as security therefor.
6.5 Insurance. Each of the Company and its Subsidiaries will keep its
---------
assets which are of an insurable character insured by financially sound and
reputable insurers against loss or damage by fire, explosion and other
risks customarily insured against by companies in similar business
similarly situated as the Company and its Subsidiaries; and the Company and
its Subsidiaries will maintain, with financially sound and reputable
insurers, insurance against other hazards and risks and liability to
persons and property to the extent and in the manner which the Company
reasonably believes is customary for companies in similar business
similarly situated as the Company and its Subsidiaries and to the extent
available on commercially reasonable terms. The Company, and each of its
Subsidiaries, will jointly and severally bear the full risk of loss from
any loss of any nature whatsoever with respect to the assets pledged to the
Purchaser as security for their respective obligations hereunder and under
the Related Agreements. At the Company's and each of its Subsidiaries'
joint and several cost and expense in amounts and with carriers reasonably
acceptable to the Purchaser, each of the Company and each of its
Subsidiaries shall (i) keep all its insurable properties and properties in
which it has an interest insured against the hazards of fire, flood,
sprinkler leakage, those hazards covered by extended coverage insurance and
such other hazards, and for such amounts, as is customary in the case of
companies engaged in businesses similar to the Company's or the respective
Subsidiary's including business interruption insurance; (ii) maintain a
bond in such amounts as is customary in the case of companies engaged in
businesses similar to the Company's or the respective Subsidiary's insuring
against larceny, embezzlement or other criminal misappropriation of
insured's officers and employees who may either singly or jointly with
others at any time have access to the assets or funds of the Company or any
of its Subsidiaries either directly or through governmental authority to
draw upon such funds or to direct generally the disposition of such assets;
(iii) maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others; (iv) maintain
all such worker's compensation or similar insurance as may be required
under the laws of any state or jurisdiction in which the Company or the
respective Subsidiary is engaged in business; and (v) furnish the Purchaser
with (x) copies of all policies and evidence of the maintenance of such
policies at least thirty (30) days before any expiration date, (y)
excepting the Company's workers' compensation policy, endorsements to such
policies naming the Purchaser as "co-insured" or "additional insured" and
appropriate loss payable endorsements in form and substance satisfactory to
the Purchaser, naming the Purchaser as loss payee, and (z) evidence that as
to the Purchaser the insurance coverage shall not be impaired or
invalidated by any act or neglect of the Company or any Subsidiary and the
insurer will provide the Purchaser with at least thirty (30) days notice
prior to cancellation. The Company and each Subsidiary shall instruct the
insurance carriers that in the event of any loss thereunder, the carriers
shall make payment for such loss to the Company and/or the Subsidiary and
the Purchaser jointly. In the event that as of the date of receipt of each
loss recovery upon any such insurance, the Purchaser has not declared an
event of default with respect to this Agreement or any of the Related
Agreements, then the Company and/or such Subsidiary shall be permitted to
direct the application of such loss recovery proceeds toward investment in
property, plant and equipment that would comprise "Collateral" secured by
the Purchaser's security interest pursuant to the Master Security Agreement
or such other security agreement as shall be required by the Purchaser,
with any surplus funds to be applied toward payment of the obligations of
the Company to the Purchaser. In the event that the Purchaser has properly
declared an event of default with respect to this Agreement or any of the
Related Agreements, then all loss recoveries received by the Purchaser upon
any such insurance thereafter may be applied to the obligations of the
Company hereunder and under the Related Agreements, in such order as the
Purchaser may determine. Any surplus (following satisfaction of all Company
obligations to the Purchaser) shall be paid by the Purchaser to the Company
or applied as may be otherwise required by law. Any deficiency thereon
shall be paid by the Company or the Subsidiary, as applicable, to the
Purchaser, on demand.
6.6 Intellectual Property. Each of the Company and each of its
----------------------
Subsidiaries shall maintain in full force and effect its existence, rights
and franchises and all licenses and other rights to use Intellectual
Property owned or possessed by it and reasonably deemed to be necessary to
the conduct of its business.
6.7 Properties. Each of the Company and each of its Subsidiaries will
----------
keep its properties in good repair, working order and condition, reasonable
wear and tear excepted, and from time to time make all needful and proper
repairs, renewals, replacements, additions and improvements thereto; and
each of the Company and each of its Subsidiaries will at all times comply
with each provision of all leases to which it is a party or under which it
occupies property if the breach of such provision could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.8 Confidentiality. The Company will not, and will not permit any of
---------------
its Subsidiaries to, disclose, and will not include in any public
announcement, the name of the Purchaser, unless expressly agreed to by the
Purchaser or unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such requirement.
Notwithstanding the foregoing, the Company may disclose the Purchaser's
identity and the terms of this Agreement to its current and prospective
debt and equity financing sources.
6.9 Required Approvals. (I) For so long as twenty-five percent (25%)
-------------------
of the principal amount of the Note is outstanding, the Company, without
the prior written consent of the Purchaser, shall not, and shall not permit
any of its Subsidiaries to:
(a) (i) directly or indirectly declare or pay any dividends, other
than dividends paid to the Company or any of its wholly-owned Subsidiaries,
(ii) issue any preferred stock that is mandatorily redeemable prior to the
one year anniversary of the Maturity Date (as defined in the Note) or (iii)
redeem any of its preferred stock or other equity interests;
(b) liquidate, dissolve or effect a material reorganization (it being
understood that in no event shall the Company or any of its Subsidiaries
dissolve, liquidate or merge with any other person or entity (unless, in
the case of such a merger, the Company or, in the case of merger not
involving the Company, such Subsidiary, as applicable, is the surviving
entity);
(c) become subject to (including, without limitation, by way of
amendment to or modification of) any agreement or instrument which by its
terms would (under any circumstances) restrict the Company's or any of its
Subsidiaries, right to perform the provisions of this Agreement, any
Related Agreement or any of the agreements contemplated hereby or thereby;
(d) materially alter or change the scope of the business of the
Company and its Subsidiaries taken as a whole; or
(e) (i) create, incur, assume or suffer to exist any indebtedness
(exclusive of trade debt and debt incurred to finance the purchase of
equipment (not in excess of five percent (5%) of the fair market value of
the Company's and its Subsidiaries' assets)) whether secured or unsecured
other than (x) the Company's obligations owed to the Purchaser, (y)
indebtedness set forth on Schedule 6.9(e) attached hereto and made a part
hereof and any refinancings or replacements thereof on terms no less
favorable to the Purchaser than the indebtedness being refinanced or
replaced, and (z) any indebtedness incurred in connection with the purchase
of assets (other than equipment) in the ordinary course of business, or any
refinancings or replacements thereof on terms no less favorable to the
Purchaser than the indebtedness being refinanced or replaced, so long as
any lien relating thereto shall only encumber the fixed assets so purchased
and no other assets of the Company or any of its Subsidiaries; (ii) cancel
any indebtedness owing to it in excess of $50,000 in the aggregate during
any 12 month period; (iii) assume, guarantee, endorse or otherwise become
directly or contingently liable in connection with any obligations of any
other person or entity, except the endorsement of negotiable instruments by
the Company or any Subsidiary thereof for deposit or collection or similar
transactions in the ordinary course of business or guarantees of
indebtedness otherwise permitted to be outstanding pursuant to this clause
(e); and
(II) The Company, without the prior written consent of the Purchaser, shall
not, and shall not permit any of its Subsidiaries to, create or acquire any
Subsidiary after the date hereof unless (i) such Subsidiary is a wholly-owned
Subsidiary of the Company and (ii) such Subsidiary becomes a party to the Master
Security Agreement, the Stock Pledge Agreement and the Subsidiary Guaranty
(either by executing a counterpart thereof or an assumption or joinder agreement
in respect thereof) and, to the extent required by the Purchaser, satisfies each
condition of this Agreement and the Related Agreements as if such Subsidiary
were a Subsidiary on the Closing Date.
6.10 Opinion. On the Closing Date, the Company will deliver to the
-------
Purchaser an opinion acceptable to the Purchaser from the Company's
external legal counsel. The Company will provide, at the Company's expense,
such other legal opinions in the future as are deemed reasonably necessary
by the Purchaser (and acceptable to the Purchaser) in connection with the
exercise of the Warrant and the Parent Warrant.
6.11 Margin Stock. The Company will not permit any of the proceeds of
------------
the Note or the Warrant to be used directly or indirectly to "purchase" or
"carry" "margin stock" or to repay indebtedness incurred to "purchase" or
"carry" "margin stock" within the respective meanings of each of the quoted
terms under Regulation U of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect.
6.12 Financing Right of First Refusal.
------------------------------------
(a) The Company hereby grants to the Purchaser a right of first
refusal to provide any Additional Financing (as defined below) to be issued
by the Company and/or any of its Subsidiaries, subject to the following
terms and conditions. From and after the date hereof, prior to the
incurrence of any additional indebtedness and/or the sale or issuance of
any equity interests of the Company or any of its Subsidiaries (an
"Additional Financing"), the Company and/or any Subsidiary of the Company,
as the case may be, shall notify the Purchaser of its intention to enter
into such Additional Financing. In connection therewith, the Company and/or
the applicable Subsidiary thereof shall submit a fully executed term sheet
(a "Proposed Term Sheet") to the Purchaser setting forth the terms,
conditions and pricing of any such Additional Financing (such financing to
be negotiated on "arm's length" terms and the terms thereof to be
negotiated in good faith) proposed to be entered into by the Company and/or
such Subsidiary. The Purchaser shall have the right, but not the
obligation, to deliver its own proposed term sheet (the "Purchaser Term
Sheet") setting forth the terms and conditions upon which the Purchaser
would be willing to provide such Additional Financing to the Company and/or
such Subsidiary. The Purchaser Term Sheet shall contain terms no less
favorable to the Company and/or such Subsidiary than those outlined in
Proposed Term Sheet. The Purchaser shall deliver such Purchaser Term Sheet
within ten business days of receipt of each such Proposed Term Sheet. If
the provisions of the Purchaser Term Sheet are at least as favorable to the
Company and/or such Subsidiary, as the case may be, as the provisions of
the Proposed Term Sheet, the Company and/or such Subsidiary shall enter
into and consummate the Additional Financing transaction outlined in the
Purchaser Term Sheet.
(b) The Company will not, and will not permit its Subsidiaries to,
agree, directly or indirectly, to any restriction with any person or entity
which limits the ability of the Purchaser to consummate an Additional
Financing with the Company or any of its Subsidiaries.
6.13 Authorization and Reservation of Shares. The Company shall at all
---------------------------------------
times have authorized and reserved a sufficient number of shares of Common
Stock to provide for the exercise of the Warrant. The Parent shall at all
times have authorized and reserved a sufficient number of shares of Parent
Common Stock to provide for the exercise of the Parent Warrant.
6.14 Operator Reports. The Company shall deliver to the Purchaser,
-----------------
within two (2) business days following the Company's receipt thereof from
the operators of the Company's oil and gas properties, a copy of the
monthly lease operating reports relating to such properties.
7. Covenants of the Purchaser. The Purchaser covenants and agrees with the
--------------------------
Company as follows:
7.1 Confidentiality. The Purchaser will not disclose, and will not
---------------
include in any public announcement, the name of the Company, unless
expressly agreed to by the Company or unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of
such requirement.
7.2 Limitation on Acquisition of Common Stock of the Company.
----------------------------------------------------------------
Notwithstanding anything to the contrary contained in this Agreement, any
Related Agreement or any document, instrument or agreement entered into in
connection with any other transactions between the Purchaser and the
Company, the Purchaser may not acquire stock in the Company (including,
without limitation, pursuant to a contract to purchase, by exercising an
option or Warrant, by converting any other security or instrument, by
acquiring or exercising any other right to acquire, shares of stock or
other security convertible into shares of stock in the Company, or
otherwise, and such contracts, options, Warrants, conversion or other
rights shall not be enforceable or exercisable) to the extent such stock
acquisition would cause any interest (including any original issue
discount) payable by the Company to the Purchaser not to qualify as
"portfolio interest" within the meaning of Section 881(c)(2) of the Code,
by reason of Section 881(c)(3) of the Code, taking into account the
constructive ownership rules under Section 871(h)(3)(C) of the Code (the
"Stock Acquisition Limitation"). The Stock Acquisition Limitation shall
automatically become null and void without any notice to the Company upon
the existence of an Event of Default (as defined in the Note).
8. Covenants of the Company and the Purchaser Regarding Indemnification.
----------------------------------------------------------------------
8.1 Company Indemnification. The Company agrees to indemnify, hold
------------------------
harmless, reimburse and defend the Purchaser, each of the Purchaser's
officers, directors, agents, affiliates, control persons, and principal
shareholders, against all claims, costs, expenses, liabilities,
obligations, losses or damages (including reasonable legal fees) of any
nature, incurred by or imposed upon the Purchaser which result, arise out
of or are based upon: (i) any misrepresentation by the Company or any of
its Subsidiaries or breach of any warranty by the Company or any of its
Subsidiaries in this Agreement, any other Related Agreement or in any
exhibits or schedules attached hereto or thereto; or (ii) any breach or
default in performance by Company or any of its Subsidiaries of any
covenant or undertaking to be performed by Company or any of its
Subsidiaries hereunder, under any other Related Agreement or any other
agreement entered into by the Company and/or any of its Subsidiaries and
the Purchaser relating hereto or thereto; or (iii) (a) the violation of any
local, state or federal law, rule or regulation pertaining to environmental
regulation, contamination or cleanup (collectively, "Environmental Laws"),
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. Sec.9601 et seq. and 40
CFR Sec.302.1 et seq.), the Resource Conservation and Recovery Act of 1976
(42 U.S.C. Sec.6901 et seq.), the Federal Water Pollution Control Act (33
U.S.C. Sec.1251 et seq., and 40 CFR Sec.116.1 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. Sec.1801 et seq.) and the
regulations promulgated pursuant to said laws, all as amended and relating
to or affecting the Company and/or any Subsidiary and the Company's and/or
any Subsidiary's properties, whether or not caused by or within the control
of the Purchaser and/or (b) the presence, release or threat of release of
any Hazardous Materials (including, without limitation, asbestos,
polychlorinated biphenyls, petroleum products, flammable explosives,
radioactive materials, infectious substances or raw materials which include
hazardous constituents) on, in, under or affecting all or any portion of
any property of the Company and/or any Subsidiary or any surrounding areas,
regardless of whether or not caused by or within the control of the
Purchaser.
8.2 Purchaser's Indemnification. The Purchaser agrees to indemnify,
----------------------------
hold harmless, reimburse and defend the Company and each of the Company's
officers, directors, agents, affiliates, control persons and principal
shareholders, at all times against any claims, costs, expenses,
liabilities, obligations, losses or damages (including reasonable legal
fees) of any nature, incurred by or imposed upon the Company which result,
arise out of or are based upon: (i) any misrepresentation by the Purchaser
or breach of any warranty by the Purchaser in this Agreement or in any
exhibits or schedules attached hereto or any Related Agreement; or (ii) any
breach or default in performance by the Purchaser of any covenant or
undertaking to be performed by the Purchaser hereunder, or any other
agreement entered into by the Company and the Purchaser relating hereto.
9. Miscellaneous.
-------------
9.1 Governing Law, Jurisdiction and Waiver of Jury Trial.
-----------------------------------------------------------
(a) THIS AGREEMENT AND THE OTHER RELATED AGREEMENTS SHALL BE GOVERNED
BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
(b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
THE COMPANY, ON THE ONE HAND, AND THE PURCHASER, ON THE OTHER HAND,
PERTAINING TO THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER
RELATED AGREEMENTS; PROVIDED, THAT THE PURCHASER AND THE COMPANY
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND
FURTHER PROVIDED, THAT, NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE THE PURCHASER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON
THE COLLATERAL (AS DEFINED IN THE MASTER SECURITY AGREEMENT) OR ANY OTHER
SECURITY FOR THE OBLIGATIONS (AS DEFINED IN THE MASTER SECURITY AGREEMENT),
OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE PURCHASER.
THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY HEREBY
WAIVES ANY OBJECTION THAT IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. THE COMPANY HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED
IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN SECTION 9.9 AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS,
PROPER POSTAGE PREPAID.
(c) THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES
HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING
BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR
OTHERWISE BETWEEN THE PURCHASER AND/OR THE COMPANY ARISING OUT OF,
CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, ANY OTHER RELATED AGREEMENT
OR THE TRANSACTIONS RELATED HERETO OR THERETO.
9.2 Severability. Wherever possible each provision of this Agreement
------------
and the Related Agreements shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement or any Related Agreement shall be prohibited by or invalid or
illegal under applicable law such provision shall be ineffective to the
extent of such prohibition or invalidity or illegality, without
invalidating the remainder of such provision or the remaining provisions
thereof which shall not in any way be affected or impaired thereby.
9.3 Survival. The representations, warranties, covenants and
--------
agreements made herein shall survive any investigation made by the
Purchaser and the closing of the transactions contemplated hereby to the
extent provided therein. All statements as to factual matters contained in
any certificate or other instrument delivered by or on behalf of the
Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument. All
indemnities set forth herein shall survive the execution, delivery and
termination of this Agreement and the Note and the making and repayment of
the obligations arising hereunder, under the Note and under the other
Related Agreements.
9.4 Successors. Except as otherwise expressly provided herein, the
----------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, heirs, executors and administrators of the parties hereto. The
Purchaser shall not be permitted to assign its rights hereunder or under
any Related Agreement to a competitor of the Company unless an Event of
Default (as defined in the Note) has occurred and is continuing.
9.5 Entire Agreement; Maximum Interest. This Agreement, the Related
------------------------------------
Agreements, the exhibits and schedules hereto and thereto and the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by
any representations, warranties, covenants and agreements except as
specifically set forth herein and therein. Nothing contained in this
Agreement, any Related Agreement or in any document referred to herein or
delivered in connection herewith shall be deemed to establish or require
the payment of a rate of interest or other charges in excess of the maximum
rate permitted by applicable law. In the event that the rate of interest or
dividends required to be paid or other charges hereunder exceed the maximum
rate permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Company to the Purchaser and thus
refunded to the Company.
9.6 Amendment and Waiver.
----------------------
(a) This Agreement may be amended or modified only upon the written
consent of the Company and the Purchaser.
(b) The obligations of the Company and the rights of the Purchaser
under this Agreement may be waived only with the written consent of the
Purchaser.
(c) The obligations of the Purchaser and the rights of the Company
under this Agreement may be waived only with the written consent of the
Company.
9.7 Delays or Omissions. It is agreed that no delay or omission to
---------------------
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the
Related Agreements, shall impair any such right, power or remedy, nor shall
it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. All remedies, either under
this Agreement or the Related Agreements, by law or otherwise afforded to
any party, shall be cumulative and not alternative.
9.8 Notices. All notices required or permitted hereunder shall be in
-------
writing and shall be deemed effectively given:
(a) upon personal delivery to the party to be notified;
(b) when sent by confirmed facsimile if sent during normal business
hours of the recipient, if not, then on the next business day;
(c) three (3) business days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or
(d) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of
receipt.
All communications shall be sent as follows:
If to the Company, to: Texaurus Energy, Inc.
0000 Xxxxxxxxxxxx, #000
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Facsimile: 604-683-2883
with a copy to:
Xxxxx X. Xxxx, Esq.
Attorney at Law
0000 Xxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxx, Esq.
Facsimile: 000-000-0000
If to the Purchaser, to: Laurus Master Fund, Ltd.
c/o M&C Corporate Services Limited
X.X. Xxx 000 XX
Xxxxxx Xxxxx
Xxxxxx Xxxx
South Church Street
Grand Cayman, Cayman Islands
Facsimile: 000-000-0000
with a copy to:
Xxxx X. Xxxxxx, Esq.
000 Xxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
and to:
Xxxxx X. Xxxxxxxx, Esq.
Loeb & Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
or at such other address as the Company or the Purchaser may designate by
written notice to the other parties hereto given in accordance herewith.
9.9 Attorneys' Fees. In the event that any suit or action is
----------------
instituted to enforce any provision in this Agreement or any Related
Agreement, the prevailing party in such dispute shall be entitled to
recover from the losing party all fees, costs and expenses of enforcing any
right of such prevailing party under or with respect to this Agreement
and/or such Related Agreement, including, without limitation, such
reasonable fees and expenses of attorneys and accountants, which shall
include, without limitation, all fees, costs and expenses of appeals.
9.10 Titles and Subtitles. The titles of the sections and subsections
--------------------
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
9.11 Facsimile Signatures; Counterparts. This Agreement may be
------------------------------------
executed by facsimile signatures and in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
agreement.
9.12 Broker's Fees. Except as set forth on Schedule 9.12 hereof, each
-------------
party hereto represents and warrants that no agent, broker, investment
banker, person or firm acting on behalf of or under the authority of such
party hereto is or will be entitled to any broker's or finder's fee or any
other commission directly or indirectly in connection with the transactions
contemplated herein. Each party hereto further agrees to indemnify each
other party for any claims, losses or expenses incurred by such other party
as a result of the representation in this Section 9.12 being untrue.
9.13 Construction. Each party acknowledges that its legal counsel
------------
participated in the preparation of this Agreement and the Related
Agreements and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be
applied in the interpretation of this Agreement or any Related Agreement to
favor any party against the other.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have executed the SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASER:
TEXAURUS ENERGY, INC. LAURUS MASTER FUND, LTD.
By:/s/ Xxxxx Xxxxxx By: /s/ Xxxxxx Grin
---------------------- -------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxx Grin
-------------------- -----------------------
Title: Director Title: Director
------------------- ----------------------
