Glen Rose Petroleum Corporation
One Energy Square
4925 Greenville Avenue
Suite 200
Dallas, TX 75206

8.5% SENIOR SECURED CONVERTIBLE DEBENTURE  AND WARRANT PURCHASE AGREEMENT

As of July 2, 2009
 
TO:  Blackwood Ventures, LLC (“Purchaser”)

Glen Rose Petroleum Corporation, a Delaware corporation (the “Company”), hereby
agrees with Purchaser as follows:
 
ARTICLE I
PURCHASE AND SALE OF
DEBENTURE
 
Section 1.01     The Debenture.  The Company has authorized the issuance and
sale to the Purchaser of a minimum of $500,000 and a maximum of $1,500,000 8.5%
Senior Secured Convertible Debenture of the Company (the “Debenture”).  The
Debenture issued to the Purchaser pursuant to this Agreement may be referred to
in this Agreement as the “Debenture.”  The Debenture shall carry the following
legend:
 
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
 
Debenture Purchase Agreement Between
 
Glen Rose Petroleum Corporation and
 
Blackwood Ventures LLC
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Said Debenture shall be in the form attached as Exhibit A to this Purchase
Agreement.
 
Section 1.02     The Warrants.  The Purchaser shall receive cashless warrants to
subscribe for new shares of Common Stock of the Company as to one share of
Common Stock at $0.33 expiring December 31, 2010 in the form attached as Exhibit
C and one share of common stock at $0.67 expiring June 30, 2012 for every 4
shares of Common Stock converted in the form attached as Exhibit D pursuant to
the conversion terms of the Debenture, provided that any such shares of Common
Stock issued pursuant to the execution of said Warrants may not be sold within
12 months of the date of this Agreement unless sold at a price of $1.50 per
share or better as adjusted for stock splits, dividends, mergers, acquisitions,
and other changes to the Company’s common stock.  Said Warrant shall be in the
form attached to Exhibit B to this Purchase Agreement.
 
Section 1.03     Purchase and Sale of Debenture and Warrants at Initial
Closing.  The Company hereby agrees to issue and sell to Purchaser, and subject
to and in reliance upon the representations, warranties, covenants, terms and
conditions of this Agreement, Purchaser agrees to purchase from the Company a
Debenture in the minimum amount of $500,000 and a maximum amount of $1,000,000,
with an initial payment of $400,000 contemporaneous with the execution of this
Agreement.  Such purchase and sale shall take place at the closing (the
“Closing”) to be held at the offices of the Company at One Energy Square, 4925
Greenville Avenue, Suite 200, Dallas, Texas 75206 on June 30, 2009 at 1:00 p.m.,
or at such other time and place as the Company and Purchaser mutually agree
upon, orally or in writing.  At the Closing, the Company shall deliver to
Purchaser the duly-executed Debenture being purchased by such Purchaser in the
form attached as Exhibit A to this Agreement and Security Agreement for such
Debenture in the form attached as Exhibit B to this Agreement and a signed and
properly authenticated 8.5% Senior Secured Convertible Debenture and Warrant
Purchase Agreement.
 
ARTICLE II
CONDITIONS TO PURCHASERS’ OBLIGATIONS
 
The obligations of Purchaser to purchase Debenture at the Closing are subject to
the fulfillment, at or prior to such Closing, of each of the following
conditions, unless otherwise waived:

Section 2.01     Representations and Warranties.  Each of the representations
and warranties of the Company set forth in Article III hereof shall be true and
correct on the date of the Closing.
 
Section 2.02     Performance.  The Company shall have performed and complied
with all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by the Company on
or before such Closing.
 
Debenture Purchase Agreement Between
 
Glen Rose Petroleum Corporation and
 
Blackwood Ventures LLC
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Section 2.03     Certificate of Incorporation.  The Company shall have filed the
Certificate of Incorporation with the Secretary of State of Delaware on or prior
to the Closing, which shall continue to be in full force and effect as of the
Closing.
 
Section 2.04     Qualifications.  All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Debenture pursuant to this Agreement shall be obtained and effective as of
such Closing and applicable state securities laws, which filings have been made
or will be made by the Company in a timely manner.
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company represents and warrants to Purchaser as follows, each of which
representation and warranty is true and correct as of the date hereof and will
be true and correct as of the Closing:

Section 3.01     Organization, Qualifications and Corporate Power.  The Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of Delaware.  The Company has the corporate power and authority to own
and hold its properties and to carry on its business as now conducted, to
execute, deliver and perform this Agreement and to issue, sell and deliver the
Debenture of the Company (the “Debenture”).
 
Section 3.02     Authorization of Agreements, Etc.  The execution and delivery
by the Company of this Agreement, the performance by the Company of its
obligations hereunder and the issuance, sale and delivery of the Debenture have
been duly authorized by all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of government, the
Certificate of Incorporation, as amended, or the Bylaws of the Company, as
amended, or will not result in a violation of any provision of any indenture,
agreement or other instrument to which the Company, or any of its properties or
assets is bound, or conflict with, result in a material breach of or constitute
(with due notice or lapse of time or both) a default under any such indenture,
agreement or other instrument, or result in the creation or imposition of any
lien, charge, restriction, encumbrance, or, to the Company’s knowledge, claim of
any nature whatsoever upon any of the properties or assets of the Company, the
result of any of which would have a material adverse effect on the business or
assets of the Company.
 
Section 3.03     The issuance, sale or delivery of the Debenture are not subject
to any preemptive right of stockholders of the Company that has not been waived
or to any right of first refusal or other right in favor of any person that has
not been waived.
 
Section 3.04     Validity.  This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.  The
Debenture, when issued, sold and delivered in accordance with the terms and for
the consideration set forth in this Agreement, will be validly issued, fully
paid and nonassessable and free of restrictions on transfer other than
applicable state and federal securities laws and liens or encumbrances created
by or imposed by Purchaser.  The Debenture will be issued in compliance with all
applicable federal and state securities laws.
 
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Glen Rose Petroleum Corporation and
 
Blackwood Ventures LLC
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Section 3.05     Governmental Approvals.  No registration or filing with, or
consent or approval of or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution, delivery and performance by the Company of this Agreement or the
issuance, sale and delivery of the Debenture and applicable state securities
laws, which filings have been made or will be made by the Company in a timely
manner.
 
Section 3.06    Capitalization; Status of Capital Stock.  Immediately prior to
the Closing, the Company has authorized and unissued Debenture in excess of the
number of shares to be delivered pursuant to this agreement.  There are no
restrictions on the transfer of shares of capital stock of the Company other
than those imposed by relevant federal and state securities laws and as
otherwise contemplated by this Agreement.  The Company is not a party to, and to
the best of the Company’s knowledge, there are, no agreements, understandings,
trusts or other collaborative arrangements or understandings concerning the
voting of the capital stock of the Company to be issued to Purchaser.
 
Section 3.07     No Insolvency.  No insolvency proceeding of any character,
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
the Company or any of its assets or properties, is pending or, to the knowledge
of the Company, threatened.  The Company has not taken any action in
contemplation of, or that would constitute the basis for, the institution of any
such insolvency proceedings.
 
Section 3.08     Disclosure.  Neither this Agreement nor any other agreement,
document, certificate or written statement furnished to the Purchaser by or on
behalf of the Company in connection with the transactions contemplated hereby
(which has not subsequently been supplemented) contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF  PURCHASER
 
Purchaser represents and warrants to the Company that: (a) Purchaser has full
power and authority to enter into and perform this Agreement in accordance with
its terms; (b) Purchaser has made an investigation of the Company and its
business as it deemed necessary and has had an opportunity to discuss and review
the Company’s business, management and financial affairs with the Company’s
management as it deemed necessary; (c) Purchaser is the record owner of a
majority of the Company’s common stock and is familiar with Company operations
and financial condition; (d) the Debenture and Warrants and any Common Shares to
be issued upon conversion of said Debenture or Warrant is being purchased by
Purchaser are being or will be acquired for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof; (e) it understands that (1) the Debenture, Warrant, and
Common Shares to be issued upon conversions of the Debenture and Warrant have
not been and will not be registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant and the regulations promulgated thereunder, (2) the
Debenture must be held indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such registration, (3) the
Debenture will bear legends to such effect and (iv) the Company will make a
notation on its transfer books to such effect.

Debenture Purchase Agreement Between
 
Glen Rose Petroleum Corporation and
 
Blackwood Ventures LLC
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ARTICLE V
COVENANTS OF THE COMPANY AND PURCHASER
 
The Company hereby covenants and agrees with Purchaser, except as otherwise
specifically provided in this Article V, so long as such Purchaser continues to
own Debenture or Debenture issued upon conversion of Debenture, as follows:
 
Section 5.01     Piggyback Registration Rights.  If the Company files a
registration statement with the U.S. Securities and Exchange Commission, the
Company shall provide 10 days notice to Purchaser of said registration statement
and include Purchaser’s shares acquired under this Agreement in said
Registration Statement at Purchaser’s option.  Purchaser acknowledges that plans
to file a registration statement may be material non-public information and
hereby covenants not to trade in company shares between the time of receipt of
notice of the planned registration statement filing and the actual filing of the
registration statement.  Purchaser’s registration rights shall not apply to Form
S-8 registration statements.
 
Section 5.02     Termination of Covenants.  The covenants of the Company set
forth in Sections 5.01 shall terminate in all respects upon the removal of the
restrictive legend referenced in Section 1.01 herein from Purchaser’s share
certificate or certificates.
 
Section 5.03     Right of First Refusal.  Should the Company determine to seek
further equity financing or other form of financing convertible into equity, the
Company shall offer Purchaser the opportunity to provide such financing and
reasonable opportunity not to exceed ten days to meet or better any competing
offers involving equity financing of financing instruments convertible into
equity.  This provision shall not apply to the Company seeking financing from a
bank as defined by Section 3(a)(6) of the Securities Exchange Act of 1934 or  to
any firmly-underwritten equity securities offering registered under the
Securities Act of 1933 or any State Securities Act.
 
Section 5.04     Expense Reimbursement. The Company shall pay Purchaser’s
incurred and payable expenses incurred in relation to due diligence and
investment documentation relating to this Agreement, including legal
expenses.  In order to claim such expenses, Purchaser must provide the Company
with documentation that it has paid the designated expense or incurred the
designated expense.  If the Purchaser has incurred but not paid the designated
expense, Purchaser shall authorize the Company to directly pay the payee for
that expense without paying Purchaser and the Company shall receive credit under
this section of this Agreement for any such payments.  All expenses to be
reimbursed under this section must be submitted for payment within 90 days of
the date of this Agreement.
 
Debenture Purchase Agreement Between
 
Glen Rose Petroleum Corporation and
 
Blackwood Ventures LLC
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Section 5.05     Publicity.  Purchaser and the Company acknowledge that upon the
execution of this Agreement, the Company may be required to file a Form 8-K with
the Securities and Exchange Commission under Items 1.01 and 3.02 of Form 8-K
relating to the entry into a material definitive agreement and the unregistered
sale of equity securities and that said Form 8-K may contain a copy of this
Agreement as an exhibit.  The Company’s decision to file a Form 8-K and attach a
copy of this Agreement, or to issue a press release about this agreement, shall
be within the Company’s sole discretion.
 
ARTICLE VI
MISCELLANEOUS
 
Section 6.01     No Waiver; Cumulative Remedies.  No failure or delay on the
part of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy
hereunder.  The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
 
Section 6.02     No Brokers.  No non-party to this Agreement has acted directly
or indirectly as a broker, finder or financial advisor for any Party in
connection with the negotiations relating to the transactions contemplated by
this Agreement, and no person is entitled to any fee or commission or like
payment in respect thereof based in any way on any agreement, arrangement or
understanding made by or on behalf of any Party, except as stated herein.
 
Section 6.03     Amendments, Waivers and Consents.   Notwithstanding any other
provisions of this Agreement to the contrary, changes in or additions to this
Agreement may be made, and compliance with any provision herein may be omitted
or waived, if the Company obtains written consent from Purchaser.
 
Section 6.04     Addresses for Notices, etc.  All notices, requests, demands and
other communications provided for hereunder shall be in writing and mailed, sent
via facsimile or hand-delivered:
 
If to Purchaser:

Blackwood Ventures LLC
400 Rella Boulevard
Montebello, NY 10901
Attention: Walter Reissman

Debenture Purchase Agreement Between
 
Glen Rose Petroleum Corporation and
 
Blackwood Ventures LLC
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If to the Company:

Glen Rose Petroleum Corporation
One Energy Square
4925 Greenville Avenue
Suite 200
Dallas, TX 75206
Attn:  Joseph F. “Chip” Langston

or at such other address as shall be designated by Purchaser or the Company in a
written notice to the other parties complying as to delivery with the terms of
this Section 6.03.

All such notices, requests, demands and other communications shall be effective:
(i) when mailed (registered mail, return receipt requested, postage prepaid),
when deposited in the mail, (ii) when sent via facsimile, when acknowledgment of
complete transmission is received, and (iii) when hand-delivered, on such date
of hand-delivery, unless otherwise provided herein.

Section 6.05      Binding Effect; Assignment.  This Agreement shall be binding
upon and inure to the benefit of the Company and Purchaser and their respective
heirs, successors and assigns.
 
Section 6.06     Survival of Representations and Warranties.  All
representations and warranties made in this Agreement or any other instrument or
document delivered in connection herewith shall survive the execution and
delivery hereof or thereof.
 
Section 6.07     Prior Agreements.  This Agreement constitutes the entire
agreement between the parties hereto and supersedes any other prior
understandings or agreements among them concerning the subject matter hereof.
 
Section 6.08      Severability.  The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
 
Section 6.09      Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the Delaware.
 
Section 6.10     Counterparts.  This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
 
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Glen Rose Petroleum Corporation and
 
Blackwood Ventures LLC
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Section 6.11     Other Interpretive Matters.  Unless a clear contrary intention
appears:  (a) the singular number includes the plural number and vice versa;
(b) reference to any gender includes each other gender, the masculine, the
feminine and neuter; (c) reference to any agreement (including this Agreement),
document or instrument means such agreement, document or instrument as amended
or modified and in effect from time to time in accordance with the terms thereof
and, if applicable, the terms hereof (and without giving effect to any amendment
or modification that would not be permitted in accordance with the terms
hereof); (d) reference to any applicable law means such applicable law as
amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder and
reference to any particular provision of any applicable law shall be interpreted
to include any revision of or successor to that provision regardless of how
numbered or classified; (e) “hereunder,” “hereof,” “hereto” and words of similar
import shall be deemed references to this Agreement as a whole and not to any
particular section or other provision hereof; and (f) “including” (and with
correlative meaning “include”) means including without limiting the generality
of any description preceding such term; (g) “or”, “either” and “any” are not
exclusive.
 
Section 6.12     Construction.  The parties hereto have participated in the
negotiation and drafting of this Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted by the parties hereto, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
 
Section 6.13     Arbitration.
 
 
(a)
Upon the request of any Party, any dispute, controversy or claim arising out of
or in connection with, or relating to, employee stock options held by Purchaser,
this Agreement or any breach or alleged breach hereof shall be submitted to, and
settled by, binding arbitration in Dallas or Tarrant Counties, Texas
administered by the American Arbitration Association (“AAA”) in accordance with
the Commercial Arbitration Rules and the Optional Rules for Emergency Measures
of Protection of AAA. 

 
 
(b)
The disputing Parties may also agree to arbitration at any time or at any other
place or under any other form of arbitration mutually acceptable to the Parties
so involved.  The AAA arbitration award shall be final and binding, and a court
having jurisdiction may enter judgment upon the award rendered by the
arbitrator(s).

 
 
(c)
The Parties hereby irrevocably consent and submit to the jurisdiction of any
federal or state court in the Dallas County, Texas, for this purpose and waive
any objections to such judgment based on venue and/or forum non conveniens.  Any
provisional remedy which would be available from a court of law shall be
available from the arbitrator(s) to the Parties to this Agreement pending
arbitration.  Three neutral arbitrators chosen by AAA shall conduct the
arbitration.

 
 
(d)
The Parties agree to request that AAA provide arbitrator(s) with experience with
oil and gas exploration and production business such as Glen Rose Petroleum
Corporation

 
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Glen Rose Petroleum Corporation and
 
Blackwood Ventures LLC
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(e)
The Parties shall equally bear the arbitration expenses, provided that each
Party shall pay for and bear the cost of its own experts, evidence, and
counsel’s fees.

 
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Glen Rose Petroleum Corporation and
 
Blackwood Ventures LLC
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day,
month and year first above written.

Glen Rose Petroleum Corporation
   
By:
  
Name:  Joseph F. “Chip” Langston
Title:  President
   
PURCHASER:
   
Blackwood Ventures LLC
   
By:
  
Name: Walter Reissman

 
Debenture Purchase Agreement Between
 
Glen Rose Petroleum Corporation and
 
Blackwood Ventures LLC
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EXHIBIT A

FORM OF DEBENTURE

 
 

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NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
 
Original Issue Date: July 2, 2009
Original Conversion Price: $0.09 per share of Common Stock
 
$[500,000-1,500,000]
 
8.5% SENIOR SECURED CONVERTIBLE DEBENTURE
DUE JUNE 30, 2011

THIS SENIOR SECURED DEBENTURE is one of a series of duly authorized and validly
issued 8.5% Senior Secured Convertible Debentures of Glen Rose Petroleum
Corporation, a Delaware corporation, (the “Company”), having its principal place
of business at Suite 200, One Energy Square, 4925 Greenville Avenue, Dallas,
Texas 75206 designated as its 8.5% Senior Secured Convertible Debenture due June
30, 2011 (this debenture, the “Debenture” and, collectively with the other
debentures of such series, the “Debentures” shall total the principal sum of
[$500,000-$1,500,000] pursuant to which the Company shall have received a total
of [$500,000-$1,500,000]) at a price of $1.00 for each $1.00 of Debenture
principal.

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
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FOR VALUE RECEIVED, the Company promises to pay to Blackwood Ventures LLC or its
registered assigns (the “Holder”), or shall have paid pursuant to the terms
hereunder, the principal sum of a minimum of Five Hundred Thousand Dollars and a
maximum of One Million Five Hundred Thousand Hundred Thousand Dollars
($500,000-$1,500,000) on June 30, 2011 (the “Maturity Date”) or such earlier
date as this Debenture is required to be repaid as provided hereunder, and to
pay interest to the Holder on the aggregate unconverted and then outstanding
principal amount of this Debenture in accordance with the provisions
hereof.  This Debenture is subject to the following additional provisions:

Section 1.         Definitions.  For the purposes hereof, in addition to the
terms defined elsewhere in this Debenture, (a) capitalized terms not otherwise
defined herein shall have the meanings set forth in the Purchase Agreement and
(b) the following terms shall have the following meanings:
 
“Alternate Consideration” shall have the meaning set forth in Section 5(e).

“Bankruptcy Event” means any of the following events: (a) the Company or any
Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation
S-X) thereof commences a case or other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction relating to the
Company or any Significant Subsidiary thereof, (b) there is commenced against
the Company or any Significant Subsidiary thereof any such case or proceeding
that is not dismissed within 60 days after commencement, (c) the Company or any
Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order
of relief or other order approving any such case or proceeding is entered, (d)
the Company or any Significant Subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its property that is not
discharged or stayed within 60 calendar days after such appointment, (e) the
Company or any Significant Subsidiary thereof makes a general assignment for the
benefit of creditors, (f) the Company or any Significant Subsidiary thereof
calls a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts or (g) the Company or any Significant
Subsidiary thereof, by any act or failure to act, expressly indicates its
consent to, approval of or acquiescence in any of the foregoing or takes any
corporate or other action for the purpose of effecting any of the foregoing.

“Base Conversion Price” shall have the meaning set forth in Section 4(b).

“Beneficial Ownership Limitation” shall have the meaning set forth in Section
4I.

“Business Day” means any day except any Saturday, any Sunday, any day which
shall be a federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or required by law
or other governmental action to close.

“Buy-In” shall have the meaning set forth in Section 4(d)(v).

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
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“Change of Control Transaction” means the occurrence after the date hereof of
any of (a) an acquisition after the date hereof by an individual or legal entity
or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 33% of the
voting securities of the Company (other than by means of conversion of the
Debentures), (b) the Company merges into or consolidates with any other Person,
or any Person merges into or consolidates with the Company and, after giving
effect to such transaction, the stockholders of the Company immediately prior to
such transaction own less than 66% of the aggregate voting power of the Company
or the successor entity of such transaction, or (c) the Company sells or
transfers all or substantially all of its assets to another Person and the
stockholders of the Company immediately prior to such transaction own less than
66% of the aggregate voting power of the acquiring entity immediately after the
transaction, (d) a replacement at one time or within a three year period of more
than one-half of the members of the Board of Directors which is not approved by
a majority of those individuals who are members of the Board of Directors on the
date hereof (or by those individuals who are serving as members of the Board of
Directors on any date whose nomination to the Board of Directors was approved by
a majority of the members of the Board of Directors who are members on the date
hereof), or (e) the execution by the Company of an agreement to which the
Company  is a party or by which it is bound, providing for any of the events set
forth in clauses (a) through (d) above.  Said Change of Control Transaction does
not include any transaction as referenced or described in the Purchase
Agreement.

“Conversion” shall have the meaning ascribed to such term in Section 4.

“Conversion Date” shall have the meaning set forth in Section 4(a).

“Conversion Price” shall have the meaning set forth in Section 4(c).

“Conversion Schedule” means the Conversion Schedule in the form of Schedule 1
attached hereto.

“Conversion Shares” means, collectively, the shares of Common Stock and Warrants
issuable upon conversion of this Debenture in accordance with the terms hereof.

“Debenture Register” shall have the meaning set forth in Section 2(b).

“Dilutive Issuance” shall have the meaning set forth in Section 5(b).

“Dilutive Issuance Notice” shall have the meaning set forth in Section 5(b).

“Event of Default” shall have the meaning set forth in Section 7(a).

“Fundamental Transaction” shall have the meaning set forth in Section 5(e).

“Interest Payment Date” shall have the meaning set forth in Section 2(a).

“Late Fees” shall have the meaning set forth in Section 2I.
 
“Notice of Conversion” shall have the meaning set forth in Section 4(a).

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 3 or 23

 
 
 

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“Original Issue Date” means the date of the first issuance of the Debentures,
regardless of any transfers of any Debenture and regardless of the number of
instruments which may be issued to evidence such Debentures.

“Permitted Indebtedness” means (a) the indebtedness evidenced by the
Debentures;  (b) up to $1,000,000 of non-equity linked indebtedness under
accounts receivable or inventory lines of credit with a federal or state
regulated bank or nationally recognized commercial lending institution whose
primary business is not investing in securities; and (c) indebtedness related to
services and goods provided by trade creditors including oilfield services and
materials providers, auditors, accountants, and (d) indebtedness previously
outstanding as of the date of this Debenture.

“Permitted Lien” means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges or levies not
yet due or Liens for taxes, assessments and other governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Company) have been
established in accordance with GAAP; (b) Liens imposed by law which were
incurred in the ordinary course of the Company’s business, such as carriers’,
warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of the Company’s business, and
which (x) do not individually or in the aggregate materially detract from the
value of such property or assets or materially impair the use thereof in the
operation of the business of the Company and its consolidated Subsidiaries or
(y) are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing for the foreseeable future the
forfeiture or sale of the property or asset subject to such Lien; (c) Liens
incurred in connection with Permitted Indebtedness; and liens previously filed
against Company property or relating to Company indebtedness existing on or
before the date of this Debenture.
 
“Purchase Agreement” means the Securities Purchase Agreement, dated as of July
2, 2009 among the Company and BVL, as amended, modified or supplemented from
time to time in accordance with its terms and including any disclosure schedules
provided in connection with the Securities Purchase Agreement.

 “Registration Statement” means a registration statement that registers the
resale of Conversion Shares of the Holder and names the Holder as a “selling
stockholder” therein.

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

“Share Delivery Date” shall have the meaning set forth in Section 4(d)(ii).

“Subsidiary” shall have the meaning set forth in the Purchase Agreement.

“Texas Courts” shall have the meaning set forth in Section 8(d).

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 4 or 23

 
 
 

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“Trading Day” means a day on which the New York Stock Exchange is open for
business.

“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American
Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“Transaction Documents” shall have the meaning set forth in the Purchase
Agreement.

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted for trading as reported by Bloomberg L.P.
(based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New
York City time)); (b)  if the OTC Bulletin Board is not a Trading Market, the
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
quoted for trading on the OTC Bulletin Board and if prices for the Common Stock
are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported; or (d) in
all other cases, the fair market value of a share of Common Stock as determined
by an independent appraiser selected in good faith by the Holder and reasonably
acceptable to the Company.

Section 2.             Interest.

a)           Payment of Interest. The Company shall pay interest to the Holder
on the aggregate unconverted and then outstanding principal amount of this
Debenture at the rate of 8.5% per annum, payable quarterly on March 1, June 1,
September 1 and December 1, beginning on the first such date after the Original
Issue Date, on each Conversion Date (as to that principal amount then being
converted) and on the Maturity Date (each such date, an “Interest Payment Date”)
(if any Interest Payment Date is not a Business Day, then the applicable payment
shall be due on the next succeeding Business Day), in cash or shares of the
Company’s common stock (“Interest Shares”), at the option of the Company. The
number of Interest Shares to be issued will be determined by dividing the
interest payment by the VWAP for the 20 consecutive Trading Days prior to the
Interest Payment Date, provided that under no circumstances shall the number of
Interest shares be determined by using a denominator less than the par value of
the Company’s common stock.  Interest Shares shall be delivered to the Purchaser
within five business days of the Interest Payment Date.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 5 or 23

 
 
 

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b)           Interest Calculations. Interest shall be calculated on the basis of
a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue
daily commencing on the Original Issue Date until payment in full of the
outstanding principal, together with all accrued and unpaid interest, liquidated
damages and other amounts which may become due hereunder, has been
made.  Interest shall cease to accrue with respect to any principal amount
converted, provided that, the Company actually delivers the Conversion Shares
within the time period required by Section 4(e)(ii) herein.  Interest hereunder
will be paid to the Person in whose name this Debenture is registered on the
records of the Company regarding registration and transfers of this Debenture
(the “Debenture Register”).

c)           Late Fee.  All overdue accrued and unpaid interest to be paid
hereunder shall entail a late fee at an interest rate equal to the lesser of 18%
per annum or the maximum rate permitted by applicable law (the “Late Fees”)
which shall accrue daily from the date such interest is due hereunder through
and including the date of actual payment in full.

d)           Prepayment.  The Company may not prepay any portion of the
principal amount of this Debenture without the prior written consent of the
Holder, which consent may be withheld in the Holder’s absolute discretion.

Section 3.             Registration of Transfers and Exchanges.

a)           Different Denominations. This Debenture is exchangeable for an
equal aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holder surrendering the same.  No service
charge will be payable for such registration of transfer or exchange.

b)           Investment Representations. This Debenture has been issued subject
to certain investment representations of the original Holder set forth in the
Purchase Agreement and may be transferred or exchanged only in compliance with
the Purchase Agreement and applicable federal and state securities laws and
regulations.

c)           Reliance on Debenture Register. Prior to due presentment for
transfer to the Company of this Debenture, the Company and any agent of the
Company may treat the Person in whose name this Debenture is duly registered on
the Debenture Register as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes, whether or not this Debenture is
overdue, and neither the Company nor any such agent shall be affected by notice
to the contrary.

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 6 or 23

 
 
 

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Section 4.             Conversion.

a)           Optional Conversion. At any time after the Original Issue Date
until this Debenture is no longer outstanding, this Debenture shall be
convertible, in whole or in part, into shares of Common Stock and Warrants at
the option of the Holder, at any time and from time to time (subject to the
conversion limitations set forth in Section 4I hereof).  The Holder shall effect
conversions by delivering to the Company a Notice of Conversion, the form of
which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying
therein the principal amount of this Debenture to be converted and the date on
which such conversion shall be effected (such date, the “Conversion Date”).  If
no Conversion Date is specified in a Notice of Conversion, the Conversion Date
shall be the date that such Notice of Conversion is deemed delivered
hereunder.  To effect conversions hereunder, the Holder shall not be required to
physically surrender this Debenture to the Company unless the entire principal
amount of this Debenture, plus all accrued and unpaid interest thereon, has been
so converted. Conversions hereunder shall have the effect of lowering the
outstanding principal amount of this Debenture in an amount equal to the
applicable conversion.  The Holder and the Company shall maintain records
showing the principal amount(s) converted and the date of such
conversion(s).  The Company may deliver an objection to any Notice of Conversion
within one Business Day of delivery of such Notice of Conversion.  In the event
of any dispute or discrepancy, the records of the Holder shall be controlling
and determinative in the absence of manifest error. The Holder, and any assignee
by acceptance of this Debenture, acknowledge and agree that, by reason of the
provisions of this paragraph and those provisions contained in Section 2(d),
following conversion of a portion of this Debenture, the unpaid and unconverted
principal amount of this Debenture may be less than the amount stated on the
face hereof.

b)           Optional Conversion – Company.  At any time after the Original
Issue Date until this Debenture is no longer outstanding, this Debenture shall
be convertible, in whole or in part, into shares of Common Stock at the option
of the Company, at any time the Company’s common stock closing bid price as
defined by NASDAQ Rule 5005(a)(3)  for the 20 consecutive Trading Days preceding
said Optional Conversion equals $1.00 or above (subject to the conversion
limitations set forth in Section 4(d) hereof).  The Holder shall effect
conversions by delivering to the Company a Notice of Conversion, the form of
which is attached hereto as Annex B (each, a “Company Notice of Conversion”),
specifying therein the principal amount of this Debenture to be converted and
the date on which such conversion shall be effected (such date, the “Company
Conversion Date”).  If no Company Conversion Date is specified in a Company
Notice of Conversion, the Company Conversion Date shall be the next business day
after the date that such Company Notice of Conversion is deemed delivered
hereunder.  To effect conversions hereunder, the Holder shall not be required to
physically surrender this Debenture to the Company unless the entire principal
amount of this Debenture, plus all accrued and unpaid interest thereon, has been
so converted. Conversions hereunder shall have the effect of lowering the
outstanding principal amount of this Debenture in an amount equal to the
applicable conversion.  The Holder and the Company shall maintain records
showing the principal amount(s) converted and the date of such
conversion(s).  The Holder may deliver an objection to any Company Notice of
Conversion within one Business Day of delivery of such Company Notice of
Conversion.  In the event of any dispute or discrepancy, the records of the
Holder shall be controlling and determinative in the absence of manifest error.
The Holder shall comply with the prospectus delivery requirements under the
applicable securities laws in connection with any transfer of the Common Stock
issued pursuant to such Conversion. The Holder, and any assignee by acceptance
of this Debenture, acknowledge and agree that, by reason of the provisions of
this paragraph and those provisions contained in Section 2(d), following
conversion of a portion of this Debenture, the unpaid and unconverted principal
amount of this Debenture may be less than the amount stated on the face hereof.

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 7 or 23

 
 
 

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c)           Conversion Price.  The conversion price in effect on any Conversion
Date shall be equal to $0.09 per share of Common Stock for any principal amount
of the Debenture for which payment has been received by July 31, 2009.  For
purchase amounts of the Debenture paid after July 31, 2009, the conversion price
in effect on any Conversion Date shall be the average “Closing Bid Price” for
the Company’s Common Stock price for the previous 20 consecutive trading
days.  For each four shares issued upon said Conversion, the Company shall also
issue Debenture Holder a warrant to subscribe for one new share of Common Stock
at $0.33 for a period of 18 months from the date of this Debenture, and a
further share of Common Stock at $0.67 for a period of 36 months from the date
of this Debenture for every four shares of Common Stock created by the
conversion of this Debenture subject to adjustment herein (the “Conversion
Price”).  Said “Closing Bid Price” shall be determined by reference to  (a) if
the Common Stock is then listed or quoted on a Trading Market, the closing bid
price of the Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted for trading as
reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City
time) to 4:02 p.m. (New York City time)); (b)  if the OTC Bulletin Board is not
a Trading Market, the closing bid price of the Common Stock for such date (or
the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock
is not then quoted for trading on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “Pink Sheets” published by Pink Sheets,
LLC (or a similar organization or agency succeeding to its functions of
reporting prices).

d)           Conversion Limitations.

i.           Aggregate Issuances. Notwithstanding anything contained herein to
the contrary, the Company shall not effect any conversion of this Debenture  or
any of the Debentures or Warrants in an amount that would be convertible into
such number of Conversion Shares and Warrant Shares which would exceed 19.99% of
the outstanding shares of Common Stock of the Company on the date of issuance of
this Debenture and the Warrants.  The Conversion Shares limitation described in
this Section 4I(ii) shall automatically become null and void upon the Company
obtaining Stockholder Approval and Nasdaq Approval (both as defined in the
Purchase Agreement).

e)           Mechanics of Conversion.

i.           Conversion Shares Issuable Upon Conversion of Principal
Amount.  The number of Conversion Shares issuable upon a conversion hereunder
shall be determined by the quotient obtained by dividing (x) the outstanding
principal amount of this Debenture to be converted by (y) the Conversion Price.

ii.           Delivery of Certificate Upon Conversion. Not later than three
Trading Days after each Conversion Date (the “Share Delivery Date”), the Company
shall deliver, or cause to be delivered, to the Holder (A) a certificate or
certificates representing the Conversion Shares which, on or after the earlier
of (i) the one year anniversary of the Original Issue Date or (ii) the Effective
Date, shall be free of restrictive legends and trading restrictions (other than
those which may then be required by the Purchase Agreement) representing the
number of Conversion Shares being acquired upon the conversion of this Debenture
and (B) a bank check in the amount of accrued and unpaid interest. On or after
the earlier of (i) the one year anniversary of the Original Issue Date or (ii)
the Effective Date, the Company shall use its best efforts to deliver any
certificate or certificates required to be delivered by the Company under this
Section 4(d) electronically through the Depository Trust Company or another
established clearing corporation performing similar functions.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 8 or 23

 
 
 

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iii.           Failure to Deliver Certificates.  If in the case of any Notice of
Conversion such certificate or certificates are not delivered to or as directed
by the applicable Holder by the third Trading Day after the Conversion Date, the
Holder shall be entitled to elect by written notice to the Company at any time
on or before its receipt of such certificate or certificates, to rescind such
Conversion, in which event the Company shall promptly return to the Holder any
original Debenture delivered to the Company and the Holder shall promptly return
to the Company the Common Stock certificates representing the principal amount
of this Debenture unsuccessfully tendered for conversion to the Company.

iv.           Obligation Absolute; Partial Liquidated Damages.  The Company’s
obligations to issue and deliver the Conversion Shares upon conversion of this
Debenture in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of such
Conversion Shares; provided, however, that such delivery shall not operate as a
waiver by the Company of any such action the Company may have against the
Holder.  In the event the Holder of this Debenture shall elect to convert any or
all of the outstanding principal amount hereof, the Company may not refuse
conversion based on any claim that the Holder or anyone associated or affiliated
with the Holder has been engaged in any violation of law, agreement or for any
other reason, unless an injunction from a court, on notice to Holder,
restraining and or enjoining conversion of all or part of this Debenture shall
have been sought and obtained, and the Company posts a surety bond for the
benefit of the Holder in the amount of 150% of the outstanding principal amount
of this Debenture, which is subject to the injunction, which bond shall remain
in effect until the completion of litigation of the underlying dispute and the
proceeds of which shall be payable to the Holder to the extent it obtains
judgment, except provided that this provision shall not apply to Company
refusals to convert made pursuant to Section 4(d)(ii) of this Debenture.  In the
absence of such injunction, the Company shall issue Conversion Shares or, if
applicable, cash, upon a properly noticed conversion.  Notwithstanding anything
contained herein to the contrary, the Company shall not be obligated to issue
free trading shares of common stock in violation of applicable federal and/or
state securities laws.

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 9 or 23

 
 
 

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v.           Compensation for Buy-In on Failure to Timely Deliver Certificates
Upon Conversion. In addition to any other rights available to the Holder, if the
Company fails for any reason to deliver to the Holder such certificate or
certificates by the Share Delivery Date pursuant to Section 4(d)(ii), and if
after such Share Delivery Date the Holder is required by its brokerage firm to
purchase (in an open market transaction or otherwise), or the Holder’s brokerage
firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Conversion Shares which the Holder was entitled to
receive upon the conversion relating to such Share Delivery Date (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder (in addition to any other
remedies available to or elected by the Holder) the amount by which (x) the
Holder’s total purchase price (including any brokerage commissions) for the
Common Stock so purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that the Holder was entitled to receive from the
conversion at issue multiplied by (2) the actual sale price at which the sell
order giving rise to such purchase obligation was executed (including any
brokerage commissions) and (B) at the option of the Holder, either reissue (if
surrendered) this Debenture in a principal amount equal to the principal amount
of the attempted conversion or deliver to the Holder the number of shares of
Common Stock that would have been issued if the Company had timely complied with
its delivery requirements under Section 4(d)(ii).  For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of this Debenture with respect to
which the actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000
under clause (A) of the immediately preceding sentence, the Company shall be
required to pay the Holder $1,000.  The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In
and, upon request of the Company, evidence of the amount of such loss.  Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing shares of Common Stock upon
conversion of this Debenture as required pursuant to the terms hereof.

vi.           Reservation of Shares Issuable Upon Conversion. The Company
covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose of issuance
upon conversion of this Debenture, as herein provided, free from preemptive
rights or any other actual contingent purchase rights of Persons other than the
Holder (and the other holders of the Debentures), not less than such aggregate
number of shares of the Common Stock as shall (subject to the terms and
conditions set forth in the Purchase Agreement) be issuable (taking into account
the adjustments and restrictions of Section 5) upon the conversion of the
outstanding principal amount of this Debenture.  The Company covenants that all
shares of Common Stock that shall be so issuable shall, upon issue, be duly
authorized, validly issued, fully paid and nonassessable and, if a Registration
Statement is then effective under the Securities Act, shall be registered for
public sale in accordance with such Registration Statement.

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 10 or 23

 
 

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vii.           Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of this Debenture.  As to
any fraction of a share which Holder would otherwise be entitled to purchase
upon such conversion, the Company shall at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Conversion Price or round up to the next whole share.

viii.           Transfer Taxes.  The issuance of certificates for shares of the
Common Stock on conversion of this Debenture shall be made without charge to the
Holder hereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificates, provided that, the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate upon
conversion in a name other than that of the Holder of this Debenture so
converted and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

Section 5.             Certain Adjustments.

a)           Stock Dividends and Stock Splits.  If the Company, at any time
while this Debenture is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on
shares of Common Stock or any Common Stock Equivalents (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company upon
conversion of the Debentures), (ii) subdivides outstanding shares of Common
Stock into a larger number of shares, (iii) combines (including by way of a
reverse stock split) outstanding shares of Common Stock into a smaller number of
shares or (iv) issues, in the event of a reclassification of shares of the
Common Stock, any shares of capital stock of the Company, then the Conversion
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding any treasury shares of the Company)
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such
event.  Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 11 or 23

 
 

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b)           Subsequent Equity Sales.  Until the one year anniversary of the
Effective Date, if at any time during this period while this Debenture is
outstanding,  the Company or any Subsidiary, as applicable, sells or grants any
option to purchase or sells or grants any right to reprice, or otherwise
disposes of or issues (or announces any sale, grant or any option to purchase or
other disposition), any Common Stock or Common Stock Equivalents entitling any
Person to acquire shares of Common Stock at an effective price per share that is
lower than the then Conversion Price (such lower price, the “Base Conversion
Price” and such issuances, collectively, a “Dilutive Issuance”) (if the holder
of the Common Stock or Common Stock Equivalents so issued shall at any time,
whether by operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to warrants,
options or rights per share which are issued in connection with such issuance,
be entitled to receive shares of Common Stock at an effective price per share
that is lower than the Conversion Price, such issuance shall be deemed to have
occurred for less than the Conversion Price on such date of the Dilutive
Issuance), then the Conversion Price shall be reduced to equal the Base
Conversion Price.  Such adjustment shall be made whenever such Common Stock or
Common Stock Equivalents are issued.  If the Company enters into a Variable Rate
Transaction, despite the prohibition set forth in the Purchase Agreement, the
Company shall be deemed to have issued Common Stock or Common Stock Equivalents
at the lowest possible conversion price at which such securities may be
converted or exercised. The Company shall notify the Holder in writing, no later
than one Business Day following the issuance of any Common Stock or Common Stock
Equivalents subject to this Section 5(b), indicating therein the applicable
issuance price, or applicable reset price, exchange price, conversion price and
other pricing terms (such notice, the “Dilutive Issuance Notice”).  For purposes
of clarification, whether or not the Company provides a Dilutive Issuance Notice
pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, the
Holder is entitled to receive a number of Conversion Shares based upon the Base
Conversion Price on or after the date of such Dilutive Issuance, regardless of
whether the Holder accurately refers to the Base Conversion Price in the Notice
of Conversion.
 
c)           Subsequent Rights Offerings.  If the Company, at any time while the
Debenture is outstanding, shall issue rights, options or warrants to all holders
of Common Stock (and not to Holders) entitling them to subscribe for or purchase
shares of Common Stock at a price per share that is lower than the VWAP on the
record date referenced below, then the Conversion Price shall be multiplied by a
fraction of which the denominator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase, and of which the numerator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights or warrants plus the
number of shares which the aggregate offering price of the total number of
shares so offered (assuming delivery to the Company in full of all consideration
payable upon exercise of such rights, options or warrants) would purchase at
such VWAP.  Such adjustment shall be made whenever such rights or warrants are
issued, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options or
warrants.

d)           Pro Rata Distributions. If the Company, at any time while this
Debenture is outstanding, distributes to all holders of Common Stock (and not to
the Holders) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security
(other than the Common Stock, which shall be subject to Section 5(b)), then in
each such case the Conversion Price shall be adjusted by multiplying such
Conversion Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the VWAP determined as of the record
date mentioned above, and of which the numerator shall be such VWAP on such
record date less the then fair market value at such record date of the portion
of such assets or evidence of indebtedness so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of Directors of
the Company in good faith.  In either case the adjustments shall be described in
a statement delivered to the Holder describing the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable
to one share of Common Stock.  Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date mentioned above.

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 12 or 23

 
 

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e)           Fundamental Transaction. If, at any time while this Debenture is
outstanding, (i) the Company effects any merger or consolidation of the Company
with or into another Person and the Company is not the surviving corporation,
(ii) the Company effects any sale of all or substantially all of its assets in
one transaction or a series of related transactions, (iii) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (iv) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a “Fundamental Transaction”),
then, upon any subsequent conversion of this Debenture, the Holder shall have
the right to receive, for each Conversion Share that would have been issuable
upon such conversion immediately prior to the occurrence of such Fundamental
Transaction, the same kind and amount of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of one share of Common Stock (the “Alternate Consideration”).  For
purposes of any such conversion, the determination of the Conversion Price shall
be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Conversion Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any conversion of this Debenture following such Fundamental
Transaction.  To the extent necessary to effectuate the foregoing provisions,
any successor to the Company or surviving entity in such Fundamental Transaction
shall issue to the Holder a new debenture consistent with the foregoing
provisions and evidencing the Holder’s right to convert such debenture into
Alternate Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is affected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 5(e)
and insuring that this Debenture (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.

f)           Calculations.  All calculations under this Section 5 shall be made
to the nearest cent or the nearest 1/100th of a share, as the case may be.  For
purposes of this Section 5, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the number of
shares of Common Stock (excluding any treasury shares of the Company) issued and
outstanding.

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
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g)           Notice to the Holder.

i.           Adjustment to Conversion Price.  Whenever the Conversion Price is
adjusted pursuant to any provision of this Section 5, the Company shall promptly
deliver to each Holder a notice setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.

ii.           Notice to Allow Conversion by Holder.  If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on the Common
Stock, (B) the Company shall declare a special nonrecurring cash dividend on or
a redemption of the Common Stock, (C) the Company shall authorize the granting
to all holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which
the Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall cause to be
filed at each office or agency maintained for the purpose of conversion of this
Debenture, and shall cause to be delivered to the Holder at its last address as
it shall appear upon the Debenture Register, at least twenty (20) calendar days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of the Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided that the
failure to deliver such notice or any defect therein or in the delivery thereof
shall not affect the validity of the corporate action required to be specified
in such notice.  The Holder is entitled to convert this Debenture during the
20-day period commencing on the date of such notice through the effective date
of the event triggering such notice.

Section 6.           Negative Covenants. As long as any portion of this
Debenture remains outstanding, unless the holders of at least 75% in principal
amount of the then outstanding Debentures shall have otherwise given prior
written consent, the Company shall not, and shall not permit any of its
subsidiaries (whether or not a Subsidiary on the Original Issue Date) to,
directly or indirectly:

Glen Rose Petroleum Corporation
 
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a)           other than Permitted Indebtedness, enter into, create, incur,
assume, guarantee or suffer to exist any indebtedness for borrowed money of any
kind, including, but not limited to, a guarantee, on or with respect to any of
its property or assets now owned or hereafter acquired or any interest therein
or any income or profits therefrom;

b)           other than Permitted Liens, enter into, create, incur, assume or
suffer to exist any Liens of any kind, on or with respect to any of its property
or assets now owned or hereafter acquired or any interest therein or any income
or profits therefrom;

c)           amend its charter documents, including, without limitation, its
certificate of incorporation and bylaws, in any manner that materially and
adversely affects any rights of the Holder;

d)           repay, repurchase or offer to repay, repurchase or otherwise
acquire any Indebtedness, other than the Debentures if on a pro-rata basis,
other than regularly scheduled interest payments as such terms are in effect as
of the Original Issue Date;

e)           pay cash dividends or distributions on any equity securities of the
Company;

f)           enter into any transaction with any Affiliate of the Company which
would be required to be disclosed in any public filing with the Commission,
unless such transaction is made on an arm’s-length basis and expressly approved
by a majority of the disinterested directors of the Company (even if less than a
quorum otherwise required for board approval); or

g)           enter into any agreement with respect to any of the foregoing.

Section 7.             Events of Default.

a)           “Event of Default” means, wherever used herein, any of the
following events (whatever the reason for such event and whether such event
shall be voluntary or involuntary or effected by operation of law or pursuant to
any judgment, decree or order of any court, or any order, rule or regulation of
any administrative or governmental body):
 
i.           any default in the payment of (A) the principal amount of any
Debenture or (B) interest, liquidated damages and other amounts owing to a
Holder on any Debenture, as and when the same shall become due and payable
(whether on a Conversion Date or the Maturity Date or by acceleration or
otherwise) which default, solely in the case of an interest payment or other
default under clause (B) above, is not cured within five Trading Days after
notice of failure is sent by the Holder;

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
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ii.           the Company shall fail to observe or perform any other covenant or
agreement contained in the Debentures (other than a breach by the Company of its
obligations to deliver shares of Common Stock to the Holder upon conversion,
which breach is addressed in clause (xi) below) or any of the Transaction
Documents which failure is not cured, if possible to cure, within the earlier to
occur of (A) five Trading Days after notice of such failure sent by the Holder
or by any other Holder to the Company and (B) 10 Trading Days after the Company
has become or should have become aware of such failure;
 
iii.           a default or event of default (subject to any grace or cure
period provided in the applicable agreement, document or instrument or any
amendment thereof) shall occur under (A) any of the Transaction Documents or (B)
any other material agreement, lease, document or instrument to which the Company
or any Subsidiary is obligated (and not covered by clause (vi) below), except
for any material agreement, lease, document or instrument listed on the
Disclosure Schedules as currently in default;
 
iv.           any representation or warranty made in this Debenture, any other
Transaction Documents, any written statement pursuant hereto or thereto or any
other report, financial statement or certificate made or delivered to the Holder
or any other Holder shall be untrue or incorrect in any material respect as of
the date when made or deemed made;

v.            the Company or any Significant Subsidiary (as such term is defined
in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;
 
vi.           the Company or any Subsidiary shall default on any of its
obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be
issued, or by which there may be secured or evidenced, any indebtedness for
borrowed money or money due under any long term leasing or factoring arrangement
that (a) involves an obligation greater than $25,000, whether such indebtedness
now exists or shall hereafter be created, and (b) results in such indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise become due and payable, except for any mortgage, credit agreement or
other facility, indenture agreement, factoring agreement or other instrument
obligations listed on the Disclosure Schedules as currently in default;

vii.           the Common Stock shall not be eligible for listing or quotation
for trading on a Trading Market and shall not be eligible to resume listing or
quotation for trading thereon within five Trading Days;
 
viii.           the Company shall be a party to any Change of Control
Transaction or Fundamental Transaction, other than the Purchase Agreement, or
shall agree to sell or dispose of all or in excess of 33% of its assets in one
transaction or a series of related transactions (whether or not such sale would
constitute a Change of Control Transaction);

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 16 or 23

 

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ix.           the Company shall fail for any reason to deliver certificates to a
Holder prior to the fifth Trading Day after a Conversion Date pursuant to
Section 4(d) or the Company shall provide at any time notice to the Holder,
including by way of public announcement, of the Company’s intention to not honor
requests for conversions of any Debentures in accordance with the terms hereof;

x.           any Person shall breach any agreement delivered to the initial
Holders pursuant to Section 2.2 of the Purchase Agreement; or
 
xi.           any monetary judgment, writ or similar final process shall be
entered or filed against the Company, any subsidiary or any of their respective
property or other assets for more than $25,000, and such judgment, writ or
similar final process shall remain unvacated, unbonded or unstayed for a period
of 45 calendar days.

b)           Remedies Upon Event of Default. If any Event of Default occurs, the
outstanding principal amount of this Debenture, plus accrued but unpaid
interest, liquidated damages and other amounts owing in respect thereof through
the date of acceleration, shall become, at the Holder’s election, immediately
due and payable in cash.  Commencing five days after the occurrence of any Event
of Default that results in the eventual acceleration of this Debenture, the
interest rate on this Debenture shall accrue at an interest rate equal to the
lesser of 18% per annum or the maximum rate permitted under applicable
law.  Upon the payment in full, the Holder shall promptly surrender this
Debenture to or as directed by the Company.  In connection with such
acceleration described herein, the Holder need not provide, and the Company
hereby waives, any presentment, demand, protest or other notice of any kind, and
the Holder may immediately and without expiration of any grace period enforce
any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law.  Such acceleration may be rescinded and
annulled by Holder at any time prior to payment hereunder and the Holder shall
have all rights as a holder of the Debenture until such time, if any, as the
Holder receives full payment pursuant to this Section 7(b).  No such rescission
or annulment shall affect any subsequent Event of Default or impair any right
consequent thereon.

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 17 or 23

 

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Section 8.               Miscellaneous.

a)           Notices.  Any and all notices or other communications or deliveries
to be provided by the Holder hereunder, including, without limitation, any
Notice of Conversion, shall be in writing and delivered personally, by
facsimile, or sent by a nationally recognized overnight courier service,
addressed to the Company, at the address set forth above, or such other
facsimile number or address as the Company may specify for such purpose by
notice to the Holder delivered in accordance with this Section 8(a).  Copies of
all notices to the Company shall be simultaneously sent to Joseph ‘Chip’
Langston, telephone no. (972) 962 4892, by both facsimile to (972) 962 3766 and
by email to chip3@flash.net. Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile number or address of
the Holder appearing on the books of the Company, or if no such facsimile number
or address appears, at the principal place of business of the Holder.  Any
notice or other communication or deliveries hereunder shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified on
the signature page prior to 5:30 p.m. (New York City time), (ii) the date
immediately following the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified on the signature
page between 5:30 p.m. (New York City time) and 11:59 p.m. (New York City time)
on any date, (iii) the second Business Day following the date of mailing, if
sent by nationally recognized overnight courier service or (iv) upon actual
receipt by the party to whom such notice is required to be given.

b)           Absolute Obligation. Except as expressly provided herein, no
provision of this Debenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, liquidated damages
and accrued interest, as applicable, on this Debenture at the time, place, and
rate, and in the coin or currency, herein prescribed.  This Debenture is a
direct debt obligation of the Company.  This Debenture ranks pari passu with all
other Debentures now or hereafter issued under the terms set forth herein.

c)           Lost or Mutilated Debenture.  If this Debenture shall be mutilated,
lost, stolen or destroyed, the Company shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Debenture, or in lieu
of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture
for the principal amount of this Debenture so mutilated, lost, stolen or
destroyed, but only upon receipt of evidence of such loss, theft or destruction
of such Debenture, and of the ownership hereof, reasonably satisfactory to the
Company.

d)           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Debenture shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflict of laws thereof.  Each
party agrees that all legal proceedings concerning the interpretation,
enforcement and defense of the transactions contemplated by any of the
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents) shall be
commenced in the state and federal courts sitting in the Dallas County, Texas
(the “Texas Courts”).  Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the Texas Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such Texas Courts, or such Texas Courts are improper or
inconvenient venue for such proceeding.  Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Debenture and agrees that such
service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by applicable law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Debenture or the transactions contemplated hereby. If either
party shall commence an action or proceeding to enforce any provisions of this
Debenture, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred in the investigation, preparation and prosecution of such
action or proceeding.

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 18 or 23

 

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e)           Waiver.  Any waiver by the Company or the Holder of a breach of any
provision of this Debenture shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Debenture.  The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Debenture.  Any waiver
by the Company or the Holder must be in writing.

f)           Severability.  If any provision of this Debenture is invalid,
illegal or unenforceable, the balance of this Debenture shall remain in effect,
and if any provision is inapplicable to any Person or circumstance, it shall
nevertheless remain applicable to all other Persons and circumstances.  If it
shall be found that any interest or other amount deemed interest due hereunder
violates the applicable law governing usury, the applicable rate of interest due
hereunder shall automatically be lowered to equal the maximum rate of interest
permitted under applicable law. The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law or other law which would prohibit or forgive the Company from
paying all or any portion of the principal of or interest on this Debenture as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this indenture, and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefits or advantage of any such law, and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Holder, but will suffer and permit the execution of every such as
though no such law has been enacted.

g)           Next Business Day.  Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day.

h)           Headings.  The headings contained herein are for convenience only,
do not constitute a part of this Debenture and shall not be deemed to limit or
affect any of the provisions hereof.

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 19 or 23

 

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i)           Assumption.  Any successor to the Company or any surviving entity
in a Fundamental Transaction shall (i) assume, prior to such Fundamental
Transaction, all of the obligations of the Company under this Debenture and the
other Transaction Documents pursuant to written agreements in form and substance
satisfactory to the Holder (such approval not to be unreasonably withheld or
delayed) and (ii) issue to the Holder a new debenture of such successor entity
evidenced by a written instrument substantially similar in form and substance to
this Debenture, including, without limitation, having a principal amount and
interest rate equal to the principal amount and the interest rate of this
Debenture and having similar ranking to this Debenture, which shall be
satisfactory to the Holder (any such approval not to be unreasonably withheld or
delayed).  The provisions of this Section 8(i) shall apply similarly and equally
to successive Fundamental Transactions and shall be applied without regard to
any limitations of this Debenture.

j)           Secured Obligation.  The obligations of the Company under this
Debenture are secured by all assets of the Company and each Subsidiary pursuant
to the Security Agreement, dated as of July 2, 2009 between the Company, the
Subsidiaries of the Company and the Secured Parties (as defined therein).
 
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by
a duly authorized officer as of the date first above indicated.

GLEN ROSE PETROLEUM CORPORATION
     
By:
     
Name: Joseph F. Langston, Jr.
   
Title: President
   
Facsimile No. for delivery of Notices: (214) 800-2662
 

Glen Rose Petroleum Corporation
 
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ANNEX A

NOTICE OF CONVERSION

The undersigned hereby elects to convert principal under the 8.5% Senior Secured
Convertible Debenture due June 30, 2011 of Glen Rose Petroleum Corporation, a
Delaware corporation (the “Company”), into shares of common stock (the “Common
Stock”), of the Company according to the conditions hereof, as of the date
written below.  If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance therewith.  No fee
will be charged to the holder for any conversion, except for such transfer
taxes, if any.

The undersigned agrees to comply with the prospectus delivery requirements under
the applicable securities laws in connection with any transfer of the aforesaid
shares of Common Stock.

Conversion calculations:

 
Date to Effect Conversion:
     
Principal Amount of Debenture to be Converted:
     
Number of shares of Common Stock to be issued:
     
Signature:
     
Name:
     
Address for Delivery of Common Stock Certificates:
     
Or
     
DWAC Instructions:
     
Broker No: 
     
Account No: 
   

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 21 or 23

 
 

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 ANNEX B

NOTICE OF CONVERSION

Glen Rose Petroleum Corporation hereby elects to convert principal under the
8.5% Senior Secured Convertible Debenture (“Debenture”) due June 30, 2011 of
Glen Rose Petroleum Corporation, a Delaware corporation (the “Company”), held by
Debenture Holder (“Holder”) into shares of common stock (the “Common Stock”), of
the Company according to the conditions hereof, as of the date written
below.    No fee will be charged to the holder of the Debenture for any
conversion.  Share Certificates shall be delivered to the delivered personally
or sent by a nationally recognized overnight courier service addressed to the
Holder at the address of the Holder appearing on the books of the Company

Conversion calculations:

 
Date to Effect Conversion:
     
Principal Amount of Debenture to be Converted:
     
Number of shares of Common Stock to be issued:
     
Signature:
     
Name:
     
Title:
     
Glen Rose Petroleum Corporation

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 22 or 23

 
 

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Schedule 1

CONVERSION SCHEDULE

The 8.5% Senior Secured Convertible Debentures due on June 30, 2011 in the
aggregate principal amount of $500,000.00 to $1,500,000 are issued by Glen Rose
Petroleum Corporation, a Delaware corporation.  This Conversion Schedule
reflects conversions made under Section 4 of the above referenced Debenture.

Dated:

Date of Conversion
(or for first entry, Original Issue
Date)
 
 
Amount of Conversion
 
Aggregate Principal Amount
Remaining Subsequent to Conversion
(or original Principal Amount)
 
 
Company Attest
                                                       

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 23 or 23

 
 

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EXHIBIT B

FORM OF SECURITY AGREEMENT

 
 

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SECURITY AGREEMENT

            This SECURITY AGREEMENT, dated as of July 2, 2009 (this
“Agreement”), is among Glen Rose Petroleum Corporation, a Delaware corporation
(the “Company”), UHC Petroleum Corporation, a Texas Corporation and a subsidiary
of the Company (the “Guarantor” and together with the Company, the “Debtors”)
and the holders of the Company’s  8.5% Senior Secured Convertible Debentures due
June 30, 2011 (collectively, the “Debentures”) issued pursuant to the Purchase
Agreement (as defined in the Debentures) to the signatories hereto, their
endorsees, transferees and assigns (collectively, the “Secured Parties”).

WITNESSETH:

            WHEREAS, pursuant to the Purchase Agreement (as defined in the
Debentures), the Secured Parties have severally agreed to extend the loans to
the Company evidenced by the Debentures;

            WHEREAS, pursuant to a certain Subsidiary Guarantee, dated as of the
date hereof (the “Guarantee”), the Guarantor have jointly and severally agreed
to guarantee and act as surety for payment of such Debentures; and

            WHEREAS, in order to induce the Secured Parties to extend the loans
evidenced by the Debentures, each Debtor has agreed to execute and deliver to
the Secured Parties this Agreement and to grant the Secured Parties, pari passu
with each other Secured Party and through the Agent, a security interest in
certain property of such Debtor to secure the prompt payment, performance and
discharge in full of all of the Company’s obligations under the Debentures and
the Guarantor’ obligations under the Guarantee.

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

             1.               Certain Definitions. As used in this Agreement,
the following terms shall have the meanings set forth in this Section 1.  Terms
used but not otherwise defined in this Agreement that are defined in Article 9
of the UCC (such as “account”, “chattel paper”, “commercial tort claim”,
“deposit account”, “document”, “equipment”, “fixtures”, “general intangibles”,
“goods”, “instruments”, “inventory”, “investment property”, “letter-of-credit
rights”, “proceeds” and “supporting obligations”) shall have the respective
meanings given such terms in Article 9 of the UCC.

(a)          “Collateral” means the collateral in which the Secured Parties are
granted a security interest by this Agreement and which shall include the
following personal property of the Debtors, whether presently owned or existing
or hereafter acquired or coming into existence, wherever situated, and all
additions and accessions thereto and all substitutions and replacements thereof,
and all proceeds, products and accounts thereof, including, without limitation,
all proceeds from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith, and all
dividends, interest, cash, notes, securities, equity interest or other property
at any time and from time to time acquired, receivable or otherwise distributed
in respect of, or in exchange for, any or all of the Pledged Securities (as
defined below):

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(i)           All goods, including, without limitation, (A) all machinery,
equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices
and other equipment of every kind and nature and wherever situated, together
with all documents of title and documents representing the same, all additions
and accessions thereto, replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other items used and useful in
connection with any Debtor’s businesses and all improvements thereto; and (B)
all inventory;

(ii)           All contract rights and other general intangibles, including,
without limitation, all partnership interests, membership interests, stock or
other securities, rights under any of the Organizational Documents, agreements
related to the Pledged Securities, licenses, distribution and other agreements,
computer software (whether “off-the-shelf”, licensed from any third party or
developed by any Debtor), computer software development rights, leases,
franchises, customer lists, quality control procedures, grants and rights,
goodwill, trademarks, service marks, trade styles, trade names, patents, patent
applications, copyrights, and income tax refunds;
 
(iii)          All accounts, together with all instruments, all documents of
title representing any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may represent, and
all right, title, security and guaranties with respect to each account,
including any right of stoppage in transit;

(iv)          All documents, letter-of-credit rights, instruments and chattel
paper;

(v)           All commercial tort claims;

(vi)          All deposit accounts and all cash (whether or not deposited in
such deposit accounts);

(vii)         All investment property;

(viii)        All supporting obligations; and

(ix)          All files, records, books of account, business papers, and
computer programs; and

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Blackwood Ventures LLC Senior Secured Debenture
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(x)           the products and proceeds of all of the foregoing Collateral set
forth in clauses (i)-(ix) above.

Without limiting the generality of the foregoing, the “Collateral” shall include
all investment property and general intangibles respecting ownership and/or
other equity interests in each Guarantor, including, without limitation, the
shares of capital stock and the other equity interests listed on Schedule H
hereto (as the same may be modified from time to time pursuant to the terms
hereof), and any other shares of capital stock and/or other equity interests of
any other direct or indirect subsidiary of any Debtor obtained in the future,
and, in each case, all certificates representing such shares and/or equity
interests and, in each case, all rights, options, warrants, stock, other
securities and/or equity interests that may hereafter be received, receivable or
distributed in respect of, or exchanged for, any of the foregoing and all rights
arising under or in connection with the Pledged Securities, including, but not
limited to, all dividends, interest and cash.
 
Notwithstanding the foregoing, nothing herein shall be deemed to constitute an
assignment of any asset which, in the event of an assignment, becomes void by
operation of applicable law or the assignment of which is otherwise prohibited
by applicable law (in each case to the extent that such applicable law is not
overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar
applicable law); provided, however, that to the extent permitted by applicable
law, this Agreement shall create a valid security interest in such asset and, to
the extent permitted by applicable law, this Agreement shall create a valid
security interest in the proceeds of such asset.

(b)           “Intellectual Property” means the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, (ii) all letters patent of
the United States, any other country or any political subdivision thereof, all
reissues and extensions thereof, and all applications for letters patent of the
United States or any other country and all divisions, continuations and
continuations-in-part thereof, (iii) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade dress,
service marks, logos, domain names and other source or business identifiers, and
all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise, and all
common law rights related thereto, (iv) all trade secrets arising under the laws
of the United States, any other country or any political subdivision thereof,
(v) all rights to obtain any reissues, renewals or extensions of the foregoing,
(vi) all licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 3 or 24

 
 

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(c)           “Majority in Interest” means, at any time of determination, the
majority in interest (based on then-outstanding principal amounts of Debentures
at the time of such determination) of the Secured Parties.

(d)           “Necessary Endorsement” means undated stock powers endorsed in
blank or other proper instruments of assignment duly executed and such other
instruments or documents as the Agent (as that term is defined below) may
reasonably request.

(e)           “Obligations” means all of the liabilities and obligations
(primary, secondary, direct, contingent, sole, joint or several) due or to
become due, or that are now or may be hereafter contracted or acquired, or owing
to, of any Debtor to the Secured Parties, including, without limitation, all
obligations under this Agreement, the Debentures, the Guarantee and any other
instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith, in each case, whether now or hereafter
existing, voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later increased, created
or incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from any of the Secured Parties as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.  Without
limiting the generality of the foregoing, the term “Obligations” shall include,
without limitation: (i) principal of, and interest on the Debentures and the
loans extended pursuant thereto; (ii) any and all other fees, indemnities,
costs, obligations and liabilities of the Debtors from time to time under or in
connection with this Agreement, the Debentures, the Guarantee and any other
instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith; and (iii) all amounts (including but not
limited to post-petition interest) in respect of the foregoing that would be
payable but for the fact that the obligations to pay such amounts are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Debtor.

(f)           “Organizational Documents” means with respect to any Debtor, the
documents by which such Debtor was organized (such as a certificate of
incorporation, certificate of limited partnership or articles of organization,
and including, without limitation, any certificates of designation for preferred
stock or other forms of preferred equity) and which relate to the internal
governance of such Debtor (such as bylaws, a partnership agreement or an
operating, limited liability or members agreement).

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 4 or 24

 
 

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(g)           “Permitted Indebtedness” means (a) the indebtedness evidenced by
the Obligations;  (b) up to $1,000,000 of non-equity linked indebtedness under
accounts receivable or inventory lines of credit with a federal or state
regulated bank or nationally recognized commercial lending institution whose
primary business is not investing in securities; and (c) indebtedness related to
services and goods provided by trade creditors including oilfield services and
materials providers, auditors, accountants, (d) indebtedness previously
outstanding as of the date of this Debenture, (e) indebtedness relating to
short-term financing as referenced in promissory notes issued in July 2008 with
up to $180,000 in principal, and (f) any and all indebtedness incurred in
connection with satisfying any Company obligations relating to Company stock or
other options through the issuance of debt to the optionholders.

(h)           “Permitted Lien” means the individual and collective reference to
the following: (a) Liens for taxes, assessments and other governmental charges
or levies not yet due or Liens for taxes, assessments and other governmental
charges or levies being contested in good faith and by appropriate proceedings
for which adequate reserves (in the good faith judgment of the management of the
Company) have been established in accordance with GAAP; (b) Liens imposed by law
which were incurred in the ordinary course of the Company’s business, such as
carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and
other similar Liens arising in the ordinary course of the Company’s business;
(c) Liens incurred in connection with Permitted Indebtedness; and (d) liens
previously filed against Company property or relating to Company indebtedness
existing on or before the date of this Security Agreement.
 
 (i)           “Pledged Securities” shall have the meaning ascribed to such term
in Section 4(i).

 (j)           “Purchase Agreement” means the Securities Purchase Agreement,
dated as of July 2, 2009 among the Company and the original Holders, as amended,
modified or supplemented from time to time in accordance with its terms and
including any disclosure schedules provided in connection with the Securities
Purchase Agreement.

(k)           “UCC” means the Uniform Commercial Code of the State of Texas and
or any other applicable law of any state or states which has jurisdiction with
respect to all, or any portion of, the Collateral or this Agreement, from time
to time.  It is the intent of the parties that defined terms in the UCC should
be construed in their broadest sense so that the term “Collateral” will be
construed in its broadest sense.  Accordingly if there are, from time to time,
changes to defined terms in the UCC that broaden the definitions, they are
incorporated herein and if existing definitions in the UCC are broader than the
amended definitions, the existing ones shall be controlling.

2.           Grant of Security Interest in Collateral. As an inducement for the
Secured Parties to extend the loans as evidenced by the Debentures and to secure
the complete and timely payment, performance and discharge in full, as the case
may be, of all of the Obligations, each Debtor hereby unconditionally and
irrevocably pledges, grants and hypothecates to the Secured Parties a security
interest in and to, a lien upon and a right of set-off against all of their
respective right, title and interest of whatsoever kind and nature in and to,
the Collateral (a “Security Interest” and, collectively, the “Security
Interests”).

Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 5 or 24

 
 

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3.            Delivery of Certain Collateral.  Contemporaneously to the
execution of this Agreement, each Debtor shall deliver or cause to be delivered
to the Agent (a) any and all certificates and other instruments representing or
evidencing the Pledged Securities, and (b) any and all certificates and other
instruments or documents representing any of the other Collateral, in each case,
together with all Necessary Endorsements.  The Debtors are, contemporaneously
with the execution hereof, delivering to Agent, or have previously delivered to
Agent, a true and correct copy of each Organizational Document governing any of
the Pledged Securities.

4.            Representations, Warranties, Covenants and Agreements of the
Debtors. Except as set forth under the corresponding section of the disclosure
schedules delivered to the Secured Parties concurrently herewith (the
“Disclosure Schedules”), which Disclosure Schedules shall be deemed a part
hereof, each Debtor represents and warrants to, and covenants and agrees with,
the Secured Parties as follows:

(a)         Each Debtor has the requisite corporate, partnership, limited
liability company or other power and authority to enter into this Agreement and
otherwise to carry out its obligations hereunder. The execution, delivery and
performance by each Debtor of this Agreement and the filings contemplated
therein have been duly authorized by all necessary action on the part of such
Debtor and no further action is required by such Debtor.  This Agreement has
been duly executed by each Debtor.  This Agreement constitutes the legal, valid
and binding obligation of each Debtor, enforceable against each Debtor in
accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization and similar laws of general
application relating to or affecting the rights and remedies of creditors and by
general principles of equity.

(b)         The Debtors have no place of business or offices where their
respective books of account and records are kept (other than temporarily at the
offices of its attorneys or accountants) or places where Collateral is stored or
located, except as set forth on Schedule A attached hereto.  Except as
specifically set forth on Schedule A, each Debtor is the record owner of the
real property where such Collateral is located, and there exist no mortgages or
other liens on any such real property.  Except as disclosed on Schedule A, none
of such Collateral is in the possession of any consignee, bailee, warehouseman,
agent or processor.

(c)         Except as set forth on Schedule B attached hereto, the Debtors are
the sole owner of the Collateral (except for non-exclusive licenses granted by
any Debtor in the ordinary course of business), free and clear of any liens,
security interests, encumbrances, rights or claims, and are fully authorized to
grant the Security Interests.  Except as set forth on Schedule B attached
hereto, there is not on file in any governmental or regulatory authority, agency
or recording office an effective financing statement, security agreement,
license or transfer or any notice of any of the foregoing (other than those that
will be filed in favor of the Secured Parties pursuant to this Agreement)
covering or affecting any of the Collateral.  Except as set forth on Schedule B
attached hereto and except pursuant to this Agreement, as long as this Agreement
shall be in effect, the Debtors shall not execute and shall not knowingly permit
to be on file in any such office or agency any other financing statement or
other document or instrument (except to the extent filed or recorded in favor of
the Secured Parties pursuant to the terms of this Agreement).
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 6 or 24

 
 
 

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(e)         Each Debtor shall at all times maintain its books of account and
records relating to the Collateral at its principal place of business and its
Collateral at the locations set forth on Schedule A attached hereto and may not
relocate such books of account and records or tangible Collateral unless it
delivers to the Secured Parties at least 30 days prior to such relocation (i)
written notice of such relocation and the new location thereof (which must be
within the United States) and (ii) evidence that appropriate financing
statements under the UCC and other necessary documents have been filed and
recorded and other steps have been taken to perfect the Security Interests to
create in favor of the Secured Parties a valid, perfected and continuing
perfected first priority lien in the Collateral.

(f)         This Agreement creates in favor of the Secured Parties a
valid security interest in the Collateral securing the payment and performance
of the Obligations.  Upon making the filings described in the immediately
following paragraph, all security interests created hereunder in any Collateral
which may be perfected by filing Uniform Commercial Code financing statements
shall have been duly perfected.  Except for the filing of the Uniform Commercial
Code financing statements referred to in the immediately following paragraph,
the recordation of the Intellectual Property Security Agreement (as defined
below) with respect to copyrights and copyright applications in the United
States Copyright Office referred to in paragraph (m), the execution and delivery
of deposit account control agreements satisfying the requirements of Section
9-104(a)(2) of the UCC with respect to each deposit account of the Debtors, and
the delivery of the certificates and other instruments provided in Section 3, no
action is necessary to create, perfect or protect the security interests created
hereunder.  Without limiting the generality of the foregoing, except for the
filing of said financing statements, the recordation of said Intellectual
Property Security Agreement, and the execution and delivery of said deposit
account control agreements, no consent of any third parties and no
authorization, approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for (i) the execution,
delivery and performance of this Agreement, (ii) the creation or perfection of
the Security Interests created hereunder in the Collateral or (iii) the
enforcement of the rights of the Agent and the Secured Parties hereunder.

(g)         Each Debtor hereby authorizes the Agent to file one or more
financing statements under the UCC, with respect to the Security Interests, with
the proper filing and recording agencies in any jurisdiction deemed proper by
it.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 7 or 24

 
 
 

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(h)          The execution, delivery and performance of this Agreement by the
Debtors does not (i) violate any of the provisions of any Organizational
Documents of any Debtor or any judgment, decree, order or award of any court,
governmental body or arbitrator or any applicable law, rule or regulation
applicable to any Debtor or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing any Debtor's debt or
otherwise) or other understanding to which any Debtor is a party or by which any
property or asset of any Debtor is bound or affected. If any, all required
consents (including, without limitation, from stockholders or creditors of any
Debtor) necessary for any Debtor to enter into and perform its obligations
hereunder have been obtained.

(i)           The capital stock and other equity interests listed on Schedule H
hereto (the “Pledged Securities”) represent all of the capital stock and other
equity interests of the Guarantor, and represent all capital stock and other
equity interests owned, directly or indirectly, by the Company.  All of the
Pledged Securities are validly issued, fully paid and nonassessable, and the
Company is the legal and beneficial owner of the Pledged Securities, free and
clear of any lien, security interest or other encumbrance except for the
security interests created by this Agreement.

(j)           The ownership and other equity interests in partnerships and
limited liability companies (if any) included in the Collateral (the “Pledged
Interests”) by their express terms do not provide that they are securities
governed by Article 8 of the UCC and are not held in a securities account or by
any financial intermediary.

(k)          Each Debtor shall at all times maintain the liens and Security
Interests provided for hereunder as valid and perfected first priority liens and
security interests in the Collateral in favor of the Secured Parties until this
Agreement and the Security Interest hereunder shall be terminated pursuant to
Section 11 hereof.  Each Debtor hereby agrees to defend the same against the
claims of any and all persons and entities. Each Debtor shall safeguard and
protect all Collateral for the account of the Secured Parties.  At the request
of the Agent, each Debtor will sign and deliver to the Agent on behalf of the
Secured Parties at any time or from time to time one or more financing
statements pursuant to the UCC in form reasonably satisfactory to the Agent and
will pay the cost of filing the same in all public offices wherever filing is,
or is deemed by the Agent to be, necessary or desirable to effect the rights and
obligations provided for herein. Without limiting the generality of the
foregoing, each Debtor shall pay all fees, taxes and other amounts necessary to
maintain the Collateral and the Security Interests hereunder, and each Debtor
shall obtain and furnish to the Agent from time to time, upon demand, such
releases and/or subordinations of claims and liens which may be required to
maintain the priority of the Security Interests hereunder.

(l)           No Debtor will voluntarily transfer, pledge, hypothecate,
encumber, license, sell or otherwise dispose of any of the Collateral (except
for non-exclusive licenses granted by a Debtor in its ordinary course of
business and sales of inventory by a Debtor in its ordinary course of business)
without the prior written consent of a Majority in Interest.  Secured Parties
acknowledge the previous existence of liens against Debtor properties and the
previous existence of other outstanding liabilities that may lead to the filing
of liens against Debtor properties; such liens and liabilities are fully
disclosed in the Purchase Agreement.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 8 or 24

 
 

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(m)         Each Debtor shall use its best efforts to keep and preserve its
equipment, inventory and other tangible Collateral in good condition, repair and
order and shall not operate or locate any such Collateral (or cause to be
operated or located) in any area excluded from insurance coverage.

(n)          Each Debtor shall, to the extent of its financial ability, maintain
with financially sound and reputable insurers, insurance with respect to the
Collateral, including Collateral hereafter acquired, against loss or damage of
the kinds and in the amounts customarily insured against by entities of
established reputation having similar properties similarly situated and in such
amounts as are customarily carried under similar circumstances by other such
entities and otherwise as is prudent for entities engaged in similar businesses
but in any event sufficient to cover the full replacement cost thereof.  Each
Debtor shall cause each insurance policy issued in connection herewith to
provide, and the insurer issuing such policy to certify to the Agent, that (a)
the Agent will be named as lender loss payee and additional insured under each
such insurance policy; (b) if such insurance be proposed to be cancelled or
materially changed for any reason whatsoever, such insurer will promptly notify
the Agent and such cancellation or change shall not be effective as to the Agent
for at least thirty (30) days after receipt by the Agent of such notice, unless
the effect of such change is to extend or increase coverage under the policy;
and (c) the Agent will have the right (but no obligation) at its election to
remedy any default in the payment of premiums within thirty (30) days of notice
from the insurer of such default.  If no Event of Default (as defined in the
Debentures) exists and if the proceeds arising out of any claim or series of
related claims do not exceed $50,000, loss payments in each instance will be
applied by the applicable Debtor to the repair and/or replacement of property
with respect to which the loss was incurred to the extent reasonably feasible,
and any loss payments or the balance thereof remaining, to the extent not so
applied, shall be payable to the applicable Debtor; provided, however, that
payments received by any Debtor after an Event of Default occurs and is
continuing or in excess of $500,000 for any occurrence or series of related
occurrences shall be paid to the Agent on behalf of the Secured Parties and, if
received by such Debtor, shall be held in trust for the Secured Parties and
immediately paid over to the Agent unless otherwise directed in writing by the
Agent.   Copies of such policies or the related certificates, in each case,
naming the Agent as lender loss payee and additional insured shall be delivered
to the Agent at least annually and at the time any new policy of insurance is
issued.

(o)          Each Debtor shall, within ten (10) days of obtaining knowledge
thereof, advise the Secured Parties promptly, in sufficient detail, of any
material adverse change in the Collateral, and of the occurrence of any event
which would have a material adverse effect on the value of the Collateral or on
the Secured Parties’ security interest, through the Agent, therein.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 9 or 24

 
 

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(p)        Each Debtor shall promptly execute and deliver to the Agent such
further deeds, mortgages, assignments, security agreements, financing statements
or other instruments, documents, certificates and assurances and take such
further action as the Agent may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce the Secured Parties’
security interest in the Collateral including, without limitation, if
applicable, the execution and delivery of a separate security agreement with
respect to each Debtor’s Intellectual Property (“Intellectual Property Security
Agreement”) in which the Secured Parties have been granted a security interest
hereunder, substantially in a form reasonably acceptable to the Agent, which
Intellectual Property Security Agreement, other than as stated therein, shall be
subject to all of the terms and conditions hereof.

(q)        Each Debtor shall permit the Agent and its representatives and agents
to inspect the Collateral during normal business hours and upon reasonable prior
notice, and to make copies of records pertaining to the Collateral as may be
reasonably requested by the Agent from time to time.

(r)         Each Debtor shall take all steps reasonably necessary to diligently
pursue and seek to preserve, enforce and collect any rights, claims, causes of
action and accounts receivable in respect of the Collateral.

(s)         Each Debtor shall promptly notify the Secured Parties in sufficient
detail upon becoming aware of any attachment, garnishment, execution or other
legal process levied against any Collateral and of any other information
received by such Debtor that may materially affect the value of the Collateral,
the Security Interest or the rights and remedies of the Secured Parties
hereunder.  Secured Parties acknowledge having knowledge and awareness as of the
date or this Security Agreement of liens and other current claims against Debtor
properties and outstanding unpaid obligations that may lead to further liens and
claims against Debtor Properties.  The Company has provided the Secured Parties
with a complete list and description of its assets secured by such outstanding
liens and all outstanding unpaid obligations in the Purchase Agreement.

(t)          All information heretofore, herein or hereafter supplied to the
Secured Parties by or on behalf of any Debtor with respect to the Collateral is
accurate and complete in all material respects as of the date furnished.

(u)         The Debtors shall at all times preserve and keep in full force and
effect their respective valid existence and good standing and any rights and
franchises material to its business.

(v)         No Debtor will change its name, type of organization, jurisdiction
of organization, organizational identification number (if it has one), legal or
corporate structure, or identity, or add any new fictitious name unless it
provides at least 30 days prior written notice to the Secured Parties of such
change and, at the time of such written notification, such Debtor provides any
financing statements or fixture filings necessary to perfect and continue the
perfection of the Security Interests granted and evidenced by this Agreement.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 10 or 24

 
 

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(w)         Except in the ordinary course of business, no Debtor may consign any
of its inventory or sell any of its inventory on bill and hold, sale or return,
sale on approval, or other conditional terms of sale without the consent of the
Agent which shall not be unreasonably withheld.

(x)          No Debtor may relocate its chief executive office to a new location
without providing 30 days prior written notification thereof to the Secured
Parties and so long as, at the time of such written notification, such Debtor
provides any financing statements or fixture filings necessary to perfect and
continue the perfection of the Security Interests granted and evidenced by this
Agreement.

 (y)        Each Debtor was organized and remains organized solely under the
laws of the state set forth next to such Debtor’s name in Schedule D attached
hereto, which Schedule D sets forth each Debtor’s organizational identification
number or, if any Debtor does not have one, states that one does not exist.

(aa)        At any time and from time to time that any Collateral consists of
instruments, certificated securities or other items that require or permit
possession by the secured party to perfect the security interest created hereby,
the applicable Debtor shall deliver such Collateral to the Agent.

(bb)       Each Debtor, in its capacity as issuer, hereby agrees to comply with
any and all orders and instructions of Agent regarding the Pledged Interests
consistent with the terms of this Agreement without the further consent of any
Debtor as contemplated by Section 8-106 (or any successor section) of the
UCC.  Further, each Debtor agrees that it shall not enter into a similar
agreement (or one that would confer “control” within the meaning of Article 8 of
the UCC) with any other person or entity.
 
(cc)        Each Debtor shall cause all tangible chattel paper constituting
Collateral to be delivered to the Agent, or, if such delivery is not possible,
then to cause such tangible chattel paper to contain a legend noting that it is
subject to the security interest created by this Agreement.  To the extent that
any Collateral consists of electronic chattel paper, the applicable Debtor shall
cause the underlying chattel paper to be “marked” within the meaning of Section
9-105 of the UCC (or successor section thereto).

(dd)       If there is any investment property or deposit account included as
Collateral that can be perfected by “control” through an account control
agreement, the applicable Debtor shall cause such an account control agreement,
in form and substance in each case satisfactory to the Agent, to be entered into
and delivered to the Agent for the benefit of the Secured Parties.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 11 or 24

 
 

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(ee)        To the extent that any Collateral consists of letter-of-credit
rights, the applicable Debtor shall cause the issuer of each underlying letter
of credit to consent to an assignment of the proceeds thereof to the Secured
Parties.

(ff)         To the extent that any Collateral is in the possession of any third
party, the applicable Debtor shall join with the Agent in notifying such third
party of the Secured Parties’ security interest in such Collateral and shall use
its best efforts to obtain an acknowledgement and agreement from such third
party with respect to the Collateral, in form and substance reasonably
satisfactory to the Agent.

(gg)       If any Debtor shall at any time hold or acquire a commercial tort
claim, such Debtor shall promptly notify the Secured Parties in a writing signed
by such Debtor of the particulars thereof and grant to the Secured Parties in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
satisfactory to the Agent.

(hh)       Each Debtor shall immediately provide written notice to the Secured
Parties of any and all accounts which arise out of contracts with any
governmental authority and, to the extent necessary to perfect or continue the
perfected status of the Security Interests in such accounts and proceeds
thereof, shall execute and deliver to the Agent an assignment of claims for such
accounts and cooperate with the Agent in taking any other steps required, in its
judgment, under the Federal Assignment of Claims Act or any similar federal,
state or local statute or rule to perfect or continue the perfected status of
the Security Interests in such accounts and proceeds thereof.

 (ii)        Each Debtor shall cause each subsidiary of such Debtor to
immediately become a party hereto (an “Additional Debtor”), by executing and
delivering an Additional Debtor Joinder in substantially the form of Annex A
attached hereto and comply with the provisions hereof applicable to the
Debtors.  Concurrent therewith, the Additional Debtor shall deliver replacement
schedules for, or supplements to all other Schedules to (or referred to in) this
Agreement, as applicable, which replacement schedules shall supersede, or
supplements shall modify, the Schedules then in effect.  The Additional Debtor
shall also deliver such authorizing resolutions, good standing certificates,
incumbency certificates, organizational documents, financing statements and
other information and documentation as the Agent may reasonably request.  Upon
delivery of the foregoing to the Agent, the Additional Debtor shall be and
become a party to this Agreement with the same rights and obligations as the
Debtors, for all purposes hereof as fully and to the same extent as if it were
an original signatory hereto and shall be deemed to have made the
representations, warranties and covenants set forth herein as of the date of
execution and delivery of such Additional Debtor Joinder, and all references
herein to the “Debtors” shall be deemed to include each Additional Debtor.

(jj)         Each Debtor shall vote the Pledged Securities to comply with the
covenants and agreements set forth herein and in the Debentures.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 12 or 24

 
 

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(kk)        Each Debtor shall register the pledge of the applicable Pledged
Securities on the books of such Debtor.  Each Debtor shall notify each issuer of
Pledged Securities to register the pledge of the applicable Pledged Securities
in the name of the Secured Parties on the books of such issuer.  Further, except
with respect to certificated securities delivered to the Agent, the applicable
Debtor shall deliver to Agent an acknowledgement of pledge (which, where
appropriate, shall comply with the requirements of the relevant UCC with respect
to perfection by registration) signed by the issuer of the applicable Pledged
Securities, which acknowledgement shall confirm that: (a) it has registered the
pledge on its books and records; and (b) at any time directed by Agent during
the continuation of an Event of Default, such issuer will transfer the record
ownership of such Pledged Securities into the name of any designee of Agent,
will take such steps as may be necessary to effect the transfer, and will comply
with all other instructions of Agent regarding such Pledged Securities without
the further consent of the applicable Debtor.

(ll)          In the event that, upon an occurrence of an Event of Default,
Agent shall sell all or any of the Pledged Securities to another party or
parties (herein called the “Transferee”) or shall purchase or retain all or any
of the Pledged Securities, each Debtor shall, to the extent applicable: (i)
deliver to Agent or the Transferee, as the case may be, the articles of
incorporation, bylaws, minute books, stock certificate books, corporate seals,
deeds, leases, indentures, agreements, evidences of indebtedness, books of
account, financial records and all other Organizational Documents and records of
the Debtors and their direct and indirect subsidiaries; (ii) use its best
efforts to obtain resignations of the persons then serving as officers and
directors of the Debtors and their direct and indirect subsidiaries, if so
requested; and (iii) use its best efforts to obtain any approvals that are
required by any governmental or regulatory body in order to permit the sale of
the Pledged Securities to the Transferee or the purchase or retention of the
Pledged Securities by Agent and allow the Transferee or Agent to continue the
business of the Debtors and their direct and indirect subsidiaries.
 
(mm)      Without limiting the generality of the other obligations of the
Debtors hereunder, each Debtor shall promptly (i) cause to be registered at the
United States Copyright Office all of its material copyrights, (ii) cause the
security interest contemplated hereby with respect to all Intellectual Property
registered at the United States Copyright Office or United States Patent and
Trademark Office to be duly recorded at the applicable office, and (iii) give
the Agent notice whenever it acquires (whether absolutely or by license) or
creates any additional material Intellectual Property.

 (nn)       Each Debtor will from time to time, at the joint and several expense
of the Debtors, promptly execute and deliver all such further instruments and
documents, and take all such further action as may be necessary or desirable, or
as the Agent may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Secured Parties to exercise and enforce their rights and remedies hereunder and
with respect to any Collateral or to otherwise carry out the purposes of this
Agreement.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 13 or 24

 
 

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Schedule F attached hereto lists all of the patents, patent applications,
trademarks, trademark applications, registered copyrights, and domain names
owned by any of the Debtors as of the date hereof.  Schedule F lists all
material licenses in favor of any Debtor for the use of any patents, trademarks,
copyrights and domain names as of the date hereof.  All material patents and
trademarks of the Debtors have been duly recorded at the United States Patent
and Trademark Office and all material copyrights of the Debtors have been duly
recorded at the United States Copyright Office.
 
5.           Effect of Pledge on Certain Rights. If any of the Collateral
subject to this Agreement consists of nonvoting equity or ownership interests
(regardless of class, designation, preference or rights) that may be converted
into voting equity or ownership interests upon the occurrence of certain events
(including, without limitation, upon the transfer of all or any of the other
stock or assets of the issuer), it is agreed that the pledge of such equity or
ownership interests pursuant to this Agreement or the enforcement of any of
Agent’s rights hereunder shall not be deemed to be the type of event which would
trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which any Debtor is subject or to
which any Debtor is party.

6.            Defaults. The following events shall be “Events of Default”:

(a)    The occurrence of an Event of Default (as defined in the Debentures)
under the Debentures;

(b)    Any representation or warranty of any Debtor in this Agreement shall
prove to have been incorrect in any material respect when made;

(c)    The failure by any Debtor to observe or perform any of its obligations
hereunder for five (5) days after delivery to such Debtor of notice of such
failure by or on behalf of a Secured Party unless such default is capable of
cure but cannot be cured within such time frame and such Debtor is using best
efforts to cure same in a timely fashion; or

(d)    If any provision of this Agreement shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by any Debtor, or a proceeding shall be commenced by any Debtor, or by
any governmental authority having jurisdiction over any Debtor, seeking to
establish the invalidity or unenforceability thereof, or any Debtor shall deny
that any Debtor has any liability or obligation purported to be created under
this Agreement.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 14 or 24

 

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7.            Duty To Hold In Trust.

(a)           Upon the occurrence of any Event of Default and at any time
thereafter, each Debtor shall, upon receipt of any revenue, income, dividend,
interest or other sums subject to the Security Interests, whether payable
pursuant to the Debentures or otherwise, or of any check, draft, note, trade
acceptance or other instrument evidencing an obligation to pay any such sum,
hold the same in trust for the Secured Parties and shall forthwith endorse and
transfer any such sums or instruments, or both, to the Secured Parties, pro-rata
in proportion to their respective then-currently outstanding principal amount of
Debentures for application to the satisfaction of the Obligations (and if any
Debenture is not outstanding, pro-rata in proportion to the initial purchases of
the remaining Debentures).

(b)           If any Debtor shall become entitled to receive or shall receive
any securities or other property (including, without limitation, shares of
Pledged Securities or instruments representing Pledged Securities acquired after
the date hereof, or any options, warrants, rights or other similar property or
certificates representing a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital, or
issued in connection with any reorganization of such Debtor or any of its direct
or indirect subsidiaries) in respect of the Pledged Securities (whether as an
addition to, in substitution of, or in exchange for, such Pledged Securities or
otherwise), such Debtor agrees to (i) accept the same as the agent of the
Secured Parties; (ii) hold the same in trust on behalf of and for the benefit of
the Secured Parties; and (iii) to deliver any and all certificates or
instruments evidencing the same to Agent on or before the close of business on
the fifth business day following the receipt thereof by such Debtor, in the
exact form received together with the Necessary Endorsements, to be held by
Agent subject to the terms of this Agreement as Collateral.

8.            Rights and Remedies Upon Default.

(a)           Upon the occurrence of any Event of Default and at any time
thereafter, the Secured Parties, acting through the Agent, shall have the right
to exercise all of the remedies conferred hereunder and under the Debentures,
and the Secured Parties shall have all the rights and remedies of a secured
party under the UCC.  Without limitation, the Agent, for the benefit of the
Secured Parties, shall have the following rights and powers:

(i)         The Agent shall have the right to take possession of the Collateral
and, for that purpose, enter, with the aid and assistance of any person, any
premises where the Collateral, or any part thereof, is or may be placed and
remove the same, and each Debtor shall assemble the Collateral and make it
available to the Agent at places which the Agent shall reasonably select,
whether at such Debtor's premises or elsewhere, and make available to the Agent,
without rent, all of such Debtor’s respective premises and facilities for the
purpose of the Agent taking possession of, removing or putting the Collateral in
saleable or disposable form.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 15 or 24

 
 
 

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(ii)        Upon notice to the Debtors by Agent, all rights of each Debtor to
exercise the voting and other consensual rights which it would otherwise be
entitled to exercise and all rights of each Debtor to receive the dividends and
interest which it would otherwise be authorized to receive and retain, shall
cease.  Upon such notice, Agent shall have the right to receive, for the benefit
of the Secured Parties, any interest, cash dividends or other payments on the
Collateral and, at the option of Agent, to exercise in such Agent’s discretion
all voting rights pertaining thereto.  Without limiting the generality of the
foregoing, Agent shall have the right (but not the obligation) to exercise all
rights with respect to the Collateral as it were the sole and absolute owner
thereof, including, without limitation, to vote and/or to exchange, at its sole
discretion, any or all of the Collateral in connection with a merger,
reorganization, consolidation, recapitalization or other readjustment concerning
or involving the Collateral or any Debtor or any of its direct or indirect
subsidiaries.

(iii)       The Agent shall have the right to operate the business of each
Debtor using the Collateral and shall have the right to assign, sell, lease or
otherwise dispose of and deliver all or any part of the Collateral, at public or
private sale or otherwise, either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in such parcel or
parcels and at such time or times and at such place or places, and upon such
terms and conditions as the Agent may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to any Debtor or right of redemption of a
Debtor, which are hereby expressly waived.  Upon each such sale, lease,
assignment or other transfer of Collateral, the Agent, for the benefit of the
Secured Parties, may, unless prohibited by applicable law which cannot be
waived, purchase all or any part of the Collateral being sold, free from and
discharged of all trusts, claims, right of redemption and equities of any
Debtor, which are hereby waived and released.

(iv)       The Agent shall have the right (but not the obligation) to notify any
account debtors and any obligors under instruments or accounts to make payments
directly to the Agent, on behalf of the Secured Parties, and to enforce the
Debtors’ rights against such account debtors and obligors.

(v)        The Agent, for the benefit of the Secured Parties, may (but is not
obligated to) direct any financial intermediary or any other person or entity
holding any investment property to transfer the same to the Agent, on behalf of
the Secured Parties, or its designee.

(vi)       The Agent may (but is not obligated to) transfer any or all
Intellectual Property registered in the name of any Debtor at the United States
Patent and Trademark Office and/or Copyright Office into the name of the Secured
Parties or any designee or any purchaser of any Collateral.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 16 or 24

 
 
 

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(b)           The Agent shall comply with any applicable law in connection with
a disposition of Collateral and such compliance will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral.  The
Agent may sell the Collateral without giving any warranties and may specifically
disclaim such warranties.  If the Agent sells any of the Collateral on credit,
the Debtors will only be credited with payments actually made by the
purchaser.  In addition, each Debtor waives any and all rights that it may have
to a judicial hearing in advance of the enforcement of any of the Agent’s rights
and remedies hereunder, including, without limitation, its right following an
Event of Default to take immediate possession of the Collateral and to exercise
its rights and remedies with respect thereto.
 
(c)           For the purpose of enabling the Agent to further exercise rights
and remedies under this Section 8 or elsewhere provided by agreement or
applicable law, each Debtor hereby grants to the Agent, for the benefit of the
Agent and the Secured Parties, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Debtor) to use, license
or sublicense following an Event of Default, any Intellectual Property now owned
or hereafter acquired by such Debtor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.

9.             Applications of Proceeds. After an Event of Default, the proceeds
of any such sale, lease or other disposition of the Collateral hereunder or from
payments made on account of any insurance policy insuring any portion of the
Collateral shall be applied first, to the expenses of retaking, holding,
storing, processing and preparing for sale, selling, and the like (including,
without limitation, any taxes, fees and other costs incurred in connection
therewith) of the Collateral, to the reasonable attorneys’ fees and expenses
incurred by the Agent in enforcing the Secured Parties’ rights hereunder and in
connection with collecting, storing and disposing of the Collateral, and then to
satisfaction of the Obligations pro rata among the Secured Parties (based on
then-outstanding principal amounts of Debentures at the time of any such
determination), and to the payment of any other amounts required by applicable
law, after which the Secured Parties shall pay to the applicable Debtor any
surplus proceeds. If, upon the sale, license or other disposition of the
Collateral, the proceeds thereof are insufficient to pay all amounts to which
the Secured Parties are legally entitled, the Debtors will be liable for the
deficiency, together with interest thereon, at the rate of 18% per annum or the
lesser amount permitted by applicable law (the “Default Rate”), and the
reasonable fees of any attorneys employed by the Secured Parties to collect such
deficiency.  To the extent permitted by applicable law, each Debtor waives all
claims, damages and demands against the Secured Parties arising out of the
repossession, removal, retention or sale of the Collateral, unless due solely to
the gross negligence or willful misconduct of the Secured Parties as determined
by a final judgment (not subject to further appeal) of a court of competent
jurisdiction.

10.           Securities Law Provision.  Each Debtor recognizes that Agent may
be limited in its ability to effect a sale to the public of all or part of the
Pledged Securities by reason of certain prohibitions in the Securities Act of
1933, as amended, or other federal or state securities laws (collectively, the
“Securities Laws”), and may be compelled to resort to one or more sales to a
restricted group of purchasers who may be required to agree to acquire the
Pledged Securities for their own account, for investment and not with a view to
the distribution or resale thereof.  Each Debtor agrees that sales so made may
be at prices and on terms less favorable than if the Pledged Securities were
sold to the public, and that Agent has no obligation to delay the sale of any
Pledged Securities for the period of time necessary to register the Pledged
Securities for sale to the public under the Securities Laws.  Each Debtor shall
cooperate with Agent in its attempt to satisfy any requirements under the
Securities Laws (including, without limitation, registration thereunder if
requested by Agent) applicable to the sale of the Pledged Securities by Agent.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 17 or 24

 
 
 

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11.           Costs and Expenses. Each Debtor agrees to pay all reasonable
out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements
pursuant to the UCC, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches
reasonably required by the Agent.  The Debtors shall also pay all other claims
and charges which in the reasonable opinion of the Agent is reasonably likely to
prejudice, imperil or otherwise affect the Collateral or the Security Interests
therein.  The Debtors will also, upon demand, pay to the Agent the amount of any
and all reasonable expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, which the Agent, for the benefit of the
Secured Parties, may incur in connection with (i) the enforcement of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, or (iii) the exercise or
enforcement of any of the rights of the Secured Parties under the Debentures.
Until so paid, any fees payable hereunder shall be added to the principal amount
of the Debentures and shall bear interest at the Default Rate.

12.           Responsibility for Collateral. The Debtors assume all liabilities
and responsibility in connection with all Collateral, and the Obligations shall
in no way be affected or diminished by reason of the loss, destruction, damage
or theft of any of the Collateral or its unavailability for any reason.  Without
limiting the generality of the foregoing, (a) neither the Agent nor any Secured
Party (i) has any duty (either before or after an Event of Default) to collect
any amounts in respect of the Collateral or to preserve any rights relating to
the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the
Collateral for sale, and (b) each Debtor shall remain obligated and liable under
each contract or agreement included in the Collateral to be observed or
performed by such Debtor thereunder.  Neither the Agent nor any Secured Party
shall have any obligation or liability under any such contract or agreement by
reason of or arising out of this Agreement or the receipt by the Agent or any
Secured Party of any payment relating to any of the Collateral, nor shall the
Agent or any Secured Party be obligated in any manner to perform any of the
obligations of any Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the
Agent or any Secured Party in respect of the Collateral or as to the sufficiency
of any performance by any party under any such contract or agreement, to present
or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to the Agent or to which
the Agent or any Secured Party may be entitled at any time or times.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 18 or 24

 

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13.           Security Interests Absolute. All rights of the Secured Parties and
all obligations of the Debtors hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Debentures or any agreement entered into in connection with the foregoing,
or any portion hereof or thereof; (b) any change in the time, manner or place of
payment or performance of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Debentures or any other agreement entered into in connection with the
foregoing; (c) any exchange, release or nonperfection of any of the Collateral,
or any release or amendment or waiver of or consent to departure from any other
collateral for, or any guarantee, or any other security, for all or any of the
Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and
cancel in its sole discretion any insurance claims or matters made or arising in
connection with the Collateral; or (e) any other circumstance which might
otherwise constitute any legal or equitable defense available to a Debtor, or a
discharge of all or any part of the Security Interests granted hereby.  Until
the Obligations shall have been paid and performed in full, the rights of the
Secured Parties shall continue even if the Obligations are barred for any
reason, including, without limitation, the running of the statute of limitations
or bankruptcy.  Each Debtor expressly waives presentment, protest, notice of
protest, demand, notice of nonpayment and demand for performance. In the event
that at any time any transfer of any Collateral or any payment received by the
Secured Parties hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than the Secured Parties, then, in any such
event, each Debtor’s obligations hereunder shall survive cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment thereof
and/or cancellation of this Agreement, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof.  Each
Debtor waives all right to require the Secured Parties to proceed against any
other person or entity or to apply any Collateral which the Secured Parties may
hold at any time, or to marshal assets, or to pursue any other remedy. Each
Debtor waives any defense arising by reason of the application of the statute of
limitations to any obligation secured hereby.

14.           Term of Agreement. This Agreement and the Security Interests shall
terminate on the date on which all payments under the Debentures have been
indefeasibly paid in full and all other Obligations have been paid or
discharged; provided, however, that all indemnities of the Debtors contained in
this Agreement shall survive and remain operative and in full force and effect
regardless of the termination of this Agreement.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 19 or 24

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15.           Power of Attorney; Further Assurances.
 
(a)           Each Debtor authorizes the Agent, and does hereby make, constitute
and appoint the Agent and its officers, agents, successors or assigns with full
power of substitution, as such Debtor’s true and lawful attorney-in-fact, with
power, in the name of the Agent or such Debtor, to, after the occurrence and
during the continuance of an Event of Default, (i) endorse any note, checks,
drafts, money orders or other instruments of payment (including payments payable
under or in respect of any policy of insurance) in respect of the Collateral
that may come into possession of the Agent; (ii) to sign and endorse any
financing statement pursuant to the UCC or any invoice, freight or express bill,
bill of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts, and other
documents relating to the Collateral; (iii) to pay or discharge taxes, liens,
security interests or other encumbrances at any time levied or placed on or
threatened against the Collateral; (iv) to demand, collect, receipt for,
compromise, settle and sue for monies due in respect of the Collateral; (v) to
transfer any Intellectual Property or provide licenses respecting any
Intellectual Property; and (vi) generally, at the option of the Agent, and at
the expense of the Debtors, at any time, or from time to time, to execute and
deliver any and all documents and instruments and to do all acts and things
which the Agent deems necessary to protect, preserve and realize upon the
Collateral and the Security Interests granted therein in order to effect the
intent of this Agreement and the Debentures all as fully and effectually as the
Debtors might or could do; and each Debtor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue hereof.  This power of
attorney is coupled with an interest and shall be irrevocable for the term of
this Agreement and thereafter as long as any of the Obligations shall be
outstanding.  The designation set forth herein shall be deemed to amend and
supersede any inconsistent provision in the Organizational Documents or other
documents or agreements to which any Debtor is subject or to which any Debtor is
a party.  Without limiting the generality of the foregoing, after the occurrence
and during the continuance of an Event of Default, each Secured Party is
specifically authorized to execute and file any applications for or instruments
of transfer and assignment of any patents, trademarks, copyrights or other
Intellectual Property with the United States Patent and Trademark Office and the
United States Copyright Office.

(b)           On a continuing basis, each Debtor will make, execute,
acknowledge, deliver, file and record, as the case may be, with the proper
filing and recording agencies in any jurisdiction, including, without
limitation, the jurisdictions indicated on Schedule C attached hereto, all such
instruments, and take all such action as may reasonably be deemed necessary or
advisable, or as reasonably requested by the Agent, to perfect the Security
Interests granted hereunder and otherwise to carry out the intent and purposes
of this Agreement, or for assuring and confirming to the Agent the grant or
perfection of a perfected security interest in all the Collateral under the UCC.
 
16.           Notices. All notices, requests, demands and other communications
hereunder shall be subject to the notice provision of the Purchase Agreement (as
such term is defined in the Debentures).

17.          Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Agent shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Parties’ rights and
remedies hereunder.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 20 or 24

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18.          Miscellaneous.

(a)           No course of dealing between the Debtors and the Secured Parties,
nor any failure to exercise, nor any delay in exercising, on the part of the
Secured Parties, any right, power or privilege hereunder or under the Debentures
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.

(b)           All of the rights and remedies of the Secured Parties with respect
to the Collateral, whether established hereby or by the Debentures or by any
other agreements, instruments or documents or by law shall be cumulative and may
be exercised singly or concurrently.

(c)           This Agreement, together with the exhibits and schedules hereto,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into this Agreement and the exhibits and schedules hereto. No provision
of this Agreement may be waived, modified, supplemented or amended except in a
written instrument signed, in the case of an amendment, by the Debtors and the
Secured Parties or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought.

(d)           If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

(e)           No waiver of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right.

(f)           This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and permitted assigns.  The Company and the
Guarantor may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Secured Party (other than by
merger).  Any Secured Party may assign any or all of its rights under this
Agreement to any Person to whom such Secured Party assigns or transfers any
Securities, provided such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of this Agreement that apply to
the “Secured Parties.”
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 21 or 24

 
 

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(g)           Each party shall take such further action and execute and deliver
such further documents as may be necessary or appropriate in order to carry out
the provisions and purposes of this Agreement.

(h)           All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Texas, without
regard to the principles of conflicts of law thereof.  Each Debtor agrees that
all proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and the Debentures (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the Dallas County, Texas.
Each Debtor hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the Dallas County, Texas for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such proceeding
is improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.  Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. If any party shall commence a proceeding to enforce any
provisions of this Agreement, then the prevailing party in such proceeding shall
be reimbursed by the other party for its reasonable attorney’s fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such proceeding.

(i)            This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and, all of
which taken together shall constitute one and the same Agreement. In the event
that any signature is delivered by facsimile transmission, such signature shall
create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.

(j)            All Debtors shall jointly and severally be liable for the
obligations of each Debtor to the Secured Parties hereunder.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 22 or 24

 
 
 

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(k)           Each Debtor shall indemnify, reimburse and hold harmless the Agent
and the Secured Parties and their respective partners, members, shareholders,
officers, directors, employees and agents (and any other persons with other
titles that have similar functions) (collectively, “Indemnitees”) from and
against any and all losses, claims, liabilities, damages, penalties, suits,
costs and expenses, of any kind or nature, (including fees relating to the cost
of investigating and defending any of the foregoing) imposed on, incurred by or
asserted against such Indemnitee in any way related to or arising from or
alleged to arise from this Agreement or the Collateral, except any such losses,
claims, liabilities, damages, penalties, suits, costs and expenses which result
from the gross negligence or willful misconduct of the Indemnitee as determined
by a final, nonappealable decision of a court of competent jurisdiction.  This
indemnification provision is in addition to, and not in limitation of, any other
indemnification provision in the Debentures, the Purchase Agreement (as such
term is defined in the Debentures) or any other agreement, instrument or other
document executed or delivered in connection herewith or therewith.

(l)           Nothing in this Agreement shall be construed to subject any
Secured Party to liability as a partner in any Debtor or any if its direct or
indirect subsidiaries that is a partnership or as a member in any Debtor or any
of its direct or indirect subsidiaries that is a limited liability company, nor
shall Agent or any Secured Party be deemed to have assumed any obligations under
any partnership agreement or limited liability company agreement, as applicable,
of any such Debtor or any if its direct or indirect subsidiaries or otherwise,
unless and until any such Secured Party exercises its right to be substituted
for such Debtor as a partner or member, as applicable, pursuant hereto.

(m)         To the extent that the grant of the security interest in the
Collateral and the enforcement of the terms hereof require the consent, approval
or action of any partner or member, as applicable, of any Debtor or any direct
or indirect subsidiary of any Debtor or compliance with any provisions of any of
the Organizational Documents, the Debtors hereby grant such consent and approval
and waive any such noncompliance with the terms of said documents.
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 23 or 24

 
 
 

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       IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.

GLEN ROSE PETROLEUM CORPORATION
   
By:
 
 
Name: Joseph F. Langston, Jr.
 
Title: President
   
UHC PETROLEUM CORPORATION
   
By:
 
 
Name:  Joseph F. Langston, Jr.
 
Title:    President

BLACKWOOD VENTURES LLC:

Signature of Investing Entity: 
______________________________________________

Name of Authorized Signatory:
Andrew Taylor-Kimmins
   
Title of Authorized Signatory:
Managing Director

[SIGNATURE PAGE OF HOLDERS FOLLOWS]
 
Glen Rose Petroleum Corporation
 
Blackwood Ventures LLC Senior Secured Debenture
Page 24 or 24

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EXHIBIT C

FORM OF $.33 WARRANTS

 
 

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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
A REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER THE ACT AND
APPLICABLE LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT
AND APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
 
Certificate No. WC-___
Warrant to Purchase 250,000 Shares of
Dated: To be Determined
Common Stock (subject to adjustment)

 
WARRANT TO PURCHASE COMMON STOCK
of
GLEN ROSE PETROLEUM CORPORATION
 
This certifies that, for value received, BLACKWOOD VENTURES LLC., or its
registered assigns (the “Holder”) is entitled, subject to the terms set forth
below, to purchase from Glen Rose Petroleum Corporation, a Delaware corporation
(the “Company”), up to _________ shares of common stock, par value $0.001 per
share (the “Common Stock”), as constituted on the date hereof (the “Warrant
Issue Date”), upon surrender hereof, at the principal office of the Company
referred to below, with the Notice of Exercise form annexed hereto duly
executed, and simultaneous payment therefor in lawful money of the United States
or otherwise as hereinafter provided, at the Exercise Price set forth in Section
2 below. The number and character of such shares of Common Stock and the
Exercise Price are subject to adjustment as provided herein. The term “Warrant”
as used herein shall include this Warrant and any warrants delivered in
substitution or exchange therefor as provided herein. This Warrant is being
issued pursuant to the 8.5% Senior Secured Debenture and Warrant Agreement,
dated July 2, 2009), by and between the Company and Blackwood Ventures LLC.
 
1.           Term of Warrant. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable, in whole or in part, during the term
commencing on the Warrant Issue Date and ending at 5:00 p.m., Eastern Standard
Time, on the December 31, 2010 (the “Term”), and shall be void thereafter.
 
2.           Exercise Price. The exercise price at which this Warrant may be
exercised shall be $.33 per share of Common Stock (the “Exercise Price”), as
such Exercise Price may be adjusted from time to time pursuant to Section 11
hereof.

Glen Rose Petroleum Corporation
 
$.33 Glen Rose Petroleum Warrants expiring December 31, 2010
Page 1 or 11

 
 

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3.           Number of Warrants.  The number of warrants shall equal one share
for each four shares of Glen Rose Petroleum Corporation issued pursuant to the
conversion of the 8.5% Senior Secured Debenture dated July 2, 2009.  The Warrant
Issue Date shall be the date upon which any such warrant is issued.
 
4.           Vesting and Exercise of Warrant.
 
(a)            Exercisability. Notwithstanding anything herein to the contrary,
this Warrant will only become exercisable (“Vest”) when the Company has obtained
shareholder approval of this Warrant in accordance with applicable federal
securities laws and the rules and regulations of any national securities
exchange or inter-dealer quotation system upon which the Company’s Common Stock
is then traded.
 
(b)            Exercise of Warrant.
 
(i)           Method of Exercise. Subject to section 3(a) above, the purchase
rights represented by this Warrant are exercisable by the Holder in whole or in
part, at any time, or from time to time, during the Term, by the surrender of
this Warrant and the Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder, at the principal office of the Company (or
such other office or agency of the Company as it may designate by notice in
writing to the Holder at the address of the Holder appearing on the books of the
Company), upon payment in cash by wire transfer or by check acceptable to the
Company of the purchase price of the shares to be purchased.
 
(ii)           Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of Common Stock is greater than
the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the Holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Notice of Exercise and notice of such
election, in which event the Company shall issue to the Holder a number of
shares of Common Stock computed using the following formula:
 
Glen Rose Petroleum Corporation
 
$.33 Glen Rose Petroleum Warrants expiring December 31, 2010
Page 2 or 11

 
 

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X = 
  Y (A-B) 
 
        A
         
Where
X
=
The number of shares of Common Stock to be issued to the Holder
         
Y
=
the number of shares of Common Stock purchasable under this Warrant or, if only
a portion of this Warrant is being exercised, the portion of this Warrant being
canceled (at the date of such calculation)
         
A
=
the fair market value of one share of the Common Stock (at the date of such
calculation)
         
B
=
Exercise Price (as adjusted to the date of such calculation).

For purposes of the above calculation, fair market value of one share of Common
Stock shall be determined by the Company’s Board of Directors in good faith;
provided, however, that where there exists a public market for the Common Stock
at the time of such exercise, the fair market value of one share of Common Stock
shall be the average of the closing bid and asked prices of the Common Stock
quoted in the Over-The-Counter Market Summary or the last reported sale price of
the Common Stock or the closing price quoted on the Nasdaq Capital Market or on
any exchange on which the Common Stock is listed, whichever is applicable, as
reported by Bloomberg L.P. for the five (5) trading days prior to the date of
the Company’s receipt of this Warrant and delivery of the properly endorsed
Notice of Exercise and notice of Holder’s election to exercise without cash.
 
(c)            Issuance of Shares. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
Warrant Shares issuable upon such exercise shall be treated for all purposes as
the holder of record of such shares as of the close of business on such date. As
promptly as practicable on or after such date and in any event within ten (10)
days thereafter, the Company at its expense shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the number of Warrant Shares issuable upon such exercise. In the event that this
Warrant is exercised in part, the Company at its expense will execute and
deliver a new Warrant of like tenor exercisable for the remaining number of
Warrant Shares for which this Warrant may then be exercised.
 
5.           No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled (after aggregating all shares that are being issued upon such
exercise), the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
 
Glen Rose Petroleum Corporation
 
$.33 Glen Rose Petroleum Warrants expiring December 31, 2010
Page 3 or 11

 
 
 

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6.           Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor and amount.
 
7.           Rights of Stockholders. Subject to Sections 10 and 12 of this
Warrant, the Holder shall not be entitled to vote or receive dividends or be
deemed the holder of the Warrant Shares or any other securities of the Company
that may at any time be issuable on the exercise hereof for any purpose, nor
shall anything contained herein be construed to confer upon the Holder, as such,
any of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value, or change of stock to no par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until this Warrant shall have been
exercised as provided herein.
 
8.           Transfer of Warrant.
 
(a)            Warrant Register. The Company will maintain a register (the
“Warrant Register”) containing the names and addresses of the Holder or Holders.
Any Holder of this Warrant or any portion thereof may change its address as
shown on the Warrant Register by written notice to the Company requesting such
change. Any notice or written communication required or permitted to be given to
the Holder may be delivered or given by mail to such Holder as shown on the
Warrant Register and at the address shown on the Warrant Register. Until this
Warrant is transferred on the Warrant Register of the Company, the Company may
treat the Holder as shown on the Warrant Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to the contrary.
 
(b)            Warrant Agent. The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section 7(a) above, issuing the Warrant Shares or other securities then
issuable upon the exercise of this Warrant, exchanging this Warrant, replacing
this Warrant, or any or all of the foregoing (the “Warrant Agent”). Thereafter,
any such registration, issuance, exchange or replacement, as the case may be,
shall be made at the office of the Warrant Agent.
 
(c)            Transferability and Negotiability of Warrant. This Warrant may
not be transferred or assigned in whole or in part without compliance with all
applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company, if such are requested by
the Company). Subject to the provisions of this Warrant with respect to
compliance with the Securities Act of 1933, as amended (the “Act”), title to
this Warrant may be transferred by endorsement (by the Holder executing the
Assignment Form annexed hereto) and delivery in the same manner as a negotiable
instrument transferable by endorsement and delivery.

Glen Rose Petroleum Corporation
 
$.33 Glen Rose Petroleum Warrants expiring December 31, 2010
Page 4 or 11

 
 

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(d)            Exchange of Warrant Upon a Transfer. Upon surrender of this
Warrant for exchange, properly endorsed on the Assignment Form and subject to
the provisions of this Warrant with respect to compliance with the Act and with
the limitations on assignments and transfers contained in this Section 7, the
Company at its expense shall issue to or on the order of the Holder a new
warrant or warrants of like tenor, in the name of the Holder or as the Holder
(on payment by the Holder of any applicable transfer taxes) may direct, for the
number of shares issuable upon exercise hereof.
 
(e)            Compliance with Securities Laws.
 
(i)           The Holder of this Warrant, by acceptance hereof, acknowledges
that this Warrant and the Warrant Shares to be issued upon exercise hereof are
being acquired for investment purposes, and that the Holder will not offer, sell
or otherwise dispose of this Warrant or any Warrant Shares to be issued upon
exercise hereof except under circumstances that will not result in a violation
of the Act or any state securities laws.
 
(ii)           This Warrant and all Warrant Shares issued upon exercise hereof
or conversion thereof shall be stamped or imprinted with a legend in
substantially the following form (in addition to any legend required by state
securities laws):
 
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH ACT AND APPLICABLE LAWS OR
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED.

9.           Reservation of Stock. The Company covenants that during the Term,
the Company will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of this Warrant and, from time to time, will take all steps
necessary to amend its Certificate or Articles of Incorporation (the
“Certificate”) to provide sufficient reserves of Warrant Shares issuable upon
exercise of this Warrant. The Company further covenants that all Warrant Shares
that may be issued upon the exercise of rights represented by this Warrant and
payment of the Exercise Price, all as set forth herein will be duly and validly
authorized and issued, fully paid and nonassessable and free from all taxes,
liens and charges in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously therewith). The Company agrees that
its issuance of this Warrant shall constitute full authority to its officers who
are charged with the duty of executing stock certificates to execute and issue
the necessary certificates for the Warrant Shares upon the exercise of this
Warrant.

Glen Rose Petroleum Corporation
 
$.33 Glen Rose Petroleum Warrants expiring December 31, 2010
Page 5 or 11

 
 
 

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10.           Notices.
 
(a)            Whenever the Exercise Price or the shares purchasable hereunder
shall be adjusted pursuant to Section 11 hereof, the Company shall issue a
certificate signed by its Chief Financial Officer setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Exercise Price and the
shares purchasable hereunder after giving effect to such adjustment, and shall
cause a copy of such certificate to be mailed (by first-class mail, postage
prepaid) to the Holder of this Warrant.
 
(b)            In case:
 
(i)           the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time receivable upon the exercise of this
Warrant) for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any other securities, or to receive any other right, or
 
(ii)           of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation or entity, or any
conveyance of all or substantially all of the assets of the Company to another
corporation or entity, or
 
(iii)           of any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
 
then, and in each such case, the Company will mail or cause to be mailed to the
Holder or Holders a notice specifying, as the case may be, (A) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(B) the date on which such reorganization, reclassification, consolidation,
merger, con-veyance, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such stock or securities at the time receivable upon the exercise of
this Warrant) shall be entitled to exchange their shares of Common Stock (or
such other stock or securities) for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least 20
days prior to the record date specified in (A) above or 30 days prior to the
date specified in (B) above.
 
11.           Amendments and Waivers.
 
(a)            Except as provided in Section 10(b) below, this Warrant, or any
provision hereof, may be amended, waived, discharged or terminated only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
 
Glen Rose Petroleum Corporation
 
$.33 Glen Rose Petroleum Warrants expiring December 31, 2010
Page 6 or 11

 
 
 

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(b)            Any term or condition of this Warrant may be amended with the
written consent of the Company and the Holder. Any amendment effected in
accordance with this Section 10(b) shall be binding upon the Holder and each
future holder of this Warrant and the Company.
 
(c)            No waivers of, or exceptions to, any term, condition or provision
of this Warrant, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.
 
12.           Adjustments. The Exercise Price and the shares purchasable
hereunder are subject to adjustment from time to time as follows:
 
(a)            Merger, Sale of Assets, etc. If at any time while this Warrant is
outstanding and unexpired there shall be (i) a reorganization (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), (ii) a merger or consolidation of the Company with or into
another corporation in which the Company is not the surviving entity, or (iii) a
sale or transfer of the Company’s properties and assets as, or substantially as,
an entirety to any other corporation or other entity, then, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation or other entity
resulting from such reorganization, merger, consolidation, merger, sale or
transfer that a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised immediately before
such reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided in this Section 11. The foregoing provision of
this Section 11(a) shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation or other entity that are at the time receivable upon the
exercise of this Warrant. If the per-share consideration payable to the Holder
for shares in connection with any such transaction is in a form other than cash
or marketable securities, then the fair market value of such consideration shall
be determined in accordance with Section 3(b)(ii). In all events, appropriate
adjustment (as determined in good faith by the Company’s Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the transaction, to the end that
the provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
 
(b)            Reclassification, etc. If the Company, at any time while this
Warrant remains outstanding and unexpired, by reclassification of securities or
otherwise, shall change any of the securities as to which purchase rights under
this Warrant exist into the same or a different number of securities of any
other class or classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject to the
purchase rights under this Warrant immediately prior to such reclassification or
other change and the Exercise Price therefor shall be appropriately adjusted,
all subject to further adjustment as provided in this Section 11.

Glen Rose Petroleum Corporation
 
$.33 Glen Rose Petroleum Warrants expiring December 31, 2010
Page 7 or 11

 
 

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(c)            Split, Subdivision or Combination of Shares. If the Company at
any time while this Warrant remains outstanding and unexpired shall split,
subdivide or combine the securities as to which purchase rights under this
Warrant exist, into a different number of securities of the same class, the
Exercise Price for such securities shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination and the number of such securities shall be proportionately increased
in the case of a split or subdivision or proportionately decreased in the case
of a combination.
 
(d)            Adjustments for Dividends in Stock or other Securities or
Property. If while this Warrant remains outstanding and unexpired, the holders
of the securities as to which purchase rights under this Warrant exist
(including without limitation securities into which such securities may be
converted) at the time shall have received, or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive, without payment therefor, other or additional stock or other
securities or property (other than cash) of the Company by way of dividend, then
and in each case, this Warrant shall represent the right to acquire, in addition
to the number of shares of the security receivable upon exercise of this
Warrant, and without payment of any additional consideration therefor, the
amount of such other or additional stock or other securities or property (other
than cash) of the Company that such holder would hold on the date of such
exercise had it been the holder of record of the security receivable upon
exercise of this Warrant (or upon such conversion) on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period, giving effect to all adjustments called
for during such period by the provisions of this Section 11.
 
(e)            Calculations. All calculations under this Section 11 shall be
made to the nearest four decimal points.
 
(f)            No Impairment. The Company will not, by amendment of its charter
or through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
 
13.           Saturdays, Sundays and Holidays. If the last or appointed day for
the taking of any action or the expiration of any right granted herein shall be
a Saturday, Sunday or legal holiday, then (notwithstanding anything herein to
the contrary) such action may be taken or such right may be exercised on the
next succeeding day that is not a Saturday, Sunday or legal holiday.
 
14.           Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.

Glen Rose Petroleum Corporation
 
$.33 Glen Rose Petroleum Warrants expiring December 31, 2010
Page 8 or 11

 
 

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15.           Binding Effect. The terms of this Warrant shall be binding upon
and inure to the benefit of the Company and the Holder and their respective
successors and assigns.
  
IN WITNESS WHEREOF, Glen Rose Petroleum Corporation has caused this Warrant to
be executed by its officers thereunto duly authorized.
 
Dated:
                   
HOLDER: BLACKWOOD VENTURES
LLC
 
GLEN ROSE PETROLEUM
CORPORATION
         
By:
   
By:
                 
Name: Walter Reissman
Its: Authorized Signatory
   
Name:  Joseph F. Langston
Title:  President

Glen Rose Petroleum Corporation
 
$.33 Glen Rose Petroleum Warrants expiring December 31, 2010
Page 9 or 11

 
 
 

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NOTICE OF EXERCISE
 
(1)           The undersigned hereby (A) elects to purchase _______ shares of
Common Stock of GLEN ROSE PETROLEUM CORPORATION, pursuant to the provisions of
Section 3(b)(i) of the attached Warrant, and tenders herewith payment of the
purchase price for such shares in full, or (B) elects to exercise this Warrant
for the purchase of_______ shares of Common Stock, pursuant to the provisions of
Section 3(b)(ii) of the attached Warrant.
 
(2)           In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock to be issued upon exercise hereof
are being acquired for investment purposes, and that the undersigned will not
offer, sell or otherwise dispose of any such shares of Common Stock except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any applicable state securities laws.
 
(3)           Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
 
  
(Name)
   
(Name)

 
(4)           Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:
 

                 
(Name)
     
  
   
(Date)
 
(Signature)
   

 
17

Glen Rose Petroleum Corporation
 
$.33 Glen Rose Petroleum Warrants expiring December 31, 2010
Page 10 or 11

 
 
 

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ASSIGNMENT
 
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of Common Stock set forth below:
 
Name of Assignee
Address
No. of Shares
                             

and does hereby irrevocably constitute and appoint ____________________________
Attorney to make such transfer on the books of GLEN ROSE PETROLEUM CORPORATION,
maintained for the purpose, with full power of substitution in the premises.
 
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment purposes, and that the
Assignee will not offer, sell or otherwise dispose of this Warrant or any shares
of stock to be issued upon exercise hereof except under circumstances which will
not result in a violation of the Securities Act of 1933, as amended, or any
applicable state securities laws.

Dated: _________________________
 
  
Signature of Holder

 
Glen Rose Petroleum Corporation
 
$.33 Glen Rose Petroleum Warrants expiring December 31, 2010
Page 11 or 11

 
 

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EXHIBIT D

FORM OF $.67 WARRANTS

 
 

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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
A REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER THE ACT AND
APPLICABLE LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT
AND APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
  
Certificate No. WC-___
Warrant to Purchase 250,000 Shares of
Dated: To be Determined
Common Stock (subject to adjustment)

 
WARRANT TO PURCHASE COMMON STOCK
of
GLEN ROSE PETROLEUM CORPORATION

 
This certifies that, for value received, BLACKWOOD VENTURES LLC., or its
registered assigns (the “Holder”) is entitled, subject to the terms set forth
below, to purchase from Glen Rose Petroleum Corporation, a Delaware corporation
(the “Company”), up to _________ shares of common stock, par value $0.001 per
share (the “Common Stock”), as constituted on the date hereof (the “Warrant
Issue Date”), upon surrender hereof, at the principal office of the Company
referred to below, with the Notice of Exercise form annexed hereto duly
executed, and simultaneous payment therefor in lawful money of the United States
or otherwise as hereinafter provided, at the Exercise Price set forth in Section
2 below. The number and character of such shares of Common Stock and the
Exercise Price are subject to adjustment as provided herein. The term “Warrant”
as used herein shall include this Warrant and any warrants delivered in
substitution or exchange therefor as provided herein. This Warrant is being
issued pursuant to the 8.5% Senior Secured Debenture and Warrant Agreement,
dated July 2, 2009), by and between the Company and Blackwood Ventures LLC.
 
1.           Term of Warrant. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable, in whole or in part, during the term
commencing on the Warrant Issue Date and ending at 5:00 p.m., Eastern Standard
Time, on the July 2, 2012 (the “Term”), and shall be void thereafter.
 
2.           Exercise Price. The exercise price at which this Warrant may be
exercised shall be $.67 per share of Common Stock (the “Exercise Price”), as
such Exercise Price may be adjusted from time to time pursuant to Section 11
hereof.
 
Glen Rose Petroleum Corporation
 
$.67 Glen Rose Petroleum Warrants expiring June 30, 2012
Page 1 or 11

 
 
 

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3.           Number of Warrants.  The number of warrants shall equal one share
for each four shares of Glen Rose Petroleum Corporation issued pursuant to the
conversion of the 8.5% Senior Secured Debenture dated July 2, 2009.  The Warrant
Issue Date shall be the date upon which any such warrant is issued.
 
4.           Vesting and Exercise of Warrant.
 
(a)            Exercisability. Notwithstanding anything herein to the contrary,
this Warrant will only become exercisable (“Vest”) when the Company has obtained
shareholder approval of this Warrant in accordance with applicable federal
securities laws and the rules and regulations of any national securities
exchange or inter-dealer quotation system upon which the Company’s Common Stock
is then traded.
 
(b)            Exercise of Warrant.
 
(i)           Method of Exercise. Subject to section 3(a) above, the purchase
rights represented by this Warrant are exercisable by the Holder in whole or in
part, at any time, or from time to time, during the Term, by the surrender of
this Warrant and the Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder, at the principal office of the Company (or
such other office or agency of the Company as it may designate by notice in
writing to the Holder at the address of the Holder appearing on the books of the
Company), upon payment in cash by wire transfer or by check acceptable to the
Company of the purchase price of the shares to be purchased.
 
(ii)           Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of Common Stock is greater than
the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the Holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Notice of Exercise and notice of such
election, in which event the Company shall issue to the Holder a number of
shares of Common Stock computed using the following formula:

 
Glen Rose Petroleum Corporation
 
$.67 Glen Rose Petroleum Warrants expiring June 30, 2012
Page 2 or 11

 
 
 

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X = 
  Y (A-B) 
 
        A
         
Where
X
=
The number of shares of Common Stock to be issued to the Holder
         
Y
=
the number of shares of Common Stock purchasable under this Warrant or, if only
a portion of this Warrant is being exercised, the portion of this Warrant being
canceled (at the date of such calculation)
         
A
=
the fair market value of one share of the Common Stock (at the date of such
calculation)
         
B
=
Exercise Price (as adjusted to the date of such calculation).

For purposes of the above calculation, fair market value of one share of Common
Stock shall be determined by the Company’s Board of Directors in good faith;
provided, however, that where there exists a public market for the Common Stock
at the time of such exercise, the fair market value of one share of Common Stock
shall be the average of the closing bid and asked prices of the Common Stock
quoted in the Over-The-Counter Market Summary or the last reported sale price of
the Common Stock or the closing price quoted on the Nasdaq Capital Market or on
any exchange on which the Common Stock is listed, whichever is applicable, as
reported by Bloomberg L.P. for the five (5) trading days prior to the date of
the Company’s receipt of this Warrant and delivery of the properly endorsed
Notice of Exercise and notice of Holder’s election to exercise without cash.
 
(c)            Issuance of Shares. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
Warrant Shares issuable upon such exercise shall be treated for all purposes as
the holder of record of such shares as of the close of business on such date. As
promptly as practicable on or after such date and in any event within ten (10)
days thereafter, the Company at its expense shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the number of Warrant Shares issuable upon such exercise. In the event that this
Warrant is exercised in part, the Company at its expense will execute and
deliver a new Warrant of like tenor exercisable for the remaining number of
Warrant Shares for which this Warrant may then be exercised.
 
5.           No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled (after aggregating all shares that are being issued upon such
exercise), the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
 
Glen Rose Petroleum Corporation
 
$.67 Glen Rose Petroleum Warrants expiring June 30, 2012
Page 3 or 11

 
 
 

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6.           Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor and amount.
 
7.           Rights of Stockholders. Subject to Sections 10 and 12 of this
Warrant, the Holder shall not be entitled to vote or receive dividends or be
deemed the holder of the Warrant Shares or any other securities of the Company
that may at any time be issuable on the exercise hereof for any purpose, nor
shall anything contained herein be construed to confer upon the Holder, as such,
any of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value, or change of stock to no par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until this Warrant shall have been
exercised as provided herein.
 
8.           Transfer of Warrant.
 
(a)            Warrant Register. The Company will maintain a register (the
“Warrant Register”) containing the names and addresses of the Holder or Holders.
Any Holder of this Warrant or any portion thereof may change its address as
shown on the Warrant Register by written notice to the Company requesting such
change. Any notice or written communication required or permitted to be given to
the Holder may be delivered or given by mail to such Holder as shown on the
Warrant Register and at the address shown on the Warrant Register. Until this
Warrant is transferred on the Warrant Register of the Company, the Company may
treat the Holder as shown on the Warrant Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to the contrary.
 
(b)            Warrant Agent. The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section 7(a) above, issuing the Warrant Shares or other securities then
issuable upon the exercise of this Warrant, exchanging this Warrant, replacing
this Warrant, or any or all of the foregoing (the “Warrant Agent”). Thereafter,
any such registration, issuance, exchange or replacement, as the case may be,
shall be made at the office of the Warrant Agent.
 
(c)            Transferability and Negotiability of Warrant. This Warrant may
not be transferred or assigned in whole or in part without compliance with all
applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company, if such are requested by
the Company). Subject to the provisions of this Warrant with respect to
compliance with the Securities Act of 1933, as amended (the “Act”), title to
this Warrant may be transferred by endorsement (by the Holder executing the
Assignment Form annexed hereto) and delivery in the same manner as a negotiable
instrument transferable by endorsement and delivery.
  
Glen Rose Petroleum Corporation
 
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Page 4 or 11

 
 

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(d)            Exchange of Warrant Upon a Transfer. Upon surrender of this
Warrant for exchange, properly endorsed on the Assignment Form and subject to
the provisions of this Warrant with respect to compliance with the Act and with
the limitations on assignments and transfers contained in this Section 7, the
Company at its expense shall issue to or on the order of the Holder a new
warrant or warrants of like tenor, in the name of the Holder or as the Holder
(on payment by the Holder of any applicable transfer taxes) may direct, for the
number of shares issuable upon exercise hereof.
 
(e)            Compliance with Securities Laws.
 
(i)           The Holder of this Warrant, by acceptance hereof, acknowledges
that this Warrant and the Warrant Shares to be issued upon exercise hereof are
being acquired for investment purposes, and that the Holder will not offer, sell
or otherwise dispose of this Warrant or any Warrant Shares to be issued upon
exercise hereof except under circumstances that will not result in a violation
of the Act or any state securities laws.
 
(ii)           This Warrant and all Warrant Shares issued upon exercise hereof
or conversion thereof shall be stamped or imprinted with a legend in
substantially the following form (in addition to any legend required by state
securities laws):
 
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH ACT AND APPLICABLE LAWS OR
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED.

9.           Reservation of Stock. The Company covenants that during the Term,
the Company will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of this Warrant and, from time to time, will take all steps
necessary to amend its Certificate or Articles of Incorporation (the
“Certificate”) to provide sufficient reserves of Warrant Shares issuable upon
exercise of this Warrant. The Company further covenants that all Warrant Shares
that may be issued upon the exercise of rights represented by this Warrant and
payment of the Exercise Price, all as set forth herein will be duly and validly
authorized and issued, fully paid and nonassessable and free from all taxes,
liens and charges in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously therewith). The Company agrees that
its issuance of this Warrant shall constitute full authority to its officers who
are charged with the duty of executing stock certificates to execute and issue
the necessary certificates for the Warrant Shares upon the exercise of this
Warrant.
 
Glen Rose Petroleum Corporation
 
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Page 5 or 11

 
 
 

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10.           Notices.
 
(a)           Whenever the Exercise Price or the shares purchasable hereunder
shall be adjusted pursuant to Section 11 hereof, the Company shall issue a
certificate signed by its Chief Financial Officer setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Exercise Price and the
shares purchasable hereunder after giving effect to such adjustment, and shall
cause a copy of such certificate to be mailed (by first-class mail, postage
prepaid) to the Holder of this Warrant.
 
(b)           In case:
 
(i)           the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time receivable upon the exercise of this
Warrant) for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any other securities, or to receive any other right, or
 
(ii)           of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation or entity, or any
conveyance of all or substantially all of the assets of the Company to another
corporation or entity, or
 
(iii)           of any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
 
then, and in each such case, the Company will mail or cause to be mailed to the
Holder or Holders a notice specifying, as the case may be, (A) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(B) the date on which such reorganization, reclassification, consolidation,
merger, con-veyance, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such stock or securities at the time receivable upon the exercise of
this Warrant) shall be entitled to exchange their shares of Common Stock (or
such other stock or securities) for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least 20
days prior to the record date specified in (A) above or 30 days prior to the
date specified in (B) above.
 
11.           Amendments and Waivers.
 
(a)           Except as provided in Section 10(b) below, this Warrant, or any
provision hereof, may be amended, waived, discharged or terminated only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.

Glen Rose Petroleum Corporation
 
$.67 Glen Rose Petroleum Warrants expiring June 30, 2012
Page 6 or 11

 
 

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(b)           Any term or condition of this Warrant may be amended with the
written consent of the Company and the Holder. Any amendment effected in
accordance with this Section 10(b) shall be binding upon the Holder and each
future holder of this Warrant and the Company.
 
(c)           No waivers of, or exceptions to, any term, condition or provision
of this Warrant, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.
 
12.           Adjustments. The Exercise Price and the shares purchasable
hereunder are subject to adjustment from time to time as follows:
 
(a)           Merger, Sale of Assets, etc. If at any time while this Warrant is
outstanding and unexpired there shall be (i) a reorganization (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), (ii) a merger or consolidation of the Company with or into
another corporation in which the Company is not the surviving entity, or (iii) a
sale or transfer of the Company’s properties and assets as, or substantially as,
an entirety to any other corporation or other entity, then, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation or other entity
resulting from such reorganization, merger, consolidation, merger, sale or
transfer that a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised immediately before
such reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided in this Section 11. The foregoing provision of
this Section 11(a) shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation or other entity that are at the time receivable upon the
exercise of this Warrant. If the per-share consideration payable to the Holder
for shares in connection with any such transaction is in a form other than cash
or marketable securities, then the fair market value of such consideration shall
be determined in accordance with Section 3(b)(ii). In all events, appropriate
adjustment (as determined in good faith by the Company’s Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the transaction, to the end that
the provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
 
(b)           Reclassification, etc. If the Company, at any time while this
Warrant remains outstanding and unexpired, by reclassification of securities or
otherwise, shall change any of the securities as to which purchase rights under
this Warrant exist into the same or a different number of securities of any
other class or classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject to the
purchase rights under this Warrant immediately prior to such reclassification or
other change and the Exercise Price therefor shall be appropriately adjusted,
all subject to further adjustment as provided in this Section 11.
 
Glen Rose Petroleum Corporation
 
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(c)           Split, Subdivision or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall split, subdivide
or combine the securities as to which purchase rights under this Warrant exist,
into a different number of securities of the same class, the Exercise Price for
such securities shall be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a combination and the
number of such securities shall be proportionately increased in the case of a
split or subdivision or proportionately decreased in the case of a combination.
 
(d)           Adjustments for Dividends in Stock or other Securities or
Property. If while this Warrant remains outstanding and unexpired, the holders
of the securities as to which purchase rights under this Warrant exist
(including without limitation securities into which such securities may be
converted) at the time shall have received, or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive, without payment therefor, other or additional stock or other
securities or property (other than cash) of the Company by way of dividend, then
and in each case, this Warrant shall represent the right to acquire, in addition
to the number of shares of the security receivable upon exercise of this
Warrant, and without payment of any additional consideration therefor, the
amount of such other or additional stock or other securities or property (other
than cash) of the Company that such holder would hold on the date of such
exercise had it been the holder of record of the security receivable upon
exercise of this Warrant (or upon such conversion) on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period, giving effect to all adjustments called
for during such period by the provisions of this Section 11.
 
(e)           Calculations. All calculations under this Section 11 shall be made
to the nearest four decimal points.
 
(f)           No Impairment. The Company will not, by amendment of its charter
or through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
 
13.           Saturdays, Sundays and Holidays. If the last or appointed day for
the taking of any action or the expiration of any right granted herein shall be
a Saturday, Sunday or legal holiday, then (notwithstanding anything herein to
the contrary) such action may be taken or such right may be exercised on the
next succeeding day that is not a Saturday, Sunday or legal holiday.
 
14.           Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
 
Glen Rose Petroleum Corporation
 
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15. Binding Effect. The terms of this Warrant shall be binding upon and inure to
the benefit of the Company and the Holder and their respective successors and
assigns.
  
IN WITNESS WHEREOF, Glen Rose Petroleum Corporation has caused this Warrant to
be executed by its officers thereunto duly authorized.
 
Dated:
                       
HOLDER: BLACKWOOD VENTURES
LLC
 
GLEN ROSE PETROLEUM
CORPORATION
         
By:
   
By:
                 
Name: Walter Reissman
Its: Authorized Signatory
   
Name:  Joseph F. Langston
Title:  President

 
Glen Rose Petroleum Corporation
 
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NOTICE OF EXERCISE
 
(1)           The undersigned hereby (A) elects to purchase _______ shares of
Common Stock of GLEN ROSE PETROLEUM CORPORATION, pursuant to the provisions of
Section 3(b)(i) of the attached Warrant, and tenders herewith payment of the
purchase price for such shares in full, or (B) elects to exercise this Warrant
for the purchase of_______ shares of Common Stock, pursuant to the provisions of
Section 3(b)(ii) of the attached Warrant.
 
(2)           In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock to be issued upon exercise hereof
are being acquired for investment purposes, and that the undersigned will not
offer, sell or otherwise dispose of any such shares of Common Stock except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any applicable state securities laws.
 
(3)           Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
 
  
(Name)
   
(Name)

 
(4)           Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:
 

                 
(Name)
               
  
   
(Date)
 
(Signature)
   

 
17
 
Glen Rose Petroleum Corporation
 
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ASSIGNMENT
 
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of Common Stock set forth below:
 
Name of Assignee
Address
No. of Shares
                             

and does hereby irrevocably constitute and appoint ____________________________
Attorney to make such transfer on the books of GLEN ROSE PETROLEUM CORPORATION,
maintained for the purpose, with full power of substitution in the premises.
 
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment purposes, and that the
Assignee will not offer, sell or otherwise dispose of this Warrant or any shares
of stock to be issued upon exercise hereof except under circumstances which will
not result in a violation of the Securities Act of 1933, as amended, or any
applicable state securities laws.

Dated: _________________________
 
  
Signature of Holder

 
Glen Rose Petroleum Corporation
 
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