SECURITIES EXCHANGE AGREEMENT

SECURITIES EXCHANGE AGREEMENT (the “Agreement”), dated as of July 30, 2007, by
and among Maverick Oil and Gas, Inc., a Nevada corporation, with headquarters
located at 16415 Addison Road, Suite 850, Addison, Texas 75001-5332 (the
“Company”), and the investors listed on the Schedule of Buyers attached hereto
(individually, a “Buyer” and collectively, the “Buyers”).

WHEREAS:

A.         The Company, Castlerigg Master Investments Ltd. and Kings Road
Investments Ltd. entered into that certain Securities Purchase Agreement, dated
as of January 5, 2006 (as amended from time to time in accordance with its
terms, the “January 2006 Securities Purchase Agreement”), whereby the Company,
among other things, issued to the Buyers (or their predecessors in interest)
(i) that aggregate principal amount of senior secured convertible debentures (as
amended, the “January 2006 Debentures”), set forth opposite such Buyer’s name in
column (3) on the Schedule of Buyers and (ii) warrants (as amended, the “January
2006 Warrants”), to acquire up to that number of additional shares of the
Company’s common stock, par value $0.001 per share (the “Common Stock”), set
forth opposite such Buyer’s name in column (4) on the Schedule of Buyers
(collectively, the “January 2006 Warrant Shares”).

B.         The Company, Castlerigg Master Investments Ltd. and Kings Road
Investments Ltd. entered into that certain Securities Purchase Agreement, dated
as of June 21, 2006 (as amended from time to time in accordance with its terms,
the “June 2006 Securities Purchase Agreement”), whereby the Company, among other
things, issued to the Buyers (or their predecessors in interest) (i) that
aggregate principal amount of senior secured convertible debentures (as amended,
the “June 2006 Debentures”), set forth opposite such Buyer’s name in column (5)
on the Schedule of Buyers and (ii) warrants (as amended, the “June 2006
Warrants”), to acquire up to that number of additional shares of Common Stock
set forth opposite such Buyer’s name in column (6) on the Schedule of Buyers
(collectively, the “June 2006 Warrant Shares”).

C.         The Company, Castlerigg Master Investments Ltd. and Kings Road
Investments Ltd. entered into that certain Securities Purchase Agreement, dated
as of November 16, 2006 (as amended from time to time in accordance with its
terms, the “November 2006 Securities Purchase Agreement”), whereby the Company,
among other things, issued to the Buyers (or their predecessors in interest)
(i) that aggregate principal amount of senior secured convertible debentures
(the “November 2006 Debentures;” together with the January 2006 Debentures and
the June 2006 Debentures, the “Outstanding Debentures”), set forth opposite such
Buyer’s name in column (7) on the Schedule of Buyers and (ii) a warrant (the
“November 2006 Warrant;” together with the January 2006 Warrants and the June
2006 Warrants, the “Outstanding Warrants”), to acquire up to that number of
additional shares of Common Stock set forth opposite such Buyer’s name in
column (8) of the Schedule of Buyers (collectively, the “November 2006 Warrant
Shares”).

 

 

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D.         The Company has authorized a new series of senior secured convertible
debentures of the Company, in substantially the form attached hereto as Exhibit
A, which shall be convertible into shares of Common Stock, in accordance with
the terms of such debentures.

E.         Prior to Closing, Kings Road Investments Ltd. has assigned to Kings
Road Holdings X Ltd., a Cayman Islands exempted company and wholly-owned
subsidiary, all of its (a) Outstanding Debentures and Outstanding Warrants and
(b) rights under the January 2006 Securities Purchase Agreement, the June 2006
Securities Purchase Agreement and the November 2006 Securities Purchase
Agreement and all of the other agreements relating to its Outstanding Debentures
and Outstanding Warrants.

F.         Each Buyer and the Company wish to exchange at the Closing (as
defined below), upon the terms and conditions contained in this Agreement,
(i) that aggregate principal amount of Outstanding Debentures set forth opposite
such Buyer’s name in column (9) on the Schedule of Buyers (which aggregate
principal amount for all Buyers as of the date hereof is $27,082,301.37) for
that aggregate principal amount of senior secured convertible debentures, in
substantially the form attached hereto as Exhibit A (collectively, the
“Debentures”), as set forth opposite such Buyer’s name in column (11) on the
Schedule of Buyers (which aggregate principal amount for all Buyers shall be
$27,759,503.96) (the Common Stock received upon such conversion, collectively,
the “Conversion Shares”), and (ii) the Outstanding Warrants set forth opposite
such Buyer’s name in column (10) on the Schedule of Buyers (exercisable in the
aggregate for all Buyers as of the date hereof into 77,902,597 shares of Common
Stock) for warrants (the “Warrants”), in substantially the form attached hereto
as Exhibit B, to acquire up to that number of additional shares of the Common
Stock set forth opposite such Buyer’s name in column (12) on the Schedule of
Buyers (as exercised, collectively, the “Warrant Shares”).

G.         The Company and each Buyer is executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by
Sections 3(a)(9) and 4(2) of the Securities Act of 1933, as amended (the “1933
Act”), and Regulation D (“Regulation D”) promulgated by the United States
Securities and Exchange Commission (the “SEC”) under the 1933 Act.

H.         Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit C (the “Registration Rights
Agreement”), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Conversion Shares and the Warrant Shares
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.

I.          The Debentures, the Conversion Shares, the Warrants and the Warrant
Shares, are collectively are referred to herein as the “Securities.”

 

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

1.          EXCHANGE OF OUTSTANDING DEBENTURES AND OUTSTANDING WARRANTS FOR
DEBENTURES AND WARRANTS.

(a)        Exchange and Cancellation of Outstanding Debentures. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
on the Closing Date (as defined below), (i) the Company shall issue and deliver
to each applicable Buyer, and each such Buyer severally, but not jointly, shall
accept the principal amount of Debentures as is set forth opposite such Buyer’s
name in column (11) on the Schedule of Buyers in exchange for the surrender to
the Company the Outstanding Debentures issued to such Buyer.

(b)        Exchange and Cancellation of Outstanding Warrants. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
on the Closing Date, (i) the Company shall issue and deliver to each applicable
Buyer, and each such Buyer severally, but not jointly, shall accept Warrants to
acquire up to that number of additional shares of the Common Stock set forth
opposite such Buyer’s name in column (12) on the Schedule of Buyers in exchange
for the surrender to the Company the Outstanding Warrants issued to such Buyer.

(c)        Closing. The closing (the “Closing”) of the exchange of Outstanding
Debentures for Debentures and Outstanding Warrants for Warrants shall occur at
the offices of McDermott Will & Emery LLP, 340 Madison Avenue, New York, New
York 10173. The date and time of the Closing (the “Closing Date”) shall be 10:00
a.m., New York City time, on the date hereof, subject to notification of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6 and 7 below (or such later date as is mutually agreed to by the Company and
each Buyer).

(d)        Purchase Price. The Debentures and Warrants shall be issued to each
Buyer in exchange for the Outstanding Debentures and Outstanding Warrants held
by such Buyer, and without the payment of any additional consideration.

(e)        Form of Payment. On the Closing Date, (i) each Buyer shall deliver,
or cause to be delivered, to the Company for cancellation, the Outstanding
Debentures held by such Buyer for the Debentures (in the denominations as such
Buyer shall have requested prior to the Closing) to be issued to such Buyer at
the Closing, and (ii) each Buyer shall deliver, or cause to be delivered, to the
Company for cancellation, the Outstanding Warrants held by such Buyer for the
Warrants (in the denominations as such Buyer shall have requested prior to the
Closing) to be issued to such Buyer at the Closing. At the Closing, the Company
shall deliver to each Buyer the Debentures (in the denominations as such Buyer
shall have requested prior to the Closing) and the Warrants (in the
denominations as such Buyer shall have requested prior to the Closing) which
such Buyer is then purchasing, duly executed on behalf of the Company and
registered in the name of such Buyer or its designee.

 

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2.

BUYER’S REPRESENTATIONS AND WARRANTIES.

Each Buyer represents and warrants with respect to only itself that:

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

(b)        Investor Status. Such Buyer is an “accredited investor” as that term
is defined in Rule 501(a) of Regulation D. Such Buyer is also an “institutional
buyer” as such term is defined in Section 11.12(e) of Title 13 of the Official
Compilation of Codes, Rules and Regulations of the State of New York.

(c)        Reliance on Exemptions. Such Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.

(d)        Information. Such Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by such Buyer. Such Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer’s right to rely on the Company’s representations and warranties contained
herein. Such Buyer understands that its investment in the Securities involves a
high degree of risk. Such Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.

(e)        No Governmental Review. Such Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

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(f)         Transfer or Resale. Such Buyer understands that except as provided
in the Registration Rights Agreement: the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the
1933 Act (or, in each case, a successor rule thereto); provided, however, that
the Securities may be pledged in connection with a bona fide margin account or
other loan or financing arrangement secured by the Securities and such pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Buyer effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document (as defined in Section 3(b)), including, without limitation, this
Section 2(f).

(g)        Legends. Such Buyer understands that the certificates or other
instruments representing the Debentures and the Warrants and, until removed in
accordance with Section 3(l) of the Registration Rights Agreement, the stock
certificates representing the Conversion Shares and the Warrant Shares, except
as set forth below, shall bear any legend as required by the “blue sky” laws of
any state and a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock certificates):

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE][EXERCISABLE]
HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN]
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE
STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if (i) such Securities are registered for resale under the 1933 Act,
and the Buyer has complied with Section 3(l) of the Registration Rights
Agreement, (ii) in connection with a sale, assignment or other transfer, such

 

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holder provides the Company with an opinion of counsel, in a generally
acceptable form, to the effect that such sale, assignment or transfer of the
Securities may be made without registration under the applicable requirements of
the 1933 Act, or (iii) such Securities are sold, assigned or transferred
pursuant to Rule 144, or such holder provides the Company with reasonable
assurance that the Securities can be sold, assigned or transferred pursuant to
Rule 144(k).

(h)        Residency. Such Buyer is a resident of that jurisdiction specified
below its address on the Schedule of Buyers.

3.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

As an inducement to the Buyers to enter into this Agreement and to consummate
the transactions contemplated hereby, the Company represents and warrants to
each of the Buyers that each and all of the following representations and
warranties (as modified by the disclosure schedules delivered to the Buyers
contemporaneously with the execution and delivery of this Agreement (the
“Schedules”)) are true and correct as of the date of this Agreement. The
Schedules shall be arranged by the Company in paragraphs corresponding to the
sections and subsections contained in this Section 3.

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

(b)        Authorization; Enforcement; Validity. The Company has the requisite
power and authority to enter into and perform its obligations under this
Agreement, the Debentures, the Warrants, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), the Pledge
and Security Agreement among the Company and the Buyers dated the date hereof
(the “Security Agreement”), and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the “Transaction Documents”) and to issue the
Securities in accordance with the terms hereof and thereof. Except as set forth
on Schedule 3(b), the execution and delivery of the Transaction Documents by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby, including, without limitation, the issuance of the
Debentures, the reservation for issuance and the issuance

 

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of the Conversion Shares issuable upon conversion of the Debentures, the
issuance of the Warrants and the reservation for issuance and issuance of the
Warrant Shares issuable upon exercise of the Warrants, have been duly authorized
by the Company’s Board of Directors and (other than the filing with the SEC of a
Form D and one or more Registration Statements in accordance with the
requirements of the Registration Rights Agreement and other than filings with
“Blue Sky” authorities as required therein) no further filing, consent, or
authorization is required by the Company, its Board of Directors or its
stockholders. This Agreement and the other Transaction Documents of even date
herewith have been duly executed and delivered by the Company, and constitute
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally, the enforcement of applicable creditors’ rights and
remedies.

(c)        Issuance of Securities. The issuance of the Debentures and the
Warrants are duly authorized and are free from all taxes, liens and charges with
respect to the issue thereof. As of the Closing, except as set forth on Schedule
3(c), the Company shall have reserved from its duly authorized capital stock not
less than the sum of (i) 100% of the maximum number of shares of Common Stock
issuable upon conversion of the Debentures (assuming for purposes hereof, that
the Debentures are convertible at the Conversion Price and without taking into
account any limitations on the conversion of the Debentures set forth in the
Debentures) and (ii) 100% of the maximum number of shares of Common Stock
issuable upon exercise of the Warrants (without taking into account any
limitations on the exercise of the Warrants set forth in the Warrants). Upon
issuance or conversion in accordance with the Debentures or exercise in
accordance with the Warrants, as the case may be, the Conversion Shares and the
Warrant Shares, respectively, will be validly issued, fully paid and
nonassessable and free from all preemptive or similar rights, taxes, liens and
charges with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock. Assuming the accuracy of the
representations made by each Buyer in Section 2, the offer and issuance by the
Company of the Securities is exempt from registration under the 1933 Act.

(d)        No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Debentures, and the Warrants and, except as set forth on
Schedule 3(d), the reservation for issuance of the Conversion Shares and the
Warrant Shares) will not (i) result in a violation of the Articles of
Incorporation or Bylaws (each as defined in Section 3(r)) of the Company or the
governing documents of any of its Subsidiaries or the terms of any capital stock
of the Company or any of its Subsidiaries; (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both, would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party; or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and the rules and regulations of the OTC
Bulletin Board (the “Principal Market”)) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected.

 

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(e)        Consents. The Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency or any regulatory or self-regulatory agency or any other
Person in order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents, in each case in accordance
with the terms hereof or thereof (other than (v) the filing with the SEC of a
Form D or one or more Registration Statements in accordance with the
requirements of the Registration Rights Agreement, (w) filings with “Blue Sky”
authorities as required thereby, (x) filings required by the Security Agreement
and (y) as set forth on Schedule 3(e)). All consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the Closing
Date, and the Company and its Subsidiaries are unaware of any facts or
circumstances which might prevent the Company from obtaining or effecting any of
the registration, application or filings pursuant to the preceding sentence. The
Company is not in violation of the listing requirements of the Principal Market
and has no knowledge of any facts which would reasonably lead to delisting or
suspension of the Common Stock in the foreseeable future. The Company is not in
violation of the listing requirements of the Principal Market and has no
knowledge of any facts which would reasonably lead to delisting or suspension of
the Common Stock in the foreseeable future.

(f)         Acknowledgment Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that each Buyer is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company, (ii) an “affiliate” of the Company (as defined in
Rule 144) or (iii) to the knowledge of the Company, a “beneficial owner” of more
than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of
the Securities Exchange Act of 1934, as amended (the “1934 Act”)). The Company
further acknowledges that no Buyer is acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and any advice
given by a Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to such Buyer’s purchase of the Securities. The Company
further represents to each Buyer that the Company’s decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.

(g)        No General Solicitation; Placement Agent’s Fees. Neither the Company,
nor any of its affiliates, nor any Person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offer or sale of the Securities.
Except as set forth on Schedule 3(g) and except for the payment of expenses of
Castlerigg Master Investments Ltd. to be reimbursed pursuant to Section 4(g),
the Company shall not pay any placement agent’s fees, financial advisory fees,
or brokers’ commissions relating to or arising out of the transactions
contemplated hereby. Notwithstanding the foregoing, the Company shall be
responsible for the payment of any placement agent’s fees, financial advisory
fees, or brokers’ commissions (other than for Persons engaged by any Buyer or
its investment advisor) relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold each Buyer harmless
against, any

 

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liability, loss or expense (including, without limitation, attorney’s fees and
out-of-pocket expenses) arising in connection with any such claim.

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

(i)         Dilutive Effect. The Company understands and acknowledges that the
number of Conversion Shares issuable upon conversion of the Debentures, and the
number of Warrant Shares issuable upon exercise of the Warrants, will increase
in certain circumstances. The Company further acknowledges that its obligation
to issue Conversion Shares upon conversion of the Debentures in accordance with
this Agreement and the Debentures and its obligation to issue the Warrant Shares
upon exercise of the Warrants in accordance with this Agreement and the Warrants
is, in each case, absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other stockholders of
the Company.

(j)         Application of Takeover Protections; Rights Agreement. The Company
and its board of directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Articles of Incorporation of the Company or
the laws of the jurisdiction of its formation which is or could become
applicable to any Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company’s issuance of the
Securities and any Buyer’s ownership of the Securities. The Company has not
adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Company.

(k)        SEC Documents; Financial Statements. During the two years prior to
the date hereof, the Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the 1934 Act (all of the foregoing filed prior to the
date hereof and all exhibits included therein and financial statements, notes
and schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”). The Company has delivered to
the Buyers or their respective representatives true, correct and complete copies
of the SEC Documents not available on the EDGAR system. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a

 

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material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of their respective
dates, the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

(l)         Absence of Certain Changes. Except as disclosed in Schedule 3(l) or
in the Company’s Quarterly Report on Form 10-Q for the period ended February 28,
2007, since February 28, 2007, there has been no material adverse change and no
material adverse development in the business, assets, properties, operations,
condition (financial or otherwise), results of operations or prospects of the
Company. Except as disclosed in Schedule 3(l), since February 28, 2007, the
Company has not (i) declared or paid any dividends, (ii) sold any assets or
(iii) had capital expenditures, individually or in the aggregate, in excess of
$100,000, other than in connection with its ongoing oil and gas projects in the
ordinary course of business. The Company has not taken any steps to seek
protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so.

(m)       No Undisclosed Events, Liabilities, Developments or Circumstances.
Except as set forth on Schedule 3(m), no event, liability, development or
circumstance has occurred or exists, or is contemplated to occur with respect to
the Company, its Subsidiaries or their respective business, properties,
prospects, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance and sale by the
Company of its Common Stock and which has not been publicly announced.

(n)        Conduct of Business; Regulatory Permits. Neither the Company nor its
Subsidiaries is in violation of any term of or in default under its Articles of
Incorporation or Bylaws or other governing documents. Neither the Company nor
any of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or its
Subsidiaries. Without limiting the generality of the foregoing, the Company is
not in violation of any of the rules, regulations or requirements of the
Principal Market and has no knowledge of any facts or circumstances that would
reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. During the two (2) years prior to the date
hereof, (i) the Common Stock has been designated for quotation on the Principal
Market, (ii) trading in the Common Stock has not been suspended by the SEC or
the Principal Market and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market. Except as set forth
in Schedule 3(a), the Company

 

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and its Subsidiaries possess all certificates, authorizations and permits issued
by the appropriate regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.

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

(p)        Sarbanes-Oxley Act. The Company is in compliance with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as
of the date hereof, and any and all applicable rules and regulations promulgated
by the SEC thereunder that are effective as of the date hereof.

(q)        Transactions With Affiliates. Except as set forth in the SEC
Documents filed at least ten days prior to the date hereof, none of the
officers, directors or employees of the Company is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for ordinary
course services as employees, officers or directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any such officer, director, or employee has a substantial interest or is
an officer, director, trustee or partner.

(r)         Equity Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 10,000,000 shares of preferred stock, $0.001
par value per share, none of which is issued and outstanding, and 335,000,000
shares of Common Stock, of which as of the date hereof, 107,428,360 shares are
issued and outstanding, 11,404,000 shares are reserved for issuance pursuant to
the Company’s stock option and purchase plans and 189,433,841 shares are
reserved for issuance pursuant to securities (including the Outstanding
Debentures and the Outstanding Warrants) exercisable or exchangeable for, or
convertible into, shares of Common Stock (subject to increase to cover the
anti-dilution provisions associated therewith). All of such outstanding shares
have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3(r) or the Company’s Quarterly
Report on Form 10-Q for the period ending February 28, 2007: (i) none of the
Company’s share capital is subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company; (ii)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any share capital of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional share capital of

 

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the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
share capital of the Company or any of its Subsidiaries; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing Indebtedness of the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the aggregate,
filed in connection with the Company or any of its Subsidiaries; (v) there are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement); (vi) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) the Company does not have any stock appreciation rights
or “phantom stock” plans or agreements or any similar plan or agreement; and
(ix) the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents but not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of the Company’s or
its Subsidiaries’ respective businesses.

(s)        Indebtedness and Other Contracts. Except as disclosed in the
Company’s Quarterly Report on Form 10-Q for the period ended February 28, 2007,
or Schedule 3(s), neither the Company nor any of its Subsidiaries (i) has any
outstanding Indebtedness, (ii) is a party to any contract, agreement or
instrument, the violation of which, or default under which, by the other
party(ies) to such contract, agreement or instrument would result in a Material
Adverse Effect, (iii) is in violation of any term of or in default under any
contract, agreement or instrument relating to any Indebtedness, or (iv) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company’s officers, has or is
expected to have a Material Adverse Effect, except as otherwise disclosed in
Schedule 3(s). Schedule 3(s) provides a detailed description of the material
terms of any such outstanding Indebtedness. For purposes of this Agreement: (x)
“Indebtedness” of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (including, without limitation,
“capital leases” in accordance with generally accepted accounting principles)
(other than trade payables entered into in the ordinary course of business), (C)
all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses, (E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either case
with respect to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale of
such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a capital
lease, (G) all indebtedness referred to in clauses (A) through (F) above secured
by (or for which the holder of such Indebtedness has an existing right,

 

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

(t)         Absence of Litigation. Except as set forth in Schedule 3(t), there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency (including the SEC), self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company, the Common Stock or any of the Company’s
Subsidiaries or any of the Company’s or its Subsidiaries’ officers or directors.

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

(v)        Employee Relations. Neither Company nor any of its Subsidiaries is a
party to any collective bargaining agreement or employs any member of a union.
The Company and its Subsidiaries believe that their relations with their
employees are good. No executive officer of the Company or any of its
Subsidiaries has notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise terminate such
officer’s employment with the Company or any such Subsidiary. No executive
officer of the Company or any of its Subsidiaries, to the knowledge of the
Company or any such Subsidiary, is, or is now expected to be, in violation of
any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each such executive officer does not subject the Company or any such
Subsidiary to any liability with respect to any of the foregoing matters. The
Company and its Subsidiaries are in compliance with all federal, state, local
and foreign laws and regulations respecting labor, employment and employment
practices and benefits, terms and conditions of employment and

 

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wages and hours, except where failure to be in compliance would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

(w)       Title. The Company and its Subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
except as set forth on Schedule 3(w), which does not materially affect the value
of such property and does not interfere with the use made and proposed to be
made of such property by the Company and any of its Subsidiaries. Any real
property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and facilities by the Company and its
Subsidiaries. Attached as Schedule B to the Schedules is a copy of the unaudited
balance sheet of Maverick Operating Company LLC as of June 30, 2007, which
balance sheet has been prepared in accordance with generally accepted accounting
principles, consistently applied (except (i) as may be otherwise indicated in
such balance sheet or the notes thereto, or (ii) to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly presents in all
material respects the financial position of Maverick Operating Company LLC as of
the date thereof (subject to normal year-end audit adjustments).

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

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

 

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

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

(aa)       Investment Company. The Company is not, and is not an affiliate of,
an “investment company” within the meaning of the Investment Company Act of
1940, as amended.

(bb)      Tax Status. The Company and each of its Subsidiaries (i) has made or
filed all foreign, federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, (ii) has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim.

(cc)       Internal Accounting and Disclosure Controls. The Company maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management’s general or specific authorization and (iv)
the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference. The Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a-14 under the 1934
Act) that are effective in ensuring that information required to be disclosed by
the Company in the reports that it files or submits under the 1934 Act is
recorded, processed, summarized and reported, within the time periods specified
in the rules and forms of the SEC, including, without limitation, controls and
procedures designed in to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the 1934 Act is
accumulated and communicated to the Company’s management, including its
principal executive officer or officers and its principal financial officer or
officers, as appropriate, to allow timely decisions regarding required
disclosure. Except as set forth on Schedule 3(cc), during the twelve months
prior to the date hereof, neither the Company nor any of its Subsidiaries have
received any notice or correspondence from any accountant relating to any
potential material weakness in any part of the system of internal accounting
controls of the Company or any of its Subsidiaries.

 

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(dd)      Off Balance Sheet Arrangements. There is no transaction, arrangement,
or other relationship between the Company and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in its 1934
Act filings and is not so disclosed or that otherwise would be reasonably likely
to have a Material Adverse Effect.

(ee)       Ranking of Debentures. Except as permitted by the Debentures, no
Indebtedness of the Company will rank senior to or pari passu with the
Debentures in right of payment, whether with respect to payment of redemptions,
interest, damages or upon liquidation or dissolution or otherwise.

(ff)       Form S-3 Eligibility. Upon either (i) the listing and registration of
shares of Common Stock on a national securities exchange or (ii) the quotation
of Common Stock on an automated quotation system of a national securities
association, the Company will be eligible to register the Conversion Shares and
the Warrant Shares for resale by the Buyers using Form S-3 promulgated under the
1933 Act, as such form is in effect on the date hereof. For the avoidance of
doubt, this Section 3(ff) shall not obligate the Company to list and register of
shares of Common Stock on a national securities exchange, or have the Common
Stock quoted on an automated quotation system of a national securities
association.

(gg)      Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income or similar taxes) which are required to be paid in connection
with the sale and transfer of the Securities to be sold to each Buyer hereunder
will be, or will have been, fully paid or provided for by the Company, and all
laws imposing such taxes will be or will have been complied with.

(hh)      Manipulation of Price. The Company has not, and to its knowledge no
one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities (except for customary placement
fees payable in connection with this transaction), or (iii) paid or agreed to
pay to any Person any compensation for soliciting another to purchase any other
securities of the Company (except for customary placement fees payable in
connection with this transaction).

(ii)        Disclosure. The Company understands and confirms that each of the
Buyers will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Buyers regarding the
Company, its business and the transactions contemplated hereby, including the
Schedules to this Agreement, furnished by or on behalf of the Company is true
and correct and does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each press release issued by the Company since March 10, 2005 did
not at the time of release contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or its
or their business, properties, prospects, operations or financial conditions,
which, under applicable law, rule or

 

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regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed, except for information that
will be contained within the Company’s next due Form 10-Q and information
relative to this transaction.

(jj)        No Event of Default. After giving effect to the terms of this
Agreement, no Default or Event of Default (as defined in the Debentures) shall
have occurred and be continuing as of the time immediately following the Closing
Date.

4.

COVENANTS.

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

(b)        Form D and Blue Sky. The Company agrees to file a Form D with respect
to the Securities as required under Regulation D and to provide a copy thereof
to each Buyer promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for or to qualify the Securities for
sale to the Buyers at the Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States (or to obtain
an exemption from such qualification), and shall provide evidence of any such
action so taken to the Buyers on or prior to the Closing Date. The Company shall
make all filings and reports relating to the offer and sale of the Securities
required under applicable securities or “Blue Sky” laws of the states of the
United States following the Closing Date.

(c)        Reporting Status. Until the date on which the Investors (as defined
in the Registration Rights Agreement) shall have sold all the Conversion Shares
and Warrant Shares and none of the Debentures or Warrants is outstanding (the
“Reporting Period”), the Company shall file all reports required to be filed
with the SEC pursuant to the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if the 1934
Act or the rules and regulations thereunder would otherwise permit such
termination.

(d)

[Intentionally omitted.]

(e)        Financial Information. The Company agrees to send the following to
each Investor (as defined in the Registration Rights Agreement) during the
Reporting Period (i) unless filed with the SEC through EDGAR and available to
the public through the EDGAR system, within one business day after the filing
thereof with the SEC, a copy of all Annual Reports on Form 10-K or 10-KSB, any
interim reports or any consolidated balance sheets, income statements,
stockholders’ equity statements and/or cash flow statements for any period other
than annual, any Current Reports on Form 8-K and any registration statements
(other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on
the same day as the release thereof, copies of all press releases issued by the
Company or any of its Subsidiaries, and (iii) copies of any notices and other
information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.

(f)         Listing. To the extent the Company’s Registrable Securities are
listed upon a national securities exchange or automated quotation system that
provides for the listing of

 

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

(g)        Fees. The Company shall reimburse Castlerigg Master Investments Ltd.
(a Buyer) or its designee(s) (in addition to any other expense amounts paid to
any Buyer prior to the date of this Agreement) for all reasonable costs and
expenses incurred in connection with the transactions contemplated by the
Transaction Documents (including all reasonable legal fees and disbursements in
connection therewith, documentation and implementation of the transactions
contemplated by the Transaction Documents and due diligence in connection
therewith), which amounts shall be added to the principal amount of the
Debentures issued to such Buyer at the Closing. The Company shall be responsible
for the payment of any placement agent’s fees, financial advisory fees, or
broker’s commissions (other than for Persons engaged by any Buyer) relating to
or arising out of the transactions contemplated hereby. The Company shall pay,
and hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, reasonable attorney’s fees and out-of-pocket expenses)
arising in connection with any claim relating to any such payment.

(h)        Pledge of Securities. The Company acknowledges and agrees that the
Securities may be pledged by an Investor (as defined in the Registration Rights
Agreement) in connection with a bona fide margin agreement or other loan or
financing arrangement that is secured by the Securities. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Investor effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(f) hereof. The Company hereby
agrees to execute and deliver such documentation as a pledgee of the Securities
may reasonably request in connection with a pledge of the Securities to such
pledgee by an Investor.

(i)         Disclosure of Transactions and Other Material Information. On or
before 8:30 a.m., New York City time, on the second business day following the
date of this Agreement, the Company shall file a Current Report on Form 8-K
describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act and attaching the material
Transaction Documents (including, without limitation, this Agreement (and all
schedules to this Agreement), the form of Debentures, the form of Warrant and
the Registration Rights Agreement) (including all attachments, the “8-K
Filing”). Any material non-public information provided by the Company to any
Buyer in connection with this transaction shall be included by the Company
within the aforementioned 8-K Filing. From and after the filing of the 8-K
Filing with the SEC, the Company represents and acknowledges that that no Buyer
shall be in possession of any material, nonpublic information received from the
Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or

 

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agents, that is not disclosed in the 8-K Filing. The Company shall not, and
shall cause each of its Subsidiaries and its and each of their respective
officers, directors, employees and agents not to, provide any Buyer with any
material, nonpublic information regarding the Company or any of its Subsidiaries
from and after the filing of the 8-K Filing with the SEC without the express
written consent of such Buyer. In the event of a breach of the foregoing
covenant by the Company, any of its Subsidiaries, or any of its or their
respective officers, directors, employees and agents, in addition to any other
remedy provided herein or in the Transaction Documents, a Buyer may, but shall
not be obligated to, notify the Company of such breach and the material,
nonpublic information the receipt of which resulted in such breach. Within two
business days of receipt of such notice, the Company shall either (a) deliver a
notice to such Buyer certifying such material, non-public information has
already been publicly disclosed by the Company or (b) make a public disclosure,
in the form of a press release, public advertisement or otherwise, of such
material, nonpublic information. Subject to the foregoing, neither the Company,
its Subsidiaries nor any Buyer shall issue any press releases or any other
public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of any Buyer, to make any press release or other public disclosure with
respect to such transactions (i) in substantial conformity with the 8-K Filing
and contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Without the prior written consent of
any applicable Buyer, the Company shall not disclose the name of any Buyer or
its affiliates in any filing, announcement, release or otherwise.

(j)         Restriction on Redemption and Cash Dividends. So long as any
Debentures are outstanding, the Company shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, the Common Stock
without the prior express written consent of the holders of Debentures
representing not less than a majority of the aggregate principal amount of the
then outstanding Debentures.

(k)        Additional Debentures; Variable Securities; Dilutive Issuances. So
long as any Buyer beneficially owns any Securities, the Company will not issue
any Debentures (other than to the Buyers as contemplated hereby) and the Company
shall not issue any other securities that would cause a breach or default under
the Debentures. For so long as any Debentures or Warrants remain outstanding,
the Company shall not, in any manner, issue or sell any rights, warrants or
options to subscribe for or purchase Common Stock or directly or indirectly
convertible into or exchangeable or exercisable for Common Stock at a price
which varies or may vary after issuance with the market price of the Common
Stock, including by way of one or more reset(s) to any fixed price, unless the
conversion, exchange or exercise price of any such security cannot be less than
the then applicable Conversion Price (as defined in the Debentures) with respect
to the Common Stock into which any Debenture is convertible or the then
applicable Exercise Price (as defined in the Warrants) with respect to the
Common Stock into which any Warrant is exercisable. For purposes of
clarification, this does not prohibit the issuance of securities with customary
“weighted average” or “full ratchet” anti-dilution adjustments which adjust a
fixed conversion or exercise price of securities sold by the Company in the
future. For so long as any Debentures or Warrants remain outstanding, the
Company shall not, in any manner, enter into or effect any Dilutive Issuance (as
defined in the Outstanding Debentures) if the effect of such Dilutive Issuance
is to cause the Company to be required to

 

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issue upon conversion of any Debentures or exercise of any Warrant any shares of
Common Stock in excess of that number of shares of Common Stock which the
Company may issue upon conversion of the Debentures and exercise of the Warrants
without breaching the Company’s obligations under the rules or regulations of
the Principal Market.

None of the Company, its Subsidiaries, any of their affiliates, or any Person
acting on their behalf shall, directly or indirectly, make any offers or sales
of any security or solicit any offers to buy any security, under circumstances
that would require registration of any of the Securities under the 1933 Act or
cause this offering of the Securities to be integrated with prior offerings by
the Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
the Principal Market such that the representation set forth in the last sentence
of either Section 3(c) or Section 3(d)(iii) would not be accurate as if such
representations were made as of such time.

(l)         Corporate Existence. So long as any Buyer beneficially owns any
Securities, the Company shall not be party to any Fundamental Transaction (as
defined in the Debentures) unless the Company is in compliance with the
applicable provisions governing Fundamental Transactions set forth in the
Debentures and the Warrants.

(m)       Incurrence of Liens. So long as any Debentures are outstanding, the
Company shall not, directly or indirectly, allow or suffer to exist any Lien,
other than Permitted Liens (as defined in the Debentures), upon any property or
assets (including accounts and contract rights) owned by the Company or any
Subsidiary.

(n)        Reservation of Shares. The Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance, no less
than 100% of the sum of the number of shares of Common Stock issuable upon
conversion of all of the Debentures and shares of Common Stock issuable upon
exercise of the Warrants.

(o)        Conduct of Business. The business of the Company and its Subsidiaries
shall not be conducted in violation of any law, ordinance or regulation of any
governmental entity, except where such violations would not result, either
individually or in the aggregate, in a Material Adverse Effect.

(p)

[Intentionally omitted.]

(q)        Stockholder Approval. The Company shall, no later than ten (10) days
after the Closing Date, file a preliminary Information Statement (as defined
below) with the SEC, and take all other steps necessary to effect a reverse
stock split at a ratio of not less than 20:1 (the “Reverse Stock Split”) as soon
as practicable. Without limiting the generality of the foregoing, the Company
shall provide each stockholder an information statement, substantially in the
form which has been previously reviewed by the Buyers and McDermott Will & Emery
LLP (the “Information Statement”), providing for such reverse stock split in
accordance with applicable law (such affirmative approval being referred to
herein as the “Stockholder Approval”). The Company shall be obligated to use its
best efforts to obtain the Stockholder Approval as soon as practicable.

 

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5.

REGISTER; TRANSFER AGENT INSTRUCTIONS.

(a)        Register. The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to each holder of Securities), a register for the Debentures and the
Warrants in which the Company shall record the name and address of the Person in
whose name the Debentures and the Warrants have been issued (including the name
and address of each transferee), the principal amount of Debentures held by such
Person, the number of Conversion Shares issuable upon conversion of the
Debentures and Warrant Shares issuable upon exercise of the Warrants held by
such Person. The Company shall keep the register open and available at all times
during business hours for inspection of any Buyer or its legal representatives.

(b)        Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates or credit shares to the applicable balance accounts at The
Depository Trust Company (“DTC”), registered in the name of each Buyer or its
respective nominee(s), for the Conversion Shares and the Warrant Shares in such
amounts as specified from time to time by each Buyer to the Company upon
conversion of the Debentures or exercise of the Warrants in the form of Exhibit
D attached hereto (the “Irrevocable Transfer Agent Instructions”). The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5(b), and stop transfer instructions to
give effect to Section 2(g) hereof, will be given by the Company to its transfer
agent with respect to the Securities, and that the Securities shall otherwise be
freely transferable on the books and records of the Company, as applicable, and
to the extent provided in this Agreement and the other Transaction Documents. If
a Buyer effects a sale, assignment or transfer of the Securities in accordance
with Section 2(g), the Company shall permit the transfer and shall promptly
instruct its transfer agent to issue one or more certificates or credit shares
to the applicable balance accounts at DTC in such name and in such denominations
as specified by such Buyer to effect such sale, transfer or assignment. In the
event that such sale, assignment or transfer involves Conversion Shares or
Warrant Shares sold, assigned or transferred pursuant to an effective
registration statement or pursuant to Rule 144, the transfer agent shall issue
such Securities to the Buyer, assignee or transferee, as the case may be,
without any restrictive legend. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to a Buyer. Accordingly,
the Company acknowledges that the remedy at law for a breach of its obligations
under this Section 5(b) will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section 5(b), that
a Buyer shall be entitled, in addition to all other available remedies, to seek
an order and/or injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.

6.

CONDITIONS TO THE COMPANY’S OBLIGATION TO EXCHANGE.

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

 

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

(ii)        Such Buyer shall have delivered to the Company for exchange its
Outstanding Debentures and Outstanding Warrants.

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

7.

CONDITIONS TO EACH BUYER’S OBLIGATION TO EXCHANGE.

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

(i)         The Company shall have executed and delivered to such Buyer (A) each
of the Transaction Documents and (B) the Debentures (in such denominations as
such Buyer shall have requested prior to the Closing) and the related Warrants
(in such denominations as such Buyer shall have requested prior to the Closing)
being purchased by such Buyer at the Closing pursuant to this Agreement.

(ii)        Such Buyer shall have received the opinions of Buchanan Ingersoll &
Rooney, PC, and Woodburn & Wedge, each the Company’s outside counsel, dated as
of the Closing Date, in substantially the forms of Exhibit E-1 and Exhibit E-2,
attached hereto.

(iii)       The Company shall have delivered to such Buyer a copy of the
Irrevocable Transfer Agent Instructions, in the form of Exhibit D attached
hereto, which instructions shall have been delivered to and acknowledged in
writing by the Company’s transfer agent.

(iv)       The Company shall have delivered to such Buyer a certificate
evidencing the formation and good standing of the Company and each of its
Subsidiaries in such entity’s jurisdiction of formation issued by the Secretary
of State (or comparable office) of such jurisdiction, as of a date reasonably
proximate to the Closing Date.

(v)        The Company shall have delivered to such Buyer a certificate
evidencing the Company’s qualification as a foreign corporation and good
standing issued by the Secretary of State (or comparable office) of each
jurisdiction in which the Company conducts business, as of a date reasonably
proximate to the Closing Date.

 

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(vi)       The Company shall have delivered to such Buyer a certified copy of
the Articles of Incorporation as certified by the Secretary of State of the
State of Nevada as of a date reasonably proximate to the Closing Date.

(vii)      The Company shall have delivered to such Buyer a certificate,
executed by the Secretary of the Company and dated as of the Closing Date, as to
(i) the resolutions consistent with Section 3(b) as adopted by the Company’s
Board of Directors in a form reasonably acceptable to such Buyer, (ii) the
Articles of Incorporation and (iii) the Bylaws, each as in effect at the
Closing, in the form attached hereto as Exhibit F.

(viii)     The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specific date), and the Company
shall have performed, satisfied and complied in all respects with the covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the Closing Date. Such
Buyer shall have received a certificate, executed by the Chief Executive Officer
of the Company, dated as of the Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by such Buyer in the form
attached hereto as Exhibit G.

(ix)       The Company shall have delivered to such Buyer a letter from the
Company’s transfer agent certifying the number of shares of Common Stock
outstanding as of a date within five days of the Closing Date.

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

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

(xii)      The Company shall have obtained all consents, amendments and/or
waivers required under (A) the January 2006 Securities Purchase Agreement and
the other transaction documents entered into in connection therewith, (B) the
June 2006 Securities Purchase Agreement and the other transaction documents
entered into in connection therewith and (C) the November 2006 Securities
Purchase and the other transaction documents entered into in connection
therewith, in each case, necessary for the consummation of the transactions
contemplated by the Transaction Documents (including sale of the Securities) or
as any Buyer or its counsel may reasonably request.

(xiii)     The Company shall have delivered to such Buyer, written consents in
the form attached hereto as Exhibit H, executed by stockholders holding the
greater of (A) 51% of the outstanding shares of Common Stock or (B) such other
percentage of the outstanding shares of Common Stock that is required to approve
the Reverse Stock Split (which

 

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shall include, without limitation, Line Trust Corporation Limited), indicating
such stockholders’ consent to the Reverse Stock Split contemplated by
Section 4(q).

(xiv)     The Company and its Subsidiaries shall have executed and delivered to
such Buyer the Security Agreement encumbering all the assets of the Company and
its Subsidiaries.

(xv)      The Company shall have obtained and delivered to such Buyer searches
of Uniform Commercial Code filings in the jurisdiction of formation of the
Company and its Subsidiaries, the jurisdiction of the chief executive office of
the Company and its Subsidiaries and each jurisdiction where any Collateral (as
defined in the Security Agreement) is located or where a filing would need to be
made in order to perfect the Buyers’ security interest in the Collateral, copies
of the financing statements on file in such jurisdictions and evidence that no
Liens exist other than Permitted Liens.

(xvi)     The Company and its Subsidiaries shall have executed and delivered to
such Buyer UCC financing statements for each appropriate jurisdiction as is
necessary, in the Buyers’ sole discretion, to perfect the Buyers’ security
interest in the Collateral.

(xvii)    The Company shall have obtained and delivered to such Buyer a waiver
from Trident Growth Fund, L.P. with respect to the anti-dilution of its existing
warrants, in the form attached hereto as Exhibit I.

(xviii)   Each other Buyer shall have concurrently delivered to the Company for
exchange its Outstanding Debentures and Outstanding Warrants.

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

8.

INTENTIONALLY DELETED.

9.          TERMINATION. In the event that the Closing shall not have occurred
with respect to a Buyer on or before five business days from the date hereof due
to the Company’s or such Buyer’s failure to satisfy the conditions set forth in
Sections 6 and 7 above (and the nonbreaching party’s failure to waive such
unsatisfied condition(s)), the nonbreaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party;
provided, however, if this Agreement is terminated pursuant to this Section 9,
the Company shall remain obligated to reimburse the non-breaching Buyers for the
expenses described in Section 4(g) above.

10.

MISCELLANEOUS.

(a)        Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each

 

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party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(b)        Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to each other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.

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

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

(e)        Entire Agreement; Amendments. This Agreement and the other
Transaction Documents supersede all other prior oral or written agreements
between the Buyers, the Company, their Affiliates and Persons acting on their
behalf with respect to the matters discussed herein, and this Agreement, the
other Transaction Documents and the instruments referenced herein and therein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of at least a majority of the aggregate number of
Registrable Securities issued and issuable hereunder, and any amendment to this
Agreement made in conformity with the provisions of this Section 10(e) shall be
binding on all Buyers and holders of Securities, as applicable. No provision
hereof may be waived other than by an instrument in writing signed by the party
against whom enforcement is sought. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the applicable
Securities then outstanding. No consideration shall be offered or paid to any
Person

 

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to amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration also is offered to all of
the parties to the Transaction Documents, holders of Debentures or holders of
the Warrants, as the case may be. The Company has not, directly or indirectly,
made any agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents. Without limiting the foregoing, the Company confirms
that, except as set forth in this Agreement, no Buyer has made any commitment or
promise or has any other obligation to provide any financing to the Company or
otherwise.

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

If to the Company:

Maverick Oil and Gas, Inc.

16415 Addison Road, Suite 850

Addison, Texas 75001-5332

Telephone:

214 239-4333

 

Facsimile:

214 239-4334

 

Attention:

Stephen M. Cohen, Esq.

 

Chief Executive Officer

 

 

With a copy (for informational purposes only) to:

Stephen M. Cohen, Esq.

Director of Legal Affairs/Corporate Counsel

Two Logan Square

 

18th and Arch Streets, Ste. 1101

Philadelphia, PA 19103

 

Telephone:

215 545-2702

 

Facsimile:

215 545-2862

 

 

and to

Brian North, Esq.

Buchanan Ingersoll, PC

 

1835 Market Street, 14th floor

Philadelphia, PA 19103

 

Telephone:

215 665-3828

 

Facsimile:

215 665-8760

 

If to the Transfer Agent:

 

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StockTrans, Inc.

44 W. Lastcaster Avenue

 

Ardmore, PA 19003

 

Telephone:

800 733-1121

 

Facsimile:

610 649-7302

 

Attention:

Jonathan Miller

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer’s representatives as set forth on the Schedule
of Buyers,

with a copy (for informational purposes only) to:

McDermott Will & Emery LLP

340 Madison Avenue

 

New York, New York 10173

 

Telephone:

212 547-5400

 

Facsimile:

212 547-5444

 

Attention:

Stephen E. Older, Esq.

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

(g)        Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Debentures or the Warrants. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the holders of at least a majority of the aggregate
number of Registrable Securities issued and issuable hereunder, including by way
of a Fundamental Transaction (unless the Company is in compliance with the
applicable provisions governing Fundamental Transactions set forth in the
Debentures and the Warrants). A Buyer may assign some or all of its rights
hereunder in connection with transfer of any of its Securities without the
consent of the Company, in which event such assignee shall be deemed to be a
Buyer hereunder with respect to such assigned rights.

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

(i)         Survival. Unless this Agreement is terminated under Section 9, the
representations and warranties of the Company and the Buyers contained in
Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 5 and
10 shall survive the Closing. Each

 

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Buyer shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.

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

(k)        Indemnification. In consideration of each Buyer’s execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each other holder of the Securities and all of their stockholders,
partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any cause of action, suit or claim brought or made against such Indemnitee
by a third party (including for these purposes a derivative action brought on
behalf of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any
disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status of
such Buyer or holder of the Securities as an investor in the Company pursuant to
the transactions contemplated by the Transaction Documents. To the extent that
the foregoing undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law. The indemnification provided in this Section 10(k) shall not apply to any
indemnified Liabilities which are the subject of the indemnification provided
for in Section 6 of the Registration Rights Agreement, as well as shall not
apply to those matters covered by the express exceptions to indemnification
provided by Section 6 of the Registration Rights Agreement. Except as otherwise
set forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 10(k) shall be the same as those set forth in
Section 6 of the Registration Rights Agreement.

(l)         No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

 

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

(n)        Payment Set Aside. To the extent that the Company makes a payment or
payments to the Buyers hereunder or pursuant to any of the other Transaction
Documents or the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.

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

[Signature Pages Follow]

 

29

 

--------------------------------------------------------------------------------

 

 

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

COMPANY:

MAVERICK OIL AND GAS, INC.

By: /s/ Stephen M. Cohen

Name: Stephen M. Cohen

Title: Chief Executive Officer

 

 

--------------------------------------------------------------------------------

 

 

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

BUYERS:

By:

By: /s/

Name:

Title: Chief Financial Officer

 

--------------------------------------------------------------------------------

 

 

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

By:

Name:

Title:

 

--------------------------------------------------------------------------------

 

 

EXHIBITS

Exhibit A

Form of Debentures

 

Exhibit B

Form of Warrants

 

Exhibit C

Registration Rights Agreement

 

Exhibit D

Irrevocable Transfer Agent Instructions

 

Exhibit E-1

Form of Buchanan Ingersoll & Rooney, PC Opinion

Exhibit E-2

Form of Woodburn & Wedge Opinion

 

Exhibit F

Form of Secretary’s Certificate

 

Exhibit G

Form of Officer’s Certificate

 

Exhibit H

Shareholder Consents

 

Exhibit I

Form of Waiver

 

SCHEDULES

 

Schedule 3(a)

Organization and Qualification

 

Schedule 3(b)

Authorization; Enforcement; Validity

 

Schedule 3(c)

Issuance of Securities

 

Schedule 3(d)

No Conflicts

 

Schedule 3(e)

Consents

 

Schedule 3(g)

No General Solicitation; Placement Agent’s Fees

 

Schedule 3(l)

Absence of Certain Changes

 

Schedule 3(m)

No Undisclosed Events, Liabilities, Developments or Circumstances

Schedule 3(r)

Equity Capitalization

 

Schedule 3(s)

Indebtedness and Other Contracts

 

Schedule 3(t)

Absence of Litigation

 

Schedule 3(w)

Title

 

Schedule 3(cc)

Internal Accounting and Disclosure Controls

 

 

SCHEDULES TO SECURITIES EXCHANGE AGREEMENT

These are the Schedules referred to in that certain Securities Exchange
Agreement dated as of July 30, 2007 (the “Agreement”) by and among the Buyers
referred to therein (the “Buyers”) and Maverick Oil and Gas, Inc. (the
“Company”). Capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to them in the Agreement. The headings in the Schedules
are for convenience of reference only.

Nothing in the Schedules is intended to broaden the scope of any representation
or warranty contained in the Agreement or to create any covenant unless clearly
specified to the contrary herein. Any disclosure on one Schedule shall be deemed
to be disclosed on each other Schedule, provided that the qualification of the
related statement in the Agreement is reasonably apparent on its face. Inclusion
of any item in the Schedules shall not constitute, or be deemed to be, an
admission to any third party concerning such item. The Schedules include
descriptions of instruments or brief summaries of certain aspects of the Company
and its business and operations. The descriptions and brief summaries are not
necessarily complete and are provided in the Schedules to identify documents or
other materials previously delivered or made available.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Schedule 3(a) - Organization and Qualification

Organization and Qualification

 

Maverick Oil and Gas, Inc. & Subsidiaries/Affiliates

Status of Good Standings

 

Name of Entity

EIN#

Domestic Jurisdiction

Foreign Qualification

Documents Received & Dated

d/b/a
(if applicable)

Maverick Oil and Gas, Inc.

 

98-0377027

 

Nevada

 

7-10-2007

 

Florida

7-10-2007

 

Maverick Operating Company LLC

 

20-2820985

 

Texas

Texas (Comptroller)

7-10-2007

 

Texas - SOS

7-10-2007

 

Arkansas

7-10-2007

 

Maverick Turner Escalera, LLC

 

20-2249653

 

Delaware

 

7-11-2007

 

Florida

7-10-2007

 

Texas (Comptroller)

7-17-2007

 

Texas - SOS

7-10-2007

 

Maverick Whitewater, LLC

 

20-2249712

 

Delaware

 

7-11-2007

 

Colorado

7-10-2007

 

Florida

7-10-2007

 

Maverick Zapata County, LLC

 

 

20-2822239

Delaware

 

7-11-2007

 

Florida

7-10-2007

 

Texas (Comptroller)

(1)

Maverick Zapata County Exploration, LLC

Texas - SOS

7-10-2007

RBE, LLC

 

84-1653499

Delaware

 

7-11-2007

 

Florida

7-10-2007

 

Texas (Comptroller)

(1)

 

Texas - SOS

7-10-2007

 

Maverick Basin Exploration, LLC

 

13-4282789

Delaware

 

7-11-2007

 

Florida

7-10-2007

 

Texas (Comptroller)

7-10-2007

Maverick Deep Basin Exploration, LLC

 

Texas - SOS

7-10-2007

Maverick Woodruff County, LLC

 

 

45-0527640

Delaware

 

 

7-11-2007

 

Arkansas

7-10-2007

 

Florida

7-10-2007

 

Ferrell RBE Holdings, LLC

35-2235277

Delaware

No longer active - winding down

 

 

 

(1)

Currently not in good standing with the Comptroller in Texas

 

--------------------------------------------------------------------------------

 

 

Schedule 3(b)-Authorization

 

The Board of Directors of the Company has approved a 20-1 reverse stock split of
the Company’s outstanding shares, while leaving the Company’s authorized shares
unchanged (the "Reverse Split"). The Company has also received written consents
from the holders of over 50% of its outstanding shares of Common Stock
authorizing this Reverse Split. The Company will need to file an Information
Statement with the SEC and comply with Regulation 14C before the Reverse Split
can become effective

 

Schedule 3(c)-Issuance of Securities

 

N/A

 

Schedule 3(d) – No Conflicts

 

Please refer to discussion in Schedule 3(b) above.

 

Schedule 3(e)-Consents

 

To effectuate the Reverse Split,: (i) the Company will be required to rely upon
the consent resolutions provided by its principal shareholders and (ii) the
Company will need to file an Information Statement with the SEC, incorporate any
comments made by its staff, and comply with Regulation 14C. For the purposes
hereof, the Company has presumed that it has secured the consent of the Buyers
under the terms of the convertible debentures and warrants issued to them
pursuant to the Securities Purchase Agreement dated January 5, 2006 (the
"January 2006 SPA"), the Securities Purchase Agreement dated June 21, 2006 (the
“June 2006 SPA”), and the Securities Purchase Agreement dated November 16, 2006
(the “November 2006 SPA”) , each between the Company and the Buyers.

 

Schedule 3(g)-Placement Agent Fees

 

N/A

 

Schedule 3(l)-Absence of Certain Changes

 

●          Since February 28, 2007, the Company has continued to incur material
losses and cash flow deficits during the third and fourth quarters of fiscal
year 2007 (collectively, the “Interim Periods”). During the third quarter of
fiscal year 2007, the Company completed the sale of its interest in the Barnett
Shale project and paid approximately $19 million towards the Outstanding
Debentures, including accrued interest. The currently remaining capital
resources of the Company will only be sufficient to support the operations of
the Company for the immediate term, and absent material proceeds from a capital
or financing transaction, the Company will not be able to remain a going concern
for more than the immediate term. Accordingly, the Company will need to include
reference to a "going concern" risk in its Quarterly Report on Form 10-Q for its
third quarter of fiscal year 2007.

 

 

--------------------------------------------------------------------------------

 

 

●          During the third quarter of fiscal year 2007, the Company incurred
operating losses of approximately $2 million, and has continued to incur
operating losses after May 31, 2007, although at lower rates. As of May 31,
2007, the Company believes it had a working capital deficit of approximately $6
million, which includes approximately $2.5 million owed to Fayetteville vendors,
$1.6 million of over advances made by Fayetteville project partners, $500,000 in
accrued interest expense and $1.2 million accrued in connection with the M. A.
Wallace litigation described in Schedule 3(t). Furthermore, our working capital
deficit does not reflect in excess of $3 million owed to us by a bankrupt
Fayetteville project partner, as we don’t believe there is any reasonable chance
of recovery and as these amounts have been reclassified to an investment in the
underlying asset account. Furthermore, we are aware that our bankrupt
Fayetteville project partner is currently marketing its interest in the
Fayetteville shale project. If the sales efforts indicate a fair market value of
the Fayetteville interest below our carrying value, we will have to consider
making a downward adjustment to that asset on our financial books and records.

 

●          Absent a material financing, the Company does not have adequate
resources to satisfy its outstanding trade payables. The Company’s inability to
satisfy its outstanding trade payables has had an adverse effect on the
Company’s ability to remain in operation as a going concern.

 

●          Also, in the course of the wind-down of the Company’s activity in
Fayetteville, the Company became aware of certain items that could have an
adverse effect on the Company if not addressed: (i) a commitment for the
continued use of a drilling rig previously deployed in Woodruff County, through
January 2008; (ii) drilling commitments that require wells to be drilled on
certain acreage within the Fayetteville Shale Project, starting in June 2007
through the end of calendar 2007, which, if not satisfied, will result in a loss
of between 30%-35% of the acreage within our Fayetteville project and will
impose several million dollars of financial penalties upon the Company; and
(iii) commitments to acquire additional leasehold acreage within Woodruff and
surrounding counties of Arkansas that have not been funded.

 

In connection with registration rights granted (see Schedule 3(r) below) to
investors who purchased securities during 2004 and 2005, certain claims may be
asserted in connection with the Company’s failure to renew its Prospectus dated
August 1, 2005, although based upon: (i) the scope of the registration rights
agreed to; (ii) the ability of most of those shareholders to sell under Rule
144; and (iii) the market price of the Company’s common stock since the
Prospectus became “stale”, the Company does not believe any of these claims
could be material. The purchasers in our December 2006 private placement have
demand registration rights since their shares were not included in a
registration statement on or before March 31, 2007.

 

Schedule 3(k)

 

The Company has prepared, but not filed, its Quarterly Report on Form 10-Q for
the quarter ended May 31, 2007.

 

Schedule 3(m) – No Undisclosed Events, etc.

 

The information included within Schedule 3(l) has not been included in any of
the Company’s SEC Documents since the information contained therein relates to
periods for which no SEC report is yet due and public disclosure is not
otherwise required .

 

 

--------------------------------------------------------------------------------

 

 

 

Schedule 3(r) – Equity Capitalization

 

Capitalization

 

The Company’s equity capitalization is summarized on attached Schedule “A”.

 

Preemptive and Similar Rights

 

●          The Buyers have the rights set forth in Section 4(p) to the January
2006 SPA, the June 2006 SPA and the November 2006 SPA, which rights will be
terminated upon the closing of this transaction.

 

Outstanding Options and Warrants

 

●          The Company has issued the options and warrants identified in
Schedule "A"

 

Outstanding Debt Securities and Notes

 

●          The Outstanding Debentures issued to the Buyers in the January 2006
SPA, June 2006 SPA and November 2006 SPA, each of which will be exchanged for
the Debentures at the closing of this transaction.

 

Financing Statements

 

●          Reference is made to the lien searches secured by the Company and
provided to the Buyers on or before the date hereof.

 

Registration Rights

 

●          Registration rights remain in effect covering those transactions and
shares identified in the schedules to the January 2006 SPA, June 2006 SPA and
November 2006 SPA.

 

●          Registration rights remain in effect with respect to the shares
covered by the Company’s Prospectus dated August 1, 2005.

 

●          The registration rights set forth in Sections 2 and 3 of Registration
Rights Agreements related to the January 2006 SPA, June 2006 SPA, and November
2006 SPA, which rights will be terminated upon the closing of this transaction.

 

●           Registration rights were granted to the investors who purchased the
shares and warrants sold by the Company in a private placement transaction
during December 2006. The Company has also elected to register the balance of
the approximately 20 million shares purchased from the Company by Line Trust
Limited and its affiliates during January 2005.

 

 

Anti-Dilution Adjustments

 

 

--------------------------------------------------------------------------------

 

 

●          Full-ratchet rights and “gross-up" associated with 533,276 warrants
issued or issuable to Trident Growth Fund, L.P. ("Trident") in connection with
an October 2005 transaction (@$1.00) and 213,310 Warrants issued to Trident in
July 2004 (@$1.00) (although as a result of the convertible debentures and
associated warrants, issued pursuant to the January 2006 SPA the exercise price
of the Trident Warrants has already been reduced to $.93 per share), have been
waived by Trident pursuant to Letter Agreements with the Company dated November
1, 2006 and June 6, 2007, copies of which have been provided to the Buyers.

 

●          Full-ratchet rights contained in the Outstanding Warrants issued to
the Buyers pursuant to the January 2006 SPA June 2006 SPA and November 2006 SPA,
which Outstanding Warrants will be exchanged for Warrants at the closing of this
transaction.

 

No Liabilities or Obligations

 

●          The information included in Schedule 3(l) have not been included in
any of the Company’s SEC Documents since the information contained therein
relates to periods for which no SEC report is yet due, and public disclosure is
not otherwise required.

 

 

 

Schedule 3(s) – Indebtedness and Other Contracts

 

●          Indebtedness under the Outstanding Debentures issued pursuant to the
January 2006 SPA, the June 2006 SPA and the November 2006 SPA, each of which
will be exchanged for Debentures at the closing of this transaction.

 

Schedule 3(t) – Absence of Litigation

 

 

On March 5, 2007, M.A. Wallace and Elvia Vaudine Wallace filed suit against us
and our wholly-owned subsidiary, Maverick Woodruff County, LLC (“Woodruff
County”), in the Circuit Court of Cross County, Arkansas. The plaintiffs have
asserted damages of approximately $1.2 million based upon their allegation that
Woodruff County failed to perform under the terms of an agreement to lease their
acreage in Saint Francis and Woodruff Counties within Arkansas. We have recently
filed an answer denying certain of the claims and asserting certain affirmative
defenses. However, we are presently unable to predict with any certainty the
outcome of this matter in view of the early stage of the proceeding.

 

On June 5, 2007, Union Drilling, Inc. filed a civil action against Maverick
Operating Company, LLC in the Circuit Court of Pulaski County, Arkansas, seeking
damages of approximately $1.6 million in connection with work performed by Union
Drilling on the Fayetteville project. The Company does not dispute the amount
due and owing, and is in the process of attempting to

 

--------------------------------------------------------------------------------

 

secure an amicable settlement of the matter. However, any settlement will
require a cash payment to Union Drilling which the Company does not presently
have.

 

From time to time Fayetteville vendors and landowers the Company owes money to
have threatened to commence litigation to collect the amounts owed to them.

 

Schedule 3(w) – Title

 

None.

 

 

Section 3(cc) - Internal Accounting and Disclosure Controls

 

As disclosed in the Company's Quarterly Report on Form 10-Q for the period ended
November 30, 2005, some accounting entries relating to debt and equity
instruments required adjustment upon review by our independent auditors.

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Schedule A

 

 

 

 

 

 

 

 

Maverick Oil & Gas, Inc.

 

 

 

 

 

Summary of Oustanding Capital

 

 

 

 

 

PROFORMA*

30-Jul-07

 

 

 

 

 

 

 

 

 

 

 

 

*Assuming completion of July 30, 2007 transaction.

 

 

 

 

 

 

 

 

 

 

 

 

DESCRIPTION

Oustanding shares calculation

 

 

 

 

 

Number of shares

 

 

 

 

 

Currently outstanding  shares

107,428,360

[1]

 

 

 

July 30, 2007 Investment Warrants

77,902,597

[2]

 

 

 

 

July 30, 2007 Debentures

111,038,016

[2], [3]

 

 

December 19, 2006 Investment Warrants

5,225,000

 

 

 

 

 

Other warrants outstanding

17,185,010

[4]

 

 

 

Currently outstanding options.

3,544,000

 

 

 

 

 

Total fully-diluted

322,302,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[1] Reflects surrender of 1,000,000 restricted shares issued to James A. Watt
(fomer CEO). Also includes 80,000 restricted shares issued to John Ruddy, 30,000
restricted shares issued to Ron Idom and 30,000 restricted shares issued to Bill
Irwin, each of which vest over 3 annual installments commencing March 23, 2007.

 

 

 

 

 

 

 

[2] See schedule below.

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

 

 

[3] Principal oustanding at July 30, 2007 $27,759,503.96 convertible at
$0.25/dollar of principal.

 

 

 

 

 

 

 

 

[4] Reflects the surrender of 5,225,000 Warrants by Line Trust on December 19,
2006.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Breakdown of shares issuable in connection with the July [*], 2007 agreement

 

 

Exercise of Investment Warrants

Conversion of principal amount

Beneficial Owner

 

 

 

 

58,426,949

83,353,512

[Investor]

 

 

19,475,648

27,684,504

[Investor]

 

 

77,902,597

111,038,016

 

 

 

 

 

[2]

[3]

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Schedule B

 

 

 

 

 

 

 

 

 

 

Maverick Operating Company, LLC

 

 

 

 

 

Balance Sheet

 

 

 

 

 

 

As of June 30, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash & Cash Equivalents

 

$(34,276)

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Receivable - Joint Owners

 

 

 

 

 

 

 

Cygnus Oil & Gas (Note 1)

3,593,142

 

 

 

 

 

 

Bamco Gas, LLC

(15,708)

 

 

 

 

 

 

PHT Whitewater

5,323

 

 

 

 

 

 

Chesapeake Operating, Inc.

2,946

3,585,704

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepaids & Other Assets:

 

 

 

 

 

 

 

Deposits - Dallas Office/Rent

3,225

 

 

 

 

 

 

Surety Bond

110,041

113,266

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Current Assets

 

3,664,694

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

Long-Term Assets:

 

 

 

 

 

 

Property, Plant & Equipment, net

 

 

 

 

 

 

 

Office Building

214,479

 

 

 

 

 

 

Office Furniture & Equipment

28,658

243,137

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$3,907,831

 

 

 

 

 

 

 

 

 

 

 

 

Note 1:

 

 

 

 

 

 

This balance corresponds to Cygnus' share of drilling and development activity
in the Fayetteville Shale.

On a consolidated basis, a portion of this receivable has been reclassified to
Unproved O&G properties

and another portion to exploration expense to reflect the uncollectible status
of that receivable due to their

their bankruptcy filing.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES & SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Payable & Accrued Expenses

$2,328,549

 

 

 

 

 

 

 

 

 

 

 

 

 

Advances from Joint Owners:

 

 

 

 

 

 

 

Bamco, LLC

992,171

 

 

 

 

 

 

Maverick Whitewater

56,841

 

 

 

 

 

 

Maverick Woodruff County, LLC

535,767

1,584,780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

Total Current Liabilities

 

3,913,328

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

Maverick Oil & Gas, Inc.

 

11,749

 

 

 

 

Year-to-date gain (loss)

 

(71,803)

 

 

 

 

Retained earnings prior year

 

54,557

 

 

 

 

Total Shareholders' Equity

 

(5,497)

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$3,907,831