Filed by Automated Filing Services Inc. (604) 609-0244 - Terax Energy, Inc. - Exhibit 10.7






EXHIBIT 10.7

SECURITIES PURCHASE AGREEMENT

     This Securities Purchase
Agreement (this "Agreement") is dated as of February 7, 2006, among
Terax Energy, Inc., a Nevada corporation (the "Company"), and each
investor identified on the signature pages hereto (each, an "Investor"
and collectively, the "Investors").

     WHEREAS, subject to the terms and
conditions set forth in this Agreement and pursuant to Section 4(2) of the
Securities Act (as defined below) and Rule 506 promulgated thereunder, the
Company desires to issue and sell to each Investor, and each Investor, severally
and not jointly, desires to purchase from the Company certain securities of the
Company, as more fully described in this Agreement.

     NOW, THEREFORE, IN CONSIDERATION
of the mutual covenants contained in this Agreement, and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Company and each Investor agree as follows:

ARTICLE I.
DEFINITIONS

     1.1 Definitions. In
addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms shall have the meanings indicated in this
Section 1.1:

     "Action" means any action,
suit, notice of violation, proceeding (including any partial proceeding such as
a deposition) or investigation pending or threatened in writing against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency,
regulatory authority (federal, state, county, local or foreign), stock market,
stock exchange or trading facility.

     "Affiliate" means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as such terms are
used in and construed under Rule 144.

     "Business Day" means any
day except Saturday, Sunday and any day which is a federal legal holiday or a
day on which banking institutions in the State of New York , State of
Connecticut or Commonwealth of Massachusetts are authorized or required by law
or other governmental action to close.

     "Closing" means the
closing of the purchase and sale of the Securities pursuant to Article II.

     "Closing Date" means the
Business Day immediately following the date on which all of the conditions set
forth in Sections 5.1 and 5.2 hereof are satisfied, or such other date as the
parties may agree.

     "Commission"
means the Securities and Exchange Commission.




     "Common Stock" means the
common stock of the Company, par value $0.001 per share, and any securities into
which such common stock may hereafter be reclassified. 

     "Company
Counsel" means Sichenzia Ross Friedman Ference
LLP.

     “Company Deliverables” has the
meaning set forth in Section 2.2(a)
..

     “Disclosure Materials” has the
meaning set forth in Section 3.1(h)
..

     "Exchange Act" means the
Securities Exchange Act of 1934, as amended.

     “GAAP” means U.S.
generally accepted accounting principles.

     “Intellectual Property
Rights” has the meaning set forth in Section 3.1(o) .

     "Investment Amount" means,
with respect to each Investor, the product of the Per Unit Purchase Price
multiplied by the number of Units being purchased by such Investor (as indicated
on such Investor’s signature page to this Agreement).

     “Investor
Deliverables” has the meaning set forth in Section 2.2(b) .

     “Investor Party”
has the meaning set forth in Section 4.7.

     "Lien" means any lien,
charge, encumbrance, security interest, right of first refusal or other
restrictions of any kind.

     “Material Adverse Effect”
means any of (i) a material and adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material and adverse effect
on the results of operations, assets, prospects, business or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
or (iii) an adverse impairment to the Company's ability to perform on a timely
basis its obligations under any Transaction Document.

     “New York Courts” means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.

     "Outside Date"
means February 6, 2006.

     "Per Unit Purchase
Price" equals $1.25.

     "Person" means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.

     "Proceeding" means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.

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     "Registration Rights
Agreement" means the Registration Rights Agreement, dated as of the date of
this Agreement, among the Company and each Investor, in the form of Exhibit
B hereto.

     "Registration Statement"
means a registration statement meeting the requirements set forth in the
Registration Rights Agreement and covering the resale by the Investors of the
Shares and the Warrant Shares.

     "Rule 144" means Rule 144
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule.

     “SEC Reports”
has the meaning set forth in Section
3.1(h) 

      “Securities” means the
Shares, the Warrants and the Warrant
Shares.

     "Securities Act"
means the Securities Act of 1933, as amended.

     "Shares" means the shares
of Common Stock issued or issuable to the Investors pursuant to this
Agreement.

     "Short Sales" include,
without limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act and all types of direct and indirect stock
pledges, forward sale contracts, options, puts, calls, swaps and similar
arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated brokers.

     "Subsidiary" means any
"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X
promulgated by the Commission under the Exchange Act.

     "Trading Day" means (i) a
day on which the Common Stock is traded on a Trading Market, or (ii) if the
Common Stock is not quoted on any Trading Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the Pink Sheets,
LLC (or any similar organization or agency succeeding to its functions of
reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i) and (ii) hereof, then Trading Day shall
mean a Business Day.

     "Trading Market" means
whichever of the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market, the Nasdaq Capital Market or OTC Bulletin Board on which
the Common Stock is listed or quoted for trading on the date in question.

     "Transaction Documents"
means this Agreement, the Warrants, the Registration Rights Agreement and any
other documents or agreements executed in connection with the transactions
contemplated hereunder.

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     "Warrants" means the
Common Stock purchase warrants in the form of Exhibit A, which are
issuable to the Investors at the Closing.

     "Warrant Shares" means the
shares of Common Stock issuable upon exercise of the Warrants.

ARTICLE II.
PURCHASE AND SALE

     2.1 Closing. Subject to
the terms and conditions set forth in this Agreement, at the Closing the Company
shall issue and sell to each Investor, and each Investor shall, severally and
not jointly, purchase from the Company, the Shares and the Warrants representing
such Investor’s Investment Amount. The Closing shall take place at the offices
of Sichenzia Ross Friedman Ference LLP, 1065 Avenue of the Americas, New York,
New York 10018 on the Closing Date or at such other location or time as the
parties may agree.

     2.2 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be delivered to each
Investor the following (the "Company Deliverables"):

                    (i)
a certificate evidencing the number of Shares indicated on such Investor’s
signature page to this Agreement, registered in the name of such Investor;

                    (ii)
a Warrant, registered in the name of such Investor, pursuant to which such
Investor shall have the right to acquire the number of shares of Common Stock
equal to such Investors Investment Amount, divided by $1.25;

                    (iii)
the Registration Rights Agreement, duly executed by the Company; and

                    (iv)
a legal opinion from counsel to the Company in form and substance reasonably
acceptable to the Investors. 

          (b)
At the Closing, each Investor shall deliver or cause to be delivered to the
Company the following (the "Investor Deliverables"):

                    (i)
Immediately upon receipt of the certificate evidencing the shares and the
warrant, its Investment Amount, in United States dollars and in immediately
available funds, by wire transfer to an account designated in writing by the
Company for such purpose; and

                    (ii)
the Registration Rights Agreement, duly executed by such Investor.

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ARTICLE III.

  REPRESENTATIONS AND WARRANTIES

     3.1 Representations and
Warranties of the Company. The Company hereby makes the following
representations and warranties to each
Investor:

          (a)
Subsidiaries. The Company has no direct or indirect Subsidiaries other
than as specified in the SEC Reports. The Company owns, directly or indirectly,
all of the capital stock of each Subsidiary free and clear of any and all Liens,
and all the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive and
similar rights.

          (b)
Organization and Qualification. The Company and each Subsidiary are duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. The Company and each Subsidiary are duly
qualified to conduct its respective businesses and are in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect.

          (c)
Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents and otherwise to carry out its obligations
thereunder. The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary action on the part of the Company and
no further action is required by the Company in connection therewith. Each
Transaction Document has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application. 

          (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 thereby do not and will not (i) conflict with or violate any
provision of the Company's or any Subsidiary's certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights 

5




of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect.

          (e)
Filings, Consents and Approvals. The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
(i) the filing with the Commission of one or more Registration Statements in
accordance with the requirements of the Registration Rights Agreement, (ii)
filings required by state securities laws, (iii) the filing of a Notice of Sale
of Securities on Form D with the Commission under Regulation D of the Securities
Act, (iv) the filings required in accordance with Section 4.4 and (v) those that
have been made or obtained prior to the date of this Agreement.

          (f)
Issuance of the Securities. The Securities have been duly authorized and,
when issued and paid for in accordance with the Transaction Documents, will be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens. As of the Closing, the Company will have reserved from its duly
authorized capital stock the shares of Common Stock issuable pursuant to this
Agreement and the Warrants in order to issue the Shares and the Warrant
Shares.

          (g)
Capitalization. The number of shares and type of all authorized, issued
and outstanding capital stock of the Company, and all shares of Common Stock
reserved for issuance under the Company’s various option and incentive plans, is
specified in the SEC Reports. Except as specified in the SEC Reports, no
securities of the Company are entitled to preemptive or similar rights, and no
Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the
Transaction Documents. Except as specified in the SEC Reports, there are no
outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
The issue and sale of the Securities will not, immediately or with the passage
of time, obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Investors) and will not result in a


6




right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such securities.

          (h)
SEC Reports; Financial Statements. The Company has filed all reports
required to be filed by it under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the twelve months
preceding the date hereof (or such shorter period as the Company was required by
law to file such reports) (the foregoing materials being collectively referred
to herein as the "SEC Reports" and, together with the Schedules to this
Agreement (if any), the "Disclosure Materials") on a timely basis or has
timely filed a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
GAAP applied on a consistent basis during the periods involved, except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated Subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.


          (i)
Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, there has been no event, occurrence or development that has had
or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables, accrued expenses and other liabilities incurred
in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company's financial statements
pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting or the
identity of its auditors, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock, and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option or
restricted stock plans. The Company does not have pending before the Commission
any request for confidential treatment of information.

          (j)
Litigation. There is no Action which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Securities or (ii) except as specifically disclosed in the SEC Reports,
could, if there were an unfavorable decision, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor any director or officer thereof (in 

7




his or her capacity as such), is or has been the subject of any
Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty, except as specifically
disclosed in the SEC Reports. The Commission has not issued any stop order or
other order suspending the effectiveness of any registration statement filed by
the Company or any Subsidiary under the Exchange Act or the Securities Act.

          (k)
Labor Relations. No material labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the
Company.

          (l)
Compliance. Except as disclosed in the SEC Reports, neither the Company
nor any Subsidiary (i) is in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of any statute, rule or
regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. 

          (m)
Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect, and neither the
Company nor any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any such permits.

          (n)
Title to Assets. Except as disclosed in the SEC Reports, the Company and
the Subsidiaries have good and marketable title in fee simple to all real
property owned by them that is material to their respective businesses and good
and marketable title in all personal property owned by them that is material to
their respective businesses, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the Subsidiaries are
in compliance, except as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.

          (o)
Patents and Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in 

8




connection with their respective businesses as described in the
SEC Reports and which the failure to so have could, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse Effect
(collectively, the "Intellectual Property Rights"). Neither the Company
nor any Subsidiary has received a written notice that the Intellectual Property
Rights used by the Company or any Subsidiary violates or infringes upon the
rights of any Person. Except as set forth in the SEC Reports, to the knowledge
of the Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual
Property Rights.

          (p)
Transactions With Affiliates and Employees. Except as set forth in the
SEC Reports, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and 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 officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

          (q)
Internal Accounting Controls. Except as disclosed in the SEC Reports, the
Company and the Subsidiaries maintain a system of internal accounting controls
consistent with similarly situated companies which is 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
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. 

          (r)
Solvency. Based on the financial condition of the Company as of the
Closing Date (and assuming that the Closing shall have occurred), (i) the
Company's fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Company's existing debts and other
liabilities (including known contingent liabilities) as they mature, (ii) the
Company's assets do not constitute unreasonably small capital to carry on its
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof, and (iii) the proceeds the
Company would receive, were it to liquidate all of its assets, after taking into
account all anticipated uses of the cash, would be sufficient to pay all amounts
on or in respect of its debt when such amounts are required to be paid. The
Company does not intend to incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be payable on
or in respect of its debt).

          (s)
Certain Fees. The Investors shall have no obligation with respect to any
fees or with respect to any claims (other than such fees or commissions owed by
an Investor 

9




pursuant to written agreements executed by such Investor which
fees or commissions shall be the sole responsibility of such Investor) made by
or on behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by this
Agreement.

          (t)
Certain Registration Matters. Assuming the accuracy of the Investors’
representations and warranties set forth in Section 3.2(b) -(e), no registration
under the Securities Act is required for the offer and sale of the Shares and
Warrant Shares by the Company to the Investors under the Transaction Documents.
The Company is eligible to register the resale of its Common Stock for resale by
the Investors under Form SB-2 promulgated under the Securities Act.

          (u)
Investment Company. The Company is not, and is not an Affiliate of, and
immediately following the Closing will not have become, an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

          (v)
Application of Takeover Protections. The Company has 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 Company's
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Investors as a
result of the Investors and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation the Company's issuance of the Securities and the Investors' ownership
of the Securities.

          (w)
No Additional Agreements. The Company does not have any agreement or
understanding with any Investor with respect to the transactions contemplated by
the Transaction Documents other than as specified in the Transaction
Documents.

          (x)
Disclosure. The Company confirms that neither it nor any Person acting on
its behalf has provided any Investor or its respective agents or counsel with
any information that the Company believes constitutes material, non-public
information except insofar as the existence and terms of the proposed
transactions hereunder may constitute such information. The Company understands
and confirms that the Investors will rely on the foregoing representations and
covenants in effecting transactions in securities of the Company. All disclosure
provided to the Investors regarding the Company, its business and the
transactions contemplated hereby, furnished by or on behalf of the Company
(including the Company’s representations and warranties set forth in this
Agreement) are true and correct and do 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 light of the circumstances under which they were
made, not misleading.

          (y)
  Patriot Act. The Company, its Subsidiaries and/or their affiliates have
  not engaged in transactions involving funds derived from illegal activity including
  money laundering, and are not under investigation for and have not been previously
  charged with violating any laws prohibiting money laundering, including but
  not limited to: (a) the Bank 

10




Secrecy Act, as amended by the USA PATRIOT ACT of 2001 (the
"PATRIOT Act”), and its implementing regulations, and all other
applicable U.S. and non-U.S. anti-money laundering laws and regulations and (b)
the Executive Orders and Sanctions Programs administered by the U.S. Department
of the Treasury's Office Foreign Assets Control (“OFAC”), including but
not limited to Executive Order No. 13224 of September 23, 2001 entitled,
"Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism," and all regulations contained in 31
C.F.R., Subtitle B, Chapter V (collectively, the “Anti-Money Laundering and
Anti-Terrorism Laws/OFAC laws”); and (c) the laws and regulations of the
jurisdictions in which the Company and its Subsidiaries operate.

     None of the Company, its
Subsidiaries or their affiliates are, to the best of their knowledge after
reasonable due diligence, acting, directly or indirectly, on behalf of
terrorists, terrorist organizations or narcotics traffickers, including those
persons or entities that appear on the Specially Designated Nationals and
Blocked Persons List ("SDN List") administered by OFAC (see
http://www.treas.gov/offices/enforcement/ofac/) and any individual or entity
included on any list of terrorists or terrorist organizations maintained by the
United Nations, the European Union and\or the countries in which the Company and
its Subsidiaries operate.

     None of the Company, its
Subsidiaries or their affiliates or, to the best of their knowledge, any of
their brokers or other agents: (i) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any person included on the SDN List; (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant
to the Sanctions Programs administered by OFAC; or (iii) engages in or conspires
to engage in any transaction that evades or avoids, or has the purpose of
evading or avoiding, or attempts to violate, any of the prohibitions set forth
in any anti-money laundering and anti-terrorism laws to which they are
subject.

     None of the Company or its Subsidiaries
  or any officer or director of the Company or its Subsidiaries: (a) appears on
  the SDN List or (b) is a politically exposed person (as defined in guidance
  issued by the Financial Action Task Force (see http://www.fatf-gafi.org/)
  or a senior foreign political figure1 or a family member or close associate
  of such a figure (see http://www.treas.gov/press/releases/docs/guidance.htm).




	1 	A "senior foreign political figure" is defined as a current or former
      senior official in the executive, legislative, administrative,  military
      or judicial branches of a non-U.S. government (whether elected or not),
      a current or former senior official of a major non-U.S. political party,
      or a current or former senior executive of a non-U.S. government owned corporation.
      In addition, a "senior foreign political figure" includes any corporation,
      business or other entity that has been formed by, or for the benefit of,
      a senior foreign political figure. "Immediate family" of a senior foreign
      political figure typically includes the figure's parents, siblings, spouse,
      children and in-laws. A "close associate" of a senior foreign political
      figure is a person who is widely and publicly known to maintain an unusually
      close relationship with the senior foreign political figure, 


11




          (z)
Foreign Corrupt Practices Act. Neither the Company or any of its
Subsidiaries, nor any director, officer, agent or employee of the Company or any
of its Subsidiaries has made, directly or indirectly, any payment or promise to
pay, or gift or promise to give or authorized such a promise or gift, of any
money or anything of value, directly or indirectly, to: (a) any foreign official
(as such term is defined in the Foreign Corrupt Practices Act (the
“FCPA”) for the purpose of influencing any official act or decision of
such official or inducing him or her to use his or her influence to affect any
act or decision of a governmental authority or (b) any foreign political party
or official thereof or candidate for foreign political office for the purpose of
influencing any official act or decision of such party, official or candidate or
inducing such party, official or candidate to use his, her or its influence to
affect any act or decision of a foreign governmental authority, in the case of
both (a) and (b) above in order to assist the Company or any of its Subsidiaries
to obtain or retain business for, or direct business to the Company or any of
its Subsidiaries, as applicable, and under circumstances which would subject the
Company or any of its Subsidiaries to liability under the FCPA or any
corresponding foreign laws. Neither the Company nor any of its Subsidiaries has
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment of funds or received or retained any funds in violation of any law, rule
or regulation.

                    (aa)
  Use of Proceeds. No part of the proceeds of the sale of the Shares and
  Warrants will be used, directly or indirectly, for any payments to: (a) any
  individual or entity listed on the SDN List and/or any other similar lists administered
  by OFAC pursuant to any authorizing statute, Executive Order or regulation;
  (b) the government of any country subject to an OFAC Sanctions Program; (c)
  any individual or entity included on any list of terrorists or terrorist organizations
  maintained by the United Nations, the European Union and/or the countries in
  which the Company and its Subsidiaries operate; or (d) any governmental official
  or employee, political party, official of a political party, candidate for political
  office, anyone else acting in an official capacity, or any agent of any such
  individual or entity, in order to obtain, retain or direct business or obtain
  any improper advantage, in violation of the FCPA.

                    (bb)
  Sarbanes-Oxley Compliance. The Company and each of its Subsidiaries are
  in compliance in all material respects with all applicable requirements of the
  Sarbanes-Oxley Act of 2002 and applicable rules and regulations promulgated
  by the Commission thereunder.

                    (cc)
  No Manipulation of Stock. Neither the Company nor any of its Subsidiaries
  has taken, in violation of applicable law, any action designed to or that might
  reasonably be expected to cause or result in stabilization or manipulation of
  the price of the Common Stock to facilitate the transactions contemplated hereby
  or the sale or resale of the Shares or the Warrant Shares.

     3.2 Representations and
Warranties of the Investors. Each Investor hereby, for itself and for no
other Investor, represents and warrants to the Company as follows:



	 	and includes a person who is in a position to conduct substantial U.S.
      and non-U.S. financial transactions on behalf of the senior foreign political
      figure.


12




          (a)
Organization; Authority. Such Investor is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations thereunder. The
execution, delivery and performance by such Investor of the transactions
contemplated by this Agreement has been duly authorized by all necessary
corporate or, if such Investor is not a corporation, such partnership, limited
liability company or other applicable like action, on the part of such Investor.
Each of this Agreement and the Registration Rights Agreement has been duly
executed by such Investor, and when delivered by such Investor in accordance
with terms hereof, will constitute the valid and legally binding obligation of
such Investor, enforceable against it in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.

          (b)
Investment Intent. Such Investor is acquiring the Securities as principal
for its own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Investor's right at all times to sell or otherwise
dispose of all or any part of such Securities in compliance with applicable
federal and state securities laws. Subject to the immediately preceding
sentence, nothing contained herein shall be deemed a representation or warranty
by such Investor to hold the Securities for any period of time. Such Investor
does not have any agreement or understanding, directly or indirectly, with any
Person to distribute any of the Securities.

          (c)
Investor Status. At the time such Investor was offered the Securities, it
was, and at the date hereof it is, and on each date on which it exercises
Warrants it will be, an "accredited investor" as defined in Rule 501(a) under
the Securities Act. Such Investor is not a registered broker-dealer under
Section 15 of the Exchange Act.

          (d)
General Solicitation. Such Investor is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

          (e)
Access to Information. Such Investor acknowledges that it has reviewed
the Disclosure Materials and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Shares and the merits and risks of investing in the Securities;
(ii) access to information about the Company and the Subsidiaries and their
respective financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Investor or its representatives or counsel shall modify, amend
or affect such Investor's right to 

13




rely on the truth, accuracy and completeness of the Disclosure
Materials and the Company's representations and warranties contained in the
Transaction Documents.

          (f)
Certain Trading Activities. Such Investor has not directly or indirectly,
nor has any Person acting on behalf of or pursuant to any understanding with
such Investor, engaged in any transactions in the securities of the Company
(including, without limitations, any Short Sales involving the Company’s
securities) since the earlier to occur of (1) the time that such Investor was
first contacted by the Company or others regarding an investment in the Company
and (2) the 30th calendar day prior to the date of this Agreement.
Such Investor covenants that neither it nor any Person acting on its behalf or
pursuant to any understanding with it will engage in any transactions in the
securities of the Company (including Short Sales) prior to the time that the
transactions contemplated by this Agreement are publicly disclosed.

          (g)
Independent Investment Decision. Such Investor has independently
evaluated the merits of its decision to purchase Securities pursuant to the
Transaction Documents, and such Investor confirms that it has not relied on the
advice of any other Investor’s business and/or legal counsel in making such
decision. Such Investor has not relied on the business or legal advice of any
other person in making its investment decision hereunder, and confirms that none
of such Persons has made any representations or warranties to such Investor in
connection with the transactions contemplated by the Transaction Documents.

ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

	    4.1 (a) Securities may
      only be disposed of in compliance with state and federal securities laws.
      In connection with any transfer of the Securities other than pursuant to
      an effective registration statement, to the Company, to an Affiliate of
      an Investor or in connection with a pledge as contemplated in Section 4.1(b),
      if reasonably necessary, the Company may require the transferor thereof
      to provide to the Company an opinion of counsel selected by the transferor,
      the form and substance of which opinion shall be reasonably satisfactory
      to the Company, to the effect that such transfer does not require registration
      of such transferred Securities under the Securities Act. 







	  	  	  
	          (b)
      Certificates evidencing the Securities will contain the following legend,
      until such time as they are not required under Section 4.1(c): 

	  	  	  


[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE
  OF THESE SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED]
  WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
  ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
  ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
  OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE 



  14 






REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

       (c) The legend set
  forth in Section 4.1(b) shall be removed and the Company shall issue a certificate
  without such legend or any other legend to the holder of the applicable Securities
  upon which it is stamped, if (i) such Securities are registered for resale under
  the 1933 Act, (ii) in connection with a sale, assignment or other transfer,
  such holder provides the Company with an opinion of counsel, in a generally
  acceptable form, to the effect that such sale, assignment or transfer of such
  Securities may be made without registration under the applicable requirements
  of the 1933 Act, or (iii) such holder provides the Company with reasonable assurance
  that such Securities can be sold, assigned or transferred pursuant to Rule 144.
  The Company shall cause its counsel to issue a legal opinion to the Company’s
  transfer agent promptly after the Effective Date if required by the Company’s
  transfer agent to effect the removal of the legend hereunder. If all or any
  portion of the Warrant is exercised at a time when there is an effective registration
  statement to cover the resale of the Warrant Shares, such Warrant Shares shall
  be issued free of the legend set forth in Section 4.1(b) . Following the Effective
  Date or at such earlier time as a legend is no longer required for certain Securities,
  the Company will no later than three Business Days following the delivery by
  an Investor to the Company or the Company’s transfer agent of a legended
  certificate representing such Securities, deliver or cause to be delivered to
  such Investor a certificate representing such Securities that is free from all
  restrictive and other legends. Following the Effective Date and upon the delivery
  to any Investor of any certificate representing Securities that is free from
  all restrictive and other legends, such Investor agrees that any sale of such
  Securities shall be made pursuant to the Registration Statement and in accordance
  with the plan of distribution described therein or pursuant to an available
  exemption from the registration requirements of the 1933 Act. The Company may
  not make any notation on its records or give instructions to any transfer agent
  of the Company that enlarge the restrictions on transfer set forth in Section
  4.1. The Company shall bear all costs and expenses of the Transfer Agent in
  connection with the delivery of the certificates, whether by electronic transfer
  or otherwise, and the removal of any restrictive legends required hereby.

       4.2 Furnishing of
  Information. As long as any Investor owns the Securities, the Company covenants
  to timely file (or obtain extensions in respect thereof and file within the
  applicable grace period) all reports required to be filed by the Company after
  the date hereof pursuant to the Exchange Act. As long as any Investor owns Securities,
  if the Company is not required to file reports pursuant to such laws, it will
  prepare and furnish to the Investors and make publicly available in accordance
  with Rule 144(c) such information as is required for the Investors to sell the
  Shares and Warrant Shares under Rule 144. The Company further covenants that
  it will take such further action as any holder of Securities may reasonably
  request, 

15




all to the extent required from time to time to enable such
Person to sell the Shares and Warrant Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.

     4.3 Integration. The
Company shall not, and shall use its best efforts to ensure that no Affiliate of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the sale
of the Securities to the Investors, or that would be integrated with the offer
or sale of the Securities for purposes of the rules and regulations of any
Trading Market in a manner that would require stockholder approval of the sale
of the securities to the Investors.

     4.4 Securities Laws
Disclosure; Publicity. As soon as reasonably practicable, and in no event
later than by 9:00 a.m. (New York time) on the Trading Day following the
execution of this Agreement, and by 9:00 a.m. (New York time) on the Trading Day
following the Closing Date, the Company shall issue press releases disclosing
the transactions contemplated hereby and the Closing. Each Investor shall have
the opportunity to review and approve such press releases prior to their public
release. In no event may the Company use the name of any Investor or of
Wellington Management Company, LLP (“WMC”) in such press releases without the
express consent of such Investor or WMC. On the Trading Day following the
execution of this Agreement the Company will file a Current Report on Form 8-K
disclosing the material terms of the Transaction Documents (and attach as
exhibits thereto the Transaction Documents), and on the Trading Day following
the Closing Date the Company will file an additional Current Report on Form 8-K
to disclose the Closing. In addition, the Company will make such other filings
and notices in the manner and time required by the Commission and the Trading
Market on which the Common Stock is listed.

     4.5 Indemnification of
Investors. In addition to the indemnity provided in the Registration Rights
Agreement, the Company will indemnify and hold the Investors and their
directors, officers, shareholders, partners, employees and agents (each, an
"Investor Party") harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys'
fees and costs of investigation (collectively, "Losses") that any such
Investor Party may suffer or incur as a result of or relating to any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will reimburse each
Investor Party for its reasonable legal and other expenses (including the cost
of any investigation, preparation and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred. 

     4.6 Non-Public
Information. The Company covenants and agrees that neither it nor any other
Person acting on its behalf will provide any Investor or its agents or counsel
with any information that the Company believes constitutes material non-public
information, unless prior thereto such Investor shall have executed a written
agreement regarding the confidentiality and 

16




use of such information. The Company understands and confirms
that each Investor shall be relying on the foregoing representations in
effecting transactions in securities of the Company.

     4.7 Listing of Securities.
The Company agrees, (i) if the Company applies to have the Common Stock traded
on any other Trading Market, it will include in such application the Shares and
Warrant Shares, and will take such other action as is necessary or desirable to
cause the Shares and Warrant Shares to be listed on such other Trading Market as
promptly as possible, and (ii) it will take all action reasonably necessary to
continue the listing and trading of its Common Stock on a Trading Market and
will comply in all material respects with the Company’s reporting, filing and
other obligations under the bylaws or rules of the Trading Market.

     4.8 J.P. Turner & Company,
L.L.C. Release. Investor has performed its own due diligence investigation
and had the opportunity to ask questions of the Company and its management team
and analyze their responses. Investor has not relied on any representations not
made by the Company and that are not expressly set forth in the purchase
agreement. The Company has performed its own due diligence investigation and had
the opportunity to ask questions of the Investor and its management team and
analyze their responses. The Company has not relied on any representations not
made by the Investor and that are not expressly set forth in the purchase
agreement. Both parties to the purchase agreement shall release and hold
harmless J.P. Turner & Company, L.L.C. from and against any losses, claims,
damages or liabilities related to the Offering. Furthermore, both parties
recognize that the Agent only act as a finder and other than introducing them,
the Agent had and will have no further role.

ARTICLE V.
CONDITIONS PRECEDENT TO CLOSING

     5.1 Conditions Precedent to
the Obligations of the Investors to Purchase Securities. The obligation of
each Investor to acquire Securities at the Closing is subject to the
satisfaction or waiver by such Investor, at or before the Closing, of each of
the following conditions:

          (a)
Representations and Warranties. The representations and warranties of the
Company contained herein shall be true and correct in all material respects as
of the date when made and as of the Closing as though made on and as of such
date;

          (b)
Performance. The Company shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by it at
or prior to the Closing;

          (c)
No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits
the consummation of any of the transactions contemplated by the Transaction
Documents;

17




          (d)
Adverse Changes. Since the date of execution of this Agreement, no event
or series of events shall have occurred that reasonably could have or result in
a Material Adverse Effect; 

          (e)
No Suspensions of Trading in Common Stock; Listing. Trading in the Common
Stock shall not have been suspended by the Commission or any Trading Market
(except for any suspensions of trading of not more than one Trading Day solely
to permit dissemination of material information regarding the Company) at any
time since the date of execution of this Agreement, and the Common Stock shall
have been at all times since such date listed for trading on a Trading Market;
and

          (f)
Company Deliverables. The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a) .

     5.2 Conditions Precedent to
the Obligations of the Company to sell Securities. The obligation of the
Company to sell Securities at the Closing is subject to the satisfaction or
waiver by the Company, at or before the Closing, of each of the following
conditions:

          (a)
Representations and Warranties. The representations and warranties of
each Investor contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made on
and as of such date;

          (b)
Performance. Each Investor shall have performed, satisfied and complied
in all material respects with all covenants, agreements and conditions required
by the Transaction Documents to be performed, satisfied or complied with by such
Investor at or prior to the Closing;

          (c)
No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits
the consummation of any of the transactions contemplated by the Transaction
Documents; and

          (d)
Investors Deliverables. Each Investor shall have delivered its Investors
Deliverables in accordance with Section 2.2(b) .

ARTICLE VI. 
MISCELLANEOUS

     6.1 Fees and Expenses.
Each party shall pay the fees and expenses of its advisers, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of the
Transaction Documents. The Company shall pay all stamp and other taxes and
duties levied in connection with the sale of the Shares.

18




     6.2 Entire Agreement. The
Transaction Documents, together with the Exhibits and Schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules.

     6.3 Notices. Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified in
this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section on
a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on
any Trading Day, (c) the Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:

	    If to the Company: 	Terax Energy, Inc. 
	  	8150 N. Central Expy., Suite 1800 
	 	Dallas, TX
75206  
	  	Facsimile: (214) 691-2501 
	  	Attention: Lawrence Finn, CEO 
	  	  
	         With a copy to: 	Sichenzia Ross Friedman Ference LLP 
	  	1065 Avenue of the Americas 
	  	New York, NY 10018 
	  	Facsimile: (212) 930-9725 
	  	Attn.: Thomas A. Rose, Esq. 
	  	  
	         If to an Investor: 	To the address set forth under such Investor's
      name 
	  	on the signature pages hereof; 
	  	  
	         With a copy to: 	[ }
	 	 
	  	 
	  	 
	  	 


or such other address as may be designated in writing
hereafter, in the same manner, by such Person.

     6.4 Amendments; Waivers; No
Additional Consideration. No provision of this Agreement may be waived or
amended except in a written instrument signed by the Company 

19




and each Investor. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right. No consideration shall be offered or paid
to any Investor to amend or consent to a waiver or modification of any provision
of any Transaction Document unless the same consideration is also offered to all
Investors who then hold Shares.

     6.5 Termination. This
Agreement may be terminated prior to Closing:

          (a)
by written agreement of the Investors and the Company; and

          (b)
by the Company or an Investor (as to itself but no other Investor) upon written
notice to the other, if the Closing shall not have taken place by 6:30 p.m.
Eastern time on the Outside Date; provided, that the right to terminate
this Agreement under this Section 6.5(b) shall not be available to any Person
whose failure to comply with its obligations under this Agreement has been the
cause of or resulted in the failure of the Closing to occur on or before such
time.

     In the event of a termination
pursuant to this Section, the Company shall promptly notify all non-terminating
Investors. Upon a termination in accordance with this Section 6.5, the Company
and the terminating Investor(s) shall not have any further obligation or
liability (including as arising from such termination) to the other and no
Investor will have any liability to any other Investor under the Transaction
Documents as a result therefrom.

     6.6 Construction. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. 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. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction Documents.

     6.7 Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and permitted assigns. The Company may not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of each Investor. Any Investor may assign any or all of its
rights under this Agreement to any Person to whom such Investor assigns or
transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof that
apply to the "Investors."

     6.8 No Third-Party
Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and their respective successors and permitted assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person,
except as otherwise set forth in Section 4.7 (as to each Investor Party).

20




     6.9 Governing Law. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced in the New York Courts. Each party hereto hereby
irrevocably submits to jurisdiction of the New York Courts for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of the any of the Transaction Documents), that such Proceeding has
been commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence a Proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its reasonable attorneys’ fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such Proceeding.

     6.10 Survival. The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Securities.

     6.11 Execution. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.

     6.12 Severability. If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

     6.13 Rescission and Withdrawal
Right. Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) the Transaction Documents, whenever any
Investor exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within
the periods 

21




therein provided, then such Investor may rescind or withdraw,
in its sole discretion from time to time upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.

     6.14 Replacement of
Securities. If any certificate or instrument evidencing any Securities is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation thereof, or in
lieu of and substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested. The
applicants for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs associated with the issuance of such
replacement Securities. If a replacement certificate or instrument evidencing
any Securities is requested due to a mutilation thereof, the Company may require
delivery of such mutilated certificate or instrument as a condition precedent to
any issuance of a replacement.

     6.15 Remedies. In addition
to being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, each of the Investors and the Company will be
entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.

     6.16 Payment Set Aside. To
the extent that the Company makes a payment or payments to any Investor pursuant
to any Transaction Document or an Investor enforces or exercises its rights
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, 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.

     6.17 Independent Nature of
Investors' Obligations and Rights. The obligations of each Investor under
any Transaction Document are several and not joint with the obligations of any
other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under any Transaction
Document. The decision of each Investor to purchase Securities pursuant to the
Transaction Documents has been made by such Investor independently of any other
Investor. Nothing contained herein or in any Transaction Document, and no action
taken by any Investor pursuant thereto, shall be deemed to constitute the
Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Investor acknowledges that no
other Investor has acted as agent for such Investor in connection with 

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making its investment hereunder and that no Investor will be
acting as agent of such Investor in connection with monitoring its investment in
the Securities or enforcing its rights under the Transaction Documents. Each
Investor shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such purpose.
The Company acknowledges that each of the Investors has been provided with the
same Transaction Documents for the purpose of closing a transaction with
multiple Investors and not because it was required or requested to do so by any
Investor.

     6.18 Limitation of
Liability. Notwithstanding anything herein to the contrary, the Company
acknowledges and agrees that the liability of an Investor arising directly or
indirectly, under any Transaction Document of any and every nature whatsoever
shall be satisfied solely out of the assets of such Investor, and that no
trustee, officer, other investment vehicle or any other Affiliate of such
Investor or any investor, shareholder or holder of shares of beneficial interest
of such a Investor shall be personally liable for any liabilities of such
Investor.

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SIGNATURE PAGES
FOLLOW]

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     IN WITNESS WHEREOF, the parties
hereto have caused this Securities Purchase Agreement to be duly executed by
their respective authorized signatories as of the date first indicated
above.

	  	TERAX ENERGY, INC.
	  	 
	 	By: _______________________________________

          Lawrence
      Finn,
    Chief Executive Officer 
	         
	         



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SIGNATURE PAGES
FOR INVESTORS FOLLOW] 

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     IN WITNESS WHEREOF, the parties
hereto have caused this Securities Purchase Agreement to be duly executed by
their respective authorized signatories as of the date first indicated
above.

	 	NAME OF INVESTOR 
	 	  
	 	_______________________________________  
	 	 
	 	By:
      ____________________________________                  
    
	 	         Name:
	 	         Title:
	 	 
	 	Number of Shares being purchased:
    ____________
	 	 
	 	Tax ID No.: 
	 	 
	 	ADDRESS FOR NOTICE 
	 	 
	 	c/o: ____________________________________
	 	 
	 	Street:
__________________________________
	 	 
	 	City/State/Zip:
  ____________________________
	 	 
	 	Attention:
_______________________________
	 	 
	 	Tel: ____________________________________
	 	 
	 	Fax: ____________________________________
	 	 
	 	DELIVERY INSTRUCTIONS 
	 	(if different from above) 
	 	 
	 	c/o: ____________________________________
	 	 
	 	Street: __________________________________
	 	 
	 	City/State/Zip:
  ____________________________
	 	 
	 	Attention:
_______________________________
	 	 
	 	Tel:
  ____________________________________


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