Document:

ex41.htm

    Exhibit 4.1

     

    November
10th ,
2009

    Bonanza
Oil and Gas, Inc. 3417 Mercer

    Houston,
TX 77027

    RE: Loan
Letter Agreement

     

    Mr.
Lender:

     

    
      	
              1.  

            	
              Loan. This letter when
      fully executed will constitute a loan agreement (this “Agreement”) between
      Marie Baier Foundation (the “Lender”) and Bonanza Oil
      and Gas, Inc, a Nevada corporation (the “Borrower”), pursuant to
      which the Lender, on the terms and conditions provided herein, shall agree
      to make one loan to the Borrower hereunder in an amount of fifty thousand
      dollars ($50,000) (the “Loan”). The Lender’s
      obligation to make the Loan is subject to the Borrower’s fulfillment of
      each of the applicable conditions set forth in Section 3
      hereof.

            

    

     

    
      	
              2.  

            	
              Loan
      Documents.

            

    

     

    a. Promissory
Notes. The Loan shall be evidenced by a promissory note issued to the Lender in
the principal amount of the Loan, dated the date the Borrower receives the funds
from the Lender, in the form attached hereto as Exhibit A (together with any
replacements and substitutes therefore, the “Note”). The principal amount
of the Loan and interest thereon, calculated at the rate of 12% per annum, as
provided in the Note, shall be payable as set forth more particularly
therein.

     

    b. Term of
Note. “The Note” shall
have a term of one (51) days, starting from the date the Borrower receives the
funds from the Lender in their entirety (the “Closing Date”). This note
shall by payable in full by 12/31/2009. In the event of prepayment by the
Borrower, the Lender will receive interest for the entire term of the note as
set forth in Section 2(b). Any changes to the term of the Note must be
accordance to Section 5(c).

     

    c. Accredited
Investor. The Lender hereby represents and warrants that it is an “accredited
investor” as defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended

     

    d. This
Agreement, the Note and any other instruments or documents required or
contemplated hereunder or thereunder, whether now existing or at any time
hereafter arising, are herein referred to as the “Loan Documents.”

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              3.

            	
              Conditions
      Precedent.

            

    

     

    
      	
               
      

            	
              a.
      Documents to be Delivered. The obligation of the Lender to make the Loan
      is subject to the due execution and delivery by the Borrower (or the
      Borrower causing the due execution and delivery) to the Lender of each of
      the following (all documents to be in form and substance satisfactory to
      the Lender):

            

    

     

    i. This
Agreement, the Note and each other instrument, agreement and document to be
executed and/or delivered pursuant to this Agreement and/or the instruments,
agreements and documents referred to in this Agreement.

     

    ii. A
certified copy of the resolutions of the Board of Directors (or if the Board of
Directors takes action by unanimous written consent, a copy of such unanimous
written consent containing all of the signatures of the members of the Board of
Directors) of the Borrower, dated as of the Closing Date, authorizing the
execution, delivery and performance of the Loan Documents.

     

    iii. A
certificate, dated as of the Closing Date, signed by an executive officer of the
Borrower to the effect that the representations and warranties set forth in
Section 4 of this Agreement are true and correct as of the Closing
Date.

     

    
      	
               
      

            	
              b.
      Absence of Certain Events. The occurrence of a Material Adverse Effect (as
      defined below) shall not have occurred or be occurring as of the Closing
      Date.

            

    

     

    
      	
               
      

            	
              4.

            	
              Representations and Warranties
      of the Borrower. To induce the Lender to make the
      Loan, the Borrower hereby represents and warrants to the Lender that at
      and as of the date hereof:

            

    

     

    
    

     

    
      	
              a.  

            	
              The
      Borrower has been duly incorporated and validly exists and is in good
      standing under the laws of the state of Nevada, with full corporate power
      and authority to own, lease and operate its properties and to conduct its
      business as currently conducted. The Borrower 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 and where the
      failure so to qualify would have a Material Adverse Effect. “Material Adverse Effect”
      means any material adverse effect on the ability of the Borrower to
      perform its obligations hereunder or under the Loan Documents or on the
      business, operations, properties or financial condition of the
      Borrower.

            

    

     

    
      	
              b.  

            	
              Each
      of the Loan Documents has been duly authorized, validly executed and
      delivered on behalf of the Borrower and is a valid and binding obligation
      of the Borrower enforceable against the Borrower in accordance with its
      terms, subject to limitations on enforcement by general principles of
      equity and by bankruptcy or other laws affecting the enforcement of
      creditors’ rights generally, and the Borrower has full power and authority
      to execute and deliver this Agreement and the Loan Documents and to
      perform its obligations hereunder and there
  under.

            

    

    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    c.   The
execution, delivery and performance of this Agreement and the Loan Documents
will not (i) conflict with or result in a breach of or a default under any of
the terms or provisions of (A) the Borrower’s articles of incorporation or
by­laws, or (B) any material provision of any indenture, mortgage, deed of
trust or other material agreement or instrument to which the Borrower is a party
or by which it or any of its material properties or assets is bound, (ii) result
in a violation of any material provision of any law, statute, rule, regulation,
or any existing applicable decree, judgment or order by any court, Federal or
state regulatory body, administrative agency, or other governmental body having
jurisdiction over the Borrower, or any of its material properties or assets or
(iii) result in the creation or imposition of any material lien, charge or
encumbrance upon any material property or assets of the Borrower or any of its
subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of their
property or any of them is subject, except, in the cases of (i), (ii) and (iii)
above, as would not have a Material Adverse Effect.

     

    d.   No
consent, approval or authorization of or designation, declaration or filing with
any governmental authority on the part of the Borrower is required in connection
with the valid execution and delivery of this Agreement or the Loan
Documents.

     

    
      	
              5.

            	
              Miscellaneous.

            

    

     

    a.   The
representations and warranties of the Borrower contained herein shall not
survive the Closing Date.

     

    b.        
 This
Agreement shall be governed by and construed in accordance with the laws of the
State of Nevada without giving effect to conflicts of laws principles that would
result in the application of the substantive laws of another jurisdiction. This
Agreement shall not be interpreted or construed with any presumption against the
party causing this Agreement to be drafted.

     

    c.            The
Bank and Borrower agree to submit to binding arbitration by the American
Arbitration Association (the "AAA") of all claims, disputes and controversies
(whether in tort, contract, or otherwise, except "core proceedings" under the
U.S. Bankruptcy Code) arising between themselves and their respective employees,
officers, directors, attorneys and other agents, which relate in any way without
limitation to existing and future loans and extensions of credit or requests for
additional credit, including by way of example but not by way of limitation the
negotiation, collateralization, administration, repayment, modification,
default, termination and enforcement of such loans or extensions of credit.
Arbitration under this Agreement will be governed by the Federal Arbitration Act
and proceed in California in accordance with AAA Rules. Arbitration will be
conducted before a single neutral arbitrator selected in accordance with AAA
Rules and who shall be an attorney who has practiced commercial law for at least
ten years. The arbitrator will determine whether an issue is arbitratable and
will give effect to applicable statutes of limitation. Judgment upon the
arbitrator's award may be entered in any court having jurisdiction.
The arbitrator has the discretion to decide, upon documents only or with a
hearing, any motion to dismiss for failure to state a claim or any motion for
summary judgment. The institution and maintenance of an action for judicial
relief or for any provisional or ancillary remedy shall not constitute a waiver
of the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief. Each request for an extension and all other discovery disputes will be
determined by the arbitrator upon a showing that the request is essential for
the party's presentation and that no alternative means for obtaining information
are available during the initial discovery period. This Agreement does not limit
the right of either party to a) foreclose against real or personal property
collateral; b) exercise self-help remedies such as setoff or repossession; c)
obtain provisional remedies such as replevin, injunctive relief, attachment or
the appointment of a receiver during the pendency or before or after any
arbitration proceeding; or d) obtain a cognovit judgment, if available. These
exceptions do not constitute a waiver of the right or obligation of either party
to submit any dispute to arbitration, including those arising from the exercise
of these remedies.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    d.   Any
forbearance, failure, or delay by the Lender in exercising any right, power, or
remedy shall not preclude the further exercise thereof, and all of the Lender’s
rights, powers, and remedies shall continue in full force and effect until
specifically waived in writing by the Lender.

     

    e.   This
Agreement may be executed in two or more 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 the other
party.

     

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

     

    g.   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 or the validity or
enforceability of this Agreement in any other jurisdiction.

     

    h.   This
Agreement, the Note and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with
enforcement.

     

    i.   This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns. The Borrower shall not assign this Agreement or
any rights or obligations hereunder without the prior written consent of the
Lender. Notwithstanding the foregoing, the Lender may assign its rights
hereunder to any other person or entity without the consent of the
Borrower.

     

    j.           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.

     

    k.            All
remedies of the Lender under this Agreement, the Note and the other

     

    Loan
Documents (i) are cumulative and concurrent, (ii) may be exercised
independently, successively or together with other lenders against the Borrower,
(iii) shall not be exhausted by any exercise thereof, but may be exercised as
often as occasion therefore may occur, and (iv) shall not be construed to be
waived or released by the Lender’s delay in exercising, or failure to exercise,
them or any of them at any time it may be entitled to do so.

     

    
      	
              6.

            	
              Notices. All notices
      required hereunder shall be made in accordance with Section 10 of
      the Note.

            

    

     

    
    

     

    a.            By
executing the appropriate signature line below, the Borrower, intending to
be
legally bound hereby, agrees to the terms and conditions of this Agreement as of
the date hereof.

     

    Very
truly yours,

     

    By:   /s/
William Wiseman

    
      
        

      
                                  

    Name:
William Wiseman Title: CEO

     

    Bonanza
Oil and Gas, Inc. 3417 Mercer

     

    Houston,
TX 77027

     

    
       

    

     

    Date:
November 1 0th, 2009

     

    By: /s/
MARIE BAIER

    
      
        

      

    

    MARIE
BAIER FOUNDATION COAST HIGHWAY #2A

     

    MALIBU,
CA 92065

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    Exhibit
A

     

    NOTE

     

    THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAW. THIS NOTE MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, ASSIGNED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT
SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT.

     

    November
10th ,
2009 Houston, Texas

     

    FOR VALUE
RECEIVED, the adequacy of which is hereby acknowledged, Bonanza Oil and Gas,
Inc. (the "Borrower"), hereby promises to pay Marie Baier Foundation (the
"Lender"), at such place as Lender may, from time to time, designate, the
principal sum of fifty thousand
dollars
($50,000) in lawful money of the United States on 12/31/2009 (the
“Maturity Date”).

     

    1. Interest:
Borrower further promises to pay interest on the unpaid principal balance
hereof at the rate of twelve percent (12%) per annum, such interest to be paid
at maturity. Interest shall be calculated on the basis of a 360 day year and
actual days elapsed. In no event shall the interest charged hereunder exceed the
maximum permitted under the laws of the State of California.

     

    2. Prepayment:
This Note can be prepaid in whole or in part at any time without the
consent of the Lender provided that Borrower shall pay all interest on the
principal for the entire term of the note. Borrower shall not be liable
hereunder for any further interest on any amounts so prepaid. All prepayments of
this Note shall be applied first to accrued and unpaid interest, and then to
outstanding principal.

     

    3. Other Financings:
Borrower warrants that any proceeds from an offering of financial
instruments of any type (including equity, debt, hybrid, or other offering) that
it receives after the date of receipt of monies related to this Note shall be
first used to repay all interest and principal pursuant to this Note before
being used for any other purpose whatsoever.

     

    4. Remedies in Event of
Default: Notwithstanding the due date of this Note specified above, the
entire unpaid principal balance of this Note and interest accrued with respect
thereto shall be immediately due and payable upon the occurrence of any of the
following events of default (individually, “an Event of Default” and
collectively, “Events of Default”): (i) the Borrower fails to pay any of the
principal, interest or any other amounts payable under this Note within five (5)
business days when due and payable;

     

    (ii) the
Borrower files any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law or any other law for the relief of,
or relating to, debtors, now or hereafter in effect, or seeks the appointment of
a custodian, receiver, trustee (or other similar official) of the Borrower or
all or any

    

     

    substantial
portion of the Borrower’s assets, or makes any assignment for the benefit of
creditors or takes any action in furtherance of any of the foregoing, or fails
to generally pay its debts as they become due;

     

    (iii) an
involuntary petition is filed, or any proceeding or case is commenced, against
the Borrower (unless such proceeding or case is dismissed or discharged within
ninety (90) days of the filing or commencement thereof) under any bankruptcy,
reorganization, arrangement, insolvency, adjustment of debt, liquidation or
moratorium statute now or hereafter in effect, or a custodian, receiver,
trustee, assignee for the benefit of creditors (or other similar official) is
applied or appointed for the B457890orrower or to take possession, custody or
control of any property of the Borrower, or an order for relief is entered
against the Borrower by any court having jurisdiction in any of the
foregoing;

     

    (iv) the
occurrence of a breach or default under any agreement, instrument or document to
which the Borrower is a party or by which it is bound involving any obligation
for borrowed money of more than $100,000 in the aggregate that remains uncured
for at least thirty (60) business days.

     

    Upon and
after an Event of Default, the outstanding principal balance hereunder shall
continue to bear interest at a per annum interest rate equal to prime plus ten
percent (10%) until the Event of Default is cured or repayment in full has been
made to the Lender.

     

    Upon the
existence of an Event of Default that remains uncured, the Lender shall have the
right to declare the outstanding principal balance of this Note, together with
all accrued interest, immediately due and payable and the Lender shall
thereafter have all of the rights and remedies afforded creditors generally by
the applicable federal laws or the laws of the state of California. The Borrower
waives demand, presentment, protest and notice of any kind.

     

    5. No Rights
as Stockholder. This Note, as such, shall not entitle the Lender to any rights
as a stockholder of the Borrower.

     

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    6. Expenses. Borrower agrees to
pay any and all expenses (including attorneys’ fees

     

    and
expenses) incurred by the Lender which are incurred in endeavoring to collect
any amounts payable hereunder which are not paid when due (whether by
acceleration or otherwise) or in otherwise enforcing any rights under this
Note.

     

    7.            Notices. All notices and other
communications provided for herein shall be in writing

     

    and shall
be deemed to have been duly given if delivered personally, sent by registered or
certified mail, return receipt requested, postage prepaid, sent via overnight
delivery service or sent via facsimile, and shall be effective (1) when
personally delivered, (2) on the day following delivery to an overnight courier
service if sent for delivery within the United States (or on the second business
day following delivery to such courier service if sent for delivery outside the
United States), (3) on the business day following receipt of transmission if
sent via facsimile, or (4) on the fifth business day after the date of mailing
if sent by registered or certified mail, in each case to the following
addresses:

    

     

    (a) If to the
Borrower: Marie Baier Foundation

     

    Coast
Highway, #2A

     

    Malibu,
CA 92065

     

    (b) If to the
Lender, to the address set forth in the Note Purchase Agreement, or such other
address as is provided in writing to the Borrower by the Lender.

     

    8.             Assignment. This Note shall be
binding on the Borrower and its successors

     

    and
permitted assigns, and shall be binding upon and inure to the benefit of the
Lender, any future holder of this Note and their respective successors and
permitted assigns. Neither the Borrower nor the Lender may assign or transfer
this Note or any of its rights or obligations hereunder (other than by operation
of law) without the other party’s prior written consent. 9. Waivers; Amendments.
No delay or omission of Lender in exercising any right or power hereunder shall
impair such right or power or be a waiver of any default or an acquiescence
therein; and no single or partial exercise of any such right or power shall
preclude other or further exercise thereof, or the exercise of any other right;
and no waiver shall be valid unless in writing signed by Lender, and then only
to the extent specifically set forth in such writing. All remedies hereunder or
by law afforded shall be cumulative and shall be available to Lender until the
principal amount of and all interest on this Note have been paid in full. No
amendment of any provision of this Note shall be effective unless the same shall
be in writing and signed by the Borrower and the Lender. 10. Governing Law. This
Note shall be governed by and construed in accordance with the laws of the State
of Califoria, without regard for the conflicts of laws principles thereof. 11.
Severability. This Agreement may be executed in two or more 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 the other
party. In the event any one or more of the provisions contained in this Note
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision hereof, and this Note shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    9. Miscellaneous.

     

    a. All
payments by the Borrower under this Note shall be made without set­off or
counterclaim and be free and clear and without any deduction or withholding for
any taxes or fees of any nature whatever, unless the obligation to make such
deduction or withholding is imposed by law.

     

    b. The
representations and warranties of the Borrower contained herein shall not
survive the Closing Date.

     

    c. The
Bank and Borrower agree to submit to binding arbitration by the American
Arbitration Association (the "AAA")of all claims, disputes and controversies
(whether in tort, contract, or otherwise, except "core proceedings" under the
U.S. Bankruptcy Code) arising between themselves and their respective employees,
officers, directors, attorneys and other agents, which relate in any way without
limitation to existing and future loans and extensions of credit or requests for
additional credit, including by way of example but not by way of limitation the
negotiation, collateralization, administration, repayment, modification,
default, termination and enforcement of such loans or extensions of credit.
Arbitration under this Agreement will be governed by the Federal Arbitration Act
and proceed in California in accordance with AAA Rules. Arbitration will be
conducted before a single neutral arbitrator selected in accordance with AAA
Rules and who shall be an attorney who has practiced commercial law for at least
ten years. The arbitrator will determine whether an issue is arbitratable and
will give effect to applicable statutes of limitation. Judgment upon the
arbitrator's award may be entered in any court having jurisdiction. The
arbitrator has the discretion to decide, upon documents only or with a hearing,
any motion to dismiss for failure to state a claim or any motion for summary
judgment. The institution and maintenance of an action for judicial relief or
for any provisional or ancillary remedy shall not constitute a waiver of the
right of any party, including the plaintiff, to submit the controversy or claim
to arbitration if any other party contests such action for judicial relief.
Discovery will be governed by the California Rules of Civil Procedure. Discovery
must be completed at least 20 days before the hearing date and within 180 days
of the commencement of arbitration. Each request for an extension and all other
discovery disputes will be determined by the arbitrator upon a showing that the
request is essential for the party's presentation and that no alternative means
for obtaining information are available during the initial discovery period.
This Agreement does not limit the right of either party to a) foreclose against
real or personal property collateral; b) exercise self-help remedies such as
setoff or repossession; c) obtain provisional remedies such as replevin,
injunctive relief, attachment or the appointment of a receiver during the
pendency or before or after any arbitration proceeding; or d) obtain a cognovit
judgment, if available. These exceptions do not constitute a waiver of the right
or obligation of either party to submit any dispute to arbitration, including
those arising from the exercise of these remedies.

    

     

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

     

    e. This
Agreement, the Note and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with
enforcement.

     

    f. 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.

     

    g. All
remedies of the Lender under this Agreement, the Note and the other Loan
Documents (i) are cumulative and concurrent, (ii) may be exercised
independently, successively or together with other lenders against the Borrower,
(iii) shall not be exhausted by any exercise thereof, but may be exercised as
often as occasion therefore may occur, and (iv) shall not be construed to be
waived or released by the Lender’s delay in exercising, or failure to exercise,
them or any of them at any time it may be entitled to do so.

     

    (remainder
of the page intentionally left blank)

     

     

    
      
        
        

      

      
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    Bonanza
Oil and Gas, Inc. 

    Date:
November 10,2009

     

     

     

    
       

    

    By:    /s/
William
Wiseman                                                

    
      
        

      

    

    Name:
William Wiseman Title: CEO

     

    By: 
/s/ Marie Baier 

    
      
        

      

    

    Marie
Baier Foundation Coast Highway #2A Malibu, CA 92065

     

    Date:
November 11, 2009

     

     

     

    8Unassociated Document

    Exhibit 10.1

     

     

    
 

    THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

    

    CONVERSION
AGREEMENT

    

    THIS
CONVERSION AGREEMENT, dated as of December 2, 2009 is made by and between
Bonanza Oil & Gas, Inc., a Nevada corporation (“Company”), and Robert
Teague, the Vice President of Operations of the Company
(“Employee”).

    

    WHEREAS,
the Company owes Employee wages in arrears in the amount of Eighty Two Thousand Two Hundred Fifty
Dollars ($82,250.00) (the “Wages”); and

    

    WHEREAS,
the Company and the Employee wish to convert Sixty Thousand Dollars ($60,000) of
the Wages (the “Conversion Wages”) into Series A Preferred Stock, par value
$0.001 per
share (“Preferred Stock”), of the Company;

    

    NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which the parties hereby acknowledge the parties agree as follows:

    

    1.            Conversion Wages. The
Company and Employee hereby agree that Conversion Wages shall convert into
5,000,000 shares of Preferred Stock (“Conversion Shares”) to
Employee.

    

    2.            Closing. At the
Closing, the Company shall deliver the Conversion Shares to
Employee.

    

    3.            Further Assurances.
In connection with the Conversion Wages, the Employee, by entering into this
Conversion Agreement, agrees to execute all agreements and other documents as
reasonably requested by the Company.

    

    4.            Investor Representations and
Warranties and Covenants. The Employee represents, warrants and covenants
to the Company as follows:

    

    a. No Registration. Such
Employee understands that the Conversion Shares have not been, and will not be,
registered under the Securities Act of 1933, as amended (the “Securities Act”)
by reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of such Employee’s
representations as expressed herein or otherwise made pursuant
hereto.

    

    b.   Investment Intent.
Such Employee is acquiring the Conversion Shares for investment for his own
account, not as a nominee or agent, and not with the view to, or for resale in
connection with, any
distribution thereof, and such Employee has no present intention of selling,
granting any participation in, or otherwise distributing the same. Such Employee
further represents that it will not violate the Securities Act and does not have
any contract, undertaking, agreement or arrangement with any person or entity to
sell, transfer or grant participation to such person or entity or to any third
person or entity with respect to the Conversion Shares.

    

    c.  Investment
Experience. Such Employee has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company and acknowledges that such Employee can protect its own
interests. Such Employee has such knowledge and experience in financial and
business matters so that such Employee is capable of evaluating the merits and
risks of its investment in the Company.

    

    d.  Speculative Nature of
Investment. Such Employee understands and acknowledges that the Company
has a limited financial and operating history and that an investment in the
Company is highly speculative and involves substantial risks. Such Employee can
bear the economic risk of such
Employee’s investment and is able, without impairing such Employee’s
financial condition, to hold the Conversion Shares for an indefinite
period of time and to suffer a complete loss of such Employee’s
investment.

     

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    
 

    e.  Accredited Investor.
The Employee is an “accredited investor’ within the meaning of Regulation D,
Rule 50 1(a), promulgated by the Securities and Exchange Commission under the
Securities Act and shall submit to the Company such further assurances of such
status as may be reasonably requested by the Company.

    

    f.   Rule 144. Such
Employee acknowledges that the Conversion Shares must be held indefinitely
unless subsequently registered under the Securities Act or an exemption from
such registration is available. Such Employee is aware of the provisions of Rule
144 promulgated under the Securities Act which permit limited resale of shares
subject to the satisfaction of certain conditions, including among other things,
the existence of a public market for the shares, the availability of certain
current public information about the Company, the resale occurring not less than
one year after a party has purchased and paid for the security to be sold, the
sale being effected through a “broker’s transaction” or in transactions directly
with a “market maker” and the number of shares being sold during any three-month
period not exceeding specified limitations. Such Employee acknowledges that, in
the event all of the requirements of Rule 144 are not met, registration under
the Securities Act or an exemption from registration will be required for any
disposition of the Conversion Shares such Employee understands that, although
Rule 144 is not exclusive, the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell restricted securities received in a
private offering other than in a registered offering or pursuant to Rule 144
will have a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales and that such persons and the
brokers who participate in the transactions do so at their own
risk.

     

    g.          Authorization.

    

    i. Employee has all requisite power
and authority to execute and deliver this Conversion Agreement, and to carry out
and perform its obligations under the terms hereof. All action on the part of
the Employee necessary for the authorization, execution, delivery and
performance of this Conversion Agreement, and the performance of all of the
Employee’s obligations herein, has been taken.

    

    ii. This Conversion Agreement, when
executed and delivered by the Employee, will constitute valid and legally
binding obligations of the Employee, enforceable in accordance with its terms
except: (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies or by general principles of equity.

    

    iii.  No
consent, approval, authorization, order, filing, registration or qualification
of or with any court, governmental authority or third person is required to be
obtained by the Employee in connection with the execution and delivery of this
Conversion Agreement by the Employee or the performance of the Employee’s
obligations hereunder.

    

    h.  Brokers or Finders.
Such Employee has not engaged any brokers, finders or agents, and the Company
has not, and will not, incur, directly or indirectly, as a result of any action
taken by the Employee, any liability for brokerage or finders’ fees or agents’
commissions or any similar charges in connection with this Conversion Agreement
and the transactions related hereto.

    

    i.  Tax Advisors. Such
Employee has reviewed with its own tax advisors the U.S. federal, state, local
and foreign tax consequences of this investment and the transactions
contemplated by this Conversion Agreement. With respect to such matters, such
Employee relies solely on such advisors and not on any statements or
representations of the Company or any of its agents, written or oral. The
Employee understands that it (and not the Company) shall be responsible for its
own tax liability that may arise as a result of this investment or the
transactions contemplated by this Conversion Agreement.

    

    j.  Legends. Such
Employee understands and agrees that the certificates evidencing the Conversion
Shares and Interest Shares shall bear a legend in substantially the form as
follows (in addition to any legend required by any other applicable agreement or
under applicable state securities laws):

     

     

    
      	 	 “THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE
      NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
      ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
      PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
      REGISTERED UNDER SUCH ACT AND/OR APPLICABLE
      STATE SECURITIES LAWS, OR UNLESS THE COMPANY
      HAS RECEIVED AN OPINION OF COUNSEL OR  OTHER
      EVIDENCE, REASONABLY SATISFACTORY TO THE
      COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION
      IS NOT REQUIRED.”	 

    

     

    

    

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    

    

    

               IN WITNESS
WHEREOF, the parties have caused this Agreement to be duly executed by their
respective officers thereonto duly authorized as of the day and year first above
written.

    

    
      
        	 	BONANZA
      OIL & GAS, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ William
      Wiseman	 
	 	 	William
      Wiseman	 
	 	 	President
      and Chief Executive Officer	 
	 	 	 	 

      

      
        	 	EMPLOYEE:	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Robert
      Teague	 
	 	 	Robert
      Teague	 
	 	 	Address:	 
	 	 	 	 

      

     

    

                                                   

    

    3

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