Document:

Exhibit
10.13

SECURITIES
PURCHASE AGREEMENT

This Securities Purchase
Agreement (this “Agreement”),
dated July 11, 2006, among Nova Oil, Inc., a Nevada corporation (the “Company”),
and the purchasers identified on the signature pages and the Schedule of Purchasers
attached hereto (each, a “Purchaser” and collectively, the “Purchasers”).

RECITALS

A.                                   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 the Purchasers, and the Purchasers,
severally and not jointly, desire to purchase from the Company certain
securities of the Company, as more fully described in this Agreement.

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 the Purchasers 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, inquiry, 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 shall be a federal legal holiday or a day on which banking
institutions in the State of New York 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.

“Commission” means the Securities and Exchange
Commission.

“Common Stock” means the common stock of the Company,
$0.001 par value per share,

 

and any securities into which such common stock may
hereafter be reclassified.

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

“Effective Date” means the date that the Registration
Statement required by Section 2(a) of the Registration Rights Agreement is
first declared effective by the Commission.

“Exchange Act” means the Securities Exchange Act of
1934, as amended.

“Investment Amount” means, with respect to each
Purchaser, the investment amount indicated below such Purchaser’s name on the
signature page of this Agreement.

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

“Per Unit Purchase Price” means $1.55, which equals
75% of the per share volume-weighted average price of shares of Common Stock for
the ten (10) Trading Days immediately preceding the date of this Agreement as
reported by Bloomberg Financial L.P.

“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.

“Registration Statement” means a registration
statement meeting the requirements set forth in the Registration Rights
Agreement and covering the resale by the Purchasers of the Registrable
Securities (as defined in the Registration Rights Agreement).

“Registration Rights Agreement” means the Registration
Rights Agreement, dated as of the date of this Agreement, among the Company and
the Purchasers, in the form of Exhibit B.

“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.

“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 to
the Purchasers at the Closing.

“Subsidiary” means any subsidiary of the Company that
is required to be listed in Schedule 3.1(b).

“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 listed
on a Trading Market, a day on which the

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Common Stock is traded in the over-the-counter market,
as reported by the Nasdaq Over The Counter Bulletin Board System, or (iii) if
the Common Stock is not quoted on the Nasdaq Over The Counter Bulletin Board
System, a day on which the Common Stock is quoted in the over-the-counter
market as reported by the National Quotation Bureau Incorporated (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), (ii) and (iii) 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 Capital Market or the NASDAQ
Stock Market, 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.

“Warrants” means the Common Stock purchase warrants in
the form of Exhibit A, which are issuable to the Purchasers 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
Purchaser, and each Purchaser shall, severally and not jointly, purchase from
the Company, the Shares and the Warrants representing such Purchaser’s
Investment Amount.  The Closing shall
take place on July 11, 2006 and at the offices of Baker & McKenzie LLP,
2001 Ross Avenue, Suite 2300, Dallas, Texas 75201 or at such other time and
location as the parties may agree.

2.2                                 Closing
Deliveries.

(a)                                  At
the Closing, the Company shall deliver or cause to be delivered to each
Purchaser, and the obligations of the Purchasers to close the purchase and sale
of the Securities shall be subject to the fulfillment or satisfaction of, the
following:

(i)                                     a
certificate evidencing the number of Shares and the number of Warrants to
purchase Warrant Shares as set forth opposite such Purchaser’s name on Schedule
of Purchasers attached hereto (the Shares and Warrants referred to collectively
herein as the “Units”) for the
Per Unit Purchase Price.  For each two
(2) Shares purchased by a Purchaser, such Purchaser shall receive a Warrant,
registered in the name of such Purchaser, pursuant to which such Purchaser
shall have the right to acquire one (1) Warrant Share at an exercise price of $2.60,
which represents 130% of the closing bid price per share of Common Stock on the
date immediately preceding the date of this Agreement as reported on the Nasdaq
Over The Counter Bulletin Board System in the form attached hereto as Exhibit
A.

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(ii)                                  the
legal opinions of Woodburn & Wedge, special Nevada counsel to the Company,
and Baker & McKenzie LLP, special counsel to the Company, each in agreed
form, addressed to the Purchasers.

(iii)                               the
Registration Rights Agreement duly executed by the Company.

(iv)                              the
representations and warranties made by the Company in Article III shall be true
and correct in all material respects, all covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Company
prior to the Closing shall have been performed or complied with (or waived by
the Purchasers), and the Company shall have obtained any approvals, consents
and qualifications necessary to perform its obligations hereunder.

(v)                                 the
Company shall have delivered to each of the Purchasers at the Closing a
certificate signed on its behalf by its Chief Executive Officer certifying that
the conditions specified in Section 2.2 hereof have been fulfilled.

(vi)                              at
the Closing, the Company shall have delivered to the Purchasers copies of each
of the following, in each case certified by the Secretary of the Corporation to
be in full force and effect on the date of the Closing:

(a)                                  the
articles of incorporation of the Company as of the Closing (which shall be the
Articles) certified by the Secretary of State of the State of Nevada as of a
date not more than thirty (30) days prior to the Closing;

(b)                                 a
good standing certificate with respect to the Company certified by the
Secretary of State of Nevada as of a date not more than thirty (30) days prior
to the Closing;

(c)                                  the
by-laws of the Company; and

(d)                                 resolutions
of the Board, and, as necessary, the shareholders of the Company, authorizing
the execution, delivery and performance of the Transaction Documents, and the
transactions contemplated hereby and thereby, including the issuance and sale
of the shares of Common Stock and the reservation of shares of Common Stock for
issuance upon exercise of the Warrants.

(vii)                           At
the Closing, the Company shall pay (or reimburse the Purchasers for) the fees
and expenses of the Purchasers specified in Section 5.1 as payable by the
Company.

(viii)                        As
of the Closing, the purchase of the Shares by each of the Purchasers shall be
legally permitted by all laws and regulations to which each of the Purchasers
and the Company is subject.

(ix)                                As
of the Closing, all authorizations, approvals or permits of, or filings with
any governmental authority, including state securities or “Blue Sky” offices,
that are

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required by law in connection with the lawful sale and
issuance of the Securities, including the exercise of the Warrants for Warrant
Shares, shall have been duly obtained by the Company, and shall be effective as
of the Closing.

(x)                                   All
corporate and other proceedings in connection with the transactions
contemplated by the Transaction Documents, and all documents and instruments
incident to such transactions, shall be satisfactory in form and substance to
each of the Purchasers, and each of the Purchasers shall have received at or
prior to the Closing all such documents as each such Purchaser shall have
requested.

(b)                                 At
the Closing, each Purchaser shall deliver or cause to be delivered to the
Company, and the obligations of the Company to close the purchase and sale of
the securities shall be subject to the fulfillment or satisfaction of, the
following:

(i)                                     the
product of the Per Unit Purchase Price and the number of Units as set forth
opposite such Purchaser’s name on Schedule of Purchasers attached hereto, 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 Purchaser.

ARTICLE III.

REPRESENTATIONS
AND WARRANTIES

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

(a)                                  Organization
and Qualification.  Each of the
Company and each Subsidiary is an entity 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 articles of incorporation,
bylaws or other organizational or charter documents.  Each of the Company and each Subsidiary is
duly qualified to conduct business and is 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 (i) an 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 (any of (i), (ii) or
(iii), a “Material
Adverse Effect”).

(b)                                 Subsidiaries.
The Company has no direct or indirect Subsidiaries other than those listed in Schedule
3.1(b).  Except as disclosed in Schedule
3.1(b), the Company owns, directly or indirectly, all of the capital stock
of each Subsidiary free and clear of any and all Liens, and all

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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.

(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, delivery and performance 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 corporate action on the part of the Company and no further corporate
action is required by the Company in connection therewith.  Each Transaction Document has 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 rights
to indemnity and contribution may be limited by state or federal securities
laws or the public policy underlying such laws, as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting parties’ rights generally and
as enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

(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 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 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) notice filings required by state securities
laws, the failure of which to make will not affect the validity of the
Securities or the enforceability of this Agreement, and (iii) 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

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issued, fully paid and
nonassessable, free and clear of all Liens.  The Company shall have reserved from its duly
authorized capital stock the maximum number of 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 authorized capital stock of the
Company consists solely of 500,000,000 shares of Common Stock and 5,000,000
shares of preferred stock, $0.0001 par value per share.  As of the date hereof prior to Closing:  (i) 82,589,627 shares of Common Stock
are issued and outstanding and no shares of Common Stock are held in treasury,
(ii) 14,392,371 shares of Common Stock are reserved for future issuance
pursuant to the Company’s equity incentive plan and pursuant to outstanding
warrants and (iii) no shares of preferred stock are issued and
outstanding.

(h)                                 SEC
Reports; Financial Statements.  Since
January 1, 2006, 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 (the foregoing materials including all exhibits and
schedules thereto, being collectively referred to herein as the “SEC Reports” and, together with the Schedules to this
Agreement and any other materials prepared by the Company and delivered to you
in writing, the “Disclosure Materials”).
 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, except as disclosed on Schedule
3.1(h), none of the SEC Reports or the Disclosure Materials, when filed or
prepared, as applicable, 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 generally accepted accounting principles applied on
a consistent basis during the periods involved (“GAAP”), 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 or as otherwise disclosed in the
SEC Reports.

(i)                                     Litigation.
 Except as disclosed in the SEC Reports
or on Schedule 3.1(i), 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) 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, 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 and there has not
been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company. The Commission has not
issued any stop order or other order suspending the effectiveness of any

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registration statement
filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.

(j)                                     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.

(k)                                  Internal
Accounting Controls.  The Company and
the Subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
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.

(l)                                     Certain
Fees.  Except for dealings with the
Placement Agent (defined below), no brokerage or finder’s fees or commissions
are or will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by this Agreement.  The Purchasers shall have no obligation with
respect to any fees or with respect to any claims (other than such fees or
commissions owed by a Purchaser pursuant to written agreements executed by such
Purchaser which fees or commissions shall be the sole responsibility of such
Purchaser) 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.

(m)                               Certain
Registration Matters.  Assuming the
accuracy of the Purchasers’ representations and warranties set forth in Section
3.2(b) to (g), no registration under the Securities Act is required for the
offer and sale of the Securities by the Company to the Purchasers under the
Transaction Documents.  The Company has
not offered the Securities by means of any form of general solicitation or
general advertising, including but not limited to the following: (A) any
advertisement, article, notice or other communication published in a newspaper
or magazine or similar media or broadcast over television or radio whether
closed circuit or generally available or (B) any seminar, meeting or industry
investor conference whose attendees were invited by any general solicitation or
general advertising.  The Company has
not, and to its knowledge no one acting on its behalf has, since March 31, 2006
(i) taken, directly or indirectly, any action designed to cause or to result in
the stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of any of the Shares or Warrants in violation
of Regulation M under the Exchange Act, (ii) bid for, purchased or paid any
compensation for soliciting purchases of any of the Securities or (iii) paid or
agreed to pay to any person any compensation for soliciting another to purchase
any other securities of the

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Company, other than, in
the case of clauses (ii) and (iii), compensation paid to the Placement Agent
(as defined herein) in connection with the placement of the Securities.

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

(o)                                 No
Additional Agreements.  Except as
disclosed on Schedule 3.1(o), the Company does not have any agreement or
understanding with any Purchaser with respect to the transactions contemplated
by the Transaction Documents other than as specified in this Agreement.

(p)                                 ERISA.  Each employee benefit plan (as defined in
Section 3(3) of ERISA) and any other plan, agreement or arrangement for the
benefit of any director, officer or employee of the Company (each, an “Employee Benefit Plan”) has been operated in material compliance
with its terms and with all applicable laws, including, but not limited to,
ERISA and the Code.  All contributions
due and payable on or before the Closing in respect of any Employee Benefit
Plan have been made in full.

(q)                                 Tax.  Since January 1, 2006, the Company has filed
all federal, state and local tax reports and returns required by any law or
regulation to be filed by it, and such returns are true and correct.  The Company has paid all taxes, interest and
penalties, if any, reflected on such tax returns or otherwise due and payable
by it.  Any deficiencies proposed as a
result of any governmental audits or such tax returns have been paid or
settled, and there are no present disputes as to taxes payable by the
Company.  The Company has not elected
pursuant to the Internal Revenue Code of 1986, as amended (the “Code”), to be treated as a Subchapter S corporation or a
collapsible corporation pursuant to Section 1362(a) or Section 341(f) of the
Code, respectively, nor has it made any other elections pursuant to the Code
(other than elections that relate solely to methods of accounting, depreciation
or amortization) that would have a material effect on the Company, its
financial condition, its business as presently conducted or proposed to be
conducted or any of its properties or material assets.  The Company has withheld or collected from
each payment made to each of its employees, the amount of all taxes (including,
but not limited to, federal income taxes, Federal Insurance Contribution Act
taxes and Federal Unemployment Tax Act taxes) required to be withheld or
collected therefrom, and has paid the same to the proper tax receiving officers
or authorized depositories.

3.2                                 Representations
and Warranties of the Purchasers. Each Purchaser hereby, for itself and for
no other Purchaser, represents and warrants to the Company and the Placement
Agent as follows:

(a)                                  Organization;
Authority.  Such Purchaser 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 Purchaser of the transactions contemplated by this
Agreement has been duly authorized by all necessary corporate or, if such
Purchaser is not a corporation, such partnership, limited liability company or
other

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applicable like action, on the part of such Purchaser.
Each of this Agreement and the Registration Rights Agreement has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with terms hereof, will constitute the valid and legally binding obligation of
such Purchaser, enforceable against it in accordance with its terms, except as
rights to indemnity and contribution may be limited by state or federal
securities laws or the public policy underlying such laws, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors’ and contracting parties’ rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

(b)                                 Investment
Intent.  Such Purchaser 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 Purchaser’s right, subject to
the provisions of this Agreement and the Registration Rights Agreement, at all
times to sell or otherwise dispose of all or any part of such Securities
pursuant to an effective registration statement under the Securities Act or
under an exemption from such registration or in a transaction not subject to
the registration provisions of the Securities Act and 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
Purchaser to hold the Securities for any period of time.  Such Purchaser is acquiring the Securities hereunder
in the ordinary course of its business. Such Purchaser does not have any agreement
or understanding, directly or indirectly, with any Person to distribute any of
the Securities.

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

(d)                                 Experience
of such Purchaser. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford
a complete loss of such investment.

(e)                                  General
Solicitation. No Securities were offered or sold to such Purchaser by means
of any form of general solicitation or general advertising, including but not
limited to the following: (A) any advertisement, article, notice or other
communication published in a newspaper or magazine or similar media or
broadcast over television or radio whether closed circuit or generally
available or (B) any seminar, meeting or industry investor conference whose
attendees were invited by any general solicitation or general advertising.

(f)                                    Access
to Information. Such Purchaser 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 Securities and the merits and risks of investing in

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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.

(g)                                 Reliance.
Such Purchaser understands and acknowledges that: (i) the Securities are being
offered and sold to it without registration under the Securities Act in a
private placement that is exempt from the registration provisions of the
Securities Act and (ii) the availability of such exemption depends in part on,
and the Company will rely upon the accuracy and truthfulness of, the foregoing
representations and such Purchaser hereby consents to such reliance.

(h)                                 Residency.
Such Purchaser is a resident of the jurisdiction set forth immediately below
such Purchaser’s name on the signature pages hereto.

(i)                                     Certain
Trading Activities. Such Purchaser has not, directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such
Purchaser, engaged in (i) any Short Sales (defined below) involving the Company’s
securities during the thirty Trading Days immediately preceding the date hereof
or (ii) any transactions in any securities of the Company following the date on
which such Purchaser was aware of this Transaction (other than this
Transaction, other than transactions among Purchasers in compliance with
federal and state securities laws and other than transfers by a Purchaser to
its affiliated funds which affiliated funds have not engaged in any such
transactions).  For purposes of this
Section, “Short Sales” include, without
limitation, all types of direct and indirect stock pledges, forward sale
contracts, options, puts, calls, short sales, swaps and similar arrangements
(including on a total return basis), and sales and other transactions through
non-US broker dealers or foreign regulated brokers having the effect of hedging
the securities or investment made under this Agreement.

(j)                                     Acknowledgements
Regarding Placement Agent. Such Purchaser acknowledges that Ardour Capital
Investments, LLC (the “Placement
Agent”) is acting as the Company’s placement agent for the sale of
the securities being offered hereby and will be compensated solely by the
Company in such capacity.

ARTICLE IV.

OTHER
AGREEMENTS OF THE PARTIES

4.1                                 Restricted
Securities.

(a)                                  Securities
may only be disposed of pursuant to an effective registration statement under
the Securities Act, to the Company or pursuant to an available exemption from
or in a transaction not subject to the registration requirements of the
Securities Act, and in compliance with any applicable state securities laws.  In connection with any transfer of the
Securities, other than pursuant to an effective registration statement, a Rule
144 transfer, to the Company or to an Affiliate of a Purchaser, 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 

 11
 

 

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, so long as is
required by this Section 4.1(b) or 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
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)                                  Subject
to receipt of appropriate representations from the Purchaser and, if applicable
its broker, following the Effective Date or at such earlier time as a legend is
no longer required for the Shares and Warrant Shares under this Section 4.1(c),
the Company will, no later than ten Trading Days following the delivery by a
Purchaser to the Company or the Company’s transfer agent of a certificate representing
Shares or Warrant Shares containing a restrictive legend, together with a
request to issue a certificate without a restrictive legend, deliver or cause
to be delivered to such Purchaser a certificate representing such Shares or
Warrant Shares that is free from all restrictive and other legends.  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 this Section except as it may
reasonably determine are necessary or appropriate to comply or to ensure
compliance with those applicable laws that are enacted or modified after the
Closing.

4.2                                 Furnishing
of Information; Information Rights. As long as any Purchaser 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 and to disclose in the Registration Statement any material,
nonpublic information provided to the Purchasers except to the extent
previously disclosed or the Company determines that such information is no
longer material.  In furtherance of the
foregoing, the Company shall make available to each Purchaser or file with the
Commission via the EDGAR system: (a) as soon as practicable, but in any event
within ninety (90) days after the end of each fiscal year of the Company, (i) a
balance sheet as of the end of such year; (ii) statements of income and of cash
flows for such year; and (iii) a statement of stockholders’ equity as of the
end of such year, audited and certified by independent registered public
accounting firm selected by the Company and (b) as soon as practicable, but in
any event within forty-five (45) days after the end of each of the first three
(3) quarters of each fiscal year of the Company, unaudited statements of income
and of cash flows for such fiscal quarter, and an unaudited balance sheet as of
the end of such fiscal quarter, all prepared in accordance with

 12
 

 

GAAP
(except that the financial statements may (i) be subject to normal year-end
audit adjustments and (ii) not contain all notes thereto that may be required
in accordance with GAAP).

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 will 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 Purchasers, or that will be integrated
with the offer or sale of the Securities for purposes of the rules and regulations
of any Trading Market.

4.4                                 Use
of Proceeds. The Company shall use the net proceeds from the sale of the
Securities hereunder for working capital purposes and not to redeem any capital
stock of the Company or to settle any outstanding Action.

4.5                                 Certain
Trading Activities. Such Purchaser will not, directly or indirectly, nor
permit any Person acting on behalf of or pursuant to any understanding with
such Purchaser, engage in any Short Sales involving the Company’s securities
prior to the Effective Date.

ARTICLE V.

MISCELLANEOUS

5.1                                 Fees
and Expenses.  At the Closing, the
Company shall reimburse Security Management Company, LLC from the proceeds
hereof up to $40,000 in the aggregate for the reasonable fees and disbursements
of legal counsel in connection with the negotiation of the Transaction
Documents and due diligence with respect to the transactions contemplated
hereby.  Except as specified in the
Registration Rights Agreement, each party shall pay the fees and expenses of
its advisers, counsel, 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 Securities.

5.2                                 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 and
understandings, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules.

5.3                                 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 at the facsimile number specified in
this Section prior to 5:00 p.m. (Central time) on a Business Day, (b) the next
Business 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 Business Day or later than 5:00 p.m. (Central time) on any
date and earlier than 11:59 p.m. (Central time) on such date, (c) the Business
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the

 13
 

 

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:

  	
  Nova Oil, Inc.

  
	
   

  	
  The Riviana
  Building

  
	
   

  	
  2777 Allen
  Parkway, Suite 800

  
	
   

  	
  Houston, Texas
  77019

  
	
   

  	
  Tel: (713)
  869-6682

  
	
   

  	
  Fax: (713)
  868-1267

  
	
   

  	
  Attention:
  President and Chief Operating Officer

  
	
   

  	
   

  
	
  with a copy to:

  	
  Baker & McKenzie LLP

  
	
   

  	
  2300 Trammell
  Crow Center

  
	
   

  	
  2001 Ross Avenue

  
	
   

  	
  Dallas, Texas
  75201

  
	
   

  	
  Tel: (214)
  978-3095

  
	
   

  	
  Fax: (214)
  978-3099

  
	
   

  	
  Attention: Roger
  W. Bivans, Esq.

  
	
   

  	
   

  
	
  If to a
  Purchaser:

  	
  To the address set forth under such Purchaser’s name
  on the signature pages hereof;

  

 

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

5.4                                 Amendments;
Waivers.  No provision of this
Agreement may be waived or amended except in a written instrument signed by the
Company and Purchasers holding no less than two-thirds of the Shares issued or
issuable under this Agreement.  The
Company shall provide prior notice to all Purchasers of any proposed waiver or
amendment.  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.

5.5                                 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.

5.6                                 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 the Purchasers. Any Purchaser may assign any or all of its
rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Securities, provided such transferee agrees in

 14
 

 

writing to be bound, with respect to the transferred
Securities, by the provisions hereof that apply to the “Purchasers.”

5.7                                 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.

5.8                                 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 THAT WOULD APPLY ANY OTHER LAW, EXCEPT TO THE EXTENT THAT THE CORPORATE
LAWS OF THE STATE OF NEVADA APPLY PURSUANT TO THE “INTERNAL AFFAIRS DOCTRINE”
OR WITH RESPECT TO THE ISSUANCE OF SECURITIES.  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) may be commenced in the state and federal courts sitting in the City
of New York, Borough of Manhattan (the “New
York Courts”).  Each party
hereto hereby irrevocably submits to the non-exclusive 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), and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such New York Court, or 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.

5.9                                 Survival.
The representations, warranties, agreements and covenants contained herein
shall survive the Closing and the delivery of the Shares and Warrants.

5.10                           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.

5.11                           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

 15
 

 

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.

5.12                           Remedies.
In addition to being entitled to exercise all rights provided herein or granted
by law, including recovery of damages, each of the Purchasers 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.

5.13                           Independent
Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any
Transaction Document are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under any Transaction
Document.  The decision
of each Purchaser to purchase Securities pursuant to the Transaction Documents
has been made by such Purchaser independently of, and without reliance on, any
other Purchaser or any other Purchaser’s legal counsel or financial advisors.
 Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document.  Each Purchaser acknowledges that no other
Purchaser has acted as agent for such Purchaser in connection with making its
investment hereunder and that no Purchaser will be acting as agent of such
Purchaser in connection with monitoring its investment in the Securities or
enforcing its rights under the Transaction Documents.  Each Purchaser 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 Purchaser to be joined as an
additional party in any proceeding for such purpose.

[SIGNATURE
PAGES ON NEXT PAGE]

 16
 

 

IN WITNESS WHEREOF, the
parties hereto have executed this Securities Purchase Agreement as of the date
first indicated above.

	
   

  	
  NOVA OIL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Kenneth T. Hern

  
	
   

  	
   

  	
  Chairman and
  Chief Executive Officer

  

 

[SIGNATURE
PAGES FOR PURCHASERS ON NEXT PAGE]

 17
 

 

IN WITNESS WHEREOF, the
parties have executed this Securities Purchase Agreement as of the date first
written above.

	
   

  	
  PURCHASER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [                                                                                           ]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for Notice:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile No:

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile No:

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Jurisdiction:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Investment Amount:

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Purchaser hereby elects to omit either or both of
  clauses (i) or (ii) of Section 11 of the Warrant as follows:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Omit Clause (i):

  	
  o

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Omit Clause (ii):

  	
  o

  	
   

  
							

 

 18
 

 

Schedule of Purchasers

 

	
  Name

  	
   

  	
  Investment Amount

  	
   

  	
  Number of 

  Shares

  	
   

  	
  Number of

  Warrants

  	
   

  
	
            

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
            

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
            

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
            

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
            

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 19Exhibit
10.14

Neither these securities nor the
securities issuable upon exercise of these securities have been registered with
the Securities and Exchange Commission or the securities commission of any
state in reliance upon an exemption from registration under the Securities Act
of 1933, as amended (the “Securities Act”), and, accordingly, may not be
offered or sold except pursuant to an effective registration statement under
the securities act or pursuant to an available exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
and in accordance with applicable state securities laws as evidenced by a legal
opinion of counsel to the transferor to such effect, the substance of which
shall be reasonably acceptable to the Company.

NOVA OIL,
INC.

WARRANT

	
  Warrant No. [   ]

  	
  Date of Original Issuance: July 11, 2006

  

 

Nova Oil, Inc., a Nevada
corporation (the “Company”),
hereby certifies that, for value received, [                     ]
or its registered assigns (the “Holder”),
is entitled to purchase from the Company up to a total of [                            ]
shares of common stock, $0.001 par value (the “Common Stock”), of the Company (each such share, a “Warrant Share” and all
such shares, the “Warrant Shares”)
at an exercise price equal to $2.60 per share (as adjusted from time to time as
provided in Section 9, the “Exercise
Price”), at any time and from time to time from and after the date
hereof and through and including the fifth year anniversary of the issuance
date hereof (the “Expiration Date”),
and subject to the following terms and conditions:

This Warrant is
one of a series of warrants issued pursuant to that certain Securities Purchase
Agreement of even date herewith to which the Company and the original Holder
are parties (the “Purchase Agreement”).

1.                                       Definitions.
In addition to the terms defined elsewhere in this Warrant, capitalized terms
that are not otherwise defined herein shall have the meanings given to such
terms in the Purchase Agreement.

2.                                       Registration
of Warrant. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof
from time to time.  The Company may deem
and treat the registered Holder of this Warrant as the absolute owner hereof
for the purpose of any exercise hereof or any distribution to the Holder, and
for all other purposes, absent actual notice to the contrary.

3.                                       Registration
of Transfers.  The Company shall
register the transfer of any portion of this Warrant in the Warrant Register,
upon surrender of this Warrant, with the Form of Assignment attached hereto
duly completed and signed, to the Company at its address specified herein. Upon
any such registration or transfer, a new Warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new Warrant, a “New Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring

 

Holder.  The acceptance of the New Warrant by the
transferee thereof shall be deemed the acceptance by such transferee of all of
the rights and obligations of a holder of a Warrant. Notwithstanding the
foregoing, this Warrant is subject to the transfer restrictions set forth in
Section 4.1 of the Purchase Agreement.

4.                                       Exercise
and Duration of Warrants.  This
Warrant shall be exercisable by the registered Holder at any time and from time
to time on or after the date hereof to and including the Expiration Date.
Subject to Section 11, at 5:00 p.m., Central time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and become void
and of no value.

5.                                       Delivery
of Warrant Shares.

(a)                                  To
effect exercises hereunder, the Holder shall not be required to physically
surrender this Warrant unless the aggregate Warrant Shares represented by this
Warrant is being exercised.  Upon
delivery of the Exercise Notice to the Company (with the attached Warrant
Shares Exercise Log) at its address for notice set forth herein and upon
payment of the Exercise Price multiplied by the number of Warrant Shares that
the Holder intends to purchase hereunder, the Company shall promptly (but in no
event later than five Trading Days after the Date of Exercise (as defined
herein)) issue and deliver to the Holder, a certificate for the Warrant Shares
issuable upon such exercise, which, unless otherwise required by the Purchase
Agreement, shall be free of restrictive legends.  The Company shall, upon request of the Holder
and subsequent to the date on which a registration statement covering the
resale of the Warrant Shares has been declared effective by the Securities and
Exchange Commission, use its best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions, if available, provided, that, the Company may, but will not be required to
change its transfer agent if its current transfer agent cannot deliver Warrant
Shares electronically through the Depository Trust Corporation.  A “Date
of Exercise” means the date on which the Holder shall have delivered
to Company: (i) the Exercise Notice (with the Warrant Exercise Log attached to
it), appropriately completed and duly signed and (ii) if such Holder is
not utilizing the cashless exercise provisions set forth in this Warrant,
payment of the Exercise Price for the number of Warrant Shares so indicated by
the Holder to be purchased.

(b)                                 If
by the fifth Trading Day after a Date of Exercise the Company fails to deliver
the required number of Warrant Shares in the manner required pursuant to
Section 5(a), then the Holder will have the right to rescind such exercise.

(c)                                  If
by the fifth Trading Day after a Date of Exercise the Company fails to deliver
the required number of Warrant Shares in the manner required pursuant to
Section 5(a), and if after such fifth Trading Day and prior to the receipt of
such Warrant Shares, the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy In”), then
the Company shall (1) pay in cash to the Holder the amount by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue by (B) the
closing bid price of the Common Stock at the time of the obligation

 

giving rise to
such purchase obligation and (2) at the option of the Holder, either reinstate
the portion of the Warrant and equivalent number of Warrant Shares for which
such exercise was not honored or deliver to the Holder the number of shares of
Common Stock that would have been issued had the Company timely complied with
its exercise and delivery obligations hereunder.  The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy In.

(d)                                 The
Company’s obligations to issue and deliver Warrant Shares in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation
of law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of Warrant Shares.  Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant
as required pursuant to the terms hereof.

6.                                       Charges,
Taxes and Expenses. Issuance and delivery of certificates for shares of
Common Stock upon exercise of this Warrant shall be made without charge to the
Holder for any issue or transfer tax, withholding tax, transfer agent fee or
other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name other
than that of the Holder.  The Holder
shall be responsible for all other tax liability that may arise as a result of
holding or transferring this Warrant or receiving Warrant Shares upon exercise
hereof.

7.                                       Replacement
of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation hereof, or in lieu of and substitution for this Warrant, a
New Warrant, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity (which shall not include a surety bond), if requested.  Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe.  If a New Warrant is requested
as a result of a mutilation of this Warrant, then the Holder shall deliver such
mutilated Warrant to the Company as a condition precedent to the Company’s
obligation to issue the New Warrant.

8.                                       Reservation
of Warrant Shares. The Company covenants that it will at all times reserve
and keep available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other

 

contingent
purchase rights of persons other than the Holder (taking into account the
adjustments and restrictions of Section 9).  The Company covenants that all Warrant Shares
so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.

9.                                       Certain
Adjustments. The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to time as set
forth in this Section 9.

(a)                                  Stock
Dividends and Splits.  If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class of
capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to clause (i) of
this paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clause (ii) or (iii) of this
paragraph shall become effective immediately after the effective date of such
subdivision or combination.  If any event
requiring an adjustment under this paragraph occurs during the period that an
Exercise Price is calculated hereunder, then the calculation of such Exercise
Price shall be adjusted appropriately to reflect such event.

(b)                                 Pro
Rata Distributions. If the Company, at any time while this Warrant is
outstanding, distributes to all holders of Common Stock (i) evidences of its
indebtedness, (ii) any security (other than a distribution of Common Stock
covered by the preceding paragraph), (iii) rights or warrants to subscribe for
or purchase any security, or (iv) any other asset (in each case, “Distributed Property”),
then, upon any exercise of the Warrant that occurs after such record date, such
Holder shall be entitled to receive, in addition to the Warrant Shares
otherwise issuable upon such conversion, the Distributed Property that such
Holder would have been entitled to receive in respect of such number of Warrant
Shares had the Holder been the record holder of such Warrant Shares immediately
prior to such record date.

(c)                                  Fundamental
Transactions. If, at any time while this Warrant is outstanding, (1) the
Company effects any merger or consolidation of the Company with or into another
Person, where the holders of outstanding shares of Common Stock prior to such
merger or consolidation do not own over 50% of the outstanding shares of Common
Stock of the surviving corporation or other entity immediately after such
merger or consolidation, (2) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (3)
any tender offer or exchange offer (whether by the Company or another Person)
is completed pursuant to which holders of Common Stock are permitted to tender
or exchange their shares for other securities, cash or property, or (4) the
Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”),
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the same amount and kind of securities, cash or property as it
would have been entitled

 

to receive upon
the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of the number of Warrant
Shares then issuable upon exercise in full of this Warrant (the “Alternate Consideration”).
 For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted to apply to
such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration.  If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction.  At the Holder’s
request, any successor to the Company or surviving entity in such Fundamental
Transaction shall, issue to the Holder a new warrant substantially in the form
of this Warrant and consistent with the foregoing provisions and evidencing the
Holder’s right to purchase the Alternate Consideration for the aggregate
Exercise Price upon exercise thereof.  The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this paragraph
(c) and insuring that the Warrant (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.

(d)                                 Dilutive
Equity Sales.  If, at any time while
this Warrant is outstanding, the Company issues additional shares of Common
Stock or rights, warrants, options or other securities or debt convertible,
exercisable or exchangeable for shares of Common Stock or otherwise entitling
any Person to acquire shares of Common Stock (collectively, “Common Stock Equivalents”)
at a price to the Company per share of Common Stock (the “Effective Price”) less than the Exercise Price of this
Warrant immediately prior to such issuance of such shares of Common Stock or
Common Stock Equivalents, then the Exercise Price shall be reduced to equal the
product of (A) the Exercise Price in effect immediately prior to such issuance
of shares of Common Stock or Common Stock Equivalents times (B) a fraction, the
numerator of which is the sum of (1) the number of shares of Common Stock
outstanding immediately prior to such issuance, plus (2) the number of
shares of Common Stock that the aggregate Effective Price of the shares of
Common Stock issued (or deemed to be issued) would purchase at the Exercise
Price in effect immediately prior to such issuance of shares of Common Stock or
Common Stock Equivalents, and the denominator of which is the aggregate number
of shares of Common Stock outstanding or deemed to be outstanding immediately
after such issuance.  For purposes of
this paragraph, in connection with any issuance of any Common Stock
Equivalents, (A) the number of shares of Common Stock that would be
issuable at conversion, exercise or exchange of such Common Stock Equivalents
on the date of issuance (the “Deemed
Number”) shall be deemed to be outstanding upon issuance of such
Common Stock Equivalents, (B) the Effective Price applicable to such Common
Stock shall equal the minimum dollar value of consideration payable to the
Company to purchase such Common Stock Equivalents and to convert, exercise or
exchange them into Common Stock (net of any discounts, fees, commissions and
other expenses), divided by the Deemed Number, and (C) no further adjustment
shall be made to the Exercise Price upon the actual issuance of Common Stock
upon conversion, exercise or exchange of such Common Stock Equivalents.  The Effective Price of Common Stock or Common
Stock Equivalents issued in any transaction in which more than one type of
securities

 

are issued shall
give effect to the allocation by the Company of the aggregate amount paid for
such securities issued in such transaction.

(e)                                  Number
of Warrant Shares.   Simultaneously with any adjustment to the
Exercise Price pursuant to paragraphs (a) or (d) of this Section, the number of
Warrant Shares that may be purchased upon exercise of this Warrant shall be
increased or decreased proportionately, so that after such adjustment the aggregate
Exercise Price payable hereunder for the adjusted number of Warrant Shares
shall be the same as the aggregate Exercise Price in effect immediately prior
to such adjustment.

(f)                                    Calculations.
All calculations under this Section 9 shall be made to the nearest cent or the
nearest whole share, as applicable.  The
number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Company, and the
disposition of any such shares shall be considered an issue or sale of Common
Stock.

(g)                                 Notice
of Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 9, the Company at its expense will promptly compute such adjustment in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment, including a statement of the adjusted Exercise Price and
adjusted number or type of Warrant Shares or other securities issuable upon
exercise of this Warrant (as applicable), describing the transactions giving
rise to such adjustments and showing in detail the facts upon which such
adjustment is based.  Upon written
request, the Company will promptly deliver a copy of each such certificate to
the Holder and to the Company’s Transfer Agent.

(h)                                 Notice
of Corporate Events. If the Company (i) declares a dividend or any other
distribution of cash, securities or other property in respect of its Common
Stock, including without limitation any granting of rights or warrants to
subscribe for or purchase any capital stock of the Company or any Subsidiary,
(ii) authorizes or approves, enters into any agreement contemplating or
solicits stockholder approval for any Fundamental Transaction or (iii) authorizes
the voluntary dissolution, liquidation or winding up of the affairs of the
Company, then, except if such notice and the contents thereof shall be deemed
to constitute material non-public information, the Company shall deliver to the
Holder a notice describing the material terms and conditions of such
transaction, at least 20 calendar days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to insure that the Holder is given
the practical opportunity to exercise this Warrant prior to such time so as to
participate in or vote with respect to such transaction; provided,
however, that the failure to deliver such notice or any defect therein shall
not affect the validity of the corporate action required to be described in
such notice.  Until the exercise of this
Warrant or any portion of this Warrant, the Holder shall not have nor exercise
any rights by virtue hereof as a stockholder of the Company (including without
limitation the right to notification of stockholder meetings or the right to
receive any notice or other communication concerning the business and affairs
of the Company other than as provided in this Section 9(h).

10.                                 Payment
of Exercise Price. The Holder may pay the Exercise Price in one of the
following manners:

 

(a)                                  Cash
Exercise. The Holder may deliver immediately available funds; or

(b)                                 Cashless
Exercise. The Holder may notify the Company in an Exercise Notice of its
election to utilize cashless exercise, in which event the Company shall issue
to the Holder the number of Warrant Shares determined as follows:

X = Y [(A-B)/A]

where:

X =                           the
number of Warrant Shares to be issued to the Holder.

Y =                            the
number of Warrant Shares with respect to which this Warrant is being exercised.

A =                          the
closing price for the Trading Day immediately prior to (but not including) the
Exercise Date.

B =                            the
Exercise Price.

For purposes of
Rule 144 promulgated under the Securities Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction
shall be deemed to have been acquired by the Holder, and the holding period for
the Warrant Shares shall be deemed to have commenced, on the date this Warrant
was originally issued.

11.                                 Limitation
on Exercise. [Investors may individually elect to omit either or both of
clauses (i) and (ii) of this Section 11 upon first issuance of the Warrant at
Closing.]

(i)                                     [Notwithstanding
anything to the contrary contained herein, the number of shares of Common Stock
that may be acquired by the Holder upon any exercise of this Warrant (or
otherwise in respect hereof) shall be limited to the extent necessary to insure
that, following such exercise (or other issuance), the total number of shares
of Common Stock then beneficially owned by such Holder and its Affiliates and
any other Persons whose beneficial ownership of Common Stock would be
aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act,
does not exceed 4.999% of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of Common Stock issuable
upon such exercise). For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. Each delivery of an Exercise Notice
hereunder will constitute a representation by the Holder that it has evaluated
the limitation set forth in this paragraph and determined that issuance of the
full number of Warrant Shares requested in such Exercise Notice is permitted
under this paragraph. This provision shall not restrict the number of shares of
Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder may
receive in the event of a merger or other business combination or
reclassification involving the Company as contemplated in Section 9 of this
Warrant. By written notice to the Company, the Holder may waive the provisions
of this Section but any such waiver will not be effective until the 61st day
after such notice is delivered to the Company.]

(ii)                                  [Notwithstanding
anything to the contrary contained herein, the number of shares of Common Stock
that may be acquired by the Holder upon any exercise of this Warrant (or
otherwise in respect hereof) shall be limited to the extent necessary to insure
that, following such

 

exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned
by such Holder and its Affiliates and any other Persons whose beneficial
ownership of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Exchange Act, does not exceed 9.999% of the total number
of issued and outstanding shares of Common Stock (including for such purpose
the shares of Common Stock issuable upon such exercise). For such purposes,
beneficial ownership shall be determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated thereunder. Each
delivery of an Exercise Notice hereunder will constitute a representation by
the Holder that it has evaluated the limitation set forth in this paragraph and
determined that issuance of the full number of Warrant Shares requested in such
Exercise Notice is permitted under this paragraph. This provision shall not
restrict the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a merger or other
business combination or reclassification involving the Company as contemplated
in Section 9 of this Warrant. This restriction may not be waived.]

12.                                 No
Fractional Shares. No fractional shares of Warrant Shares will be issued in
connection with any exercise of this Warrant. In lieu of any fractional shares
which would, otherwise be issuable, the Company shall pay cash equal to the
product of such fraction multiplied by the closing price of one Warrant Share
as reported by Bloomberg L.P. (or the successor to its function of reporting
share prices) on the date of exercise.

13.                                 Exchange
Act Filings. The Holder agrees and acknowledges that it shall have sole
responsibility for making any applicable filings with the U.S. Securities and
Exchange Commission pursuant to Section 13 and 16 of the Securities Exchange
Act of 1934, as amended, as a result of its acquisition of this Warrant and the
Warrant Shares and any future retention or transfer thereof.

14.                                 Notices.
Any and all notices or other communications or deliveries hereunder (including,
without limitation, any Exercise Notice) shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:00 p.m. (Central time) on a Trading Day,
(ii) 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 5:00 p.m. (Central
time) on any Trading Day, (iii) the Trading Day following the date of mailing,
if sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given.  The addresses for such communications shall
be: (i) if to the Company, to the address set forth in the Purchase Agreement,
or (ii) if to the Holder, to the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section.

15.                                 Warrant
Agent. The Company shall serve as warrant agent under this Warrant.  Upon 30 days’ notice to the Holder, the
Company may appoint a new warrant agent. Any corporation into which the Company
or any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or
any corporation to which the Company or any new warrant agent transfers
substantially all of its

 

corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be mailed (by first
class mail, postage prepaid) to the Holder at the Holder’s last address as
shown on the Warrant Register.

16.                                 Miscellaneous.

(a)                                  This
Warrant shall be binding on and inure to the benefit of the parties hereto and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant.  This Warrant may be
amended in writing signed by the Company and the Holder and their successors
and assigns and the Warrants issued pursuant to the Purchase Agreement,
including this Warrant, may be amended in writing signed by the Company and the
Holders of no less than two-thirds of the Warrant Shares issuable upon exercise
of all such then outstanding Warrants.  The
Company shall provide prior notice to all Holders of any proposed waiver or
amendment.

(b)                                 All questions concerning the
construction, validity, enforcement and interpretation of this Warrant 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 that would apply any other law, except to the extent that the corporate
laws of the state of nevada apply pursuant to the “internal affairs doctrine”
or with respect to the issuance of securities. 
Each party agrees that all Proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Warrant and any other Transaction Documents (whether brought against a
party hereto or its respective Affiliates, employees or agents) may be commenced
in the state and federal courts sitting in the City of New York, Borough of
Manhattan (the “New York Courts”).  Each party hereto hereby irrevocably submits
to the non-exclusive 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), and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such New York Court, or 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 Warrant 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 Warrant or the transactions contemplated
hereby.

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

 

(d)                                 In
case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

17.                                 Reference
to Registration Rights Agreement. 
This Warrant is subject to the Registration Rights Agreement and is
entitled to all the benefits provided for thereby or referred to therein.  Reference is hereby made to the Registration
Rights Agreement for a statement of such rights and benefits.

[SIGNATURE PAGE ON NEXT PAGE]

 

IN WITNESS WHEREOF,
the Company has caused this Warrant to be duly executed by its authorized
officer as of the date first indicated above.

	
   

  	
  NOVA OIL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Kenneth T. Hern

  
	
   

  	
   

  	
  Chairman and Chief Executive Officer

  

 

 

EXERCISE NOTICE

To Nova Oil, Inc.:

The undersigned hereby irrevocably elects to purchase [                  ]
shares of common stock, $0.001 par value, of Nova Oil, Inc. (“Common Stock”),
pursuant to Warrant No. [    ], originally issued July 11,
2006 (the “Warrant”), and,
if such Holder is not utilizing the cashless exercise provisions set forth in
the Warrant, encloses herewith $[                    ]
in cash, certified or official bank check or checks or other immediately
available funds, which sum represents the aggregate Exercise Price (as defined
in the Warrant) for the number of shares of Common Stock to which this Exercise
Notice relates, together with any applicable taxes payable by the undersigned
pursuant to the Warrant.

By its delivery of this Exercise Notice, the
undersigned represents and warrants to the Company that in giving effect to the
exercise evidenced hereby the Holder will not beneficially own in excess of the
number of shares of Common Stock (determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934) permitted to be owned under Section 11
of this Warrant to which this notice relates.

The undersigned requests that certificates for the
shares of Common Stock issuable upon this exercise be issued in the name of:

PLEASE INSERT SOCIAL SECURITY OR

TAX IDENTIFICATION NUMBER                                            [                                                        ]

[                                                                                    ]

[                                                                                    ]

[                                                                                    ]

[                                                                                    ]

(Please print name
and address)

 

Warrant Shares
Exercise Log

	
  Date

  	
   

  	
  Number of Warrant

  Shares Available to be

  Exercised

  	
   

  	
  Number of Warrant

  Shares Exercised

  	
   

  	
  Number of Warrant

  Shares Remaining to

  be Exercised

  
	
         

  	
   

  	
         

  	
   

  	
   

  	
   

  	
   

  
	
         

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
         

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
         

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of
Warrant]

FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto [                       ]
the right represented by the within Warrant to purchase [                               ]
shares of Common Stock of Nova Oil, Inc. to which the within Warrant relates
and appoints [                                 ]
attorney to transfer said right on the books of Nova Oil, Inc. with full power
of substitution in the premises.

	
  Dated:

  	
  ,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature must conform in all respects to name of
  holder as specified on the face of the Warrant)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address of Transferee

  
	
   

  	
   

  
	
   

  	
   

  
	
  In the presence
  of:

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