Document:

Unassociated Document

    EXHIBIT
      4.1

    

    Warrant
      Certificate No. 158

    

    NEITHER
      THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES ISSUABLE
      UPON
      THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
      OF
      1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND
      NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED
      OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT
      THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE
      STATE
      SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE
      COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
      COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY
      BE
      OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
      WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
      APPLICABLE STATE
      SECURITIES LAWS. 

    

    
      	
              Dated:
                September 8, 2006

            	
              Void
                After: September 8, 2011

            

    

     

    

    FOOTHILLS
      RESOURCES, INC.

    

    WARRANT
      TO PURCHASE COMMON STOCK

    

    Foothills
      Resources, Inc., a Nevada corporation (the “Company”), for value received on
      September 8, 2006
      (the
“Effective Date”), hereby issues to Goldman, Sachs & Co. (the
      “Holder”) this Warrant (the “Warrant”) to purchase 3,000,000 shares (each such
      share
      as from
      time to time adjusted as hereinafter provided
      being a
“Warrant Share” and all such shares being the “Warrant Shares”) of the Company’s
      Common Stock (as defined below), at the Exercise Price (as defined below),
      as
      adjusted from time to time as provided herein, on or before September
      8,
      2011
      (the
“Expiration Date”), all subject to the following terms and conditions. Unless
      otherwise defined in this Warrant, terms appearing in initial capitalized form
      shall have the meaning ascribed to them in that certain Securities Purchase
      Agreement, dated as of even date herewith, by and among the Company and the
      purchasers signatory thereto pursuant to which this Warrant was issued (the
      “Securities Purchase Agreement”).

     

    As
      used
      in this Warrant, (i) “Business Day” means any day other than Saturday, Sunday or
      any other day on which commercial banks in New York, New York are authorized
      or
      required by law or executive order to close; (ii) “Common Stock” means the
      common stock of the Company, $0.001 par value per share, including
      any securities issued or issuable with respect thereto or into which or for
      which such shares may be exchanged for, or converted into, pursuant to any
      stock
      dividend, stock split, stock combination, recapitalization, reclassification,
      reorganization or other similar event;
      (iii)
“Exercise Price” means $2.75 per share of Common Stock, subject to adjustment as
      provided herein; (iv) “Trading
      Day” means any
      day
      on which
      the Common Stock is traded on the primary national or regional stock exchange
      on
      which the Common Stock is listed, or, if not listed, on the Nasdaq National
      Market if quoted thereon, or if not so listed or quoted, the NASD
      Over-the-Counter Bulletin
      Board (the “OTC Bulletin Board”) if quoted thereon, is
      open
      for the transaction of business; and (v) “Affiliate” means any Person that,
      directly or indirectly, through one or more intermediaries, controls, is
      controlled by, or is under common control with, a Person, as such terms are
      used
      and construed in Rule 144 promulgated
      under the Securities Act of 1933, as amended.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.
      DURATION AND EXERCISE OF WARRANTS

    

    (a)
       Exercise
      Period.
      The
      Holder may exercise this Warrant in whole or in part on any Business Day on
      or
      before 5:00 p.m., Eastern time, on the Expiration Date, at which time this
      Warrant shall become void and of no value. The Holder shall also exercise the
      Warrant earlier on the Mandatory Exercise Date in accordance with Section 1(b)
      if applicable, at which time this Warrant shall entitle the Holder only to
      the
      Warrant Shares applicable upon such exercise.

    

    (b) Right
      of Mandatory Exercise by Company.
      

    

    (i)
      If at
      any time from and after the date
      no
amounts
      remain outstanding under that certain Credit and Guaranty Agreement dated as
      of
      September 8, 2006 among the Company, certain subsidiaries of the Company,
      various lenders, and J. Aron & Company (such date, the “Lender Cancellation
      Date”), (A)
      the
      closing
      sales price of the Common Stock for each Trading Day of any twenty (20)
      consecutive Trading Day period preceding the Lender Cancellation Date equals
      or
      exceeds $2.75 per share (subject to equitable adjustment for stock splits,
      stock
      dividends, combinations, and capital reorganizations, as applicable), (B) the
      registration statement registering for resale the Warrant Shares has been
      effective for a period of 45 Trading Days and remains effective or
      the
      Holder would be entitled to sell the Warrant Shares upon the exercise of the
      Warrant pursuant to the Rule 144(k) promulgated under Securities Act of 1933,
      as
      amended (i.e.,
      including without
      any volume limitations) and (C)
      the
      Common Stock is listed on the New York Stock Exchange or the American Stock
      Exchange, or quoted on the Nasdaq National Market
      (each
      such date on which all of the foregoing conditions in clauses (A) through (C)
      are satisfied being a “Mandatory Exercise Eligibility Date”), the Company shall
      have the right to require the Holder to exercise this Warrant in whole or in
      part, subject to Sections 1(b)(ii), 1(b)(iii) below, as designated in the
      Mandatory Exercise Notice (as defined below) into fully paid, validly issued
      and
      nonassessable shares of Common Stock in accordance with the terms of this
      Warrant at the Exercise Price as of the Mandatory Exercise Date (a “Mandatory
      Exercise”). The Company may exercise its right to require exercise under this
      Section 1(b) by delivering within not more than five (5) Trading Days after
      the
      end of the Mandatory Exercise Eligibility Date a written notice thereof by
      facsimile and overnight courier to all, but not less than all, of the holders
      of
      Warrants and the Transfer Agent (the “Mandatory Exercise Notice” and the date
      all of the holders received such notice by facsimile is referred to as the
      “Mandatory Exercise Notice Date”). The
      Mandatory Exercise Notice shall be irrevocable. The Mandatory Exercise Notice
      shall state (i) the Trading Day selected for the Mandatory Exercise in
      accordance with this Section 1(b)(i),
      which
      Trading Day shall be at least twenty (20) Business Days but not more than sixty
      (60) Business Days following the end of the applicable Mandatory Exercise Notice
      Date (the “Mandatory Exercise Date”), (ii) the aggregate number of Warrant
      Shares subject to Mandatory Exercise from the Holder and all of the holders
      of
      the Warrants pursuant to this Section 1(b) and (iii) the number of Warrant
      Shares to be issued to such Holder on the applicable Mandatory Exercise
      Date.

    
      
        
        

      

      
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    (ii) If
      the
      Company elects to cause exercise of any amount of this Warrant pursuant to
      Section 1(b)(i), then it must simultaneously take the same action in the same
      proportion with respect to all Warrants that contain a similar provision. All
      amounts exercised by the Holder after the Mandatory Exercise Notice Date shall
      reduce the amount of this Warrant required to be converted on the Mandatory
      Exercise Date. If the Company has elected a Mandatory Exercise, the mechanics
      of
      exercise set forth in Section 1(c) shall apply, to the extent applicable, as
      if
      the Company and the Transfer Agent had received from the Holder on the Mandatory
      Exercise Date an Exercise Notice with respect to the amount of this Warrant
      being converted pursuant to the Mandatory Exercise.

    

    (iii) Notwithstanding
      anything to the contrary contained in this Section 1(b), the aggregate number
      of
      Warrants that the Company shall have the right to call at any given time under
      Section 1(b) shall be limited to a number of Warrants such that number of
      Warrant Shares issuable upon exercise of the Warrants so called does not exceed
      the total aggregate volume of the Company’s Common Stock traded over the 20
      consecutive Trading Days prior to the applicable Mandatory Exercise Eligibility
      Date. The Company shall not have the right to deliver more than one Mandatory
      Exercise Notice in any ninety (90) day period.

    

    (c)
       Exercise
      Procedures.

    

    (i) While
      this Warrant remains outstanding and exercisable in accordance with Section
      1(a), the Holder may exercise this Warrant in whole or in part
      at any
      time and from time to time
      by:

    

    (A) surrender
      of this Warrant, with a duly executed copy of the Notice of Exercise attached
      hereto as Exhibit
      A,
      to the
      Secretary of the Company at its principal offices or at such other office or
      agency as the Company may specify in writing to the Holder; and

    

    (B) payment
      of the then
      applicable
      Exercise
      Price per share multiplied by the number of Warrant Shares being purchased
      upon
      exercise of the Warrant (such amount, the “Aggregate Exercise Price”)
made
      in
      the form of cash, or by certified check, bank draft or money order payable
      in
      lawful money of the United States of America
      or in
      the form of a Cashless Exercise
      to the
      extent permitted in Section 1(c)(ii) below.
      

    
      
        
        

      

      
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    (ii) Upon
      the
      exercise of this Warrant in compliance with the provisions of this Section
      1(c)
      or pursuant to a Mandatory Exercise Notice in accordance with Section 1(b),
      the
      Company shall promptly issue and cause to be delivered to the Holder a
      certificate for the Warrant Shares purchased by the Holder. Each
      exercise of this Warrant shall be effected immediately prior to the close of
      business on the date (the “Date of Exercise”) which (A)
      the
      conditions set forth in Section 1(b) have been satisfied
      in
      connection with a Mandatory Exercise Notice or (B) the conditions set forth
      in
      Section 1(c) have been satisfied, as the case may be.
      On
      or
      before the first Business Day following the date on which the Company has
      received each of the Exercise Notice and the Aggregate Exercise Price (the
      “Exercise Delivery Documents”), the Company shall transmit by facsimile an
      acknowledgment of confirmation of receipt of the Exercise Delivery Documents
      to
      the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before
      the third Business Day following the date on which the Company has received
      all
      of the Exercise Delivery Documents (the “Share Delivery Date”), the Company
      shall, (X) provided that the Transfer Agent is participating in The Depository
      Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the
      request of the Holder, credit such aggregate number of shares of Common Stock
      to
      which the Holder is entitled pursuant to such exercise to the Holder’s or its
      designee’s balance account with DTC through its Deposit Withdrawal Agent
      Commission system, or (Y) if the Transfer Agent is not participating in the
      DTC
      Fast Automated Securities Transfer Program, issue and dispatch by overnight
      courier to the address as specified in the Exercise Notice, a certificate,
      registered in the Company’s share register in the name of the Holder or its
      designee, for the number of shares of Common Stock to which the Holder is
      entitled pursuant to such exercise. Upon delivery of the Exercise Notice and
      Aggregate Exercise Price referred to in Section
      1(c)(i)(A)
      above, the Holder shall be deemed for all corporate purposes to have become
      the
      holder of record of the Warrant Shares with respect to which this Warrant has
      been exercised, irrespective of the date of delivery of the certificates
      evidencing such Warrant Shares. If this Warrant is submitted in connection
      with
      any exercise pursuant to Section 1(a) and the number of Warrant Shares
      represented by this Warrant submitted for exercise is greater than the
actual
      number
      of
      Warrant Shares being acquired upon such an
      exercise, then the Company shall as soon as practicable and in no event later
      than three (3) Business Days after any exercise and at its own expense, issue
      a
      new Warrant (in accordance with Section 1(c))
      of like
      tenor
      representing the right to purchase the number of Warrant Shares purchasable
      immediately prior to such exercise under this Warrant, less the number of
      Warrant Shares with respect to which this Warrant is exercised. No fractional
      shares of Common Stock are to be issued upon the exercise of this Warrant,
      but
      rather the number of shares of Common Stock to be issued shall be rounded up
      to
      the nearest whole number. The Company shall pay any and all taxes which may
      be
      payable with respect to the issuance and delivery of Warrant Shares upon
      exercise of this Warrant.

    

    (iii) If
      the
      Company shall fail to issue to the Holder within three (3) Business Days of
      receipt of the Exercise Delivery Documents, a certificate for the number of
      shares of Common Stock to which the Holder is entitled and register such shares
      of Common Stock on the Company’s share register or to credit the Holder’s
      balance account with DTC for such number of shares of Common Stock to which
      the
      Holder is entitled upon the Holder’s exercise of this Warrant, and if on or
      after such Business Day 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 shares of Common Stock issuable upon such exercise that the Holder
      anticipated receiving from the Company (a “Buy-In”), then the Company shall,
      within three (3) Business Days after the Holder’s request and in the Holder’s
      discretion, either (i) pay cash to the Holder in an amount equal to the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased (the “Buy-In Price”), at which point the
      Company’s obligation to deliver such certificate (and to issue such shares of
      Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver
      to the Holder a certificate or certificates representing such shares of Common
      Stock and pay cash to the Holder in an amount equal to the excess (if any)
      of
      the Buy-In Price over the product of (A) such number of shares of Common Stock,
      times (B) the closing bid price on
      the
      date of exercise. 

    
      
        
        

      

      
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    (d) Partial
      Exercise.
      This
      Warrant shall be exercisable, either as an entirety or, from time to time,
      for
      part only of the number of Warrant Shares referenced by this Warrant. If this
      Warrant is exercised in part, the Company shall issue, at its expense, a new
      Warrant, in substantially the form of this Warrant, referencing such reduced
      number of Warrant Shares which remain subject to this Warrant.

    

    (e) Disputes.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall promptly issue
      to the Holder the number of Warrant Shares that are not disputed and resolve
      such dispute in accordance with Section 15.

    

    2.
      ISSUANCE OF WARRANT SHARES

    

    (a) The
      Company covenants that all Warrant Shares will, upon issuance in accordance
      with
      the terms of this Warrant, be (i) duly authorized, validly issued, fully paid
      and non-assessable, and (ii) free from all liens, charges and security
      interests, with the exception of claims arising through the acts or omissions
      of
      any Holder and except as arising from applicable Federal and state securities
      laws.

    

    (b) The
      Company shall register this Warrant upon records to be maintained by the Company
      for that purpose in the name of the record holder of such Warrant from time
      to
      time. The Company may deem and treat the registered Holder of this Warrant
      as
      the absolute owner thereof for the purpose of any exercise thereof, any
      distribution to the Holder thereof and for all other purposes.

    

    (c) The
      Company will not, by amendment of its certificate of incorporation, by-laws
      or
      through any reorganization, transfer of assets, consolidation, merger,
      dissolution, issue or sale of securities or any other voluntary action, avoid
      or
      seek to avoid the observance or performance of any of the terms to be observed
      or performed hereunder by the Company, but will at all times in good faith
      assist in the carrying out of all the provisions of this Warrant and in the
      taking of all the action as may be necessary or appropriate in order to protect
      the rights of the Holder to exercise this Warrant,
      or
      against impairment of such rights.

    

    3.
      ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES

    

    (a) The
      Exercise Price and the number of shares purchasable upon the exercise of this
      Warrant shall be subject to adjustment from time to time upon the occurrence
      of
      certain events described in this Section 3(a).

    
      
        
        

      

      
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       (i)
       Subdivision
      or Combination of Stock.
      In case
      the Company shall at any time subdivide (whether
      by way of stock dividend, stock split or otherwise) its
      outstanding shares of Common Stock into a greater number of shares, the Exercise
      Price in effect immediately prior to such subdivision shall be proportionately
      reduced and
      the
      number of Warrant Shares shall be proportionately increased,
      and
      conversely, in case the outstanding shares of Common Stock of the Company shall
      be combined (whether
      by way of stock combination, reverse stock split or otherwise) into
      a
      smaller number of shares, the Exercise Price in effect immediately prior to
      such
      combination shall be proportionately increased
      and the
      number of Warrant Shares shall be proportionately decreased. The Exercise Price
      and the Warrant Shares, as so adjusted, shall be readjusted in the same manner
      upon the happening of any successive even or events described in this Section
      3(a)(i).

    

       (ii) Dividends
      in Stock, Property, Reclassification.
      If at
      any time, or from time to time, the Holders of Common Stock (or any shares
      of
      stock or other securities at the time receivable upon the exercise of this
      Warrant) shall have received or become entitled to receive, without payment
      therefor:

    

       (A) any
      shares of stock or other securities which are at any time directly or indirectly
      convertible into or exchangeable for Common Stock, or any rights or options
      to
      subscribe for, purchase or otherwise acquire any of the foregoing by way of
      dividend or other distribution, or

    

       (B) additional
      stock or other securities or property (including cash) by way of spin-off,
      split-up, reclassification, combination of shares or similar corporate
      rearrangement, (other than shares of Common Stock issued as a stock split or
      adjustments in respect of which shall be covered by the terms of Section 3(a)(i)
      above), then and in each such case, the Exercise
      Price and the number of Warrant Shares to be obtained upon exercise of this
      Warrant shall be adjusted proportionately, and the Holder
      hereof shall, upon the exercise of this Warrant, be entitled to receive, in
      addition to the number of shares of Common Stock receivable thereupon, and
      without payment of any additional consideration therefor, the amount of stock
      and other securities and property (including cash in the cases referred to
      in
      clause (ii) above) which such Holder would hold on the date of such exercise
      had
      he been the holder of record of such Common Stock as of the date on which
      holders of Common Stock received or became entitled to receive such shares
      or
      all other additional stock and other securities and property.
      The
      Exercise Price and the Warrant Shares, as so adjusted, shall be readjusted
      in
      the same manner upon the happening of any successive event or events described
      in this Section 3(a)(ii).

    
      
        
        

      

      
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    (iii) Reorganization,
      Reclassification, Consolidation, Merger or Sale.
      If any
      recapitalization, reclassification or reorganization of the capital stock of
      the
      Company, or any consolidation or merger of the Company with another corporation,
      or the sale of all or substantially all of its assets or other
      transaction shall be effected in such a way that holders of Common Stock shall
      be entitled to receive stock, securities, or other assets or property (an
“Organic Change”), then, as a condition of such Organic Change, lawful and
      adequate provisions shall be made by the Company whereby the Holder hereof
      shall
      thereafter have the right to purchase and receive (in lieu of the shares of
      the
      Common Stock of the Company immediately theretofore purchasable and receivable
      upon the exercise of the rights represented by this Warrant) such shares of
      stock, securities or other assets or property as may be issued or payable with
      respect to or in exchange for a number of outstanding shares of such Common
      Stock equal to the number of shares of such stock immediately theretofore
      purchasable and receivable assuming the full exercise of the rights represented
      by this Warrant. In the event of any Organic Change, appropriate provision
      shall
      be made by the Company with respect to the rights and interests of the Holder
      of
      this Warrant to the end that the provisions hereof (including, without
      limitation, provisions for adjustments of the Exercise Price and of the number
      of shares purchasable and receivable upon the exercise of this Warrant) shall
      thereafter be applicable, in relation to any shares of stock, securities or
      assets thereafter deliverable upon the exercise hereof. The Company will not
      effect any such consolidation, merger or sale unless, prior to the consummation
      thereof, the successor corporation (if other than the Company) resulting from
      such consolidation or merger
      or
the
      corporation purchasing such assets shall assume by written instrument reasonably
      satisfactory in form and substance to the Holders executed and mailed or
      delivered to the registered Holder hereof at the last address of such Holder
      appearing on the books of the Company, the obligation to deliver to such Holder
      such shares of stock, securities or assets as, in accordance
      with the foregoing provisions, such Holder may be entitled to
      purchase. In
      any
      event, the successor corporation (if other than the Company) resulting from
      such
      consolidation or merger or the corporation purchasing such assets shall be
      deemed to assume such obligation to deliver to such Holder such shares of stock,
      securities or assets even in the absence of a written instrument assuming such
      obligation to the extent such assumption occurs by operation of
      law.

    

    (b) Certificate
      as to Adjustments.
      Upon
      the occurrence of each adjustment or readjustment pursuant to this Section
      3,
      the Company at its expense shall promptly compute such adjustment or
      readjustment in accordance with the terms hereof and furnish to each Holder
      of
      this Warrant a certificate setting forth such adjustment or readjustment and
      showing in detail the facts upon which such adjustment or readjustment is based.
      The Company shall
      promptly furnish
      or cause to be furnished to such Holder a like certificate setting forth: (i)
      such adjustments and readjustments; and (ii) the number of shares and the
      amount, if any, of other property which at the time would be received upon
      the
      exercise of the Warrant.

    

    (c) Certain
      Events.
      If any
      event occurs as to which the other provisions of this Section 3 are not strictly
      applicable but the lack of any adjustment would not fairly protect the purchase
      rights of the Holder under this Warrant in accordance with the basic intent
      and
      principles of such provisions, or if strictly applicable would not fairly
      protect the purchase rights of the Holder under this Warrant in accordance
      with
      the basic intent and principles of such provisions, then the Company’s board of
      directors will, in good faith, make an appropriate adjustment to protect the
      rights of the Holder; provided, however, that no such adjustment pursuant to
      this Section 3(c) will increase the Exercise Price or decrease the number of
      Warrant Shares as otherwise determined pursuant to this Section
      3.

    
      
        
        

      

      
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    (d) Adjustment
      of Exercise Price Upon Issuance of Additional Shares of Common
      Stock.
      In the
      event
      the
      Company shall at any time prior to the twelfth month anniversary of the
      Effective Date, issue Additional Shares of Common Stock, as defined below,
      without consideration or for a consideration per share less than the Exercise
      Price in effect immediately prior to such issue, then the Exercise Price shall
      be reduced, concurrently with such issue, to a price (calculated to the nearest
      cent) determined by multiplying such Exercise Price by a fraction, (A) the
      numerator of which shall be (1) the number of shares of Common Stock outstanding
      immediately prior to such issue plus (2) the number of shares of Common Stock
      which the aggregate consideration received or to be received by the Company
      for
      the total number of Additional Shares of Common Stock so issued would purchase
      at such Exercise Price; and (B) the denominator of which shall be the number
      of
      shares of Common Stock outstanding immediately prior to such issue plus the
      number of such Additional Shares of Common Stock so issued; provided
      that,
      (i) for the purpose of this Section 3(d), all shares of Common Stock issuable
      upon conversion or exchange of convertible securities outstanding immediately
      prior to such issue shall be deemed to be outstanding, and (ii) the number
      of
      shares of Common Stock deemed issuable upon conversion or exchange of such
      outstanding convertible securities shall be determined without giving effect
      to
      any adjustments to the conversion or exchange price or conversion or exchange
      rate of such convertible securities resulting from the issuance of Additional
      Shares of Common Stock that is the subject of this calculation. For purposes
      of
      this Warrant, “Additional Shares of Common Stock” shall mean all shares of
      Common Stock issued by the Company after the Effective Date (including without
      limitation any shares of Common Stock issuable upon conversion or exchange
      of
      any convertible securities or upon exercise of any option or warrant, on an
      as-converted basis), other than: (i) shares of Common Stock issued or
      issuable upon conversion or exchange of any convertible securities or exercise
      of any options outstanding on the Effective Date; (ii) shares of Common
      Stock issued or issuable by reason of a dividend, stock split, split-up or
      other
      distribution on shares of Common Stock that is covered by Sections 3(a)(i)
      through 3(a)(iii) above; or (iii) shares of Common Stock (or options with
      respect thereto) issued or issuable to employees or directors of, or consultants
      to, the Company or any of its subsidiaries pursuant to a plan, agreement or
      arrangement approved by the Board of Directors of the Company. The provisions
      of
      this Section 3(d) shall not operate to increase the Exercise Price.

    

    4.
      TRANSFERS AND EXCHANGES OF WARRANT AND WARRANT SHARES

    

    (a) Registration
      of Transfers and Exchanges.
      Subject
      to Section 4(c), upon the Holder’s surrender of this Warrant, with a duly
      executed copy of the Assignment Notice attached as Exhibit
      B,
      to the
      Secretary of the Company at its principal offices or at such other office or
      agency as the Company may specify in writing to the Holder, the Company shall
      register the transfer of all or any portion of this Warrant. Upon such
      registration of transfer the Company shall issue a new Warrant, in substantially
      the form of this Warrant, evidencing the acquisition rights transferred to
      the
      transferee and a new Warrant, in similar form, evidencing the remaining
      acquisition rights not transferred, to the Holder requesting the
      transfer.

    

    (b) Warrant
      Exchangeable for Different Denominations.
      The
      Holder may exchange this Warrant for a new Warrant or Warrants, in substantially
      the form of this Warrant, evidencing in the aggregate the right to purchase
      the
      number of Warrant Shares which may then be purchased hereunder, each of such
      new
      Warrants to be dated the date of such exchange and to represent the right to
      purchase such number of Warrant Shares as shall be designated by the Holder.
      The
      Holder shall surrender this Warrant with duly executed instructions regarding
      such
      re-certification of this Warrant to the Secretary of the Company at its
      principal offices or at such other office or agency as the Company may specify
      in writing to the Holder.

    

    (c) Restrictions
      on Transfers.
      This
      Warrant may not be transferred at any time without (i) registration under the
      Act or (ii) an exemption from such registration and a written opinion of legal
      counsel addressed to the Company that the proposed transfer of the Warrant
      may
      be effected without registration under the Act, which opinion will be in form
      and from counsel reasonably satisfactory to the Company.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    

    (d) Permitted
      Transfers and Assignments.
      Notwithstanding any provision to the contrary in this Section 4, the Holder
      may
      transfer, with or without consideration, this Warrant or any of the Warrant
      Shares (or a portion thereof) to the Holder’s Affiliates without obtaining the
      opinion from counsel that may be required by Section 4(c)(ii),
      provided that the Holder delivers to the Company and its counsel certification,
      documentation, and other assurances reasonably required by Company’s counsel to
      enable Company’s counsel to render an opinion to the Company’s transfer agent
      that such transfer does not violate applicable securities laws.

    

    5.
      MUTILATED OR MISSING WARRANT CERTIFICATE

    

     If
      this
      Warrant is mutilated, lost, stolen or destroyed, upon request by the Holder,
      the
      Company will,
      at its
      expense,
      issue,
      in exchange for and upon cancellation of the mutilated Warrant, or in
      substitution for the lost, stolen or destroyed Warrant, a new Warrant, in
      substantially the form of this Warrant, representing the right to acquire the
      equivalent number of Warrant Shares, provided however, as a prerequisite to
      the
      issuance of a substitute Warrant, the Company may require satisfactory evidence
      of loss, theft or destruction as well as an indemnity from the Holder of a
      lost,
      stolen or destroyed Warrant.

    

    6.
      PAYMENT OF TAXES

    

    The
      Company will pay all transfer and stock issuance taxes attributable to the
      preparation, issuance and delivery of this Warrant and the Warrant Shares
(and
      replacement Warrants) including,
      without limitation, all documentary and stamp taxes;
      provided, however, that the Company shall not be required to pay any tax in
      respect of the transfer of this Warrant, or the issuance or delivery of
      certificates for Warrant Shares or other securities in respect of the Warrant
      Shares to any person or entity other than to the Holder or its
      transferee.

    

    7.
      FRACTIONAL WARRANT SHARES

    

    No
      fractional Warrant Shares shall be issued upon exercise of this Warrant. The
      Company, in lieu of issuing any fractional Warrant Share, shall round up the
      number of Warrant Shares issuable to nearest whole share.

    

    8.
      NO
      STOCK RIGHTS AND LEGEND

    

    No
      holder
      of this Warrant Certificate, as such, shall be entitled to vote or be deemed
      the
      holder of any other securities of the Company which may at any time be issuable
      on the exercise hereof, nor shall anything contained herein be construed to
      confer upon the holder of this Warrant Certificate, as such, the rights of
      a
      stockholder of the Company or the right to vote for the election of directors
      or
      upon any matter submitted to stockholders at any meeting thereof,
      or give
      or withhold consent to any corporate action or to receive notice of meetings
      or
      other actions affecting stockholders (except as provided herein), or to receive
      dividends or subscription rights or otherwise (except as provide
      herein).

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    

    Each
      certificate for Warrant Shares initially issued upon the exercise of this
      Warrant Certificate, and each certificate for Warrant Shares issued to any
      subsequent transferee of any such certificate, shall be stamped or otherwise
      imprinted with a legend in substantially the following form:

    

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS,
      AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
      PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT
      WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE
      SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE
      COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
      COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
      SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
      CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
      APPLICABLE STATE SECURITIES LAWS.”

    

    9.
      REGISTRATION UNDER THE SECURITIES ACT OF 1933

    

    The
      Company agrees to register the Warrants and the Warrant Shares for resale under
      the Act on the terms and subject to the conditions set forth in that certain
      Registration Rights Agreement, by and between the Company and each of the
      Purchasers listed on Schedule 1 to the Securities Purchase Agreement, pursuant
      to which this Warrant was issued.

    

    10.
      NOTICES

    

    All
      notices, consents, waivers, and other communications under this Warrant must
      be
      in writing and will be deemed given to a party when (a) delivered to the
      appropriate address by hand or by nationally recognized overnight courier
      service (costs prepaid); (b) sent by facsimile or e-mail with confirmation
      of
      transmission by the transmitting equipment; (c) received or rejected by the
      addressee, if sent by certified mail, return receipt requested, if to the
      registered Holder hereof; or (d) seven days after the placement of the notice
      into the mails (first class postage prepaid), to the Holder at the address,
      facsimile number, or e-mail address furnished by the registered Holder to the
      Company in accordance with the Securities Purchase Agreement, or if to the
      Company, to it at 4540 California Avenue, Suite 550 Bakersfield, California
      93309, Attention: W. Kirk Bosché (or to such other address, facsimile number, or
      e-mail address as the Holder or the Company as a party may designate by notice
      the other party) with a copy to McGuireWoods LLP, 1345 Avenue of the Americas,
      7th
      Floor,
      New York, New York 10105, Attention: Louis W. Zehil.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    11.
      SEVERABILITY

    

    If
      a
      court of competent jurisdiction holds any provision of this Warrant invalid
      or
      unenforceable, the other provisions of this Warrant will remain in full force
      and effect. Any provision of this Warrant held invalid or unenforceable only
      in
      part or degree will remain in full force and effect to the extent not held
      invalid or unenforceable.

    

    12.
      BINDING EFFECT

    

    This
      Warrant shall be binding upon and inure to the sole and exclusive benefit of
      the
      Company, its successors and assigns, the registered Holder or Holders from
      time
      to time of this Warrant and the Warrant Shares.

    

    13.
      SURVIVAL OF RIGHTS AND DUTIES

    

    This
      Warrant Certificate shall terminate and be of no further force and effect on
      the
      earlier of 5:00 p.m., Eastern time, on the Expiration Date or the date on which
      this Warrant has been exercised.

    

    14.
      GOVERNING LAW

    

    This
      Warrant will be governed by and construed under the laws of the State of
New
      York
      without
      regard to conflicts of laws principles that would require the application of
      any
      other law.

    

    15.
      DISPUTE RESOLUTION

    

    In
      the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall submit the
      disputed determinations or arithmetic calculations via facsimile within two
      Business Days of receipt of the Exercise Notice giving rise to such dispute,
      as
      the case may be, to the Holder. If the Holder and the Company are unable to
      agree upon such determination or calculation of the Exercise Price or the
      Warrant Shares within three Business Days of such disputed determination or
      arithmetic calculation being submitted to the Holder, then the Company shall,
      within two Business Days submit via facsimile (a) the disputed determination
      of
      the Exercise Price to an independent, reputable investment bank selected by
      the
      Company and approved by the Holder or (b) the disputed arithmetic calculation
      of
      the Warrant Shares to the Company’s independent, outside accountant. The Company
      shall cause, at its expense, the investment bank or the accountant, as the
      case
      may be, to perform the determinations or calculations and notify the Company
      and
      the Holder of the results no later than ten (10) Business Days from the time
      it
      receives the disputed determinations or calculations. Such investment bank’s or
      accountant’s determination or calculation, as the case may be, shall be binding
      upon all parties absent demonstrable error. 

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    

    16.
      NOTICES OF RECORD DATE

    

    Upon
      (a)
      any establishment by the Company of a record date of the holders of any class
      of
      securities for the purpose of determining the holders thereof who are entitled
      to receive any dividend or other distribution, or right or option to acquire
      securities of the Company, or any other right, or (b) any capital
      reorganization, reclassification, recapitalization, merger or consolidation
      of
      the Company with or into any other corporation, any transfer of all or
      substantially all the assets of the Company, or any voluntary or involuntary
      dissolution, liquidation or winding up of the Company, or the sale, in a single
      transaction, of a majority of the Company’s voting stock (whether newly issued,
      or from treasury, or previously issued and then outstanding, or any combination
      thereof), the Company shall mail to the Holder at least ten (10) Business Days,
      or such longer period as may be required by law, prior to the record date
      specified therein, a notice specifying (i) the date established as the record
      date for the purpose of such dividend, distribution, option or right and a
      description of such dividend, option or right, (ii) the date on which any such
      reorganization, reclassification, transfer, consolidation, merger, dissolution,
      liquidation or winding up, or sale is expected to become effective and (iii)
      the
      date, if any, fixed as to when the holders or record of Common Stock shall
      be
      entitled to exchange their shares of Common Stock for securities or other
      property deliverable upon such reorganization, reclassification, transfer,
      consolation, merger, dissolution, liquidation or winding up.

    

    17.
      RESERVATION OF SHARES

    

    The
      Company shall reserve and keep available out of its authorized but unissued
      shares of Common Stock for issuance upon the exercise of this Warrant, free
      from
      preemptive rights, such number of shares of Common Stock for which this Warrant
      shall from time to time be exercisable.

    

    18.
      NO
      THIRD PARTY RIGHTS

    

    This
      Warrant is not intended, and will not be construed, to create any rights in
      any
      parties other than the Company and the Holder, and no person or entity may
      assert any rights as third-party beneficiary hereunder.

    

    

    [SIGNATURE
      PAGE FOLLOWS]

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

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

    

    

    
      	
               

            	
              Foothills
                Resources, Inc.

            
	 	 
	 	 
	
               

            	
              By:
                W. Kirk
                Bosché                       
                

            
	
               

            	
              Name:
                W. Kirk Bosché

            
	
               

            	
              Title:Chief
                Financial Officer 

            
	 	
              and
                Assistant Secretary

            

    

    

    

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      A

    

    EXERCISE
      FORM

    

    (To
      be
      executed by the Holder of the Warrant if such Holder desires
      to exercise the Warrant)

    

    To
      Foothills Resources, Inc.:

    

    The
      undersigned hereby irrevocably elects to exercise this Warrant and to purchase
      thereunder, ___________________ full shares of Foothills Resources, Inc. common
      stock issuable upon exercise of the Warrant and delivery of $_________
      (in cash as provided for in the foregoing Warrant) and any applicable taxes
      payable by the undersigned pursuant to such Warrant. 

     

    The
      undersigned requests that certificates for such shares be issued in the name
      of:

    

    _________________________________________

    (Please
      print name, address and social security or federal employer

    identification
      number (if applicable))

    

    _________________________________________

    

    _________________________________________

    

    If
      the
      shares issuable upon this exercise of the Warrant are not all of the Warrant
      Shares which the Holder is entitled to acquire upon the exercise of the Warrant,
      the undersigned requests that a new Warrant evidencing the rights not so
      exercised be issued in the name of and delivered to:

    

    _________________________________________

    (Please
      print name, address and social security or federal employer

    identification
      number (if applicable))

    

    _________________________________________

    _________________________________________

    

     

    
      	 	
              Name
                of Holder (print): ________________________

            
	 	
              (Signature):
                ____________________________________

            
	 	
              (By:)
                __________________________________________

            
	 	
              (Title:)
                _________________________________________

            
	
               

            	
              Dated:
                ________________________________________

            

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    

    EXHIBIT
      B

    

    FORM
      OF
      ASSIGNMENT

    

    FOR
      VALUE
      RECEIVED, ___________________________________ hereby sells, assigns and
      transfers to each assignee set forth below all of the rights of the undersigned
      under the Warrant (as defined in and evidenced by the attached Warrant) to
      acquire the number of Warrant Shares set opposite the name of such assignee
      below and in and to the foregoing Warrant with respect to said acquisition
      rights and the shares of Foothills Resources, Inc. issuable upon exercise of
      the
      Warrant:

    

     

    
      	
              Name
                of Assignee

            	
              Address

            	
              Number
                of Shares

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 

    

    

    

    If
      the
      total of the Warrant Shares are not all of the Warrant Shares evidenced by
      the
      foregoing Warrant, the undersigned requests that a new Warrant evidencing the
      right to acquire the Warrant Shares not so assigned be issued in the name of
      and
      delivered to the undersigned.

    

    

    
      
        	 	
                Name
                  of Holder (print): ________________________

              
	 	
                (Signature):
                  ____________________________________

              
	 	
                (By:)
                  __________________________________________

              
	 	
                (Title:)
                  _________________________________________

              
	
                 

              	
                Dated:
                  ________________________________________Unassociated Document

    EXHIBIT
      4.2

     

    Warrant
      Certificate No. 157

    

    NEITHER
      THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES ISSUABLE
      UPON
      THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
      OF
      1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND
      NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED
      OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT
      THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE
      STATE
      SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE
      COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
      COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY
      BE
      OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
      WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
      APPLICABLE STATE
      SECURITIES LAWS. 

    

    
      	
              Dated:
                September 8, 2006

            	
              Void
                After: September 8, 2011

            

    

    

    

    

    FOOTHILLS
      RESOURCES, INC.

    

    WARRANT
      TO PURCHASE COMMON STOCK

    

    Foothills
      Resources, Inc., a Nevada corporation (the “Company”), for value received on
      September 8, 2006
      (the
“Effective Date”), hereby issues to Goldman, Sachs & Co.
      (the
“Holder”) this Warrant (the “Warrant”) to purchase 1,666,667 shares (each such
      share
      as from
      time to time adjusted as hereinafter provided
      being a
“Warrant Share” and all such shares being the “Warrant Shares”) of the Company’s
      Common Stock (as defined below), at the Exercise Price (as defined below),
      as
      adjusted from time to time as provided herein, on or before September
      8,
      2011
      (the
“Expiration Date”), all subject to the following terms and conditions. Unless
      otherwise defined in this Warrant, terms appearing in initial capitalized form
      shall have the meaning ascribed to them in that certain Securities Purchase
      Agreement, dated as of even date herewith, by and among the Company and the
      purchasers signatory thereto pursuant to which this Warrant was issued (the
      “Securities Purchase Agreement”).

    

    As
      used
      in this Warrant, (i) “Business Day” means any day other than Saturday, Sunday or
      any other day on which commercial banks in New York, New York are authorized
      or
      required by law or executive order to close; (ii) “Common Stock” means the
      common stock of the Company, $0.001 par value per share, including
      any securities issued or issuable with respect thereto or into which or for
      which such shares may be exchanged for, or converted into, pursuant to any
      stock
      dividend, stock split, stock combination, recapitalization, reclassification,
      reorganization or other similar event;
      (iii)
“Exercise Price” means $2.75 per share of Common Stock, subject to adjustment as
      provided herein; (iv) “Trading
      Day” means any
      day
      on which
      the Common Stock is traded on the primary national or regional stock exchange
      on
      which the Common Stock is listed, or, if not listed, on the Nasdaq National
      Market if quoted thereon, or if not so listed or quoted, the NASD
      Over-the-Counter Bulletin
      Board (the “OTC Bulletin Board”) if quoted thereon, is
      open
      for the transaction of business; and (v) “Affiliate” means any Person that,
      directly or indirectly, through one or more intermediaries, controls, is
      controlled by, or is under common control with, a Person, as such terms are
      used
      and construed in Rule 144 promulgated
      under the Securities Act of 1933, as amended.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    1.
      DURATION AND EXERCISE OF WARRANTS

    

    (a)
       Exercise
      Period.
      The
      Holder may exercise this Warrant in whole or in part on any Business Day on
      or
      before 5:00 p.m., Eastern time, on the Expiration Date, at which time this
      Warrant shall become void and of no value. The Holder shall also exercise the
      Warrant earlier on the Mandatory Exercise Date in accordance with Section 1(b)
      if applicable, at which time this Warrant shall entitle the Holder only to
      the
      Warrant Shares applicable upon such exercise.

    

    (b) Right
      of Mandatory Exercise by Company.
      

    

    (i)
      If at
      any time from and after the date
      no
amounts
      remain outstanding under that certain Credit and Guaranty Agreement dated as
      of
      September 8, 2006 among the Company, certain subsidiaries of the Company,
      various lenders, and J. Aron & Company (such date, the "Lender Cancellation
      Date"), (A)
      the
      closing
      sales price of the Common Stock for each Trading Day of any twenty (20)
      consecutive Trading Day period preceding the Lender Cancellation Date equals
      or
      exceeds $2.75 per share (subject to equitable adjustment for stock splits,
      stock
      dividends, combinations, and capital reorganizations, as applicable), (B) the
      registration statement registering for resale the Warrant Shares has been
      effective for a period of 45 Trading Days and remains effective or
      the
      Holder would be entitled to sell the Warrant Shares upon the exercise of the
      Warrant pursuant to the Rule 144(k) promulgated under Securities Act of 1933,
      as
      amended (i.e.,
      including without
      any volume limitations) and (C)
      the
      Common Stock is listed on the New York Stock Exchange or the American Stock
      Exchange, or quoted on the Nasdaq National Market
      (each
      such date on which all of the foregoing conditions in clauses (A) through (C)
      are satisfied being a “Mandatory Exercise Eligibility Date”), the Company shall
      have the right to require the Holder to exercise this Warrant in whole or in
      part, subject to Sections 1(b)(ii), 1(b)(iii) below, as designated in the
      Mandatory Exercise Notice (as defined below) into fully paid, validly issued
      and
      nonassessable shares of Common Stock in accordance with the terms of this
      Warrant at the Exercise Price as of the Mandatory Exercise Date (a “Mandatory
      Exercise”). The Company may exercise its right to require exercise under this
      Section 1(b) by delivering within not more than five (5) Trading Days after
      the
      end of the Mandatory Exercise Eligibility Date a written notice thereof by
      facsimile and overnight courier to all, but not less than all, of the holders
      of
      Warrants and the Transfer Agent (the “Mandatory Exercise Notice” and the date
      all of the holders received such notice by facsimile is referred to as the
      “Mandatory Exercise Notice Date”). The
      Mandatory Exercise Notice shall be irrevocable. The Mandatory Exercise Notice
      shall state (i) the Trading Day selected for the Mandatory Exercise in
      accordance with this Section 1(b)(i),
      which
      Trading Day shall be at least twenty (20) Business Days but not more than sixty
      (60) Business Days following the end of the applicable Mandatory Exercise Notice
      Date (the “Mandatory Exercise Date”), (ii) the aggregate number of Warrant
      Shares subject to Mandatory Exercise from the Holder and all of the holders
      of
      the Warrants pursuant to this Section 1(b) and (iii) the number of Warrant
      Shares to be issued to such Holder on the applicable Mandatory Exercise
      Date.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    

    

    (ii) If
      the
      Company elects to cause exercise of any amount of this Warrant pursuant to
      Section 1(b)(i), then it must simultaneously take the same action in the same
      proportion with respect to all Warrants that contain a similar provision. All
      amounts exercised by the Holder after the Mandatory Exercise Notice Date shall
      reduce the amount of this Warrant required to be converted on the Mandatory
      Exercise Date. If the Company has elected a Mandatory Exercise, the mechanics
      of
      exercise set forth in Section 1(c) shall apply, to the extent applicable, as
      if
      the Company and the Transfer Agent had received from the Holder on the Mandatory
      Exercise Date an Exercise Notice with respect to the amount of this Warrant
      being converted pursuant to the Mandatory Exercise.

    

    (iii) Notwithstanding
      anything to the contrary contained in this Section 1(b), the aggregate number
      of
      Warrants that the Company shall have the right to call at any given time under
      Section 1(b) shall be limited to a number of Warrants such that number of
      Warrant Shares issuable upon exercise of the Warrants so called does not exceed
      the total aggregate volume of the Company’s Common Stock traded over the 20
      consecutive Trading Days prior to the applicable Mandatory Exercise Eligibility
      Date. The Company shall not have the right to deliver more than one Mandatory
      Exercise Notice in any ninety (90) day period.

    

    (c)
       Exercise
      Procedures.

    

    (i) While
      this Warrant remains outstanding and exercisable in accordance with Section
      1(a), the Holder may exercise this Warrant in whole or in part
      at any
      time and from time to time
      by:

    

    (A) surrender
      of this Warrant, with a duly executed copy of the Notice of Exercise attached
      hereto as Exhibit
      A,
      to the
      Secretary of the Company at its principal offices or at such other office or
      agency as the Company may specify in writing to the Holder; and

    

    (B) payment
      of the then
      applicable
      Exercise
      Price per share multiplied by the number of Warrant Shares being purchased
      upon
      exercise of the Warrant (such amount, the “Aggregate Exercise Price”)
made
      in
      the form of cash, or by certified check, bank draft or money order payable
      in
      lawful money of the United States of America
      or in
      the form of a Cashless Exercise
      to the
      extent permitted in Section 1(c)(ii) below.
      

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    

    (ii) Upon
      the
      exercise of this Warrant in compliance with the provisions of this Section
      1(c)
      or pursuant to a Mandatory Exercise Notice in accordance with Section 1(b),
      the
      Company shall promptly issue and cause to be delivered to the Holder a
      certificate for the Warrant Shares purchased by the Holder. Each
      exercise of this Warrant shall be effected immediately prior to the close of
      business on the date (the “Date of Exercise”) which (A)
      the
      conditions set forth in Section 1(b) have been satisfied
      in
      connection with a Mandatory Exercise Notice or (B) the conditions set forth
      in
      Section 1(c) have been satisfied, as the case may be.
      On
      or
      before the first Business Day following the date on which the Company has
      received each of the Exercise Notice and the Aggregate Exercise Price (the
      “Exercise Delivery Documents”), the Company shall transmit by facsimile an
      acknowledgment of confirmation of receipt of the Exercise Delivery Documents
      to
      the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before
      the third Business Day following the date on which the Company has received
      all
      of the Exercise Delivery Documents (the “Share Delivery Date”), the Company
      shall, (X) provided that the Transfer Agent is participating in The Depository
      Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the
      request of the Holder, credit such aggregate number of shares of Common Stock
      to
      which the Holder is entitled pursuant to such exercise to the Holder’s or its
      designee’s balance account with DTC through its Deposit Withdrawal Agent
      Commission system, or (Y) if the Transfer Agent is not participating in the
      DTC
      Fast Automated Securities Transfer Program, issue and dispatch by overnight
      courier to the address as specified in the Exercise Notice, a certificate,
      registered in the Company’s share register in the name of the Holder or its
      designee, for the number of shares of Common Stock to which the Holder is
      entitled pursuant to such exercise. Upon delivery of the Exercise Notice and
      Aggregate Exercise Price referred to in Section
      1(c)(i)(A)
      above, the Holder shall be deemed for all corporate purposes to have become
      the
      holder of record of the Warrant Shares with respect to which this Warrant has
      been exercised, irrespective of the date of delivery of the certificates
      evidencing such Warrant Shares. If this Warrant is submitted in connection
      with
      any exercise pursuant to Section 1(a) and the number of Warrant Shares
      represented by this Warrant submitted for exercise is greater than the
actual
      number
      of
      Warrant Shares being acquired upon such an
      exercise, then the Company shall as soon as practicable and in no event later
      than three (3) Business Days after any exercise and at its own expense, issue
      a
      new Warrant (in accordance with Section 1(c))
      of like
      tenor
      representing the right to purchase the number of Warrant Shares purchasable
      immediately prior to such exercise under this Warrant, less the number of
      Warrant Shares with respect to which this Warrant is exercised. No fractional
      shares of Common Stock are to be issued upon the exercise of this Warrant,
      but
      rather the number of shares of Common Stock to be issued shall be rounded up
      to
      the nearest whole number. The Company shall pay any and all taxes which may
      be
      payable with respect to the issuance and delivery of Warrant Shares upon
      exercise of this Warrant.

    

    (iii) If
      the
      Company shall fail to issue to the Holder within three (3) Business Days of
      receipt of the Exercise Delivery Documents, a certificate for the number of
      shares of Common Stock to which the Holder is entitled and register such shares
      of Common Stock on the Company’s share register or to credit the Holder’s
      balance account with DTC for such number of shares of Common Stock to which
      the
      Holder is entitled upon the Holder’s exercise of this Warrant, and if on or
      after such Business Day 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 shares of Common Stock issuable upon such exercise that the Holder
      anticipated receiving from the Company (a “Buy-In”), then the Company shall,
      within three (3) Business Days after the Holder’s request and in the Holder’s
      discretion, either (i) pay cash to the Holder in an amount equal to the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased (the “Buy-In Price”), at which point the
      Company’s obligation to deliver such certificate (and to issue such shares of
      Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver
      to the Holder a certificate or certificates representing such shares of Common
      Stock and pay cash to the Holder in an amount equal to the excess (if any)
      of
      the Buy-In Price over the product of (A) such number of shares of Common Stock,
      times (B) the closing bid price on
      the
      date of exercise. 

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    (d) Partial
      Exercise.
      This
      Warrant shall be exercisable, either as an entirety or, from time to time,
      for
      part only of the number of Warrant Shares referenced by this Warrant. If this
      Warrant is exercised in part, the Company shall issue, at its expense, a new
      Warrant, in substantially the form of this Warrant, referencing such reduced
      number of Warrant Shares which remain subject to this Warrant.

    

    (e) Disputes.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall promptly issue
      to the Holder the number of Warrant Shares that are not disputed and resolve
      such dispute in accordance with Section 15.

    

    2.
      ISSUANCE OF WARRANT SHARES

    

      (a) The
        Company covenants that all Warrant Shares will, upon issuance in accordance
        with
        the terms of this Warrant, be (i) duly authorized, validly issued, fully
        paid
        and non-assessable, and (ii) free from all liens, charges and security
        interests, with the exception of claims arising through the acts or omissions
        of
        any Holder and except as arising from applicable Federal and state securities
        laws.

      

      (b) The
        Company shall register this Warrant upon records to be maintained by the
        Company
        for that purpose in the name of the record holder of such Warrant from time
        to
        time. The Company may deem and treat the registered Holder of this Warrant
        as
        the absolute owner thereof for the purpose of any exercise thereof, any
        distribution to the Holder thereof and for all other purposes.

      

      (c) The
        Company will not, by amendment of its certificate of incorporation, by-laws
        or
        through any reorganization, transfer of assets, consolidation, merger,
        dissolution, issue or sale of securities or any other voluntary action, avoid
        or
        seek to avoid the observance or performance of any of the terms to be observed
        or performed hereunder by the Company, but will at all times in good faith
        assist in the carrying out of all the provisions of this Warrant and in the
        taking of all the action as may be necessary or appropriate in order to protect
        the rights of the Holder to exercise this Warrant,
        or
        against impairment of such rights.

      

      3.
        ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES

      

      (a) The
        Exercise Price and the number of shares purchasable upon the exercise of
        this
        Warrant shall be subject to adjustment from time to time upon the occurrence
        of
        certain events described in this Section 3(a).

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      

      

      (i)
         Subdivision
        or Combination of Stock.
        In case
        the Company shall at any time subdivide (whether
        by way of stock dividend, stock split or otherwise) its
        outstanding shares of Common Stock into a greater number of shares, the Exercise
        Price in effect immediately prior to such subdivision shall be proportionately
        reduced and
        the
        number of Warrant Shares shall be proportionately increased,
        and
        conversely, in case the outstanding shares of Common Stock of the Company
        shall
        be combined (whether
        by way of stock combination, reverse stock split or otherwise) into
        a
        smaller number of shares, the Exercise Price in effect immediately prior
        to such
        combination shall be proportionately increased
        and the
        number of Warrant Shares shall be proportionately decreased. The Exercise
        Price
        and the Warrant Shares, as so adjusted, shall be readjusted in the same manner
        upon the happening of any successive even or events described in this Section
        3(a)(i).

      

        (ii) Dividends
        in Stock, Property, Reclassification.
        If at
        any time, or from time to time, the Holders of Common Stock (or any shares
        of
        stock or other securities at the time receivable upon the exercise of this
        Warrant) shall have received or become entitled to receive, without payment
        therefor:

      

         (A) any
        shares of stock or other securities which are at any time directly or indirectly
        convertible into or exchangeable for Common Stock, or any rights or options
        to
        subscribe for, purchase or otherwise acquire any of the foregoing by way
        of
        dividend or other distribution, or

      

         (B) additional
        stock or other securities or property (including cash) by way of spin-off,
        split-up, reclassification, combination of shares or similar corporate
        rearrangement, (other than shares of Common Stock issued as a stock split
        or
        adjustments in respect of which shall be covered by the terms of Section
        3(a)(i)
        above), then and in each such case, the Exercise
        Price and the number of Warrant Shares to be obtained upon exercise of this
        Warrant shall be adjusted proportionately, and the Holder
        hereof shall, upon the exercise of this Warrant, be entitled to receive,
        in
        addition to the number of shares of Common Stock receivable thereupon, and
        without payment of any additional consideration therefor, the amount of stock
        and other securities and property (including cash in the cases referred to
        in
        clause (ii) above) which such Holder would hold on the date of such exercise
        had
        he been the holder of record of such Common Stock as of the date on which
        holders of Common Stock received or became entitled to receive such shares
        or
        all other additional stock and other securities and property.
        The
        Exercise Price and the Warrant Shares, as so adjusted, shall be readjusted
        in
        the same manner upon the happening of any successive event or events described
        in this Section 3(a)(ii).

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      

      

      (iii) Reorganization,
        Reclassification, Consolidation, Merger or Sale.
        If any
        recapitalization, reclassification or reorganization of the capital stock
        of the
        Company, or any consolidation or merger of the Company with another corporation,
        or the sale of all or substantially all of its assets or other
        transaction shall be effected in such a way that holders of Common Stock
        shall
        be entitled to receive stock, securities, or other assets or property (an
        “Organic Change”), then, as a condition of such Organic Change, lawful and
        adequate provisions shall be made by the Company whereby the Holder hereof
        shall
        thereafter have the right to purchase and receive (in lieu of the shares
        of the
        Common Stock of the Company immediately theretofore purchasable and receivable
        upon the exercise of the rights represented by this Warrant) such shares
        of
        stock, securities or other assets or property as may be issued or payable
        with
        respect to or in exchange for a number of outstanding shares of such Common
        Stock equal to the number of shares of such stock immediately theretofore
        purchasable and receivable assuming the full exercise of the rights represented
        by this Warrant. In the event of any Organic Change, appropriate provision
        shall
        be made by the Company with respect to the rights and interests of the Holder
        of
        this Warrant to the end that the provisions hereof (including, without
        limitation, provisions for adjustments of the Exercise Price and of the number
        of shares purchasable and receivable upon the exercise of this Warrant) shall
        thereafter be applicable, in relation to any shares of stock, securities
        or
        assets thereafter deliverable upon the exercise hereof. The Company will
        not
        effect any such consolidation, merger or sale unless, prior to the consummation
        thereof, the successor corporation (if other than the Company) resulting
        from
        such consolidation or merger
        or
the
        corporation purchasing such assets shall assume by written instrument reasonably
        satisfactory in form and substance to the Holders executed and mailed or
        delivered to the registered Holder hereof at the last address of such Holder
        appearing on the books of the Company, the obligation to deliver to such
        Holder
        such shares of stock, securities or assets as, in accordance
        with the foregoing provisions, such Holder may be entitled to
        purchase. In
        any
        event, the successor corporation (if other than the Company) resulting from
        such
        consolidation or merger or the corporation purchasing such assets shall be
        deemed to assume such obligation to deliver to such Holder such shares of
        stock,
        securities or assets even in the absence of a written instrument assuming
        such
        obligation to the extent such assumption occurs by operation of
        law.

      

      (b) Certificate
        as to Adjustments.
        Upon
        the occurrence of each adjustment or readjustment pursuant to this Section
        3,
        the Company at its expense shall promptly compute such adjustment or
        readjustment in accordance with the terms hereof and furnish to each Holder
        of
        this Warrant a certificate setting forth such adjustment or readjustment
        and
        showing in detail the facts upon which such adjustment or readjustment is
        based.
        The Company shall
        promptly furnish
        or cause to be furnished to such Holder a like certificate setting forth:
        (i)
        such adjustments and readjustments; and (ii) the number of shares and the
        amount, if any, of other property which at the time would be received upon
        the
        exercise of the Warrant.

      

      (c) Certain
        Events.
        If any
        event occurs as to which the other provisions of this Section 3 are not strictly
        applicable but the lack of any adjustment would not fairly protect the purchase
        rights of the Holder under this Warrant in accordance with the basic intent
        and
        principles of such provisions, or if strictly applicable would not fairly
        protect the purchase rights of the Holder under this Warrant in accordance
        with
        the basic intent and principles of such provisions, then the Company’s board of
        directors will, in good faith, make an appropriate adjustment to protect
        the
        rights of the Holder; provided, however, that no such adjustment pursuant
        to
        this Section 3(c) will increase the Exercise Price or decrease the number
        of
        Warrant Shares as otherwise determined pursuant to this Section
        3.

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      

      

      (d) Adjustment
        of Exercise Price Upon Issuance of Additional Shares of Common
        Stock.
        In the
        event
        the
        Company shall at any time prior to the twelfth month anniversary of the
        Effective Date, issue Additional Shares of Common Stock, as defined below,
        without consideration or for a consideration per share less than the Exercise
        Price in effect immediately prior to such issue, then the Exercise Price
        shall
        be reduced, concurrently with such issue, to a price (calculated to the nearest
        cent) determined by multiplying such Exercise Price by a fraction, (A) the
        numerator of which shall be (1) the number of shares of Common Stock outstanding
        immediately prior to such issue plus (2) the number of shares of Common Stock
        which the aggregate consideration received or to be received by the Company
        for
        the total number of Additional Shares of Common Stock so issued would purchase
        at such Exercise Price; and (B) the denominator of which shall be the number
        of
        shares of Common Stock outstanding immediately prior to such issue plus the
        number of such Additional Shares of Common Stock so issued; provided
        that,
        (i) for the purpose of this Section 3(d), all shares of Common Stock issuable
        upon conversion or exchange of convertible securities outstanding immediately
        prior to such issue shall be deemed to be outstanding, and (ii) the number
        of
        shares of Common Stock deemed issuable upon conversion or exchange of such
        outstanding convertible securities shall be determined without giving effect
        to
        any adjustments to the conversion or exchange price or conversion or exchange
        rate of such convertible securities resulting from the issuance of Additional
        Shares of Common Stock that is the subject of this calculation. For purposes
        of
        this Warrant, “Additional Shares of Common Stock” shall mean all shares of
        Common Stock issued by the Company after the Effective Date (including without
        limitation any shares of Common Stock issuable upon conversion or exchange
        of
        any convertible securities or upon exercise of any option or warrant, on
        an
        as-converted basis), other than: (i) shares of Common Stock issued or
        issuable upon conversion or exchange of any convertible securities or exercise
        of any options outstanding on the Effective Date; (ii) shares of Common
        Stock issued or issuable by reason of a dividend, stock split, split-up or
        other
        distribution on shares of Common Stock that is covered by Sections 3(a)(i)
        through 3(a)(iii) above; or (iii) shares of Common Stock (or options with
        respect thereto) issued or issuable to employees or directors of, or consultants
        to, the Company or any of its subsidiaries pursuant to a plan, agreement
        or
        arrangement approved by the Board of Directors of the Company. The provisions
        of
        this Section 3(d) shall not operate to increase the Exercise Price.

      

      4.
        TRANSFERS AND EXCHANGES OF WARRANT AND WARRANT SHARES

      

      (a) Registration
        of Transfers and Exchanges.
        Subject
        to Section 4(c), upon the Holder’s surrender of this Warrant, with a duly
        executed copy of the Assignment Notice attached as Exhibit
        B,
        to the
        Secretary of the Company at its principal offices or at such other office
        or
        agency as the Company may specify in writing to the Holder, the Company shall
        register the transfer of all or any portion of this Warrant. Upon such
        registration of transfer the Company shall issue a new Warrant, in substantially
        the form of this Warrant, evidencing the acquisition rights transferred to
        the
        transferee and a new Warrant, in similar form, evidencing the remaining
        acquisition rights not transferred, to the Holder requesting the
        transfer.

      

      (b) Warrant
        Exchangeable for Different Denominations.
        The
        Holder may exchange this Warrant for a new Warrant or Warrants, in substantially
        the form of this Warrant, evidencing in the aggregate the right to purchase
        the
        number of Warrant Shares which may then be purchased hereunder, each of such
        new
        Warrants to be dated the date of such exchange and to represent the right
        to
        purchase such number of Warrant Shares as shall be designated by the Holder.
        The
        Holder shall surrender this Warrant with duly executed instructions regarding
        such
        re-certification of this Warrant to the Secretary of the Company at its
        principal offices or at such other office or agency as the Company may specify
        in writing to the Holder.

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      

      (c) Restrictions
        on Transfers.
        This
        Warrant may not be transferred at any time without (i) registration under
        the
        Act or (ii) an exemption from such registration and a written opinion of
        legal
        counsel addressed to the Company that the proposed transfer of the Warrant
        may
        be effected without registration under the Act, which opinion will be in
        form
        and from counsel reasonably satisfactory to the Company.

      

      (d) Permitted
        Transfers and Assignments.
        Notwithstanding any provision to the contrary in this Section 4, the Holder
        may
        transfer, with or without consideration, this Warrant or any of the Warrant
        Shares (or a portion thereof) to the Holder’s Affiliates without obtaining the
        opinion from counsel that may be required by Section 4(c)(ii),
        provided that the Holder delivers to the Company and its counsel certification,
        documentation, and other assurances reasonably required by Company’s counsel to
        enable Company’s counsel to render an opinion to the Company’s transfer agent
        that such transfer does not violate applicable securities laws.

      

      5.
        MUTILATED OR MISSING WARRANT CERTIFICATE

      

       If
        this
        Warrant is mutilated, lost, stolen or destroyed, upon request by the Holder,
        the
        Company will,
        at its
        expense,
        issue,
        in exchange for and upon cancellation of the mutilated Warrant, or in
        substitution for the lost, stolen or destroyed Warrant, a new Warrant, in
        substantially the form of this Warrant, representing the right to acquire
        the
        equivalent number of Warrant Shares, provided however, as a prerequisite
        to the
        issuance of a substitute Warrant, the Company may require satisfactory evidence
        of loss, theft or destruction as well as an indemnity from the Holder of
        a lost,
        stolen or destroyed Warrant.

      

      6.
        PAYMENT OF TAXES

      

      The
        Company will pay all transfer and stock issuance taxes attributable to the
        preparation, issuance and delivery of this Warrant and the Warrant Shares
        (and
        replacement Warrants) including,
        without limitation, all documentary and stamp taxes;
        provided, however, that the Company shall not be required to pay any tax
        in
        respect of the transfer of this Warrant, or the issuance or delivery of
        certificates for Warrant Shares or other securities in respect of the Warrant
        Shares to any person or entity other than to the Holder or its
        transferee.

      

      7.
        FRACTIONAL WARRANT SHARES

      

      No
        fractional Warrant Shares shall be issued upon exercise of this Warrant.
        The
        Company, in lieu of issuing any fractional Warrant Share, shall round up
        the
        number of Warrant Shares issuable to nearest whole share.

      

      8.
        NO
        STOCK RIGHTS AND LEGEND

      

      No
        holder
        of this Warrant Certificate, as such, shall be entitled to vote or be deemed
        the
        holder of any other securities of the Company which may at any time be issuable
        on the exercise hereof, nor shall anything contained herein be construed
        to
        confer upon the holder of this Warrant Certificate, as such, the rights of
        a
        stockholder of the Company or the right to vote for the election of directors
        or
        upon any matter submitted to stockholders at any meeting thereof,
        or give
        or withhold consent to any corporate action or to receive notice of meetings
        or
        other actions affecting stockholders (except as provided herein), or to receive
        dividends or subscription rights or otherwise (except as provide
        herein).

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

      

      Each
        certificate for Warrant Shares initially issued upon the exercise of this
        Warrant Certificate, and each certificate for Warrant Shares issued to any
        subsequent transferee of any such certificate, shall be stamped or otherwise
        imprinted with a legend in substantially the following form:

      

        “THE
          SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
          THE
          SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS,
          AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
          PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT
          WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE
          SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND
          THE
          COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES,
          WHICH
          COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
          SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE
          MANNER
          CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
          OR
          APPLICABLE STATE SECURITIES LAWS.”

      

       

      9.
        REGISTRATION UNDER THE SECURITIES ACT OF 1933

      

      The
        Company agrees to register the Warrants and the Warrant Shares for resale
        under
        the Act on the terms and subject to the conditions set forth in that certain
        Registration Rights Agreement, by and between the Company and each of the
        Purchasers listed on Schedule 1 to the Securities Purchase Agreement, pursuant
        to which this Warrant was issued.

      

      10.
        NOTICES

      

      All
        notices, consents, waivers, and other communications under this Warrant must
        be
        in writing and will be deemed given to a party when (a) delivered to the
        appropriate address by hand or by nationally recognized overnight courier
        service (costs prepaid); (b) sent by facsimile or e-mail with confirmation
        of
        transmission by the transmitting equipment; (c) received or rejected by the
        addressee, if sent by certified mail, return receipt requested, if to the
        registered Holder hereof; or (d) seven days after the placement of the notice
        into the mails (first class postage prepaid), to the Holder at the address,
        facsimile number, or e-mail address furnished by the registered Holder to
        the
        Company in accordance with the Securities Purchase Agreement, or if to the
        Company, to it at 4540 California Avenue, Suite 550 Bakersfield, California
        93309, Attention: W. Kirk Bosché (or to such other address, facsimile number, or
        e-mail address as the Holder or the Company as a party may designate by notice
        the other party) with a copy to McGuireWoods LLP, 1345 Avenue of the Americas,
        7th
        Floor,
        New York, New York 10105, Attention: Louis W. Zehil.

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      

      

      11.
        SEVERABILITY

      

      If
        a
        court of competent jurisdiction holds any provision of this Warrant invalid
        or
        unenforceable, the other provisions of this Warrant will remain in full force
        and effect. Any provision of this Warrant held invalid or unenforceable only
        in
        part or degree will remain in full force and effect to the extent not held
        invalid or unenforceable.

      

      12.
        BINDING EFFECT

      

      This
        Warrant shall be binding upon and inure to the sole and exclusive benefit
        of the
        Company, its successors and assigns, the registered Holder or Holders from
        time
        to time of this Warrant and the Warrant Shares.

      

      13.
        SURVIVAL OF RIGHTS AND DUTIES

      

      This
        Warrant Certificate shall terminate and be of no further force and effect
        on the
        earlier of 5:00 p.m., Eastern time, on the Expiration Date or the date on
        which
        this Warrant has been exercised.

      

      14.
        GOVERNING LAW

      

      This
        Warrant will be governed by and construed under the laws of the State of
        New
        York
        without
        regard to conflicts of laws principles that would require the application
        of any
        other law.

      

      15.
        DISPUTE RESOLUTION

      

      In
        the
        case of a dispute as to the determination of the Exercise Price or the
        arithmetic calculation of the Warrant Shares, the Company shall submit the
        disputed determinations or arithmetic calculations via facsimile within two
        Business Days of receipt of the Exercise Notice giving rise to such dispute,
        as
        the case may be, to the Holder. If the Holder and the Company are unable
        to
        agree upon such determination or calculation of the Exercise Price or the
        Warrant Shares within three Business Days of such disputed determination
        or
        arithmetic calculation being submitted to the Holder, then the Company shall,
        within two Business Days submit via facsimile (a) the disputed determination
        of
        the Exercise Price to an independent, reputable investment bank selected
        by the
        Company and approved by the Holder or (b) the disputed arithmetic calculation
        of
        the Warrant Shares to the Company’s independent, outside accountant. The Company
        shall cause, at its expense, the investment bank or the accountant, as the
        case
        may be, to perform the determinations or calculations and notify the Company
        and
        the Holder of the results no later than ten (10) Business Days from the time
        it
        receives the disputed determinations or calculations. Such investment bank’s or
        accountant’s determination or calculation, as the case may be, shall be binding
        upon all parties absent demonstrable error. 

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      

      

      16.
        NOTICES OF RECORD DATE

      

      Upon
        (a)
        any establishment by the Company of a record date of the holders of any class
        of
        securities for the purpose of determining the holders thereof who are entitled
        to receive any dividend or other distribution, or right or option to acquire
        securities of the Company, or any other right, or (b) any capital
        reorganization, reclassification, recapitalization, merger or consolidation
        of
        the Company with or into any other corporation, any transfer of all or
        substantially all the assets of the Company, or any voluntary or involuntary
        dissolution, liquidation or winding up of the Company, or the sale, in a
        single
        transaction, of a majority of the Company’s voting stock (whether newly issued,
        or from treasury, or previously issued and then outstanding, or any combination
        thereof), the Company shall mail to the Holder at least ten (10) Business
        Days,
        or such longer period as may be required by law, prior to the record date
        specified therein, a notice specifying (i) the date established as the record
        date for the purpose of such dividend, distribution, option or right and
        a
        description of such dividend, option or right, (ii) the date on which any
        such
        reorganization, reclassification, transfer, consolidation, merger, dissolution,
        liquidation or winding up, or sale is expected to become effective and (iii)
        the
        date, if any, fixed as to when the holders or record of Common Stock shall
        be
        entitled to exchange their shares of Common Stock for securities or other
        property deliverable upon such reorganization, reclassification, transfer,
        consolation, merger, dissolution, liquidation or winding up.

      

      17.
        RESERVATION OF SHARES

      

      The
        Company shall reserve and keep available out of its authorized but unissued
        shares of Common Stock for issuance upon the exercise of this Warrant, free
        from
        preemptive rights, such number of shares of Common Stock for which this Warrant
        shall from time to time be exercisable.

      

      18.
        NO
        THIRD PARTY RIGHTS

      

      This
        Warrant is not intended, and will not be construed, to create any rights
        in any
        parties other than the Company and the Holder, and no person or entity may
        assert any rights as third-party beneficiary hereunder.

      

      

      [SIGNATURE
        PAGE FOLLOWS]

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      

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

       

      
        	 	 
	 	 
	
                 

              	
                Foothills
                  Resources, Inc.

              
	 	 
	 	 
	
                 

              	
                By:
                  W. Kirk
                  Bosché                   
                  

              
	
                 

              	
                Name:
                  W. Kirk Bosché

              
	
                 

              	
                Title:
                  Chief Financial Officer 

              
	 	
                 
                  and Assistant Secretary

              

      

      

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

          
          

        

      

      EXHIBIT
        A

      

      EXERCISE
        FORM

      

      (To
        be
        executed by the Holder of the Warrant if such Holder desires
        to exercise the Warrant)

      

      To
        Foothills Resources, Inc.:

      

      The
        undersigned hereby irrevocably elects to exercise this Warrant and to purchase
        thereunder, ___________________ full shares of Foothills Resources, Inc.
        common
        stock issuable upon exercise of the Warrant and delivery of $_________
        (in cash as provided for in the foregoing Warrant) and any applicable taxes
        payable by the undersigned pursuant to such Warrant. 

       

      The
        undersigned requests that certificates for such shares be issued in the name
        of:

      

      _________________________________________

      (Please
        print name, address and social security or federal employer

      identification
        number (if applicable))

      

      _________________________________________

      

      _________________________________________

      

      If
        the
        shares issuable upon this exercise of the Warrant are not all of the Warrant
        Shares which the Holder is entitled to acquire upon the exercise of the Warrant,
        the undersigned requests that a new Warrant evidencing the rights not so
        exercised be issued in the name of and delivered to:

      

      _________________________________________

      (Please
        print name, address and social security or federal employer

      identification
        number (if applicable))

      

      _________________________________________

      _________________________________________

       

      

        
          	 	
                  Name
                    of Holder (print): ________________________

                
	 	
                  (Signature):
                    ____________________________________

                
	 	
                  (By:)
                    __________________________________________

                
	 	
                  (Title:)
                    _________________________________________

                
	 	
                  Dated:
                    ________________________________________

                

        

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

      

      EXHIBIT
        B

      

      FORM
        OF
        ASSIGNMENT

      

      FOR
        VALUE
        RECEIVED, ___________________________________ hereby sells, assigns and
        transfers to each assignee set forth below all of the rights of the undersigned
        under the Warrant (as defined in and evidenced by the attached Warrant) to
        acquire the number of Warrant Shares set opposite the name of such assignee
        below and in and to the foregoing Warrant with respect to said acquisition
        rights and the shares of Foothills Resources, Inc. issuable upon exercise
        of the
        Warrant:

      

       

      
        	
                Name
                  of Assignee

              	
                Address

              	
                Number
                  of Shares

              
	 	 	 
	 	 	 
	 	 	 
	 	 	 

      

      

      

      If
        the
        total of the Warrant Shares are not all of the Warrant Shares evidenced by
        the
        foregoing Warrant, the undersigned requests that a new Warrant evidencing
        the
        right to acquire the Warrant Shares not so assigned be issued in the name
        of and
        delivered to the undersigned.

      

      

      

        
          	 	
                  Name
                    of Holder (print): ________________________

                
	 	
                  (Signature):
                    ____________________________________

                
	 	
                  (By:)
                    __________________________________________

                
	 	
                  (Title:)
                    _________________________________________

                
	 	
                  Dated:
                    ________________________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}]]