Document:

ex42.htm

    Exhibit 4.2

     

    

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  THE SECURITIES MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM,
SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE
144 OR REGULATION S UNDER SAID ACT.

     

     

    CONVERTIBLE
NOTE

     

    
      	Houston,
TX	
               $[   ]

            
	May __,
    2008	 

    

     

     

    FOR VALUE RECEIVED, BONANZA OIL & GAS, INC.,
a Nevada corporation (hereinafter called the “Borrower”), hereby promises to
pay to the order of [   ] or registered assigns (the “Holder”) the sum of $__,000,
on May __, 2009 (the “Maturity
Date”), and to pay interest on the unpaid principal balance hereof at the
rate of eight percent (8%) per annum from May __, 2008 (the “Issue Date”) until the same
becomes due and payable, whether at maturity or upon acceleration or by
prepayment or otherwise.  Any amount of principal or interest on this
Note which is not paid when due shall bear interest at the rate of fifteen
percent (15%) per annum from the due date thereof until the same is paid (“Default
Interest”).  Interest shall commence accruing on the issue
date, shall be computed on the basis of a 365-day year and the actual number of
days elapsed and shall be payable quarterly on the last business day of the
quarter beginning on June 30, 2008.  All payments due hereunder (to
the extent not converted into common stock, $.001 par value per share, of the
Borrower (the “Common
Stock”) in accordance with the terms hereof) shall be made in lawful
money of the United States of America.  All payments shall be made at
such address as the Holder shall hereafter give to the Borrower by written
notice made in accordance with the provisions of this Note.  Whenever
any amount expressed to be due by the terms of this Note is due on any day which
is not a business day, the same shall instead be due on the next succeeding day
which is a business day and, in the case of any interest payment date which is
not the date on which this Note is paid in full, the extension of the due date
thereof shall not be taken into account for purposes of determining the amount
of interest due on such date.  As used in this Note, the term
“business day” shall mean any day other than a Saturday, Sunday or a day on
which commercial banks in the city of New York, New York are authorized or
required by law or executive order to remain closed.  Each capitalized
term used herein, and not otherwise defined, shall have the meaning ascribed
thereto in that certain Securities Purchase Agreement, dated May __, 2008,
pursuant to which this Note was originally issued (the “Purchase
Agreement”).

     

    
      
         

      

      
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    The
following terms shall apply to this Note:

     

     

    ARTICLE
I.CONVERSION RIGHTS

     

    1.1 Conversion
Right.  The Holder shall
have the right from time to time, and at any time on or prior to repayment, to
convert all or any part of the outstanding and unpaid principal amount of this
Note into fully paid and non-assessable shares of Common Stock, as such Common
Stock exists on the Issue Date, or any shares of capital stock or other
securities of the Borrower into which such Common Stock shall hereafter be
changed or reclassified at the conversion price  (the “Conversion Price”) determined
as provided herein (a “Conversion”); provided, however, that in no
event shall the Holder be entitled to convert any portion of this Note in excess
of that portion of this Note upon conversion of which the sum of (1) the number
of shares of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unconverted portion of the Notes or the unexercised
or unconverted portion of any other security of the Borrower (including, without
limitation, the warrants issued by the Borrower pursuant to the Purchase
Agreement) subject to a limitation on conversion or exercise analogous to the
limitations contained herein) and (2) the number of shares of Common Stock
issuable upon the conversion of the portion of this Note with respect to which
the determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.9% of the outstanding
shares of Common Stock.  For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulations 13D-G thereunder, except as otherwise provided in
clause (1) of such proviso.  The number of shares of Common Stock to
be issued upon each conversion of this Note shall be determined by dividing the
Conversion Amount (as defined below) by the Conversion Price on the date
specified in the notice of conversion, in the form attached hereto as Exhibit A
(the “Notice of
Conversion”), delivered to the Borrower by the Holder in accordance with
Section 1.4 below; provided that the Notice of Conversion is submitted by
facsimile (or by other means resulting in, or reasonably expected to result in,
notice) to the Borrower before 6:00 p.m., New York, New York time on such
conversion date (the “Conversion
Date”).  The term “Conversion Amount” means, with
respect to any conversion of this Note, the sum of (1) the principal amount of
this Note to be converted in such conversion plus (2) accrued and
unpaid interest, if any, on such principal amount at the interest rates provided
in this Note to the Conversion Date.

     

    1.2 Conversion
Price.  The Conversion
Price is $0.50; provided, however, the Conversion Price shall be adjusted on the
120th day
following the Issue Date (the “Adjustment Date”), to provide that the Note,
together with the holders that purchased an aggregate of $2,000,000 in notes
pursuant to the Purchase Agreement, are convertible into 12% of the Borrower on
a fully diluted basis as of the Adjustment Date but in no event shall the
Conversion Price be greater than $0.50.

     

    
      
         

      

      
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    1.3 Authorized
Shares.  The Borrower
covenants that during the period the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares, free from preemptive rights, to provide for the issuance of Common Stock
upon the full conversion of this Note and the other Notes issued pursuant to the
Purchase Agreement.

     

    1.4 Method of
Conversion.

     

    (a) Mechanics
of Conversion.  Subject to
Section 1.1, this Note may be converted by the Holder in whole or in part at any
time from time to time after the Issue Date, by (A) submitting to the
Borrower a Notice of Conversion (by facsimile or other reasonable means of
communication dispatched on the Conversion Date prior to 6:00 p.m., New York,
New York time) and (B) subject to Section 1.4(b), surrendering this Note at
the principal office of the Borrower.

     

    (b) Surrender
of Note Upon Conversion.  Notwithstanding
anything to the contrary set forth herein, upon conversion of this Note in
accordance with the terms hereof, the Holder shall not be required to physically
surrender this Note to the Borrower unless the entire unpaid principal amount of
this Note is so converted.  The Holder and the Borrower shall maintain
records showing the principal amount so converted and the dates of such
conversions or shall use such other method, reasonably satisfactory to the
Holder and the Borrower, so as not to require physical surrender of this Note
upon each such conversion.  In the event of any dispute or
discrepancy, such records of the Borrower shall be controlling and determinative
in the absence of manifest error.  Notwithstanding the foregoing, if
any portion of this Note is converted as aforesaid, the Holder may not transfer
this Note unless the Holder first physically surrenders this Note to the
Borrower, whereupon the Borrower will forthwith issue and deliver upon the order
of the Holder a new Note of like tenor, registered as the Holder (upon payment
by the Holder of any applicable transfer taxes) may request, representing in the
aggregate the remaining unpaid principal amount of this Note.  The
Holder and any assignee, by acceptance of this Note, acknowledge and agree that,
by reason of the provisions of this paragraph, following conversion of a portion
of this Note, the unpaid and unconverted principal amount of this Note
represented by this Note may be less than the amount stated on the face
hereof.

     

    (c) Payment
of Taxes.  The Borrower
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock or other
securities or property on conversion of this Note in a name other than that of
the Holder (or in street name), and the Borrower shall not be required to issue
or deliver any such shares or other securities or property unless and until the
person or persons (other than the Holder or the custodian in whose street name
such shares are to be held for the Holder’s account) requesting the issuance
thereof shall have paid to the Borrower the amount of any such tax or shall have
established to the satisfaction of the Borrower that such tax has been
paid.

     

    
      
         

      

      
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    (d) Delivery
of Common Stock Upon Conversion.  Upon receipt by
the Borrower from the Holder of a facsimile transmission (or other reasonable
means of communication) of a Notice of Conversion meeting the requirements for
conversion as provided in this Section 1.4, the Borrower shall issue and deliver
or cause to be issued and delivered to or upon the order of the Holder
certificates for the Common Stock issuable upon such conversion within two (2)
business days after such receipt (and, solely in the case of conversion of the
entire unpaid principal amount hereof, surrender of this Note) in accordance
with the terms hereof and the Purchase Agreement.

     

    (e) Obligation
of Borrower to Deliver Common Stock.  Upon receipt by
the Borrower of a Notice of Conversion, the Holder shall be deemed to be the
holder of record of the Common Stock issuable upon such conversion, the
outstanding principal amount and the amount of accrued and unpaid interest on
this Note shall be reduced to reflect such conversion, and, unless the Borrower
defaults on its obligations under this Article I, all rights with respect to the
portion of this Note being so converted shall forthwith terminate except the
right to receive the Common Stock or other securities, cash or other assets, as
herein provided, on such conversion.  If the Holder shall have given a
Notice of Conversion as provided herein, the Borrower’s obligation to issue and
deliver the certificates for Common Stock shall be absolute and unconditional,
irrespective of the absence of any action by the Holder to enforce the same, any
waiver or consent with respect to any provision thereof, the recovery of any
judgment against any person or any action to enforce the same, any failure or
delay in the enforcement of any other obligation of the Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder of any obligation to the Borrower,
and irrespective of any other circumstance which might otherwise limit such
obligation of the Borrower to the Holder in connection with such
conversion.  The Conversion Date specified in the Notice of Conversion
shall be the Conversion Date so long as the Notice of Conversion is received by
the Borrower before 6:00 p.m., New York, New York time, on such
date.

     

    (f) Delivery
of Common Stock by Electronic Transfer.  In lieu of
delivering physical certificates representing the Common Stock issuable upon
conversion and if such shares are available for resale in accordance with Rule
144, provided the Borrower’s transfer agent is participating in the Depository
Trust Company (“DTC”)
Fast Automated Securities Transfer (“FAST”) program, upon request
of the Holder and its compliance with the provisions contained in Section 1.1
and in this Section 1.4, the Borrower shall use its best efforts to cause its
transfer agent to electronically transmit the Common Stock issuable upon
conversion to the Holder by crediting the account of Holder’s Prime Broker with
DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.

     

    1.5 Concerning
the Shares.  The shares of
Common Stock issuable upon conversion of this Note may not be sold or
transferred unless  (i) such shares are sold pursuant to an effective
registration statement under the Act or (ii) the Borrower or its transfer agent
shall have been furnished with an opinion of  counsel (which opinion
shall be in form, substance and scope customary for opinions of counsel in
comparable transactions) to the effect that the shares to be sold or transferred
may be sold or transferred pursuant to an exemption from such registration or
(iii) such shares are sold or transferred pursuant to Rule 144 under the
Act (or a successor rule) (“Rule 144”) or (iv) such shares
are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who
agrees to sell or otherwise transfer the shares only in accordance with this
Section 1.5 and who is an Accredited Investor (as defined in the Purchase
Agreement).  Except as otherwise provided in the Purchase Agreement
(and subject to the removal provisions set forth below), until such time as the
shares of Common Stock issuable upon conversion of this Note have been
registered under the Act or otherwise may be sold pursuant to Rule 144 without
any restriction as to the number of securities as of a particular date that can
then be immediately sold, each certificate for shares of Common Stock issuable
upon conversion of this Note that has not been so included in an effective
registration statement or that has not been sold pursuant to an effective
registration statement or an exemption that permits removal of the legend, shall
bear a legend substantially in the following form, as appropriate:

     

    
      
         

      

      
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    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.  THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT  UNLESS SOLD PURSUANT TO
RULE 144 OR REGULATION S UNDER SAID ACT.”

     

    The
legend set forth above shall be removed and the Borrower shall issue to the
Holder a new certificate therefor free of any transfer legend if (i) the
Borrower or its transfer agent shall have received an opinion of counsel, in
form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Common Stock
may be made without registration under the Act and the shares are so sold or
transferred, (ii) such Holder provides the Borrower or its transfer agent with
reasonable assurances that the Common Stock issuable upon conversion of this
Note (to the extent such securities are deemed to have been acquired on the same
date) can be sold pursuant to Rule 144 or (iii) in the case of the Common Stock
issuable upon conversion of this Note, such security is registered for sale by
the Holder under an effective registration statement filed under the Act or
otherwise may be sold pursuant to Rule 144 without any restriction as to the
number of securities as of a particular date that can then be immediately
sold.

     

    1.6 Effect of Certain
Events.

     

    (a) Effect of
Merger, Consolidation, Etc.  At the option of
the Holder, the sale, conveyance or disposition of all or substantially all of
the assets of the Borrower shall be deemed to be an Event of Default (as defined
in Article III) pursuant to which the Borrower shall be required to pay to the
Holder upon the consummation of and as a condition to such transaction an amount
equal to the Default Amount (as defined in Article III)

     

    (b) Adjustment
Due to Merger, Consolidation, Etc.  If, at any time
when this Note is issued and outstanding and prior to conversion of all of the
Notes, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which
shares of Common Stock of the Borrower shall be changed into the same or a
different number of shares of another class or classes of stock or securities of
the Borrower or another entity, or in case of any sale or conveyance of all or
substantially all of the assets of the Borrower other than in connection with a
plan of complete liquidation of the Borrower, then the Holder of this Note shall
thereafter have the right to receive upon conversion of this Note, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore issuable upon conversion, such
stock, securities or assets which the Holder would have been entitled to receive
in such transaction had this Note been converted in full immediately prior to
such transaction (without regard to any limitations on conversion set forth
herein), and in any such case appropriate provisions shall be made with respect
to the rights and interests of the Holder of this Note to the end that the
provisions hereof (including, without limitation, provisions for adjustment of
the Conversion Price and of the number of shares issuable upon conversion of the
Note) shall thereafter be applicable, as nearly as may be practicable in
relation to any securities or assets thereafter deliverable upon the conversion
hereof.

     

    
      
         

      

      
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    (c) Adjustment
Due to Dividend, Distribution or Split.  If the Borrower, at
any time while the Note is outstanding: (A) shall pay a stock dividend or
otherwise make a distribution or distributions on shares of its Common Stock or
any other equity or equity equivalent securities payable in shares of Common
Stock, (B) subdivide outstanding shares of Common Stock into a larger number of
shares, (C) combine (including by way of reverse stock split) outstanding shares
of Common Stock into a smaller number of shares, or (D) issue by
reclassification of shares of the Common Stock any shares of capital stock of
the Borrower, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
reclassification.

     

    (d) Adjustment Due to Dilutive
Issuance.  Except in connection with the issuance of securities
associated with (a) shares of Common Stock or options to employees, officers,
consultants or directors of the Borrower, (b) securities upon the exercise of or
conversion of any securities issued hereunder, convertible securities, options
or warrants issued and outstanding on the date of this Note, provided that such
securities have not been amended since the date of this Note to increase the
number of such securities or to decrease the exercise or conversion price of any
such securities, (c) securities issued in connection with acquisitions or
strategic transactions or (d) securities issued as equity enhancements in
connection with standard non convertible debt transactions (“Excepted Issuances”),
if the Borrower, at any time during the period commencing on the Issue Date
through the one year anniversary of the Issue Date shall sell, grant any option
or warrant to purchase or sell or grant any right to reprice its securities, or
otherwise dispose of or issue (or announce any offer, sale, grant or any option
to purchase or other disposition) any Common Stock or any equity or equity
equivalent securities (including any equity, debt or other instrument that is at
any time over the life thereof convertible into or exchangeable for Common
Stock) (collectively, “Common Stock
Equivalents”) entitling any Person to acquire shares of Common Stock, at
an price per share less than the Conversion Price (the “Effective Price”) then
the Conversion Price shall be reduced to a price equal the Effective Price. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued.

     

    
      
         

      

      
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    1.7 Trading
Market Limitations.
Unless permitted by the applicable rules and regulations of the principal
securities market on which the Common Stock is then listed or traded, in no
event shall the Borrower issue upon conversion of or otherwise pursuant to this
Note and the other Notes issued pursuant to the Purchase Agreement more than the
maximum number of shares of Common Stock that the Borrower can issue pursuant to
any rule of the principal United States securities market on which the Common
Stock is then traded (the “Maximum Share Amount”), which
shall be 19.99% of the total shares outstanding on the Closing Date (as defined
in the Purchase Agreement), subject to equitable adjustment from time to time
for stock splits, stock dividends, combinations, capital reorganizations and
similar events relating to the Common Stock occurring after the date
hereof.  Once the Maximum Share Amount has been issued, the Borrower
will use its best efforts to seek and obtain shareholder approval as soon as
practicable.

     

    1.8 Status as
Shareholder.  Upon submission
of a Notice of Conversion by a Holder, (i) the shares covered
thereby  shall be deemed converted into shares of Common Stock and
(ii) the Holder’s rights as a Holder of such converted portion of this Note
shall cease and terminate, excepting only the right to receive certificates for
such shares of Common Stock and to any remedies provided herein or otherwise
available at law or in equity to such Holder because of a failure by the
Borrower to comply with the terms  of this Note.

     

    1.9           Forced
Conversion. Notwithstanding anything herein to the contrary, if the
Closing Prices for any 10 consecutive Trading Days (the “Threshold Period”))
exceeds 300% of the then Conversion Price, the Borrower may, within 1 Trading
Day of the end of any such Threshold Period, deliver a notice to the Holder (a
“Forced Conversion
Notice” and the date such notice is received by the Holder, the “Forced Conversion Notice
Date”) to cause the Holder to immediately convert all or part of the then
outstanding principal amount of this Note subject to the 4.9% limitations set
forth in Section 1.1. Any Forced Conversion shall be applied ratably to all
Holders based on their initial purchases of Notes pursuant to the Purchase
Agreement.  “Closing Price” means on any particular date the last
reported closing bid price per share of Common Stock on such date on the OTCBB
or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market, the New York Stock Exchange, or the American Stock Exchange or
the Pinksheets (as reported by Bloomberg L.P. at 4:15 PM (New York
time).  “Trading Day” means a
day on which the Common Stock is traded on the OTCBB or an equivalent
replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market,
the New York Stock Exchange, or the American Stock Exchange or the
Pinksheets.

     

    ARTICLE II.CERTAIN
COVENANTS

     

    2.1 Sale of
Assets.  So long as the
Borrower shall have any obligation under this Note, the Borrower shall not,
without the Holder’s written consent, sell, lease or otherwise dispose of any
significant portion of its assets outside the ordinary course of
business.  Any consent to the disposition of any assets may be
conditioned on a specified use of the proceeds of disposition.

     

    2.2 Advances
and Loans.  So long as the
Borrower shall have any obligation under this Note, the Borrower shall not,
without the Holder’s written consent, lend money, give credit or make advances
to any person, firm, joint venture or corporation that is an officers,
directors, employees, subsidiaries and affiliates of the Borrower, except loans,
credits or advances (a) in existence or committed on the date hereof and which
the Borrower has informed Holder in writing prior to the date hereof, (b) made
in the ordinary course of business or (c) not in excess of $50,000.

     

    
      
         

      

      
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    ARTICLE III.EVENTS
OF DEFAULT

     

    If any of
the following events of default (each, an “Event of Default”) shall
occur:

     

    3.1 Failure
to Pay Principal or Interest.  The Borrower
fails to pay the principal hereof or interest thereon when due on this Note and,
if such failure is to pay interest, is not cured within ninety (90) days of such
failure;

     

    3.2 Receiver
or Trustee.  The Borrower or
any subsidiary of the Borrower shall make an assignment for the benefit of
creditors, or apply for or consent to the appointment of a receiver or trustee
for it or for a substantial part of its property or business, or such a receiver
or trustee shall otherwise be appointed;

     

    3.3 Judgments.  Any money
judgment, writ or similar process shall be entered or filed against the Borrower
or any subsidiary of the Borrower or any of its property or other assets for
more than $250,000, and shall remain unvacated, unbonded or unstayed for a
period of sixty (60) days unless otherwise consented to by the Holder, which
consent will not be unreasonably withheld;

     

    3.4 Bankruptcy.  Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for
relief under any bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Borrower or any subsidiary of the
Borrower;

     

    3.5 Delisting
of Common Stock.  The Borrower
shall fail to maintain the listing of the Common Stock on at the OTCBB or an
equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap
Market, the New York Stock Exchange, or the American Stock Exchange or the
Pinksheets; or

     

    then,
upon the occurrence and during the continuation of any Event of Default, at the
option of the Holders of a majority of the aggregate principal amount of the
outstanding Notes issued pursuant to the Purchase Agreement exercisable through
the delivery of written notice to the Borrower by such Holders (the “Default Notice”), the Notes
shall become immediately due and payable and the Borrower shall pay to the
Holder, in full satisfaction of its obligations hereunder, an amount equal to
the sum of (w)
the then outstanding principal amount of this Note plus (x) accrued and
unpaid interest on the unpaid principal amount of this Note to the date of
payment  plus (y) Default
Interest, if any, on the amounts referred to in clauses (w) and/or (x) (the
“Default Amount”) and
all other amounts payable hereunder and the Holder shall be entitled to exercise
all other rights and remedies available at law or in equity.

     

    
      
         

      

      
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    ARTICLE
IV.MISCELLANEOUS

     

    4.1 Failure
or Indulgence Not Waiver.  No failure or
delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privileges.  All
rights and remedies existing hereunder are cumulative to, and not exclusive of,
any rights or remedies otherwise available.

     

    4.2 Notices.  Any notice herein
required or permitted to be given shall be in writing and may be personally
served or delivered by courier or sent by United States mail and shall be deemed
to have been given upon receipt if personally served (which shall include
telephone line facsimile transmission) or sent by courier or three (3) days
after being deposited in the United States mail, certified, with postage
pre-paid and properly addressed, if sent by mail.  For the purposes
hereof, the address of the Holder shall be as shown on the records of the
Borrower; and the address of the Borrower shall be as set forth in the Purchase
Agreement. Both the Holder and the Borrower may change the address for service
by service of written notice to the other as herein provided.

     

    4.3 Amendments.  This Note and any
provision hereof may only be amended by an instrument in writing signed by the
Borrower and the Holder.  The term “Note” and all reference thereto,
as used throughout this instrument, shall mean this instrument (and the other
Notes issued pursuant to the Purchase Agreement) as originally executed, or if
later amended or supplemented, then as so amended or supplemented.

     

    4.4 Assignability.  This Note shall
be binding upon the Borrower and its successors and assigns, and shall inure to
be the benefit of the Holder and its successors and assigns.  Each
transferee of this Note must be an “accredited investor” (as defined in Rule
501(a) of the 1933 Act).  Notwithstanding anything in this Note to the
contrary, this Note may only be assigned with the express written consent of the
Borrower.

     

    4.5 Cost of
Collection.  If default is
made in the payment of this Note, the Borrower shall pay the Holder hereof costs
of collection, including reasonable attorneys’ fees.

     

    
      
         

      

      
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    4.6 Governing
Law.  THIS NOTE SHALL
BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.  THE
BORROWER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES
FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING
UNDER THIS NOTE, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR
PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A
PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING.  NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  BOTH PARTIES AGREE THAT
A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT
OR IN ANY OTHER LAWFUL MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN
ANY DISPUTE ARISING UNDER THIS NOTE SHALL BE RESPONSIBLE FOR ALL FEES AND
EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN
CONNECTION WITH SUCH DISPUTE.

     

    4.7 Purchase
Agreement.  By its acceptance
of this Note, each Holder agrees to be bound by the applicable terms of the
Purchase Agreement.

     

    

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by its duly authorized officer
this ____ day of May, 2008.

     

     

     

     

    
      
        	 	BONANZA OIL
      & GAS, INC.	 
	 	 	 	 
	 	
                By:
      

              	/s/ 	 
	 	 	William
      Wiseman	 
	 	 	Chief
      Executive Officer	 
	 	 	 	 

      

     

     

     

     

     

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    NOTICE
OF CONVERSION

     

    (To be
Executed by the Registered Holder

     

    in order
to Convert the Notes)

     

    The
undersigned hereby irrevocably elects to convert $__________ principal amount of
the Note (defined below) into shares of common stock, par value $.001 per share
(“Common Stock”), of
Bonanza Oil & Gas, Inc., a Nevada corporation (the “Borrower”) according to the
conditions of the convertible Notes of the Borrower dated as of April __, 2008
(the “Notes”), as of the
date written below.  If securities are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such
certificates.  A copy of each Note is attached hereto (or evidence of
loss, theft or destruction thereof).

     

    If
available, the Borrower shall electronically transmit the Common Stock issuable
pursuant to this Notice of Conversion to the account of the undersigned or its
nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).

     

    Name of
DTC Prime
Broker:                                                                                                                     

    Account
Number:                                                                                                                     

     

    In lieu
of receiving shares of Common Stock issuable pursuant to this Notice of
Conversion by way of a DWAC Transfer, the undersigned hereby requests that the
Borrower issue a certificate or certificates for the number of shares of Common
Stock set forth below (which numbers are based on the Holder’s calculation
attached hereto) in the name(s) specified immediately below or, if additional
space is necessary, on an attachment hereto:

     

    Name:                                                                                                                     

    Address:                                                                                                                     

     

    The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable to the undersigned upon conversion of the Notes shall
be made pursuant to registration of the securities under the Securities Act of
1933, as amended (the “Act”), or pursuant to an
exemption from registration under the Act.

     

    Date of
Conversion:___________________________

    Applicable
Conversion Price:$0.50

    Number of
Shares of Common Stock to be Issued Pursuant to

    Conversion
of the Notes:______________

    Signature:___________________________________

    Name:______________________________________

    Address:____________________________________

     

     

     

    
12ex43.htm

    Exhibit 4.3

     

    

     

    

     

    THIS
WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGIS­TERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  EXCEPT
AS OTHERWISE SET FORTH HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED AS OF
MAY __, 2008, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRA­TION
STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM,
SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE
TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 OR REGULATION S UNDER SUCH ACT.

     

    Right to
Purchase ________ Shares of Common Stock, par value $.001 per share

     

    SERIES
A STOCK PURCHASE WARRANT

     

    THIS CERTIFIES THAT, for value
received, _________ or its registered assigns, is entitled to purchase from
Bonanza Oil & Gas,
Inc., a Nevada corporation (the “Company”), at any time or from time to
time during the period specified in Paragraph 2 hereof, ____________ fully
paid and nonassessable shares of the Company’s Common Stock, par value $.001 per
share (the “Common Stock”), at an exercise price per share equal to $0.75 (the
“Exercise Price”). The term “Warrant Shares,” as used herein, refers to the
shares of Common Stock purchasable hereunder.  The Warrant Shares and
the Exercise Price are subject to adjustment as provided in Paragraph 4
hereof.  The term “Warrants” means this Warrant and the other warrants
issued pursuant to that certain Securities Purchase Agreement, dated May __,
2008, by and among the Company and the Buyers listed on the execution page
thereof (the “Securities Purchase Agreement”).

     

    This
Warrant is subject to the following terms, provisions, and
conditions:

     

    1. Manner of Exercise; Issuance
of Certificates; Payment for Shares.

     

    
      	
              Subject
      to the provisions hereof, this Warrant may be exercised by the holder
      hereof, in whole or in part, by the surrender of this Warrant, together
      with a completed exercise agreement in the form attached hereto (the
      “Exercise Agreement”), to the Company during normal business hours on any
      business day at the Company’s principal executive offices (or such other
      office or agency of the Company as it may designate by notice to the
      holder hereof), and upon payment to the Company in cash, by certified or
      offi­cial bank check or by wire transfer for the account of the
      Company of the Exercise Price for the Warrant Shares specified in the
      Exercise Agreement.  The Warrant Shares so purchased shall be
      deemed to be issued to the holder hereof or such holder’s designee, as the
      record owner of such shares, as of the close of business on the date on
      which this Warrant shall have been surrendered, the completed Exercise
      Agreement shall have been deliv­ered, and payment shall have been made
      for such shares as set forth above.  Certifi­cates for the
      Warrant Shares so purchased, representing the aggregate number of shares
      specified in the Exercise Agreement, shall be delivered to the holder
      hereof within a reasonable time, not exceeding three (3) business days,
      after this Warrant shall have been so exercised.   If this
      Warrant shall have been exercised only in part, then, unless this Warrant
      has expired, the Company shall, at its expense, at the time of delivery of
      such certificates, deliver to the holder a new Warrant representing the
      number of shares with respect to which this Warrant shall not then have
      been exercised.

            

    

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    Notwithstanding
anything in this Warrant to the contrary, in no event shall the holder of this
Warrant be entitled to exercise a number of Warrants (or portions thereof) in
excess of the number of Warrants (or portions thereof) upon exercise of which
the sum of (i) the number of shares of Common Stock beneficially owned by the
holder and its affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unexercised Warrants and the
unexercised or unconverted portion of any other securities of the Company
(including the Notes (as defined in the Securities Purchase Agreement)) subject
to a limitation on conversion or exercise analogous to the limitation contained
herein) and (ii) the number of shares of Common Stock issuable upon exercise of
the Warrants (or portions thereof) with respect to which the determination
described herein is being made, would result in beneficial ownership by the
holder and its affiliates of more than 4.9% of the outstanding shares of Common
Stock.  For purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13D-G thereunder, except as
otherwise provided in clause (i) of the preceding
sentence.  Notwithstanding anything to the contrary contained herein,
the limitation on exercise of this Warrant set forth herein may not be amended
without (i) the written consent of the holder hereof and the Company and (ii)
the approval of a majority of shareholders of the Company.

     

    2. Period of
Exercise.

     

     This
Warrant is exercisable at any time or from time to time on or after the date on
which this Warrant is issued and delivered pursuant to the terms of the
Securities Purchase Agreement and before 6:00 p.m., New York, New York time on
the second (2nd)
anniversary of the date of issuance (the “Exercise
Period”).  Notwithstanding  the foregoing,  on any
given date, the maximum number of Warrant Shares issuable upon exercise of this
Warrant on such date shall equal (i) half of such number of shares of common
stock issued on or prior to such date upon conversion of the Convertible Note
issued to the holder pursuant to the Securities Purchase Agreement, less (ii)
such number of Warrant  Shares  exercised hereunder prior to
such date.  In the event that the holder does not convert the
Convertible Note into shares of common stock, then the holder shall not entitled
to exercise this Warrant at all.

    

    3. Certain Agreements of the
Company.

     

    
      	
              The
      Company hereby covenants and agrees as
follows:

            

    

     

    (a) Shares to
be Fully Paid.  All Warrant
Shares will, upon issuance in accordance with the terms of this Warrant, be
validly issued, fully paid, and nonassessable and free from all taxes, liens,
and charges with respect to the issue thereof.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b) Reservation
of Shares.  During the
Exercise Period, the Company shall at all times have authorized, and reserved
for the purpose of issuance upon exercise of this Warrant, a suf­ficient
number of shares of Common Stock to provide for the exercise of this
Warrant.

     

    (c) Successors
and Assigns.  This Warrant will
be binding upon any entity succeeding to the Company by merger, consolidation,
or acquisition of all or sub­stantially all the Company’s
assets.

     

    4. Antidilution
Provisions.  

     

    During
the Exercise Period, the Exercise Price and the number of Warrant Shares shall
be subject to adjustment from time to time as provided in this Paragraph
4.

     

    In the
event that any adjustment of the Exercise Price as required herein results in a
fraction of a cent, such Exercise Price shall be rounded up to the nearest
cent.

     

    (a) Adjustment
of Exercise Price and Number of Shares upon Issuance of Common Stock.  Except as
otherwise provided, for a period of one year following the date of issuance, the
Company issues or sells shares of Common Stock for no consideration or for a
consideration per share (before deduction of reasonable expenses or commissions
or underwriting discounts or allowances in connection therewith) less than the
Conversion Price, as defined in the Convertible Note, on the date of issuance (a
“Dilutive Issuance”), then immediately upon the Dilutive Issuance, the Exercise
Price will be reduced to a price determined by multiplying the Exercise Price in
effect immediately prior to the Dilutive Issuance by a fraction, (i) the
numerator of which is an amount equal to the sum of (x) the number of shares of
Common Stock actually outstanding immediately prior to the Dilutive Issuance,
plus (y) the quotient of the aggregate consideration received by the Company
upon such Dilutive Issuance divided by the Exercise Price in effect immediately
prior to the Dilutive Issuance, and (ii) the denominator of which is the total
number of shares of Common Stock outstanding immediately after the Dilutive
Issuance.   No adjustment to the Exercise Price will be made for
Excepted Issuances as defined in the Convertible Note.

     

    (b) Subdivision
or Combination of Common Stock.  If the Company at
any time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced.  If the
Company at any time combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a smaller number of shares, then, after the date of
record for effecting such combination, the Exercise Price in effect immediately
prior to such combination will be proportionately increased.

     

    (c) Adjustment
in Number of Shares.  Upon each
adjustment of the Exercise Price pursuant to the provisions of this Paragraph 4,
the number of shares of Common Stock issuable upon exercise of this Warrant
shall be adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise
Price.  Further, if the number of shares issuable upon conversion of
the Convertible Note (the “Note”) issued to the holder as of the date hereof is
adjusted as a result of an adjustment to the Conversion Price, as defined in the
Note, in accordance with Section 1.2 of the Note, then the number of Warrant
Shares issuable upon exercise of this Warrant shall be adjusted to equal the
number of shares issuable upon conversion of the Note multiplied by
..5.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (d) Consolidation,
Merger or Sale.  In case of any
consolidation of the Company with, or merger of the Company into any other
corporation, or in case of any sale or conveyance of all or substantially all of
the assets of the Company other than in connection with a plan of complete
liquidation of the Company, then as a condition of such consolidation, merger or
sale or conveyance, adequate provision will be made whereby the holder of this
Warrant will have the right to acquire and receive upon exercise of this Warrant
in lieu of the shares of Common Stock immediately theretofore acquirable upon
the exercise of this Warrant, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore acquirable and receivable upon exercise of
this Warrant had such consolidation, merger or sale or conveyance not taken
place.  In any such case, the Company will make appropriate provision
to insure that the provisions of this Paragraph 4 hereof will thereafter be
applicable as nearly as may be in relation to any shares of stock or securities
thereafter deliverable upon the exercise of this Warrant.  The Company
will not effect any consolidation, merger or sale or conveyance unless prior to
the consummation thereof, the successor corporation (if other than the Company)
assumes by written instrument the obligations under this Paragraph 4 and the
obligations to deliver to the holder of this Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the holder
may be entitled to acquire.

     

    5. Issue
Tax.

     

    
      	
              The
      issuance of certificates for Warrant Shares upon the exercise of this
      Warrant shall be made without charge to the holder of this Warrant or such
      shares for any issuance tax or other costs in respect thereof, provided
      that the Company shall not be required to pay any tax which may be payable
      in respect of any transfer involved in the issuance and delivery of any
      certificate in a name other than the holder of this
    Warrant.

            

    

     

    6. No Rights or Liabilities as
a Shareholder.

     

    
      	
              This
      Warrant shall not entitle the holder hereof to any voting rights or other
      rights as a shareholder of the Company.  No provision of this
      Warrant, in the absence of affirmative action by the holder hereof to
      purchase Warrant Shares, and no mere enumeration herein of the rights or
      privileges of the holder hereof, shall give rise to any liability of such
      holder for the Exercise Price or as a shareholder of the Company, whether
      such liability is asserted by the Company or by creditors of the
      Company.

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    7. Transfer, Exchange, and
Replacement of Warrant.

     

    (a) Restriction
on Transfer.  This Warrant and
the rights granted to the holder hereof are transferable, in whole or in part,
upon surrender of this Warrant, together with a properly executed assignment in
the form attached hereto, at the office or agency of the Company, pro­vided,
however, that any transfer or assignment shall be subject to the conditions set
forth in Paragraph 7(f) hereof and to the applicable provisions of the
Securities Purchase Agreement.  Until due presentment for registration
of transfer on the books of the Company, the Company may treat the registered
holder hereof as the owner and holder hereof for all purposes, and the Company
shall not be affected by any notice to the con­trary.

     

    (b) Warrant
Exchangeable for Different Denomina­tions.  This Warrant is
exchange­able, upon the surrender hereof by the holder hereof at the office
or agency of the Company, for new Warrants of like tenor representing in the
aggregate the right to purchase the number of shares of Common Stock which may
be purchased hereunder, each of such new Warrants to represent the right to
purchase such number of shares as shall be designated by the holder hereof at
the time of such surrender.

     

    (c) Replacement
of Warrant.  Upon receipt of
evi­dence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Warrant and, in the case of any such loss,
theft, or destruc­tion, upon delivery of an indemnity agreement
reason­ably satisfactory in form and amount to the Company, or, in the case
of any such mutilation, upon surrender and cancellation of this Warrant, the
Company, at its expense, will execute and deliver, in lieu thereof, a new
Warrant of like tenor.

     

    (d) Cancellation;
Payment of Expenses.  Upon the
surrender of this Warrant in connection with any trans­fer, exchange, or
replacement as provided in this Paragraph 7, this Warrant shall be promptly
canceled by the Company.  The Company shall pay all taxes (other than
securities transfer taxes) and all other expenses (other than legal expenses, if
any, incurred by the holder or transferees) and charges payable in connection
with the preparation, execution, and delivery of Warrants pursuant to this
Paragraph 7.

     

    (e) Register.  The Company shall
maintain, at its principal executive offices (or such other office or agency of
the Company as it may designate by notice to the holder hereof), a register for
this Warrant, in which the Company shall record the name and address of the
person in whose name this Warrant has been issued, as well as the name and
address of each transferee and each prior owner of this Warrant.

     

    (f) Exercise
or Transfer Without Registration.  If, at the time
of the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the Securities
Act of 1933, as amended (the “Securities Act”) and under applicable state
securities or blue sky laws, the Company may require, as a condition of allowing
such exercise, transfer, or exchange, (i) that the holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of
counsel, which opinion and counsel are acceptable to the Company, to the effect
that such exercise, transfer, or exchange may be made without registration under
said Act and under applicable state securities or blue sky laws, (ii) that the
holder or transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee be an
“accredited investor” as defined in Rule 501(a) promulgated under the Securities
Act; provided that no such opinion, letter or status as an “accredited investor”
shall be required in connection with a transfer pursuant to Rule 144 under the
Securities Act.  The first holder of this Warrant, by taking and
holding the same, represents to the Company that such holder is acquiring this
Warrant for investment and not with a view to the distribution
thereof.  In no event shall the Holder be permitted to assign the
Warrant unless provided with express written consent by the
Company.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    8. [Intentionally
Omitted]

     

    9. Notices.

     

    
      	
              All
      notices, requests, and other communications required or permitted to be
      given or delivered hereunder to the holder of this Warrant shall be in
      writing, and shall be personally delivered, or shall be sent by certified
      or registered mail or by recognized overnight mail courier, postage
      prepaid and addressed, to such holder at the address shown for such holder
      on the books of the Company, or at such other address as shall have been
      furnished to the Company by notice from such holder.  All
      notices, requests, and other communications required or permitted to be
      given or delivered hereunder to the Company shall be in writing, and shall
      be personally delivered, or shall be sent by certified or registered mail
      or by recognized overnight mail courier, postage prepaid and addressed, to
      the office of the Company at the address set forth in the Purchase
      Agreement, or at such other address as shall have been furnished to the
      holder of this Warrant by notice from the Company.  Any such
      notice, request, or other communication may be sent by facsimile, but
      shall in such case be subsequently confirmed by a writing personally
      delivered or sent by certified or registered mail or by recognized
      overnight mail courier as provided above.  All notices,
      requests, and other communications shall be deemed to have been given
      either at the time of the receipt thereof by the person entitled to
      re­ceive such notice at the address of such person for purposes of
      this Paragraph 9, or, if mailed by registered or certified mail or with a
      recognized overnight mail courier upon deposit with the United States Post
      Office or such overnight mail courier, if postage is prepaid and the
      mailing is properly addressed, as the case may
  be.

            

    

     

    10. Governing
Law.

     

    
      	
              THIS
      WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
      THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
      PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF
      CONFLICT OF LAWS.  THE PARTIES HERETO HEREBY SUBMIT TO THE
      EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW
      YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT, THE
      AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS
      CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE
      OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR
      PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS
      UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT
      EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
      PROCEEDING.  NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO
      SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  BOTH
      PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR
      PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS
      BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER.  THE
      PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS WARRANT
      SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING ATTORNEYS’ FEES,
      INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
      DISPUTE.

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    11. Miscellaneous.

     

    (a) Amendments.  This Warrant and
any provision hereof may only be amended by an instrument in writing signed by
the Company and the holder hereof.

     

    (b) Descriptive
Headings.  The descriptive
headings of the several paragraphs of this Warrant are in­serted for
purposes of reference only, and shall not affect the meaning or construction of
any of the provisions hereof.

     

    (c) Remedies.  The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the holder, by vitiating the intent and purpose of the
transaction contemplated hereby.  Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Warrant will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Warrant, that the holder shall
be entitled, in addition to all other available remedies at law or in equity,
and in addition to the penalties assessable herein, to an injunction or
injunctions restraining, preventing or curing any breach of this Warrant and to
enforce specifically the terms and provisions thereof, without the necessity of
showing economic loss and without any bond or other security being
required.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

     

     

     

     

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
Company has caused this Warrant to be signed by its duly authorized
officer.

     

     

    
      
        	 	BONANZA OIL
      & GAS, INC.	 
	 	 	 	 
	 	
                By:
      

              	/s/ 	 
	 	 	William
      Wiseman	 
	 	 	Chief Executive Officer	 
	 	 	 	 

      

    

     

    

     

     

     

     

     

     

    

     

    Dated as
of May __, 2008

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    FORM
OF EXERCISE AGREEMENT

     

    

     

    Dated:  ________ __,
20__

     

    

     

    To:           ______________________

     

    

     

    

     

    The
undersigned, pursuant to the provisions set forth in the within Warrant, hereby
agrees to purchase ________ shares of Common Stock covered by such Warrant, and
makes pay­ment herewith in full therefor at the price per share provided by
such Warrant in cash or by certified or official bank check in the amount of
equal to $_________.  Please issue a certificate or certifi­cates
for such shares of Common Stock in the name of and pay any cash for any
fractional share to:

     

    

     

    Name: ______________________________

    

    

    Signature:

    Address:
____________________________

     ____________________________

    

    
      	
               
      

            	
              Note:

            	
              The
      above signature should correspond exactly with the name on the face of the
      within Warrant, if applicable.

            

    

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    FORM
OF ASSIGNMENT

     

    

     

    

     

    FOR VALUE RECEIVED, the
undersigned hereby sells, assigns, and transfers all the rights of the
undersigned under the within Warrant, with respect to the number of shares of
Common Stock covered thereby set forth hereinbelow, to:

    

     

    Name of
Assignee                                                                Address                                                                No of
Shares

     

    

     

    

     

    

     

    , and
hereby irrevocably constitutes and appoints ___________________________________
as agent and attorney-in-fact to trans­fer said Warrant on the books of the
within-named corporation, with full power of substitution in the
premises.

     

    

     

    Dated:                      ________
__, 20__

     

    

     

    In the
presence
of:                                                                          ______________________________

     

    Name:______________________________

    

     

    Signature:_________________________

    Title of
Signing Officer or Agent (if any):

    ______________________________

    Address:                ______________________________

    ______________________________

    

    

    
      	
               
      

            	
              Note:

            	
              The
      above signature should correspond exactly with the name on the face of the
      within Warrant, if applicable.

            

    

     

     

     

    
10

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