Document:

Exhibit
      10.11

    

    THE
      SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
      SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
      THE
      ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR
      (B)
      AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
      NOT
      REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS
      SOLD
      PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
      SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
      OTHER
      LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF
      THIS
      WARRANT SHOULD CAREFULLY REVIEW THE TERMS OF THIS WARRANT, INCLUDING
SECTION
      2(f)
      HEREOF.
      THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE LESS THAN THE NUMBER SET
      FORTH
      ON THE FACE HEREOF PURSUANT TO SECTION
      2(f)
      HEREOF.

    

    

    SONTERRA
      RESOURCES, INC.

    

    Warrant
      To Purchase Common Stock

     

    
      	Warrant
              No.: CW-001	
              Number
                of Shares: 4,958,678

            
	Date
              of Issuance: February
              14, 2008	 

    

     

    Sonterra
      Resources, Inc. (f/k/a River Capital Group, Inc.), a Delaware corporation (the
      “Company”),
      hereby certifies that, for Ten United States Dollars ($10.00) and other good
      and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, The Longview Fund, L.P., a California limited partnership, the
      registered holder hereof or its permitted assigns (the “Holder”),
      is
      entitled, subject to the terms set forth below, to purchase from the Company,
      at
      any time or times on or after the date hereof, but not after 11:59 P.M. New
      York
      Time on the Expiration Date (as defined herein) Four Million Nine Hundred
      Fifty-Eight Thousand Six Hundred Seventy-Eight (4,958,678) fully paid
      nonassessable shares of Common Stock (as defined in Section
      1(b))
      of the
      Company (the “Warrant
      Shares”)
      at the
      Warrant Exercise Price (as defined in Section
      1(b)).

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Securities
      Exchange Agreement.
      This
      Warrant was issued pursuant to Section
      1
      of that
      certain Securities Exchange and Additional Note Purchase Agreement, dated as
      of
      August 3, 2007, between the Company and The Longview Fund, L.P., a California
      limited partnership (as amended by the February 2008 Amendment Agreement, dated
      as of February 14, 2008, and as may be further amended, modified, restated
      or
      supplemented from time to time, the “Securities
      Exchange Agreement”),
      or
      issued in exchange or substitution therefor or replacement thereof. Each
      capitalized term used, and not otherwise defined, herein shall have the meaning
      ascribed thereto in the Securities Exchange Agreement.

     

    Definitions.
      The
      following words and terms used in this Warrant shall have the following
      meanings:

     

    “Approved
      Stock Plan”
means
      any employee benefit plan that has been approved by the Board of Directors
      and
      stockholders of the Company after the date of the Securities Exchange Agreement,
      pursuant to which the Company’s securities may be issued to consultants,
      employees, officers and directors for services provided to the
      Company.

     

    “Business
      Day”
means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      the City of New York are authorized or required by law to remain
      closed.

     

    “Common
      Stock”
means
      (A) the Company’s Common Stock, par value $.001 per share, and (B) any
      capital stock into which such Common Stock shall have been changed or any
      capital stock resulting from a reclassification of such Common Stock.

     

    “Convertible
      Securities”
means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exchangeable or exercisable for Common Stock.

     

    “dollar”
or
      “$”
means
      U.S. dollars.

     

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

     

    “Exempted
      Issuances”
means
      (I) shares of Common Stock issued or deemed to be issued by the Company pursuant
      to, and in accordance with the terms of, an Approved Stock Plan, provided that
      the Company does not (A) amend any Option to reduce its exercise price, (B)
      cancel any Option and re-grant an Option with a lower exercise price than the
      original exercise price of the cancelled Option, or (C) take any other action
      (whether in the form of an amendment, cancellation or replacement grant) that
      has the effect of repricing an Option, except pursuant to a proportional
      adjustment to the exercise price and number of shares issuable thereunder in
      accordance with such Approved Stock Plan to reflect a stock split dividend
      or
      stock combination with respect to the Common Stock; (II) shares of Common Stock
      issued or deemed to be issued by the Company upon the exercise of any Initial
      Officer Option, provided that the terms of such Initial Officer Option or
      security are not amended or otherwise modified on or after the Exchange Closing
      Date, and provided that the exercise price thereof is not reduced, adjusted
      or
      otherwise modified and the number of shares of Common Stock issuable thereunder
      is not increased (whether by operation of, or in accordance with, the relevant
      governing documents or otherwise) on or after the Exchange Closing Date, except
      pursuant to a proportional adjustment to the exercise price and number of shares
      issuable thereunder in accordance with the 2007 Option Plan to reflect a stock
      split dividend or stock combination with respect to the Common Stock; (III)
      shares of Common Stock issued or deemed to be issued by the Company upon
      exercise of this Warrant or (IV) shares of Common Stock issued to C.K. Cooper
      & Company (“CKC”)
      as
      compensation for services pursuant to the engagement letter dated July 25,
      2007
      between the Company and CKC.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Expiration
      Date”
means
      the date that is five (5) years after the Warrant Date (as defined in
Section
      12)
      or, if
      such date does not fall on a Business Day, then the next Business
      Day.

     

    “Options”
means
      any rights, warrants or options to subscribe for or purchase any Common Stock
      or
      Convertible Securities. 

     

    “Person”
means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization or a government or any
      department or agency thereof or any other legal entity.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Trading
      Day”
means
      any day on which the Common Stock is traded on the Principal Market; provided
      that “Trading Day” shall not include any day on which the Common Stock is
      scheduled to trade, or actually trades, on the Principal Market for less than
      4.5 hours.

     

    “Warrant”
means
      this Warrant and all warrants issued in exchange, transfer or replacement
      thereof pursuant to the terms of this Warrant.

     

    “Warrant
      Exercise Price”
shall
      be equal to, with respect to any Warrant Share, $0.30210709, subject to
      adjustment as hereinafter provided. 

     

    “Weighted
      Average Price”
means,
      for any security as of any date, the dollar volume-weighted average price for
      such security on its Principal Market during the period beginning at 9:30 a.m.
      New York City time (or such other time as its Principal Market publicly
      announces is the official open of trading) and ending at 4:00 p.m. New York
      City
      time (or such other time as its Principal Market publicly announces is the
      official close of trading) as reported by Bloomberg Financial Markets (or any
      successor thereto) (“Bloomberg”)
      through its “Volume at Price” functions, or if the foregoing does not apply, the
      dollar volume-weighted average price of such security in the over-the-counter
      market on the electronic bulletin board for such security during the period
      beginning at 9:30 a.m. New York City time (or such other time as such
      over-the-counter market publicly announces is the official open of trading),
      and
      ending at 4:00 p.m. New York City time (or such other time as such
      over-the-counter market publicly announces is the official close of trading)
      as
      reported by Bloomberg, or, if no dollar volume-weighted average price is
      reported for such security by Bloomberg for such hours, the average of the
      highest closing bid price and the lowest closing ask price of any of the market
      makers for such security as reported in the “pink sheets” by the National
      Quotation Bureau, Inc. If the Weighted Average Price cannot be calculated for
      such security on such date on any of the foregoing bases, the Weighted Average
      Price of such security on such date shall be the fair market value as mutually
      determined by the Company and the Holder. If the Company and the Holder are
      unable to agree upon the fair market value of such security, then such dispute
      shall be resolved pursuant to Section
      2(a).
      All
      such determinations shall be appropriately adjusted for any stock dividend,
      stock split, stock combination or other similar transaction during any period
      during which the Weighted Average Price is being determined.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Exercise
      of Warrant.

     

    Subject
      to the terms and conditions hereof, this Warrant may be exercised by the Holder
      hereof then registered on the books of the Company, in whole or in part, at
      any
      time on any Business Day on or after the opening of business on the date hereof
      and prior to 11:59 P.M. New York City time on the Expiration Date by (i)
      delivery of a written notice, in the form of the exercise notice attached as
      Exhibit
      A
      hereto
      (the “Exercise
      Notice”),
      of
      the Holder’s election to exercise this Warrant, which notice shall specify the
      number of Warrant Shares to be purchased and, if such exercise is conditioned
      upon consummation of any transaction (“Exercise
      Trigger Transaction”),
      such
      condition to exercise, (ii) (A) payment to the Company of an amount equal to the
      product of the Warrant Exercise Price multiplied by the number of Warrant Shares
      as to which this Warrant is being exercised (such product, the “Aggregate
      Exercise Price”)
      by
      wire transfer of immediately available funds (or by check if the Company has
      not
      provided the Holder with wire transfer instructions for such payment), or (B)
      notifying the Company that this Warrant is being exercised pursuant to a
      Cashless Exercise (as defined in Section
      2(e)),
      and
      (iii) if required by Section
      2(f)
      unless
      the Holder has previously delivered this Warrant to the Company and it or a
      new
      replacement Warrant has not yet been delivered to the Holder, the surrender
      to a
      common carrier for overnight delivery to the Company as soon as practicable
      following such date, of this Warrant (or an indemnification undertaking, in
      customary form, with respect to this Warrant in the case of its loss, theft
      or
      destruction pursuant to Section
      10);
      provided, that if such Warrant Shares are to be issued in any name other than
      that of the Holder, such issuance shall be deemed a transfer and the provisions
      of Section
      7
      shall be
      applicable. In the event of any exercise of the rights represented by this
      Warrant in compliance with this Section
      2(a),
      on the
      second (2nd)
      Business Day (the “Warrant
      Share Delivery Date”)
      following the date of its receipt of the Exercise Notice, the Aggregate Exercise
      Price (or notice of Cashless Exercise) and if required by Section
      2(f)
      (unless
      the Holder has previously delivered this Warrant to the Company and a new or
      replacement Warrant has not yet been delivered to the Holder), this Warrant
      (or
      an indemnification undertaking, in customary form, with respect to this Warrant
      in the case of its loss, theft or destruction pursuant to Section
      10)
      (the
“Exercise
      Delivery Documents”)
      (or,
      if the exercise of this Warrant is conditioned upon the consummation of an
      Exercise Trigger Transaction, on the later of such second (2nd) Business Day
      and
      the date of consummation of such Exercise Trigger Transaction), (A) if the
      transfer agent for the Common Stock is participating in The Depository Trust
      Company (“DTC”)
      Fast
      Automated Securities Transfer Program and the Holder is eligible to receive
      shares through DTC, the Company shall credit such aggregate number of shares
      of
      Common Stock to which the Holder shall be entitled to the Holder’s or its
      designee’s balance account with DTC through its Deposit Withdrawal Agent
      Commission system or (B) if not, the Company shall issue and deliver to the
      address specified in the Exercise Notice, a certificate, registered in the
      name
      of the Holder or its designee, for the number of shares of Common Stock to
      which
      the Holder shall be entitled. Upon the latest of (x) the date of delivery of
      the
      Exercise Notice, (y) the date of delivery of the Aggregate Exercise Price
      referred to in clause (ii)(A) above or notification to the Company of a Cashless
      Exercise referred to in Section
      2(e),
      and (z)
      if the exercise of this Warrant is conditioned upon the consummation of an
      Exercise Trigger Transaction, the date of such consummation, the Holder shall
      be
      deemed for all purposes to have become the Holder of record of the Warrant
      Shares with respect to which this Warrant has been exercised (the date thereof
      being referred to as the “Deemed
      Issuance Date”),
      irrespective of the date of delivery of this Warrant as required by clause
      (iii)
      above or the certificates evidencing such Warrant Shares. In the case of a
      dispute as to the determination of the Warrant Exercise Price, the Weighted
      Average Price of a security or the arithmetic calculation of the number of
      Warrant Shares, the Company shall promptly issue to the Holder the number of
      shares of Common Stock that is not disputed and shall submit the disputed
      determinations or arithmetic calculations to the Holder via facsimile within
      two
      (2) Business Days after receipt of the Holder’s Exercise Notice. If the Holder
      and the Company are unable to agree upon the determination of the Warrant
      Exercise Price, the Weighted Average Price or arithmetic calculation of the
      number of Warrant Shares within one (1) Business Day of such disputed
      determination or arithmetic calculation being submitted to the Holder, then
      the
      Company shall immediately submit via facsimile (i) the disputed determination
      of
      the Warrant Exercise Price or the Weighted Average Price to an independent,
      reputable investment banking firm agreed to by the Company and the Holder or
      (ii) the disputed arithmetic calculation of the number of Warrant Shares to
      an
      independent, reputable certified public accounting firm agreed to by the Company
      and the Holder. The Company shall cause the investment banking firm 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 two (2)
      Business Days after the date it receives the disputed determinations or
      calculations. Such investment banking firm’s or accountant’s determination or
      calculation, as the case may be, shall be deemed conclusive absent manifest
      error. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    If
      this
      Warrant is submitted for exercise, as may be required by Section 2(f),
      and
      unless the rights represented by this Warrant shall have expired or shall have
      been fully exercised, the Company shall, as soon as practicable and in no event
      later than three (3) Business Days after receipt of this Warrant (the
“Warrant
      Delivery Date”)
      and at
      its own expense, issue a new Warrant identical in all respects to this Warrant
      except it shall represent rights 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 such Warrant is exercised
      (together with, in the case of a Cashless Exercise, the number of Warrant Shares
      surrendered in lieu of payment of the Exercise Price).

     

    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 issued upon exercise
      of
      this Warrant shall be rounded up or down to the nearest whole number (with
      0.5
      rounded up).

     

    If
      the
      Company shall fail for any reason or for no reason (x) to issue and deliver
      to
      the Holder within two (2) 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 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 or (y) to issue and deliver to the Holder
      on the Warrant Delivery Date a new Warrant for the number of shares of Common
      Stock to which such holder is entitled pursuant to Section
      2(b)
      hereof,
      if any, then the Company shall, in addition to any other remedies under this
      Warrant or the Securities Exchange Agreement or otherwise available to such
      holder, including any indemnification under Section
      8
      of the
      Securities Exchange Agreement, pay as additional damages in cash to such holder
      on each day after such second (2nd) Business Day that such shares of Common
      Stock are not issued and delivered to the Holder, in the case of clause (x)
      above, or such third (3rd) Business Day that such Warrant is not delivered,
      in
      the case of clause (y) above, an amount equal to the sum of (i) 0.5% of the
      product of (A) the number of shares of Common Stock not issued to the Holder
      on
      or prior to the Warrant Share Delivery Date and (B) the Weighted Average Price
      of the Common Stock on the Warrant Share Delivery Date, in the case of the
      failure to deliver Common Stock, and (ii) if the Company has failed to deliver
      a
      Warrant to the Holder on or prior to the Warrant Delivery Date, 0.5% of the
      product of (x) the number of shares of Common Stock issuable upon exercise
      of
      the Warrant as of the Warrant Delivery Date, and (y) the Weighted Average Price
      of the Common Stock on the Warrant Delivery Date; provided that in no event
      shall cash damages accrue pursuant to this Section
      2(d)
      during
      the period, if any, in which any Warrant Shares are the subject of a bona fide
      dispute that is subject to and being resolved pursuant to, and in compliance
      with the time periods and other provisions of, the dispute resolution provisions
      of Section
      2(a).
      Alternatively, at the election of the Holder made in the Holder’s sole
      discretion, the Company shall pay to the Holder, in lieu of the additional
      damages referred to in the preceding sentence (but in addition to all other
      available remedies that the Holder may pursue hereunder and under the Securities
      Exchange Agreement (including indemnification pursuant to Section 8 thereof)),
      110% of the amount that (A) the Holder’s total purchase price (including
      brokerage commissions, if any) for shares of Common Stock purchased to make
      delivery in satisfaction of a sale by such holder of the shares of Common Stock
      to which the Holder is entitled but has not received upon an exercise, exceeds
      (B) the net proceeds received by the Holder from the sale of the shares of
      Common Stock to which the Holder is entitled but has not received upon such
      exercise.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Notwithstanding
      anything contained herein to the contrary, at any time after the Warrant Date
      (as defined in Section
      12)
      that
      all of the Warrant Shares issuable hereunder are not registered and available
      for resale pursuant to an effective registration statement under the Securities
      Act in accordance with the Registration Rights Agreement, for any reason
      whatsoever, including as a result of a Grace Period (as defined in the
      Registration Rights Agreement), or as a result of a limitation on the number
      of
      Warrant Shares that may be registered pursuant to Rule 415 under the Act, the
      Holder may, at its election exercised in its sole discretion, exercise this
      Warrant in whole or in part and, in lieu of making the cash payment otherwise
      contemplated to be made to the Company upon such exercise in payment of the
      Aggregate Exercise Price, elect instead to receive upon such exercise the “Net
      Number” of shares of Common Stock determined according to the following formula
      (a “Cashless
      Exercise”):

     

    Net
      Number = (A
      x
      B) - (A x C)

    B

    For
      purposes of the foregoing formula:

    

    A=
      the
      total number of shares with respect to which this Warrant is then being
      exercised;

    

    B=
      the
      Weighted Average Price per share of Common Stock on the Trading Day immediately
      preceding the date of the delivery of the Exercise Notice; and

    

    C=
      the
      Warrant Exercise Price then in effect for the applicable Warrant Shares at
      the
      time of such exercise.

    

    Book-Entry.
      Notwithstanding anything to the contrary set forth herein, upon exercise of
      this
      Warrant in accordance with the terms hereof, the Holder shall not be required
      to
      physically surrender this Warrant to the Company unless it is being exercised
      for all of the Warrant Shares represented by the Warrant. The Holder and the
      Company shall maintain records showing the number of Warrant Shares exercised
      and issued and the dates of such exercises or shall use such other method,
      reasonably satisfactory to the Holder and the Company, so as not to require
      physical surrender of this Warrant upon each such exercise. In the event of
      any
      dispute or discrepancy, such records of the Company establishing the number
      of
      Warrant Shares to which the Holder is entitled shall be controlling and
      determinative in the absence of error. Notwithstanding the foregoing, if this
      Warrant is exercised as aforesaid, the Holder may not transfer this Warrant
      unless the Holder first physically surrenders this Warrant to the Company,
      whereupon the Company will forthwith issue and deliver upon the order of the
      Holder a new Warrant of like tenor, registered as the Holder may request,
      representing in the aggregate the remaining number of Warrant Shares represented
      by this Warrant. The Holder and any assignee, by acceptance of this Warrant,
      acknowledge and agree that, by reason of the provisions of this paragraph,
      following exercise of any portion of this Warrant, the number of Warrant Shares
      represented by this Warrant may be less than the number stated on the face
      hereof. 

     

    Covenants
      as to Common Stock.
      The Company hereby covenants and agrees as follows:

     

    This
      Warrant is, and any Warrants issued in substitution for or replacement of this
      Warrant will upon issuance be, duly authorized and validly issued.

     

    All
      Warrant Shares that may be issued upon the exercise of the rights represented
      by
      this Warrant will, upon issuance and receipt of payment therefor from the Holder
      (including pursuant to a Cashless Exercise, as applicable), be validly issued,
      fully paid and nonassessable and free from all taxes, liens and charges with
      respect to the issue thereof.

     

    During
      the period within which the rights represented by this Warrant may be exercised,
      the Company will at all times have authorized and reserved at least 100% of
      the
      number of shares of Common Stock needed to provide for the exercise of the
      rights then represented by this Warrant.

     

    The
      Company shall promptly secure the quotation or listing of the Warrant Shares
      on
      the Principal Market (subject to official notice of issuance upon exercise
      of
      this Warrant) and each other market or exchange on which the Common Stock is
      traded or listed and shall maintain, so long as any other shares of Common
      Stock
      shall be so traded or listed, such listing of all Warrant Shares from time
      to
      time issuable upon the exercise of this Warrant; and the Company shall so list
      on the Principal Market and each other market or exchange on which the Common
      Stock is traded or listed and shall maintain such listing of, any other shares
      of capital stock of the Company issuable upon the exercise of this Warrant
      if
      and so long as any shares of the same class shall be listed on the Principal
      Market and each other market or exchange on which such shares are traded or
      listed.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    The
      Company will not, by amendment of its Certificate of Incorporation 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 by it hereunder, 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
      such
      action as may reasonably be requested by the Holder in order to protect the
      exercise privilege of the Holder against impairment, consistent with the tenor
      and purpose of this Warrant. Without limiting the generality of the foregoing,
      the Company (i) will not increase the par value of any shares of Common
      Stock receivable upon the exercise of this Warrant, and (ii) will take all
      such actions as may be necessary or appropriate in order that the Company may
      validly and legally issue fully paid and nonassessable shares of Common Stock
      upon the exercise of this Warrant.

     

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

     

    Taxes.
      The Company shall pay any and all taxes that may be payable with respect to
      the
      issuance and delivery of Warrant Shares upon exercise of this
      Warrant.

     

    Warrant
      Holder Not Deemed a Stockholder.
      Except as expressly provided herein, the Holder, as holder of this Warrant
      shall
      not be entitled to vote or be deemed the holder of stock of the Company for
      any
      purpose (other than to the extent that the Holder is deemed to be a beneficial
      holder of Warrant Shares under applicable securities laws), or otherwise have
      any of the rights of a stockholder of the Company or any right to vote, give
      or
      withhold consent to any corporate action (whether any reorganization, issue
      of
      stock, reclassification of stock, consolidation, merger, conveyance or
      otherwise), receive notice of meetings, or receive dividends or subscription
      rights, prior to the Deemed Issuance Date of the Warrant Shares that such holder
      is then entitled to receive upon the due exercise of this Warrant. In addition,
      nothing contained in this Warrant shall be construed as imposing any liabilities
      on such holder to purchase any securities (except to the extent set forth in
      an
      Exercise Notice that has been delivered by the Holder to the Company) or as
      a
      stockholder of the Company, whether such liabilities are asserted by the Company
      or by creditors of the Company. Notwithstanding the foregoing, the Company
      will
      provide the Holder with copies of the same notices (without duplication if
      the
      Holder is also a stockholder of the Company) and other information given to
      the
      stockholders of the Company generally, contemporaneously with the giving thereof
      to the stockholders.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Representations
      of Holder.
      The holder of this Warrant, by the acceptance hereof, represents that it is
      acquiring this Warrant, and upon exercise hereof (other than pursuant to a
      Cashless Exercise) will acquire the Warrant Shares, for its own account and
      not
      with a view towards, or for resale in connection with, the public sale or
      distribution of this Warrant or the Warrant Shares, except pursuant to sales
      registered, or exempted from registration, under the Securities Act; provided,
      however, that by making the representations herein, the Holder does not agree
      to
      hold this Warrant or any of the Warrant Shares for any minimum or other specific
      term and reserves the right to dispose of this Warrant and the Warrant Shares
      at
      any time in accordance with or pursuant to a registration statement or an
      exemption under the Securities Act. The holder of this Warrant further
      represents, by acceptance hereof, that, as of this date, such holder is an
      “accredited investor” as such term is defined in Rule 501(a)(3) of Regulation D
      promulgated by the Securities and Exchange Commission under the Securities
      Act.
      Each delivery of an Exercise Notice, other than in connection with a Cashless
      Exercise, shall constitute confirmation at such time by the Holder of the
      representations concerning the Warrant Shares set forth in the first two
      sentences of this Section
      6,
      unless contemporaneously with the delivery of such Exercise Notice, the Holder
      notifies the Company in writing that it is not making such representations
      (a
“Representation
      Notice”).
      If the Holder delivers a Representation Notice in connection with an exercise,
      it shall be a condition to such Holder’s exercise of this Warrant and the
      Company’s obligations set forth in Section
      2
      in connection with such exercise, that the Company receive such other
      representations as the Company considers reasonably necessary to assure the
      Company that the issuance of its securities upon exercise of this Warrant shall
      not violate any United States or state securities laws.

     

    Ownership
      and Transfer.

     

    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), 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. The Company may treat the person in whose
      name any Warrant is registered on the register as the owner and holder thereof
      for all purposes, notwithstanding any notice to the contrary, but in all events
      recognizing any transfers made in accordance with the terms of this
      Warrant.

     

    This
      Warrant and the rights granted hereunder shall be assignable by the Holder
      hereof in accordance with the Securities Exchange Agreement. 

     

    The
      Company is obligated to register the Warrant Shares for resale under the
      Securities Act pursuant to the Registration Rights Agreement and the initial
      holder of this Warrant (and certain assignees thereof) is entitled to the
      registration rights in respect of the Warrant Shares as set forth in the
      Registration Rights Agreement.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Adjustment
      of Warrant Exercise Price and Number of Warrant Shares.
      The Warrant Exercise Price and the number of shares of Common Stock issuable
      upon exercise of this Warrant shall be adjusted from time to time as follows:
      

     

    Adjustment
      of Warrant Exercise Price and Number of Shares upon Issuance of Common
      Stock.
      If and
      whenever on or after the Warrant Date (as defined in Section
      12),
      the
      Company issues or sells, or is deemed to have issued or sold, any shares of
      Common Stock (including the issuance or sale of shares of Common Stock owned
      or
      held by or for the account of the Company, but excluding Exempted Issuances),
      for a consideration per share less than a price (the “Applicable
      Price”)
      equal
      to the Warrant Exercise Price in effect immediately prior to such issuance
      or
      sale, then immediately after such issue or sale the Warrant Exercise Price
      then
      in effect shall be reduced to an amount equal to such consideration per share.
      Upon each such adjustment of the Warrant Exercise Price pursuant to the
      immediately preceding sentence, the number of shares of Common Stock acquirable
      upon exercise of this Warrant shall be adjusted to the number of shares
      determined by multiplying the Warrant Exercise Price in effect immediately
      prior
      to such adjustment by the number of shares of Common Stock acquirable upon
      exercise of this Warrant immediately prior to such adjustment and dividing
      the
      product thereof by the Warrant Exercise Price resulting from such adjustment.
      

     

    Effect
      on Warrant Exercise Price of Certain Events.
      For all
      purposes of this Section
      8,
      including for purposes of determining the adjusted Warrant Exercise Price under
      Section
      8(a)
      above
      and for purposes of determining whether the Company has issued or sold, or
      shall
      be deemed to have issued or sold, any shares of Common Stock for a consideration
      per share less than a price equal to the Applicable Price), the following shall
      be applicable:

     

    Issuance
      of Options.
      If the
      Company in any manner grants or sells any Options (other than pursuant to an
      Approved Stock Plan) and the lowest price per share for which one share of
      Common Stock is issuable upon the exercise of any such Option or upon
      conversion, exchange or exercise of any Convertible Securities issuable upon
      exercise of any such Option is less than the Applicable Price, then such share
      of Common Stock shall be deemed to be outstanding and to have been issued and
      sold by the Company at the time of the granting or sale of such Option for
      such
      price per share. For purposes of this Section
      8(b)(i),
      the
“lowest price per share for which one share of Common Stock is issuable upon
      exercise of any such Option or upon conversion, exchange or exercise of any
      Convertible Security issuable upon exercise of any such Option” shall be equal
      to the sum of the lowest amounts of consideration (if any) received or
      receivable by the Company with respect to any one share of Common Stock upon
      the
      granting or sale of the Option, upon exercise of the Option and upon conversion,
      exchange or exercise of any Convertible Security issuable upon exercise of
      such
      Option. No further adjustment of the Warrant Exercise Price shall be made upon
      the actual issuance of such Common Stock or of such Convertible Securities
      upon
      the exercise of such Options or upon the actual issuance of such Common Stock
      upon conversion, exchange or exercise of such Convertible
      Securities.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities and the lowest
      price per share for which one share of Common Stock is issuable upon the
      conversion, exchange or exercise thereof is less than the Applicable Price,
      then
      such share of Common Stock shall be deemed to be outstanding and to have been
      issued and sold by the Company at the time of the issuance or sale of such
      Convertible Securities for such price per share. For the purposes of this
Section
      8(b)(ii),
      the
“lowest price per share for which one share of Common Stock is issuable upon
      such conversion, exchange or exercise” shall be equal to the sum of the lowest
      amounts of consideration (if any) received or receivable by the Company with
      respect to one share of Common Stock upon the issuance or sale of the
      Convertible Security and upon conversion, exchange or exercise of such
      Convertible Security. No further adjustment of the Warrant Exercise Price shall
      be made upon the actual issuance of such Common Stock upon conversion, exchange
      or exercise of such Convertible Securities, and if any such issue or sale of
      such Convertible Securities is made upon exercise of any Options for which
      adjustment of the Warrant Exercise Price had been or are to be made pursuant
      to
      other provisions of this Section
      8(b),
      no
      further adjustment of the Warrant Exercise Price shall be made by reason of
      such
      issue or sale.

     

    Change
      in Option Price or Rate of Conversion.
      If the
      purchase, exchange or exercise price provided for in any Options, the additional
      consideration, if any, payable upon the issue, conversion, exchange or exercise
      of any Convertible Securities, or the rate at which any Options or Convertible
      Securities are convertible into or exchangeable or exercisable for Common Stock
      changes at any time, the Warrant Exercise Price in effect at the time of such
      change shall be adjusted to the Warrant Exercise Price that would have been
      in
      effect at such time had such Options or Convertible Securities provided for
      such
      changed purchase, exchange or exercise price, additional consideration or
      changed conversion rate, as the case may be, at the time initially granted,
      issued or sold, and the number of shares of Common Stock acquirable hereunder
      shall be correspondingly readjusted. For purposes of this Section
      8(b)(iii),
      if the
      terms of any Option or Convertible Security that was outstanding as of the
      date
      of issuance of this Warrant are changed in the manner described in the
      immediately preceding sentence, then such Option or Convertible Security and
      the
      Common Stock deemed issuable upon exercise, conversion or exchange thereof
      shall
      be deemed to have been issued as of the date of such change. No adjustment
      shall
      be made if such adjustment would result in an increase of the Warrant Exercise
      Price then in effect.

     

    Calculation
      of Consideration Received.
      In case
      any Options are issued in connection with the issue or sale of other securities
      of the Company, together comprising one integrated transaction or series of
      related transactions, (A) the Options will be deemed to have been issued for
      a
      consideration equal to the greatest of (I) $0.01, (II) the specific aggregate
      consideration, if any, allocated to such Options, and (III) the Black-Scholes
      Value (as defined below) of such Options (the greatest of (I), (II) and (III),
      the “Option
      Consideration”)
      and,
      for purposes of applying the provisions of this Section
      8,
      the
      Option Consideration shall be allocated pro rata among all the shares of Common
      Stock issuable upon exercise of such Options to determine the consideration
      per
      each such share of Common Stock and (B) the other securities will be deemed
      to
      have been issued for an aggregate consideration equal to the aggregate
      consideration received by the Company for the Options and other securities
      (determined as provided below with respect to each share of Common Stock
      represented thereby), less the Option Consideration. If any Common Stock,
      Options or Convertible Securities are issued or sold or deemed to have been
      issued or sold for cash, the consideration received therefor will be deemed
      to
      be the net amount received by the Company therefor. If any Common Stock, Options
      or Convertible Securities are issued or sold for a consideration other than
      cash, the amount of such consideration received by the Company will be the
      fair
      value of such consideration, except where such consideration consists of
      marketable securities, in which case the amount of consideration received by
      the
      Company will be the Weighted Average Price of such securities on the date of
      receipt of such securities. If any Common Stock, Options or Convertible
      Securities are issued to the owners of the non-surviving entity in connection
      with any merger in which the Company is the surviving entity, the amount of
      consideration therefor will be deemed to be the fair value of such portion
      of
      the net assets and business of the non-surviving entity as is attributable
      to
      such Common Stock, Options or Convertible Securities, as the case may be. The
      fair value of any consideration other than cash or securities will be determined
      jointly by the Company and the Holder. If such parties are unable to reach
      agreement within ten (10) days after the occurrence of an event requiring
      valuation (the “Valuation
      Event”),
      the
      fair value of such consideration will be determined within five (5) Business
      Days after the tenth (10th) day following the Valuation Event by an independent,
      reputable appraiser jointly selected by the Company and the Holder. The
      determination of such appraiser shall be final and binding upon all parties
      absent manifest error, and the fees and expenses of such appraiser shall be
      borne by the Company.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Record
      Date.
      If the
      Company takes a record of the Holders of Common Stock for the purpose of
      entitling them (1) to receive a dividend or other distribution payable in Common
      Stock, Options or in Convertible Securities or (2) to subscribe for or purchase
      Common Stock, Options or Convertible Securities, then such record date will
      be
      deemed to be the date of the issue or sale of the shares of Common Stock deemed
      to have been issued or sold upon the declaration of such dividend or the making
      of such other distribution or the date of the granting of such right of
      subscription or purchase, as the case may be.

     

    Black-Scholes
      Value.
      The
“Black-Scholes
      Value”
of
      any
      Options shall mean the sum of the amounts resulting from applying the
Black-Scholes
      pricing
      model to each such Option, which calculation is made with the following inputs:
      (i) the “option striking price” being equal to the lowest exercise price
      possible under the terms of such Option on the date of the issuance of such
      Option (the “Valuation
      Date”),
      (ii)
      the “interest rate” being equal to the Federal Reserve US H.15 T Note Treasury
      Constant Maturity 1 Year rate on the Valuation Date (as reported by Bloomberg
      through its "ALLX H15T" function (accessed by typing "ALLX H15T" [GO] on a
      Bloomberg terminal, and inserting the date of the Valuation Date and then
      looking at the row entitled "Treas Const Mat 1 Year" under the column entitled
      “Previous Value”)), or if such rate is not available then such other similar
      rate mutually agreed to by the Company and the Holder, (iii) the “time until
      option expiration” being the time from the Valuation Date until the expiration
      date of such Option, (iv) the “current stock price” being equal to the Weighted
      Average Price of the Common Stock on the Valuation Date, (v) the “volatility”
being the 100-day historical volatility of the Common Stock as of the Valuation
      Date (as reported by the Bloomberg “HVT” screen), and (vi) the “dividend rate”
being equal to zero. Within three (3) Business Days after the Valuation Date,
      each of the Company and the Holder shall deliver to the other a written
      calculation of its determination of the Black-Scholes Value of the Options.
      If
      the Holder and the Company are unable to agree upon the calculation of the
      Black-Scholes Value of the Options within five (5) Business Days of the
      Valuation Date, then the Company shall submit via facsimile the disputed
      calculation to an independent, reputable investment banking firm (jointly
      selected by the Company and the Holder) within seven (7) Business Days of the
      Valuation Date. The Company shall cause such investment banking firm to perform
      the calculations and notify the Company and the Holder of the results no later
      than ten (10) Business Days after the Valuation Date. Such investment banking
      firm’s calculation of the Black-Scholes Value of the Options shall be deemed
      conclusive absent manifest error. The Company shall bear the fees and expenses
      of such investment banking firm for providing such calculation.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Adjustment
      of Warrant Exercise Price upon Subdivision or Combination of Common
      Stock.
      If the
      Company at any time after the date of issuance of this Warrant subdivides (by
      any stock split, stock dividend, recapitalization or otherwise) its outstanding
      shares of Common Stock into a greater number of shares, the Warrant Exercise
      Price in effect immediately prior to such subdivision will be proportionately
      reduced and the number of shares of Common Stock obtainable upon exercise of
      this Warrant will be proportionately increased. If the Company at any time
      after
      the date of issuance of this Warrant combines (by combination, reverse stock
      split or otherwise) its outstanding shares of Common Stock into a smaller number
      of shares, the Warrant Exercise Price in effect immediately prior to such
      combination will be proportionately increased and the number of shares of Common
      Stock obtainable upon exercise of this Warrant will be proportionately
      decreased. Any adjustment under this Section
      8(d)
      shall
      become effective at the close of business on the date the subdivision or
      combination becomes effective or, if earlier, the record date with respect
      to
      the subdivision or combination.

     

    Dividends;
      Distributions of Assets.
      If the
      Company shall declare or make any dividend or other distribution of its assets
      (or rights to acquire its assets) to holders of Common Stock, by way of return
      of capital or otherwise (including any dividend or other distribution of cash,
      stock or other securities, property or options by way of a dividend, spin off,
      reclassification, corporate rearrangement or other similar transaction) (a
      “Distribution”),
      at
      any time after the issuance of this Warrant, then, in each such case, the Holder
      shall be entitled to receive such Distribution, and the Company shall make
      such
      Distribution to the Holder, exactly as if the Holder had exercised this Warrant
      in full (and, as a result, had held all of the shares of Common Stock that
      the
      Holder would have received upon such exercise) immediately prior to the record
      date for such Distribution, or if there is no record therefor, immediately
      prior
      to the effective date of such Distribution (but without the Holder’s actually
      having to so exercise this Warrant).

     

    Certain
      Events.
      If any
      event occurs of the type contemplated by the provisions of this Section
      8
      but not
      expressly provided for by such provisions (including the granting of stock
      appreciation rights, phantom stock rights or other rights with equity features),
      then the Company’s Board of Directors will make an appropriate adjustment in the
      Warrant Exercise Price and the number of shares of Common Stock obtainable
      upon
      exercise of this Warrant so as to protect the rights of the Holder; provided
      that no such adjustment will increase the Warrant Exercise Price or decrease
      the
      number of shares of Common Stock obtainable as otherwise determined pursuant
      to
      this Section
      8.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    Notices.

     

    As
      soon
      as reasonably practicable, but in no event later than two (2) Business Days,
      upon any adjustment of the Warrant Exercise Price, the Company will give written
      notice thereof to the Holder, setting forth in reasonable detail, and
      certifying, the calculation of such adjustment; provided, however, that neither
      the timing of giving any such notice nor any failure by the Company to give
      such
      a notice shall effect any such adjustment or the effective date
      thereof.

     

    The
      Company will give written notice to the Holder at least ten (10) days prior
      to
      the date on which the Company closes its books or takes a record (A) with
      respect to any dividend or distribution upon the Common Stock, (B) with respect
      to any pro rata subscription offer to holders of Common Stock or (C) for
      determining rights to vote with respect to any Organic Change (as defined
      below), dissolution or liquidation.

     

    The
      Company will also give written notice to the Holder at least ten (10) days
      prior
      to the date on which any Organic Change, dissolution or liquidation will take
      place.

     

    Purchase
      Rights; Reorganization, Reclassification, Consolidation, Merger or
      Sale.
      

     

    In
      addition to any adjustments pursuant to Section
      8
      above,
      if at any time the Company grants, issues or sells any Options, Convertible
      Securities or rights to purchase stock, warrants, securities or other property
      pro rata to the record holders of any class of its capital stock (the
“Purchase
      Rights”),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights that such holder could have
      acquired if such holder had held the number of shares of Common Stock acquirable
      upon complete exercise of this Warrant immediately before the date on which
      a
      record is taken for the grant, issuance or sale of such Purchase Rights, or,
      if
      no such record is taken, the date as of which the record holders of Common
      Stock
      are to be determined for the grant, issue or sale of such Purchase
      Rights.

     

    Any
      recapitalization, reorganization, reclassification, consolidation, merger,
      sale
      of all or substantially all of the Company’s assets to another Person or other
      transaction that is effected in such a way that holders of Common Stock are
      entitled to receive (either directly or upon subsequent liquidation) stock,
      securities or assets with respect to or in exchange for Common Stock is referred
      to herein as “Organic
      Change.”
Prior
      to the consummation of any (i) sale of all or substantially all of the Company’s
      assets to an acquiring Person or (ii) other Organic Change following which
      the
      Company is not a surviving entity, the Company will secure from the Person
      purchasing such assets or the successor resulting from such Organic Change
      (in
      each case, the “Acquiring
      Entity”)
      a
      written agreement (in form and substance satisfactory to the Holder) to deliver
      to the Holder, in exchange for this Warrant, a security of the Acquiring Entity
      evidenced by a written instrument substantially similar in form and substance
      to
      this Warrant and satisfactory to the Holder (including, an adjusted Warrant
      Exercise Price equal to the value for the Common Stock reflected by the terms
      of
      such consolidation, merger or sale, and exercisable for a corresponding number
      of shares of Common Stock acquirable and receivable upon exercise of this
      Warrant, if the value so reflected is less than the Warrant Exercise Price
      in
      effect immediately prior to such consolidation, merger or sale). Prior to the
      consummation of any other Organic Change, the Company shall make appropriate
      provision (in form and substance satisfactory to the Holder) to ensure that
      the
      Holder will thereafter have the right to acquire and receive in lieu of or
      in
      addition to (as the case may be) the shares of Common Stock immediately
      theretofore acquirable and receivable upon the exercise of such this Warrant,
      such shares of stock, securities or assets that would have been issued or
      payable in such Organic Change with respect to or in exchange for the number
      of
      shares of Common Stock that would have been acquirable and receivable upon
      the
      exercise of this Warrant as of the date of such Organic Change.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Lost,
      Stolen, Mutilated or Destroyed Warrant.
      If this Warrant is lost, stolen, mutilated or destroyed, the Company shall
      promptly, on receipt of an indemnification undertaking in customary form (or
      in
      the case of a mutilated Warrant, the Warrant), issue a new Warrant of like
      denomination and tenor as this Warrant so lost, stolen, mutilated or
      destroyed.

     

    Notice.
      Any notices, consents, waivers or other communications required or permitted
      to
      be given under the terms of this Warrant must be in writing and will be deemed
      to have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one (1) Business Day after deposit with a nationally recognized
      overnight delivery service, in each case properly addressed to the party to
      receive the same. The addresses and facsimile numbers for such communications
      shall be:

     

    If
      to the
      Company:

    

    Sonterra
      Resources, Inc.

    300
      East
      Sonterra Boulevard, Suite 1220

    San
      Antonio, Texas

    Facsimile:
      210-545-3317

    Attention:
      Michael J. Pawelek

    

    With
      a
      copy to:

    

    Thompson
      & Knight

    333
      Clay
      Street, Suite 3300

    Houston,
      Texas 77002

    Facsimile:
      832-397-8110

    Attention:
      Dallas Parker, Esq.

    

    If
      to the
      initial Holder, to it at the address and facsimile number set forth in the
      Securities Exchange Agreement, with copies to the Holder’s representatives as
      set forth in the Securities Exchange Agreement or, in the case of any other
      Holder or any other Person named above, at such other address and/or facsimile
      number and/or to the attention of such other person as the recipient party
      has
      specified by written notice to the other party at least five (5) Business Days
      prior to the effectiveness of such change. Written confirmation of receipt
      (A)
      given by the recipient of such notice, consent, waiver or other communication,
      (B) mechanically or electronically generated by the sender’s facsimile machine
      containing the time, date, recipient facsimile number and an image of the first
      page of such transmission or (C) provided by a nationally recognized overnight
      delivery service shall be rebuttable evidence of personal service, receipt
      by
      facsimile or deposit with a nationally recognized overnight delivery service
      in
      accordance with clause (i), (ii) or (iii) above, respectively.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    Date.
      The date of this Warrant is February 14, 2008 (the “Warrant
      Date”).
      This Warrant, in all events, shall be wholly void and of no effect after
      11:59 P.M., New York City time, on the Expiration Date, except that
      notwithstanding any other provisions hereof, the provisions of
Section
      7
      shall continue in full force and effect after such date as to any Warrant Shares
      or other securities issued upon the exercise of this
      Warrant.

     

    Amendment
      and Waiver.
      Except as otherwise provided herein, the provisions of this Warrant may be
      amended and the Company may take any action herein prohibited, or omit to
      perform any act herein required to be performed by it, only if the Company
      has
      obtained the written consent of the Holder.

     

    Descriptive
      Headings; Governing Law.
      The descriptive headings of the several sections and paragraphs of this Warrant
      are inserted for convenience only and do not constitute a part of this Warrant.
      All questions concerning the construction, validity, enforcement and
      interpretation of this Warrant shall be governed by the internal laws of the
      State of New York, without giving effect to any choice of law or conflict of
      law
      provision or rule (whether of the State of New York or any other jurisdiction)
      that would cause the application of the laws of any jurisdiction other than
      the
      State of New York.

     

    Rules
      of Construction.
      Unless the context otherwise requires, (a) all references to Articles, Sections,
      Schedules or Exhibits are to Articles, Sections, Schedules or Exhibits contained
      in or attached to this Warrant, (b) each accounting term not otherwise defined
      in this Warrant or the Securities Exchange Agreement has the meaning assigned
      to
      it in accordance with GAAP, (c) words in the singular or plural include the
      singular and plural and pronouns stated in either the masculine, the feminine
      or
      neuter gender shall include the masculine, feminine and neuter and (d) the
      use
      of the word “including” in this Warrant shall be by way of example rather than
      limitation.

     

    Signatures. In
      the event that any signature to this Warrant or any amendment hereto is
      delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
      data file, such signature shall create a valid and binding obligation of the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile or “.pdf” signature page were an original
      thereof. Notwithstanding the foregoing, the Company shall be obligated to
      deliver to the Holder an originally executed Warrant. At the request of any
      party, each other party shall promptly re-execute an original form of this
      Warrant or any amendment hereto and deliver the same to the other party. No
      party hereto shall raise the use of a facsimile machine or e-mail delivery
      of a
“.pdf” format data file to deliver a signature to this Warrant or any amendment
      hereto or the fact that such signature was transmitted or communicated through
      the use of a facsimile machine or e-mail delivery of a “.pdf” format data file
      as a defense to the formation or enforceability of a contract, and each party
      hereto forever waives any such defense.

     

    *
      * * * * *

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to be executed as of February 14,
      2008.

    

    
      	 	 	 
	 	 	SONTERRA
              RESOURCES, INC. (f/k/a River Capital Group, Inc.)
	 
 	 
 	 
 
	 	 	By: /s/ Howard
              Taylor
	 	
              
Name: Howard
              Taylor 
	 	Title:   
              Chief
              Executive Officer

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A TO WARRANT

     

    EXERCISE
      NOTICE

     

    TO
      BE
      EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

     

    SONTERRA
      RESOURCES, INC.

     

    The
      undersigned holder hereby exercises the right to purchase _________________
      of
      the shares of Common Stock (“Warrant
      Shares”)
      of
      SONTERRA RESOURCES, INC. (f/k/a River Capital Group, Inc.), a Delaware
      corporation (the “Company”),
      evidenced by the attached Warrant (the “Warrant”).
      Capitalized terms used herein and not otherwise defined shall have the
      respective meanings set forth in the Warrant.

     

    1.
      Form
      of Warrant Exercise Price. The holder intends that payment of the Warrant
      Exercise Price shall be made as:

     

    ____________       
      a
      “Cash
      Exercise”
      with
      respect to ___________________ Warrant Shares; and/or

     

    ____________       
      a
      “Cashless
      Exercise”
with
      respect to ______________ Warrant Shares.

     

    2.
      Payment of Warrant Exercise Price. In the event that the Holder has elected
      a
      Cash Exercise with respect to some or all of the Warrant Shares to be issued
      pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum
      of
      $___________________ to the Company in accordance with the terms of the
      Warrant.

     

    3.
      Exercise Trigger Transaction. This exercise of the Warrant is conditioned upon
      the consummation of the following Exercise Trigger Transaction:
      __________________________1  No
      such condition applies if left blank

     

    4.
      Delivery of Warrant Shares. The Company shall deliver __________ Warrant Shares
      in accordance with the terms of the Warrant in the following name and to the
      following address:

     

    Issue
      to:          

     

    Facsimile
      Number:
      _______________________________________________________________      

     

    DTC
      Participant Number and Name (if electronic book entry transfer):
      ________________________  

     

    Account
      Number (if electronic book entry transfer):
      _____________________________________

     

    Date:
      _______________ __, ______

     

    Name
      of
      Registered Holder of this Warrant

    ____________________________

     

    ________

      1
        No such
        condition applies if left blank

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    By:
      __________________________   

    Name:

    Title:

    ACKNOWLEDGMENT

     

    The
      Company hereby acknowledges this Exercise Notice and hereby directs [TRANSFER
      AGENT] to issue the above indicated number of shares of Common Stock in
      accordance with the Transfer Agent Instructions dated ________________, 200_
      from the Company and acknowledged and agreed to by [TRANSFER
      AGENT].

     

    
      	 	 	 
	 	 	SONTERRA
              RESOURCES, INC.
	 
 	 
 	 
 
	 	 	By:
              ________________________
	 	Name:
              ______________________
	 	Title:
              _______________________

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B TO WARRANT

    

    FORM
      OF
      WARRANT POWER

    

    

    FOR
      VALUE
      RECEIVED, the undersigned does hereby assign and transfer to ________________,
      Federal Identification No. __________, a warrant to purchase ____________ shares
      of the capital stock of Sonterra Resources, Inc. (f/k/a River Capital Group,
      Inc.), a Delaware corporation, represented by warrant certificate no. _____,
      standing in the name of the undersigned on the books of said corporation. The
      undersigned does hereby irrevocably constitute and appoint ______________,
      attorney to transfer the warrants of said corporation, with full power of
      substitution in the premises.

    

    

    Dated:
      _________, 200_

    

    

    
      	 	
              _________________________________

              

              Name: ____________________________

              Title: _____________________________

            

    

    

    
      
        
        

      

      
        19Exhibit
      10.12

     

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
      NOT
      BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
      AN
      EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
      OF
      1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION OF
      COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
      UNDER
      SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO
      RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY
      BE
      PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
      ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD
      CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTION 3(d) HEREOF. THE
      PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS THAN THE AMOUNTS SET
      FORTH
      ON THE FACE HEREOF PURSUANT TO SECTION 3(d) HEREOF.

     

    SENIOR
      SECURED NOTE

     

    
      
        	February
                14, 2008	 
	Note
                No.: SSN-001 	
                $2,000,000

              

      

       

    

    FOR
      VALUE
      RECEIVED, SONTERRA RESOURCES, INC. (f/k/a River Capital Group, Inc.), a
      Delaware corporation (the “Company”),
      hereby promises to pay to the order of The Longview Fund, L.P. or its permitted
      assigns (the “Holder”)
      the principal amount of Two Million Dollars ($2,000,000) when due, whether
      upon
      maturity, acceleration, redemption or otherwise, and to pay interest
      (“Interest”)
      on the unpaid principal balance hereof on each Interest Payment Date (as defined
      in Section 2) and upon maturity, or earlier upon acceleration or prepayment
      pursuant to the terms hereof, at the Applicable Interest Rate (as defined in
      Section 2). Interest on this Note payable on each Interest Payment Date and
      upon
      maturity, or earlier upon acceleration or prepayment pursuant to the terms
      hereof, shall accrue from the Issuance Date (as defined in Section 2) and shall
      be computed on the basis of a 365-day year and actual days
      elapsed.

     

    Payments
      of Principal and Interest.
      All payments under this Note shall be made in lawful money of the United States
      of America by wire transfer of immediately available funds to such account
      as
      the Holder may from time to time designate by written notice in accordance
      with
      the provisions of this Note. Interest on the Principal shall be paid quarterly
      in arrears on each Interest Payment Date (as defined in Section 2). The Company
      has no right, but under certain circumstances has an obligation, to make
      payments of Principal of this Note prior to the Maturity Date (as defined in
      Section 2), except as set forth in Section 3 hereof. Whenever any amount
      expressed to be due by the terms of this Note is due on any day that is not
      a
      Business Day (as defined in Section 2), the same shall instead be due on the
      next succeeding day that is a Business Day. This Note and all Other Notes (as
      defined in Section 2) issued by the Company pursuant to the Securities Exchange
      Agreement (as defined in Section 2) on the Exchange Closing Date and any
      Additional Closing Dates, and all notes issued in exchange or substitution
      therefor or replacement or addition thereof are collectively referred to in
      this
      Note as the “Notes.”
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Certain
      Defined Terms.
      Each capitalized term used in this Note, and not otherwise defined, shall have
      the meaning ascribed thereto in the Securities Exchange and Additional Note
      Purchase Agreement, dated as of August 3, 2007, pursuant to which this Note
      was
      originally issued (as amended by the February 2008 Amendment Agreement, dated
      as
      of February 14, 2008, and as may be further amended, modified, restated or
      supplemented and in effect from time to time, the “Securities
      Exchange Agreement”).
      For purposes of this Note, the following terms shall have the following
      meanings:

     

    “3-Month
      LIBOR Rate”
means
      the London Interbank Offered Rate of LIBOR with respect to a three-month period
      for deposits of United States Dollars as reported by Bloomberg Financial Markets
      (or any successor thereto, “Bloomberg”)
      at
      approximately 10:00 a.m. (New York time) through its “LIBOR Rates” function
      (accessed by typing “LR” [GO] on a Bloomberg terminal, and looking at the row
      entitled “3 MONTH” and under the column entitled “DOLLAR LIBOR”) (or such other
      page as may replace that page on that service, or such other service as may
      be
      selected jointly by the Company and the holders of the Notes). If such rate
      appears on the Bloomberg LIBOR Rates page on any date of determination of the
      3-Month LIBOR Rate (a “LIBOR
      Determination Date”),
      the
      3-Month LIBOR Rate for such date of determination will be such rate. If on
      any
      LIBOR Determination Date such rate does not appear on the Bloomberg LIBOR Rates
      page, the Company and the holders of Notes representing at least two-thirds
      (2/3) of the aggregate principal amount of the Notes then outstanding will
      jointly request each of four major reference banks in the London interbank
      market, as selected jointly by the Company and such holders to provide the
      Company with its offered quotation for United States dollar deposits for the
      upcoming three-month period, to prime banks in the London interbank market
      at
      approximately 4:00 p.m., London time on any such LIBOR Determination Date and
      in
      a principal amount that is representative for a single transaction in United
      States Dollars in such market at such time. If at least two reference banks
      provide the Company with offered quotations, 3-Month LIBOR Rate on such LIBOR
      Determination Date will be the arithmetic mean of all such quotations. If on
      such LIBOR Determination Date fewer than two of the reference banks provide
      the
      Company with offered quotations, 3-Month LIBOR Rate on such LIBOR Determination
      Date will be the arithmetic mean of the offered per annum rates that three
      major
      banks in New York City selected jointly by the Company and the holders of Notes
      representing at least two-thirds (2/3) of the aggregate principal amount of
      the
      Notes then outstanding quote at approximately 11:00 A.M. in New York City on
      such LIBOR Determination Date for three-month United States dollar loans to
      leading European banks, in a principal amount that is representative for a
      single transaction in United States dollars in such market at such time. If
      these New York City quotes are not available, then the 3-Month LIBOR Rate
      determined on such LIBOR Determination Date will continue to be 3-Month LIBOR
      Rate as then currently in effect on such LIBOR Determination Date.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Applicable
      Interest Rate”
means
      the Interest Rate, or, for so long as an Event of Default shall have occurred
      and be continuing, the Default Rate. 

     

    “Business
      Day”
means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      the city of New York are authorized or required by law to remain
      closed.

     

    “Cash
      and Cash Equivalents”
means
      (I) cash, (II) certificates of deposit or time deposits, having in each case
      a
      tenor of not more than six (6) months, issued by any United States commercial
      bank or any branch or agency of a non-United States bank licensed to conduct
      business in the United States having combined capital and surplus of not less
      than $250,000,000, and (III) money market funds, provided that substantially
      all
      of the assets of such funds consist of securities of the type described in
      clauses (I) or (II) immediately above, all as determined in accordance with
      GAAP
      applied on a consistent basis.

     

    “Change
      of
      Control”
      means (i) the consolidation, merger or other business combination of the Company
      with or into another Person (other than (A) a consolidation, merger or other
      business combination in which holders of the Company’s voting power immediately
      prior to the transaction continue after the transaction to hold, directly or
      indirectly, a majority of the combined voting power of the surviving entity
      or
      entities entitled to vote generally for the election of a majority of the
      members of the board of directors (or their equivalent if other than a
      corporation) of such entity or entities, or (B) pursuant to a migratory merger
      effected solely for the purpose of changing the jurisdiction of incorporation
      of
      the Company), (ii) the sale or transfer of all or substantially all of the
      Company’s assets (including, for the avoidance of doubt, the sale of all or
      substantially all of the assets of the Included Subsidiaries in the aggregate);
      or (iii) the consummation of a purchase, tender or exchange offer made to and
      accepted by the holders of more than the 50% of the outstanding RCGI Common
      Shares, provided that such shares include more than 50% of the outstanding
      RCGI
      Common Shares held by Persons other than the Holder and its Related
      Persons.

     

    “Collateral
      Agent”
shall
      have the meaning ascribed to such term in the Security Agreement.

     

    “Default
      Rate”
means
      the per annum interest rate equal to the sum of (i) the Interest Rate plus
      (ii)
      two percent (2.0%) (i.e., 200 basis points). 

     

    “Dollars”
or
      “$”
means
      United States Dollars.

     

    “Excluded
      Taxes”
means,
      with respect to the Holder, or any other recipient of payment to be made by
      or
      on account of any obligations of the Company or any of the Subsidiaries under
      the Notes, the Securities Exchange Agreement or under any other Transaction
      Document, income or franchise taxes imposed on (or measured by) such recipient’s
      net income by the United States of America or such other jurisdiction under
      the
      laws of which such recipient is organized or its principal offices are
      located.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Financial
      Covenant Test Failure”
      means
      that, as of any date of determination, (A) the Revenue from the sale of
      hydrocarbons and the provision of related services for the three-month period
      ending on such date is less than the Required Revenue as of such date, (B)
      the
      Total Proved Reserves as of such date are less than the Required Total Proved
      Reserves as of such date, or (C) the PRV Ratio as of such date is less than
      the
      Required PRV Ratio as of such date.

     

    “Financial
      Covenant Test Failure Amount”
means
      that, in the event that there is a Financial Covenant Test Failure, as of the
      date of any determination, an amount equal to the sum of:

     

    (i) the
      product of (A) the result of (I) one (1) minus (II) the quotient of the Revenue
      for the three-month period ended on such date, divided by the Required Revenue
      for the three-month period ended on such date, multiplied by (B) the aggregate
      outstanding principal amount of all Notes then outstanding; plus

     

    (ii) the
      product of (A) the result of (I) one (1) minus (II) the quotient of the PRV
      Ratio as of such date, divided by the Required PRV Ratio as of such date,
      multiplied by (B) the aggregate outstanding principal amount of all Notes then
      outstanding; plus

     

    (iii) the
      product of (A) the result of (I) one (1) minus (II) the quotient of the Total
      Proved Reserves as of such date, divided by the Required Total Proved Reserves
      as of such date, multiplied by (B) the aggregate outstanding principal amount
      of
      all Notes then outstanding.

     

    “Governmental
      Authority”
means
      the government of the United States of America or any other nation, or any
      political subdivision thereof, whether state, provincial or local, or any
      agency, authority, instrumentality, regulatory body, court, central bank or
      other entity exercising executive, legislative, judicial, taxing, regulatory
      or
      administration powers or functions of or pertaining to government over the
      Company, or any of their respective properties, assets or
      undertakings.

     

    “Indemnified
      Taxes”
means
      Taxes other than Excluded Taxes.

     

    “Interest
      Amount”
means
      as of any date, with respect to any Principal, all accrued and unpaid Interest
      (including any Interest at the Default Rate) on such Principal through and
      including such date; provided,
      however, that“Interest
      Amount” shall mean, as of any date from and including the Issuance Date until
      the entire Additional Interest Amount has been paid in full pursuant to this
      Note, with respect to any Principal, the sum of (i) all accrued and unpaid
      Interest (including any Interest at the Default Rate) on such Principal through
      and including such date plus (ii) any portion of the Additional Interest Amount
      that has not been paid to the Holder pursuant to this Note; and for purposes
      of
      this definition “Additional
      Interest Amount”
means
      $30,466.62.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Interest
      Payment Date”
means
      the first Business Day of each calendar quarter, beginning with the calendar
      quarter that commences on April 1, 2007, through and including the last calendar
      quarter that commences prior to the Maturity Date.

     

    “Interest
      Rate”
shall
      initially mean the per annum interest rate equal to the sum of (a) the 3-Month
      LIBOR Rate in effect on the Issuance Date and (b) eight and one quarter of
      one
      percent (8.25%) (i.e., 825 basis points). Thereafter, the “Interest
      Rate”
shall
      adjust as of the first Business Day of each calendar quarter thereafter (or,
      if
      not a London Banking Day, then on the First London Banking Day thereafter)
      to
      equal the per annum interest rate equal to the sum of (x) the 3-Month LIBOR
      Rate
      in effect on such date and (y) eight and one quarter of one percent (8.25%)
      (i.e., 825 basis points). 

     

    “Issuance
      Date”
means
      the original date of issuance of this Note pursuant to the Securities Exchange
      Agreement, regardless of any exchange or replacement hereof.

     

    “London
      Banking Day”
means
      a
      day on which dealings in U.S. dollar deposits are transacted in the London
      interbank market.

     

    “Maturity
      Date”
means
      August 31, 2010, unless such date is not a Business Day, in which case “Maturity
      Date” shall mean the first Business Day following August 31, 2010.

     

    “Original
      Principal Amount”
means
      Two Million Dollars ($2,000,000).

     

    “Other
      Notes”
means
      all of the senior secured notes, other than this Note, that have been issued
      by
      the Company pursuant to the Securities Exchange Agreement and all notes issued
      in exchange or substitution therefor, addition thereto or replacement
      thereof.

     

    “PDNP”
as
      of
      any date of determination, means the total proved developed
      non-producing reserves
      of the Company and the Included Subsidiaries, determined as of such date of
      determination in accordance with SEC guidelines based on an independent reserve
      report prepared in good faith by the Petroleum Engineer in accordance with
      the
      Petroleum Engineer Report Guidelines attached as Exhibit
      A
      hereto
      (an “Independent
      Reserve Report”);
      provided, however, that PDNP shall mean zero unless (A) it is based upon an
      Independent Reserve Report (or an update thereof prepared (but not certified)
      by
      the Petroleum Engineer, which update includes all material adjustments to the
      amounts set forth in the most recent Independent Reserve Report to reflect
      the
      Company’s and the Included Subsidiaries’ oil and gas drilling, exploration,
      development and production since the date of such Independent Reserve Report
      (a
“Reserve
      Update”))
      that
      was current as of a date within 92 days of such date of determination, (B)
      the
      Company has publicly disclosed the PDNP in a Periodic Report as of a date within
      274 days of such date of determination (based on an Independent Reserve Report
      that was current as of such date of determination), (C) the PDNP is based upon
      the same Independent Reserve Report or Reserve Update on which the PDP and
      PUD
      are based as of such date of determination, and (D) if the PDNP is not based
      upon an Independent Reserve Report (or a Reserve Update) that was current as
      of
      such date of determination, the Company reasonably believes, based upon its
      own
      analysis conducted in good faith and reflecting the Company’s and the Included
      Subsidiaries’ oil and gas drilling, exploration, development and production
      since the date of the Independent Reserve Report (or Reserve Update) on which
      the PDNP is based (the “Recent
      Production”)
      (and
      has certified to the Holder in the applicable Officer’s Certificate to the
      Holder that it so reasonably believes), that the PDP is not less than that
      disclosed in the Independent Reserve Report (or Reserve Update) on which the
      PDNP is based.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    “PDP”
means
      the total proved developed producing reserves of the Company and the Included
      Subsidiaries, determined in accordance with SEC guidelines based on an
      Independent Reserve Report; provided, however, that PDP shall mean zero unless
      (A) it is based upon an Independent Reserve Report (or a Reserve Update) that
      was current as of a date within 92 days of such date of determination, (B)
      the
      Company has publicly disclosed the PDNP in a Periodic Report as of a date within
      274 days of such date of determination (based on an Independent Reserve Report
      that was current as of such date of determination), (C) the PDP is based upon
      the same Independent Reserve Report or Reserve Update on which the PDNP and
      PUD
      are based as of such date of determination, and (D) if the PDP is not based
      upon
      an Independent Reserve Report (or a Reserve Update) that was current as of
      such
      date of determination, the Company reasonably believes, based upon its own
      analysis conducted in good faith and reflecting the Recent Production (and
      has
      certified to the Holder in the applicable Officer’s Certificate that it so
      reasonably believes), that the PDP is not less than that disclosed in the
      Independent Reserve Report (or Reserve Update) on which the PDP is
      based.

     

    “Periodic
      Report”
means
      a
      quarterly report on Form 10-Q or 10-QSB, or an annual report on Form 10-K or
      10-KSB under the 1934 Act.

     

    “Person”
means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization or a government or any
      department or agency thereof or any other legal entity.

     

    “Petroleum
      Engineer”
means
      a
      petroleum engineer selected and engaged by the Company and approved by the
      holders of Notes representing at least two-thirds (2/3) of the aggregate
      principal amount of the Notes then outstanding.

     

    “Prepayment
      Notice”
means
      a
      written notice from the Company to Holder indicating the Company’s commitment to
      prepay a specified amount of Principal, together with the applicable Interest
      Amount and Prepayment Premium with respect thereto on the applicable Prepayment
      Date.

     

    “Prepayment
      Premium”
means,
      with respect to any prepayment of Principal, (1) at any time during the period
      beginning on the Exchange Closing Date and ending on and including the day
      immediately preceding the first anniversary of the Exchange Closing Date, 3%
      of
      the amount of Principal so prepaid or required to be prepaid, (2) at any time
      during the period beginning on and including the first anniversary of the
      Exchange Closing Date and ending on and including the day immediately preceding
      the second anniversary of the Exchange Closing Date, 2% of the amount of
      Principal so prepaid or required to be prepaid, (3) at any time during the
      period beginning on and including the second anniversary of the Exchange Closing
      Date and ending on and including the day immediately preceding the Maturity
      Date, 1% of the amount of Principal so prepaid or required to be prepaid;
      provided, that (i) in respect of any prepayment of Principal occurring on or
      after the Company’s public announcement of a pending, proposed or intended
      Change of Control, but before the abandonment or termination thereof and public
      announcement of such abandonment or termination, or (ii) in respect of any
      prepayment of Principal pursuant to Section 4(b) occurring as a result of an
      Event of Default set forth in clause (i), (ii), (iii), (iv), (vii), (viii),
      (ix), (x), (xi), (xii), (xiii), (xiv) or (xv) of Section 4(a), “Prepayment
      Premium”
shall
      mean an amount equal to twenty percent (20%) of the amount of Principal so
      prepaid or required to be prepaid.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “Principal”
means
      the outstanding principal amount of this Note as of any date. 

     

    “Pro
      Rata Financial Covenant Test Failure Amount”
means,
      as of the date of any determination, an amount equal to the sum of (i) the
      product of (A) a fraction, of which the numerator is the outstanding Principal
      as of such date, and of which the denominator is the aggregate outstanding
      principal amount of all Notes as of such date, multiplied by (B) the Financial
      Covenant Test Failure Amount, and (ii) the Interest Amount with respect to
      such
      Principal as of the date such amount is paid to the Holder.

     

    “PRV
      Ratio”
means,
      as of any date of determination, the quotient of:

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (I)
      the
      result of:

     

    (i)
      (A)
      the product of the aggregate actual PDP and PDNP mcfe of the Company’s and the
      Included Subsidiaries’ oil and gas properties and interests in which the holders
      of the Notes have a valid, first priority, perfected security interest as of
      such date of determination, multiplied by (B) the relevant hub spot price as
      of
      such date of determination multiplied by (C) 40%; plus

     

    (ii)
      the
      product of (A) the actual PUD mcfe of such properties multiplied by (B) relevant
      hub spot price multiplied by (C) 15%; plus

     

    (iii)
      the
      product of (A) the fair market value as of such date of determination of the
      pipeline systems and separation or tank farm facilities with respect to such
      properties that are owned by the Company or the Included Subsidiaries and in
      which the holders of the Notes have a valid, first priority, perfected security
      interest, as determined in good faith by a Qualified Appraiser, multiplied
      by
      (B) (1) on or prior to the one year anniversary of the Exchange Closing Date,
      40% or (2) after the one year anniversary of the Exchange Closing Date but
      on or
      prior to the two year anniversary of the Exchange Closing Date, 20% and (3)
      thereafter, 0%; plus

     

    (iv)
      the
      aggregate Cash and Cash Equivalents of the Company and the Included
      Subsidiaries, the aggregate hydrocarbon receivables of the Company and the
      Included Subsidiaries, and the market value of hedges of the Company and the
      Included Subsidiaries, each as of such date of determination, as set forth
      in
      the financial statements included in the Periodic Report for the fiscal quarter
      or year ended on such date of determination; minus

     

    (vii)
      the
      aggregate hedge margin collateral of the Company and the Included Subsidiaries,
      the aggregate hydrocarbon payables of the Company and the Included Subsidiaries,
      and the aggregate accrued cash expenses of the Company and the Included
      Subsidiaries, each as of such date of determination, as set forth in the
      financial statements included in the Periodic Report for the fiscal quarter
      or
      year ended on such date of determination; minus

     

    (x)
      the
      aggregate Indebtedness for borrowed money of the Company and the Subsidiaries
      due within one year (excluding the Notes), as of such date of determination,
      as
      set forth in the financial statements included in the Periodic Report for the
      fiscal quarter or year ended on such date of determination ;

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    divided
      by

     

    
      	 	
              (II)
                

            	
              the
                aggregate outstanding principal amount of all
                Notes.

            

    

     

    “PUD”
means
      the total proved undeveloped reserves of the Company and the Included
      Subsidiaries, determined in accordance with SEC guidelines based on an
      Independent Reserve Report; provided, however, that PUD shall mean zero unless
      (A) it is based upon an Independent Reserve Report (or a Reserve Update) that
      was current as of a date within 92 days of such date of determination, (B)
      the
      Company has publicly disclosed the PDNP in a Periodic Report as of a date within
      274 days of such date of determination (based on an Independent Reserve Report
      that was current as of such date of determination), (C) the PUD is based upon
      the same Independent Reserve Report or Reserve Update on which the PDNP and
      PDP
      are based as of such date of determination, and (D) if the PDNP is not based
      upon an Independent Reserve Report (or a Reserve Update) that was current as
      of
      such date of determination, the Company reasonably believes, based upon its
      own
      analysis conducted in good faith and reflecting the Recent Production (and
      has
      certified in the applicable Officer’s Certificate that it so reasonably
      believes), that the PUD is not less than that disclosed in the Independent
      Reserve Report (or Reserve Update) on which the PUD is based.

     

    “Qualified
      Appraiser”
means
      a
      qualified, independent appraiser selected and engaged by the Company and
      approved by holders of Notes representing at least two-thirds (2/3) of the
      aggregate principal amount of the Notes then outstanding.

    

     

    “Required
      PRV Ratio”
means,
      with respect to any date set forth below, the ratio set forth below opposite
      such date:

     

    
      	
              Date

            	
              Ratio

            
	 	 
	
              Exchange
                Closing Date (if prior to September 30, 2007)

            	
              1.00

            
	 	 
	
              September
                30, 2007

            	
              1.00

            
	 	 
	
              December
                31, 2007

            	
              1.25

            
	 	 
	
              March
                31, 2008

            	
              1.50

            
	 	 
	
              June
                30, 2008 and 

              the
                last day of each fiscal quarter thereafter

            	
              1.75

            

    

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    “Required
      Revenue”
means,
      with respect to any fiscal quarter (i) ending on or after September 30, 2007
      and
      prior to or on June 30, 2008, $300,000 and (ii) ending after June 30, 2008,
      $500,000.

     

    “Required
      Total Proved Reserves”
means,
      with respect to any date set forth below, the amount set forth below opposite
      such date:

     

    
      	
              Date

            	
              Total
                Proved Reserves

            
	 	 
	
              Exchange
                Closing Date (if prior to September 30, 2007)

            	
              2.0
                BCFE

            
	 	
               

            
	
              September
                30, 2007

            	
              2.0
                BCFE

            
	 	 
	
              December
                31, 2007

            	
              4.0
                BCFE

            
	 	 
	
              March
                31, 2008

            	
              5.0
                BCFE

            
	 	 
	
              June
                30, 2008 and the last day

              of
                each fiscal quarter thereafter

            	
              7.0
                BCFE

            

    

    

     

    “Revenue”
means
      the consolidated revenues of the Company and the Included Subsidiaries
      determined in accordance with GAAP, consistently applied; provided, however,
      that revenues of an Included Subsidiary that is not a wholly-owned Subsidiary
      shall only be recognized in the percentage amount of the Company or its wholly
      owned Subsidiaries’ percentage ownership of the Capital Stock of such Included
      Subsidiary; provided, however, that in determining Revenue for any measurement
      period commencing prior to the Exchange Closing and ending after the Exchange
      Closing, Revenue shall include the revenues of Sonterra, determined in
      accordance with GAAP, consistently applied, from the first day of such
      measurement period through (but not including) the Exchange Closing
      Date.

     

    “SEC”
means
      the U.S. Securities and Exchange Commission, or any successor
      thereto.

     

    “Total
      Proved Reserves”
means,
      as of any date of determination, the sum of the PUD, the PDNP and the PDP of
      the
      oil and gas properties and interests of the Company and the Included
      Subsidiaries in which the holder of the Notes have a valid, first priority,
      perfected security interest; provided, however, there shall be excluded, in
      making such calculation, such portion, if any, of the PUD in excess of the
      portion that would result in the PUD constituting 40% of such sum.

     

    “U.S.”
means
      the United States of America.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    Principal
      Payments.
      

     

    Optional
      Principal Prepayments.

     

    General.
      The
      Company shall have the right at any time not less than ten (10) Business
      Days following
      the receipt by Holder of a Prepayment Notice from the Company, to voluntarily
      prepay this Note (an “Optional
      Prepayment”),
      in
      whole or in part, for an amount in cash equal to the sum of (A) the Principal
      then being prepaid pursuant to this Section 3(a), (B) the Interest Amount with
      respect to such Principal as of the applicable prepayment date (the
“Optional
      Prepayment Date”)
      and
      (C) the Prepayment Premium with respect to such Principal as of the Optional
      Prepayment Date (collectively, the “Required
      Prepayment Amount”);
      provided, however, that the Company may not take such action unless it
      simultaneously takes the same action with respect to the same percentage of
      the
      outstanding principal amount of each outstanding Other Note.

     

    Mechanics
      of Optional Prepayments.
      If the
      Company has delivered a Prepayment Notice in accordance with Section 3(a)(i),
      then the Company shall pay to the Holder the Required Prepayment Amount in
      cash
      by wire transfer of immediately available funds to an account designated by
      the
      Holder. The delivery of a Prepayment Notice by the Company to the Holder shall
      be irrevocable, and the failure of the Company to prepay the Required Prepayment
      Amount set forth therein on the applicable Optional Prepayment Date shall
      constitute an Event of Default hereunder.

     

    Condition
      to Optional Prepayment.
      Notwithstanding anything to the contrary contained in this Section 3(a), the
      Company shall not be permitted to deliver any Prepayment Notice or to effect
      any
      Optional Prepayment at any time after any Event of Default, or any event that
      with the passage of time or the giving of notice (or both) and without being
      cured would constitute an Event of Default, has occurred and is
      continuing.

     

    Mandatory
      Prepayment Upon Financial Covenant Test Failure. 

     

    On
      the
      second Business Day following each date that the Company files or is required
      to
      file a Periodic Report (which in each case shall disclose the Company’s Revenue
      for the three-month period ending on the last day of the period covered by
      such
      Periodic Report, and the Total Proved Reserves, the PRV Ratio and any Financial
      Covenant Test Failure Amount as of the last day of the period covered by such
      Periodic Report, and details of the calculations and components thereof), the
      Company shall deliver to the Holder, by facsimile or overnight courier, a
      certificate executed by its principal financial officer (an “Officer’s
      Certificate”)
      (1)
      certifying as to the accuracy of the Periodic Report and of the Total Proved
      Reserves, the PRV Ratio and any Financial Covenant Test Failure Amount disclosed
      therein, (2) if there is no Financial Covenant Test Failure disclosed therein,
      certifying that there was no Financial Covenant Test Failure as of the last
      day
      of the period covered by such Periodic Report, (3) if there was a Financial
      Covenant Test Failure as of the last day of the period covered by such Periodic
      Report, certifying as to the Holder’s Pro Rata Financial Covenant Test Failure
      Amount as of the last day of the period covered by such Periodic Report.
      Notwithstanding anything contained herein to the contrary, no Officer’s
      Certificate delivered by the Company to any Holder shall contain any material
      non-public information regarding the Company or any of the Subsidiaries. Upon
      the occurrence of any Financial Covenant Test Failure, the Company shall
      immediately prepay, without demand or notice by the Holder, by wire transfer
      of
      immediately available funds to such account as the Holder may from time to
      time
      designate, an amount equal to the Holder’s Pro Rata Financial Covenant Test
      Failure Amount. 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    In
      the
      case of a bona fide dispute as to the determination of the Revenue, PUD, PDP,
      PDNP, or PRV Ratio or the arithmetic calculation of any Financial Covenant
      Test
      Failure Amount, the Company shall pay any amount that is not disputed and shall
      transmit an explanation of the disputed determinations or arithmetic
      calculations to the Holder via facsimile within two (2) Business Days of the
      occurrence of the dispute. If the Holder and the Company are unable to agree
      upon the determination of the Revenue, PUD, PDP, PDNP, or PRV Ratio or the
      arithmetic calculation of any Financial Covenant Test Failure Amount within
      two
      (2) Business Days of such disputed determination or arithmetic calculation
      being
      transmitted to the Holder, then the Company shall promptly (and in any event
      within two (2) Business Days) submit via facsimile (A) the disputed
      determination of the PUD, PDP, PDNP, or PRV Ratio to a qualified, independent
      petroleum engineer and/or a qualified, independent appraiser (other than the
      Petroleum Engineer and the Qualified Appraiser), as applicable, agreed to by
      the
      Company and the holders of the Notes representing at least two-thirds (2/3)
      of
      the aggregate principal amounts of the Notes then outstanding as to which such
      determination is being made, or (B) the disputed arithmetic calculation of
      the
      Revenue or such Financial Covenant Test Failure Amount to an independent,
      outside certified public accountant, agreed to by the Company and the holder
      of
      the Notes representing at least two-thirds (2/3) of the aggregate principal
      amounts of the Notes then outstanding as to which such determination is being
      made. The Company shall direct the petroleum engineer, the appraiser, or the
      accountant, as the case may be, to perform the determinations or calculations,
      at the Company’s expense, and notify the Company and the Holder of the results
      no later than two (2) Business Days from the time it receives the disputed
      determinations or calculations. Such petroleum engineer’s, appraiser’s, or
      accountant’s determination or calculation, as the case may be, shall be binding
      upon all parties absent manifest error.

     

    Mandatory
      Payment by the Company on Maturity Date.
      If any
      Principal remains outstanding on the Maturity Date, then the Holder shall
      surrender this Note, duly endorsed for cancellation to the Company, and such
      Principal shall be redeemed by the Company as of the Maturity Date by payment
      on
      the Maturity Date to the Holder, by wire transfer of immediately available
      funds, of an amount equal to 100% of such Principal.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    Surrender
      of Note.
      Notwithstanding anything to the contrary set forth in this Note, upon any
      prepayment of this Note in accordance with its terms, the Holder shall not
      be
      required to physically surrender this Note to the Company unless all of the
      Principal is being repaid and the related Interest Amount and all other
      obligations payable under this Note (including any applicable Prepayment
      Premium) have been paid in full. The Holder and the Company shall maintain
      records showing the Principal repaid and the date(s) of such repayments or
      shall
      use such other method, reasonably satisfactory to the Holder and the Company,
      so
      as not to require physical surrender of this Note upon each such repayment.
      In
      the event of any dispute or discrepancy, such records of the Holder establishing
      the Principal to which the Holder is entitled shall be controlling and
      determinative in the absence of manifest error. The Holder and any assignee,
      by
      acceptance of this Note, acknowledge and agree that, by reason of the provisions
      of this paragraph, following partial repayment of any portion of this Note,
      the
      Principal of this Note may be less than the principal amount stated on the
      face
      hereof.

     

    Defaults
      and Remedies.

     

    Events
      of
      Default. An “Event
      of Default”
shall
      mean any of: (i) default in payment of any Principal, Required Prepayment
      Amount, or Pro Rata Financial Covenant Test Failure Amount under this Note
      or
      any Other Note when and as due; (ii) default in payment of any Interest or
      other
      amount due on this Note or any Other Note that is not included in an amount
      described in the immediately preceding clause (i) that is not cured within
      three
      Business Days from the date such or other amount was due; (iii) failure by
      the
      Company for 10 days to comply with any other provision of this Note in all
      material respects; (iv) any default in payment of at least $100,000,
      individually or in the aggregate, under or acceleration prior to maturity of,
      or
      any event or circumstances arising such that, any person is entitled, or could,
      with the giving of notice and/or lapse of time and/or the fulfillment of any
      condition and/or the making of any determination, become entitled, to require
      repayment before its stated maturity of, or to take any step to enforce any
      security for, any mortgage, indenture or instrument under which there may be
      issued or by which there may be secured or evidenced any
      indebtedness
      for
      money borrowed of at least $100,000 by the Company or any of the Subsidiaries,
      or for money borrowed the repayment of at least $100,000 of which is guaranteed
      by the Company or any of the Subsidiaries, whether such indebtedness or
      guarantee now exists or shall be created hereafter; (v) the Company or any
      of
      the Subsidiaries pursuant to or within the meaning of any Bankruptcy Law (as
      defined below); (A) commences a voluntary case or applies for a receiving order;
      (B) consents to the entry of an order for relief against it in an involuntary
      case or consents to any involuntary application for a receiving order; (C)
      consents to the appointment of a Custodian of it or any of the Subsidiaries
      for
      all or substantially all of its property; (D) makes a general assignment for
      the
      benefit of its creditors; or (E) admits in writing that it is generally unable
      to pay its debts as the same become due; (vi) an involuntary case or other
      proceeding is commenced directly against the Company or any of the Subsidiaries
      seeking liquidation, reorganization or other relief with respect to it or its
      Indebtedness under any Bankruptcy Law now or hereafter in effect or seeking
      the
      appointment of a trustee, receiver, liquidator, custodian or other similar
      official of it or any substantial part of its property, and such involuntary
      case or other Bankruptcy Law proceeding remains undismissed and unstayed for
      a
      period of 45 days, or an order of relief is entered against the Company as
      debtor under the Bankruptcy Laws as are now or hereafter in effect;
      (vii) the Company or any of the Subsidiaries breaches any covenant or other
      term or condition of the Security Documents; (viii) the Company or any of the
      Subsidiaries breaches any covenant or other term or condition of the Securities
      Exchange Agreement, the Warrants, this Note or any other Transaction Document,
      except, in the case of a breach of a covenant or other term that is curable,
      only if such breach continues for a period of at least 20 days; (ix) the Company
      breaches, or otherwise does not comply with, Section 4(u), or any of the
      provisions of Section 5, of
      the
      Securities Exchange Agreement; (x) one or more judgments, non-interlocutory
      orders or decrees shall be entered by a U.S. state or federal or a foreign
      court
      or administrative agency of competent jurisdiction against the Company or any
      of
      the Subsidiaries involving, in the aggregate, a liability (to the extent not
      covered by independent third-party insurance) as to any single or related series
      of transactions, incidents or conditions, of $100,000 or more, and the same
      shall remain unsatisfied, unvacated, unbonded or unstayed pending appeal for
      a
      period of 30 days after the entry thereof; (xi) there shall occur a Change
      of
      Control; (xii) any representation, warranty, certification or statement made
      by
      the Company or any of the Subsidiaries in the Securities Exchange Agreement,
      the
      Registration Rights Agreement, the Warrants, this Note, the Security Documents
      or any other Transaction Document or in any certificate, financial statement
      or
      other document delivered pursuant to any such Transaction Document is incorrect
      in any material respect when made (or deemed made); (xiii) any Lien created
      by
      any of the Security Documents shall at any time fail to constitute a valid
      and
      perfected Lien on all of the Collateral purported to be secured thereby, subject
      to no prior or equal Lien except Permitted Liens, or the Company or any of
      the
      Subsidiaries shall so assert, (xiv) the Company fails to file, or is determined
      to have failed to file, in a timely manner any Periodic Report or Current Report
      (other than a Current Report that is required solely pursuant to Item 1.01,
      1.02, 2.03, 2.04, 2.05, 2.06, 4.02(a) or 5.02(e) of Form 8-K as in effect on
      the
      Issuance Date) required to be filed with the SEC pursuant to the 1934 Act
      (provided that any filing made within the time period permitted by Rule 12b-25
      under the 1934 Act and pursuant to a timely filed Form 12b-25 shall, for
      purposes of this clause (xiv), be deemed to be timely filed) or the Revenue,
      the
      Total Proved Reserves, the PRV Ratio or any Financial Covenant Test Failure
      Amount disclosed in any Periodic Report is not true and correct in all material
      respects; or (xv) the Company fails to deliver an Officer’s Certificate pursuant
      to Section 3(b)(i) within five (5) days after the date such Officer’s
      Certificate is required to be delivered pursuant to Section 3(b)(i), any
      Officer’s Certificate delivered to the Holder does not contain any of the
      information required to be included therein pursuant to Section 3(b)(i), or
      any
      of the information contained in any Officer’s Certificate delivered to the
      Holder is not true, correct and complete in all material respects. The term
      “Bankruptcy
      Law”
means
      Title 11, U.S. Code, or any similar U.S. federal or state law or law of any
      applicable foreign government or political subdivision thereof for the relief
      of
      debtors. The term “Custodian”
means
      any receiver, trustee, assignee, liquidator or similar official under any
      Bankruptcy Law. Within two Business Days after the occurrence of any Event
      of
      Default, the Company shall deliver written notice thereof to the
      Holder.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Remedies.
      If an
      Event of Default occurs and is continuing, the Holder may declare all or any
      portion of this Note, including any or all amounts due hereunder, to be due
      and
      payable immediately, except that in the case of an Event of Default arising
      from
      events described in clauses (v) and (vi) of Section 4(a) above, all amounts
      due
      hereunder shall immediately become due and payable without further action or
      notice. In addition to any remedy the Holder may have under this Note, the
      Security Documents and the other Transaction Documents, such unpaid amounts
      shall bear interest at the Default Rate, and any payment of Principal prior
      to
      the scheduled maturity thereof as a result of acceleration under this Section
      4(b) shall be accompanied by the Prepayment Premium in respect thereof. Nothing
      in this Section 4 shall limit any other rights the Holder may have under this
      Note, the Security Documents or the other Transaction Documents.

     

    Vote
      to Change the Terms of the Notes.
      The written consent of the Company and the Holder shall be required in order
      to
      affect any amendment, waiver or other modification of this
      Note.

     

    Lost
      or Stolen Notes.
      Upon receipt by the Company of evidence reasonably satisfactory to the Company
      of the loss, theft, destruction or mutilation of this Note, and, in the case
      of
      loss, theft or destruction, of an indemnification undertaking by the Holder
      to
      the Company in customary form and reasonably satisfactory to the Company and,
      in
      the case of mutilation, upon surrender and cancellation of this Note, the
      Company shall execute and deliver a new Note of like tenor and
      date.

     

    Remedies,
      Characterizations, Other Obligations, Breaches and Injunctive
      Relief.
      The remedies provided in this Note shall be cumulative and in addition to all
      other remedies available under the Securities Exchange Agreement, the Security
      Documents and the other Transaction Documents, at law or in equity (including
      a
      decree of specific performance and/or other injunctive relief), and no remedy
      contained herein shall be deemed a waiver of compliance with the provisions
      giving rise to such remedy, and nothing herein shall limit the Holder’s right to
      pursue actual damages for any failure by the Company to comply with the terms
      of
      this Note. The Company covenants to the Holder that there shall be no
      characterization concerning this instrument other than as expressly provided
      herein. Amounts set forth or provided for herein with respect to payments and
      the like (and the computation thereof) shall be the amounts to be received
      by
      the Holder and shall not, except as expressly provided herein, be subject to
      any
      other obligation of the Company (or the performance thereof). The Company
      acknowledges that a breach by it of its obligations hereunder will cause
      irreparable harm to the Holder and that the remedy at law for any such breach
      may be inadequate. The Company therefore agrees that, in the event of any such
      breach or threatened breach, the Holder shall be entitled, in addition to all
      other available remedies, to an injunction restraining any breach, without
      the
      necessity of showing economic loss and without any bond or other security being
      required.

     

    Specific
      Shall Not Limit General; Construction.
      No specific provision contained in this Note shall limit or modify any more
      general provision contained herein. This Note shall be deemed to be jointly
      drafted by the Company and the Buyers pursuant to the Securities Exchange
      Agreement and shall not be construed against any person as the drafter
      hereof.

     

    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 privilege.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Notice.
      Whenever notice is required to be given under this Note, unless otherwise
      provided herein, such notice shall be given in accordance with Section
      9(f) of
      the Securities Exchange Agreement.

     

    Transfer
      of this Note.
      The Holder may assign or transfer some or all of its rights hereunder, subject
      to compliance with applicable Securities Laws (if applicable) and the provisions
      of Section 2(f) of the Securities Exchange Agreement without the consent of
      the
      Company. Notwithstanding anything to the contrary contained in this Section
      11,
      each such assignee or transferee, upon becoming a Holder hereunder, acknowledges
      that it is bound by the terms and conditions of Section 5.12 of the Security
      Agreement and agrees to, promptly upon the request of the Collateral Agent,
      deliver to Collateral Agent a written Joinder to the Security Agreement and
      other Security Documents.

     

    Payment
      of Collection, Enforcement and Other Costs.
      Without limiting the provisions of the Securities Exchange Agreement, the
      Security Documents and the other Transaction Documents, if (a) this Note is
      placed in the hands of an attorney for collection or enforcement or is collected
      or enforced through any legal proceeding; or (b) an attorney is retained to
      represent the Holder in any bankruptcy, reorganization, receivership of the
      Company or other proceedings affecting Company creditors’ rights and involving a
      claim under this Note, then the Company shall pay the costs incurred by the
      Holder for such collection, enforcement or action, including reasonable
      attorneys’ fees and disbursements.

     

    Cancellation.
      After all principal and other amounts at any time owed under this Note have
      been
      paid in full in accordance with the terms hereof, this Note shall automatically
      be deemed canceled, shall be surrendered to the Company for cancellation and
      shall not be reissued.

     

    Note
      Exchangeable for Different Denominations.
      Subject to Section 3(d), in the event of an option, mandatory or scheduled
      payment of less than all of the Principal pursuant to the terms hereof, the
      Company shall, upon the request of Holder and tender of this Note promptly
      cause
      to be issued and delivered to the Holder, a new Note of like tenor representing
      the remaining Principal that has not been so repaid. This Note is exchangeable,
      upon the surrender hereof by the Holder at the principal office of the Company,
      for a new Note or Notes containing the same terms and conditions and
      representing in the aggregate the Principal, and each such new Note will
      represent such portion of such Principal as is designated by the Holder at
      the
      time of such surrender. The date the Company initially issued this Note shall
      be
      the “Issuance Date” hereof regardless of the number of times a new Note shall be
      issued.

     

    Taxes.
      

     

    Payments
      Free of Taxes.
      Any and
      all payments by or on account of any obligation of the Company or any of the
      Included Subsidiaries under this Note, the Securities Exchange Agreement, the
      Security Documents or any other Transaction Document shall be made without
      any
      set-off, counterclaim or deduction and free and clear of and without deduction
      for any Indemnified Taxes; provided that if the Company or any of the Included
      Subsidiaries shall be required to deduct any Indemnified Taxes from such
      payments, then (i) the sum payable shall be increased as necessary so that
      after
      making all required deductions (including deductions applicable to additional
      sums payable under this Section 15(a)), the Holder receives an amount equal
      to
      the sum it would have received had no such deductions been made, (ii) the
      Company or the applicable Included Subsidiary shall make such deductions and
      (iii) the Company or the applicable Included Subsidiary as applicable shall
      pay
      the full amount deducted to the relevant Governmental Authority in accordance
      with applicable law.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Indemnification
      by the Company.
      The
      Company shall indemnify the Holder, within ten (10) days after written demand
      therefor, for the full amount of any Indemnified Taxes paid by the Holder,
      on or
      with respect to any payment by or on account of any obligation of the Company
      or
      any of the Included Subsidiaries under the Notes, the Securities Exchange
      Agreement, the Security Documents or any of the other Transaction Documents
      (including Indemnified Taxes imposed or asserted on or attributable to amounts
      payable under this Section 15) and any penalties, interest and reasonable
      expenses arising therefrom or with respect thereto, whether or not such
      Indemnified Taxes were correctly or legally imposed or asserted by the relevant
      Governmental Authority. A certificate of the Holder as to the amount of such
      payment or liability under this Section 15 shall be delivered to the Company
      and
      shall be conclusive absent manifest error. In addition, the Company shall
      promptly pay the fees, costs and expenses incurred thereby in connection with
      the engagement of the Petroleum Engineer and the Qualified Appraiser with
      respect to the determination of the PUD, the PDNP, the PDP, the PRV Ratio,
      the
      Revenue and the Financial Covenant Test Failure Amount.

     

    Waiver
      of Notice.
      To the extent permitted by law, the Company hereby waives demand, notice,
      protest and all other demands and notices in connection with the delivery,
      acceptance, performance, default or enforcement of this Note, the Security
      Documents, the Securities Exchange Agreement and the other Transaction
      Documents.

     

    Governing
      Law.
      This Note shall be construed and enforced in accordance with, and all questions
      concerning the construction, validity, interpretation and performance of this
      Note shall be governed by, the internal laws of the State of New York, without
      giving effect to any choice of law or conflict of law provision or rule (whether
      of the State of New York or any other country or jurisdiction) that would cause
      the application of the laws of any jurisdiction or country other than the State
      of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
      of the state and federal courts sitting in the City of New York, borough of
      Manhattan, for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein, and
      hereby irrevocably waives, and agrees not to assert in any suit, action or
      proceeding, any claim that it is not personally subject to the jurisdiction
      of
      any such court, that such suit, action or proceeding is brought in an
      inconvenient forum or that the venue of such suit, action or proceeding is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof by registered or certified U.S. mail, return receipt
      requested, or by a nationally recognized overnight delivery service, to such
      party at the address for such notices to it under this Note and agrees that
      such
      service shall constitute good and sufficient service of process and notice
      thereof. Nothing contained herein shall be deemed to limit in any way any right
      to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
      WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
      ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING
      OUT
      OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    Further
      Assurances.
      The Company shall do and perform, or cause to be done and performed, all such
      further acts and things, and shall execute and deliver all such other
      agreements, certificates, instruments and documents, as the Holder may
      reasonably request in order to carry out the intent and accomplish the purposes
      of this Note and the consummation of the transactions contemplated
      hereby.

     

    Payment
      Set Aside.
      To the extent that the Company makes a payment or payments to the Holder
      hereunder or the Holder enforces or exercises its rights hereunder, and such
      payment or payments or the proceeds of such enforcement or exercise or any
      part
      thereof are subsequently invalidated, declared to be fraudulent or preferential,
      set aside, recovered from, disgorged by or are required to be refunded, repaid
      or otherwise restored to the Company, by a trustee, receiver or any other person
      under any law (including any Bankruptcy Law, U.S. state or federal law, the
      laws
      of any foreign government or any political subdivision thereof, common law
      or
      equitable cause of action), then to the extent of any such restoration the
      obligation or part thereof originally intended to be satisfied shall be revived
      and continued in full force and effect as if such payment had not been made
      or
      such enforcement or setoff had not occurred.

     

    Interpretative
      Matters.
      Unless the context otherwise requires, (a) all references to Sections, Schedules
      or Exhibits are to Sections, Schedules or Exhibits contained in or attached
      to
      this Note, (b) words in the singular or plural include the singular and plural
      and pronouns stated in either the masculine, the feminine or neuter gender
      shall
      include the masculine, feminine and neuter and (d) the use of the word
“including” in this Note shall be by way of example rather than
      limitation.

     

    Signatures.
      In the event that any signature to this Note or any amendment hereto is
      delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
      data file, such signature shall create a valid and binding obligation of the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile or “.pdf” signature page were an original
      thereof. Notwithstanding the foregoing, the Company shall be required to deliver
      an originally executed Note to the Holder. At the request of any party each
      other party shall promptly re-execute an original form of this Note or any
      amendment hereto and deliver the same to the other party. No party hereto shall
      raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data
      file to deliver a signature to this Note or any amendment hereto or the fact
      that such signature was transmitted or communicated through the use of a
      facsimile machine or e-mail delivery of a “.pdf” format data file as a defense
      to the formation or enforceability of a contract and each party hereto forever
      waives any such defense.

     

    [
      Remainder of Page Intentionally Left Blank; Signature Page Follows
      ]

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Note to be executed on its behalf by the undersigned
      as
      of the year and date first above written.

     

    
      	 	
              SONTERRA
                RESOURCES, INC.
                (f/k/a River Capital Group, Inc.), 
a Delaware corporation

              By:
                /s/
                Howard Taylor 

              Name: Howard
                Taylor 

              Title:
                 Chief
                Executive Officer

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      EXHIBIT
        A

      Petroleum
        Engineer Report Guidelines

      [Attached]

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