Document:

EXHIBIT
      10.4

     

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT (this “Agreement”) dated April 6, 2006 (the “Effective
      Date”), between Foothills Resources, Inc., a Delaware corporation with
      its
      principal place of business located at P.O. Box 2701, Bakersfield, California
      93303, its affiliates, subsidiaries, successors and assigns (the “Company”), and
      Dennis B. Tower, an individual residing at 13743 Monks Hood Road P.O. Box 8217,
      Black Butte Ranch, Oregon 97759 (the “Executive”).

     

    WHEREAS,
      the Company and the Executive (collectively, the “Parties”) wish to memorialize
      the terms and conditions of the Executive’s employment by the Company and to
      continue the Executive’s services for the Company on the terms and conditions
      set forth herein.

     

    NOW,
      THEREFORE, in consideration of the covenants and promises contained herein,
      the
      Parties agree as follows:

     

    1. Employment
      Period.
      The
      Company shall employ the Executive, and the Executive agrees to be employed
      by
      the Company in the position of Chief Executive Officer in accordance with the
      terms and subject to the conditions of this Agreement, commencing on the
      Effective Date and continuing until such employment is terminated in accordance
      with the provisions of paragraph 11, in which case the provisions of paragraph
      11 shall control (the “Term”). 

     

    The
      Executive affirms that no obligation exists between the Executive and any other
      entity which would prevent or impede the Executive’s immediate and full
      performance of every obligation of this Agreement.

     

    2. Position
      and Duties.
      During
      the Term, the Executive shall serve in, and assume duties and responsibilities
      consistent with, the position of Chief Executive Officer, unless and until
      otherwise instructed by the Company. During the Term, the Executive agrees
      to
      devote his working
      time, as
      set
      forth in Paragraph 4 hereof, using his skill, energy and best business efforts
      on behalf of the Company. During the Term, Executive shall not engage in any
      other employment, consulting or other business activity without the prior
      written consent of the Company, which consent shall not be unreasonably
      withheld. 

     

    3. No
      Conflicts.
      The
      Executive covenants and agrees that for so long as he is employed by the
      Company, he shall inform the Company of each and every business opportunity
      related to the business of the Company of which he becomes aware, and that
      he
      will not, directly or indirectly, exploit any such opportunity for his own
      account, nor will he render any services to any other person or business,
      acquire any interest of any type in any other business or engage in any
      activities that conflict with the Company’s best interests or which is in
      competition with the Company. 

     

    4. Days/Hours
      of Work and Work Week.
      The
      Executive shall normally work 5 days per week and his hours of work shall be
      appropriate with the nature of the Executive’s duties and responsibilities with
      the Company, it being recognized that such duties and responsibilities require
      flexibility in the Executive’s work schedule. 

     

    5. Location.
      The
      locus of the Executive’s employment with the Company shall be the Company’s
      corporate headquarters located in Bakersfield, California.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6. Compensation.

     

    (a) Base
      Salary.
      During
      the Term, the Company shall pay, and the Executive agrees to accept, in
      consideration for the Executive’s services hereunder, pro
      rata
      semi-monthly payments of the annual salary of One Hundred Ninety Thousand
      Dollars ($190,000.00), less all applicable taxes and other appropriate
      deductions. In
      addition, the Board shall review the Executive’s base salary annually and shall
      determine whether upward adjustment is appropriate given the Company’s operating
      performance over the relevant Term.
      

     

    (b) Annual
      Bonus.
      During
      the Term of this Agreement, the Executive
      shall be eligible to receive an annual bonus in an amount to be determined
      by
      the Board for each
      calendar year (or pro-rata
      portion
      thereof in the case of a period of less than twelve (12) months)
      to be
      awarded and paid in the Board’s sole discretion based on its review of
the
      operating performance of the Company during the fiscal year to which the bonus
      pertains. Such review by the Board shall be based on an evaluation of the
      Company’s results of operations relative to the Company’s achievement of certain
      milestones established for the Company’s operational performance, and milestones
      established for the Executive’s performance, that shall be agreed to
      by
      the
      Executive and the Board from time to time. Each annual bonus shall be paid
      by
      the Company to the Executive promptly after
      the
      first meeting of the Board following the previous calendar year,
      but
      in no case later than March 30th of each year

     

    7. Expenses.
      During
      the Term, the Executive shall be entitled to payment for or reimbursement of
      any
      and all reasonable expenses paid or incurred by the Executive in connection
      with
      and related to the performance of his duties and responsibilities for the
      Company. All requests by the Executive for payment for or reimbursement of
      such
      expenses shall be supported by appropriate invoices, vouchers, receipts or
      such
      other supporting documentation in such form and containing such information
      as
      the Company may from time to time reasonably require, evidencing that the
      Executive, in fact, incurred or paid such expenses.

     

    8. Vacation.
      During
      the Term of this Agreement, the Executive shall be entitled to accrue twenty
      five (25) vacation days per year. 

     

    9. Stock
      Options.

     

    (a) Grant
      of Options.
      The
      Company shall issue to the Executive an option to acquire three hundred thousand
      (300,000) shares of the Company’s common stock (the “Common Stock”), pursuant to
      the Company’s then current stock option plan (the
      “Plan”). The
      exercise
      price of the option to be granted pursuant to this paragraph 9(a) shall be
      equal
      to the fair market value per share of the Common Stock on the date of
      grant.

     

    (b) Vesting
      and Exercise of Options.
      The
      option to be granted pursuant to paragraph 9(a) shall vest as follows: 25%
      of
      the shares of Common Stock underlying such option will vest on the date of
      grant, and the remaining 75% of the shares of Common Stock underlying the option
      will vest in equal annual on the first, second and third anniversaries of the
      date of grant. 

     

    10. Other
      Benefits.
      

     

    (a) During
      the Term, the Company shall purchase term life insurance, the beneficiary of
      which shall be the Executive’s estate, with a benefit amount equal to or greater
      than One Million Dollars ($1,000,000.00), subject to the insurability of the
      Executive over the Term.

     

    
      
        
        

      

      
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    (b) During
      the Term, the Executive shall be eligible to participate in Company-sponsored
      benefit plans (collectively, the “Benefit Plans”) all in accordance with the
      Company’s policies as in effect from time to time and in substantially the same
      manner and at
      substantially the same levels as the Company makes
      such
      opportunities available to the Company’s employees. 

     

    11. Termination
      of Employment.

     

    (a) Death.
      In the
      event that during the Term, the Executive dies, this Agreement and the
      Executive’s employment with the Company shall automatically terminate and the
      Company shall have no further obligations to the Executive or his heirs,
      administrators or executors with respect to compensation and benefits accruing
      thereafter, except for the obligation to pay to the Executive’s heirs,
      administrators or executors any earned but unpaid base salary and vacation
      pay,
      and reimbursement
      of any and all reasonable expenses paid or incurred by the Executive in
      connection with and related to the performance of his duties and
      responsibilities for the Company during the period ending on the termination
      date.
      The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA, and other appropriate
      deductions.

     

    (b) Disability.
      In
      the
      event that, during the Term, the Executive shall be prevented from performing
      his duties and responsibilities hereunder to the full extent required by the
      Company by reason of a Disability (as defined below), this
      Agreement and the Executive’s employment with the Company shall automatically
      terminate and the Company shall have no further obligations to the Executive
      or
      his heirs, administrators or executors with respect to compensation and benefits
      accruing thereafter, except for the obligation to pay the Executive’s heirs,
      administrators or executors any earned but unpaid base salary and vacation
      pay,
      and reimbursement
      of any and all reasonable expenses paid or incurred by the Executive in
      connection with and related to the performance of his duties and
      responsibilities for the Company during the period ending on the termination
      date.
      The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA.
      For
      purposes of this Agreement, “Disability” shall mean a physical or mental
      disability that, in the Board’s discretion, based upon the medical opinions of
      two qualified physicians specializing in the area or areas of the Executive’s
      affliction, one of whom shall be chosen by the Board and one of whom shall
      be
      chosen by the Executive, prevents the performance by the Executive, with or
      without reasonable accommodation, of his duties and responsibilities hereunder
      for a continuous period of not less than six consecutive months. 

     

    (c) Cause.

     

    (i) At
      any
      time during the Term, the Company may terminate this Agreement and the
      Executive’s employment hereunder for Cause. For purposes of this Agreement,
“Cause” shall mean:
      (a)
the
      willful and continued failure of the Executive to perform substantially his
      duties and responsibilities for the Company (other than any such failure
      resulting from a Disability) after a written demand by the Board for substantial
      performance is delivered to the Executive by the Company, which specifically
      identifies the manner in which the Board believes that the Executive has not
      substantially performed his duties and responsibilities, which willful and
      continued failure is not cured by the Executive within thirty (30) days of
      his
      receipt of such written demand; (b) the
      conviction of, or plea of guilty or nolo
      contendere
      to a
      felony, after the exhaustion of all available appeals; or (c) fraud,
      dishonesty, competition with the Company, unauthorized use of any of the
      Company’s or any of its subsidiary’s trade secrets or confidential
      information, or
      gross
      misconduct which is materially and demonstratively injurious to the Company.
      Termination under sections 11(c)(i)(b) and 11(c)(i)(c) above shall not be
      subject to cure.

     

    
      
        
        

      

      
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    (ii) Termination
      of the Executive for Cause pursuant to paragraph 11(c)(i)(a) shall be made
      by
      delivery to the Executive of a copy of the written demand referred to in
      paragraph 11(c)(i)(a), or pursuant to paragraphs 11(c)(i)(b) or (c) by delivery
      to the Executive of a written notice from the Board, either of which shall
      specify the basis of such termination, the conduct justifying such termination,
      and the particulars thereof and finding that in the reasonable judgment of
      the
      Board, the conduct set forth in paragraph 11(c)(i)(a), 11(c)(i)(b) or
      11(c)(i)(c), as applicable, has occurred and that such occurrence warrants
      the
      Executive’s termination of employment. Upon receipt of such demand or notice,
      the Executive, shall be entitled to appear before the Board for the purpose
      of
      demonstrating that Cause for termination does not exist or that the
      circumstances which may have constituted Cause have been cured in accordance
      with the provisions of paragraph 11(c)(i)(a). No termination shall be final
      until the Board has reached a determination regarding “Cause” following such
      appearance.

     

    (iii) Upon
      termination of this Agreement for Cause, the Company shall have no further
      obligations or liability to the Executive or his heirs, administrators or
      executors with respect to compensation and benefits thereafter, except for
      the
      obligation to pay the Executive any earned but unpaid base salary and vacation
      pay, and reimbursement
      of any and all reasonable expenses paid or incurred by the Executive in
      connection with and related to the performance of his duties and
      responsibilities for the Company during the period ending on the termination
      date.
      The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA, and other appropriate
      deductions.

     

    (d) Good
      Reason.

     

    (i) At
      any
      time during the Term, subject to the conditions set forth in paragraph
      11(d)(iii) below, the Executive may terminate this Agreement and the Executive’s
      employment with the Company for Good Reason. For purposes of this Agreement,
      for
“Good Reason” shall mean the occurrence, without the Executive’s consent, of
(i) a
      material diminishment of the Executive’s job assignment, duties,
      responsibilities or reporting relationships which is inconsistent with his
      initial position hereunder or any later agreed upon amendment of that
      position; (ii) a
      reduction in the Executive’s base compensation or total compensation package,
including
      benefit plans and programs; (iii) a
      breach
      of
      the
      terms
      of this Agreement by the
      Company, or any permitted successor or assignee; or (iv) a Change of
      Control (as defined herein).

     

    (ii) For
      purposes of this Agreement, “Change of Control” shall
      mean the occurrence of any one or more of the following: (i) the accumulation,
      whether
      directly, indirectly, beneficially or of record,
      by any
      individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
      of the Securities Exchange Act of 1934, as amended) of Fifty Percent (50%)
      or
      more of the shares of the outstanding Common Stock of the Company, (ii) a
      merger or consolidation of the Company in which the Company does not survive
      as
      an independent public company or upon the consummation of which the holders
      of
      the Company’s outstanding equity securities prior to such merger or
      consolidation own less than Fifty Percent (50%) of the outstanding equity
      securities of the Company after such merger or consolidation, (iii) a sale
      of all or substantially all of the assets of the Company, (iv) a voluntary
      or involuntary proceeding against the Company under any applicable federal,
      state or foreign bankruptcy or similar law, (v) the appointment of a
      custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
      official) for the Company, or (vi) the ordering of the winding up,
      dissolution or liquidation of the affairs of the Company; provided,
      however,
      that
      the following acquisitions shall not constitute a Change of Control for the
      purposes of this Agreement: (A) any acquisitions of Common Stock or securities
      convertible into Common Stock directly from the Company, or (B) any acquisition
      of Common Stock or securities convertible into Common Stock by any employee
      benefit plan (or related trust) sponsored by or maintained by the
      Company.

     

    
      
        
        

      

      
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    (iii) The
      Executive shall be entitled to terminate this Agreement and his employment
      with
      the Company for Good Reason provided that he has delivered written notice to
      the
      Company of his intention to terminate this Agreement and his employment with
      the
      Company for Good Reason within 5 business days after either (a) the date on
      which the Executive receives written notice from the Company of the occurrence
      of any event included within the meaning of Good Reason under paragraph
      11(d)(ii) or (b) the date on which the Executive obtains actual knowledge of
      the
      occurrence of any event included within the meaning of Good Reason under
      paragraph 11(d)(ii). Such notice, if given by the Executive pursuant to
      subparagraph 11(d)(iii)(b) hereof, shall specify in reasonable detail the
      circumstances claimed to provide the basis for such termination for Good Reason.
      Notwithstanding the foregoing, the Executive shall not be entitled to terminate
      this Agreement and his employment with the Company if the Company has eliminated
      the circumstances constituting “Good Reason” within 30 days of its receipt from
      the Executive of the written notice described in this paragraph 11(d)(iii).
      

     

    (iv) In
      the
      event that the Executive terminates this Agreement and his employment with
      the
      Company for Good Reason, the Company shall pay or provide to the Executive
      (or,
      following his death, to the Executive’s heirs, administrators or executors):
      (a)
      any
      earned but unpaid base salary and vacation pay, and reimbursement
      of any and all reasonable expenses paid or incurred by the Executive in
      connection with and related to the performance of his duties and
      responsibilities for the Company during the period ending on the termination
      date;
      (b)
a
      severance payment in an amount equal to 2 years of the Executive’s base salary;
      (c) for 2 years, continuation on behalf of the Executive and the Executive’s
      dependents and beneficiaries of life insurance, disability, medical, dental,
      hospitalization and long-term care benefits, provided, however, that the
      Company’s obligation hereunder with respect to the foregoing benefits shall be
      limited to the extent that the Executive obtains any such benefits pursuant
      to a
      subsequent employer’s benefit plans, in which case the Company may reduce the
      coverage of any benefits it is required to provide the Executive hereunder
      as
      long as the aggregate coverages and benefits of the combined benefits plans
      are
      no less favorable to the Executive than the coverages and benefits required
      to
      be provided hereunder; and (d) to the extent the Executive holds any unvested
      portion of the option granted to the Executive pursuant to paragraph 9(a),
      the
      portion of the option so granted that would otherwise vest following the date
      of
      termination of the Executive’s employment with the Company will as of the date
      of termination become fully vested. The Company shall deduct, from all payments
      made hereunder, all applicable taxes, including income tax, FICA and FUTA,
      and
      other appropriate deductions. 

     

    (v) At
      the
      Executive’s option, the amount described in paragraph 11(d)(iv)(b) shall be paid
      to the Executive in the same manner as they would have been paid, in accordance
      with the provisions of paragraph 6(a), had the Executive remained employed
      by
      the Company. To exercise such option, the Executive shall deliver to the Company
      written notice electing such option within 10 business days after the
      Executive’s last day of employment with the Company. If the Executive fails to
      deliver such written notice within 10 business days after his last date of
      employment with the Company, the Executive shall be entitled to receive the
      amounts described in paragraphs 11(d)(iv)(b) in a lump sum within 45 days of
      his
      last date of employment with the Company.

     

    
      
        
        

      

      
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    (e) Without
      Cause.

     

    (i) At
      any
      time during the Term, the Parties shall be entitled to terminate this Agreement
      and the Executive’s employment with the Company without cause, by providing
      prior written notice of at least 30 days to the other party. Upon the Company’s
      termination of this Agreement and the Executive’s employment with the Company
      pursuant to this paragraph 11(e)(i), the Company shall have no further
      obligations to the Executive or his heirs, administrators or executors with
      respect to compensation and benefits thereafter, except for the obligation
      to
      pay or provide to the Executive (a) any earned but unpaid base salary and
      vacation pay, and reimbursement
      of any and all reasonable expenses paid or incurred by the Executive in
      connection with and related to the performance of his duties and
      responsibilities for the Company during the period ending on the termination
      date,
      (b) a
      severance payment in an amount equal to two years of the Executive’s base salary
      plus any bonus earned or accrued through the date of such termination, (c)
      for 2
      years, continuation on behalf of the Executive and the Executive’s dependents
      and beneficiaries of life insurance, disability, medical, dental,
      hospitalization and long-term care benefits, provided, however, that the
      Company’s obligation hereunder with respect to the foregoing benefits shall be
      limited to the extent that the Executive obtains any such benefits pursuant
      to a
      subsequent employer’s benefit plans, in which case the Company may reduce the
      coverage of any benefits it is required to provide the Executive hereunder
      as
      long as the aggregate coverages and benefits of the combined benefits plans
      are
      no less favorable to the Executive than the coverages and benefits required
      to
      be provided hereunder and (d) to the extent the Executive holds any unvested
      portion of the option granted to the Executive pursuant to paragraph 9(a),
      the
      portion of the option so granted that would otherwise vest following the date
      of
      termination of the Executive’s employment with the Company will as of the date
      of termination become fully vested. Upon the Executive’s termination of this
      Agreement and the Executive’s employment with the Company pursuant to this
      paragraph 11(e)(i), the Company shall have no further obligations to the
      Executive or his heirs, administrators or executors with respect to compensation
      and benefits thereafter, except for the obligation to pay to the Executive
      (a)
      any earned but unpaid base salary and vacation pay, and reimbursement
      of any and all reasonable expenses paid or incurred by the Executive in
      connection with and related to the performance of his duties and
      responsibilities for the Company during the period ending on the termination
      date. The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA, and other appropriate
      deductions.

     

    (ii) At
      the
      Executive’s option, the amounts described in paragraph 11(e)(i) shall be paid to
      the Executive in the same manner as they would have been paid, in accordance
      with the provisions of paragraph 6(a), had the Executive remained employed
      by
      the Company. To exercise such option, the Executive shall deliver to the Company
      written notice electing such option within 10 business days after his last
      day
      of employment with the Company. If the Executive fails to deliver such written
      notice within 10 business days after his last day of employment with the
      Company, the Executive shall be entitled to receive the amounts described in
      paragraph 11(e)(i) in a lump sum within 45 days of his last day of employment
      with the Company.

     

    12. Confidential
      Information/Ownership and Assignment of Inventions. The
      Executive expressly acknowledges that, in the performance of his duties and
      responsibilities with the Company, (i) he has been exposed, and will be exposed,
      to the trade secrets, business and/or financial secrets and confidential and
      proprietary information of the Company, its affiliates and/or its clients or
      customers (“Confidential Information”) and (ii) he and/or other employees of the
      Company working with him, without him or under his supervision, may create,
      conceive of, make, prepare, work on or contribute to the creation of, or may
      be
      asked by the Company or its affiliates to create, conceive of, make, prepare,
      work on or contribute to the creation of, without limitation, lists, business
      diaries, business address books (except
      for business addresses and business address books not related to the Company),
      documentation, ideas, concepts, inventions, designs, works of authorship,
      computer programs, audio/visual works, developments, proposals, works for hire
      or other materials. Therefore, the Executive agrees to execute and abide by
      the
      terms of the Assignment of Invention and Non-Disclosure Agreement attached
      hereto as Exhibit A. Additionally,
      the Executive affirms that he does not possess and will not rely upon the
      protected trade secrets or confidential or proprietary information of his prior
      employer(s) in providing services to the Company.

     

    
      
        
        

      

      
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    13. Non-Competition
      and Non-Solicitation.
      The
      Executive agrees and acknowledges that the Confidential Information that the
      Executive has already received and will receive are valuable to the Company,
      its
      affiliates and/or its clients or customers, and
      that
      its protection and maintenance constitutes a legitimate business interest of
      Company, its
      affiliates and/or its clients or customers
      to be
      protected by non-competition restrictions. Therefore, the Executive agrees
      to
      execute and abide by the terms of the Non-solicitation Agreement attached hereto
      as Exhibit B and the Executive agrees and acknowledges that the non-competition
      restrictions set forth therein are reasonable and necessary and do not impose
      undue hardship or burdens on the Executive. 

     

    14. Insider
      Trading Policy/Public Disclosure.
      As a
      result of the potential liability for both the Company and the Executive for
      “insider trading” under the securities laws, the Board has adopted an Insider
      Trading and Public Disclosure Policy attached hereto as Exhibit C. The Executive
      agrees to bound by and comply with such policy and to evidence such agreement
      by
      executing and delivering to the Company the Insider Trading and Disclosure
      Policy Acknowledgement contained in Exhibit C.

     

    15. Indemnification.
      The
      Company hereby covenants and agrees to indemnify the Executive to the fullest
      extent permitted by law and the Company’s charter documents and to hold the
      Executive harmless fully, completely, and absolutely against and in any respects
      to any and all actions, suits, proceedings, claims, demands, judgments, costs,
      expenses (including attorneys’ fees), losses, and damages resulting from the
      Executive’s good faith performance of his job duties pursuant to this Agreement.
      The Company also hereby agrees to use its best efforts to purchase, maintain
      and
      cover the Executive under a directors’ and officers’ liability insurance policy.

     

    16. Dispute
      Resolution.
      The
      Parties agree that any dispute or claim, whether based on contract, tort,
      discrimination, retaliation, or otherwise, relating to, arising from, or
      connected in any manner with this Agreement or the Executive’s employment with
      the Company shall be resolved exclusively through final and binding arbitration
      under the auspices of the American Arbitration Association (“AAA”). The
      arbitration shall be held in the State of New York. The arbitration shall
      proceed in accordance with the National Rules for the Resolution of Employment
      Disputes of the AAA in effect at the time the claim or dispute arose, unless
      other rules are agreed upon by the parties. The arbitration shall be conducted
      by one arbitrator who is a member of the AAA, unless the parties mutually agree
      otherwise. The arbitrators shall have jurisdiction to determine any claim,
      including the arbitrability of any claim, submitted to them. The arbitrators
      may
      grant any relief authorized by law for any properly established claim. The
      interpretation and enforceability of this paragraph of this Agreement shall
      be
      governed and construed in accordance with the United States Federal Arbitration
      Act, 9. U.S.C. §1, et
      seq.
      More
      specifically, the parties agree to submit to binding arbitration any claims
      for
      unpaid wages or benefits, or for alleged discrimination, harassment, or
      retaliation, arising under Title VII of the Civil Rights Act of 1964, the Equal
      Pay Act, the National Labor Relations Act, the Age Discrimination in Employment
      Act, the Americans With Disabilities Act, the Employee Retirement Income
      Security Act, the Civil Rights Act of 1991, the Family and Medical Leave Act,
      the Fair Labor Standards Act, Sections 1981 through 1988 of Title 42 of the
      United States Code, COBRA, and any other federal, state, or local law,
      regulation, or ordinance, and any common law claims, claims for breach of
      contract, or claims for declaratory relief. The Executive acknowledges that
      the
      purpose and effect of this paragraph is solely to elect private arbitration
      in
      lieu of any judicial proceeding he might otherwise have available to him in
      the
      event of an employment-related dispute between him and the Company. Therefore,
      the Executive hereby waives his right to have any such employment-related
      dispute heard by a court or jury, as the case may be, and agrees that his
      exclusive procedure to redress any employment-related claims will be
      arbitration.

     

    
      
        
        

      

      
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    Notwithstanding
      this agreement to arbitrate, the Parties agree that any violation of paragraphs
      12, 13 or 14 of this Agreement and the Assignment of Invention and
      Non-Disclosure Agreement attached hereto as Exhibit A, the Non-solicitation
      Agreement attached hereto as Exhibit B and the Insider Trading and Public
      Disclosure Policy attached hereto as Exhibit C may be restrained by the issuance
      of an injunction or other equitable relief by a court of competent jurisdiction,
      in addition to other remedies provided by law or this Agreement. 

     

    In
      the
      event of any legal action or other proceeding arising out of or related to
      or
      for the enforcement of this Agreement, the prevailing party shall be entitled
      to
      recover its reasonable attorneys’ fees, costs and expenses incurred in that
      action or proceeding, including attorneys’ fees, costs and expenses incurred on
      appeal, if any, in addition to any other relief to which such party may be
      entitled, from the non-prevailing party.

     

    The
      Company shall pay all legal fees and related expenses incurred by the Executive
      as a result of (a) the Executive’s termination of employment, or (b) the
      Executive seeking to obtain or enforce any right or benefit provided by this
      Agreement or by any other plan or arrangement maintained by the Company under
      which the Executive is or may be entitled to receive benefits; provided,
      however, that the circumstances set forth in clauses (a) and (b) occurred on
      or
      after a Change in Control, and provided, however, that the Executive prevails
      in
      any such dispute or proceeding.

     

    17. Notice.
      For
      purposes of this Agreement, notices and all other communications provided for
      in
      this Agreement or contemplated hereby shall be in writing and shall be deemed
      to
      have been duly given when personally delivered, delivered by a nationally
      recognized overnight delivery service or when mailed United States Certified
      or
      registered mail, return receipt requested, postage prepaid, and addressed as
      follows or at such other address provided in writing by the Executive to the
      Company:

     

    If
      to the
      Company: 

     

    Foothills
      Resources, Inc.

    P.O.
      Box
      2701

    Bakersfield,
      California 93303

    Attn:
      Dennis B. Tower, Chief Executive Officer

    Facsimile:
      (541) 595-2484

    

    with
      a
      copy to:

    

    McGuireWoods
      LLP

    1345
      Avenue of the Americas

    New
      York,
      New York 10105

    Attn:
      Louis W. Zehil, Esq.

    Facsimile:
      (212) 548-2175

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    

    and
      with
      a copy to:

    

    W.
      Kirk
      Bosché 

    14619
      Carols Way Drive,

    Houston,
      Texas 77070

    Facsimile:
      (281) 376-9367

    

    If
      to the
      Executive:

     

    Dennis
      B.
      Tower

    13743
      Monks Hood

    P.O.
      Box
      8217

    Black
      Butte Ranch, Oregon 97759

    Facsimile:
      (541) 595-2484

    

    18. Miscellaneous.

     

    (a) Telephones,
      stationery, postage, e-mail, the internet and other resources made available
      to
      the Executive by the Company, are solely for the furtherance of the Company’s
      business.

     

    (b) All
      issues and disputes concerning, relating to or arising out of this Agreement
      and
      from the Executive’s employment by the Company, including, without limitation,
      the construction and interpretation of this Agreement, shall be governed by
      and
      construed in accordance with the internal laws of the State of New York, without
      giving effect to that State’s principles of conflicts of law.

     

    (c) The
      Parties agree that any provision of this Agreement deemed unenforceable or
      invalid may be reformed to permit enforcement of the objectionable provision
      to
      the fullest permissible extent. Any provision of this Agreement deemed
      unenforceable after modification shall be deemed stricken from this Agreement,
      with the remainder of the Agreement being given its full force and
      effect.

     

    (d) The
      Company shall be entitled to equitable relief, including injunctive relief
      and
      specific performance as against the Executive, for the Executive’s threatened or
      actual breach of paragraphs 12, 13 and 14 of this Agreement and
      the
      Assignment of Invention and Non-Disclosure Agreement attached hereto as Exhibit
      A, the Non-solicitation Agreement attached hereto as Exhibit B and the Insider
      Trading and Public Disclosure Policy attached hereto as Exhibit C,
      as
      money damages for a breach thereof would be incapable of precise estimation,
      uncertain, and an insufficient remedy for an actual or threatened breach of
      paragraphs 12, 13 and 14 of this Agreement and
      the
      Assignment of Invention and Non-Disclosure Agreement attached hereto as Exhibit
      A, the Non-solicitation Agreement attached hereto as Exhibit B and the Insider
      Trading and Public Disclosure Policy attached hereto as Exhibit C.
      The
      Parties agree that any pursuit of equitable relief in respect of paragraphs
      12,
      13 and 14 of this Agreement and
      the
      Assignment of Invention and Non-Disclosure Agreement attached hereto as Exhibit
      A, the Non-solicitation Agreement attached hereto as Exhibit B and the Insider
      Trading and Public Disclosure Policy attached hereto as Exhibit C shall
      have no effect whatsoever regarding the continued viability and enforceability
      of paragraph 16 of this Agreement. 

     

    (e) Any
      waiver or inaction by the Company or the Executive for any breach of this
      Agreement shall not be deemed a waiver of any subsequent breach of this
      Agreement.

     

    (f) The
      Parties independently have made all inquiries regarding the qualifications
      and
      business affairs of the other which either party deems necessary. The Executive
      affirms that he fully understands this Agreement’s meaning and legally binding
      effect. Each party has participated fully and equally in the negotiation and
      drafting of this Agreement.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    (g) The
      Executive’s obligations under this Agreement are personal in nature and may not
      be assigned by the Executive to any other person or entity. This
      Agreement shall be enforceable by the
      Company
      and its
      parents, affiliates, successors and assigns, and the Company shall require
      any
      successors and assigns to expressly assume and agree to perform this Agreement
      in the same manner and to the same extent that the Company would be required
      to
      perform it if no such succession or assignment had taken place.

     

    (h) This
      instrument constitutes the entire Agreement between the Parties regarding its
      subject matter. When signed by each of the Parties, this Agreement supersedes
      and nullifies all prior or contemporaneous conversations, negotiations, or
      agreements, oral and written, regarding the subject matter of this Agreement.
      In
      any future construction of this Agreement, this Agreement should be given its
      plain meaning. This Agreement may be amended only by a writing signed by the
      Parties.

     

    (i) This
      Agreement may be executed in counterparts, a counterpart transmitted via
      facsimile, and all executed counterparts, when taken together, shall constitute
      sufficient proof of the parties’ entry into this Agreement. The Parties agree to
      execute any further or future documents which may be necessary to allow the
      full
      performance of this Agreement. This Agreement contains headings for ease of
      reference. The headings have no independent meaning.

     

    THE
      EXECUTIVE STATES THAT HE HAS FREELY AND VOLUNTARILY ENTERED INTO THIS AGREEMENT
      AND THAT HE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION THEREOF. THIS
      AGREEMENT IS EFFECTIVE UPON THE EXECUTION OF THIS AGREEMENT BY BOTH
      PARTIES.  IT
      IS UNDERSTOOD, AGREED, AND ACCEPTED BY SUCH PERSONS WHOSE NAMES APPEAR ON THE
      SIGNATURE PAGE HERETO.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Executive and the Company have caused this Employment
      Agreement to be executed as of the date first above written.

     

    
      
        	Executive	 	Foothills Resources,
                Inc.
	 	 	 
	
                /s/
                  Dennis B. Tower

              	 	
                By: /s/
                  John L. Moran

              
	
                Dennis
                  B. Tower

              	 	
                Name: John
                  L. Moran

              
	 	 	
                Title: President

              

      

    

     

     

    
      
        
        

      

      -11-EXHIBIT
      10.5

     

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT (this “Agreement”) dated April 6, 2006 (the “Effective
      Date”), between Foothills Resources, Inc., a Delaware corporation with
      its
      principal place of business located at P.O. Box 2701, Bakersfield, California
      93303, its affiliates, subsidiaries, successors and assigns (the “Company”), and
      John L. Moran, an individual residing at 11902 Shanklin St., Bakersfield,
      California 93312 (the
      “Executive”).

     

    WHEREAS,
      the Company and the Executive (collectively, the “Parties”) wish to memorialize
      the terms and conditions of the Executive’s employment by the Company and to
      continue the Executive’s services for the Company on the terms and conditions
      set forth herein.

     

    NOW,
      THEREFORE, in consideration of the covenants and promises contained herein,
      the
      Parties agree as follows:

     

    1. Employment
      Period.
      The
      Company shall employ the Executive, and the Executive agrees to be employed
      by
      the Company in the position of President in accordance with the terms and
      subject to the conditions of this Agreement, commencing on the Effective Date
      and continuing until such employment is terminated in accordance with the
      provisions of paragraph 11, in which case the provisions of paragraph 11 shall
      control (the “Term”). 

     

    The
      Executive affirms that no obligation exists between the Executive and any other
      entity which would prevent or impede the Executive’s immediate and full
      performance of every obligation of this Agreement.

     

    2. Position
      and Duties.
      During
      the Term, the Executive shall serve in, and assume duties and responsibilities
      consistent with, the position of President, unless and until otherwise
      instructed by the Company. During the Term, the Executive agrees to devote
      his working
      time, as
      set
      forth in Paragraph 4 hereof, using his skill, energy and best business efforts
      on behalf of the Company. During the Term, Executive shall not engage in any
      other employment, consulting or other business activity without the prior
      written consent of the Company, which consent shall not be unreasonably
      withheld. 

     

    3. No
      Conflicts.
      The
      Executive covenants and agrees that for so long as he is employed by the
      Company, he shall inform the Company of each and every business opportunity
      related to the business of the Company of which he becomes aware, and that
      he
      will not, directly or indirectly, exploit any such opportunity for his own
      account, nor will he render any services to any other person or business,
      acquire any interest of any type in any other business or engage in any
      activities that conflict with the Company’s best interests or which is in
      competition with the Company. 

     

    4. Days/Hours
      of Work and Work Week.
      The
      Executive shall normally work 5 days per week and his hours of work shall be
      appropriate with the nature of the Executive’s duties and responsibilities with
      the Company, it being recognized that such duties and responsibilities require
      flexibility in the Executive’s work schedule. 

     

    5. Location.
      The
      locus of the Executive’s employment with the Company shall be the Company’s
      corporate headquarters located in Bakersfield, California.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6. Compensation.

     

    (a) Base
      Salary.
      During
      the Term, the Company shall pay, and the Executive agrees to accept, in
      consideration for the Executive’s services hereunder, pro
      rata
      semi-monthly payments of the annual salary of One Hundred Ninety Thousand
      Dollars ($190,000.00), less all applicable taxes and other appropriate
      deductions. In
      addition, the Board shall review the Executive’s base salary annually and shall
      determine whether upward adjustment is appropriate given the Company’s operating
      performance over the relevant Term.
      

     

    (b) Annual
      Bonus.
      During
      the Term of this Agreement, the Executive
      shall be eligible to receive an annual bonus in an amount to be determined
      by
      the Board for each
      calendar year (or pro-rata
      portion
      thereof in the case of a period of less than twelve (12) months)
      to be
      awarded and paid in the Board’s sole discretion based on its review of
the
      operating performance of the Company during the fiscal year to which the bonus
      pertains. Such review by the Board shall be based on an evaluation of the
      Company’s results of operations relative to the Company’s achievement of certain
      milestones established for the Company’s operational performance, and milestones
      established for the Executive’s performance, that shall be agreed to
      by
      the
      Executive and the Board from time to time. Each annual bonus shall be paid
      by
      the Company to the Executive promptly after
      the
      first meeting of the Board following the previous calendar year,
      but
      in no case later than March 30th of each year

     

    7. Expenses.
      During
      the Term, the Executive shall be entitled to payment for or reimbursement of
      any
      and all reasonable expenses paid or incurred by the Executive in connection
      with
      and related to the performance of his duties and responsibilities for the
      Company. All requests by the Executive for payment for or reimbursement of
      such
      expenses shall be supported by appropriate invoices, vouchers, receipts or
      such
      other supporting documentation in such form and containing such information
      as
      the Company may from time to time reasonably require, evidencing that the
      Executive, in fact, incurred or paid such expenses.

     

    8. Vacation.
      During
      the Term of this Agreement, the Executive shall be entitled to accrue twenty
      five (25) vacation days per year. 

     

    9. Stock
      Options.

     

    (a) Grant
      of Options.
      The
      Company shall issue to the Executive an option to acquire three hundred thousand
      (300,000) shares of the Company’s common stock (the “Common Stock”), pursuant to
      the Company’s then current stock option plan (the
      “Plan”). The
      exercise
      price of the option to be granted pursuant to this paragraph 9(a) shall be
      equal
      to the fair market value per share of the Common Stock on the date of
      grant.

     

    (b) Vesting
      and Exercise of Options.
      The
      option to be granted pursuant to paragraph 9(a) shall vest as follows: 25%
      of
      the shares of Common Stock underlying such option will vest on the date of
      grant, and the remaining 75% of the shares of Common Stock underlying the option
      will vest in equal annual on the first, second and third anniversaries of the
      date of grant. 

     

    10. Other
      Benefits.
      

     

    (a) During
      the Term, the Company shall purchase term life insurance, the beneficiary of
      which shall be the Executive’s estate, with a benefit amount equal to or greater
      than One Million Dollars ($1,000,000.00), subject to the insurability of the
      Executive over the Term.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    (b) During
      the Term, the Executive shall be eligible to participate in Company-sponsored
      benefit plans (collectively, the “Benefit Plans”) all in accordance with the
      Company’s policies as in effect from time to time and in substantially the same
      manner and at
      substantially the same levels as the Company makes
      such
      opportunities available to the Company’s employees. 

     

    11. Termination
      of Employment.

     

    (a) Death.
      In the
      event that during the Term, the Executive dies, this Agreement and the
      Executive’s employment with the Company shall automatically terminate and the
      Company shall have no further obligations to the Executive or his heirs,
      administrators or executors with respect to compensation and benefits accruing
      thereafter, except for the obligation to pay to the Executive’s heirs,
      administrators or executors any earned but unpaid base salary and vacation
      pay,
      and reimbursement
      of any and all reasonable expenses paid or incurred by the Executive in
      connection with and related to the performance of his duties and
      responsibilities for the Company during the period ending on the termination
      date.
      The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA, and other appropriate
      deductions.

     

    (b) Disability.
      In
      the
      event that, during the Term, the Executive shall be prevented from performing
      his duties and responsibilities hereunder to the full extent required by the
      Company by reason of a Disability (as defined below), this
      Agreement and the Executive’s employment with the Company shall automatically
      terminate and the Company shall have no further obligations to the Executive
      or
      his heirs, administrators or executors with respect to compensation and benefits
      accruing thereafter, except for the obligation to pay the Executive’s heirs,
      administrators or executors any earned but unpaid base salary and vacation
      pay,
      and reimbursement
      of any and all reasonable expenses paid or incurred by the Executive in
      connection with and related to the performance of his duties and
      responsibilities for the Company during the period ending on the termination
      date.
      The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA.
      For
      purposes of this Agreement, “Disability” shall mean a physical or mental
      disability that, in the Board’s discretion, based upon the medical opinions of
      two qualified physicians specializing in the area or areas of the Executive’s
      affliction, one of whom shall be chosen by the Board and one of whom shall
      be
      chosen by the Executive, prevents the performance by the Executive, with or
      without reasonable accommodation, of his duties and responsibilities hereunder
      for a continuous period of not less than six consecutive months. 

     

    (c) Cause.

     

    (i) At
      any
      time during the Term, the Company may terminate this Agreement and the
      Executive’s employment hereunder for Cause. For purposes of this Agreement,
“Cause” shall mean:
      (a)
the
      willful and continued failure of the Executive to perform substantially his
      duties and responsibilities for the Company (other than any such failure
      resulting from a Disability) after a written demand by the Board for substantial
      performance is delivered to the Executive by the Company, which specifically
      identifies the manner in which the Board believes that the Executive has not
      substantially performed his duties and responsibilities, which willful and
      continued failure is not cured by the Executive within thirty (30) days of
      his
      receipt of such written demand; (b) the
      conviction of, or plea of guilty or nolo
      contendere
      to a
      felony, after the exhaustion of all available appeals; or (c) fraud,
      dishonesty, competition with the Company, unauthorized use of any of the
      Company’s or any of its subsidiary’s trade secrets or confidential
      information, or
      gross
      misconduct which is materially and demonstratively injurious to the Company.
      Termination under sections 11(c)(i)(b) and 11(c)(i)(c) above shall not be
      subject to cure.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (ii) Termination
      of the Executive for Cause pursuant to paragraph 11(c)(i)(a) shall be made
      by
      delivery to the Executive of a copy of the written demand referred to in
      paragraph 11(c)(i)(a), or pursuant to paragraphs 11(c)(i)(b) or (c) by delivery
      to the Executive of a written notice from the Board, either of which shall
      specify the basis of such termination, the conduct justifying such termination,
      and the particulars thereof and finding that in the reasonable judgment of
      the
      Board, the conduct set forth in paragraph 11(c)(i)(a), 11(c)(i)(b) or
      11(c)(i)(c), as applicable, has occurred and that such occurrence warrants
      the
      Executive’s termination of employment. Upon receipt of such demand or notice,
      the Executive, shall be entitled to appear before the Board for the purpose
      of
      demonstrating that Cause for termination does not exist or that the
      circumstances which may have constituted Cause have been cured in accordance
      with the provisions of paragraph 11(c)(i)(a). No termination shall be final
      until the Board has reached a determination regarding “Cause” following such
      appearance.

     

    (iii) Upon
      termination of this Agreement for Cause, the Company shall have no further
      obligations or liability to the Executive or his heirs, administrators or
      executors with respect to compensation and benefits thereafter, except for
      the
      obligation to pay the Executive any earned but unpaid base salary and vacation
      pay, and reimbursement
      of any and all reasonable expenses paid or incurred by the Executive in
      connection with and related to the performance of his duties and
      responsibilities for the Company during the period ending on the termination
      date.
      The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA, and other appropriate
      deductions.

     

    (d) Good
      Reason.

     

    (i) At
      any
      time during the Term, subject to the conditions set forth in paragraph
      11(d)(iii) below, the Executive may terminate this Agreement and the Executive’s
      employment with the Company for Good Reason. For purposes of this Agreement,
      for
“Good Reason” shall mean the occurrence, without the Executive’s consent, of
(i) a
      material diminishment of the Executive’s job assignment, duties,
      responsibilities or reporting relationships which is inconsistent with his
      initial position hereunder or any later agreed upon amendment of that
      position; (ii) a
      reduction in the Executive’s base compensation or total compensation package,
including
      benefit plans and programs; (iii) a
      breach
      of
      the
      terms
      of this Agreement by the
      Company, or any permitted successor or assignee; or (iv) a Change of
      Control (as defined herein).

     

    (ii) For
      purposes of this Agreement, “Change of Control” shall
      mean the occurrence of any one or more of the following: (i) the accumulation,
      whether
      directly, indirectly, beneficially or of record,
      by any
      individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
      of the Securities Exchange Act of 1934, as amended) of Fifty Percent (50%)
      or
      more of the shares of the outstanding Common Stock of the Company, (ii) a
      merger or consolidation of the Company in which the Company does not survive
      as
      an independent public company or upon the consummation of which the holders
      of
      the Company’s outstanding equity securities prior to such merger or
      consolidation own less than Fifty Percent (50%) of the outstanding equity
      securities of the Company after such merger or consolidation, (iii) a sale
      of all or substantially all of the assets of the Company, (iv) a voluntary
      or involuntary proceeding against the Company under any applicable federal,
      state or foreign bankruptcy or similar law, (v) the appointment of a
      custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
      official) for the Company, or (vi) the ordering of the winding up,
      dissolution or liquidation of the affairs of the Company; provided,
      however,
      that
      the following acquisitions shall not constitute a Change of Control for the
      purposes of this Agreement: (A) any acquisitions of Common Stock or securities
      convertible into Common Stock directly from the Company, or (B) any acquisition
      of Common Stock or securities convertible into Common Stock by any employee
      benefit plan (or related trust) sponsored by or maintained by the
      Company.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    (iii) The
      Executive shall be entitled to terminate this Agreement and his employment
      with
      the Company for Good Reason provided that he has delivered written notice to
      the
      Company of his intention to terminate this Agreement and his employment with
      the
      Company for Good Reason within 5 business days after either (a) the date on
      which the Executive receives written notice from the Company of the occurrence
      of any event included within the meaning of Good Reason under paragraph
      11(d)(ii) or (b) the date on which the Executive obtains actual knowledge of
      the
      occurrence of any event included within the meaning of Good Reason under
      paragraph 11(d)(ii). Such notice, if given by the Executive pursuant to
      subparagraph 11(d)(iii)(b) hereof, shall specify in reasonable detail the
      circumstances claimed to provide the basis for such termination for Good Reason.
      Notwithstanding the foregoing, the Executive shall not be entitled to terminate
      this Agreement and his employment with the Company if the Company has eliminated
      the circumstances constituting “Good Reason” within 30 days of its receipt from
      the Executive of the written notice described in this paragraph 11(d)(iii).
      

     

    (iv) In
      the
      event that the Executive terminates this Agreement and his employment with
      the
      Company for Good Reason, the Company shall pay or provide to the Executive
      (or,
      following his death, to the Executive’s heirs, administrators or executors):
      (a)
      any
      earned but unpaid base salary and vacation pay, and reimbursement
      of any and all reasonable expenses paid or incurred by the Executive in
      connection with and related to the performance of his duties and
      responsibilities for the Company during the period ending on the termination
      date;
      (b)
a
      severance payment in an amount equal to 2 years of the Executive’s base salary;
      (c) for 2 years, continuation on behalf of the Executive and the Executive’s
      dependents and beneficiaries of life insurance, disability, medical, dental,
      hospitalization and long-term care benefits, provided, however, that the
      Company’s obligation hereunder with respect to the foregoing benefits shall be
      limited to the extent that the Executive obtains any such benefits pursuant
      to a
      subsequent employer’s benefit plans, in which case the Company may reduce the
      coverage of any benefits it is required to provide the Executive hereunder
      as
      long as the aggregate coverages and benefits of the combined benefits plans
      are
      no less favorable to the Executive than the coverages and benefits required
      to
      be provided hereunder; and (d) to the extent the Executive holds any unvested
      portion of the option granted to the Executive pursuant to paragraph 9(a),
      the
      portion of the option so granted that would otherwise vest following the date
      of
      termination of the Executive’s employment with the Company will as of the date
      of termination become fully vested. The Company shall deduct, from all payments
      made hereunder, all applicable taxes, including income tax, FICA and FUTA,
      and
      other appropriate deductions. 

     

    (v) At
      the
      Executive’s option, the amount described in paragraph 11(d)(iv)(b) shall be paid
      to the Executive in the same manner as they would have been paid, in accordance
      with the provisions of paragraph 6(a), had the Executive remained employed
      by
      the Company. To exercise such option, the Executive shall deliver to the Company
      written notice electing such option within 10 business days after the
      Executive’s last day of employment with the Company. If the Executive fails to
      deliver such written notice within 10 business days after his last date of
      employment with the Company, the Executive shall be entitled to receive the
      amounts described in paragraphs 11(d)(iv)(b) in a lump sum within 45 days of
      his
      last date of employment with the Company.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    (e) Without
      Cause.

     

    (i) At
      any
      time during the Term, the Parties shall be entitled to terminate this Agreement
      and the Executive’s employment with the Company without cause, by providing
      prior written notice of at least 30 days to the other party. Upon the Company’s
      termination of this Agreement and the Executive’s employment with the Company
      pursuant to this paragraph 11(e)(i), the Company shall have no further
      obligations to the Executive or his heirs, administrators or executors with
      respect to compensation and benefits thereafter, except for the obligation
      to
      pay or provide to the Executive (a) any earned but unpaid base salary and
      vacation pay, and reimbursement
      of any and all reasonable expenses paid or incurred by the Executive in
      connection with and related to the performance of his duties and
      responsibilities for the Company during the period ending on the termination
      date,
      (b) a
      severance payment in an amount equal to two years of the Executive’s base salary
      plus any bonus earned or accrued through the date of such termination, (c)
      for 2
      years, continuation on behalf of the Executive and the Executive’s dependents
      and beneficiaries of life insurance, disability, medical, dental,
      hospitalization and long-term care benefits, provided, however, that the
      Company’s obligation hereunder with respect to the foregoing benefits shall be
      limited to the extent that the Executive obtains any such benefits pursuant
      to a
      subsequent employer’s benefit plans, in which case the Company may reduce the
      coverage of any benefits it is required to provide the Executive hereunder
      as
      long as the aggregate coverages and benefits of the combined benefits plans
      are
      no less favorable to the Executive than the coverages and benefits required
      to
      be provided hereunder and (d) to the extent the Executive holds any unvested
      portion of the option granted to the Executive pursuant to paragraph 9(a),
      the
      portion of the option so granted that would otherwise vest following the date
      of
      termination of the Executive’s employment with the Company will as of the date
      of termination become fully vested. Upon the Executive’s termination of this
      Agreement and the Executive’s employment with the Company pursuant to this
      paragraph 11(e)(i), the Company shall have no further obligations to the
      Executive or his heirs, administrators or executors with respect to compensation
      and benefits thereafter, except for the obligation to pay to the Executive
      (a)
      any earned but unpaid base salary and vacation pay, and reimbursement
      of any and all reasonable expenses paid or incurred by the Executive in
      connection with and related to the performance of his duties and
      responsibilities for the Company during the period ending on the termination
      date. The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA, and other appropriate
      deductions.

     

    (ii) At
      the
      Executive’s option, the amounts described in paragraph 11(e)(i) shall be paid to
      the Executive in the same manner as they would have been paid, in accordance
      with the provisions of paragraph 6(a), had the Executive remained employed
      by
      the Company. To exercise such option, the Executive shall deliver to the Company
      written notice electing such option within 10 business days after his last
      day
      of employment with the Company. If the Executive fails to deliver such written
      notice within 10 business days after his last day of employment with the
      Company, the Executive shall be entitled to receive the amounts described in
      paragraph 11(e)(i) in a lump sum within 45 days of his last day of employment
      with the Company.

     

    12. Confidential
      Information/Ownership and Assignment of Inventions. The
      Executive expressly acknowledges that, in the performance of his duties and
      responsibilities with the Company, (i) he has been exposed, and will be exposed,
      to the trade secrets, business and/or financial secrets and confidential and
      proprietary information of the Company, its affiliates and/or its clients or
      customers (“Confidential Information”) and (ii) he and/or other employees of the
      Company working with him, without him or under his supervision, may create,
      conceive of, make, prepare, work on or contribute to the creation of, or may
      be
      asked by the Company or its affiliates to create, conceive of, make, prepare,
      work on or contribute to the creation of, without limitation, lists, business
      diaries, business address books (except
      for business addresses and business address books not related to the Company),
      documentation, ideas, concepts, inventions, designs, works of authorship,
      computer programs, audio/visual works, developments, proposals, works for hire
      or other materials. Therefore, the Executive agrees to execute and abide by
      the
      terms of the Assignment of Invention and Non-Disclosure Agreement attached
      hereto as Exhibit A. Additionally,
      the Executive affirms that he does not possess and will not rely upon the
      protected trade secrets or confidential or proprietary information of his prior
      employer(s) in providing services to the Company.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    13. Non-Competition
      and Non-Solicitation.
      The
      Executive agrees and acknowledges that the Confidential Information that the
      Executive has already received and will receive are valuable to the Company,
      its
      affiliates and/or its clients or customers, and
      that
      its protection and maintenance constitutes a legitimate business interest of
      Company, its
      affiliates and/or its clients or customers
      to be
      protected by non-competition restrictions. Therefore, the Executive agrees
      to
      execute and abide by the terms of the Non-solicitation Agreement attached hereto
      as Exhibit B and the Executive agrees and acknowledges that the non-competition
      restrictions set forth therein are reasonable and necessary and do not impose
      undue hardship or burdens on the Executive. 

     

    14. Insider
      Trading Policy/Public Disclosure.
      As a
      result of the potential liability for both the Company and the Executive for
      “insider trading” under the securities laws, the Board has adopted an Insider
      Trading and Public Disclosure Policy attached hereto as Exhibit C. The Executive
      agrees to bound by and comply with such policy and to evidence such agreement
      by
      executing and delivering to the Company the Insider Trading and Disclosure
      Policy Acknowledgement contained in Exhibit C.

     

    15. Indemnification.
      The
      Company hereby covenants and agrees to indemnify the Executive to the fullest
      extent permitted by law and the Company’s charter documents and to hold the
      Executive harmless fully, completely, and absolutely against and in any respects
      to any and all actions, suits, proceedings, claims, demands, judgments, costs,
      expenses (including attorneys’ fees), losses, and damages resulting from the
      Executive’s good faith performance of his job duties pursuant to this Agreement.
      The Company also hereby agrees to use its best efforts to purchase, maintain
      and
      cover the Executive under a directors’ and officers’ liability insurance policy.

     

    16. Dispute
      Resolution.
      The
      Parties agree that any dispute or claim, whether based on contract, tort,
      discrimination, retaliation, or otherwise, relating to, arising from, or
      connected in any manner with this Agreement or the Executive’s employment with
      the Company shall be resolved exclusively through final and binding arbitration
      under the auspices of the American Arbitration Association (“AAA”). The
      arbitration shall be held in the State of New York. The arbitration shall
      proceed in accordance with the National Rules for the Resolution of Employment
      Disputes of the AAA in effect at the time the claim or dispute arose, unless
      other rules are agreed upon by the parties. The arbitration shall be conducted
      by one arbitrator who is a member of the AAA, unless the parties mutually agree
      otherwise. The arbitrators shall have jurisdiction to determine any claim,
      including the arbitrability of any claim, submitted to them. The arbitrators
      may
      grant any relief authorized by law for any properly established claim. The
      interpretation and enforceability of this paragraph of this Agreement shall
      be
      governed and construed in accordance with the United States Federal Arbitration
      Act, 9. U.S.C. §1, et
      seq.
      More
      specifically, the parties agree to submit to binding arbitration any claims
      for
      unpaid wages or benefits, or for alleged discrimination, harassment, or
      retaliation, arising under Title VII of the Civil Rights Act of 1964, the Equal
      Pay Act, the National Labor Relations Act, the Age Discrimination in Employment
      Act, the Americans With Disabilities Act, the Employee Retirement Income
      Security Act, the Civil Rights Act of 1991, the Family and Medical Leave Act,
      the Fair Labor Standards Act, Sections 1981 through 1988 of Title 42 of the
      United States Code, COBRA, and any other federal, state, or local law,
      regulation, or ordinance, and any common law claims, claims for breach of
      contract, or claims for declaratory relief. The Executive acknowledges that
      the
      purpose and effect of this paragraph is solely to elect private arbitration
      in
      lieu of any judicial proceeding he might otherwise have available to him in
      the
      event of an employment-related dispute between him and the Company. Therefore,
      the Executive hereby waives his right to have any such employment-related
      dispute heard by a court or jury, as the case may be, and agrees that his
      exclusive procedure to redress any employment-related claims will be
      arbitration.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    Notwithstanding
      this agreement to arbitrate, the Parties agree that any violation of paragraphs
      12, 13 or 14 of this Agreement and the Assignment of Invention and
      Non-Disclosure Agreement attached hereto as Exhibit A, the Non-solicitation
      Agreement attached hereto as Exhibit B and the Insider Trading and Public
      Disclosure Policy attached hereto as Exhibit C may be restrained by the issuance
      of an injunction or other equitable relief by a court of competent jurisdiction,
      in addition to other remedies provided by law or this Agreement. 

     

    In
      the
      event of any legal action or other proceeding arising out of or related to
      or
      for the enforcement of this Agreement, the prevailing party shall be entitled
      to
      recover its reasonable attorneys’ fees, costs and expenses incurred in that
      action or proceeding, including attorneys’ fees, costs and expenses incurred on
      appeal, if any, in addition to any other relief to which such party may be
      entitled, from the non-prevailing party.

     

    The
      Company shall pay all legal fees and related expenses incurred by the Executive
      as a result of (a) the Executive’s termination of employment, or (b) the
      Executive seeking to obtain or enforce any right or benefit provided by this
      Agreement or by any other plan or arrangement maintained by the Company under
      which the Executive is or may be entitled to receive benefits; provided,
      however, that the circumstances set forth in clauses (a) and (b) occurred on
      or
      after a Change in Control, and provided, however, that the Executive prevails
      in
      any such dispute or proceeding.

     

    17. Notice.
      For
      purposes of this Agreement, notices and all other communications provided for
      in
      this Agreement or contemplated hereby shall be in writing and shall be deemed
      to
      have been duly given when personally delivered, delivered by a nationally
      recognized overnight delivery service or when mailed United States Certified
      or
      registered mail, return receipt requested, postage prepaid, and addressed as
      follows or at such other address provided in writing by the Executive to the
      Company:

     

    If
      to the
      Company: 

     

    Foothills
      Resources, Inc.

    P.O.
      Box
      2701

    Bakersfield,
      California 93303

    Attn:
      Dennis B. Tower, Chief Executive Officer

    Facsimile:
      (541) 595-2484

    

    with
      a
      copy to:

    

    McGuireWoods
      LLP

    1345
      Avenue of the Americas

    New
      York,
      New York 10105

    Attn:
      Louis W. Zehil, Esq.

    Facsimile:
      (212) 548-2175

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    

    and
      with
      a copy to:

    

    W.
      Kirk
      Bosché 

    14619
      Carols Way Drive,

    Houston,
      Texas 77070

    Facsimile:
      (281) 376-9367

    

    If
      to the
      Executive:

     

    John
      L.
      Moran

    11902
      Shanklin St.

    Bakersfield,
      California 93312

    Facsimile:
      (661) 587-3688

    

    18. Miscellaneous.

     

    (a) Telephones,
      stationery, postage, e-mail, the internet and other resources made available
      to
      the Executive by the Company, are solely for the furtherance of the Company’s
      business.

     

    (b) All
      issues and disputes concerning, relating to or arising out of this Agreement
      and
      from the Executive’s employment by the Company, including, without limitation,
      the construction and interpretation of this Agreement, shall be governed by
      and
      construed in accordance with the internal laws of the State of New York, without
      giving effect to that State’s principles of conflicts of law.

     

    (c) The
      Parties agree that any provision of this Agreement deemed unenforceable or
      invalid may be reformed to permit enforcement of the objectionable provision
      to
      the fullest permissible extent. Any provision of this Agreement deemed
      unenforceable after modification shall be deemed stricken from this Agreement,
      with the remainder of the Agreement being given its full force and
      effect.

     

    (d) The
      Company shall be entitled to equitable relief, including injunctive relief
      and
      specific performance as against the Executive, for the Executive’s threatened or
      actual breach of paragraphs 12, 13 and 14 of this Agreement and
      the
      Assignment of Invention and Non-Disclosure Agreement attached hereto as Exhibit
      A, the Non-solicitation Agreement attached hereto as Exhibit B and the Insider
      Trading and Public Disclosure Policy attached hereto as Exhibit C,
      as
      money damages for a breach thereof would be incapable of precise estimation,
      uncertain, and an insufficient remedy for an actual or threatened breach of
      paragraphs 12, 13 and 14 of this Agreement and
      the
      Assignment of Invention and Non-Disclosure Agreement attached hereto as Exhibit
      A, the Non-solicitation Agreement attached hereto as Exhibit B and the Insider
      Trading and Public Disclosure Policy attached hereto as Exhibit C.
      The
      Parties agree that any pursuit of equitable relief in respect of paragraphs
      12,
      13 and 14 of this Agreement and
      the
      Assignment of Invention and Non-Disclosure Agreement attached hereto as Exhibit
      A, the Non-solicitation Agreement attached hereto as Exhibit B and the Insider
      Trading and Public Disclosure Policy attached hereto as Exhibit C shall
      have no effect whatsoever regarding the continued viability and enforceability
      of paragraph 16 of this Agreement. 

     

    (e) Any
      waiver or inaction by the Company or the Executive for any breach of this
      Agreement shall not be deemed a waiver of any subsequent breach of this
      Agreement.

     

    (f) The
      Parties independently have made all inquiries regarding the qualifications
      and
      business affairs of the other which either party deems necessary. The Executive
      affirms that he fully understands this Agreement’s meaning and legally binding
      effect. Each party has participated fully and equally in the negotiation and
      drafting of this Agreement. 

     

    (g) The
      Executive’s obligations under this Agreement are personal in nature and may not
      be assigned by the Executive to any other person or entity. This
      Agreement shall be enforceable by the
      Company
      and its
      parents, affiliates, successors and assigns, and the Company shall require
      any
      successors and assigns to expressly assume and agree to perform this Agreement
      in the same manner and to the same extent that the Company would be required
      to
      perform it if no such succession or assignment had taken place.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    (h) This
      instrument constitutes the entire Agreement between the Parties regarding its
      subject matter. When signed by each of the Parties, this Agreement supersedes
      and nullifies all prior or contemporaneous conversations, negotiations, or
      agreements, oral and written, regarding the subject matter of this Agreement.
      In
      any future construction of this Agreement, this Agreement should be given its
      plain meaning. This Agreement may be amended only by a writing signed by the
      Parties.

     

    (i) This
      Agreement may be executed in counterparts, a counterpart transmitted via
      facsimile, and all executed counterparts, when taken together, shall constitute
      sufficient proof of the parties’ entry into this Agreement. The Parties agree to
      execute any further or future documents which may be necessary to allow the
      full
      performance of this Agreement. This Agreement contains headings for ease of
      reference. The headings have no independent meaning.

     

    THE
      EXECUTIVE STATES THAT HE HAS FREELY AND VOLUNTARILY ENTERED INTO THIS AGREEMENT
      AND THAT HE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION THEREOF. THIS
      AGREEMENT IS EFFECTIVE UPON THE EXECUTION OF THIS AGREEMENT BY BOTH
      PARTIES.  IT
      IS UNDERSTOOD, AGREED, AND ACCEPTED BY SUCH PERSONS WHOSE NAMES APPEAR ON THE
      SIGNATURE PAGE HERETO.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

IN
        WITNESS WHEREOF, the Executive and the Company have caused this Employment
        Agreement to be executed as of the date first above written.

    

     

     

    
      
        	
                Executive

              	 	
                Foothills
                  Resources, Inc.

              
	 	 	 
	
                /s/
                  John L. Moran

              	 	
                By:
                  /s/ Dennis B. Tower

              
	
                John
                  L. Moran

              	 	
                Name:
                  Dennis B. Tower

              
	 	 	
                Title: Chief
                  Executive Officer

              

      

    

             

     

    
      
        
        

      

      -11-

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