Document:

WARRANT

     

    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(e)
      HEREOF.
      THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE LESS THAN THE NUMBER SET
      FORTH
      ON THE FACE HEREOF PURSUANT TO SECTION
      2(e)
      HEREOF.

    

    

    SONTERRA
      RESOURCES, INC.

    

    Warrant
      To Purchase Common Stock

    

    
      	
              Warrant
                No.: SRW – 002

            	
              Number
                of Shares: 1,000,000

            

    

    Date
      of
      Issuance: November 13, 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, Longview Marquis Master Fund, L.P., a British Virgin Island
      limited partnership (“Marquis”),
      the
      registered holder hereof, or its successors or permitted assigns (the
“Holder”),
      is
      entitled, subject to the terms and conditions 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) ONE MILLION
      (1,000,000) 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));
      provided,
      however, that in no event shall the Holder be entitled or required to exercise
      this Warrant for a number of Warrant Shares in excess of that number of Warrant
      Shares that, upon giving effect to such exercise, would cause the aggregate
      number of shares of Common Stock beneficially owned by the Holder and its
      Affiliates to exceed 4.99% of the outstanding shares of the Common Stock
      following such exercise. For purposes of the foregoing proviso, the aggregate
      number of shares of Common Stock beneficially owned by the Holder and its
      Affiliates shall include the number of shares of Common Stock issuable upon
      exercise of this Warrant with respect to which the determination of such proviso
      is being made, but shall exclude shares of Common Stock that would be issuable
      upon (i) exercise of the remaining, unexercised Warrants (as defined in Section
      1(b) below) beneficially owned by the Holder and its Affiliates and (ii)
      exercise, conversion or exchange of the unexercised, unconverted or unexchanged
      portion of any other securities of the Company beneficially owned by the Holder
      and its Affiliates subject to a limitation on conversion, exercise or exchange
      analogous to the limitation contained herein. Except as set forth in the
      preceding sentence, for purposes of this paragraph, beneficial ownership shall
      be calculated in accordance with Section 13(d) of the Exchange Act (as defined
      in Section 1(b)). For purposes of this Warrant, in determining the number of
      outstanding shares of Common Stock, a Holder may rely on the number of
      outstanding shares of Common Stock as reflected in (1) the Company’s most recent
      Periodic Report (as defined in Section 1(b)), (2) a more recent public
      announcement by the Company or (3) any other written (including e-mail) notice
      by the Company or its transfer agent setting forth the number of shares of
      Common Stock outstanding. Upon the written request of the Holder, the Company
      shall promptly, but in no event later than two Business Days following the
      receipt of such request, confirm in writing to the Holder the number of shares
      of Common Stock then outstanding. In any case, the number of outstanding shares
      of Common Stock shall be determined after giving effect to the conversion,
      exercise or exchange of securities of the Company, including this Warrant,
      by
      the Holder and its Affiliates since the date as of which such number of
      outstanding shares of Common Stock was reported.  

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
      1. 

     

    (a) Securities
      Exchange Agreement.
      This
      Warrant is issued pursuant to Section
      1
      of that
      certain Securities Exchange Agreement, dated as of November 13, 2008, among
      the
      Company and Marquis referred to therein (as such agreement may be amended from
      time to time as provided therein, the “Securities
      Exchange Agreement”).
      Each
      capitalized term used, and not otherwise defined, herein shall have the meaning
      ascribed thereto in the Securities Exchange Agreement.

     

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

     

    (i) “Approved
      Stock Plan”
means
      the Company’s 2007 Non-Qualified Stock Option Plan and the 2008 Sonterra
      Resources, Inc. Equity Compensation Plan, each as in effect as of the date
      of
      the Securities Exchange Agreement, without amendment or modification thereafter.
      

     

    (ii) “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.

     

    (iii) “Common
      Stock”
means
      (A) the Company’s Common Stock, par value $0.001 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.
      

     

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

     

    
      
        
        

      

      
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    (v) “dollar”
or
      “$”
means
      U.S. dollars.

     

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

     

    (vii) “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, any Approved Stock Plan, provided
      that
      the Company shall 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 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 conversion, exchange or exercise of any option, obligation or security
      outstanding on the date prior to the Warrant Date and set forth in Schedule
      3(c)
      to the Securities Exchange Agreement, provided that the terms of such option,
      obligation or security are not amended or otherwise modified on or after the
      date of the Securities Exchange Agreement, and provided that the conversion
      price, exchange price, exercise price or other purchase price is not reduced,
      adjusted or otherwise modified and the number of shares of Common Stock issued
      or issuable thereunder is not increased (whether by operation of, or in
      accordance with, the relevant governing documents or otherwise) on or after
      the
      date of the Securities Exchange Agreement; or (III) shares of Common Stock
      issued or deemed to be issued by the Company upon exercise of this Warrant
      or
      the warrant pursuant to that certain Securities Purchase Agreement.

     

    (viii) “Expiration
      Date”
means
      the date that is five 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.

     

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

     

    (x) “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.

     

    (xi) “Principal
      Market”
means,
      with respect to the Common Stock or any other security, the principal securities
      exchange or trading market for the Common Stock or such other security.

     

    (xii) “Securities
      Act”
means
      the Securities Act of 1933, as amended, together with the rules and regulations
      promulgated by the Securities and Exchange Commission thereunder.

     

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

     

    
      
        
        

      

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

     

    (xv) “Warrant
      Exercise Price”
shall
      be equal to, with respect to any Warrant Share, $0.01, subject
      to adjustment as hereinafter provided. 

     

    (xvi) “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(d).
      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.

     

    
      
        
        

      

      
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    Section
      2. Exercise
      of Warrant.

     

    (a) 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
      such 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 (an “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
      check or wire transfer of funds, 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 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 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. 

     

    (b) 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 five 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 that 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).

     

    (c) 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).

     

    
      
        
        

      

      
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    (d) If
      the
      Company shall fail for any reason or for no reason (x) to issue and deliver
      to
      the Holder within two 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 the Holder is entitled pursuant to Section
      2(b),
      if any,
      then the Company shall, in addition to any other remedies under this Warrant
      or
      the Securities Exchange Agreement or otherwise available to the Holder,
      including any indemnification under Section 8 of the Securities Exchange
      Agreement, pay as additional damages in cash to the Holder on each day after
      such second 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 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. 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. If the Holder and the Company are unable to agree upon
      the
      determination of the Weighted Average Price, within one Business Day of such
      disputed determination being submitted to the Holder, then the Company shall
      immediately submit via facsimile the disputed determination of the Weighted
      Average Price to an independent, reputable investment banking firm agreed to
      by
      the Company and the Holder. The Company shall cause the investment banking
      firm
      to perform the determination and notify the Company and the Holder of the
      results no later than two Business Days after the date it receives the disputed
      determinations. Such investment banking firm’s determination shall be deemed
      conclusive absent manifest error.

     

    (e) At
      any
      time after the Warrant Date (as defined in Section
      12),
      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”):

     

    
      
        
        

      

      
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    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.

    

    (f) 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, by acceptance of this Warrant, acknowledges and
      agrees 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. 

     

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

     

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

     

    (b) 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.

     

    
      
        
        

      

      
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    (c) At
      all
      times through (and including) the Expiration Date, 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.

     

    (d) The
      Company shall promptly secure the quotation or listing of the Warrant Shares
      on
      the Principal Market for the Common Stock 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, and shall maintain such listing of, any other shares
      of capital stock of the Company issuable upon the exercise of this Warrant
      on
      the Principal Market for such capital stock and each other market or exchange
      on
      which such capital stock is traded or listed. 

     

    (e) 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 take 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) shall not increase the par value of any shares of Common Stock
      receivable upon the exercise of this Warrant above $0.001 per share, and
      (ii) shall 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.

     

    (f) 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.

     

    Section
      4. 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.

     

    Section
      5. Warrant
      Holder Not Deemed a Stockholder.
      Except
      as otherwise provided herein, the Holder, as holder of this Warrant, shall
      not
      be entitled to vote or be deemed the holder of shares of the Company for any
      purpose (other than to the extent that the Holder is deemed to be a beneficial
      owner of Warrant Shares under applicable securities laws after taking into
      account the limitation set forth in the first paragraph of this Warrant), nor
      shall anything contained in this Warrant be construed to confer upon the Holder,
      as holder of this Warrant, 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, receive dividends
      or subscription rights, or otherwise, prior to the Deemed Issuance Date of
      the
      Warrant Shares that the 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 the 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.

     

    
      
        
        

      

      
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    Section
      6. Representations
      of Holder.
      The
      Holder, 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 further represents, by acceptance
      hereof, that, as of the date of its acquisition of this Warrant, the 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 the 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 applicable registration requirements of United States or state
      securities laws.

     

    Section
      7. Ownership
      and Transfer.

     

    (a) 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.

     

    (b) This
      Warrant and the rights granted hereunder shall be assignable by the Holder
      hereof in accordance with the Securities Exchange Agreement and upon proper
      surrender of this Warrant, properly endorsed. 

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    Section
      8. Adjustment
      of 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:

     

    (a) 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(a)
      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.

     

    (b) 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, 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.

     

    (c) Par
      Value.
      Notwithstanding anything to the contrary contained in this Section
      8,
      if, as
      a result of an adjustment pursuant to this Section
      8,
      the par
      value per share of Common Stock would be greater than the Warrant Exercise
      Price, then the Warrant Price shall be an amount equal to the par value per
      share of the Common Stock but the number of shares the holder of this Warrant
      shall be entitled to purchase shall be such greater number of shares of Common
      Stock as would have resulted from the Warrant Exercise Price that, absent such
      limitation, would have been in effect pursuant to this Section
      8.
      The
      foregoing adjustment shall not constitute a waiver of any claim arising against
      the Company by reason of any covenant contained in Section
      3(e).

     

    Section
      9. Purchase
      Rights; Dividends/Distributions of Assets; Reorganization, Reclassification,
      Consolidation, Merger or Sale.
      

     

    (a) 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 the Holder could have
      acquired if the 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.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    (b) 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 (without regard to any limitations on exercise), 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 this Warrant (without regard to any limitations
      on exercise), 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 (without
      taking into account any limitations or restrictions on the exerciseability
      of
      this Warrant).

     

    (c) 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, without regard to any limitations on exercise (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).

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    (d) Notices.

     

    (i) As
      soon
      as reasonably practicable, but in no event later than two Business Days, upon
      any adjustment of the Warrant Exercise Price or number of shares of Common
      Stock
      obtainable upon exercise of this Warrant, 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.

     

    (ii) The
      Company will give written notice to the Holder at least 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, dissolution or liquidation, provided
      that such information shall be made known to the public prior to or
      contemporaneously with such notice being provided to the Holder.

     

    (iii) The
      Company will also give written notice to the Holder at least 10 days prior
      to
      the date on which any Organic Change, dissolution or liquidation will take
      place, provided that such information shall be made known to the public prior
      to
      or contemporaneously with such notice being provided to the Holder.

     

    Section
      10. 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.

     

    Section
      11. 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 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.

    523
      North
      Sam Houston Parkway East, Suite 1175

    Houston,
      Texas 77060

    Facsimile:
      281-741-0895

    Attention:
      D. E. Vandenberg

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    With
      a
      copy to:

    

    Duane
      Morris LLP

    3200
      Southwest Freeway, Suite 3150

    Houston,
      Texas 77027

    Facsimile:
      713-402-3901

    Attention:
      Charles E. Harrell

    

    If
      to the
      Holder:

    

    Longview
      Marquis Master Fund, L.P., a 

    British
      Virgin Island limited partnership

    c/o
      Summerline Asset Management, LLC

    70
      West
      Red Oak Lane, 4th
      Floor

    White
      Plains, New York 10604

    Attention:
      Robert J. Brantman

    Facsimile:
      (914) 697-4967

    

    With
      a
      copy to:

    

    Katten
      Muchin Rosenman LLP

    525
      W.
      Monroe Street 

    Chicago,
      Illinois 60661-3693 

    Attention:
      Mark D. Wood, Esq.

    Facsimile:
      (312) 902-1061

    

    or,
      in
      the case of any other Holder or any 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
      Business Days prior to the effectiveness thereof. 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.

    

    Section
      12. Date.
      The
      date of this Warrant is November 13, 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 to the extent it has
      been exercised prior thereto and except that any applicable provisions of this
      Warrant 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.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    Section
      13. Amendment
      and Waiver.
      Except
      as otherwise provided herein, the provisions of this Warrant and the other
      Warrants 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.

     

    Section
      14. 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.

     

    Section
      15. 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) 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 (c) the
      use
      of the word “including” in this Warrant shall be by way of example rather than
      limitation.

     

    Section
      16. 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. 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.

     

    *
      * * * *
      *

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the
      Company has caused this Warrant to be executed as of the 13th day of November,
      2008.

     

    

    
      	 	
              SONTERRA
                RESOURCES, INC.

            
	 	 
	 	 
	 	
              By:

            	
                  

            	 
	 	
              Name:

            	
              D.
                E. Vandenberg

            	 
	 	
              Title:

            	
              President

            	 

    

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A TO WARRANT

     

    EXERCISE
      NOTICE

    TO
      BE
      EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

    SONTERRA
      RESOURCES, INC.

     

    The
      undersigned holder (the “Holder”)
      hereby
      exercises the right to purchase _________________ of the shares of Common Stock
      (“Warrant
      Shares”)
      of
      SONTERRA RESOURCES, 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 

     

    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):    
         

     

    5.
      Representations.
      Other
      than in connection with a Cashless Exercise, the undersigned hereby confirms
      the
      representations concerning the Warrant Shares set forth in the first two
      sentences of Section 6 of the Warrant (unless the Holder has otherwise notified
      the Company in writing).

     

    Name
      of
      Registered Holder of this Warrant

    

    
      	
              By:

            	
                     

            	 	
              Date:

            	
                       

            	 
	
              Name:

            	 
	
              Title:

            	 

    

    
       

      
        
1 No
        such
        condition applies if left blank

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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:

            	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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., 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:CONVEYANCE
      OF OVERRIDING ROYALTY INTEREST

     

    For
      a
      good and valuable consideration, the receipt of which is hereby acknowledged,
      Sonterra Resources, Inc., a Delaware corporation, with principal offices located
      at 523 North Sam Houston Parkway East, Suite 175, Houston, Texas 77060
      (“Grantor”),
      does
      hereby grant, bargain, sell, transfer, assign and convey to Longview Marquis
      Master Fund, L.P. (“Grantee”),
      a
      British Virgin Island limited partnership, whose address is c/o Summerline
      Asset
      Management LLC, 70 West Red Oak Lane, 4th
      Floor,
      White Plains, New York 10604, Attention: Robert Brantman, an overriding royalty
      interest (the “Overriding
      Royalty”)
      equal
      to three percent (3%) of the Applicable Percentage (defined below) of the oil,
      gas and other minerals in, under and that may be produced from the lands (a)
      described in Exhibit “A” attached hereto and made a part hereof or (b) covered
      by the oil and gas leases described in such Exhibit “A” (collectively the
“Subject
      Lands”),
      commencing at the Effective Time (defined below) and at all times thereafter.
      As
      used herein, the terms (i) “Subject
      Leases”
refers
      to the oil and gas leases described in Exhibit “A”, (ii) “Working
      Interest”
and
      “WI”
mean
      the cost bearing percentage interest that the owner thereof must bear relative
      to 100% of all costs to explore, develop, and produce oil and/or gas from the
      applicable portion of the Subject Lands, and (iii) “Applicable
      Percentage”
shall
      mean, with respect to each portion of Subject Lands identified on Exhibit “A”,
      the percentage set forth on such Exhibit “A” as the “Working Interest” or “WI”
for such portion of the Subject Lands.

     

    It
      is
      understood and agreed that though the Overriding Royalty is conveyed by Grantor
      to Grantee out of Grantor's interest (such interest, subject to the Overriding
      Royalty, being herein called the “Burdened
      Interest”)
      in the
      Subject Leases insofar as they cover Subject Lands, such Overriding Royalty
      shall be equal to three percent (3%) of the Applicable Percentage of the oil,
      gas and other minerals in, under and that may be produced from the Subject
      Lands
      (the “ORRI
      Percentage”),
      commencing at the Effective Time and at all times thereafter, and the ORRI
      Percentage shall not be reduced by Grantor to less than 3% of the Applicable
      Percentage for any reason, including, without limitation, the same shall not
      be
      reduced if the Working Interest of Grantor in a Subject Lease is less than
      the
      Working Interest stated on Exhibit “A” with respect to such Subject Lease or
      that portion of the Subject Lands covered by such Subject Lease, or if the
      interest in oil, gas and other minerals underlying any portion of the Subject
      Lands which is covered by a particular Subject Lease (or group of Subject
      Leases) is less than the entire interest in the oil, gas and other minerals
      underlying such portion of the Subject Lands, or if the share of production
      from
      any portion of Subject Lands to which Grantor is entitled by virtue of its
      ownership interest in the Subject Leases is less than the Applicable Percentage
      set forth on Exhibit “A” for such portion of the Subject Lands.

     

    TO
      HAVE
      AND TO HOLD the Overriding Royalty unto Grantee, its successors and assigns
      forever. The Overriding Royalty herein conveyed, and the Burdened Interest
      of
      Grantor, shall be subject to the following provisions:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1. Grantor
      shall have the obligation to market, or cause to be marketed, the oil, gas
      and
      other minerals produced from the Subject Lands and attributable to the
      Overriding Royalty (the “ORRI
      Hydrocarbons”)
      on
      behalf of and for the account of Grantee in arm's-length transactions with
      reputable purchasers in accordance with prudent business judgment, with each
      such sale to be: (i) upon terms and conditions which are the best terms and
      conditions reasonably available taking into account all relevant circumstances,
      including without limitation, price, quality of production, access to markets
      or
      lack thereof, minimum purchase guarantees, identify of purchaser and length
      of
      commitment, (ii) upon terms and conditions at least as favorable as (a) Grantor
      obtains for the share of oil, gas and/or other minerals attributable to the
      Burdened Interest in the Subject Lands to which such sale relates, (b) Grantor
      obtains for its interest in other oil, gas and/or other minerals which are
      of
      comparable type and quality and which are produced in the same area as the
      Subject Lands to which such sale relates, and (c) those obtained by any
      Affiliates (below defined) of Grantor for oil, gas and/or other minerals
      produced from the Subject Lands to which such sale relates or from lands in
      the
      same area, and (iii) made to a party who is not an Affiliate of Grantor. As
      used
      herein, “Affiliate”
shall
      mean, with respect to any person or entity, another person or entity that,
      directly or indirectly, (a) has an equity interest in that person or entity,
      (b)
      has a common ownership with that person or entity, (c) controls that person
      or
      entity, (d) is controlled by that person or entity or (e) shares common control
      with that person or entity. “Control”
or
      “controls”
for
      purposes hereof means that a person or entity has the power, direct or indirect,
      to conduct or govern the policies of another person or entity. Grantor shall
      duly perform all obligations performable by it under production sales contracts
      under which ORRI Hydrocarbons are sold and shall take all appropriate measures
      to enforce the performance under each such production sales contract of the
      obligations of the other parties thereto. 

     

    2. Grantor
      does hereby represent and warrant to Grantee (i) that Grantor owns the interests
      specified in Exhibit “A” hereto in and to the Subject Leases (and Grantor has
      good and marketable title to such interests, free of liens and encumbrances,
      except liens and encumbrances in favor of Summerline Asset Management, LLC
      on
      its own behalf and in its capacity as collateral agent), (ii) that Grantor
      has
      good right and authority to sell and convey the Overriding Royalty, and (iii)
      that this Conveyance of Overriding Royalty Interest (“this
      Conveyance”)
      vests
      in Grantee good and marketable title to the Overriding Royalty free of any
      other
      liens and encumbrances not referenced in this sentence. Grantor hereby covenants
      and agrees to use its reasonable best efforts to rectify any defects in its
      title to the interests specified in Exhibit “A” hereto, and otherwise to cause
      the foregoing representations and warranties to be true and correct in all
      respects (without giving effect to the exception set forth in the clause at
      the
      end of the immediately preceding sentence), to the extent reasonably possible.
      Grantor hereby binds itself to warrant and forever defend, all and singular,
      title to the Overriding Royalty unto Grantee, its successors and assigns,
      against the claims and demands of all persons claiming or to claim the same
      or
      any part thereof by, through or under Grantor. This Conveyance is made with
      full
      substitution and subrogation of Grantee in and to all covenants and warranties
      by others heretofore given or made.

     

    3. Grantor
      shall be obligated to explore, develop, operate and maintain the Burdened
      Interest as would a prudent operator. As to any portions of the Burdened
      Interest as to which Grantor is not the operator, Grantor shall take all such
      action and exercise all such rights and remedies as are reasonably available
      to
      it to cause the operator to so explore, develop, maintain and operate such
      portions of the Burdened Interest. Grantor shall promptly (and, unless the
      same
      are being contested in good faith and by appropriate proceedings, before the
      same are delinquent) pay all costs and expenses (including all taxes and all
      costs, expenses and liabilities for labor, materials and equipment incurred
      in
      connection with the Burdened Interests and all obligations to the holders of
      royalty interests and other interests affecting the Subject Leases) incurred
      in
      developing, operating and maintaining the Burdened Interests.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    4. Grantor
      shall revise and supplement Exhibit “A” promptly upon any increase in the
      Grantor’s Working Interest in the Subject Lands, by purchase or otherwise, that
      occurs at any time prior to the date on which Grantor has repaid in full all
      of
      the outstanding Notes (as defined in the Securities Purchase Agreement dated
      November 13, 2008, between Grantor and Grantor, pursuant to which this
      Conveyance was originally issued), to reflect such increase and to reflect
      the
      accordingly increased “Applicable Percentage” pertaining to the Subject Lands.
      For purposes of clarification, upon any increase in Grantor’s Working Interests
      in the Subject Lands that occurs at any time prior to the date on which Grantor
      has repaid in full all of the outstanding Notes, whether or not Exhibit “A” has
      been updated in accordance with this Section 4, such increase in Working
      Interests shall become subject to this Overriding Royalty and with respect
      to
      that portion of the Subject Lands in which Grantor increases its Working
      Interest, such increased Working Interest shall be the revised increased
“Applicable
      Percentage”
for
      such portion of the Subject Lands; provided, however, that the ORRI Percentage
      shall (i) always equal 3% of the Applicable Percentage, as the same may be
      increased from time to time pursuant to this Section 4, and (ii) with respect
      to
      each portion of Subject Lands identified on Exhibit “A”, the amount of the
      Applicable Percentage, shall never be less than the percentage set forth on
      such
      Exhibit “A” as the “Working Interest” or “WI” for such portion of the Subject
      Lands, as the same may be increased from time to time pursuant to this Section
      4. 

     

    5. Grantee
      shall be entitled to receive payment for all ORRI Hydrocarbons directly from
      the
      purchasers thereof or from other parties obligated to make payment therefor.
      Grantor shall cause to be prepared and executed such division orders, transfer
      orders, or instructions in lieu thereof, as Grantee (or any third party) may
      require from time to time to cause payments to be made directly to Grantee.
      In
      the event that, for any reason, Grantee cannot (or does not) receive such
      payments directly, the same shall be collected by Grantor and shall constitute
      trust funds in Grantor's hands and shall be immediately paid over to Grantor.
      Grantee may also, at any time, and from time to time, at Grantee's option,
      take
      all or any part of the ORRI Hydrocarbons in kind and all production sales
      contracts entered into by Grantor covering ORRI Hydrocarbons shall be subject
      to
      such right; during such time or times as Grantee is so taking ORRI Hydrocarbons
      in kind Grantor's obligation to market the same, as provided above, shall be
      suspended as to the ORRI Hydrocarbons so taken, but shall again become effective
      where Grantee elects to cease such taking in kind.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    6. Grantor
      shall keep full, true, and correct records of the oil, gas, and other
      hydrocarbons produced from or attributable to the Subject Lands each calendar
      month, and the portion attributable to the Overriding Royalty. Such records
      may
      be inspected by Grantee or its authorized representatives and copies thereof
      may
      be made by Grantee at all reasonable times upon prior written notice from
      Grantee to Grantor requesting such inspection and copying. Grantee shall also
      have, upon request, access to review all reports, data and information relating
      to the Subject Lands or to exploration, development, production and other
      operations conducted on the Subject Lands. On or before the earlier of (a)
      the
      fifth business day after Grantor’s first public disclosure, by issuance of a
      press release or filing of a report with the Securities and Exchange Commission,
      of Grantor’s production from the Subject Lands or other results of operations
      for the most recently completed fiscal quarter or fiscal year, or (b) the last
      day on which the Grantor can timely (without giving effect to any extensions
      of
      time permitted by Rule 12b-25 under the Securities Exchange Act of 1934) file
      a
      quarterly report on Form 10-Q or annual report on Form 10-K, as applicable,
      with
      respect to such fiscal quarter of fiscal year, Grantor shall (a) deliver to
      Grantee a statement (a “Production
      Statement”)
      setting forth (i) the production from the Subject Lands for the most recently
      completed fiscal quarter, (ii) the portion of such production attributable
      to
      the Overriding Royalty, (iii) to the extent Grantee does not receive direct
      payment of proceeds from sale of ORRI Hydrocarbons (or take ORRI Hydrocarbons
      in
      kind) pursuant to Section 5 above,the gross proceeds (“ORRI
      Collected Proceeds”)
      attributable to the sale of ORRI Hydrocarbons (and the taxes and other costs
      permitted to be deducted therefrom under Section 7 below) during such fiscal
      quarter and (iv) such other data as Grantee may reasonably request in such
      form
      as Grantee may reasonably request, and (b) make a payment to Grantee of such
      ORRI Collected Proceeds (less such costs permitted to be deducted therefrom
      under Section 7 below) in immediately available funds by wire transfer (or
      such
      other form specified by Grantee) to such bank or location as Grantee may direct
      from time to time in writing. No Production Statement delivered to Grantee
      shall
      contain any information regarding the production from the Subject Lands or
      reserves that has not been publicly disclosed by Grantor or any other material
      non-public information. If any Production Statement contains, or Grantor
      otherwise provides Grantee, any information regarding aggregate production
      from
      the Subject Lands or reserves that has not been publicly disclosed (or any
      other
      material non-public information), Grantee shall have the right to make public
      disclosure of such information and Grantee shall not have any liability to
      Grantor, any of its subsidiaries or any of its or their respective officers,
      directors, employees, shareholders or agents for any such disclosure. Grantor
      shall not publicly disclose its results of operations for any fiscal quarter
      or
      fiscal year unless it contemporaneously publicly discloses, or prior thereto
      has
      publicly disclosed, the production from the Subject Lands for the most recently
      completed fiscal quarter.

    

    7. The
      Overriding Royalty shall be free of all costs, expenses, and liabilities, of
      whatever kind or character, except the Overriding Royalty shall bear its
      proportionate share of the costs charged to Grantor by a third party (not an
      Affiliate of Grantor) for compression, dehydration and transportation that
      are
      incurred between the first point of receipt of production by such third party
      and the redelivery of such compressed and dehydrated production to Grantor.
      Specifically, but not by way of limitation, the Overriding Royalty shall never
      bear, either directly or indirectly, any costs, expenses or liabilities for
      building, constructing, acquiring, drilling, developing, producing, operating,
      gathering, separating, trucking, or transporting (except as set forth in the
      first sentence of this Section 7) or any post production expenses, related
      or
      pertaining to the Subject Lands, Subject Leases, or wells, pipelines, or other
      facilities or improvements situated on the Subject Lands or lands pooled
      therewith, or production of oil and/or gas from the Subject Lands or lands
      pooled therewith; provided, however, the Overriding Royalty shall bear its
      proportionate share of (i) the third party costs identified in the first
      sentence of this Section 7 and (ii) production, severance and similar
      taxes.

    

    8. Grantor
      agrees to execute and deliver, and, to the extent it is within Grantor's power
      to do so, to cause any third parties to execute and deliver, to Grantee all
      such
      other and additional instruments and to do all such further acts and things
      as
      may be necessary more fully to vest in and assure to Grantee all of the rights,
      titles, interests, remedies, powers and privileges herein granted or intended
      so
      to be.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    9. Exhibit
      “A” sets forth those certain portions, if any, of the Subject Lands that have
      been pooled or unitized for the production of oil, gas and/or minerals prior
      to
      the date hereof. With respect to each such existing pool or unit set forth
      on
      such Exhibit “A”, and with respect to each pool or unit in which the Overriding
      Royalty is included, as below provided, after the date hereof, the Overriding
      Royalty in each portion of Subject Lands included in such pool or unit shall
      apply to the portion of production from such pool or unit which is attributable
      to such portion of Subject Lands under and by virtue of the applicable pooling
      and unitization agreements, designations and/or orders. From and after the
      date
      hereof, Grantor shall have the right and power to unitize or pool in good faith
      on customary terms any portion or portions of the Overriding Royalty with other
      lands in which the mineral interest thereof is owned by a person or entity
      other
      than Grantor or an Affiliate of Grantor and on which is located, or will be
      located, a well producing, or capable of producing, oil and/or gas in
      commercially paying quantities (collectively “Third
      Party Lands”);
      provided, however, Grantor shall not have the right and power to unitize or
      pool
      any portion or portions of the Overriding Royalty with any non Third Party
      Lands
      without first obtaining the prior written consent of Grantee. If pursuant to
      any
      law, rule, regulation or order of any governmental body or official, any portion
      of the Subject Lands is pooled or unitized in any manner, or if Grantee has
      joined in or agreed to any pooling or unitization, the Overriding Royalty
      insofar as it affects such portion of Subject Lands shall also be pooled and
      unitized and, in each event, the Overriding Royalty shall apply to the
      production which is attributable to such portion of Subject Lands under and
      by
      virtue of such pooling and unitization arrangements.

    

    10. Nothing
      herein contained shall in any way limit or restrict the right of Grantee to
      sell, convey, assign or mortgage (or grant a deed of trust on) the Overriding
      Royalty (including its rights, titles, interests, estates, remedies, powers
      and
      privileges appurtenant or incident to the Overriding Royalty under this
      Conveyance) in whole or in part. No change of ownership of the Overriding
      Royalty shall be binding upon Grantor until Grantor is furnished with copies
      of
      the original documents evidencing such change. Upon receipt by Grantor of copies
      of the original documents evidencing a sale, conveyance, assignment or mortgage
      (or grant of a deed of trust on) the Overriding Royalty, Grantor shall deal
      with
      the purchaser or assignee in place of Grantee and shall deal with the mortgagee
      (or the beneficiary of the deed of trust) in addition to the Grantee, and
      references herein to the Grantee shall thereafter also be deemed to be
      references to such purchaser, assignee or mortgagee (or the beneficiary of
      the
      deed of trust).

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    11. If
      the
      Grantor proposes or intends to make any sale, transfer or other disposition
      of
      all or any portion of its Burdened Interest, including without limitation a
      proposed or intended sale, transfer or disposition of its Burdened Interest
      by
      merger, reorganization, consolidation, or by sale of all or substantially all
      of
      its assets (other than a sale, transfer or other disposition to a directly
      or
      indirectly wholly-owned subsidiary of Grantor), and such sale, transfer or
      other
      disposition will result in Grantor owning less than a fifty percent (50%)
      Working Interest in such Burdened Interest and/or resigning as operator of
      such
      Burdened Interest, Grantor shall so inform Grantee by notice in writing (the
      “Transfer
      Notice”)
      describing the interest (or portion thereof) that is the subject of such
      proposed or intended sale, transfer or disposition (the “Offered
      Interest”),
      and
      the other pertinent and reasonable details of such proposed or intended sale,
      transfer or disposition. Grantee shall thereupon have fifteen (15) days after
      receipt of the Transfer Notice to notify Grantor in writing that Grantee desires
      to participate in such sale, transfer or disposition and contribute the
      Overriding Royalty, or some portion thereof, as a part of the properties to
      be
      covered by such sale, transfer or disposition. Failure of Grantee to notify
      Grantor in writing that Grantee desires to participate in such sale, transfer
      or
      disposition within such fifteen (15) day period shall be deemed an election
      by
      Grantee not to participate. If Grantee does timely submit its notice to Grantor
      (i) the Burdened Interest, or portion thereof that is to be covered by such
      sale, transfer or disposition, shall not be sold or disposed of separate and
      apart of the Overriding Royalty (or portion thereof as designated by Grantee
      in
      its notice) and (ii) Grantor and Grantee shall mutually agree upon the price
      or
      value that Grantee shall receive upon conclusion of such sale, transfer or
      disposition for the Overriding Royalty (or portion thereof) that is to be a
      part
      of the properties covered by such sale, transfer or disposition. In the event
      Grantor and Grantee cannot so mutually agree, Grantor and Grantee shall retain
      the services of a petroleum reservoir engineer experienced in the valuation
      of
      oil and gas properties employed by Ryder Scott & Associates of Houston,
      Texas (or its successors in interest) to serve as the sole arbiter of such
      disagreement (the “Arbiter”).
      In
      the event Ryder Scott & Associates (or its successor in interest) is
      unwilling or incapable of having one of its petroleum reservoir engineers serve
      as Arbiter, then Grantor and Grantee shall mutually agree on the person to
      serve
      as Arbiter, and in the event Grantor and Grantee cannot so mutually agree,
      the
      selection of the Arbiter shall be made by a federal judge sitting in the
      Southern District of New York in the borough of Manhattan, New York, New York,
      upon petition filed by either Grantor or Grantee requesting that such selection
      be made. The decision of the Arbiter as to such price or value Grantee shall
      receive shall be delivered by the Arbiter within ten (10) days of his retention,
      and shall be final as to Grantor and Grantee for all purposes. The costs of
      such
      Arbiter shall be borne equally by Grantor and Grantee.

    

    12. Grantor
      shall have the right without the joinder of Grantee to release, surrender and/or
      abandon its Burdened Interest, or any part thereof, or interest therein, even
      though the effect of such release, surrender or abandonment will be to release,
      surrender or abandon the Overriding Royalty; provided, however, that Grantor
      shall not release, surrender or abandon any Burdened Interest unless and until
      Grantor has determined in good faith that such Burdened Interest will no longer
      produce in paying quantities, and provided further that, Grantor will, at least
      thirty (30) days prior to the release, surrender or abandonment (unless a lesser
      period of time governing such release, surrender or abandonment is provided
      for
      in an applicable operating agreement entered into by and between Grantor and
      a
      person or entity that is not an Affiliate of Grantor, in which case at least
      the
      number of days provided for in such lesser time period) of any Burdened
      Interest, or any part thereof or interest therein, notify Grantee (in writing,
      giving a description of each Burdened Interest, or part thereof or interest
      therein, proposed to be released, surrendered or abandoned, and the date upon
      which such release, surrender or abandonment is projected to occur) and, if
      Grantee shall so request, Grantor shall assign to Grantee the interests proposed
      to be released, surrendered or abandoned, together with the interest
      attributable to the Burdened Interests in all equipment located thereon or
      used
      in connection therewith; provided further that, in the event of such an
      assignment from Grantor to Grantee, Grantee shall pay to Grantor the salvage
      value of any equipment so conveyed by Grantor to Grantee.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    13. Without
      prior written notice to Grantee providing Grantee with the opportunity to
      acquire the affected interest of Grantor at no additional cost to Grantee other
      than assumption by Grantee of the obligations of Grantor pertaining to the
      affected interest, Grantor shall not elect to be a non-participating party
      (whether pursuant to an operating agreement or other agreement or arrangement,
      including without limitation, non-consent rights and obligations imposed by
      statute and/or regulatory agency) with respect to any drilling, deepening,
      plugging back, reworking, sidetracking or completion (or other) operation on
      any
      Burdened Interest or elect to be an abandoning party with respect to a well
      located on any Burdened Interest; provided, however, if such direct acquisition
      by Grantee would be prohibited by the applicable operating agreement or other
      agreement or arrangement and Grantee has timely notified Grantor that Grantee
      elects to acquire such affected interest, Grantor agrees to use reasonable
      commercial efforts to enter into a mutually satisfactorily contractual
      arrangement with Grantee that would allow Grantee to indirectly acquire such
      affected interest, or have the same economic consequences of ownership of such
      affected interest, and not be in violation or breach of such applicable
      operating agreement or other agreement or arrangement. Grantor agrees to provide
      such prior written notice to Grantee as soon as is reasonably possible in order
      to afford Grantee as much time as reasonably possible to respond. Such prior
      written notice shall include information advising Grantee of the time period
      required by the applicable operating agreement, other agreement or arrangement
      for response on this matter, and failure on the part of Grantee to notify
      Grantor of its election to acquire such affected interest within such time
      period shall be deemed an election by Grantee to not acquire such affected
      interest. Notwithstanding anything to the contrary contained herein, Grantor
      shall not elect, as to any Burdened Interest, to be a non-participating party
      with respect to any operation contemplated in this Section 11 in the event
      Grantor or any Affiliate of Grantor will also be a participating party in such
      operation.

    

    14. The
      Overriding Royalty shall apply to all renewals, extensions and other similar
      arrangements (and/or interests therein) of the Subject Leases insofar as they
      cover Subject Lands. A new lease taken before the expiration of the existing
      Subject Lease which it replaced or within one (1) year after expiration of
      such
      Subject Lease, and covering the same interest (or any part thereof) that was
      covered by the Subject Lease, shall be considered a renewal or extension for
      the
      purposes hereof. Additionally, the Overriding Royalty shall continue in force
      and effect and not be extinguished in the event Grantor acquires the mineral
      estate covered by a Subject Lease and thereafter releases such Subject
      Lease.

    

    15, The
      agreements and obligations of Grantor in Sections 9, 11 and 13 above shall
      not
      be covenants running with the land and shall be personal agreements and
      obligations of Grantor and any Affiliate of Grantor that shall terminate upon
      a
      sale, transfer or disposition of Grantor’s Burdened Interest to a third party
      that is not an Affiliate of Grantor. All other covenants and agreements of
      Grantor herein contained shall be deemed to be covenants running with the
      Burdened Interest. All of the provisions hereof shall inure to the benefit
      of
      Grantee and its successors and assigns.

    

    16. All
      communications required or permitted to be given under this Conveyance shall
      be
      in writing and shall be given by registered or certified mail, postage prepaid
      or telecopy, or by personal service (including express or courier service),
      and
      addressed to the addresses specified at the beginning of this Conveyance (or
      to
      such other address or telecopy number as may be designated in writing in
      accordance herewith). Notices shall be deemed given upon
      receipt.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    17. This
      Conveyance is being executed in several counterparts, all of which are
      identical, except that, to facilitate recordation, in certain counterparts
      hereof only that portion of Exhibit “A” which contains specific descriptions of
      the Subject Lands located in the recording jurisdiction in which the counterpart
      is to be recorded shall be included, and all other portions of Exhibit “A” shall
      be included by reference only. Complete copies of this Conveyance containing
      the
      entire Exhibit “A” have been retained by Grantor and Grantee. All of such
      counterparts together shall constitute but one and the same
      instrument.

    

    18. WITHOUT
      REGARD TO PRINCIPLES OF CONFLICTS OF LAW, THIS CONVEYANCE SHALL BE CONSTRUED
      AND
      ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
      APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE
      AND
      THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT THAT TO THE EXTENT THAT THE
      LAW
      OF A STATE IN WHICH A PORTION OF THE OVERRIDING ROYALTY IS LOCATED (OR WHICH
      IS
      OTHERWISE APPLICABLE TO A PORTION OF THE OVERRIDING ROYALTY) NECESSARILY OR,
      IN
      THE SOLE DISCRETION OF GRANTEE, APPROPRIATELY GOVERNS, WITH RESPECT TO
      PROCEDURAL AND SUBSTANTIVE MATTERS RELATING TO THE CREATION, PERFECTION AND
      VESTING OF THE OVERRIDING ROYALTY, AND OTHER RIGHTS AND REMEDIES OF THE GRANTEE
      GRANTED HEREIN, THE LAW OF SUCH STATE SHALL APPLY AS TO THAT PORTION OF THE
      OVERRIDING ROYALTY LOCATED IN (OR WHICH IS OTHERWISE SUBJECT TO THE LAWS OF)
      SUCH STATE. GRANTOR AND GRANTEE HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE
      JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK,
      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 WAIVE, AND AGREE 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. GRANTOR AND GRANTEE HEREBY IRREVOCABLY WAIVE PERSONAL SERVICE OF
      PROCESS AND CONSENT TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
      PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS SHOWN ABOVE
      FOR SUCH PARTY, AND AGREE 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.
      THE PARTIES ACKNOWLEDGE THAT GRANTEE’S PRINCIPAL OFFICE IS IN THE STATE OF NEW
      YORK AND GRANTEE HAS MADE PAYMENTS TO GRANTOR FROM ITS BANK ACCOUNT LOCATED
      IN
      THE STATE OF NEW YORK. 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 CONVEYANCE
      OR
      ANY TRANSACTION CONTEMPLATED HEREBY.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    19. It
      is not
      the intent of the Grantor or Grantee that any provision herein violate any
      applicable law regarding the rule against perpetuities, and this Conveyance
      shall be construed as not violating such rule to the extent the same can be
      construed consistent with the expressed intent of the Grantor and Grantee as
      set
      forth in this Conveyance. In the event, however, that any provision of this
      Conveyance is determined to violate such rule, then such provision shall
      nevertheless be effective for the maximum period (but not longer than the
      maximum period) permitted by such rule that will result in no such violation.
      To
      the extent such maximum period is permitted to be determined by reference to
      lives in being, Grantor and Grantee agree that “lives in being” shall refer to
      the lifetime of the last to die of the now living lineal descendants of George
      Herbert Walker Bush, 41st
      President of the United States of America.

    

    IN
      WITNESS WHEREOF, this Conveyance is executed as of the date indicated below,
      effective as of 7 o'clock a.m. local time at the locations of the Subject Lands,
      respectively on November 13, 2008 (the “Effective
      Time”)

    

    [signatures
      and acknowledgement pages to follow]

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    
      	
              “GRANTOR”

            
	 
	
              SONTERRA
                RESOURCES, INC.

            
	 
	
              By:

            	 

	 	
              D.
                E. Vandenburg, President

            
	 
	 
	
              “GRANTEE”

            
	 
	
              LONGVIEW
                MARQUIS MASTER FUND, L.P. 

            
	 
	
              By:
                Viking Asset Management, LLC

            
	
              Its:
                Investment Adviser

            
	 
	
              By:

            	 

	
              Name:
                Peter T. Benz

            
	
              Title:
                Chairman

            

    

    

    STATE
      OF
      TEXAS                             
)

                                                      
                 )
      ss:

    COUNTY
      OF
      HARRIS                       
)

    

    The
      foregoing instrument was acknowledged before me on this ___ day of _________,
      2008, by D.E. Vandenburg, President of Sonterra Resources, Inc., a Delaware
      corporation, as the act and deed and on behalf of said corporation.

    

    
      	 	 
	 	
              Notary
                Public, State of Texas

            
	 	 
	
              [SEAL]

            	 
	 	
              (printed
                name)

            

    

    

    My
      commission expires:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    STATE
      OF                                           
)

                                                                                    
      ) ss:

    COUNTY
      OF                                        )

    

    The
      foregoing instrument was acknowledged before me on this ___ day of ___________,
      2008, by Peter T. Benz, Chairman of Viking Asset Management, LLC, as investment
      adviser to Longview Marquis Master Fund, L.P., a British Virgins Island limited
      partnership, as the act and deed of such _____________ on behalf of said limited
      partnership.

    

    
      	 	 
	 	
              Notary
                Public, State and County of

            
	
              [SEAL]

            	 
	 	 
	 	
              (printed
                name)

            

    

    

    My
      commission expires:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      “A”

    

    Shark
      Prospect 

    

    
      	 	
              1.

            	
              Oil
                and Gas Lease dated July 1, 2003, from the State of Texas, as Lessor,
                to
                Cinco Natural Resources Corporation, as Lessee, covering Oil and
                Gas Lease
                No. M-103194, being the South One-Half (S/2) of State Tract 150,
                Matagorda
                Bay, Calhoun County, Texas, containing approximately 320.0 acres,
                recorded
                in File No. 82095, Volume 349, Page 1 of the Official Records of
                Calhoun
                County, Texas.

            

    

     

    Lease
      Interest:

     

    Surface
      down to 9400' true vertical depth as seen in the Cockrell Corporation –
Aquamarine Unit Well No. 1 (API No. 42-057-31600).

     

    72.80
      WI
      / 57.512% NRI

     

    Rights
      between 9401' and 50' below the stratigraphic equivalent of the top of the
      9800'
      Sand, said top of the 9800' Sand being equal to 9790' TVD as seen on the
      electric log for the Cockrell Corporation – Aquamarine Unit Well No. 1 (API
      No. 42-057-31600).

     

    30.30%
      WI
      / 23.55825% NRI

     

    Rights
      below 50' below the stratigraphic equivalent of the top of the 9800' Sand,
      said
      top of the 9800' Sand being equal to 9790' TVD as seen on the electric log
      for
      the Cockrell Corporation – Aquamarine Unit Well No. 1 (API No.
      42-057-31600).

     

    30.30%
      WI
      / 23.331% NRI

     

    Well
      Interest:

     

    Flash –
      State Tract 150 No. 1 Well, API No. 42-057-31770: 72.80% WI / 57.512% NRI
      (Shut-In)

     

    Flash –
      State Tract 150 No. 1 ST #1 Well, API No. 42-057-31770: 72.80% WI / 57.512%
      NRI
      (Sidetrack well scheduled for 4th
      Quarter
      2008)

     

    BOSS –
      State Tract 150 No. 2 Well, API No. 42-057-31692: 30.30% WI / 23.55825% NRI
      (Current NRI) 

     

    Recompletion
      of the State Tract 150 No. 2 Well, API No. 42-057-31692, scheduled in 2009
      will
      be drilled by shallow owners only and Sonterra’s WI and NRI percentages are as
      follows: 72.8% WI / 57.512% NRI (before a negotiated NPI to deep
      interest owners).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Ray
      Prospect

    

    
      	 	
              2.

            	
              Oil
                and Gas Lease dated October 19, 2004, from the State of Texas, by
                and
                through the Commissioner of the General Land Office of the State
                of Texas,
                as Lessor, to Cinco Natural Resources Corporation, as Lessee, covering
                Oil
                and Gas Lease Number M-104265, being the South One-Half (S/2) of
                Tract
                175, Matagorda Bay, Matagorda and Calhoun Counties, Texas, containing
                approximately 320 acres as shown on the applicable Official Submerged
                Area
                Map on file in the Texas General Land Office, Austin, Texas, and
                recorded
                in the Official Records of Matagorda County, Texas, as File No. 050427,
                and recorded in the Official Records of Calhoun County, Texas, as
                File No.
                91879, Volume 400, Page 525.

            

    

    

    Lease
      Interest:
      30.30%
      WI / 22.04325% NRI

     

    
      	 	
              3.

            	
              Oil
                and Gas Lease dated October 19, 2004, from the State of Texas, by
                and
                through the Commissioner of the General Land Office of the State
                of Texas,
                as Lessor, to Cinco Natural Resources Corporation, as Lessee, covering
                Oil
                and Gas Lease Number M-104266, being the South One-Half (S/2) of
                Tract
                178, Matagorda Bay, Matagorda County, Texas, containing approximately
                320
                acres as shown on the applicable Official Submerged Area Map on file
                in
                the Texas General Land Office, Austin, Texas, and recorded in the
                Official
                Records of Matagorda County, Texas, as File No.
                050428.

            

    

    

    Lease
      Interest:
      30.30%
      WI / 22.04325% NRI

     

    
      	 	
              4.

            	
              Oil
                and Gas Lease dated October 19, 2004, from the State of Texas, by
                and
                through the Commissioner of the General Land Office of the State
                of Texas,
                as Lessor, to Cinco Natural Resources Corporation, as Lessee, covering
                Oil
                and Gas Lease Number M-104267, being the North One-Half (N/2) of
                Tract
                179, Matagorda Bay, Matagorda County, Texas, containing approximately
                320
                acres as shown on the applicable Official Submerged Area Map on file
                in
                the Texas General Land Office, Austin, Texas, and recorded in the
                Official
                Records of Matagorda County, Texas, as File No.
                050429.

            

    

    

    Lease
      Interest:
      30.30%
      WI / 22.04325% NRI

     

    Starfish
      Prospect 

    

    
      	 	
              5.

            	
              Oil
                and Gas Lease dated April 5, 2005, from the State of Texas, by and
                through
                the Commissioner of the General Land Office of the State of Texas,
                as
                Lessor, to Cinco Energy Corporation, as Lessee, covering Oil and
                Gas Lease
                Number M-104829, being the South One-Half (S/2) of Tract 96, Matagorda
                Bay, Calhoun County, Texas, containing approximately 320 acres as
                shown on
                the applicable Official Submerged Area Map on file in the Texas General
                Land Office, Austin, Texas, and recorded in the Official Records
                of
                Calhoun County, Texas, as File No. 92724, Volume 406, Page
                35.

            

    

    

    Lease
      Interest:
      30.30%
      WI / 22.422% NRI (to April 5, 2009)/ 21.6645% NRI (after April 5,
      2009)

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.

            	
              Oil
                and Gas Lease dated July 19, 2005, from the State of Texas, by and
                through
                the Commissioner of the General Land Office of the State of Texas,
                as
                Lessor, to Cinco Resources, Inc., as Lessee, covering Oil and Gas
                Lease
                Number M-105371, being the North One-Half (N/2) of Tract 104, Matagorda
                Bay, Calhoun County, Texas, containing approximately 320 acres as
                shown on
                the applicable Official Submerged Area Map on file in the Texas General
                Land Office, Austin, Texas, and recorded in the Official Records
                of
                Calhoun County, Texas, as File No. 96377, Volume 426, Page
                912.

            

    

    

    Lease
      Interest: 
      36.2874%
      WI / 26.852676% NRI (to July 19, 2009) / 25.945491% (after July 19, 2009)

     

    Barracuda
      Prospect 

    

    
      	 	
              7.

            	
              Oil
                and Gas Lease dated April 5, 2005, from the State of Texas, by and
                through
                the Commissioner of the General Land Office of the State of Texas,
                as
                Lessor, to Cinco Energy Corporation, as Lessee, covering Oil and
                Gas Lease
                Number M-104827, being the North One-Half (N/2) of Tract 94, Matagorda
                Bay, Calhoun County, Texas, containing approximately 320 acres as
                shown on
                the applicable Official Submerged Area Map on file in the Texas General
                Land Office, Austin, Texas, and recorded in the Official Records
                of
                Calhoun County, Texas, as File No. 92722, Volume 406, Page
                21.

            

    

    

    Lease
      Interest:
      30.30%
      WI / 22.422% NRI (to April 5, 2009)/ 21.6645% NRI (after April 5,
      2009)

     

    
      	 	
              8.

            	
              Oil
                and Gas Lease dated April 5, 2005, from the State of Texas, by and
                through
                the Commissioner of the General Land Office of the State of Texas,
                as
                Lessor, to Cinco Energy Corporation, as Lessee, covering Oil and
                Gas Lease
                Number M-104828, being the South One-Half (S/2) of Tract 94, Matagorda
                Bay, Calhoun County, Texas, containing approximately 320 acres as
                shown on
                the applicable Official Submerged Area Map on file in the Texas General
                Land Office, Austin, Texas, and recorded in the Official Records
                of
                Calhoun County, Texas, as File No. 92723, Volume 406, Page
                28.

            

    

     

    Lease
      Interest:
      30.30%
      WI / 22.422% NRI (to April 5, 2009)/ 21.6645% NRI (after April 5,
      2009)

     

    Mackerel
      Prospect 

     

    
      	 	
              9.

            	
              Oil
                and Gas Lease dated July 19, 2005, from the State of Texas, by and
                through
                the Commissioner of the General Land Office of the State of Texas,
                as
                Lessor, to Cinco Resources, Inc., as Lessee, covering Oil and Gas
                Lease
                Number M-105373, being the North One-Half (N/2) of Tract 175, Matagorda
                Bay, Calhoun and Matagorda Counties, Texas, containing approximately
                320
                acres as shown on the applicable Official Submerged Area Map on file
                in
                the Texas General Land Office, Austin, Texas, and recorded in the
                Official
                Records of Calhoun County, Texas, as File No. 96378, Volume 426,
                Page 919,
                and recorded in the Official Records of Matagorda County, Texas,
                as File
                No. 063722.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Lease
      Interest:
      36.2874%
      WI / 26.852676% (to July 19, 2009) / 25.945491% (after July 19, 2009)

     

    
      	 	
              10.

            	
              Oil
                and Gas Lease dated October 4, 2005, from the State of Texas, by
                and
                through the Commissioner of the General Land Office of the State
                of Texas,
                as Lessor, to Cinco Resources, Inc., as Lessee, covering Oil and
                Gas Lease
                Number M-105679, being the North One-Half (N/2) of Tract 178, Matagorda
                Bay, Matagorda County, Texas, containing approximately 320 acres
                as shown
                on the applicable Official Submerged Area Map on file in the Texas
                General
                Land Office, Austin, Texas, and recorded in the Official Records
                of
                Matagorda County, Texas, as File No.
                059741.

            

    

    

    Lease
      Interest:
      30.30%
      WI / 22.422% NRI (to October 4, 2009)/ 21.6645% NRI (after October 4,
      2009)

     

    
      	 	
              11.

            	
              Oil
                and Gas Lease dated October 4, 2005, from the State of Texas, by
                and
                through the Commissioner of the General Land Office of the State
                of Texas,
                as Lessor, to Cinco Resources, Inc., as Lessee, covering Oil and
                Gas Lease
                Number M-105678, being the South One-Half (S/2) of Tract 176, Matagorda
                Bay, Calhoun and Matagorda Counties, Texas, containing approximately
                320
                acres as shown on the applicable Official Submerged Area Map on file
                in
                the Texas General Land Office, Austin, Texas, and recorded in the
                Official
                Records of Calhoun County, Texas, as File No. 96971, Volume 429,
                Page 918,
                and recorded in the Official Records of Matagorda County, Texas,
                as File
                No. 059740.

            

    

    

    Lease
      Interest:
      30.30%
      WI / 22.422% NRI (to October 4, 2009)/ 21.6645% NRI (after October 4,
      2009)

     

    Sydney/150-Deep
      Prospect

     

    
      	 	
              12.

            	
              Oil
                and Gas Lease dated July 1, 2003, from the State of Texas, by and
                through
                the Commissioner of the General Land office of the State of Texas,
                as
                Lessor, to LLOG Exploration Texas, L.P., as Lessee, covering Oil
                and Gas
                Lease Number M-103190, being the North One-Half (N/2) of Tract 127,
                Matagorda Bay, Calhoun County, Texas, containing approximately 320
                acres
                as shown on the applicable Official Submerged Area Map on file in
                the
                Texas General Land Office, Austin, Texas, and recorded in the Official
                Records of Calhoun County, Texas, as File No. 00081323, Volume 344,
                Page
                875.

            

    

    

    
      	 	
              13.

            	
              Oil
                and Gas Lease dated July 1, 2003, from the State of Texas, by and
                through
                the Commissioner of the General Land office of the State of Texas,
                as
                Lessor, to LLOG Exploration Texas, L.P., as Lessee, covering Oil
                and Gas
                Lease Number M-103191, being the South One-Half (S/2) of Tract 127,
                Matagorda Bay, Calhoun County, Texas, containing approximately 320
                acres
                as shown on the applicable Official Submerged Area Map on file in
                the
                Texas General Land Office, Austin, Texas, and recorded in the Official
                Records of Calhoun County, Texas, as File No.0081324, Volume 344,
                Page
                882.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	 	
              14.

            	
              Oil
                and Gas Lease dated July 1, 2003, from the State of Texas, as Lessor,
                to
                Cinco Natural Resources Corporation, as Lessee, covering Oil and
                Gas Lease
                No. M-103194, being the south one-half (S/2) of State Tract 150,
                Matagorda
                Bay, Calhoun County, Texas, containing approximately 320.0 acres,
                recorded
                in File No. 82095, Volume 349, Page 1 of the Official Records of
                Calhoun
                County, Texas. (This tract is also in the Shark
                Prospect.)

            

    

     

    
      	 	
              15.

            	
              Oil
                and Gas Lease dated July 1, 2003, from the State of Texas, by and
                through
                the Commissioner of the General Land office of the State of Texas,
                as
                Lessor, to LLOG Exploration Texas, L.P., as Lessee, covering Oil
                and Gas
                Lease Number M-103195, being the South One-Half (S/2) of Tract 151,
                Matagorda Bay, Calhoun County, Texas, containing approximately 320
                acres
                as shown on the applicable Official Submerged Area Map on file in
                the
                Texas General Land Office, Austin, Texas, and recorded in the Official
                Records of Calhoun County, Texas, as File No. 00081326, Volume 344,
                Page
                896.

            

    

     

    
      	 	
              16.

            	
              Oil
                and Gas Lease dated July 1, 2003, from the State of Texas, by and
                through
                the Commissioner of the General Land office of the State of Texas,
                as
                Lessor, to LLOG Exploration Texas, L.P., as Lessee, covering Oil
                and Gas
                Lease Number M-103192, being the North One-Half (N/2) of Tract 128,
                Matagorda Bay, Calhoun County, Texas, containing approximately 320
                acres
                as shown on the applicable Official Submerged Area Map on file in
                the
                Texas General Land Office, Austin, Texas, and recorded in the Official
                Records of Calhoun County, Texas, as File No. 00081325, Volume 344,
                Page
                889.

            

    

     

    
      	 	
              17.

            	
              Oil
                and Gas Lease dated July 6, 2004, from the State of Texas, by and
                through
                the Commissioner of the General Land office of the State of Texas,
                as
                Lessor, to LLOG Exploration Texas, L.P., as Lessee, covering Oil
                and Gas
                Lease Number M-104022, being the North One-Half (N/2) of Tract 150,
                Matagorda Bay, Calhoun County, Texas, containing approximately 320
                acres
                as shown on the applicable Official Submerged Area Map on file in
                the
                Texas General Land Office, Austin, Texas, and recorded in the Official
                Records of Calhoun County, Texas, as File No. 00088242, Volume 381,
                Page
                433.

            

    

     

    
      	 	
              18.

            	
              Oil
                and Gas Lease dated July 19, 2005, from the State of Texas, by and
                through
                the Commissioner of the General Land office of the State of Texas,
                as
                Lessor, to LLOG Exploration Texas, L.P., as Lessee, covering Oil
                and Gas
                Lease Number M-105372, being the South One-Half (S/2) of Tract 154,
                Matagorda Bay, Calhoun County, Texas, containing approximately 320
                acres
                as shown on the applicable Official Submerged Area Map on file in
                the
                Texas General Land Office, Austin, Texas, and recorded in the Official
                Records of Calhoun County, Texas, as File No. 00095163, Volume 420,
                Page
                166.

            

    

     

    Lease
      Interest:
      N/2 ST
      150 (SAVE AND EXCEPT the portion excluded from the State Tract 127 No. 1 Unit,
      being depths above the stratigraphic equivalent of 100’ below the base of the
      9800’ Sand TVD as seen in the Cockrell Corporation Aquamarine Unit Well No. 1
      (API No. 42-057-31600) and the S/2 of ST 154: 53.8 % WI / 39.6775 %
      NRI

     

    Lease
      Interest:
      INSOFAR
      only as to that portion of the N/2 ST 150 excluded from the State Tract 127
      No.
      1 Unit, being depths above the stratigraphic equivalent of 100’ below the base
      of the 9800’ Sand TVD as seen in the Cockrell Corporation Aquamarine Unit Well
      No. 1 (API No. 42-057-31600): 74.8 % WI / 55.165% NRI

     

    Lease
      Interest:
      S/2 and
      the N/2 of ST 127; N/2 ST 128; and the S/2 of ST 151:

    53.8
      % WI
      / 38.3325 % NRI

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Unit
      Well Interest:

     

    Sonterra –
      State Tract 127 No. 1 Unit #1 Well, API No. 42-057-31770:

     

    
      	 	
              A.

            	
              3.558523%
                WI to Casing Point/ 5.113335% NRI to Casing
                Point;

            

    

    

    
      	 	
              B.

            	
              7.025190%
                WI at Casing Point BPO of Raptor and Hayes non-consent WI and BPO
                Rainier
                4.5% WI / 5.113335% NRI; 

            

    

    

    
      	 	
              C.

            	
              6.571999%
                WI APO Rainier 4.5% WI and BPO Raptor and Hayes non-consent WI /
                4.783477
                % NRI; and

            

    

    

    
      	 	
              D.

            	
              11.359472%
                WI APO Raptor and Hayes non-consent (and simultaneous back-in to
                25% of
                South Texas Oil’s WI/NRI **) / 8.268073 %
                NRI

            

    

     

    Unit
      Description:

     

    State
      of
      Texas Tract 127 No. 1 Unit Well #1, covering 2,240 acres, consisting of oil
      and
      gas leases covering the S/2 and the N/2 of State Tract 127; the N/2 of State
      Tract 128; the S/2 of State Tract 151; the S/2 of State Tract 154; the S/2
      ST
      150, Save and Except depths above the stratigraphic equivalent of 100' below
      the
      base of the 9800' Sand TVD as seen in the Cockrell Corporation Aquamarine Unit
      Well No. 1 (API No. 42-057-31600); and the N/2 ST 150 North Half of State Tract
      150, Save and Except the depths above the stratigraphic equivalent
      of 100
      feet
      below the base of the 9800’ Sand TVD as seen in the Cockrell Corporation
      Aquamarine Unit Well No. 1 (API No. 42-057-31600) which shall be excluded from
      the Term Pooling Agreement described below:

     

    Term
      Pooling Agreement from the Commissioner of the General Land Office, as Lessor,
      to Sonterra Resources, Inc., as Lessee, dated February 20, 2008, but effective
      December 11, 2008, and filed of record on February 28, 2008 as Instrument No.
      111111 in the Official Records of Calhoun County, Texas, forming a pooled unit
      covering all depths, except from the surface to 10,000’ TVD on all of State
      Lease M-103194 and that part of State Lease M-104022 shown on Exhibit “D”
attached thereto encompassing the S/2 of Tract 127 (M-103191); N/2 of Tract
      127
      (M-103190); N/2 of Tract 128 (M-103192); N/2 of Tract 150 (M-104022); S/2 of
      Tract 151 (M-103195); and S/2 of Tract 154 (M-105372). 

     

    Pipeline:

    An
      undivided 100.0% interest in and to the seven (7) mile six-inch (6") S80 Gr
      B
      pipeline connecting Matagorda Bay, Calhoun County, Texas State Tract 150 No.
      1
      line heater platform to the Keller Bay Facility onshore.

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