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NEITHER THIS NOTE NOR THE SECURITIES THAT MAY BE ISSUED BY THE COMPANY UPON
CONVERSION HEREOF (COLLECTIVELY, THE “SECURITIES”) HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION. NEITHER THE SECURITIES NOR ANY INTEREST OR
PARTICIPATION THEREIN MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED:
(I) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE 1933 ACT, OR APPLICABLE STATE SECURITIES LAWS; OR (II) IN THE ABSENCE
OF AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE ISSUER, THAT REGISTRATION
IS NOT REQUIRED UNDER THE 1933 ACT OR; (III) UNLESS SOLD, TRANSFERRED OR
ASSIGNED PURSUANT TO RULE 144 UNDER THE 1933 ACT.

 

10% CONVERTIBLE PROMISSORY NOTE

 

MATURITY DATE OF MAY 29, 2020*THE “MATURITY DATE”

 

$57,000 MAY 29, 2019 *THE “ISSUANCE DATE”

 

FOR VALUE RECEIVED, Foothills Exploration, Inc., a Delaware Corporation (the
“Company”) doing business in Los Angeles, California, hereby promises to pay to
the order of JSJ Investments Inc., an accredited investor and Texas Corporation,
or its assigns (the “Holder”), the principal amount of Fifty-Seven Thousand
Dollars ($57,000) (“Note”), on demand of the Holder at any time on or after May
29, 2020 (the “Maturity Date”), and to pay interest on the unpaid principal
balance hereof at the rate of Ten Percent (10%) per annum (the “Interest Rate”)
commencing on the date hereof (the “Issuance Date”).

 

  1. Payments of Principal and Interest.

 

  a. Pre-Payment and Payment of Principal and Interest. The Company may pay this
Note in full, together with any and all accrued and unpaid interest, plus any
applicable pre-payment premium set forth herein and subject to the terms of this
Section 1.a, at any time on or prior to the date which occurs 180 days after the
Issuance Date hereof (the “Prepayment Date”). In the event the Note is not
prepaid in full on or before the Prepayment Date, it shall be deemed a
“Pre-Payment Default” hereunder. Until the Sixtieth (60th) day after the
Issuance Date the Company may pay the principal at a cash redemption premium of
125%, in addition to outstanding interest, without the Holder’s consent; from
the 60th day to the One Hundred and Twentieth (120th) day after the Issuance
Date, the Company may pay the principal at a cash redemption premium of 135%, in
addition to outstanding interest, without the Holder’s consent; from the 121st
day to the Prepayment Date, the Company may pay the principal at a cash
redemption premium of 145%, in addition to outstanding interest, without the
Holder’s consent. After the Prepayment Date up to the Maturity Date this Note
shall have a cash redemption premium of 150% of the then outstanding principal
amount of the Note, plus accrued interest and Default Interest, if any, which
may only be paid by the Company upon Holder’s prior written consent. At any time
on or after the Maturity Date, the Company may repay the then outstanding
principal plus accrued interest and Default Interest (defined below), if any, to
the Holder.         b. Demand of Repayment. The principal and interest balance
of this Note shall be paid to the Holder hereof on demand by the Holder at any
time on or after the Maturity Date. The Default Amount (defined herein), if
applicable, shall be paid to Holder hereof on demand by the Holder at any time
such Default Amount becomes due and payable to Holder. The Holder may, by
written notice to the Company at least five (5) days before the Maturity Date
(as may have been previously extended), extend the Maturity Date to up to one
(1) year following the date of the original Maturity Date hereunder.         c.
Interest. This Note shall bear interest (“Interest”) at the rate of Ten Percent
(10%) per annum from the Issuance Date until the same is paid, or otherwise
converted in accordance with Section 2 below, in full and the Holder, at the
Holder’s sole discretion, may include any accrued but unpaid Interest in the
Conversion Amount. Interest shall commence accruing on the Issuance Date, shall
be computed on the basis of a 365-day year and the actual number of days elapsed
and shall accrue daily and, after the Maturity Date, compound quarterly. Upon an
Event of Default, as defined in Section 10 below, the Interest Rate shall
increase to Eighteen Percent (18%) per annum for so long as the Event of Default
is continuing (“Default Interest”).         d. General Payment Provisions. This
Note shall be paid in lawful money of the United States of America by check or
wire transfer to such account as the Holder may from time to time designate by
written notice to the Company in accordance with the provisions of this Note.
Whenever any amount expressed to be due by the terms of this Note is due on any
day which is not a Business Day (as defined below), the same shall instead be
due on the next succeeding day which is a Business Day and, in the case of any
interest payment date which is not the date on which this Note is paid in full,
the extension of the due date thereof shall not be taken into account for
purposes of determining the amount of interest due on such date. For purposes of
this Note, “Business Day” shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in the State of Texas are authorized or required
by law or executive order to remain closed.

 

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  2. Conversion of Note. At any time after the Pre-payment Date, the Conversion
Amount (see Paragraph 2(a)(i)) of this Note shall be convertible into shares of
the Company’s common stock (the “Common Stock”) according to the terms and
conditions set forth in this Paragraph 2.

 

  a. Certain Defined Terms. For purposes of this Note, the following terms shall
have the following meanings:

 

  i. “Conversion Amount” means the sum of (a) the principal amount of this Note
to be converted with respect to which this determination is being made, (b)
Interest; and (c) Default Interest, if any, if so included at the Holder’s sole
discretion.         ii. “Conversion Price” means a 45% discount to the lowest
trading price during the previous twenty (20) trading days to the date of a
Conversion Notice; (subject to equitable adjustments for stock splits, stock
dividends or rights offerings by the Company relating to the Company’s
securities or the securities of any subsidiary of the Company, combinations,
recapitalization, reclassifications, extraordinary distributions and similar
events).         iii. “Person” means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.         iv.
“Shares” means the Shares of the Common Stock of the Company into which any
balance on this Note may be converted upon submission of a “Conversion Notice”
to the Company substantially in the form attached hereto as Exhibit 1.

 

  b. Holder’s Conversion Rights. At any time after the Pre-payment Date, the
Holder shall be entitled to convert all of the outstanding and unpaid principal
and accrued interest of this Note into fully paid and non- assessable shares of
Common Stock in accordance with the stated Conversion Price. The Holder shall
not be entitled to convert on a Conversion Date that amount of the Note in
connection with that number of shares of Common Stock which would be in excess
of the sum of the number of shares of Common Stock issuable upon the conversion
of the Note with respect to which the determination of this provision is being
made on a Conversion Date, which would result in beneficial ownership by the
Holder and its affiliates of more than 4.99% of the outstanding shares of Common
Stock of the Company on such Conversion Date. For the purposes of the provision
to the immediately preceding sentence, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder
shall not be limited to aggregate conversions of 4.99% (“Conversion Limitation
1”). The Holder shall have the authority to determine whether the restriction
contained in this Section 2(b) will limit any conversion hereunder, and
accordingly, the Holder may waive the conversion limitation described in this
Section 2(b), in whole or in part, upon and effective after 61 days prior
written notice to the Company to increase or decrease such percentage to any
other amount as determined by Holder in its sole discretion (“Conversion
Limitation 2”). If in the case that the Company’s Common Stock is “chilled” for
deposit into the DTC system and only eligible for clearing deposit, then an
additional 15% discount to the Conversion Price shall apply for all future
conversions under the Note while the “chill” is in effect. For the avoidance of
doubt, with reference to section 2(a)ii of this note, when the “chill” is in
effect the conversion price will increase from a 35% discount to a 50% discount
to the lowest trading price during the previous (20) days to the date of a
Conversion Notice. To the extent the Conversion Price of the Company’s Common
Stock closes below the par value per share, the Company will take all steps
necessary to solicit the consent of the stockholders to reduce the par value to
the lowest value possible under law. The Company agrees to honor all conversions
submitted pending this adjustment unless the Holder, in its sole and absolute
discretion elects instead to set the Conversion Price to par value for such
conversion(s) and the conversion amount for such conversion(s) shall be
increased to include Additional Principal, where “Additional Principal” means
such additional amount to be added to the conversion amount to the extent
necessary to cause the number of Common Stock issuable upon such conversion(s)
to equal the same number of Common Stock as would have been issued had the
Conversion Price not been set to par value in the Holder’s sole and absolute
discretion.         c. Fractional Shares. The Company shall not issue any
fraction of a share of Common Stock upon any conversion; if such issuance would
result in the issuance of a fraction of a share of Common Stock, the Company
shall round such fraction of a share of Common Stock up to the nearest whole
share except in the event that rounding up would violate the conversion
limitation set forth in section 2(b) above.         d. Conversion Amount. The
Conversion Amount shall be converted pursuant to Rule 144(b)(1)(ii) and Rule
144(d)(1)(ii) as promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, into unrestricted shares at the Conversion
Price.         e. Mechanics of Conversion. The conversion of this Note shall be
conducted in the following manner:

 

  i. Holder’s Conversion Requirements. To convert this Note into shares of
Common Stock on any date set forth in the Conversion Notice by the Holder (the
“Conversion Date”), the Holder shall transmit by email, facsimile or otherwise
deliver, for receipt on or prior to 11:59 p.m., Eastern Time, on such date or on
the next business day, a copy of a fully executed notice of conversion in the
form attached hereto as Exhibit 1 to the Company.

 

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  ii. Company’s Response. Upon receipt by the Company of a copy of a Conversion
Notice, the Company shall as soon as practicable, but in no event later than one
(1) Business Day after receipt of such Conversion Notice, send, via email,
facsimile or overnight courier, a confirmation of receipt of such Conversion
Notice to such Holder indicating that the Company will process such Conversion
Notice in accordance with the terms herein. Within two (2) Business Days after
the date the Conversion Notice is delivered, the Company shall have issued and
electronically transferred the shares to the Broker indicated in the Conversion
Notice; should the Company be unable to transfer the shares electronically, it
shall, within two (2) Business Days after the date the Conversion Notice was
delivered, have surrendered to an overnight courier for delivery the next day to
the address as specified in the Conversion Notice, a certificate, registered in
the name of the Holder, for the number of shares of Common Stock to which the
Holder shall be entitled.         iii. Record Holder. The person or persons
entitled to receive the shares of Common Stock issuable upon a conversion of
this Note shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on the Conversion Date.         iv. Timely Response
by Company. Upon receipt by Company of a Conversion Notice, Company shall
respond within one business day to Holder confirming the details of the
Conversion, and provide within two business days the Shares requested in the
Conversion Notice.         v. Liquidated Damages for Delinquent Response. If the
Company fails to deliver for whatever reason (including any neglect or failure
by, e.g., the Company, its counsel or the transfer agent) to Holder the Shares
as requested in a Conversion Notice within three (3) business days of the
Conversion Date, the Company shall be deemed in “Default of Conversion.”
Beginning on the fourth (4th) business day after the date of the Conversion
Notice, after the Company is deemed in Default of Conversion, there shall accrue
liquidated damages (the “Conversion Damages”) of $2,000 per day for each day
after the third business day until delivery of the Shares is made, and such
penalty will be added to the Note being converted (under the Company’s and
Holder’s expectation and understanding that any penalty amounts will tack back
to the Issuance Date of the Note). The Parties agree that, at the time of
drafting of this Note, the Holder’s damages as to the delinquent response are
incapable or difficult to estimate and that the liquidated damages called for is
a reasonable forecast of just compensation.         vi. Liquidated Damages for
Inability to Issue Shares. If the Company fails to deliver Shares requested by a
Conversion Notice due to an exhaustion of authorized and issuable common stock
such that the Company must increase the number of shares of authorized Common
Stock before the Shares requested may be issued to the Holder, the discount set
forth in the Conversion Price will be increased by 5 percentage points (i.e.
from 45% to 50%) for the Conversion Notice in question and all future Conversion
Notices until the outstanding principal and interest of the Note is converted or
paid in full. These liquidated damages shall not render the penalties prescribed
by Paragraph 2(e)(v) void, and shall be applied in conjunction with Paragraph
2(e)(v) unless otherwise agreed to in writing by the Holder. The Parties agree
that, at the time of drafting of this Note, the Holder’s damages as to the
inability to issue shares are incapable or difficult to estimate and that the
liquidated damages called for is a reasonable forecast of just compensation.    
    vii. Rescindment of Conversion Notice. If: (i) the Company fails to respond
to Holder within one business day from the date of delivery of a Conversion
Notice confirming the details of the Conversion, (ii) the Company fails to
provide the Shares requested in the Conversion Notice within three business days
from the date of the delivery of the Conversion Notice, (iii) the Holder is
unable to procure a legal opinion required to have the Shares issued
unrestricted and/or deposited to sell for any reason related to the Company’s
standing with the SEC or FINRA, or any action or inaction by the Company, (iv)
the Holder is unable to deposit the Shares requested in the Conversion Notice
for any reason related to the Company’s standing with the SEC or FINRA, or any
action or inaction by the Company, (v) if the Holder is informed that the
Company does not have the authorized and issuable Shares available to satisfy
the Conversion, or (vi) if OTC Markets changes the Company’s designation to
‘Limited Information’ (Yield), ‘No Information’ (Stop Sign), ‘Caveat Emptor’
(Skull and Crossbones), or ‘OTC’, ‘Other OTC’ or ‘Grey Market’ (Exclamation Mark
Sign) on the day of or any day after the date of the Conversion Notice, the
Holder maintains the option and sole discretion to rescind the Conversion Notice
(“Rescindment”) by delivering a notice of rescindment to the Company in the same
manner that a Conversion Notice is required to be delivered to the Company
pursuant to the terms of this Note.         viii. Transfer Agent Fees and Legal
Fees. The issuance of the certificates shall be without charge or expense to the
Holder. The Company shall pay any and all Transfer Agent fees, legal fees, and
advisory fees required for execution of this Note and processing of any Notice
of Conversion, including but not limited to the cost of obtaining a legal
opinion with regard to the Conversion. The Holder will deduct $2,000 from the
principal payment of the Note solely to cover the cost of obtaining any and all
legal opinions required to obtain the Shares requested in any given Conversion
Notice. These fees do not make provision for or suffice to defray any legal fees
incurred in collection or enforcement of the Note as described in Paragraph 13.
All expenses incurred by Holder, for the issuance and clearing of the Common
Stock into which this Note is convertible into, shall immediately and
automatically be added to the balance of the Note at such time as the expenses
are incurred by Holder.         ix. Conversion Right Unconditional. If the
Holder shall provide a Notice of Conversion as provided herein, the Company’s
obligations to deliver Common Stock shall be absolute and unconditional,
irrespective of any claim of setoff, counterclaim, recoupment, or alleged breach
by the Holder of any obligation to the Company.

 

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  3. Other Rights of Holder: Reorganization, Reclassification, Consolidation,
Merger or Sale. Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company’s assets
to another Person or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities, cash or other assets with respect to
or in exchange for Common Stock is referred to herein as “Organic Change.” Prior
to the consummation of any (i) Organic Change 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 reasonably satisfactory to the Holder) to deliver to Holder
in exchange for this Note, a security of the Acquiring Entity evidenced by a
written instrument substantially similar in form and substance to this Note, and
reasonably satisfactory to the Holder. Prior to the consummation of any other
Organic Change, the Company shall make appropriate provision (in form and
substance reasonably 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 conversion of the Note, such shares of stock,
securities, cash or other 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 which would have been acquirable and receivable upon the conversion of the
Note as of the date of such Organic Change (without taking into account any
limitations or restrictions on the convertibility of the Note set forth in
Section 2(b) or otherwise). All provisions of this Note must be included to the
satisfaction of Holder in any new Note created pursuant to this section.

 

  a. Adjustment Due to Distribution. If the Company shall declare or make any
distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a dividend, stock repurchase, by way of return of capital or
otherwise (including any dividend or distribution to the Company’s shareholders
in cash or shares (or rights to acquire shares) of capital stock of a subsidiary
(i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be
entitled, upon any conversion of this Note after the date of record for
determining shareholders entitled to such Distribution, to receive the amount of
such assets which would have been payable to the Holder with respect to the
shares of Common Stock issuable upon such conversion had such Holder been the
holder of such shares of Common Stock on the record date for the determination
of shareholders entitled to such Distribution.

 

  4. Representations and Warranties of the Company. In connection with the
transactions provided for herein, the Company hereby represents and warrants to
the Holder the following:

 

  a. Organization, Good Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation and has all requisite corporate power and authority
to carry on its business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on its business or
properties.         b. Authorization. All corporate action has been taken on the
part of the Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement. The Company has taken
all corporate action required to make all of the obligations of the Company
reflected in the provisions of this Agreement, valid and enforceable
obligations. The shares of capital stock issuable upon conversion of the Note
have been authorized or will be authorized prior to the issuance of such shares.
        c. Fiduciary Obligations. The Company hereby represents that it intends
to use the proceeds of the Note primarily for the operations of its business and
not for any personal, family, or household purpose. The Company hereby
represents that its board of directors, in the exercise of its fiduciary duty,
has approved the execution of this Agreement based upon a reasonable belief that
the proceeds of the Note provided for herein is appropriate for the Company
after reasonable inquiry concerning its financial objectives and financial
situation.

 

  5. Covenants of the Company.

 

  a. So long as the Company shall have any obligations under this Note, the
Company shall not without the Holder’s prior written consent pay, declare or set
apart for such payment any dividend or other distribution (whether in cash,
property, or other securities) on shares of capital stock solely in the form of
additional shares of Common Stock         b. So long as the Company shall have
any obligations under this Note, the Company shall not without the Holder’s
prior written consent sell, lease, or otherwise dispose of a significant portion
of its assets outside the ordinary course of business. Any consent to the
disposition of any assets may be conditioned upon a specified use of the
proceeds thereof.

 

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  6. Issuance of Common Stock Equivalents. If the Company, at any time after the
Issuance Date, shall issue any securities convertible into or exchangeable for,
directly or indirectly, Common Stock (“Convertible Securities”), other than the
Note, or any rights or warrants or options to purchase any such Common Stock or
Convertible Securities, shall be issued or sold (collectively, the “Common Stock
Equivalents”) and the aggregate of the price per share for which additional
Shares of Common Stock may be issuable thereafter pursuant to such Common Stock
Equivalent, plus the consideration received by the Company for issuance of such
Common Stock Equivalent divided by the number of shares of Common Stock issuable
pursuant to such Common Stock Equivalent (the “Aggregate Per Common Share
Price”) shall be less than the applicable Conversion Price then in effect, or
if, after any such issuance of Common Stock Equivalents, the price per share for
which additional Shares of Common Stock may be issuable thereafter is amended or
adjusted, and such price as so amended shall make the Aggregate Per Share Common
Price be less than the applicable Conversion Price in effect at the time of such
amendment or adjustment, then the applicable Conversion Price upon each such
issuance or amendment shall be reduced to the lower of: (i) the Conversion
Price; or (ii) a twenty-five percent (25%) discount to the lowest Aggregate Per
Common Share Price (whether or not such Common Stock Equivalents are actually
then exercisable, convertible or exchangeable in whole or in part) as of the
earlier of (A) the date on which the Company shall enter into a firm contract
for the issuance of such Common Stock Equivalent, or (B) the date of actual
issuance of such Common Stock Equivalent. No adjustment of the applicable
Conversion Price shall be made under this Section 6 upon the issuance of any
Convertible Security which is outstanding on the day immediately preceding the
Issuance Date.         7. Reservation of Shares. On or before June 26, 2019, and
so long as any principal amount of the Note is outstanding, thereafter the
Company shall reserve and keep available out of its authorized and unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the Note, eight times the number of shares of Common Stock as shall at all times
be sufficient to effect the conversion of all of the principal amount, plus
Interest and Default Interest, if any, of the Note then outstanding (“Share
Reserve”), unless the Holder stipulates otherwise in the “Irrevocable Letter of
Instructions to the Transfer Agent.” So long as this Note is outstanding, upon
written request of the Holder or via telephonic communication, the Company’s
Transfer Agent shall furnish to the Holder the then-current number of common
shares issued and outstanding, the then-current number of common shares
authorized, the then-current number of unrestricted shares, and the then-current
number of shares reserved for third parties. If after June 26, 2019 the company
fails maintain a share reserve of eight times the number of shares of Common
Stock as shall at all times be sufficient to effect the conversion of all of the
principal amount, then the discount set forth in the Conversion Price will be
increased by 10 percentage points (i.e. from 45% to 55%) for the Conversion
Notice in question and all future Conversion Notices until the outstanding
principal and interest of the Note is converted or paid in full.         8.
Voting Rights. The Holder of this Note shall have no voting rights as a note
holder, except as required by law, however, upon the conversion of any portion
of this Note into Common Stock, Holder shall have the same voting rights as all
other Common Stock holders with respect to such shares of Common Stock then
owned by Holder.         9. Reissuance of Note. In the event of a conversion or
redemption pursuant to this Note of less than all of the Conversion Amount
represented by this Note, the Company shall promptly cause to be issued and
delivered to the Holder, upon tender by the Holder of the Note converted or
redeemed, a new note of like tenor representing the remaining principal amount
of this Note which has not been so converted or redeemed and which is in
substantially the same form as this Note, as set forth above.         10.
Default and Remedies.

 

  a. Event of Default. For purposes of this Note, an “Event of Default” shall
occur upon:

 

  i. the Company’s default in the payment of the outstanding principal, Interest
or Default Interest of this Note when due, whether at Maturity, acceleration or
otherwise;   ii. the occurrence of a Default of Conversion as set forth in
Section 2(e)(v);   iii. the failure by the Company for ten (10) days after
notice to it to comply with any material provision of this Note not included in
this Section 10(a);   iv. the Company’s breach of any covenants, warranties, or
representations made by the Company herein;   v. the default by the Company in
any Other Agreement entered into by and between the Company and Holder, for
purposes hereof “Other Agreement” shall mean, collectively, all agreements and
instruments between, among or by: (1) the Company, and, or for the benefit of,
(2) the Holder and any affiliate of the Holder, including without limitation,
promissory notes;   vi. the cessation of operations of the Company or a material
subsidiary;   vii. the Company pursuant to or within the meaning of any
Bankruptcy Law; (a) commences a voluntary case; (b) consents to the entry of an
order for relief against it in an involuntary case; (c) consents to the
appointment of a Custodian of it or for all or substantially all of its
property; (d) makes a general assignment for the benefit of its creditors; or
(e) admits in writing that it is generally unable to pay its debts as the same
become due;   viii. court of competent jurisdiction entering an order or decree
under any Bankruptcy Law that: (a) is for relief against the Company in an
involuntary case; (b) appoints a Custodian of the Company or for all or
substantially all of its property; or (c) orders the liquidation of the Company
or any subsidiary, and the order or decree remains unstayed and in effect for
thirty (30) days;   ix. the Company files a Form 15 with the SEC;   x. the
Company’s failure to timely file all reports required to be filed by it with the
Securities and Exchange Commission;   xi. the Company’s failure to timely file
all reports required to be filed by it with OTC Markets to remain a “Current
Information” designated company;   xii. the Company’s Common Stock is reported
as “No Inside” by OTC Markets at any time while any principal, Interest or
Default Interest under the Note remains outstanding;   xiii. the Company’s
failure to maintain the required Share Reserve pursuant to the terms of the
Irrevocable Letter of Instructions to the Transfer Agent;

 

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  xiv. the Company directs its transfer agent not to transfer, or delays,
impairs, or hinders its transfer agent in transferring or issuing
(electronically or in certificated form) any certificate for Shares of Common
Stock to be issued to the Holder upon conversion of or otherwise pursuant to
this Note as and when required by this Note, or fails to remove (or directs its
transfer agent not to remove or impairs, delays and/or hinders its transfer
agent from removing) any restrictive legend (or to withdraw and stop transfer
instructions) on any certificate for any Shares of Common Stock issued to the
Holder upon conversion of or otherwise pursuant to this Note as and when
required by this Note (or makes any written announcement, statement or threat
that it does not intend to honor its obligations pursuant to a Conversion Notice
submitted by the Holder) and any such failure shall continue uncured for three
(3) Business Days after the Conversion Notice has been delivered to the Company
by Holder;   xv. the Company’s failure to remain current in its billing
obligations with its transfer agent and such delinquency causes the transfer
agent to refuse to issue Shares to Holder pursuant to a Conversion Notice;  
xvi. the Company effectuates a reverse split of its Common Stock and fails to
provide twenty (20) days prior written notice to Holder of its intention to do
so; or   xvii. OTC Markets changes the Company’s designation to ‘No Information’
(Stop Sign), ‘Caveat Emptor’ (Skull and Crossbones), or ‘OTC’, ‘Other OTC’ or
‘Grey Market’ (Exclamation Mark Sign).   xviii. “Change of Control Transaction”
means the occurrence after the date hereof of any of (a) an acquisition after
the date hereof by an individual or legal entity or “group” (as described in
Rule 13d-5(b)(1) promulgated under the Securities Exchange Act of 1934) of
effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 40% of the
voting securities of the Company, (b) the Company merges into or consolidates
with any other Person, as that term is defined in the Securities Act of 1933, as
amended, or any Person merges into or consolidates with the Company and, after
giving effect to such transaction, the stockholders of the Company immediately
prior to such transaction own less than 60% of the aggregate voting power of the
Company or the successor entity of such transaction, (c) the Company sells or
transfers all or substantially all of its assets to another Person and the
stockholders of the Company immediately prior to such transaction own less than
60% of the aggregate voting power of the acquiring entity immediately after the
transaction, (d) a replacement at one time or within a three year period of more
than one-half of the members of the Board of Directors which is not approved by
a majority of those individuals who are members of the Board of Directors on the
Issuance Date (or by those individuals who are serving as members of the Board
of Directors on any date whose nomination to the Board of Directors was approved
by a majority of the members of the Board of Directors who are members on the
date hereof), or (e) the execution by the Company of an agreement to which the
Company is a party or by which it is bound.   xix. Altering the conversion terms
of any notes that are currently outstanding.   xx. Notwithstanding anything to
the contrary contained in this Note or the other related or companion documents,
a breach or default by the Company of any covenant or other term or condition
contained in any of other agreement entered into by the Company, after the
passage of all applicable notice and cure or grace periods therein.          
The Term “Bankruptcy Law” means Title 11, U.S. Code, or any similar Federal or
State Law for the relief of debtors. The term “Custodian” means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.

 

  b. Remedies. If an Event of Default occurs, the Holder may in its sole
discretion determine to request immediate repayment of all or any portion of the
Note that remains outstanding; at such time the Company will be required to pay
the Holder the Default Amount (defined herein) in cash. For purposes hereof, the
“Default Amount” shall mean: the product of (A) the then outstanding principal
amount of the Note, plus accrued Interest and Default Interest, divided by (B)
the Conversion Price as determined on the Issuance Date, multiplied by (C) the
highest price at which the Common Stock traded at any time between the Issuance
Date and the date of the Event of Default. If the Company fails to pay the
Default Amount within five (5) Business Days of written notice that such amount
is due and payable, then Holder shall have the right at any time, so long as the
Company remains in default (and so long and to the extent there are a sufficient
number of authorized but unissued shares), to require the Company, upon written
notice, to immediately issue, in lieu of the Default Amount, the number of
shares of Common Stock of the Company equal to the Default Amount divided by the
Conversion Price then in effect.         c. If at any time after the Issuance
Date, the Company is not DWAC Eligible, then an additional 5% discount shall be
factored into the Conversion Price. If at any time after the Issuance Date, the
Common Stock is not DTC Eligible, then an additional 5% discount shall be
factored into the Conversion Price. In addition, if any Event of Default occurs
after the Issuance Date, then an additional 5% discount shall be factored into
the Conversion Price for each of the first three (3) Events of Default that
occur after the Issuance Date (for the avoidance of doubt, each occurrence of
any Event of Default shall be deemed to be a separate occurrence for purposes of
the foregoing reductions, even if the same Event of Default occurs three (3)
separate times). For example, if there are three (3) separate occurrences of an
Event of Default, then an additional 5% discount shall be factored into the
Conversion Price for the first such occurrence, and so on for each of the second
and third occurrences of such Event of Default.

 

  11. Vote to Change the Terms of this Note. This Note and any provision hereof
may only be amended by an instrument in writing signed by the Company and the
Holder.

 

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  12. Lost or Stolen Note. Upon receipt by the Company of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of this Note, and,
in the case of loss, theft or destruction, of an indemnification undertaking by
the Holder to the Company in a form reasonably acceptable to the Company and, in
the case of mutilation, upon surrender and cancellation of the Note, the Company
shall execute and deliver a new Note of like tenor and date and in substantially
the same form as this Note; provided, however, the Company shall not be
obligated to re-issue a Note if the Holder contemporaneously requests the
Company to convert such remaining principal amount, plus accrued Interest and
Default Interest, if any, into Common Stock.         13. Payment of Collection,
Enforcement and Other Costs. If: (i) this Note is placed in the hands of an
attorney for collection or enforcement or is collected or enforced through any
legal proceeding; or (ii) an attorney is retained to represent the Holder of
this Note in any bankruptcy, reorganization, receivership or other proceedings
affecting creditors’ rights and involving a claim under this Note, then the
Company shall pay to the Holder all reasonable attorneys’ fees, costs and
expenses incurred in connection therewith, in addition to all other amounts due
hereunder.         14. Cancellation. After all principal, accrued Interest and
Default Interest, if any, at any time owed on this Note has been paid in full or
otherwise converted in full, this Note shall automatically be deemed canceled,
shall be surrendered to the Company for cancellation and shall not be reissued.
        15. Waiver of Notice. To the extent permitted by law, the Company hereby
waives demand, notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or enforcement of this Note.
        16. Governing Law. This Note shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the laws of
the State of Texas, without giving effect to provisions thereof regarding
conflict of laws. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in Texas for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by sending, through certified mail
or overnight courier, a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.         17. Remedies, Characterizations,
Other Obligations, Breaches and Injunctive Relief. The remedies provided in this
Note shall be cumulative and in addition to all other remedies available under
this Note, at law or in equity (including a decree of specific performance
and/or other injunctive relief), and no remedy contained herein shall be deemed
a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit the Holder’s right to pursue actual damages for any
failure by the Company to comply with the terms of this Note. The Company
covenants to the Holder that there shall be no characterization concerning this
instrument other than as expressly provided herein. Amounts set forth or
provided for herein with respect to payments, conversion and the like (and the
computation thereof) shall be the amounts to be received by the Holder thereof
and shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof).         18. Specific
Shall Not Limit General; Construction. No specific provision contained in this
Note shall limit or modify any more general provision contained herein. This
Note shall be deemed to be jointly drafted by the Company and the Holder and
shall not be construed against any person as the drafter hereof.         19.
Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder
in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude further exercise thereof or of any other right,
power or privilege.         20. Partial Payment. In the event of partial payment
by the Holder, the principal sum due to the Holder shall be prorated based on
the consideration actually paid by the Holder such that the Company is only
required to repay the amount funded and the Company is not required to repay any
unfunded portion of this Note, with the exception of any OID contemplated
herein.         21. Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects herein. None of the terms of this Agreement can be waived or modified,
except by an express agreement signed by all Parties hereto.         22.
Additional Representations and Warranties. The Company expressly acknowledges
that the Holder, including but not limited to its officer, directors, employees,
agents, and affiliates, have not made any representation or warranty to it
outside the terms of this Agreement. The Company further acknowledges that there
have been no representations or warranties about future financing or subsequent
transactions between the parties.

 

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  23. Notices. All notices and other communications given or made to the Company
pursuant hereto shall be in writing (including facsimile or similar electronic
transmissions) and shall be deemed effectively given: (i) upon personal
delivery, (ii) when sent by electronic mail or facsimile, as deemed received by
the close of business on the date sent, (iii) five (5) days after having been
sent by registered or certified mail, return receipt requested, postage prepaid
or (iv) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery. All communications shall be sent either
by email, or fax, or to the email address or facsimile number set forth on the
signature page hereto. The physical address, email address, and phone number
provided on the signature page hereto shall be considered valid pursuant to the
above stipulations; should the Company’s contact information change from that
listed on the signature page, it is incumbent on the Company to inform the
Holder.         24. Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the rest of the Agreement shall be enforceable
in accordance with its terms.         25. Usury. If it shall be found that any
interest or other amount deemed interest due hereunder violates the applicable
law governing usury, the applicable rate of interest due hereunder shall
automatically be lowered to equal the maximum rate of interest permitted under
applicable law. The Company covenants (to the extent that it may lawfully do so)
that it will not seek to claim or take advantage of any law that would prohibit
or forgive the Company from paying all or a portion of the principal, Interest
or Default Interest on this Note.         26. Successors and Assigns. This
Agreement shall be binding upon all successors and assigns hereto. The Company
may not assign this Note without the prior written consent of Holder. This Note
and any shares of Common Stock issued upon conversion of this Note may be
offered, sold, assigned or transferred by Holder without the consent of the
Company.         27. Right of First Refusal. If at any time while this Note is
outstanding, the Company has a bona fide offer of capital or financing from any
3rd party, that the Company intends to act upon, then the Company must first
offer such opportunity to the Holder to provide such capital or financing to the
Company on the same terms as each respective 3rd party’s terms. Should the
Holder be unwilling or unable to provide such capital or financing to the
Company within 10 trading days from Holder’s receipt of written notice of the
offer (the “Offer Notice”) from the Company, then the Company may obtain such
capital or financing from that respective 3rd party upon the exact same terms
and conditions offered by the Company to the Holder, which transaction must be
completed within 30 days after the date of the Offer Notice. If the Company does
not receive the capital or financing from the respective 3rd party within 30
days after the date of the respective Offer Notice, then the Company must again
offer the capital or financing opportunity to the Holder as described above, and
the process detailed above shall be repeated. The Offer Notice must be sent via
electronic mail to matthewhirji@jsjinvestments.com.         28. Terms of Future
Financings. So long as this Note is outstanding, upon any issuance by the
Company or any of its subsidiaries of any security with any term more favorable
to the holder of such security or with a term in favor of the holder of such
security that was not similarly provided to the Holder in this Note, then the
Company shall notify the Holder of such additional or more favorable term and
such term, at Holder’s option, shall become a part of the transaction documents
with the Holder. The types of terms contained in another security that may be
more favorable to the holder of such security include, but are not limited to,
terms addressing conversion discounts, prepayment rate, conversion lookback
periods, interest rates, original issue discounts, stock sale price, private
placement price per share, and warrant coverage.

 

— SIGNATURE PAGE TO FOLLOW —

 

8

 

 

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IN WITNESS WHEREOF, the Company has caused this Note to be signed by its CEO, on
and as of the Issuance Date.

 

Foothills Exploration, Inc.

 

Signature:

 

By:           Title:           Address:                                   Email:
          Phone:           Facsimile:    

 

JSJ Investments Inc.

 

Signature:

 

Sameer Hirji, President JSJ Investments Inc.

10830 North Central Expressway, Suite 152

Dallas TX 75231

888-503-2599

 

9

 

 

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Exhibit 1

Conversion Notice

 

Reference is made to the 10% Convertible Note issued by Foothills Exploration,
Inc. (the “Note”), dated May 29, 2019 in the principal amount of $57,000 with
10% interest. This note currently holds a principal balance of $57,000. The
features of conversion stipulate a Conversion Price equal to a 45% discount to
the lowest trading price during the previous twenty (20) trading days to the
date of a Conversion Notice, pursuant to the provisions of Section 2(a)(ii) in
the Note.

 

In accordance with and pursuant to the Note, the undersigned hereby elects to
convert $_____ of the principal/interest balance of the Note, indicated below
into shares of Common Stock (the “Common Stock”), of the Company, by tendering
the Note specified as of the date specified below.

 

Date of Conversion: __________

 

Please confirm the following information:

 

Conversion Amount: $ ________________

Conversion Price: $__________ (______% discount from $____________________)

Number of Common Stock to be issued:
________________________________________________________________

Current Issued/Outstanding:
_________________________________________________________________________

 

If the Issuer is DWAC eligible, please issue the Common Stock into which the
Note is being converted in the name of the Holder of the Note and transfer the
shares electronically to:

 

[BROKER INFORMATION]

 

Holder Authorization:

 

JSJ Investments Inc.

10830 North Central Expressway, Suite 152 *Do not send certificates to this
address

Dallas, TX 75231

888-503-2599

 

Tax ID: 20-2122354

 

Sameer Hirji, President

 

[DATE]

 

[CONTINUED ON NEXT PAGE]

 

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PLEASE BE ADVISED, pursuant to Section 2(e)(ii) of the Note, “Upon receipt by
the Company of a copy of the Conversion Notice, the Company shall as soon as
practicable, but in no event later than one (1) Business Day after receipt of
such Conversion Notice, SEND, VIA EMAIL, FACSIMILE OR OVERNIGHT COURIER, A
CONFIRMATION OF RECEIPT OF SUCH CONVERSION NOTICE TO SUCH HOLDER INDICATING THAT
THE COMPANY WILL PROCESS SUCH CONVERSION NOTICE in accordance with the terms
herein. Within two (2) Business Days after the date of the Conversion
Confirmation, the Company shall have issued and electronically transferred the
shares to the Broker indicated in the Conversion Notice; should the Company be
unable to transfer the shares electronically, they shall, within two (2)
Business Days after the date of the Conversion Confirmation, have surrendered to
FedEx for delivery the next day to the address as specified in the Conversion
Notice, a certificate, registered in the name of the Holder, for the number of
shares of Common Stock to which the Holder shall be entitled.”

 

Signature:           B.P. Allaire   CEO   Foothills Exploration, Inc.  

 

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