Document:

Unassociated Document

    EXHIBIT
      4.3

    

    Warrant
      Certificate No. [_____]

    

    NEITHER
      THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES ISSUABLE
      UPON
      THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
      OF
      1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND
      NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED
      OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT
      THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE
      STATE
      SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE
      COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
      COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY
      BE
      OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
      WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
      APPLICABLE STATE
      SECURITIES LAWS. 

     

    
      	Dated: September 8, 2006 	
              Void
                After: September 8,
                2011 

            

    

     

    

    FOOTHILLS
      RESOURCES, INC.

    

    WARRANT
      TO PURCHASE COMMON STOCK

    

    Foothills
      Resources, Inc., a Nevada corporation (the “Company”), for value received on
      September 8, 2006
      (the
“Effective Date”), hereby issues to [___________]
      (the
“Holder”) this Warrant (the “Warrant”) to purchase [__________]
      shares
      (each such share
      as from
      time to time adjusted as hereinafter provided
      being a
“Warrant Share” and all such shares being the “Warrant Shares”) of the Company’s
      Common Stock (as defined below), at the Exercise Price (as defined below),
      as
      adjusted from time to time as provided herein, on or before September 8, 2011
      (the “Expiration Date”), all subject to the following terms and conditions.
      Unless otherwise defined in this Warrant, terms appearing in initial capitalized
      form shall have the meaning ascribed to them in that certain Securities Purchase
      Agreement, dated as of even date herewith, by and among the Company and the
      purchasers signatory thereto pursuant to which this Warrant was issued (the
      “Securities Purchase Agreement”).

    

    As
      used
      in this Warrant, (i) “Business Day” means any day other than Saturday, Sunday or
      any other day on which commercial banks in New York, New York are authorized
      or
      required by law or executive order to close; (ii) “Common Stock” means the
      common stock of the Company, $0.001 par value per share, including
      any securities issued or issuable with respect thereto or into which or for
      which such shares may be exchanged for, or converted into, pursuant to any
      stock
      dividend, stock split, stock combination, recapitalization, reclassification,
      reorganization or other similar event;
      (iii)
“Exercise Price” means $2.75 per share of Common Stock, subject to adjustment as
      provided herein; (iv) “Trading
      Day” means any
      day
      on which
      the Common Stock is traded on the primary national or regional stock exchange
      on
      which the Common Stock is listed, or, if not listed, on the Nasdaq National
      Market if quoted thereon, or if not so listed or quoted, the NASD
      Over-the-Counter Bulletin
      Board (the “OTC Bulletin Board”) if quoted thereon, is
      open
      for the transaction of business; and (v) “Affiliate” means any Person that,
      directly or indirectly, through one or more intermediaries, controls, is
      controlled by, or is under common control with, a Person, as such terms are
      used
      and construed in Rule 144 promulgated
      under the Securities Act of 1933, as amended.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    1.
      DURATION AND EXERCISE OF WARRANTS

    

    (a)
       Exercise
      Period.
      The
      Holder may exercise this Warrant in whole or in part on any Business Day on
      or
      before 5:00 p.m., Eastern time, on the Expiration Date, at which time this
      Warrant shall become void and of no value. The Holder shall also exercise the
      Warrant earlier on the Mandatory Exercise Date in accordance with Section 1(b)
      if applicable, at which time this Warrant shall entitle the Holder only to
      the
      Warrant Shares applicable upon such exercise.

    

    (b) Right
      of Mandatory Exercise by Company.
      

    

    (i)
      If at
      any time from and after the Mandatory
      Effective Date (as defined in the Registration Rights Agreement),
      (A)
      the
      closing
      sales price of the Common Stock for each Trading Day of any twenty (20)
      consecutive Trading Day period preceding the applicable Mandatory Exercise
      Eligibility Date equals or exceeds $5.50 per share (subject to equitable
      adjustment for stock splits, stock dividends, combinations, and capital
      reorganizations, as applicable), (B) the registration statement registering
      for
      resale the Warrant Shares has been effective for a period of 45 Trading Days
      and
      remains effective or
      the
      Holder would be entitled to sell the Warrant Shares upon the exercise of the
      Warrant pursuant to the Rule 144(k) promulgated under Securities Act of 1933,
      as
      amended (i.e.,
      including without
      any volume limitations) and (C)
      the
      Common Stock is listed on the New York Stock Exchange or the American Stock
      Exchange, or quoted on the Nasdaq National Market
      (each
      such date on which all of the foregoing conditions in clauses (A) through (C)
      are satisfied being a “Mandatory Exercise Eligibility Date”), the Company shall
      have the right to require the Holder to exercise this Warrant in whole or in
      part, subject to Sections 1(b)(ii), 1(b)(iii) below, as designated in the
      Mandatory Exercise Notice (as defined below) into fully paid, validly issued
      and
      nonassessable shares of Common Stock in accordance with the terms of this
      Warrant at the Exercise Price as of the Mandatory Exercise Date (a “Mandatory
      Exercise”). The Company may exercise its right to require exercise under this
      Section 1(b) by delivering within not more than five (5) Trading Days after
      the
      end of the Mandatory Exercise Eligibility Date a written notice thereof by
      facsimile and overnight courier to all, but not less than all, of the holders
      of
      Warrants and the Transfer Agent (the “Mandatory Exercise Notice” and the date
      all of the holders received such notice by facsimile is referred to as the
      “Mandatory Exercise Notice Date”). The
      Mandatory Exercise Notice shall be irrevocable. The Mandatory Exercise Notice
      shall state (i) the Trading Day selected for the Mandatory Exercise in
      accordance with this Section 1(b)(i),
      which
      Trading Day shall be at least twenty (20) Business Days but not more than sixty
      (60) Business Days following the end of the applicable Mandatory Exercise Notice
      Date (the “Mandatory Exercise Date”), (ii) the aggregate number of Warrant
      Shares subject to Mandatory Exercise from the Holder and all of the holders
      of
      the Warrants pursuant to this Section 1(b) and (iii) the number of Warrant
      Shares to be issued to such Holder on the applicable Mandatory Exercise
      Date.

     

    
      
        
        

      

      
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    (ii) If
      the
      Company elects to cause exercise of any amount of this Warrant pursuant to
      Section 1(b)(i), then it must simultaneously take the same action in the same
      proportion with respect to all Warrants that contain a similar provision. All
      amounts exercised by the Holder after the Mandatory Exercise Notice Date shall
      reduce the amount of this Warrant required to be converted on the Mandatory
      Exercise Date. If the Company has elected a Mandatory Exercise, the mechanics
      of
      exercise set forth in Section 1(c) shall apply, to the extent applicable, as
      if
      the Company and the Transfer Agent had received from the Holder on the Mandatory
      Exercise Date an Exercise Notice with respect to the amount of this Warrant
      being converted pursuant to the Mandatory Exercise.

    

    (iii) Notwithstanding
      anything to the contrary contained in this Section 1(b), the aggregate number
      of
      Warrants that the Company shall have the right to call at any given time under
      Section 1(b) shall be limited to a number of Warrants such that number of
      Warrant Shares issuable upon exercise of the Warrants so called does not exceed
      the total aggregate volume of the Company’s Common Stock traded over the 20
      consecutive Trading Days prior to the applicable Mandatory Exercise Eligibility
      Date. The Company shall not have the right to deliver more than one Mandatory
      Exercise Notice in any ninety (90) day period.

    

    (c)
       Exercise
      Procedures.

    

    (i) While
      this Warrant remains outstanding and exercisable in accordance with Section
      1(a), the Holder may exercise this Warrant in whole or in part
      at any
      time and from time to time
      by:

    

    (A) surrender
      of this Warrant, with a duly executed copy of the Notice of Exercise attached
      hereto as Exhibit
      A,
      to the
      Secretary of the Company at its principal offices or at such other office or
      agency as the Company may specify in writing to the Holder; and

    

    (B) payment
      of the then
      applicable
      Exercise
      Price per share multiplied by the number of Warrant Shares being purchased
      upon
      exercise of the Warrant (such amount, the “Aggregate Exercise Price”)
made
      in
      the form of cash, or by certified check, bank draft or money order payable
      in
      lawful money of the United States of America
      or in
      the form of a Cashless Exercise
      to the
      extent permitted in Section 1(c)(ii) below.
      

     

    
      
        
        

      

      
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    (ii) Upon
      the
      exercise of this Warrant in compliance with the provisions of this Section
      1(c)
      or pursuant to a Mandatory Exercise Notice in accordance with Section 1(b),
      the
      Company shall promptly issue and cause to be delivered to the Holder a
      certificate for the Warrant Shares purchased by the Holder. Each
      exercise of this Warrant shall be effected immediately prior to the close of
      business on the date (the “Date of Exercise”) which (A)
      the
      conditions set forth in Section 1(b) have been satisfied
      in
      connection with a Mandatory Exercise Notice or (B) the conditions set forth
      in
      Section 1(c) have been satisfied, as the case may be.
      On
      or
      before the first Business Day following the date on which the Company has
      received each of the Exercise Notice and the Aggregate Exercise Price (the
      “Exercise Delivery Documents”), the Company shall transmit by facsimile an
      acknowledgment of confirmation of receipt of the Exercise Delivery Documents
      to
      the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before
      the third Business Day following the date on which the Company has received
      all
      of the Exercise Delivery Documents (the “Share Delivery Date”), the Company
      shall, (X) provided that the Transfer Agent is participating in The Depository
      Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the
      request of the Holder, credit such aggregate number of shares of Common Stock
      to
      which the Holder is entitled pursuant to such exercise to the Holder’s or its
      designee’s balance account with DTC through its Deposit Withdrawal Agent
      Commission system, or (Y) if the Transfer Agent is not participating in the
      DTC
      Fast Automated Securities Transfer Program, issue and dispatch by overnight
      courier to the address as specified in the Exercise Notice, a certificate,
      registered in the Company’s share register in the name of the Holder or its
      designee, for the number of shares of Common Stock to which the Holder is
      entitled pursuant to such exercise. Upon delivery of the Exercise Notice and
      Aggregate Exercise Price referred to in Section
      1(c)(i)(A)
      above, the Holder shall be deemed for all corporate purposes to have become
      the
      holder of record of the Warrant Shares with respect to which this Warrant has
      been exercised, irrespective of the date of delivery of the certificates
      evidencing such Warrant Shares. If this Warrant is submitted in connection
      with
      any exercise pursuant to Section 1(a) and the number of Warrant Shares
      represented by this Warrant submitted for exercise is greater than the
actual
      number
      of
      Warrant Shares being acquired upon such an
      exercise, then the Company shall as soon as practicable and in no event later
      than three (3) Business Days after any exercise and at its own expense, issue
      a
      new Warrant (in accordance with Section 1(c))
      of like
      tenor
      representing the right 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 this Warrant is exercised. 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 to be issued shall be rounded up
      to
      the nearest whole number. The Company shall pay any and all taxes which may
      be
      payable with respect to the issuance and delivery of Warrant Shares upon
      exercise of this Warrant.

    

    (iii) If
      the
      Company shall fail to issue to the Holder within three (3) 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 and register such shares
      of Common Stock on the Company’s share register 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, and if on or
      after such Business Day the Holder purchases (in an open market transaction
      or
      otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
      Holder of shares of Common Stock issuable upon such exercise that the Holder
      anticipated receiving from the Company (a “Buy-In”), then the Company shall,
      within three (3) Business Days after the Holder’s request and in the Holder’s
      discretion, either (i) pay cash to the Holder in an amount equal to the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased (the “Buy-In Price”), at which point the
      Company’s obligation to deliver such certificate (and to issue such shares of
      Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver
      to the Holder a certificate or certificates representing such shares of Common
      Stock and pay cash to the Holder in an amount equal to the excess (if any)
      of
      the Buy-In Price over the product of (A) such number of shares of Common Stock,
      times (B) the closing bid price on
      the
      date of exercise. 

     

    
      
        
        

      

      
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    (d) Partial
      Exercise.
      This
      Warrant shall be exercisable, either as an entirety or, from time to time,
      for
      part only of the number of Warrant Shares referenced by this Warrant. If this
      Warrant is exercised in part, the Company shall issue, at its expense, a new
      Warrant, in substantially the form of this Warrant, referencing such reduced
      number of Warrant Shares which remain subject to this Warrant.

    

    (e) Disputes.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall promptly issue
      to the Holder the number of Warrant Shares that are not disputed and resolve
      such dispute in accordance with Section 15.

    

    2.
      ISSUANCE OF WARRANT SHARES

    

    (a) The
      Company covenants that all Warrant Shares will, upon issuance in accordance
      with
      the terms of this Warrant, be (i) duly authorized, validly issued, fully paid
      and non-assessable, and (ii) free from all liens, charges and security
      interests, with the exception of claims arising through the acts or omissions
      of
      any Holder and except as arising from applicable Federal and state securities
      laws.

    

    (b) The
      Company shall register this Warrant upon records to be maintained by the Company
      for that purpose in the name of the record holder of such Warrant from time
      to
      time. The Company may deem and treat the registered Holder of this Warrant
      as
      the absolute owner thereof for the purpose of any exercise thereof, any
      distribution to the Holder thereof and for all other purposes.

    

    (c) The
      Company will not, by amendment of its certificate of incorporation, by-laws
      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 hereunder by the Company, but will at all times in good faith
      assist in the carrying out of all the provisions of this Warrant and in the
      taking of all the action as may be necessary or appropriate in order to protect
      the rights of the Holder to exercise this Warrant,
      or
      against impairment of such rights.

    

    3.
      ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES

    

    (a) The
      Exercise Price and the number of shares purchasable upon the exercise of this
      Warrant shall be subject to adjustment from time to time upon the occurrence
      of
      certain events described in this Section 3(a).

    

       (i)
       Subdivision
      or Combination of Stock.
      In case
      the Company shall at any time subdivide (whether
      by way of stock dividend, stock split or otherwise) its
      outstanding shares of Common Stock into a greater number of shares, the Exercise
      Price in effect immediately prior to such subdivision shall be proportionately
      reduced and
      the
      number of Warrant Shares shall be proportionately increased,
      and
      conversely, in case the outstanding shares of Common Stock of the Company shall
      be combined (whether
      by way of stock combination, reverse stock split or otherwise) into
      a
      smaller number of shares, the Exercise Price in effect immediately prior to
      such
      combination shall be proportionately increased
      and the
      number of Warrant Shares shall be proportionately decreased. The Exercise Price
      and the Warrant Shares, as so adjusted, shall be readjusted in the same manner
      upon the happening of any successive even or events described in this Section
      3(a)(i).

     

    
      
        
        

      

      
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       (ii) Dividends
      in Stock, Property, Reclassification.
      If at
      any time, or from time to time, the Holders of Common Stock (or any shares
      of
      stock or other securities at the time receivable upon the exercise of this
      Warrant) shall have received or become entitled to receive, without payment
      therefor:

    

       (A) any
      shares of stock or other securities which are at any time directly or indirectly
      convertible into or exchangeable for Common Stock, or any rights or options
      to
      subscribe for, purchase or otherwise acquire any of the foregoing by way of
      dividend or other distribution, or

    

       (B) additional
      stock or other securities or property (including cash) by way of spin-off,
      split-up, reclassification, combination of shares or similar corporate
      rearrangement, (other than shares of Common Stock issued as a stock split or
      adjustments in respect of which shall be covered by the terms of Section 3(a)(i)
      above), 

    

    then
      and
      in each such case, the Exercise
      Price and the number of Warrant Shares to be obtained upon exercise of this
      Warrant shall be adjusted proportionately, and the Holder
      hereof shall, upon the exercise of this Warrant, be entitled to receive, in
      addition to the number of shares of Common Stock receivable thereupon, and
      without payment of any additional consideration therefor, the amount of stock
      and other securities and property (including cash in the cases referred to
      in
      clause (ii) above) which such Holder would hold on the date of such exercise
      had
      he been the holder of record of such Common Stock as of the date on which
      holders of Common Stock received or became entitled to receive such shares
      or
      all other additional stock and other securities and property.
      The
      Exercise Price and the Warrant Shares, as so adjusted, shall be readjusted
      in
      the same manner upon the happening of any successive event or events described
      in this Section 3(a)(ii).

    

    (iii) Reorganization,
      Reclassification, Consolidation, Merger or Sale.
      If any
      recapitalization, reclassification or reorganization of the capital stock of
      the
      Company, or any consolidation or merger of the Company with another corporation,
      or the sale of all or substantially all of its assets or other
      transaction shall be effected in such a way that holders of Common Stock shall
      be entitled to receive stock, securities, or other assets or property (an
“Organic Change”), then, as a condition of such Organic Change, lawful and
      adequate provisions shall be made by the Company whereby the Holder hereof
      shall
      thereafter have the right to purchase and receive (in lieu of the shares of
      the
      Common Stock of the Company immediately theretofore purchasable and receivable
      upon the exercise of the rights represented by this Warrant) such shares of
      stock, securities or other assets or property as may be issued or payable with
      respect to or in exchange for a number of outstanding shares of such Common
      Stock equal to the number of shares of such stock immediately theretofore
      purchasable and receivable assuming the full exercise of the rights represented
      by this Warrant. In the event of any Organic Change, appropriate provision
      shall
      be made by the Company with respect to the rights and interests of the Holder
      of
      this Warrant to the end that the provisions hereof (including, without
      limitation, provisions for adjustments of the Exercise Price and of the number
      of shares purchasable and receivable upon the exercise of this Warrant) shall
      thereafter be applicable, in relation to any shares of stock, securities or
      assets thereafter deliverable upon the exercise hereof. The Company will not
      effect any such consolidation, merger or sale unless, prior to the consummation
      thereof, the successor corporation (if other than the Company) resulting from
      such consolidation or merger
      or
the
      corporation purchasing such assets shall assume by written instrument reasonably
      satisfactory in form and substance to the Holders executed and mailed or
      delivered to the registered Holder hereof at the last address of such Holder
      appearing on the books of the Company, the obligation to deliver to such Holder
      such shares of stock, securities or assets as, in accordance
      with the foregoing provisions, such Holder may be entitled to
      purchase. In
      any
      event, the successor corporation (if other than the Company) resulting from
      such
      consolidation or merger or the corporation purchasing such assets shall be
      deemed to assume such obligation to deliver to such Holder such shares of stock,
      securities or assets even in the absence of a written instrument assuming such
      obligation to the extent such assumption occurs by operation of
      law.

     

    
      
        
        

      

      
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    (b) Certificate
      as to Adjustments.
      Upon
      the occurrence of each adjustment or readjustment pursuant to this Section
      3,
      the Company at its expense shall promptly compute such adjustment or
      readjustment in accordance with the terms hereof and furnish to each Holder
      of
      this Warrant a certificate setting forth such adjustment or readjustment and
      showing in detail the facts upon which such adjustment or readjustment is based.
      The Company shall
      promptly furnish
      or cause to be furnished to such Holder a like certificate setting forth: (i)
      such adjustments and readjustments; and (ii) the number of shares and the
      amount, if any, of other property which at the time would be received upon
      the
      exercise of the Warrant.

    

    (c) Certain
      Events.
      If any
      event occurs as to which the other provisions of this Section 3 are not strictly
      applicable but the lack of any adjustment would not fairly protect the purchase
      rights of the Holder under this Warrant in accordance with the basic intent
      and
      principles of such provisions, or if strictly applicable would not fairly
      protect the purchase rights of the Holder under this Warrant in accordance
      with
      the basic intent and principles of such provisions, then the Company’s board of
      directors will, in good faith, make an appropriate adjustment to protect the
      rights of the Holder; provided, however, that no such adjustment pursuant to
      this Section 3(c) will increase the Exercise Price or decrease the number of
      Warrant Shares as otherwise determined pursuant to this Section 3.

    

    (d) Adjustment
      of Exercise Price Upon Issuance of Additional Shares of Common
      Stock.
      In the
      event
      the
      Company shall at any time prior to the twelfth month anniversary of the
      Effective Date issue Additional Shares of Common Stock, as defined below,
      without consideration or for a consideration per share less than the Exercise
      Price in effect immediately prior to such issue, then the Exercise Price shall
      be reduced, concurrently with such issue, to a price (calculated to the nearest
      cent) determined by multiplying such Exercise Price by a fraction, (A) the
      numerator of which shall be (1) the number of shares of Common Stock outstanding
      immediately prior to such issue plus (2) the number of shares of Common Stock
      which the aggregate consideration received or to be received by the Company
      for
      the total number of Additional Shares of Common Stock so issued would purchase
      at such Exercise Price; and (B) the denominator of which shall be the number
      of
      shares of Common Stock outstanding immediately prior to such issue plus the
      number of such Additional Shares of Common Stock so issued; provided
      that,
      (i) for the purpose of this Section 3(d), all shares of Common Stock issuable
      upon conversion or exchange of convertible securities outstanding immediately
      prior to such issue shall be deemed to be outstanding, and (ii) the number
      of
      shares of Common Stock deemed issuable upon conversion or exchange of such
      outstanding convertible securities shall be determined without giving effect
      to
      any adjustments to the conversion or exchange price or conversion or exchange
      rate of such convertible securities resulting from the issuance of Additional
      Shares of Common Stock that is the subject of this calculation. For purposes
      of
      this Warrant, “Additional Shares of Common Stock” shall mean all shares of
      Common Stock issued by the Company after the Effective Date (including without
      limitation any shares of Common Stock issuable upon conversion or exchange
      of
      any convertible securities or upon exercise of any option or warrant, on an
      as-converted basis), other than: (i) shares of Common Stock issued or
      issuable upon conversion or exchange of any convertible securities or exercise
      of any options outstanding on the Effective Date; (ii) shares of Common
      Stock issued or issuable by reason of a dividend, stock split, split-up or
      other
      distribution on shares of Common Stock that is covered by Sections 3(a)(i)
      through 3(a)(iii) above; or (iii) shares of Common Stock (or options with
      respect thereto) issued or issuable to employees or directors of, or consultants
      to, the Company or any of its subsidiaries pursuant to a plan, agreement or
      arrangement approved by the Board of Directors of the Company. The provisions
      of
      this Section 3(d) shall not operate to increase the Exercise Price.

     

    
      
        
        

      

      
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    4.
      TRANSFERS AND EXCHANGES OF WARRANT AND WARRANT SHARES

    

    (a) Registration
      of Transfers and Exchanges.
      Subject
      to Section 4(c), upon the Holder’s surrender of this Warrant, with a duly
      executed copy of the Assignment Notice attached as Exhibit
      B,
      to the
      Secretary of the Company at its principal offices or at such other office or
      agency as the Company may specify in writing to the Holder, the Company shall
      register the transfer of all or any portion of this Warrant. Upon such
      registration of transfer the Company shall issue a new Warrant, in substantially
      the form of this Warrant, evidencing the acquisition rights transferred to
      the
      transferee and a new Warrant, in similar form, evidencing the remaining
      acquisition rights not transferred, to the Holder requesting the
      transfer.

    

    (b) Warrant
      Exchangeable for Different Denominations.
      The
      Holder may exchange this Warrant for a new Warrant or Warrants, in substantially
      the form of this Warrant, evidencing in the aggregate the right to purchase
      the
      number of Warrant Shares which may then be purchased hereunder, each of such
      new
      Warrants to be dated the date of such exchange and to represent the right to
      purchase such number of Warrant Shares as shall be designated by the Holder.
      The
      Holder shall surrender this Warrant with duly executed instructions regarding
      such
      re-certification of this Warrant to the Secretary of the Company at its
      principal offices or at such other office or agency as the Company may specify
      in writing to the Holder.

     

    
      
        
        

      

      
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    (c) Restrictions
      on Transfers.
      This
      Warrant may not be transferred at any time without (i) registration under the
      Act or (ii) an exemption from such registration and a written opinion of legal
      counsel addressed to the Company that the proposed transfer of the Warrant
      may
      be effected without registration under the Act, which opinion will be in form
      and from counsel reasonably satisfactory to the Company.

    

    (d) Permitted
      Transfers and Assignments.
      Notwithstanding any provision to the contrary in this Section 4, the Holder
      may
      transfer, with or without consideration, this Warrant or any of the Warrant
      Shares (or a portion thereof) to the Holder’s Affiliates without obtaining the
      opinion from counsel that may be required by Section 4(c)(ii),
      provided that the Holder delivers to the Company and its counsel certification,
      documentation, and other assurances reasonably required by Company’s counsel to
      enable Company’s counsel to render an opinion to the Company’s transfer agent
      that such transfer does not violate applicable securities laws.

    

    5.
      MUTILATED OR MISSING WARRANT CERTIFICATE

    

    If
      this
      Warrant is mutilated, lost, stolen or destroyed, upon request by the Holder,
      the
      Company will,
      at its
      expense,
      issue,
      in exchange for and upon cancellation of the mutilated Warrant, or in
      substitution for the lost, stolen or destroyed Warrant, a new Warrant, in
      substantially the form of this Warrant, representing the right to acquire the
      equivalent number of Warrant Shares, provided however, as a prerequisite to
      the
      issuance of a substitute Warrant, the Company may require satisfactory evidence
      of loss, theft or destruction as well as an indemnity from the Holder of a
      lost,
      stolen or destroyed Warrant.

    

    6.
      PAYMENT OF TAXES

    

    The
      Company will pay all transfer and stock issuance taxes attributable to the
      preparation, issuance and delivery of this Warrant and the Warrant Shares
(and
      replacement Warrants) including,
      without limitation, all documentary and stamp taxes;
      provided, however, that the Company shall not be required to pay any tax in
      respect of the transfer of this Warrant, or the issuance or delivery of
      certificates for Warrant Shares or other securities in respect of the Warrant
      Shares to any person or entity other than to the Holder or its
      transferee.

    

    7.
      FRACTIONAL WARRANT SHARES

    

    No
      fractional Warrant Shares shall be issued upon exercise of this Warrant. The
      Company, in lieu of issuing any fractional Warrant Share, shall round up the
      number of Warrant Shares issuable to nearest whole share.

    

    8.
      NO
      STOCK RIGHTS AND LEGEND

    

    No
      holder
      of this Warrant Certificate, as such, shall be entitled to vote or be deemed
      the
      holder of any other securities of the Company which may at any time be issuable
      on the exercise hereof, nor shall anything contained herein be construed to
      confer upon the holder of this Warrant Certificate, as such, the rights of
      a
      stockholder of the Company or the right to vote for the election of directors
      or
      upon any matter submitted to stockholders at any meeting thereof,
      or give
      or withhold consent to any corporate action or to receive notice of meetings
      or
      other actions affecting stockholders (except as provided herein), or to receive
      dividends or subscription rights or otherwise (except as provide
      herein).

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    Each
      certificate for Warrant Shares initially issued upon the exercise of this
      Warrant Certificate, and each certificate for Warrant Shares issued to any
      subsequent transferee of any such certificate, shall be stamped or otherwise
      imprinted with a legend in substantially the following form:

    

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS,
      AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
      PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT
      WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE
      SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE
      COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
      COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
      SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
      CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
      APPLICABLE STATE SECURITIES LAWS.”

    

    9.
      REGISTRATION UNDER THE SECURITIES ACT OF 1933

    

    The
      Company agrees to register the Warrants and the Warrant Shares for resale under
      the Act on the terms and subject to the conditions set forth in that certain
      Registration Rights Agreement, by and between the Company and each of the
      Purchasers listed on Schedule 1 to the Securities Purchase Agreement, pursuant
      to which this Warrant was issued.

    

    10.
      NOTICES

    

    All
      notices, consents, waivers, and other communications under this Warrant must
      be
      in writing and will be deemed given to a party when (a) delivered to the
      appropriate address by hand or by nationally recognized overnight courier
      service (costs prepaid); (b) sent by facsimile or e-mail with confirmation
      of
      transmission by the transmitting equipment; (c) received or rejected by the
      addressee, if sent by certified mail, return receipt requested, if to the
      registered Holder hereof; or (d) seven days after the placement of the notice
      into the mails (first class postage prepaid), to the Holder at the address,
      facsimile number, or e-mail address furnished by the registered Holder to the
      Company in accordance with the Securities Purchase Agreement, or if to the
      Company, to it at 4540 California Avenue, Suite 550 Bakersfield, California
      93309, Attention: W. Kirk Bosché (or to such other address, facsimile number, or
      e-mail address as the Holder or the Company as a party may designate by notice
      the other party) with a copy to McGuireWoods LLP, 1345 Avenue of the Americas,
      7th
      Floor,
      New York, New York 10105, Attention: Louis W. Zehil.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    11.
      SEVERABILITY

    

    If
      a
      court of competent jurisdiction holds any provision of this Warrant invalid
      or
      unenforceable, the other provisions of this Warrant will remain in full force
      and effect. Any provision of this Warrant held invalid or unenforceable only
      in
      part or degree will remain in full force and effect to the extent not held
      invalid or unenforceable.

    

    12.
      BINDING EFFECT

    

    This
      Warrant shall be binding upon and inure to the sole and exclusive benefit of
      the
      Company, its successors and assigns, the registered Holder or Holders from
      time
      to time of this Warrant and the Warrant Shares.

    

    13.
      SURVIVAL OF RIGHTS AND DUTIES

    

    This
      Warrant Certificate shall terminate and be of no further force and effect on
      the
      earlier of 5:00 p.m., Eastern time, on the Expiration Date or the date on which
      this Warrant has been exercised.

    

    14.
      GOVERNING LAW

    

    This
      Warrant will be governed by and construed under the laws of the State of
New
      York
      without
      regard to conflicts of laws principles that would require the application of
      any
      other law.

    

    15.
      DISPUTE RESOLUTION

    

    In
      the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall submit the
      disputed determinations or arithmetic calculations via facsimile within two
      Business Days of receipt of the Exercise Notice giving rise to such dispute,
      as
      the case may be, to the Holder. If the Holder and the Company are unable to
      agree upon such determination or calculation of the Exercise Price or the
      Warrant Shares within three Business Days of such disputed determination or
      arithmetic calculation being submitted to the Holder, then the Company shall,
      within two Business Days submit via facsimile (a) the disputed determination
      of
      the Exercise Price to an independent, reputable investment bank selected by
      the
      Company and approved by the Holder or (b) the disputed arithmetic calculation
      of
      the Warrant Shares to the Company’s independent, outside accountant. The Company
      shall cause, at its expense, the investment bank or the accountant, as the
      case
      may be, to perform the determinations or calculations and notify the Company
      and
      the Holder of the results no later than ten (10) Business Days from the time
      it
      receives the disputed determinations or calculations. Such investment bank’s or
      accountant’s determination or calculation, as the case may be, shall be binding
      upon all parties absent demonstrable error. 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    16.
      NOTICES OF RECORD DATE

    

    Upon
      (a)
      any establishment by the Company of a record date of the holders of any class
      of
      securities for the purpose of determining the holders thereof who are entitled
      to receive any dividend or other distribution, or right or option to acquire
      securities of the Company, or any other right, or (b) any capital
      reorganization, reclassification, recapitalization, merger or consolidation
      of
      the Company with or into any other corporation, any transfer of all or
      substantially all the assets of the Company, or any voluntary or involuntary
      dissolution, liquidation or winding up of the Company, or the sale, in a single
      transaction, of a majority of the Company’s voting stock (whether newly issued,
      or from treasury, or previously issued and then outstanding, or any combination
      thereof), the Company shall mail to the Holder at least ten (10) Business Days,
      or such longer period as may be required by law, prior to the record date
      specified therein, a notice specifying (i) the date established as the record
      date for the purpose of such dividend, distribution, option or right and a
      description of such dividend, option or right, (ii) the date on which any such
      reorganization, reclassification, transfer, consolidation, merger, dissolution,
      liquidation or winding up, or sale is expected to become effective and (iii)
      the
      date, if any, fixed as to when the holders or record of Common Stock shall
      be
      entitled to exchange their shares of Common Stock for securities or other
      property deliverable upon such reorganization, reclassification, transfer,
      consolation, merger, dissolution, liquidation or winding up.

    

    17.
      RESERVATION OF SHARES

    

    The
      Company shall reserve and keep available out of its authorized but unissued
      shares of Common Stock for issuance upon the exercise of this Warrant, free
      from
      preemptive rights, such number of shares of Common Stock for which this Warrant
      shall from time to time be exercisable.

    

    18.
      NO
      THIRD PARTY RIGHTS

    

    This
      Warrant is not intended, and will not be construed, to create any rights in
      any
      parties other than the Company and the Holder, and no person or entity may
      assert any rights as third-party beneficiary hereunder.

    

    

    [SIGNATURE
      PAGE FOLLOWS]

    
      
        
          

        

        
        

      

      
        12

        
          

        

      

      
        
        

        
          

        

      

    

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its
      officer thereunto duly authorized as of the date hereof.

    
      	 	 	 
	 	
              Foothills
                Resources, Inc.

            
	 
 	 
 	 
 
	 	By:  	___________________________
	 	Name: Louis W. Zehil
	 	Title:
              Secretary

    

        

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      A

    

    EXERCISE
      FORM

    

    (To
      be
      executed by the Holder of the Warrant if such Holder desires
      to exercise the Warrant)

    

    To
      Foothills Resources, Inc.:

    

    The
      undersigned hereby irrevocably elects to exercise this Warrant and to purchase
      thereunder, ___________________ full shares of Foothills Resources, Inc. common
      stock issuable upon exercise of the Warrant and delivery of $_________
      (in cash as provided for in the foregoing Warrant) and any applicable taxes
      payable by the undersigned pursuant to such Warrant. 

     

    The
      undersigned requests that certificates for such shares be issued in the name
      of:

    

    _________________________________________

    (Please
      print name, address and social security or federal employer

    identification
      number (if applicable))

    

    _________________________________________

    

    _________________________________________

    

    If
      the
      shares issuable upon this exercise of the Warrant are not all of the Warrant
      Shares which the Holder is entitled to acquire upon the exercise of the Warrant,
      the undersigned requests that a new Warrant evidencing the rights not so
      exercised be issued in the name of and delivered to:

    

    _________________________________________

    (Please
      print name, address and social security or federal employer

    identification
      number (if applicable))

    

    _________________________________________

    _________________________________________

    

    
      
        	 	 	Name of Holder (print):
                ________________________ 
	 	 	(Signature):
                _________________________________
	 	 	(By:)
                ______________________________________
	 	 	(Title:)
                _____________________________________
	 	 	Dated:
                _____________________________________

      

    

     

       

      

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      B

    

    FORM
      OF
      ASSIGNMENT

    

    FOR
      VALUE
      RECEIVED, ___________________________________ hereby sells, assigns and
      transfers to each assignee set forth below all of the rights of the undersigned
      under the Warrant (as defined in and evidenced by the attached Warrant) to
      acquire the number of Warrant Shares set opposite the name of such assignee
      below and in and to the foregoing Warrant with respect to said acquisition
      rights and the shares of Foothills Resources, Inc. issuable upon exercise of
      the
      Warrant:

    

     

    
      	
              Name
                of Assignee

            	
              Address

            	
              Number
                of Shares

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 

    

    

    

    If
      the
      total of the Warrant Shares are not all of the Warrant Shares evidenced by
      the
      foregoing Warrant, the undersigned requests that a new Warrant evidencing the
      right to acquire the Warrant Shares not so assigned be issued in the name of
      and
      delivered to the undersigned.

     

    
      

      
        
          	 	 	Name of Holder (print):
                  ________________________ 
	 	 	(Signature):
                  _________________________________
	 	 	(By:)
                  ______________________________________
	 	 	(Title:)
                  _____________________________________
	 	 	Dated:
                  _____________________________________Unassociated Document

    EXHIBIT
      10.1

     

    REGISTRATION
      RIGHTS AGREEMENT

     

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of the 8th day of September, 2006 (the “Effective
      Date”)
      between Foothills Resources, Inc., a Nevada corporation (the “Company”),
      and
      TARH E&P Holdings, L.P., a Texas limited partnership (“TARH”).

     

    RECITALS:

     

    WHEREAS,
      Foothills Texas, Inc., a Delaware corporation and a wholly owned subsidiary
      of
      the Company (“Sub”), and TARH executed that certain Purchase and Sale Agreement,
      dated as of June 21, 2006, (the “Purchase
      and Sale Agreement”),
      whereby Sub has agreed to purchase (the “Acquisition”)
      from
      TARH all of TARH’s right, title and interest in certain Properties (as defined
      in the Purchase and Sale Agreement).

     

    WHEREAS,
      the Acquisition is expected to close on
      or
      before September 30, 2006, or at such other time and place as the parties to
      the
      Purchase and Sale Agreement may agree (the “Closing
      Date”);
      

     

    WHEREAS,
      as consideration for the purchase the Properties, Sub agreed in the Purchase
      and
      Sale Agreement, among other consideration, to deliver to TARH 1,605,345 shares
      (the “Registrable
      Securities”)
      of the
      Company’s common stock, par value $0.001 per share (the “Common
      Stock”);

     

    WHEREAS,
      as a condition to the Purchase and Sale Agreement, the Company has agreed to
      provide TARH with certain registration rights related to the Registrable
      Securities that will be issued to TARH on the Closing Date on the terms set
      forth herein; and 

     

    WHEREAS,
      pursuant to certain Subscription and Registration Rights Agreements among the
      Company and the purchasers signatory thereto dated April 6, 2006 and April
      20,
      2006, the Company is obligated to file a registration statement to register
      for
      resale the securities (the “PPO
      Securities”)
      sold to
      investors in the private placement offering consummated in connection with
      the
      Company’s reverse merger transaction (the “Private
      Placement Offering”).

     

    NOW,
      THEREFORE, in consideration of the mutual promises, representations, warranties,
      covenants, and conditions set forth herein, the parties mutually agree as
      follows:

     

    1. Certain
      Definitions.
      As used
      in this Agreement, the following terms shall have the following respective
      meanings:

     

    “Acquisition”
shall
      have the meaning set forth in the Recitals.

     

    “Agreement”
shall
      have the meaning set forth in the introductory paragraph hereto. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    “Approved
      Market”
means
      the NASD Over-The-Counter Bulletin Board, the NASDAQ National Market, the NASDAQ
      Capital Market, the New York Stock Exchange, Inc.
      or
      the
      American Stock Exchange, Inc.

     

    “Blackout
      Period”
means,
      with respect to a registration, a period, in each case commencing on the day
      immediately after the Company notifies TARH that it is required, pursuant to
      Section 4(f), to suspend offers and sales of Registrable Securities during
      which
      the Company, in the good faith judgment of its board of directors, determines
      (because of the existence of, or in anticipation of, any material acquisition,
      financing activity, or other transaction involving the Company, or the
      unavailability for reasons beyond the Company’s control of any required
      financial statements, disclosure of information which is in its best interest
      not to publicly disclose, or any other event or condition of similar
      significance to the Company) that the Registration and distribution of the
      Registrable Securities to be covered by such Registration Statement, if any,
      would be seriously detrimental to the Company and its stockholders and ending
      on
      the earlier of (a) the date upon which the material non-public information
      commencing the Blackout Period is disclosed to the public or ceases to be
      material and (b) such time as the Company notifies TARH that the Company will
      no
      longer delay such filing of the Registration Statement, but in no event for
      more
      than ninety (90) days, recommence taking steps to make such Registration
      Statement effective, or allow sales pursuant to such Registration Statement
      to
      resume. 

     

    “Business
      Day”
means
      any day of the year, other than a Saturday, Sunday, or other day on which the
      Commission is required or authorized to close.

     

    “Closing
      Date”
shall
      have the meaning set forth in the Recitals.

     

    “Commission”
means
      the Securities and Exchange Commission or any other federal agency at the time
      administering the Securities Act.

     

    “Common
      Stock”
shall
      have the meaning set forth in the Recitals. 

     

    “Company”
shall
      have the meaning set forth in the introductory paragraph hereto. 

     

    “Effective
      Date”
shall
      have the meaning set forth in the introductory paragraph hereto. 

     

    “Effectiveness
      Period”
shall
      have the meaning set forth in Section 4(a). 

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      of the Commission promulgated thereunder.

     

    “Holder”
means
      TARH or any of TARH’s respective successors and Permitted Assignees who acquire
      rights in accordance with this Agreement with respect to the Registrable
      Securities directly or indirectly from TARH or from any Permitted
      Assignee.

     

    “Permitted
      Assignee”
means
      any of the partners or former partners of TARH as set forth in Schedule 1
      attached hereto, or an entity that is controlled by, controls, or is under
      common control with TARH.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

     

    “PPO
      Securities”
shall
      have the meaning set forth in the Recitals. 

     

    “Private
      Placement Offering”
shall
      have the meaning set forth in the Recitals.

     

    “Purchase
      and Sale Agreement”
shall
      have the meaning set forth in the Recitals.

     

    “Registrable
      Securities”
means
      the 1,605,345 shares of Common Stock issued to TARH in connection with the
      Acquisition, and any shares of Common Stock issued with respect to such shares
      of Common Stock pursuant to a stock split, stock dividend or similar corporate
      event, but excluding (a) any Registrable Securities that have been publicly
      sold
      or may be sold immediately without registration under the Securities Act either
      pursuant to Rule 144 of the Securities Act or otherwise, (b) any Registrable
      Securities sold by TARH in a transaction pursuant to a registration statement
      filed under the Securities Act or (c) any Registrable Securities that are at
      the
      time subject to an effective registration statement under the Securities
      Act.

     

    “Registration”
means
      a
      registration of Common Stock effected by preparing and filing a registration
      statement in compliance with the Securities Act, and the declaration or ordering
      of the effectiveness of such registration statement. The terms “Register”
and
      “Registered”
shall
      have corollary meanings to “Registration” throughout this Agreement.

     

    “Registration
      Filing Date”
shall
      have the meaning set forth in Section 3(a).

     

    “Registration
      Statement”
means
      the registration statement that the Company is required to file pursuant to
      this
      Agreement to Register the Registrable Securities.

     

    “Rule
      144”
means
      Rule 144 promulgated by the Commission under the Securities Act.

     

    “Rule
      144A”
means
      Rule 144A promulgated by the Commission under the Securities Act.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, or any similar federal statute
      promulgated in replacement thereof, and the rules and regulations of the
      Commission thereunder, all as the same shall be in effect at the
      time.

     

    “Sub”
shall
      have the meaning set forth in the Recitals.

     

    “TARH”
shall
      have the meaning set forth in the introductory paragraph hereto.

     

    “Trading
      Day”
means
      any day on which the national securities exchange, the NASDAQ Capital Market,
      the NASDAQ National Market, the NASD Over the Counter Bulletin Board or such
      other securities market or quotation system, which at the time constitutes
      the
      principal securities market for the Common Stock, is open for general trading
      of
      securities.

     

    2. Term.
      This
      Agreement shall continue in full force and effect until the later of (i) a
      period of two years from the Effective Date, and (ii) until the Company is
      no longer required hereunder to keep a Registration Statement with respect
      to
      the Registrable Securities effective under the Securities Act, unless terminated
      sooner hereunder. Notwithstanding the foregoing, the provisions of Sections
      9,
      10 and 11 shall survive any termination of this Agreement. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

     

    3.
       Mandatory
      and Piggy Back Registration.

     

    (a) Mandatory
      Registration on Form SB-2.
      As
      promptly as reasonably practicable after the Closing Date, but in any event
      not
      later than 90 days after the Closing Date (the “Registration
      Filing Date”),
      the
      Company shall file with the Commission a Registration Statement on Form SB-2,
      or
      other applicable form, relating to the resale by the Holders of all of the
      Registrable Securities. In the event that, as of the Registration Filing Date,
      the Company has not undertaken an obligation to register some or all of the
      PPO
      Securities, the Registration Filing Date shall be a date no later than 150
      days
      following the Company’s issuance of Registrable Securities to TARH. The Company
      shall use its commercially reasonable best efforts to cause the Registration
      Statement filed as to the Registrable Securities to be declared effective within
      120 days after the Registration Filing Date if such Registration Statement
      is
      not reviewed by the Commission and within 150 days if the Commission reviews
      such Registration Statement, in accordance with the provisions of Section 4
      hereof. In addition to the foregoing, the Company undertakes to use commercially
      reasonable efforts to include the Registrable Securities in the registration
      statement registering the PPO Securities.

     

    (b) Obligation
      to Re-file or Supplement.
      If the
      Company should fail to maintain the effectiveness of the Registration Statement
      registering for resale the Registrable Securities during the Effectiveness
      Period, or upon the Company’s provision of notice to the Holders of the
      happening of any event of the kind described in Section 4(f) and/or the
      commencement of a Blackout Period, and such Holder’s discontinuance, pursuant to
      Section 5, of the disposition of Registrable Securities registered under such
      Registration Statement, the Company shall use its commercially reasonable best
      efforts, as soon as reasonably practicable but in no event later than sixty
      (60)
      days, to take all steps necessary to cause a Registration Statement registering
      the Registrable Securities to be filed with the Commission and become effective
      for the public resale of the Registrable Securities by the Holders (and
      otherwise complying with the provisions of this Agreement), and the
      Effectiveness Period shall be extended for any such period during which such
      effectiveness was not maintained and/or any period during which such Holder
      was
      required to discontinue such disposition of Registrable Securities.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

     

    (c) Piggyback
      Registration.
      If at
      any time any Registrable Securities are not able to be resold pursuant to an
      effective registration statement, and the Company proposes to register any
      of
      its Common Stock under the Securities Act, whether as a result of an offering
      for its own account or the account of others (but excluding any registrations
      to
      be effected on Forms S-4 or S-8 or other applicable successor Forms), the
      Company shall, each such time, give to the Holders twenty (20) days’ prior
      written notice of its intent to do so, and such notice shall describe the
      proposed registration and shall offer such Holders the opportunity to register
      such number of Registrable Securities as each such Holder may request. Upon
      the
      written request of any Holder given to the Company within twenty (20) days
      after
      the receipt of any such notice by the Company, the Company shall include in
      such
      registration statement all or part of the Registrable Securities of such Holder,
      to the extent requested to be registered. If a registration pursuant to Section
      3(c) hereof involves an underwritten offering and the managing underwriter
      shall
      advise the Company in writing that, in its opinion, the number of shares of
      Common Stock requested by the Holders to be included in such registration is
      likely to affect materially and adversely the success of the offering or the
      price that would be received for any shares of Common Stock offered in such
      offering, then, notwithstanding anything in Section 3(c) to the contrary, the
      Company shall only be required to include in such registration, to the extent
      of
      the number of shares of Common Stock which the Company is so advised can be
      sold
      in such offering, (i)
      first, the number of shares of Common Stock requested to be included in such
      registration for the account of any stockholders of the Company (including
      the
      Holders), pro rata among such stockholders on the basis of the number of shares
      of Common Stock that each of them has requested to be included in such
      registration, and (ii) second, any shares of Common Stock proposed to be
      included in such registration for the account of the Company.
      In
      connection with any offering involving an underwriting of shares, the Company
      shall not be required under this Section 3(c) or otherwise to include the
      Registrable Securities of any Holder therein unless such Holder accepts and
      agrees to the terms of the underwriting, which shall be reasonable and
      customary, as agreed upon between the Company and the underwriters selected
      by
      the Company.

     

    4. Registration
      Procedures.
      The
      Company will keep each Holder reasonably advised as to the filing and
      effectiveness of the Registration Statement. At its expense with respect to
      the
      Registration Statement, the Company will:

     

    (a) prepare
      and file with the Commission with respect to the Registrable Securities, a
      Registration Statement on Form SB-2, or any other form for which the Company
      then qualifies or which counsel for the Company shall deem appropriate and
      which
      form shall be available for the sale of the Registrable Securities in accordance
      with the intended methods of distribution thereof, and use its commercially
      reasonable efforts to cause such Registration Statement to become and remain
      effective for a period of two years or for such shorter period ending on the
      earlier to occur of (i) the sale of all Registrable Securities and (ii) the
      availability under Rule 144(k) for the Holder to sell the Registrable Securities
      (in either case, the “Effectiveness
      Period”);

     

    (b) if
      a
      Registration Statement is subject to review by the Commission, promptly respond
      to all comments and diligently pursue resolution of any comments to the
      satisfaction of the Commission;

     

    (c) prepare
      and file with the Commission such amendments and supplements to such
      Registration Statement and the prospectus used in connection therewith as may
      be
      necessary to keep such Registration Statement effective during the Effectiveness
      Period;

     

    (d) furnish,
      without charge, to each Holder of Registrable Securities covered by such
      Registration Statement (i) a reasonable number of copies of such Registration
      Statement (including any exhibits thereto other than exhibits incorporated
      by
      reference), each amendment and supplement thereto as such Holder may reasonably
      request, (ii) such number of copies of the prospectus included in such
      Registration Statement (including each preliminary prospectus and any other
      prospectus filed under Rule 424 under the Securities Act) as such Holders may
      reasonably request, in conformity with the requirements of the Securities Act,
      and (iii) such other documents as such Holder may require to consummate the
      disposition of the Registrable Securities owned by such Holder, but only during
      the Effectiveness Period;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

     

    (e) use
      its
      commercially reasonable best efforts to Register or qualify such Registration
      under such other applicable securities or blue sky laws of such jurisdictions
      as
      any Holder of Registrable Securities covered by such Registration Statement
      reasonably requests and as may be necessary for the marketability of the
      Registrable Securities (such request to be made by the time the applicable
      Registration Statement is deemed effective by the Commission) and do any and
      all
      other acts and things necessary to enable such Holder to consummate the
      disposition in such jurisdictions of the Registrable Securities owned by such
      Holder; provided, however, that the Company shall not be required to (i) qualify
      generally to do business in any jurisdiction where it would not otherwise be
      required to qualify but for this paragraph, (ii) subject itself to taxation
      in
      any such jurisdiction, or (iii) consent to general service of process in any
      such jurisdiction; provided further, that the Company shall use its reasonable
      best efforts to Register or qualify such Registration under the applicable
      securities or blue sky laws of at least those jurisdictions where the Company
      was Registered or qualified under such laws for the Registration of the PPO
      Securities; 

     

    (f) as
      promptly as practicable after becoming aware of such event, notify each Holder
      of Registrable Securities, the disposition of which requires delivery of a
      prospectus relating thereto under the Securities Act, of the happening of any
      event, which comes to the Company’s attention, that will after the occurrence of
      such event cause the prospectus included in such Registration Statement, if
      not
      amended or supplemented, to contain an untrue statement of a material fact
      or an
      omission to state a material fact required to be stated therein or necessary
      to
      make the statements therein not misleading and the Company shall promptly
      thereafter prepare and furnish to such Holder a supplement or amendment to
      such
      prospectus (or prepare and file appropriate reports under the Exchange Act)
      so
      that, as thereafter delivered to the purchasers of such Registrable Securities,
      such prospectus shall not contain an untrue statement of a material fact or
      omit
      to state any material fact required to be stated therein or necessary to make
      the statements therein not misleading, unless suspension of the use of such
      prospectus otherwise is authorized herein or in the event of a Blackout Period,
      in which case no supplement or amendment need be furnished (or Exchange Act
      filing made) until the termination of such suspension or Blackout
      Period;

     

    (g) comply,
      and continue to comply during the Effectiveness Period, in all material respects
      with the Securities Act and the Exchange Act and with all applicable rules
      and
      regulations of the Commission with respect to the disposition of all securities
      covered by such Registration Statement;

     

    (h) as
      promptly as practicable after becoming aware of such event, notify each Holder
      of Registrable Securities being offered or sold pursuant to the Registration
      Statement of the issuance by the Commission of any stop order or other
      suspension of effectiveness of the Registration Statement;

     

    (i) use
      its
      best efforts to cause all the Registrable Securities covered by the Registration
      Statement to be quoted on the NASD Over-The-Counter Bulletin Board or such
      other
      principal securities market on which securities of the same class or series
      issued by the Company are then listed or traded; and

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

     

    (j) provide
      a
      transfer agent and registrar, which may be a single entity, for the shares
      of
      Common Stock at all times.

     

    5. Suspension
      of Offers and Sales.
      Each
      Holder agrees that, upon receipt of any notice from the Company of the happening
      of any event of the kind described in Section 4(f) hereof or of the commencement
      of an Blackout Period, such Holder shall discontinue the disposition of
      Registrable Securities included in the Registration Statement until such
      Holder’s receipt of the copies of the supplemented or amended prospectus
      contemplated by Section 4(f) hereof or notice of the end of the Blackout Period,
      and, if so directed by the Company, such Holder shall deliver to the Company
      (at
      the Company’s expense) all copies (including, without limitation, any and all
      drafts), other than permanent file copies, then in such Holder’s possession, of
      the prospectus covering such Registrable Securities current at the time of
      receipt of such notice.

     

    6. Registration
      Expenses.
      The
      Company shall pay all expenses in connection with any Registration obligation
      provided herein, including, without limitation, all Registration, filing, stock
      exchange fees, printing expenses, all fees and expenses of complying with
      securities or blue sky laws, and the fees and disbursements of counsel for
      the
      Company and of its independent accountants; provided that, in any underwritten
      Registration, each party shall pay for its own underwriting discounts and
      commissions, fees of brokers and similar industry professionals and transfer
      taxes. Except as provided in this Section and Section 9, the Company shall
      not
      be responsible for the expenses of any attorney or other advisor employed by
      a
      Holder.

     

    7. Assignment
      of Rights.
      No
      Holder may assign its rights under this Agreement to any party without the
      prior
      written consent of the Company; provided, however, that a Holder may assign
      its
      rights under this Agreement without such consent to a Permitted Assignee as
      long
      as (a) such transfer or assignment is effected in accordance with applicable
      securities laws; (b) such transferee or assignee agrees in writing to
      become subject to the terms of this Agreement; and (c) the Company is given
      written notice by such Holder of such transfer or assignment, stating the name
      and address of the transferee or assignee and identifying the Registrable
      Securities with respect to which such rights are being transferred or
      assigned.

     

    8. Information
      by Holder.
      Holders
      included in any Registration shall furnish to the Company such information
      as
      the Company may from time to time reasonable request in writing regarding such
      Holders and the distribution proposed by such Holders.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

     

    9. Indemnification.

     

    (a) In
      the
      event of the offer and sale of Registrable Securities under the Securities
      Act,
      the Company shall, and hereby does, indemnify and hold harmless, to the fullest
      extent permitted by law, each Holder, its members, directors, officers,
      employees, partners and representatives, and each other person who participates
      as an underwriter in the offering or sale of such securities, and each other
      person, if any, who controls or is under common control with such Holder or
      any
      such underwriter within the meaning of Section 15 of the Securities Act, against
      all expenses, claims, losses, damages or liabilities (or actions in respect
      thereof), including, without limitation, any of the foregoing incurred in
      settlement of any litigation, commenced or threatened, arising out of or based
      on any untrue statement (or alleged untrue statement) of a material fact
      contained in any registration statement, prospectus (including a free writing
      prospectus as defined in Rule 405 of the Securities Act), offering circular
      or
      other document, or any amendment or supplement thereto, incident to any such
      registration, qualification or compliance, or based on any omission (or alleged
      omission) to state therein a material fact required to be stated therein or
      necessary to make the statements therein, in light of the circumstances in
      which
      they were made, not misleading, or any violation (or alleged violation) by
      the
      Company of the Securities Act, the Exchange Act, any state securities law or
      any
      rule or regulation promulgated under any of the foregoing applicable to the
      Company in connection with any such registration, qualification or compliance,
      and the Company shall reimburse each such Holder, each of its officers,
      directors, partners, members and stockholders and each person controlling such
      Holder, each such underwriter and each person who controls any such underwriter,
      for any legal and any other expenses reasonably incurred in connection with
      investigating, preparing or defending any such claim, loss, damage, liability
      or
      action, as such expenses are incurred; provided that the Company shall not
      be
      liable in any such case to the extent that any such loss, claim, damage,
      liability (or action or proceeding in respect thereof) or expense arises out
      of
      or is based upon an untrue statement in or omission from any such registration
      statement, prospectus (including a free writing prospectus as defined in Rule
      405 of the Securities Act), offering circular or other document, or any
      amendment or supplement thereto, in reliance upon and in conformity with written
      information furnished to the Company through an instrument duly executed by
      or
      on behalf of such Holder specifically stating that it is for use in the
      preparation thereof.
      Such
      indemnity shall remain in full force and effect regardless of any investigation
      made by or on behalf of any Holder or any of its members, directors, officers,
      employees, partners, representatives, or controlling persons and shall survive
      the transfer by any Holder of such shares. 

     

    (b) As
      a
      condition to including Registrable Securities in any registration statement
      filed pursuant to this Agreement, each Holder agrees to be bound by the terms
      of
      this Section 9 and to indemnify and hold harmless, to the fullest extent
      permitted by law, the Company, its directors and officers, and each other
      person, if any, who controls the Company within the meaning of Section 15 of
      the
      Securities Act, against
      all claims, losses, damages and liabilities (or actions in respect thereof)
      arising out of or based on any untrue statement (or alleged untrue statement)
      of
      a material fact contained in registration statement, prospectus (including
      a
      free writing prospectus as defined in Rule 405 of the Securities Act), offering
      circular or other document, or any amendment or supplement thereto, or any
      omission (or alleged omission) to state therein a material fact required to
      be
      stated therein or necessary to make the statements therein not misleading,
      or
      that arise out of or based upon any violation (or alleged violation) by such
      Holder of the Securities Act, the Exchange Act, any state securities law or
      any
      rule or regulation promulgated under any of the foregoing applicable to the
      Holder in connection with any such registration, qualification or compliance,
      and will reimburse the Company, such Holders, such directors, officers, persons,
      underwriters or control persons for any legal or any other expenses reasonably
      incurred in connection with investigating or defending any such claim, loss,
      damage, liability or action, as such expenses are incurred, in each case to
      the
      extent, but only to the extent, that such untrue statement (or alleged untrue
      statement) or omission (or alleged omission) is made in such registration
      statement, prospectus (including a free writing prospectus as defined in Rule
      405 of the Securities Act), offering circular or other document, or any
      amendment or supplement thereto, in reliance upon and in conformity with written
      information furnished to the Company by such Holder and stated to be
      specifically for use therein. In no event shall any indemnity under this Section
      9(b) (aggregated with any amounts paid in contribution pursuant to
      Section 9(e)) exceed the net proceeds from the offering received by such
      Holder.
      Such
      indemnity shall remain in full force and effect, regardless of any investigation
      made by or on behalf of the Company or any such director, officer or controlling
      person and shall survive the transfer by any Holder of such shares.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

     

    (c) Promptly
      after receipt by an indemnified party of notice of the commencement of any
      action or proceeding involving a claim referred to in this Section (including
      any governmental action), such indemnified party shall, if a claim in respect
      thereof is to be made against an indemnifying party, give written notice to
      the
      indemnifying party of the commencement of such action; provided that the failure
      of any indemnified party to give notice as provided herein shall not relieve
      the
      indemnifying party of its obligations under this Section, except to the extent
      that the indemnifying parry is actually prejudiced by such failure to give
      notice. In case any such action is brought against an indemnified party, unless
      in the reasonable judgment of counsel to such indemnified party a conflict
      of
      interest between such indemnified and indemnifying parties may exist or the
      indemnified party may have defenses not available to the indemnifying party
      in
      respect of such claim, the indemnifying party shall be entitled to participate
      in and to assume the defense thereof, with counsel reasonably satisfactory
      to
      such indemnified party and, after notice from the indemnifying party to such
      indemnified parry of its election so to assume the defense thereof, the
      indemnifying party shall not be liable to such indemnified party for any legal
      or other expenses subsequently incurred by the latter in connection with the
      defense thereof, unless in such indemnified party’s reasonable judgment a
      conflict of interest between such indemnified and indemnifying parties arises
      in
      respect of such claim after the assumption of the defenses thereof or the
      indemnifying party fails to defend such claim in a diligent manner, other than
      reasonable costs of investigation. Neither an indemnified nor an indemnifying
      party shall be liable for any settlement of any action or proceeding effected
      without its consent. No indemnifying party shall, without the consent of the
      indemnified party, consent to entry of any judgment or enter into any
      settlement, which does not include as an unconditional term thereof the giving
      by the claimant or plaintiff to such indemnified party of a release from all
      liability in respect of such claim or litigation. Notwithstanding anything
      to
      the contrary set forth herein, and without limiting any of the rights set forth
      above, in any event any party shall have the right to retain, at its own
      expense, counsel with respect to the defense of a claim.

     

    (d) In
      the
      event that an indemnifying party does or is not permitted to assume the defense
      of an action pursuant to Sections 9(c) or in the case of the expense
      reimbursement obligation set forth in Sections 9(a) and (b), the indemnification
      required by Sections 9(a) and (b) hereof shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills received or expenses, losses, damages, or liabilities are
      incurred.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

     

    (e) If
      the
      indemnification provided for in this Section is held by a court of competent
      jurisdiction to be unavailable to an indemnified party with respect to any
      loss,
      liability, claim, damage or expense referred to herein, the indemnifying party,
      in lieu of indemnifying such indemnified party hereunder, shall (i) contribute
      to the amount paid or payable by such indemnified party as a result of such
      loss, liability, claim, damage or expense as is appropriate to reflect the
      proportionate relative fault of the indemnifying party on the one hand and
      the
      indemnified party on the other (determined by reference to, among other things,
      whether the untrue or alleged untrue statement of a material fact or omission
      relates to information supplied by the indemnifying party or the indemnified
      party and the parties’ relative intent, knowledge, access to information and
      opportunity to correct or prevent such untrue statement or omission), or (ii)
      if
      the allocation provided by clause (i) above is not permitted by applicable
      law
      or provides a lesser sum to the indemnified party than the amount hereinafter
      calculated, not only the proportionate relative fault of the indemnifying party
      and the indemnified party, but also the relative benefits received by the
      indemnifying party on the one hand and the indemnified party on the other,
      as
      well as any other relevant equitable considerations. No indemnified party guilty
      of fraudulent misrepresentation (within the meaning of Section 11(f) of the
      Securities Act) shall be entitled to contribution from any indemnifying party
      who was not guilty of such fraudulent misrepresentation.

     

    10. Rule
      144.
      Until
      the shorter of (a) 24 months following the Closing Date and (b) the day the
      Holders no longer own any Registrable Securities, the Company will use its
      commercially reasonable best efforts to timely file all reports required to
      be
      filed by the Company after the date hereof under the Securities Act and the
      Exchange Act and the rules and regulations adopted by the Commission thereunder,
      and if the Company is not required to file reports pursuant to such sections,
      it
      will prepare and furnish to the Holders and make publicly available in
      accordance with Rule 144(c) such information as is required for the Holders
      to
      sell shares of Common Stock under Rule 144.

     

    11. Miscellaneous.

     

    (a) Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York and the United States of America, both substantive and
      remedial, without regard to any choice or conflict of law principles thereof.
      Any judicial proceeding brought against either of the parties to this agreement
      or any dispute arising out of this Agreement or any matter related hereto shall
      be brought in the courts of the State of New York, New York County, or in the
      United States District Court for the Southern District of New York and, by
      its
      execution and delivery of this agreement, each party to this Agreement accepts
      the jurisdiction of such courts. The foregoing consent to jurisdiction shall
      not
      be deemed to confer rights on any person other than the parties to this
      Agreement.

     

    (b) Successors
      and Assigns.
      Except
      as otherwise provided herein, the provisions hereof shall inure to the benefit
      of, and be binding upon, the successors, Permitted Assigns, executors and
      administrators of the parties hereto. In the event the Company merges with,
      or
      is otherwise acquired by, a direct or indirect subsidiary of a publicly traded
      company, the Company shall condition the merger or acquisition on the assumption
      by such parent company of the Company’s obligations under this
      Agreement.

     

    (c) Entire
      Agreement.
      This
      Agreement constitutes the full and entire understanding and agreement between
      the parties with regard to the subject matter hereof.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

     

    (d) Notices,
      etc.
      All
      notices or other communications which are required or permitted under this
      Agreement shall be in writing and sufficient if delivered by hand, by facsimile
      transmission, by registered or certified mail, postage pre-paid, by electronic
      mail, or by courier or overnight carrier, to the persons at the addresses set
      forth below (or at such other address as may be provided hereunder), and shall
      be deemed to have been delivered as of the date so delivered:

     

    If
      to the
      Company to:

     

    Foothills
      Resources, Inc.

    4540
      California Avenue, Suite 550

    Bakersfield,
      California 93309

    Phone:
      (661) 716-1320

     

    Fax: (661)
      716-1340

     

    with
      copy to:

     

    McGuireWoods
      LLP

    1345
      Avenue of the Americas

    New
      York,
      New York 10105

    Attn:
      Louis W. Zehil

    Phone:
      (212) 548-2138

     

    Fax: (212)
      548-2175

     

    If
      to
      TARH:

     

    TARH
      E&P Holdings, LP

    98
      San
      Jacinto Blvd., Suite 800

    Austin,
      Texas 78701

    Attn:
      David E. Honeycutt, President

    Phone:
      (512) 480-8700

    Fax:
       (512)
      480-8732

    

     

    or
      at
      such other address as any party shall have furnished to the other parties in
      writing.

     

    (e) Delays
      or Omissions.
      No
      delay or omission to exercise any right, power or remedy accruing to any Holder,
      upon any breach or default of the Company under this Agreement, shall impair
      any
      such right, power or remedy of such Holder nor shall it be construed to be
      a
      waiver of any such breach or default, or an acquiescence therein, or of or
      in
      any similar breach or default thereunder occurring; nor shall any waiver of
      any
      single breach or default be deemed a waiver of any other breach or default
      theretofore or thereafter occurring. Any waiver, permit, consent or approval
      of
      any kind or character on the part of any Holder of any breach or default under
      this Agreement, or any waiver on the part of any Holder of any provisions or
      conditions of this Agreement, must be in writing and shall be effective only
      to
      the extent specifically set forth in such writing. All remedies, either under
      this Agreement, or by law or otherwise afforded to any holder, shall be
      cumulative and not alternative.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

     

    (f) Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      enforceable against the parties actually executing such counterparts, and all
      of
      which together shall constitute one instrument. In the event that any signature
      is delivered by facsimile transmission, 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 signature page
      were an original thereof.

     

    (g) Severability.
      In the
      case any provision of this Agreement shall be invalid, illegal or unenforceable,
      the validity, legality and enforceability of the remaining provisions shall
      not
      in any way be affected or impaired thereby.

     

    (h) Amendments.
      The
      provisions of this Agreement may be amended at any time and from time to time,
      and particular provisions of this Agreement may be waived, with and only with
      an
      agreement or consent in writing signed by the Company. 

     

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    This
      Registration Rights Agreement is hereby executed as of the date first above
      written.

     

    

     

    

      
        	 	
                FOOTHILLS
                  RESOURCES, INC.

              
	 	
                 

              
	 	 
	 	
                 

              
	 	
                By: 
                  /s/ Dennis
                  B.
                  Tower                   
                  

              
	 	
                Name: Dennis
                  B. Tower

              
	 	
                Its:
                   Chief
                  Executive Officer

              
	 	
                 

              
	 	 
	 	 
	 	 
	 	
                TARH
                  E&P HOLDINGS, L.P.

              
	 	
                 

              
	 	 
	 	
                 

              
	 	
                By: 
                  /s/ David
                  E.
                  Honeycutt              

              
	 	
                Name: David
                  E. Honeycutt

              
	 	
                Its: President

              

      

    

    

    
      
        
        

      

        13

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