EXHIBIT 10.1
 
FORM OF SUBSCRIPTION AGREEMENT
 
THIS SUBSCRIPTION AGREEMENT (the “Agreement”) is made as of this ___ day of
April, 2006, by and among Foothills Resources, Inc., a Nevada corporation (the
“Company”), Brasada California, Inc., a Delaware corporation (“Brasada”) and the
investor identified on the signature page to this Agreement (the “Investor”).
 
RECITALS:
 
WHEREAS, the Company and Brasada have executed a Term Sheet, by which they have
agreed to enter into an Agreement and Plan of Merger and Reorganization,
pursuant to which Brasada Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of the Company, will merge with and into Brasada, with
Brasada being the surviving entity and a wholly-owned subsidiary of the Company
(the “Merger”), upon the effective date of the Merger (the “Merger Effective
Date”);
 
WHEREAS, as a condition to the consummation of the Merger, and to provide
financing capital required by Brasada for working capital purposes, the Company
is offering pursuant to Rule 506 of Regulation D of the Securities Act of 1933,
as amended (the “Securities Act”), to accredited investors in a private
placement transaction (the “Offering”), up to 10,000,000 units (“Units”)
consisting of one share of the Company’s common stock, par value $0.001 per
share (“Common Stock”) and a warrant (the “Investor Warrants”) to purchase 0.75
shares of Common Stock for five years at the exercise price of $1.00 per share
of Common Stock;
 
WHEREAS, to the extent that all 10,000,000 Units are sold, the Company will have
the option to sell up to an additional 2,000,000 Units in the Offering;
 
WHEREAS, in addition to the Offering, the Company intends to offer and sell, to
accredited investors in a private transaction, debentures of the Company (the
“Debenture Sale”), which debentures shall bear interest at the rate of nine
percent (9%) per annum for a three-year term, and which are payable in
consecutive monthly installments of principal and interest commencing 120 days
from issuance (the “Debentures”), and which shall convert, into such number of
Units as to their outstanding principal at a conversion price equal to the price
per Unit in the Offering, upon the simultaneous closing of the Merger and the
Offering;

WHEREAS, the Investor desires to subscribe for, purchase and acquire from the
Company and the Company desires to sell and issue to the Investor the number of
Units, set forth on the signature page of this Agreement (the “Investor’s
Units”) upon the terms and conditions and subject to the provisions hereinafter
set forth;
 
WHEREAS, in connection with the purchase of the Investor’s Units, the Company
and the Investor will execute a Registration Rights Agreement dated as of the
same date as this Agreement pursuant to which the Company will provide certain
registration rights to the Investor (the “Registration Rights Agreement”); and
 
WHEREAS, The Company, Brasada and McGuireWoods, LLP (the “Escrow Agent”) have
entered into an Escrow Agreement (the “Escrow Agreement”) to provide for the
safekeeping of funds received and documents executed in connection with the
Offering.
 
 
 

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NOW, THEREFORE, for and in consideration of the mutual premises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
 
1. Purchase and Sale of the Units. Subject to the terms and conditions of this
Agreement and the satisfaction of the Closing Conditions, the Investor
subscribes for and agrees to purchase and acquire from the Company and the
Company agrees to sell and issue to the Investor the Investor’s Units at the
purchase price of $0.70 per Unit (the “Purchase Price”).
 
2. The Closing. The Offering will terminate on the receipt of acceptable
subscriptions representing 10,000,000 Units (the “Termination Date”) and will
close on the same date as the closing of the Merger (the “Closing Date”) at the
offices of the Escrow Agent. On the Closing Date, the Escrow Agent shall deliver
the funds and Transaction Documents (as defined herein) held in escrow as of the
Closing Date pursuant to the terms of the Escrow Agreement. As soon as
practicable after the Closing Date, the Company shall issue and deliver, or
shall cause the issuance and delivery of, a stock certificate, registered in the
name of the Investor and representing the shares of Common Stock underlying the
Investor’s Units and an Investor Warrant registered in the name of the Investor
representing the Investor’s right to purchase the number of shares of Common
Stock underlying the Investor’s Warrant.
 
3. Subscription Procedure. To complete a subscription for Units, the Investor
must fully comply with the subscription procedure provided in this Section on or
before 5:00 p.m. eastern time on the Termination Date.
 
(a) Transaction Documents. Prior to 5:00 p.m. eastern time on the Termination
Date, the Investor shall review, complete and execute this Agreement, the
Investor Questionnaire attached hereto as Appendix A and the Registration Rights
Agreement, and deliver such agreements and questionnaire to the Escrow Agent at
the address provided below. Executed agreements and questionnaires may be
delivered to the Escrow Agent by facsimile using the facsimile number provided
below if the Investor immediately thereafter confirms receipt of such
transmission with the Escrow Agent and delivers the original copies of the
agreements and questionnaire to the Escrow Agent as soon as practicable
thereafter.
 
Escrow Agent - Mailing Address and Facsimile Number:

McGuireWoods LLP
77 West Wacker Drive, Suite 4100
Chicago, Illinois 60601
Facsimile Number: (312) 920-7236
Attention: Thomas Horenkamp
Telephone Number: (312) 849-8184

(b) Purchase Price. Simultaneously with the delivery of the Transaction
Documents to the Escrow Agent as provided herein, and in any event on or prior
to 5:00 p.m. eastern time on the Termination Date, the Investor shall deliver to
the Escrow Agent the full Purchase Price for the Investor’s Units by wire
transfer of immediately available funds pursuant to wire transfer instructions
provided below:
 
Escrow Agent - Wire Transfer Instructions:

BANK OF AMERICA - Jacksonville, FL
ABA: 026009593 (Domestic Wires)
Swift Code: BOFAUS3N (International Wires)
Credit: McGuireWoods LLP IOLTA Account
Account Number: 2101206537
Reference: Louis Zehil - Brasada California, Inc. Escrow - 2047495-0001
 
 
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McGuireWoods Accounting Contact: Julie Aaron (804) 775-1224
Bank Contact: Patrick Comia (888) 841-8159, Opt. 2, Ext. 2160

(c) Purchaser Representative. If the Investor has retained the services of a
purchaser representative to assist in evaluating the merits and risks associated
with investing in the Units, the Investor must deliver along with the
Transaction Documents a purchaser representative certificate in a form
acceptable to the Company.
 
4. Representations and Warranties of the Company and Brasada. In order to induce
the Investor to enter into this Agreement, the Company and, as applicable,
Brasada represent and warrant to the Investor the following:
 
(a) Authority. The Company and Brasada each is a corporation duly organized,
validly existing, and in good standing under the laws of the state in which it
was incorporated or otherwise formed, and has all requisite right, power, and
authority to execute, deliver and perform this Agreement.
 
(b) Subsidiaries. The Company has no direct or indirect subsidiaries (each a
“Subsidiary” and collectively the “Subsidiaries”) other than those set forth in
the Exchange Act Documents (as defined in Section 3(f)), or as are necessary or
desirable to consummate the Merger and the transactions contemplated in the
Merger Agreement. Except as disclosed in the Exchange Act Documents, the Company
owns, directly or indirectly, all of the capital stock of each Subsidiary free
and clear of any and all liens, and all the issued and outstanding shares of
capital stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.
 
(c) Enforceability. The execution, delivery, and performance of this Agreement
by the Company have been duly authorized by all requisite corporate action. This
Agreement has been duly executed and delivered by each of the Company and
Brasada, and, upon its execution by the Investor, shall constitute the legal,
valid, and binding obligation of each of the Company and Brasada, enforceable in
accordance with its terms, except to the extent that its enforceability is
limited by bankruptcy, insolvency, reorganization, or other laws relating to or
affecting the enforcement of creditors’ rights generally and by general
principles of equity.
 
(d) No Violations. The execution, delivery, and performance of this Agreement by
the Company or by Brasada does not, and will not, violate or conflict with any
provision of the Company’s or Brasada’s respective Certificate of Incorporation
or Bylaws, or other charter documents, and does not and will not, with or
without the passage of time or the giving of notice, result in the breach of, or
constitute a default, cause the acceleration of performance, or require any
consent under, or result in the creation of any lien, charge or encumbrance upon
any property or assets of the Company, or as applicable of Brasada, pursuant to,
any material instrument or agreement to which the Company, or Brasada, is a
party or by which the Company, or Brasada, or its properties are bound.
 
(e) Capitalization. The authorized capital stock of the Company consists of:
100,000,000 shares of Common Stock, of which as of September 30, 2005,
39,356,189 shares were issued and outstanding, and 10,000,000 shares of
preferred stock, par value $0.001 per share, of which as of September 30, 2005
no shares were issued and outstanding. Upon issuance in accordance with the
terms of this Agreement against payment of the Purchase Price therefore, the
shares of Common Stock underlying the Investor’s Units will be duly and validly
issued, fully paid, and nonassessable and free and clear of all liens imposed by
or through the Company, and, assuming the accuracy of the representations and
warranties of the Investor and all other purchasers of Units in the Offering,
will be issued in accordance with a valid exemption from the registration or
qualification provisions of the Securities Act, and any applicable state
securities laws (the “State Acts”).
 
 
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(f) Exchange Act Filing. Other than with respect to the quarterly report on Form
10-QSB for the three months ended March 31, 2005, during the 12 calendar months
immediately preceding the date of this Agreement, all reports and statements
required to be filed by the Company with the Securities and Exchange Commission
(the “Commission”) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the rules and regulations thereunder, have been timely
filed. Such filings, together with all documents incorporated by reference
therein, are referred to as “Exchange Act Documents.” Each Exchange Act
Document, as amended, conformed in all material respects to the requirements of
the Exchange Act and the rules and regulations thereunder, and no Exchange Act
Document, as amended, at the time each such document was filed, included any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
 
(g) Company Financial Statements. The audited financial statements, together
with the related notes of the Company at December 31, 2004, included in the
Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31,
2004 as filed with the Commission, and the unaudited financial statements of the
Company at September 30, 2005, for the nine months then ended, (collectively,
the “Company Financial Statements”) included in the Company’s Quarterly Report
on Form 10-QSB, fairly present in all material respects, on the basis stated
therein and on the date thereof, the financial position of the Company at the
respective dates therein specified and its results of operations and cash flows
for the periods then ended (provided that the unaudited financial statements are
subject to normal year-end audit adjustments and lack footnotes and other
presentation items). Such statements and related notes have been prepared in
accordance with generally accepted accounting principles in the United States
applied on a consistent basis except as expressly noted therein.
 
(h) No Material Liabilities. Except for liabilities or obligations not
individually in excess of $100,000, and as set forth in the Exchange Act
Documents, since September 30, 2005, the Company has not incurred any material
liabilities or obligations, direct or contingent, except in the ordinary course
of business and except for liabilities or obligations reflected or reserved
against on the Company’s balance sheet as of September 30, 2005, and there has
not been any change, or to the knowledge of the Company, development or effect
(individually or in the aggregate) that is or is reasonably likely to be,
materially adverse to the condition (financial or otherwise), business,
prospects, or results of operations of the Company and the Subsidiaries
considered as a whole (a “Material Adverse Effect”) or any change in the capital
or material increase in the long-term debt of the Company, nor has the Company
declared, paid, or made any dividend or distribution of any kind on its capital
stock.
 
(i) No Disputes Against Company. There is no material pending or, to the
knowledge of the Company, threatened (i) action, suit, claim, proceeding, or
investigation against the Company, at law or in equity, or before or by any
Federal, state, municipal, or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, (ii) arbitration
proceeding against the Company, (iii) governmental inquiry against the Company
or (iv) any action or suit by or on behalf of the Company pending or threatened
against others.
 
(j) Approvals. The execution, delivery, and performance by the Company of this
Agreement and the offer and sale of the Shares require no consent of, action by
or in respect of, or filing with, any person, governmental body, agency, or
official other than those consents that have been obtained prior to the Closing
and those filings required to be made pursuant to the Securities Act and any
State Acts which the Company undertakes to file within the applicable time
period.
 
 
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(k) Compliance. Neither the Company nor Brasada, nor any their respective
Subsidiaries, (i) is in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company nor Brasada, or any of their respective
Subsidiaries under), nor has the Company nor Brasada, or any of their respective
Subsidiaries received notice of a claim that it is in default under or that it
is in violation of, any indenture, loan or credit agreement, or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any order of any Court, arbitrator, or governmental body
or (iii) is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect. The Company is in compliance
with the applicable requirements of the Sarbanes-Oxley Act of 2002, as amended,
and the rules and regulations thereunder, except where such noncompliance could
not have or reasonably be expected to result in a Material Adverse Effect.
 
(l) Patents and Trademarks. The Company and Brasada, or any of their respective
Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
licenses, and other similar rights that are necessary or material for use in
connection with their respective businesses as described in the Exchange Act
Documents and which the failure to so have could, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). Neither the Company nor
Brasada, or any of their respective Subsidiaries, has received a written notice
that the Intellectual Property Rights used by the Company or Brasada, or any of
their respective Subsidiaries, violates or infringes upon the rights of any
person. Except as set forth in the Exchange Act Documents, to the knowledge of
the Company, all such Intellectual Property Rights are enforceable and there is
no existing infringement by another person of any of the Intellectual Property
Rights, except where such infringement could not have or reasonably be expected
to result in a Material Adverse Effect.
 
(m) Transactions With Affiliates and Employees. Except as set forth in the
Exchange Act Documents, none of the officers or directors of the Company and, to
the knowledge of the Company, none of the employees of the Company is presently
a party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers, and directors), including any contract,
agreement, or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director, or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee, or
partner.
 
(n) Internal Accounting Controls. The Company and the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that material information relating to the Company and its Subsidiaries
is made known to the Company’s certifying officers by others within those
entities, particularly during the period in which the Company’s Form 10-KSB or
10-QSB, as the case may be, are being prepared. The Company’s certifying
officers have evaluated the effectiveness of the Company’s controls and
procedures as of the end of the reporting period covered by the Company’s Form
10-KSB and each of the Company’s Forms 10-QSB filed with the Commission (each
such date, the “Evaluation Date”) and presented in each such report their
conclusions about the effectiveness of the Company’s disclosure controls and
procedures based on their evaluations as of the applicable Evaluation Date.
Since the Evaluation Date of the Company’s most recently filed Form 10-KSB or
Form 10-QSB, there have been no significant changes in the Company’s disclosure
controls and procedures, the Company’s internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) or 15d-15(f) or, to the Company’s
knowledge, in other factors that could significantly affect the Company’s
internal controls over financial reporting.
 
 
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(o) Solvency. Based on the financial condition of the Company as of the Closing
Date (and assuming that the Closing shall have occurred), (i) the Company’s fair
saleable value of its assets exceeds the amount that will be required to be paid
on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature; (ii) the Company’s
assets do not constitute unreasonably small capital to carry on its business for
the current fiscal year as now conducted and as proposed to be conducted
including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).
 
(p) Certain Fees. Other than those finder’s fees payable in shares of common
stock of the Company on the closing of the Offering and the cash commission
payable on the closing as indicated in the Confidential Private Placement
Memorandum provided to Investor in connection with the Offering, no brokerage or
finder’s fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank, or other person with respect to the transactions contemplated by
this Agreement. The Investor shall have no obligation with respect to any claims
(other than such fees or commissions owed by an Investor pursuant to written
agreements executed by the Investor which fees or commissions shall be the sole
responsibility of such Investor) made by or on behalf of other persons for fees
of a type contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement.
 
(q) Certain Registration Matters. Assuming the accuracy of the Investor’s
representations and warranties set forth in this Agreement and the Transaction
Documents and the representations and warranties made by all other purchasers of
Units in the Offering, no registration under the Securities Act is required for
the offer and sale of the Investor’s Units by the Company to the Investor
hereunder.
 
(r) Listing and Maintenance Requirements. Except as specified in the Exchange
Act Documents, the Company has not, in the two years preceding the date hereof,
received notice from any automated dealer quotation system or stock exchange to
the effect that the Company is not in compliance with the listing or maintenance
requirements thereof. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with the listing and
maintenance requirements for continued listing of the Common Stock on the NASD
Over the Counter Bulletin Board.
 
(s) Investment Company. The Company and Brasada are not, and are not an
“affiliate” of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
 
(t) No Additional Agreements. The Company and Brasada do not have any agreement
or understanding with any other purchasers of the Units in the Offering with
respect to the transactions contemplated by this Agreement on terms that differ
substantially from those set forth in this Agreement.
 
 
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(u) Disclosure. The Company and Brasada confirm that neither they nor any person
acting on their behalf has provided the Investor, or its agents or counsel, with
any information that the Company or Brasada believes would constitute material,
non-public information following the announcement of the Closing and the
transactions contemplated thereby. The Company understands and confirms that the
Investor will rely on the foregoing representations and covenants in effecting
transactions in securities of the Company. All disclosure provided to the
Investor regarding the Company and Brasada, their respective businesses and the
transactions contemplated hereby, furnished by or on behalf of the Company or,
as applicable, Brasada (including the Company’s and Brasada’s representations
and warranties set forth in this Agreement) are true and correct and do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
 
5. Representations and Warranties of the Investor. In order to induce the
Company to enter into this Agreement, the Investor represents and warrants to
the Company and Brasada the following:
 
(a) Authority. If a corporation, partnership, limited partnership, limited
liability company, or other form of entity, the Investor is duly organized or
formed, as the case may be, validly existing, and in good standing under the
laws of its jurisdiction of organization or formation, as the case may be. The
Investor has all requisite individual or entity right, power, and authority to
execute, deliver, and perform this Agreement.
 
(b) Enforceability. The execution, delivery, and performance of this Agreement
by the Investor have been duly authorized by all requisite partnership,
corporate or other entity action, as the case may be. This Agreement has been
duly executed and delivered by the Investor, and, upon its execution by the
Company, shall constitute the legal, valid, and binding obligation of the
Investor, enforceable in accordance with its terms, except to the extent that
its enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium, or other laws relating to or affecting the enforcement of creditors’
rights generally and by general principles of equity.
 
(c) No Violations. The execution, delivery, and performance of this Agreement by
the Investor do not and will not, with or without the passage of time or the
giving of notice, result in the breach of, or constitute a default, cause the
acceleration of performance, or require any consent under, or result in the
creation of any lien, charge or encumbrance upon any property or assets of the
Investor pursuant to, any material instrument or agreement to which the Investor
is a party or by which the Investor or its properties may be bound or affected,
and, do not or will not violate or conflict with any provision of the articles
of incorporation or bylaws, partnership agreement, operating agreement, trust
agreement, or similar organizational or governing document of the Investor, as
applicable.
 
(d) Knowledge of Investment and its Risks. The Investor has knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of Investor’s investment in the Units. The Investor understands
that an investment in the Company represents a high degree of risk and there is
no assurance that the Company’s business or operations will be successful. The
Investor has considered carefully the risks attendant to an investment in the
Company, and that, as a consequence of such risks, the Investor could lose
Investor’s entire investment in the Company.
 
(e) Investment Intent. The Investor hereby represents and warrants that (i) the
Investor’s Units are being acquired for investment for the Investor’s own
account, and not as a nominee or agent and not with a view to the resale or
distribution of all or any part of the Investor’s Units, and the Investor has no
present intention of selling, granting any participation in, or otherwise
distributing any of the Investor’s Units within the meaning of the Securities
Act, (ii) the Investor’s Units are being acquired in the ordinary course of the
Investor’s business, and (iii) the Investor does not have any contracts,
understandings, agreements, or arrangements, directly or indirectly, with any
person and/or entity to distribute, sell, transfer, or grant participations to
such person and/or entity with respect to, any of the Investor’s Units. The
Investor is not purchasing the Investor’s Units as a result of any
advertisement, article, notice or other communication regarding the Investor’s
Units published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.
 
 
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(f) Investor Status. The Investor is an “accredited investor” as that term is
defined by Rule 501 of Regulation D promulgated under the Securities Act and the
information provided by the Investor in the Investor Questionnaire, attached
hereto as Appendix A, is truthful, accurate, and complete. The Investor is not
registered as a broker-dealer under Section 15 of the Exchange Act or an
affiliate of such broker-dealer.
 
(g) Disclosure. The Investor has reviewed the information provided to the
Investor by the Company in connection with the Investor’s decision to purchase
the Investor’s Units, including the Company’s Confidential Private Placement
Memorandum distributed in connection with the Offering and the Company’s
publicly available filings with the Commission and the information contained
therein. The Company has provided the Investor with all the information that the
Investor has requested in connection with the decision to purchase the
Investor’s Units. The Investor further represents that the Investor has had an
opportunity to ask questions and receive answers from the Company regarding the
business, properties, prospects, and financial condition of the Company. All
such questions have been answered to the full satisfaction of the Investor.
Neither such inquiries nor any other investigation conducted by or on behalf of
the Investor or its representatives or counsel shall modify, amend, or affect
the Investor’s right to rely on the truth, accuracy, and completeness of the
disclosure materials and the Company’s representations and warranties contained
herein.
 
(h) No Registration. The Investor understands that Investor may be required to
bear the economic risk of Investor’s investment in the Company for an indefinite
period of time. The Investor further understands that (i) neither the offering
nor the sale of the Investor’s Units has been registered under the Securities
Act or any applicable State Acts in reliance upon exemptions from the
registration requirements of such laws, (ii) the Investor’s Units must be held
by the Investor indefinitely unless the sale or transfer thereof is subsequently
registered under the Securities Act and any applicable State Acts, or an
exemption from such registration requirements is available, (iii) except as set
forth in the Registration Rights Agreement, dated as of the date hereof, between
the Company and the Investor, the Company is under no obligation to register any
of the shares of Common Stock underlying the Investor’s Units on the Investor’s
behalf or to assist the Investor in complying with any exemption from
registration, and (iv) the Company will rely upon the representations and
warranties made by the Investor in this Agreement and the Transaction Documents
in order to establish such exemptions from the registration requirements of the
Securities Act and any applicable State Acts.
 
(i) Transfer Restrictions. The Investor will not transfer any of the Investor’s
Units or the shares of Common Stock underlying the Investor’s Units or the
Investor Warrants unless such transfer is registered or exempt from registration
under the Securities Act and such State Acts, and, if requested by the Company
in the case of an exempt transaction, the Investor has furnished an opinion of
counsel reasonably satisfactory to the Company that such transfer is so exempt.
The Investor understands and agrees that (i) the certificates evidencing the
shares of Common Stock underlying the Investor’s Units and the Investor Warrants
will bear appropriate legends indicating such transfer restrictions placed upon
the Units and shares of Common Stock and Investor Warrants, (ii) the Company
shall have no obligation to honor transfers of any of the Investor’s Units,
Investor Warrants or shares of Common Stock underlying the Investor’s Units or
Investor Warrants in violation of such transfer restrictions, and (iii) the
Company shall be entitled to instruct any transfer agent or agents for the
securities of the Company to refuse to honor such transfers.
 
 
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(j) Principal Address. The Investor’s principal residence, if an individual, or
principal executive office, if an entity, is set forth on the signature page of
this Subscription Agreement.
 
6. Independent Nature of Investor’s Obligations and Rights. The obligations of
the Investor under this Agreement and the Transaction Documents are several and
not joint with the obligations of any other purchaser of Units in the Offering,
and the Investor shall not be responsible in any way for the performance of the
obligations of any other purchaser of Units in the Offering under any
Transaction Document. The decision of the Investor to purchase the Investor’s
Units pursuant to the Transaction Documents has been made by the Investor
independently of any other purchaser of Units in the Offering. Nothing contained
herein or in any Transaction Document, and no action taken by any purchaser of
Units pursuant thereto, shall be deemed to constitute such purchasers as a
partnership, an association, a joint venture, or any other kind of entity, or
create a presumption that the purchasers of Units are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. The Investor acknowledges that no
other purchaser of Units has acted as agent for the Investor in connection with
making its investment hereunder and that no other purchaser of Units will be
acting as agent of the Investor in connection with monitoring its investment in
the Units or enforcing its rights under the Transaction Documents. The Investor
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other purchaser of
Units to be joined as an additional party in any proceeding for such purpose.
 
7. Prospectus Delivery Requirement. The Investor hereby covenants with the
Company not to make any sale of the Investor’s Units or the shares of Common
Stock underlying the Investor’s Units or the Investor Warrants or the shares of
Common Stock underlying the Investor Warrants without complying with the
provisions hereof and of the Registration Rights Agreement, and without
effectively causing the prospectus delivery requirement under the Securities Act
to be satisfied (unless the Investor is selling in a transaction not subject to
the prospectus delivery requirement).
 
8. Shareholder Approval. The Company represents and warrants to the Investor
that a vote of the stockholders of the Company will not be required to approve
the issuance of the Investor’s Units.
 
9. Indemnification of Investor. In addition to the indemnity provided in the
Registration Rights Agreement, the Company will indemnify and hold the Investor
and its directors, officers, shareholders, members, managers, partners,
employees and agents (each, an “Investor Party”) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs, and
reasonable attorneys’ fees and costs of investigation (collectively, “Losses”)
that any such Investor Party may suffer or incur as a result of or relating to
any misrepresentation, breach, or inaccuracy of any representation, warranty,
covenant, or agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will reimburse each
Investor Party for its reasonable legal and other expenses (including the cost
of any investigation, preparation, and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred.
 
10. Non-Public Information. Subsequent to the Closing, the Company covenants and
agrees that neither it nor any other person acting on its behalf will provide
Investor or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto Investor shall
have executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that Investor shall be relying
on the foregoing representations in effecting transactions in securities of the
Company.
 
 
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11. Further Assurances. The parties hereto will, upon reasonable request,
execute and deliver all such further assignments, endorsements and other
documents as may be necessary in order to perfect the purchase by the Investor
of the Investor’s Units.
 
12. Entire Agreement; No Oral Modification. This Agreement and the other
Transaction Documents contain the entire agreement among the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings with respect thereto and this Agreement may not be amended or
modified except in a writing signed by both of the parties hereto.
 
13. Binding Effect; Benefits. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, successors and
assigns; however, nothing in this Agreement, expressed or implied, is intended
to confer on any other person other than the parties hereto, or their respective
heirs, successors or assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
 
14. Counterparts. This Agreement may be executed in any number of counterparts,
for each of which shall be deemed to be an original and all of which together
shall be deemed to be one and the same 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.
 
15. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the United States of America and the
State of New York, both substantive and remedial, without regard to New York
conflicts of law principles. 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.
 
16. Prevailing Parties. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party shall be entitled to receive and the
nonprevailing party shall pay upon demand reasonable attorneys’ fees in addition
to any other remedy.
 
17. Notices. All communication hereunder shall be in writing and shall be
mailed, delivered, telegraphed or sent by facsimile or electronic mail, and such
delivery shall be confirmed to the addresses as provided below:

if to the Investor:

to the address set forth on the signature page of this Agreement
 
if to the Company:

Foothills Resources, Inc.
Canadiana Lodge, Wellfield Close, Coad’s Green
Launceston, Cornwall, England PL15 7LR
Attention: J. Earl Terris, President and Chief Executive Officer
Facsimile: 011 (56) 678-2214
 
 
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with copy to:

Gottbetter & Partners, LLP
488 Madison Avenue, 12th Floor
New York, New York 10022
Attention: Adam S. Gottbetter, Esq.
Facsimile Number: (212) 400-6901

if to Brasada, to:

Brasada California, Inc.
P.O. Box 2701
Bakersfield, California 93303
Attention: Dennis B. Tower, Chief Executive Officer
Facsimile: (541) 595-2484

with copy to:

McGuireWoods LLP
1345 Avenue of the Americas, 7th Floor
New York, New York 10105
Attention: Louis W. Zehil, Esq.
Facsimile: (212) 548-2175

and with copy to:

W. Kirk Bosche
14619 Carols Way Drive
Houston, Texas 77070
Facsimile: (281) 376-9376
 
18. Headings. The section headings herein are included for convenience only and
are not to be deemed a part of this Agreement.
 

[SIGNATURE PAGES FOLLOW]
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement
as of the date first written above.
 
 
COMPANY
Foothills Resources, Inc.
 
By:  ________________________________
Name: J. Earl Terris
Its:  President and Chief Executive Officer

[SIGNATURE PAGES OF BRASADA AND INVESTOR FOLLOW]
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement
as of the date first written above.
 

 
BRASADA CALIFORNIA, INC.
 
By:  ______________________________
Name:  Dennis B. Tower
Its:  Chief Executive Officer

[SIGNATURE PAGE OF INVESTOR FOLLOWS]
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement
as of the date first written above.

INVESTOR (individual)
INVESTOR (entity)
   
______________________________________
____________________________________
Signature
Name of Entity
   
______________________________________
____________________________________
Print Name
Signature
   
Address of Principal Residence:
 
_____________________________________
Print Name: __________________________
_____________________________________
 
_____________________________________
Title: ________________________________
   
Social Security Number:
Address of Executive Offices:
_____________________________________
   
_____________________________________
Telephone Number:
_____________________________________
_____________________________________
_____________________________________
   
Facsimile Number:
IRS Tax Identification Number:
_____________________________________
__________________________________
     
Telephone Number:
 
__________________________________
     
Facsimile Number:
 
____________________________________

 
_________________
X
$0.70
=
$___________________
Number of Units
 
Price per Unit
 
Purchase Price

 

 
 
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APPENDIX A

Investor Questionnaire

 
(See Attached)
 
 
 
 
 

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