================================================================================
PLEDGE AND ESCROW AGREEMENT
THIS PLEDGE AND ESCROW AGREEMENT (the "Escrow Agreement") is made and
entered into as of March 17th, 2006 (the "Effective Date") by and among
FOOTHILLS RESOURCES, INC., a corporation organized and existing under the laws
of the State of Nevada (the "Pledgee"), BRASADA CALIFORNIA, INC., a corporation
organized and existing under the laws of the State of Delaware (the "Borrower"),
Xxxx X. Xxxxx, Xxxxxx X. Tower, MMP LLP, and W. Xxxx Xxxxxx (each a
"Stockholder" and collectively, the "Stockholders") (each of the Borrower and
the Stockholders are sometimes hereinafter referred to individually as a
"Pledgor" and collectively as the "Pledgors"), and GOTTBETTER & PARTNERS, LLP, a
New York limited liability partnership, as escrow agent (the "Escrow Agent").
RECITALS:
WHEREAS, in order to secure the Borrower's obligations under a certain
Bridge Loan and Control Share Pledge and Security Agreement, together with the
related Bridge Loan Promissory Note and Security Agreement, all of even date
herewith (collectively referred to as the "Loan Documents") (capitalized terms
not otherwise defined in this Escrow Agreement shall have the meanings ascribed
to them in the other Loan Documents), each Stockholder has agreed to pledge to
the Pledgee the number of shares of Brasada common stock owned by such
Stockholder as set forth below such Stockholders name on the signature page
hereto, which together with all of the Stockholders' shares pledged hereunder
constitute the Borrower Control Shares and are sometimes hereinafter referred to
collectively as the "Pledged Shares".
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
warranties, and representations herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
TERMS AND CONDITIONS
1. Pledge and Transfer of Pledged Shares. The Pledgors hereby grant to
the Pledgee a security interest in all Pledged Shares as security for the
Borrower's obligations under the Loan Documents. Simultaneously with the
execution of the Loan Documents, the Pledgors shall deliver to the Escrow Agent
stock certificates representing the Pledged Shares, together with duly executed
stock powers or other appropriate transfer documents executed in blank by the
Pledgors (the "Transfer Documents"), and such stock certificates and Transfer
Documents shall be held by the Escrow Agent until the full payment of all
amounts due to the Pledgee under the Loan Documents and through repayment in
accordance with the terms of the Loan Documents, or the termination or
expiration of this Escrow Agreement.
2. Rights Relating to Pledged Shares.
---------------------------------
2.1. The Pledgors shall have the right to vote the Pledged Shares at all
meetings of the Borrower's stockholders to the same extent as if such Pledged
Shares were held by Pledgors; provided that no Event of Default (as defined
herein) has occurred and is continuing and that the Pledgors are not in default
in the performance of any term of the Security Agreement.
2.2. Upon the occurrence of an Event of Default and for so long as an Event of
Default is continuing, the Pledgee shall be entitled to vote the Pledged Shares,
to receive dividends and other distributions thereon, and to enjoy all other
rights and privileges incident to the ownership of the Pledged Shares.
3. Release of Pledged Shares from Pledge. Upon the payment of all
amounts due to the Pledgee under the Loan Documents by repayment in accordance
with the terms of the Note, the parties hereto shall notify the Escrow Agent to
such effect in writing. Upon receipt of such written notice, the Escrow Agent
shall return to the Pledgors the Transfer Documents and the certificates
representing the Pledged Shares, (collectively the "Pledged Materials"),
whereupon any and all rights of Pledgee in the Pledged Materials shall be
terminated. Notwithstanding anything to the contrary contained herein, upon full
payment of all amounts due to the Pledgee under the Loan Documents, by repayment
in accordance with the terms of the Note, this Escrow Agreement and Pledgee's
security interest and rights in and to the Pledged Shares shall terminate.
4. Event of Default. An "Event of Default" shall be deemed to have
occurred under this Escrow Agreement upon an Event of Default under the
Transaction Documents.
5. Remedies. Upon the occurrence of an Event of Default, the Pledgee
shall provide written notice of such Default (the "Default Notice") to the
Escrow Agent, with a copy to the Pledgors. As soon as practicable after receipt
of the Default Notice, the Escrow Agent shall deliver to the Pledgee the Pledged
Materials held by the Escrow Agent hereunder, whereupon the Pledgee may exercise
all rights and remedies of a secured party with respect to such property as may
be available under the Uniform Commercial Code as in effect in the State of New
York.
6. Concerning the Escrow Agent.
6.1. The Escrow Agent undertakes to perform only such duties as are expressly
set forth herein and no implied duties or obligations shall be read into this
Escrow Agreement against the Escrow Agent.
6.2. The Escrow Agent may act in reliance upon any writing or instrument or
signature which it, in good faith, believes to be genuine, may assume the
validity and accuracy of any statement or assertion contained in such a writing
or instrument, and may assume that any person purporting to give any writing,
notice, advice or instructions in connection with the provisions hereof has been
duly authorized to do so. The Escrow Agent shall not be liable in any manner for
the sufficiency or correctness as to form, manner, and execution, or validity of
any instrument deposited in this escrow, nor as to the identity, authority, or
right of any person executing the same; and its duties hereunder shall be
limited to the safekeeping of such certificates, monies, instruments, or other
document received by it as such escrow holder, and for the disposition of the
same in accordance with the written instruments accepted by it in the escrow.
2
6.3. The Pledgee and the Pledgors hereby agree, to defend and indemnify the
Escrow Agent and hold it harmless from any and all claims, liabilities, losses,
actions, suits, or proceedings at law or in equity, or any other expenses, fees,
or charges of any character or nature which it may incur or with which it may be
threatened by reason of its acting as Escrow Agent under this Escrow Agreement;
and in connection therewith, to indemnify the Escrow Agent against any and all
expenses, including attorneys' fees and costs of defending any action, suit, or
proceeding or resisting any claim (and any costs incurred by the Escrow Agent
pursuant to Sections 6.4 or 6.5 hereof). The Escrow Agent shall be vested with a
lien on all property deposited hereunder, for indemnification of attorneys' fees
and court costs regarding any suit, proceeding or otherwise, or any other
expenses, fees, or charges of any character or nature, which may be incurred by
the Escrow Agent by reason of disputes arising between the makers of this escrow
as to the correct interpretation of this Escrow Agreement and instructions given
to the Escrow Agent hereunder, or otherwise, with the right of the Escrow Agent,
regardless of the instructions aforesaid, to hold said property until and unless
said additional expenses, fees, and charges shall be fully paid. Customary fees
and costs charged by the Escrow Agent for serving hereunder shall be paid by the
Pledgors.
6.4. If any of the parties shall be in disagreement about the interpretation of
this Escrow Agreement, or about the rights and obligations, or the propriety of
any action contemplated by the Escrow Agent hereunder, the Escrow Agent may, at
its sole discretion deposit the Pledged Materials with the Clerk of the United
States District Court for the Southern District of New York, sitting in New
York, New York, and, upon notifying all parties concerned of such action, all
liability on the part of the Escrow Agent shall fully cease and terminate. The
Escrow Agent shall be indemnified by the Pledgors and the Pledgee for all costs,
including reasonable attorneys' fees in connection with the aforesaid
proceeding, and shall be fully protected in suspending all or a part of its
activities under this Escrow Agreement until a final decision or other
settlement in the proceeding is received.
6.5. The Escrow Agent may consult with counsel of its own choice (and the costs
of such counsel shall be paid by the Pledgors and the Pledgee) and shall have
full and complete authorization and protection for any action taken or suffered
by it hereunder in good faith and in accordance with the opinion of such
counsel. The Escrow Agent shall not be liable for any mistakes of fact or error
of judgment, or for any actions or omissions of any kind, unless caused by its
willful misconduct or gross negligence.
6.6. The Escrow Agent may resign upon ten (10) days' written notice to the
parties in this Escrow Agreement. If a successor Escrow Agent is not appointed
within this ten (10) day period, the Escrow Agent may petition a court of
competent jurisdiction to name a successor.
6.7 Conflict Waiver. The Pledgors hereby acknowledge that the Escrow
Agent is counsel to the Pledgee in connection with the transactions contemplated
and referred to herein. The Pledgors agree that in the event of any dispute
arising in connection with this Escrow Agreement or otherwise in connection with
any transaction or agreement contemplated and referred herein, the Escrow Agent
shall be permitted to continue to represent the Pledgee and the Pledgors will
not seek to disqualify such counsel and waives any objection the Pledgors might
have with respect to the Escrow Agent acting as the Escrow Agent pursuant to
this Escrow Agreement.
3
6.8 Notices. Unless otherwise provided herein, all demands, notices,
consents, service of process, requests and other communications hereunder shall
be in writing and shall be delivered in person or by overnight courier service,
or mailed by certified mail, return receipt requested, addressed:
If to Borrower or to the Stockholders:
Brasada California, Inc.
X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Tower, Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
McGuireWoods LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
and with a copy to:
W. Xxxx Xxxxxx
00000 Xxxxxx Xxx Xxxxx,
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
If to Pledgee:
Foothills Resources, Inc.
Candiana Lodge, Wellfield X0, Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx, Xxxxxxx
Attn: J. Xxxx Xxxxxx, President and Chief Executive Officer
Facsimile: (000) 000000000000
with a copy to:
Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
4
If to the Escrow Agent:
Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
Any such notice shall be effective (a) when delivered, if delivered by hand
delivery or overnight courier service, or (b) five (5) days after deposit in the
United States mail, as applicable.
7. Binding Effect. All of the covenants and obligations contained herein
shall be binding upon and shall inure to the benefit of the respective parties,
their successors and assigns.
8. Governing Law; Venue; Service of Process. The validity,
interpretation and performance of this Escrow Agreement shall be determined in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within that state except to the extent that Federal
law applies. The parties hereto agree that any disputes, claims, disagreements,
lawsuits, actions or controversies of any type or nature whatsoever that,
directly or indirectly, arise from or relate to this Escrow Agreement,
including, without limitation, claims relating to the inducement, construction,
performance or termination of this Escrow Agreement, shall be brought in the
state supreme courts located in New York County, New York or the United States
District Court for the Southern District of New York located in New York, New
York, and the parties hereto agree not to challenge the selection of that venue
in any such proceeding for any reason, including, without limitation, on the
grounds that such venue is an inconvenient forum. The parties hereto
specifically agree that service of process may be made, and such service of
process shall be effective if made, pursuant to Section 8 hereto. 9. Enforcement
Costs. If any legal action or other proceeding is brought for the enforcement of
this Escrow Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any provisions of this Escrow Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees, court costs and all expenses even if not taxable as
court costs (including, without limitation, all such fees, costs and expenses
incident to appeals), incurred in that action or proceeding, in addition to any
other relief to which such party or parties may be entitled.
10. Remedies Cumulative. No remedy herein conferred upon any party is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law, in equity, by statute, or
otherwise. No single or partial exercise by any party of any right, power or
remedy hereunder shall preclude any other or further exercise thereof.
11. Counterparts. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same instrument.
5
12. No Penalties. No provision of this Escrow Agreement is to be
interpreted as a penalty upon any party to this Escrow Agreement.
13. JURY TRIAL. EACH OF THE PLEDGEE AND THE BORROWER AND THE STOCKHOLDER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT WHICH IT MAY
HAVE TO A TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN ANY WAY CONNECTED WITH THE DEALINGS
BETWEEN PLEDGEE AND THE PLEDGORS, THIS PLEDGE AND ESCROW AGREEMENT OR ANY
DOCUMENT EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR
THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE.
6
IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge
and Escrow Agreement as of the date first above written.
FOOTHILLS RESOURCES, INC. BRASADA CALIFORNIA, INC.
By:______________________ By:______________________
Name: J. Xxxx Xxxxxx Name: Xxxxxx X. Tower
Title: Chief Executive Officer Title: Chief Executive Officer
XXXXXX X. TOWER XXXX X. XXXXX
----------------------------- ----------------------------
Number of Pledged Shares 14,344 Number of Pledged Shares 14,344
MMP LLP W. XXXX XXXXXX
By:_________________________ __________________________
Name: Number of Pledged Shares 9,563
Title: Managing Partner
Number of Pledged Shares 12,750
GOTTBETTER & PARTNERS, LLP
As Escrow Agent
By:______________________
Name: Xxxx X. Xxxxxxxxxx, Esq.
7
