PLEDGE AND ESCROW AGREEMENT
THIS PLEDGE AND ESCROW AGREEMENT (the "Escrow Agreement") is made and
entered into as of September 1, 2005 (the "Effective Date") by and among
GOLDSTRIKE INC., a corporation organized and existing under the laws of the
State of Nevada (the "Pledgee"), and GRAN TIERRA ENERGY INC., a corporation
organized and existing under the laws of the Province of Alberta of Nevada (the
"Borrower" or Pledgor"), 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 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),
(i) the Borrower has agreed to issue and pledge 13,114,285 shares of its common
stock to the Pledgee, which shares constitute the Borrower Control Shares and
(ii) the Borrower has agreed to pledge to the Pledgee all of the Subsidiary
Securities (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; Deposit of Borrower Control
Shares.
1.1. The Borrower hereby grants to the Pledgee a security interest
in the Borrower Control Shares and all Pledged Shares as security for the
Borrower's obligations under the Loan Documents. Simultaneously with the
execution of the Loan Documents, the Borrower shall deliver to the Escrow Agent
stock certificates representing Borrower Control Shares, together with duly
executed stock powers or other appropriate transfer documents executed in blank
by the Borrower (the "Borrower Control Share Transfer Documents") and the
Pledged Shares, together with duly executed stock powers or other appropriate
transfer documents executed in blank by the Borrower (the "Pledged Share
Transfer Documents"), and such stock certificates, Borrower Control Share
Transfer Documents and Pledged Share 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.
1.2. The Borrower Control Share Transfer Documents and the Pledged
Share Transfer Documents are sometimes hereinafter collectively referred to as
the "Transfer Documents"). Such stock certificates and Transfer Documents are
being delivered to Escrow Agent contemporaneously with the execution and
delivery of this Agreement and 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 and Borrower Control Shares.
2.1. The Borrower shall have the right to vote the Pledged Shares at
all meetings of the Subsidiaries' stockholders to the same extent as if such
Pledged Shares were held by the Borrower; provided that no Event of Default (as
defined herein) has occurred and is continuing following the expiration of the
applicable Cure Period, as defined in the Bridge Loan Agreement and the Security
Agreement, and that the Borrower is not in default in the performance of any
term of the Security Agreement.
2.2. Upon the occurrence of an Event of Default and the continuance
thereof following the expiration of the applicable Cure Period, the Pledgee
shall be entitled to vote the Borrower Control Shares and the Pledged Shares, to
receive dividends and other distributions thereon, and to enjoy all other rights
and privileges incident to the ownership of the Borrower Control Shares and the
Pledged Shares.
3. Release of Pledged Shares from Pledge and Borrower Control Shares from
Escrow. 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:
3.1. the Escrow Agent shall return to the Borrower the Transfer
Documents and the certificates representing the Borrower Control Shares and the
Pledged Shares, (collectively the "Pledged Materials"), whereupon any and all
rights of Pledgee in the Pledged Materials shall be terminated; and
3.2. 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 Borrower Control Shares and
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, and the
continuance of such Event of Default following the expiration of the applicable
Cure Period, the Pledgee shall provide written notice of such Default (the
"Default Notice") to the Escrow Agent, with a copy to the Borrower. 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.
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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.
6.3. The Pledgee and the Borrower 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. Any fees and costs
charged by the Escrow Agent for serving hereunder shall be paid by the Borrower.
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 and the
Borrower Control Share Documents 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 Borrower 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 Borrower 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.
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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 Borrower hereby acknowledges that the Escrow
Agent is counsel to the Pledgee in connection with the transactions contemplated
and referred to herein. The Borrower agrees 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 Borrower will
not seek to disqualify such counsel and waives any objection the Borrower might
have with respect to the Escrow Agent acting as the Escrow Agent pursuant to
this Escrow Agreement.
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 (with a copy by facsimile) in person or by
overnight courier service, or mailed by certified mail, return receipt
requested, addressed:
If to the Borrower, to: Gran Tierra Energy Inc.
Xxxxx Xxxxx, 00 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxx Xxxxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: McGuireWoods LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Pledgee, to: Goldstrike Inc.
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, X.X. Xxxxxx X0X 0X0
Attn: Xx. Xxx Xxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to: Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Escrow Agent, to: Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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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 or Canadian 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.
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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.
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 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
BORROWER, 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.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge
and Escrow Agreement as of the date first above written.
GOLDSTRIKE INC.
By:
--------------------------------
Name:
Title:
GRAN TIERRA ENERGY INC.
By:
--------------------------------
Name:
Title:
GOTTBETTER & PARTNERS, LLP
As Escrow Agent
By:
--------------------------------
Name: Xxxx X. Xxxxxxxxxx, Esq.
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