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ESCROW AGREEMENT
Escrow Agreement (this "Agreement"), dated as of the 28th day of
February, 2006, among Foothills Resources, Inc., a Nevada corporation (the
"Company"), Gottbetter & Partners, LLP (the "Escrow Agent"), and the Buyers
listed on Schedule 1 attached hereto (individually a "Buyer" or collectively
"Buyers"):
W I T N E S S E T H
WHEREAS, the Company intends to offer and sell in a private
placement transaction (the "Debenture Debenture PPO") up to $3,000,000 principal
amount of its secured convertible debentures (the "Convertible Debentures") at a
purchase price equal to the principal amount thereof;
WHEREAS, the Debenture PPO will commence immediately and will continue
until the earlier to occur of (i) the sale of $3,000,000 principal amount of
Convertible Debentures and (ii) March 31, 2006, unless extended by up to 30 days
by the Company (the "Offering Period");
WHEREAS, once $500,000 principal amount (the "Minimum") of Convertible
Debentures have been subscribed for, the Company may conduct one or more
closings (each a "Closing") on the sale of such Convertible Debentures;
WHEREAS, if the Minimum is not sold prior to the end of the Offering
Period and there is no Closing, the Debenture PPO will be terminated and all
funds received from Buyers will be returned, without accrued interest and
without any deduction. The day that the Offering Period terminates is
hereinafter referred to as the "Termination Date";
WHEREAS, the parties hereto require the Securities Purchase Agreements
(the "Purchase Agreements") executed by the Buyers in connection with the
Debenture PPO (the Purchase Agreements, together with all other documents
necessary or desirable to effect the transactions contemplated hereby, are
sometimes collectively referred to as the "Transaction Documents") and the
Escrowed Funds (as defined below) be delivered to the Escrow Agent to be held in
escrow and released by the Escrow Agent in accordance with the terms and
conditions of this Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant
to the terms and conditions of this Agreement;
NOW THEREFORE, the parties hereto intending legally to be bound, agree
as follows:
ARTICLE I
INTERPRETATION
1.1. Entire Agreement. This Agreement and the Transaction Documents
constitute the entire agreement between the parties hereto pertaining to the
subject matter contained herein and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. There are no warranties, representations and other agreements made by
the parties in connection with the subject matter hereof except as specifically
set forth in this Agreement or as set forth in the Transaction Documents.
1.2. Extended Meanings. In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.
1.3. Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties or, in the
case of a waiver, by the party waiving compliance. Except as expressly stated
herein, no delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder preclude any
other or future exercise of any other right, power or privilege hereunder.
1.4. Headings. The division of this Agreement into articles,
sections, subsections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.5. Law Governing this Agreement. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of New York or in the federal courts
located in the state of New York. The parties and the individuals executing this
Agreement and other agreements referred to herein or delivered in connection
herewith agree to submit to the jurisdiction of such courts and waive trial by
jury. The prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement.
1.6. Specific Enforcement, Consent to Jurisdiction. The Company
acknowledges and agrees that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, it is agreed that
the parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
any of them may be entitled by law or equity. Subject to Section 1.5 hereof, the
Company hereby waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper. Nothing
in this Section shall affect or limit any right to serve process in any other
manner permitted by law.
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ARTICLE II
DELIVERIES TO THE ESCROW AGENT
2.1. Buyer Deliveries. On or before the date of the Closing (the
"Closing Date"), each Buyer shall have deliverd to the Escrow Agent its portion
of the purchase price for the Convertible Debentures (the aggregate of purchase
price referred to as the "Escrowed Funds") and the Transaction Documents. The
parties shall ensure that each Buyer's portion of the Escrowed Funds will be
delivered to the Escrow Agent pursuant to the following wire transfer
instructions:
BANK: CITIBANK, N.A., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
ABA: 000000000
BENEFICIARY: Gottbetter & Partners, LLP
ACCOUNT: 00000000
REFERENCE: "Foothills Resources, Inc. - [insert Buyer's name]"
Gottbetter & Partners Accounting Contact: Xxxxxxx XxXxxxx;
telephone: (000) 000-0000; email: xxx@xxxxxxxxxx.xxx.
2.2. Intention to Create Escrow Over Transaction Documents and Escrowed
Funds. The Company intends that the Transaction Documents and the Escrowed Funds
shall be held in escrow by the Escrow Agent pursuant to this Agreement for their
benefit and for the benefit of the Buyers as set forth herein.
2.3. Escrow Agent to Deliver Transaction Documents and Escrowed
Funds. The Escrow Agent shall hold and release the Transaction Documents and
the Escrowed Funds only in accordance with the terms and conditions of this
Agreement.
ARTICLE III
RELEASE OF TRANSACTION DOCUMENTS AND ESCROWED FUNDS
3.1. Release of Escrow. Subject to the provisions of Section 4.2,
the Escrow Agent shall release the Transaction Documents and Escrowed Funds
as follows:
(a) On the Closing Date, the Escrow Agent will release the Transaction
Documents to the Company and the Escrowed Funds to or for the benefit of
the Company except that:
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(i) the legal fees and expenses owed to Gottbetter & Partners, LLP as
counsel to the Company shall be deducted from the Escrowed Funds and
released to Gottbetter & Partners, LLP; and
(ii) the legal fees and expenses owed to McGuireWoods LLP as counsel to
Brasada shall be deducted from the Escrowed Funds and released to
McGuireWoods LLP.
(b) All funds to be delivered to the Company shall be delivered pursuant to
written instructions substantially in the form of Exhibit A hereto (the
"Instructions") signed by the Company.
(c) Notwithstanding the above, upon receipt by the Escrow Agent of the
Instructions, the Escrow Agent shall deliver the Transaction Documents and
the Escrowed Funds in accordance with the terms of the Instructions;
provided, however, that in the event of any conflict between such
Instructions and the provisions of Section 3.1(a) of this Agreement, the
provisions of Section 3.1(a) shall control.
(d) Notwithstanding the above, upon receipt by the Escrow Agent of a final and
non-appealable judgment, order, decree or award of a court of competent
jurisdiction (a "Court Order"), the Escrow Agent shall deliver the
Transaction Documents and the Escrowed Funds in accordance with the Court
Order. Any Court Order shall be accompanied by an opinion of counsel for
the party presenting the Court Order to the Escrow Agent (which opinion
shall be satisfactory to the Escrow Agent) to the effect that the court
issuing the Court Order has competent jurisdiction and that the Court Order
is final and non-appealable.
(e) In the event Transaction Documents for an aggregate purchase price of not
less than the Minimum of $500,000 and corresponding Escrowed Funds for an
aggregate of not less than such Minimum of $500,000 have not been received
by the Escrow Agent on or before the Termination Date, then the Escrow
Agent shall release the Transaction Documents and the Escrowed Funds to the
Buyers as soon as reasonably possible.
3.2. Acknowledgement of Company and Buyers; Disputes. The Company
acknowledges that the only terms and conditions upon which the Transaction
Documents and Escrowed Funds are to be released are set forth in Sections 3 and
4 of this Agreement. The Company reaffirms its agreement to abide by the terms
and conditions of this Agreement with respect to the release of the Transaction
Documents and the Escrowed Funds. Any dispute with respect to the release of the
Transaction Documents or Escrowed Funds shall be resolved pursuant to Section
4.2 or by agreement between the parties.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow
Agent's duties and responsibilities shall be subject to the following terms
and conditions:
(a) The Company and the Buyers acknowledge and agree that the Escrow Agent (i)
shall not be responsible for or bound by, and shall not be required to
inquire into whether either the Company or the Buyers are entitled to
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receipt of the Transaction Documents or Escrowed Funds pursuant to, any
other agreement or otherwise; (ii) shall be obligated only for the
performance of such duties as are specifically assumed by the Escrow Agent
pursuant to this Agreement; (iii) may rely on and shall be protected in
acting or refraining from acting upon any written notice, instruction,
instrument, statement, request or document furnished to it hereunder and
believed by the Escrow Agent in good faith to be genuine and to have been
signed or presented by the proper person or party, without being required
to determine the authenticity or correctness of any fact stated therein or
the propriety or validity or the service thereof; (iv) may assume that any
person believed by the Escrow Agent in good faith to be authorized to give
notice or make any statement or execute any document in connection with the
provisions hereof is so authorized; (v) shall not be under any duty to give
the property held by Escrow Agent hereunder any greater degree of care than
the Escrow Agent gives its own similar property, but in no event less than
a reasonable amount of care; and (vi) may consult with counsel satisfactory
to the Escrow Agent, the opinion of such counsel to be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by the Escrow Agent hereunder in good faith and in accordance with
the opinion of such counsel.
(b) The Company and the buyers acknowledge that the Escrow Agent is acting
solely as a stakeholder at their request and that the Escrow Agent shall
not be liable for any action taken by Escrow Agent in good faith and
believed by the Escrow Agent to be authorized or within the rights or
powers conferred upon the Escrow Agent by this Agreement. The Company
agrees to indemnify and hold harmless the Escrow Agent and any of the
Escrow Agent's partners, employees, agents, and representatives for any
action taken or omitted to be taken by the Escrow Agent or any of them
hereunder, including the fees of outside counsel and other costs and
expenses of defending itself against any claim or liability under this
Agreement, except in the case of gross negligence or willful misconduct on
the part of the Escrow Agent committed in its capacity as Escrow Agent
under this Agreement. The Escrow Agent shall owe a duty only to the Company
and the Buyers under this Agreement and to no other person.
(c) The Company agrees to reimburse the Escrow Agent for outside counsel fees,
to the extent authorized hereunder and incurred in connection with the
performance of its duties and responsibilities hereunder.
(d) The Escrow Agent may at any time resign as Escrow Agent hereunder by giving
five (5) days prior written notice of resignation to the Company. Prior to
the effective date of the resignation as specified in such notice, the
Company will issue to the Escrow Agent an Instruction authorizing delivery
of the Transaction Documents and the Escrowed Funds to a substitute escrow
agent selected by the Company. If no successor escrow agent is named by the
Company, the Escrow Agent may apply to a court of competent jurisdiction in
the State of New York for appointment of a successor escrow agent, and to
deposit the Transaction Documents and Escrowed Funds with the clerk of any
such court.
(e) The Escrow Agent does not have and will not have any interest in the
Transaction Documents or the Escrowed Funds, but is serving only as escrow
agent in connection therewith, having only possession thereof.
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(f) This Agreement sets forth exclusively the duties of the Escrow Agent with
respect to any and all matters pertinent thereto and no implied duties or
obligations shall be read into this Agreement.
(g) The provisions of this Section 4.1 shall survive the resignation of the
Escrow Agent or the termination of this Agreement.
4.2. Dispute Resolution; Judgments. Resolution of disputes
arising under this Agreement shall be subject to the following terms and
conditions:
(a) If any dispute shall arise with respect to the delivery, ownership, right
of possession or disposition of the Transaction Documents or the Escrowed
Funds, or if the Escrow Agent shall in good faith be uncertain as to its
duties or rights hereunder, the Escrow Agent shall be authorized, without
liability to anyone, to (i) refrain from taking any action other than to
continue to hold the Transaction Documents or the Escrowed Funds pending
receipt of an Instruction from the Company, or (ii) deposit the Transaction
Documents and Escrowed Funds with any court of competent jurisdiction in
the State of New York, in which event the Escrow Agent shall give written
notice thereof to the Company and shall thereupon be relieved and
discharged from all further obligations pursuant to this Agreement. The
Escrow Agent may, but shall be under no duty to, institute or defend any
legal proceedings which relate to the Transaction Documents or the Escrowed
Funds. The Escrow Agent shall have the right to retain counsel if it
becomes involved in any disagreement, dispute or litigation on account of
this Agreement or otherwise determines that it is necessary to consult
counsel.
(b) The Escrow Agent is hereby expressly authorized to comply with and obey any
Court Order. In case the Escrow Agent obeys or complies with a Court Order,
the Escrow Agent shall not be liable to the Buyers, the Company or to any
other person, firm, corporation or entity by reason of such compliance.
ARTICLE V
GENERAL
5.1. Termination. The escrow established hereby shall terminate
upon the release of all of the Transaction Documents and delivery to the
Company of the Escrowed Funds in accordance with Section 3.1 hereof, or at
any time upon the agreement in writing of the Buyers and the Company.
5.2. Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
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or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
(a) If to the Company, to:
Foothills Resources, Inc.
Candiana Lodge, Wellfield X0, Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx, Xxxxxxx
Attn: J. Xxxx Xxxxxx, President and Chief Executive Officer
Facsimile: (000) 000000000
with a copy to (which copy shall not constitute notice hereunder):
Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
Fax: (000) 000-0000
(b) If to the Escrow Agent, to:
Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
Fax: (000) 000-0000
If to the Buyer(s), to its address and facsimile number on Schedule I.
or to such other address as any of them shall give to the others by
notice made pursuant to this Section 5.2.
5.3. Interest. The Escrowed Funds shall neither be held in an interest
bearing account nor will interest be payable in connection therewith. In the
event the Escrowed Funds are deposited in an interest bearing account, each
Buyer shall be entitled to receive its pro rata portion of any accrued interest
thereon, but only if the Escrow Agent receives from such Buyer the Buyer's
United States taxpayer identification number and other requested information and
forms.
5.4. Assignment; Binding Agreement. Neither this Agreement nor any
right or obligation hereunder shall be assignable by any party without the prior
written consent of the other parties hereto. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors, and assigns.
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5.5. Invalidity. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
5.6. Counterparts/Execution. This Agreement may be executed in
several counterparts and by different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original,
but all such counterparts shall constitute but one and the same instrument.
This Agreement may be executed by facsimile transmission and delivered by
facsimile transmission.
5.7. Agreement. Each of the undersigned states that the undersigned has
read this Agreement, understands it, and agrees to it.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
COMPANY
FOOTHILLS RESOURCES, INC.
By:______________________________
Name: J. Xxxx Xxxxxx
Title: Chief Executive Officer
ESCROW AGENT
GOTTBETTER & PARTNERS, LLP
By:______________________________
Name: Xxxx X. Xxxxxxxxxx
Title: Partner
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SCHEDULE 1
SCHEDULE OF BUYERS
Address/Facsimile Amount of
Name Signature Number of Buyer Subscription
By:_______________
Name:
Office:
By:_______________
Name:
Office:
By:_______________
Name:
Office:
By:_______________
Name:
Office:
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EXHIBIT A
Form of Instructions
Xx. Xxxx Xxxxxxxxxx
Gottbetter & Partners, LLP
000 Xxxxxxx Xxx.
Xxx Xxxx, Xxx Xxxx 00000-0000
P: 212-400-6900
F: 000-000-0000
Re: Foothills Resources, Inc.
Dear Xx. Xxxxxxxxxx:
We hereby confirm that with respect to the Escrow Agreement entered into on
_______________, 2006 among Foothills Resources, Inc., the Buyers and Gottbetter
& Partners (the "Escrow Agreement"), LLP, the closing of the Debenture PPO (as
defined in the Escrow Agreement) has taken place. All conditions for the release
of the Transaction Documents and the Escrowed Funds have therefore been met. We
authorize the release of the Transaction Documents and Escrowed Funds to the
Company.
FOOTHILLS RESOURCES, INC.
By:______________________________
Name: J. Xxxx Xxxxxx
Title: Chief Executive Officer
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