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EXHIBIT 10.19

                       NONREIMBURSABLE SPACE ACT AGREEMENT
                                     BETWEEN
                 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION,
                          JOHN F. KENNEDY SPACE CENTER
                                       AND
                            HYBRID TECHNOLOGIES, INC.
                                       FOR
              LOAN OF HYBRID TECHNOLOGIES PT CRUISER, SMART CAR AND
                     ALL TERRAIN VEHICLES, ELECTRIC VEHICLES

I.  AUTHORITY

This  agreement  is  entered.   into  by  the  National  Aeronautics  and  Space
Administration,  John F. Kennedy Space Center (hereinafter "NASA.-T SC") located
at  Kennedy  Space  Center,   Florida  32899,  and  Hybrid  Technologies,   Inc.
(hereinafter  "Hybrid Tech"),  located at 5001 East Bonanza Road, Suite 138-145,
Las Vegas,  Nevada  89110.  This  agreement is entered into pursuant to sections
203(c)  (5) and (6) of the  National  Aeronautics  and  Space  Act of  1958,  as
amended,  42 U.S.C.  Section  2473(c),  as implemented by NASA Policy  Directive
1050.1 G.

II. PURPOSE OF AGREEMENT AND AGENCY COMMITMENT

This agreement  details the roles and  responsibilities  of NASA-KSC and. Hybrid
Tech regarding the loan of three electric  vehicles:  one PT Cruiser,  one Smart
Car, and one All Terrain  Vehicle  (ATV) (see pages 11-13 of this  agreement) to
NASA-KSC.  Utilizing  these  vehicles at K SC is a  cooperative  opportunity  to
demonstrate zero emission vehicle  technology in a high-visibility  application.
Benefits to NASA-KSC  include having improved  compliance with  Alternative Fuel
Vehicles  (AFVs)  mandates,  demonstrating  the use of an  electric  vehicle  in
Federal  (fleets  the size of KSC's  fleet  and  studying  the possibilities  of
utilizing  electric  vehicles  in  our  fleet  operations,  and  establishing  a
relationship with Hybrid Tech for possible future collaboration on AFVs.

III.RESPONSIBILITIES

A.  LOAN OF VEHICLES TO NASA-KSC

          1.   Hybrid Tech agrees to loan to NASA-KSC  and.  NASA-KSC  agrees to
               accept from Hybrid Tech one used and/or new PT Cruiser,  one used
               and/or new Smart Car  Electric  Vehicle  and one new or used ATV,
               all of which  will.  include  a  battery  pack  with 100  percent
               lithium  batteries  used  to  power  the  vchicle(s)  for  use in
               NASA-KSC's   business.   Vehicles  shall  be  described  in  Loan
               Agreement Supplements  ("Supplement") executed by Hybrid Tech and
               NASA-KSC  from  time to  time.  Each  such  Supplement  shall  be
               incorporated  herein  upon  its  execution  by  Hybrid  Tech  and
               NASA-KSC.

         2.    This is an Agreement for loan of the vehicles only  and is  not a
               contract for the sale or lease of  vehicle(s). Hybrid Tech is the
               owner  of  the  three  vehicles  mentioned  above,  and  NASA-KSC
               recognizes that it does not acquire any legal or equitable

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               interest in the vehicle(s).  NASA-KSC's  rights to possess,  use,
               and  operate any and all  vehicles  shall he  forfeited  upon the
               termination  or  expiration  of  this  Agreement  as  hereinafter
               provided.

          3.   With respect to each  vehicle,  the term of the loan (the "Term")
               shall  commence on the date the  vehicle(s)  is  delivered to the
               NASA-KSC (the  "In-Service  Date") and shall continue through the
               date set forth in the applicable Supplement as the maturity date.
               In no event will the term of the loan of any  individual  vehicle
               described  in a  Supplement  exceed  the  term  of the  Agreement
               established in Section XVIII, herein.

B.  PLACEMENT OF VEHICLES IN SERVICE

          1.   Hybrid Tech shall  complete a Supplement  for the vehicle,  which
               N4SA-KSC and Hybrid Tech shall  execute  prior to delivery of the
               vehicle to NASA-KSC. Vehicles described in such Supplement shall,
               upon execution of the Supplement by NASA, KSC and Hybrid Tech and
               delivery of the vehicle to NASA-KSC,  he subject to all the terms
               and  conditions  of  this  Agreement.  Carrier  receipt  will  be
               sufficient proof of delivery of the vehicles to NASA-KSC.

          2.   Vehicles shall include all equipment required by Federal,  state,
               or municipal statutes,  laws, ordinances,  rules, or regulations,
               present or future.  Hybrid  Tech  shall pay for and  install  any
               equipment  necessary to bring  vehicles in compliance  with these
               requirements.  NASA-KSV  agrees to cooperate  with Hybrid Tech in
               accomplishing compliance.

          3.   NASA-KSC shall inspect all vehicles within five (5) business days
               of  delivery.  If,  as a  result  of  such  inspection,  NASA-KSC
               discovers  any  physical  or  functional  defect  in the  vehicle
               received,  NASA-KSC  shall  notify  Hybrid  Tech  within ten (10)
               business  days,  and  Hybrid  Tech  may,  at its  option,  either
               promptly repair the defect or terminate the loan of such vehicle.

C.  REGISTRATION, OFFICIAL FEES AND TAXES, MOVEMENT OF VEHICLE

          1.   Hybrid Tech shall not be  responsible for  any fines  incurred by
               drivers of the vehicles such as traffic or parking tickets.

          2.   Hybrid Tech or its designee  will  register and title the vehicle
               initially,  and NASA-KSC plans to either provide a Government tag
               or  shall  be  responsible  for  subsequent  registration  of the
               vehicle.  All vehicles  will be titled or registered in the state
               specified  in  the  Supplement.  The  Certificate  of  Title  and
               Registration for each vehicle shall be completed as instructed by
               Hybrid Tech.   Hybrid Tech will be the legal owner of the vehicle
               and shall retain possession of All Certificates of Title.

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D.  USAGE

         1.    NASA-KSC shall use each vehicle only for official business
               requirements.
               Vehicles may not be leased by NASA-KSC. NASA-KSC will ensure that
               all  vehicles are used in a careful manner and in accordance with
               all  applicable   governmental  and  insurance  requirements  and
               limitations  and in no event for other than a lawful  purpose and
               in compliance  with all laws.  Hybrid Tech property and liability
               insurance  must  cover  all  users  of  the  vehicle.   Under  no
               circumstances  shall  NASA-KSC  permit any  vehicle to be used or
               charged by any individual who has not been trained by NASA-KSC to
               use and charge the vehicle.

          2.   NASA-KSC  understands and agrees that NASA-KSC may not, under any
               circumstances,  disassemble the vehicles or any portion  thereof.
               If NASA-KSC makes any alterations to a vehicle with Hybrid Tech's
               permission,  NASA-KSC  shall  return the vehicle to its  original
               condition  prior to the  expiration or early  termination of this
               Agreement. NASA-KSC agrees to maintain in unobliterated condition
               any identification numbers, labels, tags, and other markings used
               to identify the vehicles.

          3.   NASA-KSC will provide to Hybrid Tech such  information  regarding
               the  vehicles  and  NASA-KSC's  use thereof as may be  reasonably
               requested by Hybrid Tech.

E.  INSURANCE

          1.   Hybrid Tech shall provide,  at Hybrid Tech's  expense,  for each,
               vehicle during the Term thereon,  Automobile  Liability Insurance
               with limits not less than $1 million per accident  and  including
               Comprehensive and Collision Damage coverage for each vehicle. The
               insurance  shall name Hybrid  Tech as Loss Payee and  NASA-KSC as
               Additional Insured. Hybrid Tech must provide continued,  proof of
               such  insurance to  NASA-KSC,  as  requested.  Proof of insurance
               shall be provided at the time of execution of  Supplement to this
               Agreement.

          2.   NASA-KSC shall promptly notify Hybrid Tech of any damage to their
               vehicles.  NASA-KSC may assist  Hybrid Tech in  coordinating  the
               pickup or delivery of the vehicles  with their  Approved  Service
               Providers.  The Approved  Service  Providers  shall provide proof
               that the  necessary  repairs  have  been  completed  and that the
               vehicle  is safe  to  operate.  Hybrid   Tech  shall  pay for any
               accident-related  vehicle  repairs  or  expenses  which  are  not
               covered by  insurance.  If any claim is made or action  commenced
               for  personal  injury or death or property  damage in  connection
               with any vehicle, NASA-KSC shall promptly notify Hybrid Tech.

F.  MAINTENANCE AND REPAIRS

          1.   Hybrid Tech shall,  at Hybrid Tech's sole expense (no maintenance
               costs from NASA),  maintain all their vehicles in accordance with
               the  owner's  and  service   manuals.   Hybrid  Tech  shall  have
               maintenance  and repairs  performed  only by authorized  KSC area
               dealers or other Approved Service Provider(s) designated by

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               Hybrid  Tech.  Hybrid Tech shall  provide NASA with a list of the
               Approved Service Providers in NASA-KSC's geographic area prior to
               delivery of the vehicle. If any of the foregoing dealers cease to
               he Approved Service  Providers during the Term,  Hybrid Tech will
               appoint  one or more  alternate  Approved  Service  Providers  in
               NASA-KSC's  geographic area and provide  NASA-KSC with an updated
               list.

          2.   Hybrid  Tech  shall  immediately   arrange  for  repairs  or,  if
               necessary,  replacement  of the  vehicle.  All  vehicle  warranty
               repair and maintenance  shall be performed in accordance with the
               manufacturer's  suggested warranty repair and maintenance program
               and by an Approved Service Provider.  Any manufacturer  recall or
               other  notices  regarding  the operation or repair of the vehicle
               will be forwarded to NASA-KSC within five (5) days of receipt.

          3.   NASA-KSC  may  assist   Hybrid  Tech  (upon  their   request)  by
               delivering  the  vehicle to the  Approved  Service  Provider  for
               warranty repair and maintenance.  If the vehicle is not drivable,
               NASA-KSC  will obtain  clearance  of any approved KSC tow company
               for the removal of the vehicle from KSC property.

          4.   NASA-KSC shall provide,  at its own expense,  a power source that
               meets  the  specifications  set  forth  by  Hybrid  Tech  and the
               manufacturer  for  recharging  required for the proper  operation
               and/or protection of each vehicle.

          5.   NASA-KSC  shall  be   responsible   for  all  expenses or charges
               associated  with washing, parking,  towing, garage and/or highway
               tolls for each vehicle.

          6.   NASA-KSC  gives Hybrid Tech the right to inspect any vehicle upon
               prior reasonable  notice to NASA-KSC.  If Hybrid Tech, during any
               inspection of a vehicle,  determines  that NASA-KSC has failed to
               perform its obligations as set forth in this Section, Hybrid Tech
               shall give  NASA-KSC  written  notice  thereof.  Unless  NASA-KSC
               performs its obligations within thirty (30) days from the date of
               Hybrid Tech notice, Hybrid Tech shall have the right, but not the
               obligation,  to  terminate  the loan of the  vehicle to  NASA-KSC
               and/or to perform the maintenance,  service,  and repair required
               to be performed.

          7.   NASA-KSC gives Hybrid Tech the right to install, at any time, any
               equipment  or make any  repairs or changes to the  vehicle  which
               Hybrid Tech deems are necessary.

G.  RETURN OF VEHICLES

          1.   Upon the  expiration  or  termination  of this  Agreement  in its
               entirety or with respect to any or all  vehicles,  said  vehicles
               shall be returned to Hybrid  Tech's  closest  regional  office or
               Approved  Service  Provider from NASA-KSC's  location,  at Hybrid
               Tech's expense,  NASA-KSC shall give Hybrid Tech thirty (30) days
               written  notice  of  the  vehicle  identification  number  of the
               vehicle(s) coming to the end of its Term.

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         2.    Prior to Hybrid  Tech's  acceptance  of any vehicle at the end of
               the Term for such vehicle, Hybrid Tech may schedule a prerecovery
               inspection with NASA-KSC.

         3.    Each  vehicle  returned to Hybrid Tech shall have one (1) battery
               pack  with  lithium  batteries,   four  (4)  undamaged  tires  of
               identical  make and type,  and one (1) spare tire  (allowing  for
               normal wear and tear).

          4.   Actual mileage of the vehicle during the In-Service  period shall
               be certified pursuant to a federally required odometer statement,
               to  be  signed  by  the  NASA-KSC upon  the  expiration  of  this
               Agreement.

IV. LIABILITY AND RISK OF LOSS

A.  Hybrid  Tech  assumes  all  risks  and  liability  arising  from  NASA-KSC's
    possession, use, and operation of the  vehicles,  including  liability which
    may  rise  from  NASA-KSC's  employee's  or  agent's  possession,  use,  and
    operation of a vehicle from the moment of delivery to NASA-KSC to the moment
    of return to Hybrid Tech. Hybrid  Tech agrees to indemnify and hold NASA and
    NASA-KSC harmless from any and  all  of  the  following  whether  actual  or
    alleged: (i) all loss,  damage,  claims,  suits,  taxes,  liens,  penalties,
    fines, liability, and expense (including reasonable attorneys' fees) arising
    in any manner, relating directly or indirectly to the  possession,  use, and
    operation of the vehicles, including, but not limited to, injuries or  death
    to persons  or damages to or destruction of property; (ii) claims and  liens
    for storage, labor, and materials; and (iii)  all loss of and damage to, the
    vehicles, regardless of whether insured for physical damage insurance.

B.  Without limiting its  obligations  under  subsection  A above,  Hybrid  Tech
    further agrees to indemnify and hold harmless NASA and NASA-KSC from any and
    all loss, damage, claims, suits, taxes, liens, penalties, fines,  liability,
    and expense (including reasonable attorneys' fees) arising out of  claims by
    third parties  (including employees, agents,  or  contractors  of  NASA-KSC)
    which relate directly or indirectly  to  NASA-KSC's  acts  or  omissions  or
    breach of this  Agreement  in  connection  with  the  possession,  use,  and
    operation of the  vehicles, including, but not limited to, injuries or death
    to persons or damages to, or destruction of,  property. Such indemnity shall
    not waive any  rights the  NASA-KSC may have against the manufacturer of the
    vehicle or Hybrid Tech for product liability claims.

C.  Hybrid Tech further  agrees  to  extend  this  unilateral  waiver to its own
    related entities by requiring them, by contract or otherwise, to waive   all
    claims against NASA, its related  entities,  and employees of NASA or of its
    related entities  for  injury,  death,  damage, or  loss  arising  from,  or
    related to, activities undertaken pursuant to this agreement.

D.  Hybrid Tech assumes  any  and  all  risks  of  personal  injury and property
    damage  attributable  to  the  negligent  acts  or  omissions of Hybrid Tech
    and its  officers,  employees,  servants,  and  agents  thereof while acting
    within the scope of their employment by Hybrid Tech.

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V. ASSIGNMENT

A. NASA-KSC shall not assign or permit any vehicle to be  used  by anyone  other
than NASA-KSC and/or NASA contractor employees.

B.  Hybrid  Tech  shall  have the right to assign any or all of  its rights  and
    obligations at any time without the consent of NASA-KSC.   Without  limiting
    the foregoing, Hybrid Tech shall have the right to assign any  of its rights
    hereunder to a financial institution retained by Hybrid Tech to service this
    Agreement.

VI. NOTICES

Any notice  required or permitted  under this Agreement  shall be in writing and
shall be deemed   given when mailed by certified mail, return receipt requested,
or  nationally  recognized  courier  service to Hybrid Tech or NASA-KSC at their
respective  addresses  set forth on page 8 of this  Agreement,  or at such other
address  furnished  by either party to the other in  accordance  with the notice
provisions of this Section.

VII. APPLICABLE LAWS, RULES, REGULATIONS, AND POLICIES

A.  United  States  Federal  law  governs  this  Agreement  for   all  purposes,
    including, but not limited to, determining the  validity  of  the Agreement,
    the meaning of its provisions, and the rights,  obligations and  remedies of
    the parties.

B.  While  engaged  in  activities  on  NASA-KSC  property  pursuant   to   this
    Agreement, Hybrid Tech agrees to comply  with all NASA-KSC policies,  rules,
    and regulations  in  effect  at  the time the activities are occurring. This
    includes,  but  is  not  limited,  to,  all  safety,  health,  security, and
    environmental requirements.

VIII. FURTHER ASSURANCES

From time to time each party shall  execute and  deliver  supplements  and  such
further  instruments  and will  take  such  other  actions  as the  other  party
reasonably  may  request in order to  discharge  and  perform  their  respective
obligations and agreements hereunder.

IX. FORCE MAJEUERE

Neither  party shall incur any  liability  to the other for any  obligations  if
caused by wars, fires, strikes, or other labor disputes, accidents, acts of God,
governmental  regulations  or  interference,  shortages  of labor or  materials,
delays in  transportation,  nonavailability  of same from the  manufacturer,  or
other  causes  beyond that  party's  control.  IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR SPECIAL OR CONSEQUENTIAL DAMAGES.

X. SEVERABILITY AND WAIVER

Any provision of this Agreement prohibited by applicable law will be ineffective
to the extent of such prohibition without  invalidating the remaining provisions
hereof. The failure of either party

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to require  strict  performance  of any provision will not diminish that party's
right thereafter to require strict performance of any provision.

XI. SUCCESSORS AND ASSIGNS

This  Agreement  shall he binding  on, and shall  endure to the  benefit of, the
parties hereto and their respective permitted successors and assigns.

XII. SURVIVAL OF COVENANTS, REPRESENTATIONS, AND WARRANTIES

The  covenants,  representations,  and warranties of each of the parties to this
Agreement shall survive the termination of this Agreement.

XIII. FINANCIAL OBLIGATIONS

There  will  be no  transfer  of  funds  between  NASA-KSC  and  Hybrid  Tech in
connection with this Agreement. Each party will fund its own participation under
this Agreement.

All activities under,  or  pursuant  to,  this  agreement  are  subject  to  the
availability of appropriated funds, and no  provision shall  be  interpreted  to
require obligation. or  provision  of  funds in violation of the Anti-Deficiency
Act, 31 U.S.C. section 1341.

XIV. INTELLECTUAL PROPERTY AND DATA RIGHTS

Data  generated  under  this  Agreement  will be  reserved  to  Hybrid  Tech for
scientific  analysis and first  publication  rights beginning with creation of a
form suitable for  analysis.  NASA may also have access to, and use of, the data
and any  associated  data,  but such access and use will not prejudice the first
publication rights of the investigators.

Final  results  will be  made  available  to the  scientific  community  through
publication in  appropriate  journals or other  established  channels as soon as
practicable  and consistent  with good  scientific  practice.  In the event such
reports or  publications  are  copyrighted,  NASA and  Hybrid  Tech shall have a
royalty-free  right  under  the  copyright  to  reproduce,   distribute,  create
derivative works, and use such copyrighted work for their purposes. In the event
such reports or publications are  copyrighted,  Hybrid Tech shall either own all
such copyrights,  or if Hybrid Tech chooses for any reason  whatsoever not to do
so,  NASA and  Hybrid  Tech  shall  each  have a  royalty-free  right  under the
copyright  to  reproduce,  distribute,  create  derivative  works,  and use such
copyrighted work for their purposes.

Title to inventions made (conceived or first actually  reduced to practice) as a
consequence  of, or in direct  relation to, the  performance  of  the activities
under this Agreement will remain with the respective  inventing parties,  and no
invention and patent rights are exchanged  between the parties unless  otherwise
specifically agreed and set forth in, this Agreement.  Tn the event an invention
is made  jointly  by  employees  of the  parties  or an  employee  of a  party's
contractor,  the  parties  will  consult and agree as to future  actions  toward
establishment  of patent  protection  for the  invention.  It is recognized  and
agreed that the parties may be required to and shall grant license

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or other  rights to  sponsor(s)  in  inventions,  data,  and  information  under
provisions which may be contained in prime funding agreement(s).

XV. DISCLAIMER OF WARRANTY

Neither NASA nor Hybrid Tech warrants the data's availability or suitability for
any particular use.

XVI. CONTINUING OBLIGATIONS

The obligations of the parties set forth in this Agreement  concerning Liability
and Risk of Loss and  intellectual  Property and Data Rights  shall  continue to
apply after the expiration or termination of this Agreement.

   VII. KEY PERSONNEL

The following personnel arc designated as the key officials for their respective
party.  These key  officials  are the  principal  points of contact  between the
parties in the performance of this Agreement:
<table>
<caption>
NASA-KSC                                                    HYBRID TECH
                                                         <c>
Brace Chesson                                               Richard Griffiths
Transportation, Alternative Fuels and Vehicles              Public Relations & Business Development
Mail Code: TA-El                                            Hybrid Technologies, Inc
NASA, John F. Kennedy Space Center                          5001 East Bonanza Road, Suite 138-14
Kennedy Space Center, FL 32899                              Las Vegas, NV 89110
Telephone: 321 867-8635                                     Telephone: 888-669-1808
Fax: 321-867-1.458                                          Fax: 702-926-9508
E-mail: Bruce E. Chesson@nasa.gov                           E-mail: rgriffiths@ hybridtechnologies.com
</table>

XVIII.TERM OF AGREEMENT AND RIGHT TO TFRMINAT1ON

This Agreement sets forth the entire and complete agreement between the parties.
This  Agreement  becomes  effective  on the  date of the last  signature  of the
parties.  Either party,  upon a 30-day  written  notice to the other party,  may
terminate this Agreement at any time and for any reason it deems substantial. In
the event of such termination,  each party shall return to the other any data it
furnished to assist the other in performance of this  Agreement,  but each party
may  retain  one  archival  copy of such  data  and any  data  generated  by its
performance  under the  Agreement,  unless the  "Intellectual  Property and Data
Rights" or other section of this Agreement  provides  otherwise.  This Agreement
shall expire upon completion of all  obligations of both,  parties hereto or not
to exceed one year from the date of the last signature of the parties, whichever
comes first.

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XIX. NEWS RELEASES AND PUBLICATIONS

The parties  agree to  coordinate  in advance any news  releases  and/or  widely
distributed publications that result from activities ,performed pursuant to this
Agreement.  This coordination  shall entail,  notifying the respective points of
contact of the proposed news release or publication in sufficient  time to allow
the other party an opportunity to review and comment as deemed appropriate.

XIX. USE OF NAME, INITIALS, AND INSIGNIA

Hybrid Tech agrees to submit to  NASA  for  its  approval  all  promotional  and
advertising material that uses the  NASA  name,  initials,  insignia,  seal,  or
logotype prior to publication. Approval by NASA. shall be  based  on  applicable
law (e.g..  42 U.S.C. section 2459(b), 2472(a), and   2473(c)(1);  and 14 C.F.R.
section 1221.100 et seq.) and policy governing the use:  of  the words "National
Aeronautics and Space Administration," and the letters "N A S A,"  and the NASA.
insignia, sea], and logotype.

NASA agrees that it will not at any time during or following termination of this
Agreement use the name of Hybrid Tech or any other names,  insignia,  symbol(s),
or logotypes  associated with Hybrid Tech or any variant or variants  thereof or
the  names of the  principal  Hybrid  Tech  representative  or  employee  in any
formally published literature, advertising, or other materials without the prior
written consent of Hybrid Tech, notwithstanding the foregoing, Hybrid Tech shall
be  permitted  to state orally and in writing the fact that the loan of vehicles
has taken place.
XX. INDEPENDENCE OF CONTRACTS

The parties  agree that this  Agreement is  independent  of  any other  contract
between the United States  Government and Hybrid Tech. By  participating in this
Agreement,  NASA makes no assurances to Hybrid Tech or others as to  performance
of the objects  tested in NASA  facilities  or other test  objects and  relieves
Hybrid Tech of none of its obligations under any other contract, grant, or other
agreement with the  Government.  This  Agreement  does not constitute  NASA's or
Hybrid Tech's endorsement of any test results,  resulting designs,  hardware, or
other matters.
XXI. NONEXCLUSIVITY

This Agreement is not exclusive; accordingly, Hybrid Tech or NASA may enter into
similar  agreements for the same or similar purpose with other private or public
entities.

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XXIII. EXECUTION

This Agreement is hereby executed in duplicate originals by the undersigned.

National Aeronautics                        Hybrid Technologies, Inc.
And Space Administration
John F. Kennedy Space Center
BY: /s/ James W. Kennedy                    By: /s/ Holly Roseberry
James W. Kennedy                            Holly Roseberry
Director                                    President================================================================================

           BRIDGE LOAN AND CONTROL SHARE PLEDGE AND SECURITY AGREEMENT

         THIS BRIDGE LOAN AND CONTROL SHARE PLEDGE AND SECURITY AGREEMENT  (this
"Agreement") is made this  17th  day  of  March,  2006,  by  and  among  BRASADA
CALIFORNIA, INC., a Delaware corporation ("Borrower"), John L. Moran,  Dennis B.
Tower,  MMP LLP, and W. Kirk Bosche (each a "Stockholder" and  collectively, the
"Stockholders"), and FOOTHILLS RESOURCES, INC., a Nevada corporation ("Lender").

                              W I T N E S S E T H:
         WHEREAS,  Lender and Borrower have agreed upon certain of the terms and
conditions of a merger (the  "Merger") and related  transactions  (collectively,
the "Transactions"), as set forth in the Term Sheet attached hereto as Exhibit A
(the "Term Sheet"); and

         WHEREAS,  simultaneously  herewith  Lender  is  engaged  in  a  private
placement  offering (the "PPO") of its securities,  which PPO is being conducted
pursuant to the exemption from registration provided by Rule 506 of Regulation D
under the  Securities  Act of 1933,  as amended  (the  "Securities  Act") and/or
Section 4(2) of the Securities Act;

         WHEREAS,  to provide Borrower with sufficient working capital to enable
Borrower  to  fulfill  its  obligations  under  certain  contractual  agreements
incident  to its oil and gas  exploration  business  while  Lender and  Borrower
prepare  the   documentation   necessary  and   appropriate  to  consummate  the
Transactions  and obtain all necessary  approvals  from  stockholders  and third
parties,  Lender has agreed to utilize a portion of the  proceeds  of the PPO to
provide Borrower with a temporary loan;

         WHEREAS, in order to secure the Borrower's  obligations under such loan
including,  but not limited to, the  Borrower's  obligations  under the Note and
Security  Agreement  (hereinafter  referenced),  each  dated  as  of  even  date
herewith,  the Stockholders have agreed to pledge to the Lender 51,001 shares of
Borrower's  common stock (the "Borrower  Control  Shares") which will constitute
51% of the outstanding capital stock of Borrower, on a fully-diluted basis;

         NOW,  THEREFORE,  in  consideration  of the premises and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  Borrower and the Lender,  intending to be legally bound, agree as
follows:

                                ARTICLE I - LOAN

         1.1.  Loan.  Lender  agrees,  on  the  terms  and  conditions  of  this
Agreement, to make loans to Borrower in the amount of up toThree Million Dollars
($3,000,000)  (the "Loan").  Upon the execution and delivery of this  Agreement,
the Lender shall  disburse  Nine  Hundred  Ninety  Seven  Thousand  Five Hundred
Dollars ($997,500) of the Loan to Borrower.

<page>

         1.2. The Note.  Borrower has authorized the issuance  promissory  notes
(each, a "Note") made in favor of Lender by Borrower, which shall be in the form
set forth in Exhibit B attached hereto. Each disbursement of the Loan shall bear
interest  at the rate of nine  percent  (9%)  per  annum,  and  shall be due and
payable to the order of Lender 120 days after the date of such disbursement (the
"Due  Date");  provided,  however,  that from and after an Event of Default,  as
defined in  Article VI hereof,  such  interest  rate shall  increase  to fifteen
percent (15%) per annum.

         1.3. Payments.  Borrower will begin making consecutive monthly interest
only payments on the Loan of accrued interest  commencing thirty (30) days after
the date of a disbursement  and  continuing  through the Due Date, at which time
Borrower  shall repay the unpaid  principal  amount of the Loan,  together  with
accrued and unpaid interest;  provided, that upon the closing of the Merger, all
amounts  outstanding  under the Loan  shall be  forgiven,  and the Note shall be
deemed repaid in full.

                              ARTICLE II - SECURITY

         As collateral security for Borrower's  obligations  hereunder and under
the Notes,  Borrower  will grant and  pledge a security  interest  in all of its
respective  assets  to  Lender,  upon the  terms and  conditions  of a  Security
Agreement  in the form set forth in  Exhibit C attached  hereto,  which is being
executed and delivered  simultaneously  herewith. As an additional inducement to
Lender to make the Loan  hereunder,  the  Stockholders  will pledge the Borrower
Control  Shares,  as  provided  for below.  All  certificates  representing  the
Borrower  Control Shares,  shall be deposited into escrow pursuant to the Pledge
and Escrow  Agreement (the "Escrow  Agreement")  being  executed  simultaneously
herewith

                      ARTICLE III - BORROWER CONTROL SHARES

         3.1 Rights Relating to Borrower Control Shares. Prior to the occurrence
of an Event of Default (as defined  herein),  (i) the Lender shall have no right
to  vote  the  Borrower   Control  Shares  at  any  meeting  of  the  Borrower's
stockholders,  and (ii) the Lender shall have no right to assign or transfer the
Borrower  Control Shares.  Upon the occurrence of such an Event of Default,  the
Lender  shall be entitled (X) to vote the Borrower  Control  Shares,  and (Y) to
assign or transfer such Borrower  Control Shares,  and to enjoy all other rights
and privileges incident to the ownership of the Borrower Control Shares.  Lender
shall  credit   against  the  amounts  owed  on  the  Loan,   any  dividends  or
distributions  received  with respect to the Borrower  Control  Shares,  and any
proceeds received from the sale or disposition of the Borrower Control Shares.

         3.2 Release  of  Pledged  Shares  from  Pledge  and  Borrower   Control
Shares from Escrow.  Upon the payment of all amounts due to the Lender under the
Loan  Documents  by  repayment  in  accordance  with the terms of the Note,  the
parties  hereto  shall notify the Escrow  Agent,  as such term is defined in the
Escrow  Agreement,  to such  effect in  writing.  Upon  receipt of such  written
notice,  the Escrow Agent shall return to the party designated in the notice the
Transfer  Documents  and the  certificates  representing  the  Borrower  Control
Shares.  Notwithstanding  anything to the contrary  contained herein,  upon full
payment of all amounts due to the Lender under the Loan Documents,  by repayment
in accordance with the terms of the Note,  this Agreement and Lender's  security
interest and rights in and to the Borrower Control Shares shall terminate.

                                       2

<page>

             ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BORROWER

         Borrower  (together  with  Stockholder,  with  respect to Section  4.10
below) represents and warrants to Lender as follows:

         4.1.  Organization.  Borrower is a corporation  duly existing under the
laws of its  jurisdiction  of  incorporation  and  qualified  and licensed to do
business  in any  jurisdiction  in which  the  conduct  of its  business  or its
ownership of property requires that it be so qualified, except where the failure
to be so qualified  would not have a material  adverse  effect on the  business,
operations,  condition  (financial  or  otherwise),  property  or  prospects  of
Borrower,  or the ability of Borrower to carry out their respective  obligations
under the Loan Documents (as defined in Section 4.2 below) (a "Company  Material
Adverse Effect").

         4.2. Subsidiaries.  Borrower has no Subsidiaries.  For purposes of this
Agreement, a "Subsidiary" means any corporation,  partnership,  joint venture or
other entity in which Borrower has,  directly or indirectly,  an equity interest
representing  50% or more of the capital stock thereof or other equity interests
therein.

         4.3.  Authorization.  All corporate  action on the part of Borrower and
its  officers,  directors  and  stockholders  necessary  for the  authorization,
execution,  delivery and  performance of all  obligations of Borrower under this
Agreement,  the Note, the Security Agreement, the Escrow Agreement and all other
documents necessary or desirable in connection with the Loan (collectively,  the
"Loan  Documents")  to which any of them may be a party  have been  taken.  This
Agreement,  the Note,  the Escrow  Agreement  and the Security  Agreement,  when
executed and delivered by Borrower,  shall constitute  legal,  valid and binding
obligations of Borrower,  enforceable  against Borrower in accordance with their
terms,  except as such  enforceability may be limited by applicable  bankruptcy,
insolvency,  moratorium  or similar  laws  affecting  creditors'  rights and the
enforcement  of debtors'  obligations  generally  and by general  principles  of
equity,  regardless of whether enforcement is pursuant to a proceeding in equity
or at law.

         4.4. Absence of Conflicts.  The execution,  delivery and performance of
this  Agreement and each of the other Loan Documents is not in conflict with nor
does  it  constitute  a  breach  of  any   provision   contained  in  Borrower's
organizational  documents,  nor will it constitute an event of default under any
material agreement to which Borrower is a party or by which Borrower is bound.

         4.5.  Consents and  Approvals.  Borrower  has  obtained  all  consents,
approvals and  authorizations  of, made all  declarations  or filings with,  and
given all  notices  to,  all  governmental  authorities  and  agencies  that are
necessary  for the  continued  operation  of  Borrower's  business as  currently
conducted, or are required by law.

                                       3

<page>

         4.6  Capitalization.  The authorized and  outstanding  share capital of
Borrower is described on Schedule  4.6 attached  hereto.  Except as set forth on
Schedule 4.6 or as contemplated by the Transactions, there are no subscriptions,
convertible  securities,  options,  warrants  or  other  rights  (contingent  or
otherwise) currently  outstanding to purchase any of the authorized but unissued
capital  stock  of  Borrower.  Except  as  set  forth  in  Schedule  4.6  or  as
contemplated by the Transactions,  Borrower has no obligation to issue shares of
its capital stock, or subscriptions,  convertible securities, options, warrants,
or other rights  (contingent or otherwise) to purchase any shares of its capital
stock or to distribute to holders of any of its equity securities,  any evidence
of indebtedness  or asset. No shares of Borrower  capital stock are subject to a
right of  withdrawal or a right of rescission  under any  applicable  securities
law. Except as set forth in Schedule 4.6, there are no outstanding or authorized
stock  appreciation,  phantom  stock  or  similar  rights  with  respect  to the
Borrower. To the Knowledge of the Borrower,  except as described in Schedule 4.6
or otherwise  contemplated by this  Agreement,  there are no agreements to which
the  Borrower  is a party or by which it is bound  with  respect  to the  voting
(including without limitation voting trusts or proxies),  registration under any
applicable  securities laws, or sale or transfer  (including  without limitation
agreements  relating to pre-emptive  rights,  rights of first  refusal,  co-sale
rights  or  "drag-along"  rights)  of any  securities  of the  Borrower.  To the
Knowledge of the Borrower, there are no agreements among other parties, to which
the  Borrower is not a party and by which it is not bound,  with  respect to the
voting  (including  without  limitation  voting  trusts or  proxies)  or sale or
transfer  (including without limitation  agreements  relating to rights of first
refusal,  co-sale  rights  or  "drag-along"  rights)  of any  securities  of the
Borrower.

         4.7.  Litigation.  Except as  disclosed on Schedule  4.7,  there are no
actions,  suits,  claims,   investigations,   arbitrations  or  other  legal  or
administrative  proceedings,  to the Knowledge of Borrower,  threatened  against
Borrower at law or in equity, and to Borrower's Knowledge, there is no basis for
any of the  foregoing.  Except  as  disclosed  on  Schedule  4.7,  there  are no
unsatisfied judgments,  penalties or awards against or affecting Borrower or its
businesses,  properties or assets. Except as disclosed on Schedule 4.7, Borrower
is not in default,  and no event has occurred  which with the passage of time or
giving of notice or both would  constitute a default by Borrower with respect to
any order,  writ,  injunction  or decree known to or served upon Borrower of any
court  or of any  foreign,  federal,  state,  municipal  or  other  governmental
department,  commission,  board, bureau, agency or instrumentality,  domestic or
foreign.  Except as  disclosed  on Schedule  4.7,  there is no action or suit by
Borrower pending or threatened  against others.  Except as disclosed on Schedule
4.7,  Borrower  has  complied  with all  laws,  rules,  regulations  and  orders
applicable to its current business, operations, properties, assets, products and
services the violation of which would have a Company  Material  Adverse  Effect.
There is no  existing  law,  rule,  regulation  or order,  and  Borrower  has no
Knowledge of any proposed  law,  rule,  regulation  or order,  whether  foreign,
federal or state,  that would prohibit or materially  restrict Borrower from, or
otherwise  materially adversely affect Borrower in, conducting its businesses in
any jurisdiction in which it is now conducting business.

                                       4

<page>

         As defined in this Agreement,  "Knowledge" of Borrower means the actual
knowledge  by a  director  or  officer  of  Borrower  of a  particular  fact  or
circumstance  or such knowledge as may reasonably be imputed to such person as a
result of his actual  knowledge of other facts or  circumstances  as well as any
other  knowledge which such person would have possessed had they made reasonable
inquiry of  appropriate  employees  and agents of Borrower  with  respect to the
matter in question.

         4.8. Absence of Certain Events.  To  the Borrower's Knowledge, there is
no existing condition, event or series  of  events  which  reasonably  would  be
expected to have a Company Material Adverse Effect.

         4.9  Title  to  Property  and  Assets.  Borrower  does not own any real
property.  Except as set forth on Schedule 4.9, Borrower has good and marketable
title to all of its personal  property and assets free and clear of any material
restriction,  mortgage,  deed of trust, pledge, lien, security interest or other
charge, claim or encumbrance which would have a Company Material Adverse Effect.
Except as set forth on Schedule 4.9,  with respect to  properties  and assets it
leases,  Borrower is in material  compliance  with such leases and holds a valid
leasehold interest free of any liens,  claims or encumbrances which would have a
Company Material Adverse Effect.

         4.10. Governmental Permits. Borrower (including its Subsidiaries) holds
all licenses,  franchises,  permits and other governmental  authorizations which
are required for the conduct of any aspect of Borrower's business,  as presently
conducted  and as presently  contemplated  to be conducted,  including,  but not
limited to, all such business  operations  contemplated  by, or incident to, the
Transactions.  All such  licenses,  franchises,  permits and other  governmental
authorizations  are valid and current,  and Borrower has not received any notice
that any governmental  authority  intends to cancel,  terminate or not renew any
such license, franchise,  permit or other governmental  authorization.  Borrower
has  conducted  and  is   conducting   its  business  in  compliance   with  the
requirements,  standards,  criteria and  conditions  set forth in such licenses,
franchises,  permits  and other  governmental  authorizations,  and all laws and
regulations applicable thereto, and is not in violation of any of the foregoing.
The  consummation of the transactions  contemplated  hereunder will not alter or
impair  or  require  changes  to any such  license,  franchise,  permit or other
governmental authorization.

         4.11 Borrower  Control  Shares.  The Borrower  Control Shares have been
duly and validly  authorized for issuance and pledge  pursuant to this Agreement
and, when issued and delivered as provided  hereunder,  will be duly authorized,
validly issued,  fully paid and  non-assessable  and free and clear of all Liens
imposed by the Borrower or any other person other than  restrictions on transfer
provided for in the Loan  Documents.  As used in this  Agreement  "Lien" means a
lien,  charge,  security  interest,  right of first refusal,  preemptive  right,
mortgage, pledge, title retention device, or other encumbrance or restriction.

                                       5

<page>

                        ARTICLE V - COVENANTS OF BORROWER

         So long as the Note is outstanding, Borrower agrees that, unless Lender
shall give its prior consent in writing:

         5.1. Ordinary Course. Borrower shall  carry  on  its  business  in  the
ordinary course substantially as conducted heretofore, and shall not  engage  in
any transaction outside of the ordinary course of business.

         5.2. Maintain Properties. Borrower shall maintain  its  properties  and
facilities in good  working  order  and  condition,  reasonable  wear  and  tear
excepted.

         5.3. Performance under Agreements. Borrower shall perform  all  of  its
obligations under agreements  relating to or affecting its assets, properties or
rights.

         5.5. Cooperation with Lender.  Borrower shall cooperate with Lender and
shall use its reasonable best efforts to complete and sign the merger  agreement
(the "Merger Agreement") contemplated by the Merger and shall use its reasonable
best efforts to consummate the Transactions contemplated thereby.

         5.5.  Financial  Statements.  Borrower shall provide to Lender prior to
the Due  Date any such  audited  or  unaudited  financial  statements  as may be
required  under  applicable  U.S.   Securities   Exchange   Commission   ("SEC")
regulations  for  inclusion  of  such  statements  in  Lender's  SEC  and  other
regulatory filings upon and following the Closing of the Merger.

         5.6. Maintenance of Business Organization.  Borrower shall maintain and
preserve its business organization intact and use its best efforts to retain its
present key employees and  relationships  with  suppliers,  customers and others
having business relationships with Borrower.

         5.7. Compliance with Permits. Borrower shall maintain  compliance  with
all permits, laws, rules and regulations, consent orders and all other orders of
applicable courts, regulatory agencies, and similar governmental authorities.

         5.8. Leases. Borrower shall maintain its present leases  in  accordance
with their respective terms, and  shall  not  enter  into  new  or amended lease
instruments.

         5.9.   Payments.   Except  with  respect  to  fees  due  to  attorneys,
accountants, and investment bankers relating to the Transactions, including with
respect  to the  Loan,  Borrower  shall  not make  any  payment,  or  incur  any
obligation  to make any payment in the ordinary  course of business in excess of
$25,000  without the prior written  consent of the Lender.  Notwithstanding  the
foregoing,  Borrower is hereby permitted to make all such expenditures as are in
compliance  with (with  respect to both type of expense and amount  thereof) the
use of proceeds (the "Use of Proceeds") attached hereto as Exhibit D.

                                       6

<page>

         5.10. Loan Documents. Borrower shall comply in all  respects  with  the
terms of the Security Agreement and all other Loan Documents.

         5.11.  Indebtedness.  Except as  contemplated  by the Use of  Proceeds,
Borrower shall not incur any indebtedness other than: (i) trade debt incurred in
the ordinary course of business, (ii) purchase money obligations in the ordinary
course of business up to $25,000,  or (iii) taxes and assessments not delinquent
or actively being contested in good faith by Borrower and for which Borrower has
adequate reserves.

         5.12.  Liens.  Borrower  shall not permit to exist  against  any of its
assets  any Lien  except for (i)  Permitted  Liens (as  defined in the  Security
Agreement),  (ii)  taxes  and  assessments  not  delinquent  or  actively  being
contested  in good  faith  by  Borrower  and for  which  Borrower  has  adequate
reserves,  or (iii)  deposits  or  pledges  for  goods or  services  made in the
ordinary course of business.

         5.13.  Mergers.  Except as contemplated by the  Transactions,  Borrower
shall not merge or  consolidate  with or into any  other  corporation,  or sell,
assign,  lease or  otherwise  dispose of or  voluntarily  part with the  control
(whether in one  transaction or in a series of related  transactions)  of assets
(whether  now owned or  hereafter  acquired)  having a fair market value of more
than $25,000 at the time(s) of transfer, or sell, assign or otherwise dispose of
(whether in one transaction or in a series of transactions)  any of its accounts
receivable (whether now in existence or hereafter created) at a discount or with
recourse,  to any person,  except sales or other  dispositions  of assets in the
ordinary course of business.

         5.14.  Issuance  of  Capital  Stock.  Except  as  contemplated  by  the
Transactions,  Borrower shall not issue, or agree or commit to issue, any shares
of capital stock,  or to issue or grant any option,  warrant,  security or other
rights  (contingent  or otherwise) to purchase or acquire  shares of its capital
stock, or any bond,  debenture or other  instrument or obligation  which has the
power to vote in respect to the corporate affairs and management of Borrower.

         5.15. Charter Documents. Borrower shall not make any amendment  to  its
Certificate of Incorporation or its By-Laws.

         Within  three (3)  business  days  following  Borrower's  request for a
waiver of any  provision of this Article V, the Lender  shall  provide  Borrower
with their response to such request.

                       ARTICLE VI - DEFAULTS AND REMEDIES

         6.1. An "Event of Default" occurs if:

                                       7

<page>

                  (a)  Borrower  defaults  in the  payment of any  principal  or
         interest  of the Note when the same  shall  become  due,  either by the
         terms thereof or otherwise as herein provided; or

                  (b) Borrower defaults in the performance or observance of  any
         other agreement, term or  condition contained in the Note or the  other
         Loan Documents; or

                  (c) Borrower shall default in the payment of any principal of,
         or premium, if any, or interest on, any other indebtedness in excess of
         $25,000 or obligation  with respect to borrowed money after  expiration
         of any grace or cure period or shall default in the  performance of any
         material term of any instrument  evidencing such indebtedness or of any
         mortgage,  indenture or agreement  relating thereto after expiration of
         any grace or cure period, and the effect of such default is to cause or
         to permit  the  holder or holders  of such  obligation  to cause,  such
         indebtedness  or  obligation  to become  due and  payable  prior to its
         stated maturity; or

                  (d) The Merger shall not have closed by the Due Date; or

                  (e) Borrower  pursuant  to  or  within   the  meaning  of  any
                      Bankruptcy Law:

                           (i)   commences a voluntary case,

                           (ii)  consents to the entry of an  order  for  relief
                                 against it in an involuntary case,

                           (iii) consents to the appointment  of a  Custodian of
                                 it or for  all  or  substantially  all  of  its
                                 property,

                           (iv)  makes a  general  assignment for the benefit of
                                 its creditors, or

                           (v)   is the  debtor in  an involuntary case which is
                                 not dismissed within thirty (30)  days  of  the
                                 commencement thereof, or

                  (f) A court  of  competent  jurisdiction  enters  an  order or
                      decree under any Bankruptcy Law that:

                           (i)   provides for  relief  against  Borrower  in  an
                                 involuntary case,

                           (ii)  appoints a Custodian of  Borrower  for  all  or
                                 substantially all of its property, or

                           (iii) orders the liquidation of Borrower,

                                       8

<page>

                  (g) A final  judgment for the payment of money in an amount in
         excess of $25,000 shall be rendered  against  Borrower  (other than any
         judgment as to which a reputable  insurance company shall have accepted
         full liability in writing) and shall remain  undischarged  for a period
         (during which  execution  shall not be  effectively  stayed) of 20 days
         after the date on which the right to appeal has expired;

                  (h) Any  representation  or warranty  made by Borrower in this
         Agreement,  any  other  Loan  Document  or in  any  other  document  or
         instrument  furnished in connection with the transactions  contemplated
         hereby shall prove to be  materially  false or incorrect on the date as
         of which such representation or warranty was made; or

                  (i) An event shall occur or there exist facts or circumstances
         which create or result in a Company Material Adverse Effect;

         then and in any such  case (x)  upon  the  occurrence  of any  Event of
Default  described in paragraphs (e) or (f), the unpaid  principal amount of and
accrued  interest  on the Notes  shall  automatically  become  due and  payable,
without  presentment,  demand,  protest or notice of any kind,  all of which are
hereby  waived by Borrower,  and (y) upon the  occurrence  of any other Event of
Default,  in addition to any other rights,  powers and remedies permitted by law
or in equity,  the Lender may, at its option,  by notice in writing to Borrower,
declare  the  Notes  to be,  and  the  Notes  shall  thereupon  be  and  become,
immediately  due and payable,  together  with interest  accrued  thereon and all
other sums due hereunder,  without presentment,  demand, protest or other notice
of any kind, all of which are waived by Borrower.

         Upon the  occurrence  of any Event of Default,  the holder of the Notes
may  proceed  to protect  and  enforce  its rights by an action at law,  suit in
equity or other appropriate proceeding,  whether for the specific performance of
any  agreement  contained  herein or in the Notes held by it, for an  injunction
against a violation of any of the terms hereof or thereof, or for the pursuit of
any other  remedy  which it may have by virtue of this  Agreement,  the Security
Agreement or pursuant to applicable law. Borrower shall pay to the holder of the
Notes upon demand the  reasonable  costs and expenses of  collection  and of any
other  actions  referred  to  in  this  Article,  including  without  limitation
reasonable attorneys' fees, expenses and disbursements.

         No  course  of  dealing  and no delay on the part of the  holder of the
Notes in  exercising  any of its rights  shall  operate  as a waiver  thereof or
otherwise prejudice the rights of such holders,  nor shall any single or partial
exercise of any right,  power or remedy  preclude any other or further  exercise
thereof or the exercise of any other right, power or remedy hereunder. No right,
power or remedy  conferred hereby or by the Notes on the holder thereof shall be
exclusive of any other right,  power or remedy  referred to herein or therein or
now or hereafter available at law, in equity, by statute or otherwise.

         6.2. For purposes  of  this Article, the  following  definitions  shall
apply:

                                       9

<page>

         "Bankruptcy Law" means Title 11, U.S. Code or any  similar  federal  or
state  law  for  the  relief  of  debtors,  or  equivalent  law  of  a  non-U.S.
jurisdiction.

         "Custodian"  means  any  receiver,  trustee,  assignee,  liquidator  or
similar official under any Bankruptcy Law.

                              ARTICLE VII - NOTICES

         All notices,  requests  and demands  shall be given to or made upon the
respective parties hereto in writing, such address as may be designated by it in
a written notice to the other party. All notices, requests, consents and demands
hereunder  shall be effective  when duly  deposited  in the mails (by  overnight
delivery  by a  nationally-recognized  overnight  courier  service  or by United
States registered or certified mail, postage prepaid,  return receipt requested)
with a copy via  facsimile.  Unless the  parties  designate  otherwise,  notices
should be addressed as follows:

If to Borrower or to the Stockholders:

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

with a copy to:

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

and with a copy to:

         W. Kirk Bosche
         14619 Carols Way Drive,
         Houston, Texas 77070
         Facsimile: (281) 376-9367

If to Lender:

         Foothills Resources, Inc.
         Candiana Lodge, Wellfield C1, Coads Green
         Launceston, Cornwall, England
         Attn: J. Earl Terris, President and Chief Executive Officer
         Facsimile: (011) 441566782214

                                       10

<page>

with a copy to:

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

                          ARTICLE VIII - MISCELLANEOUS

         8.1. Governing Law. This Agreement shall be  governed by and  construed
in accordance with  the  laws  of the  State  of  New  York, without  regard  to
conflicts of laws principles thereof.

         8.2. Amendment. This Agreement may be amended, modified  or  terminated
only by an instrument in writing signed by all parties.

         8.3. No Assignment. Neither this Agreement nor any right or  obligation
provided for herein may be  assigned by any  party  without  the  prior  written
consent of the other parties.

         8.4. Successors. The terms and provisions of this  Agreement  shall  be
binding upon and inure to the  benefit of, and be enforceable by, the respective
successors and assigns of the parties hereto.

         8.5. Counterparts. The Agreement may  be  executed  in  any  number  of
counterparts, with the same  effect as  if  all  parties  had  signed  the  same
document. All such counterparts shall be deemed an original, shall be  construed
together and shall constitute one and the same instrument. This Agreement may be
executed by facsimile signature.

         8.6. Construction. The language used in this Agreement shall be  deemed
to be the language chosen by the  parties to express their mutual intent, and no
rule of strict construction shall be applied against any party.

         8.8. Headings. The section headings contained  in  this  Agreement  are
inserted for convenience only and  shall not affect in any way  the  meaning  or
interpretation of this Agreement.

         8.8.  Severability.  Any term or  provision of this  Agreement  that is
invalid or unenforceable  in any situation in any jurisdiction  shall not affect
the validity or  enforceability  of the remaining terms and provisions hereof or
the validity or  enforceability  of the offending term or provision in any other
situation  or in any other  jurisdiction.  If the final  judgment  of a court of

                                       11

<page>

competent  jurisdiction declares that any term or provision hereof is invalid or
unenforceable,  the parties  agree that the court  making the  determination  of
invalidity  or  unenforceability  shall  have the  power  to  limit  the term or
provision,  to delete  specific  words or phrases,  or to replace any invalid or
unenforceable  term or  provision  with a term or  provision  that is valid  and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable  term or provision,  and this Agreement shall be enforceable as so
modified.

                                       12

<page>

         IN WITNESS WHEREOF, the parties hereto have caused this Bridge Loan and
Control  Share Pledge and Security  Agreement to be duly  executed as of the day
and year first above written.

LENDER:                                        BORROWER:

FOOTHILLS RESOURCES, INC.                      BRASADA CALIFORNIA, INC.

By:______________________                      By:______________________
Name:    J. Earl Terris                        Name:    Dennis B. Tower
Title:   Chief Executive Officer               Title:   Chief Executive Officer

STOCKHOLDER:                                   STOCKHOLDER:

DENNIS B. TOWER                                JOHN L. MORAN

-----------------------------                  ----------------------------

STOCKHOLDER:                                   STOCKHOLDER:

MMP LLP                                        W. KIRK BOSCHE

By:_________________________                   __________________________
Name:
Title:   Managing Partner

                                       13

<page>

                                    EXHIBIT A

                                  [Term Sheet]

                                       14

<page>

                                    EXHIBIT B

                                 Promissory Note

                                       15

<page>

                                    EXHIBIT C

                              [Security Agreement]

                                       16

<page>

                                    EXHIBIT D

                      [Use of Proceeds of Bridge Financing]

                                       17

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