PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "Agreement"), dated August 24, 2005, between
Strata Oil & Gas Inc., a Canadian corporation (the "Pledgor"), and Pacific World
Enterprises (the "Pledgee").
W I T N E S S E T H:
WHEREAS, the Pledgor is indebted to the Pledgee in the principal amount
of USD $1,000,000 Dollars pursuant to the Secured Promissory Note, dated of even
date herewith (the "Note"), made by the Pledgor in favor of the Pledgee
(capitalized terms used and not defined herein shall have the meanings ascribed
to them in the Note);
WHEREAS, pursuant to the Note, the Pledgee has required and the Pledgor
has agreed, subject to the terms and conditions herein, to grant to the Pledgee,
its successors, endorsees, transferees or assigns a security interest in
60,000,000 shares of the common stock of Pledgor (the "Shares") by the Pledgor
as collateral security for payment of the amounts due under the Note.
NOW, THEREFORE, in consideration of the foregoing recitals, and the
mutual covenants contained herein, the parties hereby agree as follows:
1. Pledge. As collateral security for the punctual payment and performance, when
and if due, by the Pledgor of the Note, Pledgor hereby pledges with,
hypothecates, transfers and assigns to the Pledgee all of the Shares and all
proceeds, shares and other securities received, receivable or otherwise
distributed in respect of or in exchange for said shares, including, without
limitation, any shares and other securities into which such shares may be
convertible or exchangeable (collectively, the "Collateral").
2. Voting Power, Dividends, Etc. and other Agreements.
(a) Unless and until an Event of Default (as set forth in Section 3 below) has
occurred, the Pledgee shall be entitled to exercise all voting powers pertaining
to the Collateral, or any part thereof, for all purposes.
(b) Unless and until an Event of Default (as set forth in Section 3 below) has
occurred, the Pledgor shall be entitled to receive and retain dividends paid
with respect to the Collateral.
(c) The Pledgor and Pledgee agree that they will not sell, assign, transfer,
pledge, hypothecate, encumber or otherwise dispose of the Collateral.
3. Default and Remedies. For purposes of this Agreement, an "Event of Default"
shall have the meaning given to such term in the Note. The Pledgee shall have
the following rights upon an Event of Default:
(a) the rights and remedies provided by applicable laws, as
said laws may be amended; and
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(b) all the rights, title, and interest in and to the
Collateral, including, without limitation, the right to receive and
retain all dividends, payments and other distributions of any kind upon
any or all of the Collateral.
4. Representations and Warranties.
(a) The Pledgor hereby represents and warrants to the Pledgee
that:
(1) the Pledgor has full power and authority and
legal right to pledge the Collateral to the Pledgee pursuant
to this Agreement and this Agreement constitutes a legal,
valid and binding obligation of the Pledgor, enforceable in
accordance with its terms;
(2) the execution, delivery and performance of this
Agreement and other instruments contemplated herein will not
violate any provision of any order or decree of any court or
governmental instrumentality or of any mortgage, indenture,
contract or other agreement to which the Pledgor is a party or
by which the Pledgor and the Collateral may be bound, and will
not result in the creation or imposition of any lien, charge
or encumbrance on, or security interest in, any of the
Pledgor's properties pursuant to the provisions of such
mortgage, indenture, contract or other agreement; and
(3) the Shares are duly authorized and validly
issued;
(b) The Pledgee hereby represents and warrants to the Pledgor
that:
(1) the Pledgee has full power and authority and
legal right to enter into this Agreement and this Agreement
constitutes a legal, valid and binding obligation of the
Pledgee, enforceable in accordance with its terms;
(2) the execution, delivery and performance of this
Agreement and other instruments contemplated herein will not
violate any provision of any order or decree of any court or
governmental instrumentality or of any contract or other
agreement to which the Pledgee is a party or by which the
Pledgor may be bound;
(3) The Pledgee acknowledges its understanding that
the offering and sale of the Shares is intended to be exempt
from registration under the Securities Act. In furtherance
thereof, in addition to the other representations and
warranties of the Pledgee made herein, the Pledgee further
represents and warrants to and agrees with the Pledgor and its
affiliates as follows:
(i) The Pledgee is acquiring the interest in
the Shares for the Pledgee's own account as
principal, not as a nominee or agent, for investment
purposes only, and not with a view to, or for,
resale, distribution or fractionalization thereof in
whole or in part and no other person has a direct or
indirect beneficial interest in such Shares or any
portion thereof. Further, the Pledgee does not have
any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant
participations to such person or to any third person,
with respect to the Shares or any part of the Shares.
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(ii) The Pledgee is not acquiring the
interest in the Shares as a result of or subsequent
to any advertisement, article, notice or other
communication published in any newspaper, magazine or
similar media or broadcast over television or radio,
or presented at any seminar or meeting, or any
solicitation of a subscription by a person previously
not known to the Pledgee in connection with
investment securities generally.
(iii) The Pledgee is experienced in entering
into transactions of the kind described in this
Agreement and the related documents, and is able, by
reason of the business and financial experience of
its officers (if an entity) and professional advisors
(who are not affiliated with or compensated in any
way by the Pledgor or any of its affiliates or
selling agents), to protect its own interests in
connection with the transactions described in this
Agreement and the related documents. The Pledgee has
the financial ability to bear the economic risk
associated with the transactions described in this
Agreement and the related documents and has adequate
means for providing for its current needs and
personal contingencies. The Pledgee realizes that the
basis for the exemption may not be present if,
notwithstanding such representations, the Pledgee has
in mind merely acquiring the Shares for a fixed or
determinable period in the future, or for a market
rise, or for sale if the market does not rise. The
Pledgee does not have any such intention.
(iv) The Pledgee has been provided an
opportunity for a reasonable period of time prior to
the date hereof to obtain additional information
concerning the Shares, the Pledgor and all other
information to the extent the Pledgor possesses such
information or can acquire it without unreasonable
effort or expense.
(v) The Pledgee understands that the
interest in the Shares is granted to Pledgee in
reliance on an exemption from the registration
requirements of United States federal and state
securities laws and that the Pledgor is relying upon
the truth and accuracy of the representations,
warranties, agreements, acknowledgments and
understandings of the Pledgee set forth herein in
order to determine the applicability of such
exemptions and the suitability of the Pledgee to
acquire the security interest in the Shares.
(vi) The Pledgee is an "accredited investor"
as that term is defined in Rule 501 of the General
Rules and Regulations under the Securities Act by
reason of Rule 501(a)(3).
(vii) Each certificate for any Shares shall
bear a legend to the effect that the Shares have not
been registered under the Securities Act or
registered or qualified under any the securities laws
of any state or other jurisdiction, are "restricted
securities," and cannot be resold or otherwise
transferred unless they are registered under the
Securities Act, and registered or qualified under any
other applicable securities laws, or an exemption
from such registration and qualification is
available. Any resale of the Shares shall only be
made in compliance with exemptions from registration
afforded by the Securities Act and the rules and
regulations promulgated thereunder. Further, any such
sale of the Shares in any jurisdiction outside of the
United States will be made in compliance with the
securities laws of such jurisdiction. The Pledgee
will not offer to sell or sell the Shares in any
jurisdiction unless the Pledgee obtains all required
consents, if any.
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5. No Waiver; No Election of Remedies. No failure on the part of the Pledgee to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Pledgee of any right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The remedies herein
provided are cumulative and are not exclusive of any remedies provided by law.
In addition, the exercise of any right or remedy of the Pledgee at law or equity
or under this Agreement or any of the documents shall not be deemed to be an
election of Pledgee's rights or remedies under such documents or at law or
equity.
6. Termination. This Agreement shall terminate and have no further force and
effect when all obligations of the Pledgor under the Note and this Agreement
have been satisfied, paid or discharged.
7. Further Assurances. The parties hereto agree that, from time to time upon the
written request of any party hereto, they will execute and deliver such further
documents and do such other acts and things as such party may reasonably request
in order fully to effect the purposes of this Agreement.
8. Miscellaneous.
(a) Modification. This Agreement contains the entire
understanding between the parties with respect to the subject matter
hereof and specifically incorporates all prior oral and written
agreements relating to the subject matter hereof. No portion or
provision of this Agreement may be changed, modified, amended, waived,
supplemented, discharged, canceled or terminated orally or by any
course of dealing, or in any manner other than by an agreement in
writing, signed by the party to be charged.
(b) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile telephone number specified in this
Section prior to 5:00 p.m. on a business day in the state in which the
recipient is located, (ii) the business day after the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Agreement
later than 5:00 p.m. on any date and earlier than 11:59 p.m. on such
date, (iii) two business days following the date of mailing, if sent by
nationally recognized overnight courier services, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as follows:
If to the Pledgor, to:
Strata Oil & Gas Inc.
00000 0xx Xxx - Xxxxx 000
Xxxxxxxxxx, X.X., Xxxxxx, X0X 0X0
Attention: Xxxxx Xxxxxx
Facsimile Number: 000-000-0000
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If to the Pledgee, to:
Pacific World Enterprises
00000 Xxxxxxxx Xxxx
Xxxxxxxx, X.X., Xxxxxx, X0X 0X0
Attention: Xxxx Xxxxx
Facsimile Number: 000-000-0000
(c) Invalidity. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations,
such provision shall be inapplicable and deemed omitted to the extent
so contrary, prohibited or invalid, but the remainder hereof shall not
be invalidated thereby and shall be given effect so far as possible.
(d) Benefit of Agreement. This Agreement shall be binding upon
and inure to the parties hereto and their respective successors and
assigns.
(e) Mutual Agreement. This Agreement embodies the arm's length
negotiation and mutual agreement between the parties hereto and shall
not be construed against either party as having been drafted by it.
(f) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the
province of British Columbia and Canada. Each party hereby irrevocably
submits to the exclusive jurisdiction of the Provincial courts of
British Columbia or the Federal courts of Canada, for the adjudication
of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court or that such suit, action or proceeding
is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address in
effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by facsimile, all of which taken together shall
constitute one and the same instrument, and any of the parties hereto
may execute this Agreement by signing any such counterpart.
(h) Headings. Article, section and subsection headings in this
Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.
PLEDGOR:
STRATA OIL & GAS INC.
By: _/s/______________________________
Name: Xxxxx Xxxxxx
Title: President
PLEDGEE:
Pacific World Enterprises
By: _/s/_____________________________
Name: Xxxx Xxxxx
Title: President
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