ESCROW AGREEMENT
Escrow Agreement (this "Agreement"), dated August 24, 2005, among
Pacific World Enterprises ("Secured Party"), Strata Oil & Gas Inc., a Canadian
corporation ("Debtor"), and Xxxxxxxxx Xxxxxxxx LLP (the "Escrow Agent").
R E C I T A L S
1. Pursuant to a Pledge Agreement, dated of even date herewith (the
"Pledge Agreement"), between Secured Party and Debtor, Debtor has granted to
Secured Party a security interest in 60,000,000 shares (the "Shares") of
Debtor's common stock. Such security interest has been granted as collateral
security for the payment of the Secured Promissory Note (the "Note"), dated of
even date herewith, made by Debtor in favor of Secured Party, in the original
principal amount of USD $1,000,000.
2. Secured Party and Debtor desire to appoint the Escrow Agent to hold
and dispose of the Shares and the proceeds thereof in accordance with the terms
of this Agreement, and the Escrow Agent is willing to act as an escrow agent
upon the terms and conditions hereof.
NOW THEREFORE, in consideration of the foregoing and the mutual
agreements and covenants set forth herein, the parties agree as follows:
1. Appointment of Escrow Agent. The Escrow Agent is hereby appointed by
all the parties hereto to act as the Escrow Agent, and agrees to receive, hold,
administer and deliver the Shares and the proceeds thereof in accordance with
the terms of this Agreement.
2. Establishment of Escrow and Release Thereof.
(a) The Escrow Agent hereby acknowledges that it has received (i) a
stock certificate(s) representing the Shares and (ii) stock powers executed in
blank by Secured Party (collectively, the "Escrow Deposit"). Any dividends paid
with respect to the Shares while such Shares are held by the Escrow Agent shall
be delivered to the Escrow Agent and shall be deemed to be part of the Escrow
Deposit.
(b) The Secured Party shall be entitled to exercise all voting powers
pertaining to the Shares, or any part thereof, for all purposes. To the extent
that the Shares are held in escrow pursuant to the terms of this Agreement, on
all matters to come before the shareholders of the Corporation, the Escrow Agent
shall vote the Shares in the manner directed by Secured Party.
(c) The Escrow Deposit shall be released by the Escrow Agent as
follows:
(1) Upon written notice received by the Escrow Agent from
Secured Party that Debtor has committed an Event of Default under the Note or
Pledge Agreement, the Escrow Agent shall promptly release the Escrow Deposit to
Secured Party; or
(2) The Escrow Agent shall promptly release the Escrow Deposit
to Debtor if (i) the Escrow Agent receives from Debtor (A) written notice that
all obligations of Debtor under the Note and the Pledge Agreement have been
satisfied, paid or discharged, and (B) evidence that a copy of such written
notice has also been delivered to Secured Party, and (ii) the Escrow Agent does
not receive from the Secured Party within ten business days thereafter written
notice objecting to such release; or
(3) Upon written instructions signed by Secured Party and
Debtor, then the Escrow Agent shall release the Escrow Deposit in accordance
with such instructions; or
(4) Upon a judicial order, then the Escrow Agent shall release
the Escrow Deposit in accordance with such order.
3. Declaration of Escrow. The Escrow Agent hereby declares and agrees
that it will hold, administer and deliver the Shares and the executed stock
powers (collectively, the "Escrow Deposit") in accordance with and subject to
the express provisions of this Agreement.
4. Escrow Period. The term of this Agreement (the "Term") shall
commence upon the execution and delivery of this Agreement by the parties hereto
and shall expire when the Escrow Agent distributes the Escrow Deposit and
proceeds thereof as provided for herein.
5. Provisions Concerning the Escrow Agent.
(a) Amendments and Modifications. The Escrow Agent shall not, in any
way, be bound or affected by any amendment, modification or cancellation of this
Agreement which increases or alters the obligations of the Escrow Agent under or
pursuant to this Agreement, unless the same shall have been agreed to in writing
by the Escrow Agent.
(b) Out of Pocket Expenses. Secured Party agrees to pay the Escrow
Agent any and all out of pocket expenses incurred by the Escrow Agent in
performing its duties hereunder.
(c) Duties of Escrow Agent. This Agreement sets forth the entire duties
and obligations of the Escrow Agent with respect to any and all matters
pertinent to its acting as such hereunder. The Escrow Agent shall not have
duties or responsibilities under this Agreement other than those specifically
set forth herein and shall act only in accordance with the provisions hereof.
The Escrow Agent shall be entitled to rely upon any instructions or directions
to it in writing under this Agreement signed or presented by any of the other
parties and shall be entitled to treat as genuine any instructions or document
delivered to the Escrow Agent hereunder and reasonably believed to be genuine
and to have been presented by the proper party or parties, without being
required to determine the authenticity or correctness of any fact stated
therein, or the authority or authorization of the person or persons making
and/or delivering the same to do so.
(d) Liabilities of Escrow Agent. Neither the Escrow Agent nor any of
the partners, associates, employees, representatives or agents of the Escrow
Agent shall be liable to any of the parties hereto or any of their affiliates,
including without limitation, their officers, directors, stockholders,
employees, agents and successors and assigns or to any other person or entity,
for or in respect of any loss, claim, damage, liability or expense (including,
without limitation, attorneys' fees and expenses) resulting from or arising out
of any act or failure to act by the Escrow Agent in connection with this
Agreement, other than for any loss, claim, damage, liability or expense which
shall be finally adjudicated to be the result of bad faith or willful misconduct
on the part of the Escrow Agent or any of the partners, associates, employees,
representatives or agents of the Escrow Agent. More specifically, the Escrow
Agent (i) shall not be liable for any error of judgment made by it in good
faith; and (ii) may consult with counsel of its own choice whenever the Escrow
Agent shall deem it convenient or appropriate, and shall have full and complete
authorization and protection for any action taken or suffered by it hereunder in
good faith.
(e) Discharge of Escrow Agent.Notwithstanding anything in this
Agreement to the contrary, upon the distribution of the Escrow Deposit in
accordance with the terms and conditions of this Agreement, the Escrow Agent
shall be released, relieved and discharged from all duties and obligations
hereunder.
(f) Indemnity. Each of the Secured Party and Debtor shall jointly and
severally indemnify and hold the Escrow Agent and any of the partners,
associates, employees, representatives or agents of the Escrow Agent, harmless
from and against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, attorneys' fees and disbursements) arising out
of or in connection with any act or failure to act (other than by reason of any
bad faith or willful misconduct) on the part of the Escrow Agent in connection
with any of the duties required or permitted to be performed by the Escrow Agent
hereunder.
(g) Resignation of Escrow Agent. At any time that the Escrow Agent so
chooses, the Escrow Agent may resign from his duties hereunder by giving not
less than five (5) days written notice to all the parties hereto. Prior to the
expiration of such five day period, the parties shall mutually designate a
successor escrow agent; provided, that, notwithstanding any resignation date set
forth in the Escrow Agent's notice, such resignation shall not take effect until
receipt by the Escrow Agent of an instrument duly executed by all the parties
hereto and the successor escrow agent evidencing its appointment as Escrow Agent
hereunder and acceptance of this Agreement. If no successor escrow agent is
appointed within such five day period, the Escrow Agent may deposit the Escrow
Deposit with a court of competent jurisdiction as provided in Section (h) below
and thereupon the Escrow Agent shall be discharged of all duties and obligations
hereunder.
(h) Deposit of Escrow Deposit With Court. Notwithstanding anything
herein to the contrary, in any one of the following events: (i) any disagreement
between the parties to this Agreement resulting in adverse claims or demands
being made against the Escrow Deposit; (ii) the Escrow Agent in good faith is in
doubt as to what action it should take hereunder; or (iii) the Escrow Agent
wishes to resign and no successor escrow agent is appointed, the Escrow Agent
may be discharged of its duties and obligations hereunder upon its deposit, at
any time after a written notice is given to all the parties hereto, of the
Escrow Deposit with a court of competent jurisdiction. The parties hereto agree
to submit to the personal jurisdiction of any such court, and consent to service
of process by hand delivery or mail delivery thereof to their respective
addresses set forth in Section 6(b) hereof.
(i) Legal Representation. Each of the parties acknowledges that the
Escrow Agent has not acted as legal counsel to either party and is not acting in
his capacity as legal counsel to any party in connection with this Agreement or
any of the transactions contemplated thereby. Each party represents to the
Escrow Agent that it has received advice from counsel of its own choosing
regarding the transactions contemplated herein. Notwithstanding the foregoing,
each of the parties' waives any objections or rights it has or may have which
would impair, hinder or eliminate the Escrow Agent's right or ability to
represent or counsel the other party or their affiliates after the date hereof.
The foregoing notwithstanding, in the event of a dispute with respect to the
subject matter of this Agreement, the Escrow Agent shall cease to serve as
Escrow Agent hereunder, and a successor escrow agent shall be appointed in
accordance with Section 5(g) herein.
6. Miscellaneous.
(a) Entire Agreement. This Agreement embodies the entire agreement and
understandings between the parties hereto relating to the subject matter hereof
and may only be changed by a writing signed by all parties hereto.
(b) Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been given when delivered: (i) if delivered in person; or (ii)
five (5) business days following the mailing thereof, if mailed within the US
and mailed by certified or registered mail, return receipt requested; or (iii)
the third business day following the delivery thereof, if delivered through an
internationally recognized overnight carrier, addressed to each party hereto as
follows:
If to the Secured Party, at:
Pacific World Enterprises
00000 Xxxxxxxx Xxxx
Xxxxxxxx, X.X., Xxxxxx, X0X 0X0
Attention: Xxxx Xxxxx
Facsimile Number: 000-000-0000
If to Debtor, at:
Strata Oil & Gas Inc.
00000 0xx Xxx - Xxxxx 000
Xxxxxxxxxx, X.X., Xxxxxx, X0X 0X0
Attention: Xxxxx Xxxxxx
Facsimile Number: 000-000-0000
If to the Escrow Agent:
Xxxxxxxxx Xxxxxxxx LLP
0000-000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X., Xxxxxx, X0X 0X0
Attention: Xxxx Xxxxxxxxx
Facsimile Number: 000-000-0000
or at such other address as any party may designate by means of notice given in
accordance with this Paragraph 6(b).
(c) Headings.The headings of the paragraphs of this Agreement have
been inserted for convenience only, and shall not modify, define, limit or
expend the express provisions of this Agreement.
(d) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the province of British Columbia and the federal
laws of Canada.
(e) Consent to Jurisdiction. All actions and proceedings arising out
of, or relating to this Agreement shall be exclusively heard and determined in a
provincial or federal court sitting in British Columbia. The undersigned, by
execution and delivery of this Agreement, expressly and irrevocably: (i) consent
and submit to the personal jurisdiction of any of such courts in any such action
or proceeding; (ii) consent to the service of any complaint, summons, notice or
other process relating to any such action or proceeding by delivery thereof to
such party by hand or by certified mail, delivered or addressed as set forth in
Section 6(b); and (iii) waive any claim or defense in any such action or
proceeding based on any alleged lack of personal jurisdiction, improper venue or
forum non conveniens or any similar basis. EACH PARTY HERETO HEREBY WAIVES ALL
RIGHTS TO A JURY TRIAL IN CONNECTION WITH ANY DISPUTES HEREOF.
(f) Binding Agreement. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns, provided that no
party other than the Escrow Agent may assign their obligations hereunder without
the prior written consent of the Escrow Agent.
(g) Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile, each of which shall be deemed an original, and
all of which together shall constitute one and the same agreement.
(h) Further Assurances. Secured Party and Debtor 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.
[Remainder of Page Intentionally Omitted; Signature Pages to Follow]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written.
SECURED PARTY:
Pacific World Enterprises
By: ___/s/___________________
Name: Xxxx Xxxxx
Title: President
DEBTOR:
STRATA OIL & GAS INC.
By: _/s/______________________
Name: Xxxxx Xxxxxx
Title: President
ESCROW AGENT:
XXXXXXXXX XXXXXXXX
By: _/s/_____________________
Name: Xxxx Xxxxxxxxx
Title: Partner
