HYPOTHECATION
HYPOTHECATION
This Agreement made as of the 6th day of July, 2004.
AMONG
BAYSHORE BANK & TRUST (BARBADOS) CORPORATION, a corporation incorporated and existing under the laws of Barbados and having its registered offices at Lauriston House, Lower Xxxxxxxxx Rock Drive, Bridgetown, Barbados, as Trustee of the Epitihia Trust
("Bayshore")
AND
WESCORP ENERGY INC., a Delaware corporation, with an office at 0000 00 Xxxxxx, Xxxxxxxx, Xxxxxxx, Xxxxxx
("Wescorp")
AND
XXXXXXXX & XXXXX, Attorneys-At-Law, a partnership formed pursuant to the laws of Barbados, with an office at 00 Xxxxx Xxxxxx, X.X. Xxx 00, Xxxxxxxxxx, Xxxxxxxx
("Escrow Agent")
WHEREAS:
A. The Epitihia Trust was the registered and beneficial owner of 100 fully paid up shares in the capital of Vasjar Trading Ltd. (the "Vasjar Shares"), which shares represent 50% of the issued and outstanding common shares in the capital of Vasjar Trading Ltd.;
B. Pursuant to the Share Purchase Agreement dated January 14, 2004, as amended on June 16, 2004 made between Bayshore and Wescorp (the "SPA"), Wescorp purchased the Vasjar Shares from the Epitihia Trust;
C. Wescorp is the registered and beneficial owner of the Vasjar Shares; and
D. Wescorp has agreed to pledge the Vasjar Shares as security to guarantee the performance of Wescorp under the SPA.
IN CONSIDERATION of the premises herein and for other valuable consideration (the receipt whereof is acknowledged by each of the parties), it is agreed by and between the parties as follows:
| 1. | As security to guarantee the performance of Wescorp under the SPA, Wescorp hereby hypothecates and pledges to and in favour of Bayshore the Vasjar Shares as well as all bonds, debentures and other instruments whatsoever which may hereafter be pledged to Bayshore by or on behalf of Wescorp and any replacements thereof, substitutions therefor and proceeds thereof (collectively the "securities"). |
| 2. | The Escrow Agent acknowledges receipt from Wescorp of the following documents to be held as security for the performance of Wescorp under the SPA: |
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| (a) | original share certificate no. 3 issued June 30, 2004, representing the Vasjar Shares; | |
| (b) | duly executed instrument of transfer, in blank, with respect to the Vasjar Shares; and | |
| (c) | an executed copy of the SPA; | |
| which documents, together with other documents
from time to time delivered to the Escrow Agent by the parties pursuant
to this Agreement, are hereinafter collectively referred to as the "Escrow
Documents". |
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| 3. | The Escrow Agent agrees to hold the Escrow
Documents in escrow and undelivered and: |
|
| (a)
|
upon receipt of a letter signed by both Bayshore
and Wescorp directing delivery of the Escrow Documents, or such part or
parts thereof as may be specified, as the case may be, to a party specified
in the letter, the Escrow Agent shall deliver such Escrow Documents to
such party; or |
|
| (b) |
the Escrow Agent shall deliver the Escrow Documents
to Wescorp twenty (20) days after receipt by the Escrow Agent of a statutory
declaration sworn by an officer or director of Wescorp stating that Wescorp
has performed all its obligations under the SPA, unless then prohibited
by an order of a Court of competent jurisdiction; or |
|
| (c) |
the Escrow Agent shall deliver the Escrow Documents
to Bayshore twenty (20) days after receipt by the Escrow Agent of a statutory
declaration sworn by an officer or director of Bayshore stating that Wescorp
is in default of performance of its obligations under the SPA, the specifics
of such default and that such default has continued for (30) days after
notice thereof has been given to Wescorp, unless then prohibited by an
order of a Court of competent jurisdiction or unless Wescorp shall before
then have delivered to the Escrow Agent shares of its common stock registered
in the name of Bayshore as trustee of the Epitihia Trust sufficient to
satisfy and cure the default and the Escrow Agent shall forthwith upon
receipt of such shares deliver them to Bayshore; |
|
| whichever shall first occur. |
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| 4. | Upon receipt of the statutory declaration
referred to in subsection 3(b) of this Agreement, the Escrow Agent shall
forthwith give notice in writing to Bayshore of such receipt and shall
send with such notice a copy of the statutory declaration. Upon receipt
of the statutory declaration referred to in subsection 3(c) of this Agreement,
the Escrow Agent shall forthwith give notice in writing to Wescorp of
such receipt and shall send with such notice a copy of the statutory declaration.
|
|
| 5. | In the event that the Escrow Agent receives
a written notice advising that litigation over entitlement to some or
all of the Escrow Documents has been commenced, the Escrow Agent may deposit
the Escrow Documents with the clerk of the Court in which the litigation
is pending. |
|
| 6. | If Bayshore receives the Escrow Documents
under the provisions of subsection 3(c) of this Agreement, subject to
compliance with the terms and conditions of this Agreement, all the rights
and obligations of the Epitihia Trust and of Bayshore as trustee of the
Epitihia Trust and of Wescorp under the SPA shall be at an end and in
particular, without limiting the foregoing, Bayshore shall have no right
on behalf of the Epitihia Trust to recover from Wescorp any unissued shares
of common stock of Wescorp or damages for breach of the SPA and Wescorp
will have no right to recover any shares of its common stock that have
then been issued to Bayshore as trustee of the Epitihia Trust pursuant
to the SPA. |
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| 7. | Upon performance by Wescorp of all its
obligations under the SPA, the hypothecation and pledge hereunder will
be discharged and released. |
|
| 8. | Until the security hereby constituted
becomes enforceable, Wescorp shall be entitled to: |
|
| (a)
|
have all of the Vasjar Shares registered in its
name on the books of Vasjar Trading Ltd.; |
|
| (b) |
exercise all voting and other rights in respect
of the Vasjar Shares; and |
|
| (c) |
receive all dividends, whether in cash or stock,
interest, income, revenue or other distributions made to the holders of
shares of Vasjar Trading Ltd. paid or made in respect of the Vasjar Shares
for Wescorp's own use and benefit. |
|
| 9. | If default is made by Wescorp in its performance
of its obligations under the SPA, and Wescorp fails to cure such default
within (30) days following its receipt of notice of such default, the
security hereby constituted shall become enforceable, and Bayshore may
sell by public or private sale or otherwise deal with the securities in
such manner as reasonably commercial and may hold the proceeds in lieu
of any securities realised and appropriate the same on account of such
parts of the said indebtedness and liability as Bayshore thinks fit. All
reasonable costs and expenses incurred by Bayshore in respect of the securities
and the realisations hereof shall be added to the said indebtedness and
liability and shall be a first charge upon the moneys received. |
|
| 10. | Not less than 20 days before the disposition
of the securities, Bayshore (including a receiver or receiver manager)
must give notice of disposition to Wescorp. |
|
| 11. | The notice of disposition referred to
in section 5 must contain: |
|
| (a) |
a description of the collateral; |
|
| (b) |
the amount required to satisfy the obligation secured
by the security interest; |
|
| (c) |
the sum actually in arrears, exclusive of the operation
of an acceleration clause in any operative security agreement and a brief
description of any default other than non- payment and the provision of
the security agreement the breach of which resulted in the default; |
|
| (d) |
the amount of the applicable expenses referred to
in section 4 or, if the amount of the expenses has not been determined,
a reasonable estimate; |
|
| (e) |
a statement that on payment of the amounts due,
the securities may be redeemed; |
|
| (f) |
a statement that, unless the collateral is redeemed
or, if permitted, the security agreement is reinstated, it will be disposed
of and Wescorp may be liable for a deficiency, and |
|
| (g) |
the date, time and place of any sale by public auction
or the place to which closed tenders may be delivered and the date after
which closed tenders will not be accepted or after which any private disposition
of the collateral is to be made. |
|
| 12. | Bayshore shall not be bound to realise
any of the securities or to allow any of the securities to be sold and
shall not be responsible for any loss occasioned by any sale or failure
to sell or enforce any of the securities; and Bayshore shall not be bound
to protest any of the securities nor to perform any act to prevent prescription
thereof nor to protect any of the securities from depreciating in value
or becoming worthless; and Bayshore shall not be bound to examine lists
of |
|
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| drawn or redeemed bonds or notices relating to coupons
or dividends nor to advise Wescorp of the expiry of rights or warrants
in connection with any of the securities. |
|
| 13. | Bayshore shall not be bound to collect any interest,
dividends, income or revenue payable in respect of any of the securities
but after the security hereby constituted shall have become enforceable
all such interest, dividends, income or revenue, if received by Wescorp,
shall be forthwith be paid to Bayshore. |
| 14. | Bayshore may grant extensions, take and give up
securities, accept compositions, grant releases and discharges and otherwise
deal with the securities and all parties thereto as Bayshore thinks fit
without affecting the said indebtedness and liability of Wescorp to Bayshore
and without prejudice to the rights of Bayshore in respect of the securities.
|
| 15. | After the security hereby constituted shall have
become enforceable, Bayshore may have any of the securities registered
in its name or in the name of its nominee, and shall be entitled but not
bound or required to vote in respect of the securities at any meeting
at which the holder of the securities may at any time have; but Bayshore
shall not be responsible for any loss occasioned by the exercise of any
of such rights or by failure to exercise the same within the time limited
for the exercise thereof. |
| 16. | After the security hereby constituted shall have
become enforceable, Wescorp hereby irrevocably constitutes and appoints
any officer of Bayshore the true and lawful attorney of Wescorp in the
name and on behalf of Wescorp from time to time to endorse and transfer
to Bayshore or to cause to be endorsed and transfer to Bayshore its nominee
or any purchaser from Bayshore any of the securities which may require
endorsement or transfer, in order that full title to the same may be vested
in Bayshore or its nominee or any purchaser from Bayshore. |
| 17. | The Escrow Agent will have no duties or obligations
other than those specifically set forth in this Agreement. |
| 18. | The Escrow Agent will not be obliged to take any
action hereunder which might, in the Escrow Agent's judgement, involve
any expense or liability unless the Escrow Agent has been furnished with
reasonable indemnity by Wescorp or Bayshore or both. |
| 19. | The Escrow Agent is not bound in any way by any
other contract or agreement between the parties hereto whether or not
the Escrow Agent has knowledge thereof or of its terms and conditions
and the Escrow Agent's only duty, liability and responsibility will be
to hold and deal with the Escrow Documents as herein directed. |
| 20. | If the Escrow Agent wishes to resign, it will give
30 days advance notice to Wescorp and Bayshore, and prior to the effective
date of the resignation, Wescorp and Bayshore will appoint a new escrow
agent. |
| 21. | The Escrow Agent will be entitled to assume that
any notice and evidence received by them pursuant to this Agreement from
either of Wescorp or Bayshore has been duly executed by the party by whom
it purports to have been signed and the Escrow Agent will not be obliged
to enquire into the sufficiency or authority of any signatures appearing
on such notice or evidence. |
| 22. | Subject to section 21 below, Wescorp and Bayshore
jointly and severally covenant and agree to indemnify the Escrow Agent
and to hold them harmless against loss, liability or expense incurred
without negligence or bad faith on the Escrow's Agent's part arising out
of or in connection with the administration of their duties hereunder,
including the costs and expenses of defending themselves against any claim
or liability arising therefrom. |
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| 23. | Wescorp agrees to pay the Escrow Agent reasonable
fees plus disbursements and applicable taxes for its services as escrow
agent hereunder. |
| 24. | Any demand, notice or other communication in connection
with this agreement shall be in writing and shall be personally delivered
to an officer or other responsible employee of the addressee, mailed by
registered mail or sent by facsimile, charges prepaid, at or to the address,
or facsimile number of the party set out in the SPA in respect of Wescorp
and Bayshore and set out on page one of this Agreement in respect of the
Escrow Agent or to such other address or addresses, or facsimile number
or numbers as a party may from time to time designate to the other parties
in such manner. |
| Any communication which is personally delivered
as aforesaid shall be deemed to have been validly and effectively given
on the date of such delivery if such date is a business day (not a Saturday
or Sunday or bank holiday) and such delivery was made during normal business
hours of the recipient; otherwise, it shall be deemed to have been validly
and effectively given on the business day next following such date of
delivery. Any communication mailed as aforesaid shall be deemed to have
been validly and effectively given on the fifth business day following
the date of mailing provided that, in the event of an interruption in
postal service before such fifth business day, such communication shall
be given by one of the other means. Any communication which is transmitted
by facsimile shall be deemed to have been validly and effectively given
on the date of transmission if such date is a business day and such transmission
was made during normal business hours of the recipient; otherwise, it
shall be deemed to have been validly and effectively given on the business
day next following such date of transmission. |
|
| 25. | This Agreement shall enure to the benefit of and
be binding on the parties and their respective successors and permitted
assigns. |
| 26. | This Agreement may be executed and delivered in
any number of counterparts which, if read together, will constitute one
and the same Agreement and either in the original or in electronically
transmitted form. |
| 27. | This Agreement or a counterpart thereof may be executed
by a party hereto and transmitted by facsimile and if so executed and
transmitted this Agreement will be for all purposes as effective and binding
upon such party as if such party had delivered any originally executed
document. A party transmitting an executed document by facsimile shall
forthwith thereafter deliver the original of the executed document. |
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| 28. | This Agreement shall in all respects, including
all matters of construction, validity and performance, be governed by
and construed in accordance with the laws of Barbados. |
In Witness whereof this Agreement has been executed under seal this 6th day of July, 2004.
| WESCORP ENERGY INC. By: |
|
| /s/ Xxxx Xxxxx | |
| Xxxx Xxxxx, President and Authorized Signatory | |
| BAYSHORE BANK & TRUST (BARBADOS) CORPORATION as Trustee of the Epitihia Trust By: |
|
| /s/ Xxxxx Xxxxxxxx | |
| Authorized signatory | |
| XXXXXXXX & XXXXX By: |
|
| /s/ Partner | |
| Authorized Signatory |
