pledgeagmt_castlerock.htm


    


     

    STOCK PLEDGE
AGREEMENT

     

     

    THIS AGREEMENT (the "Agreement"), made
and entered into as of the 12th day
of November,
2009
by and between Castle Rock
Resources II, LLC a corporation duly organized under the laws of The State of
Colorado, USA (the "Pledgee") and Bontan
Corporation Inc., a corporation duly organized under the laws of Province of
Ontario, Canada ("Pledgor");

     

     

    WITNESSETH:

     

     

    WHEREAS the Pledgor, as Borrower, has
entered into that certain loan evidenced by a Promissory Note in favour of the
Pledgee as Lender dated 12th day
of November,
2009  in
the principal sum of US$850,000
(as amended or supplemented from time to time, the "Promissory Note"), the terms
and provisions of which are incorporated herein by reference; and

     

     

    WHEREAS, terms which are defined in the
Promissory Note and which are used herein but not otherwise defined herein shall
have the same meanings herein as ascribed thereto in the Promissory Note;
and

     

     

    WHEREAS, to induce the Lender to extend
credit to the Pledgor, the Pledgor has agreed to make and enter into this
Agreement.

     

     

    NOW THEREFORE, for $10.00 and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce the Pledgee to extend credit to the Pledgor, the
Pledgor hereby agrees as follows:

     

     

    
      	
              1.

            	
              The
      Pledgor does hereby pledge, hypothecate, assign, transfer, set over,
      deliver and grant a security interest in and to the Pledgee, in all that
      stock of the Pledgor set forth and described on Schedule "A", attached
      hereto and by reference made a part hereof, together with any and all
      other securities, cash or other property at any time and from time to time
      receivable or otherwise distributed in respect of or in exchange for any
      or all of such pledged stock, and together with the proceeds thereof
      (hereinafter said property being collectively referred to as the "Stock
      Collateral"), all as security for the payment and performance when due of
      any and all obligations of the Pledgor, as Borrower, to the Pledgee, as
      Lender, under the loan evidenced by the Promissory Note (the
      "Obligations").

            


    

     

    
      	
              2.

            	
              The
      Pledgor acknowledges and agrees that the Pledgee shall hold the Stock
      Collateral, together with all right, title, interest, powers, privileges
      and preferences pertaining or incidental thereto forever, subject,
      however, to return of the Stock Collateral (or such portion thereof as may
      be existing from time to time hereafter after giving effect to the terms
      hereof) by the Pledgee or the Pledgor upon payment and performance in full
      of all the obligations and termination by the Lender in writing of any and
      all credit commitments with respect thereto. Notwithstanding the
      foregoing, any cash dividends received under the Stock Collateral shall
      first be used to retire the Principal Sum and the Pledgee shall have the
      right to exercise all voting rights under the Stock Collateral until all
      accrued interest and the Principal Sum are paid in
    full. 

            


    

     

    
      	
              3.

            	
              In
      order to induce the Pledgee to accept this Agreement, the Pledgor hereby
      represents and warrants to the
Pledgee:

            


    

     

    
      	
               
      

            	
              (i)

            	
              that
      the Pledgor has the complete and unconditional authority to pledge the
      Stock Collateral, holds (or will hold on the date of the pledge hereof)
      the Stock Collateral free and clear of any and all liens, charges,
      encumbrances and security interests thereon (other than in favour of the
      Pledgee) and has (or will have on the date of the pledge thereof) good
      right, title and legal authority to pledge the Stock Collateral in the
      manner contemplated herein; and

            


    

     

     

    
      	
               
      

            	
              (ii)

            	
              that
      all stock now owned or hereafter owned by the Pledgor and constituting or
      which will constitute Stock Collateral hereunder is, or will be on the
      date of the pledge thereof, validly issued, fully paid and
      non-assessable.

            


    

     

     

     

    
      
        
        

      

      
        -
1 -

        
          

        

      

      
        
        

      

    

     

    
      	
              4.

            	
              The
      Pledgor further covenants with the Pledgee that the Pledgor will cause any
      additional securities or other property issued to or received by the
      Pledgor with respect to any of the Stock Collateral, whether for value
      paid by the Pledgor or otherwise, to be deposited forthwith with the
      Pledgee and pledged hereunder, in each case accompanied by proper
      instruments of assignment duly executed by the Pledgor in such form as may
      be required by the Agent.

            


    

     

     

    
      	
              5.

            	
              The
      Pledgor further acknowledges and agrees that the Pledgee may hold any of
      the Stock Collateral in its own name for its benefit, endorsed or signed
      in blank or in the name of any nominee or nominees, and the Pledgee, after
      occurrence of a default in payment under the Promissory Note, may deliver
      any or all of the Stock Collateral to the issuer or issuers thereof for
      the purpose of making denominational exchanges or registrations or
      transfer or for such other purposes in furtherance of this Agreement as
      the Pledgee may deem advisable.

            


    

     

     

    
      	
              6.

            	
              The
      Pledgor hereby agrees that it will not assign, attempt to encumber,
      subject to further pledge or security interest, sell, transfer or
      otherwise dispose of any of the Stock Collateral without the prior written
      consent of the Pledgee.

            


    

     

     

    
      	
              7.

            	
              From
      and after the occurrence of a default in payment under the Promissory
      Note, the Pledgor acknowledges and agrees that the Pledgee shall be
      entitled to collect and receive all distributions in respect of the Stock
      Collateral and that the Pledgee may exercise any and all rights and
      remedies of the Pledgor with respect thereto, including, but not limited
      to, sale and voting rights, in addition to the exercise by the Pledgee of
      any and all rights, powers and remedies of the Pledgee existing by law or
      agreement.

            


    

     

    
      	
              8.

            	
              This
      Agreement shall be governed by and construed in accordance with the laws
      of the province of Ontario
      and shall enure to the benefit of and be binding upon the successors and
      assigns of the parties hereto.

            


    

     

     

    
      	
               
      

            	
              IN WITNESS WHEREOF, the
      parties have caused this Agreement to be duly executed under seal as of
      the date first above written.

            


    

     

    Bontan Corporation
Inc.

    [Missing Graphic
Reference]

     

     

               Kam
Shah, CEO__ /s/   __

    (Authorized
Signing Officer)

     

    


     

     

    Castle
Rock Resouces II, LLC

     

    Per:
_______/s/___________________

     

    _

     

    


     

    _________________/s/___________

    (Authorized
Signing Officer)


    
      
         


      

      
        -
2 -

        
          

        

      

      
         


      

    


    Schedule
"A"

     

    Stock
Collateral:

     

     

    1,125  Shares
of Israel
Petroleum Company Limited

     


    
      
         


      

      
        -
3 -