1
PLEDGE AGREEMENT
AGREEMENT made effective as of the 23rd day of May, 1992, between XXXXX
X. XXXXXX, an individual referred to herein as the "Pledgor" and M.S. HOLDING
CO. CORP., a Nevada corporation referred to herein as the "Secured Party".
WHEREAS, Pledgor is the sole shareholder of JRG Investment Co., Inc., a
Nevada corporation ("JRG");
WHEREAS, JRG executed a pledge agreement and that note in the original
amount of $1,686,471.18 Dated May 23, 1991 to Syntek Finance Corporation and due
May 23, 1992 (the "Syntek Loan"), which was sold to American Realty and further
sold to Secured Party;
WHEREAS, JRG executed a pledge agreement and that note in the original
amount of $3,313,528.82 Dated May 23, 1991 to International Health Products,
Inc. and due May 23, 1992 (the "International Loan") as sold to Secured Party;
WHEREAS, at the time of the execution of this Agreement (the "Pledge
Agreement"), Pledgor has requested that Secured Party renew and extend the
Syntek Loan and the International Loan; and
WHEREAS, to induce Secured Party to renew and extend the Syntek Loan
and the International Loan, the Pledgor has agreed to pledge certain stock with
the Secured Party as security for the repayment of the Loan;
NOW THEREFORE, in consideration of the sum of $3,313,528.82 loaned by
Secured Party to JRG, and for other valuable consideration, the receipt of which
is hereby acknowledged, Pledgor agrees with Secured Party as follows:
1. Event of Default. The term "Event of Default" means the
occurrence of any Event of Default under the Note (hereinafter
defined).
2. Pledge. Upon the terms hereof, Pledgor hereby pledges and
grants to Secured Party a first lien on and security interest (the "Security
Interest") in and to all of the right, title and interest of Pledgor in and to
all of the following instruments and property (all of the following being herein
sometimes called the "Collateral"):
(a) 2,500 shares of the issued and outstanding common stock of
JRG, together with all certificates, options, rights or other
distributions issued as an addition to, in substitution or in exchange
for, or on account of, any such shares, as represented
2
by a true and correct copy of Certificate No. 001 attached hereto and
incorporated herein by reference representing 2,500 shares of the
common stock of JRG, the originals of this certificate having been
deposited in the physical possession of Secured Party simultaneously
with the Pledgor's execution hereof:
(b) All securities and other property, rights or interests of any
description at any time issued or issuable as an addition to, in
substitution or exchange for, with respect to, incident to or in lieu
of such shares described in Sections 2(a) hereof or with respect to,
incident to or in lieu of the Collateral (i) due to any dividend,
stock-split, stock dividend or distribution on dissolution, on partial
or total liquidation, or other corporate reorganization, or for any
other reason; (ii) in connection with a reduction of capital, capital
surplus or paid-in surplus; or (iii) in connection with any spin-off,
split-off, reclassification, readjustment, merger, consolidation, sale
of assets, combination of shares or any other plan of distribution
affecting the companies which have issued the shares described in
Section 2(a) hereof;
(c) Any subscription or other rights or options issued in
connection with the shares described in Sections 2(a) hereof,
including, but not limited to preemptive rights and, if exercised by
the Pledgor, all new shares or other securities so acquired by the
Pledgor, which shall immediately be assigned and delivered to Secured
Party and held under the terms of this Pledge Agreement in the same
manner as the shares originally pledged hereunder;
(d) Any and all proceeds, monies, income and benefits arising from
or by virtue of and all dividends and distributions (cash or otherwise)
payable and/or distributable with respect to, all or any of the shares
or other securities and rights and interests described herein;
3. Obligations Secured. This Pledge Agreement and the Security
Interest granted hereby secure the prompt repayment of that certain extended and
consolidated promissory note executed by JRG of even date herewith (the "Note").
4. Warranties. Pledgor represents, warrants, covenants and agrees
to and with Secured Party that: (a) Pledgor is the legal and beneficial owner of
the Collateral and that the Collateral constitutes all of the issued and
outstanding stock of JRG; (b) the Collateral is duly authorized and issued,
fully paid, and nonassessable; (c) no dispute, right of setoff, counterclaim or
defense exists with respect to all or any part of the Collateral; (d) all of the
shares of the Collateral are owned by the Pledgor free of any pledge, mortgage,
hypothecation, lien, charge, encumbrance or security interest or purchase right
or option on the
2
3
part of any third person in such shares or the proceeds thereof, except the
Security Interest and those restrictions legended on the stock certificate which
restrictions Pledgor acknowledges are operative only so long as no Event of
Default has occurred; (e) there are no restrictions upon the transfer of any of
the shares constituting the Collateral; (f) the Pledgor has the full power,
authority and legal right to transfer and pledge the Collateral free of any
encumbrances and without obtaining the consent of the issuer of the Collateral;
(g) the execution and delivery of this Pledge Agreement, and the performance of
its terms, will not violate or constitute a default under the terms of any
agreement, indenture or other instrument, license, judgment, decree, order, law,
statute, ordinance or other governmental rule or regulation, applicable to the
Pledgor or any of his property; (h) this Pledge Agreement has been duly
authorized, executed and delivered by the Pledgor and constitutes a legal, valid
and binding obligation of the Pledgor enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and, to
the extent that such instruments require or may require, enforcement by a court
of equity, such principles of equity as the court may have jurisdiction to
impose; and (i) upon delivery of the Collateral to the Secured Party, this
Pledge Agreement will create a valid and perfected first priority lien upon, and
security interest in, the Collateral and the proceeds thereof, securing the
payment of the Note. The delivery at any time by the Pledgor to the Secured
Party of Collateral shall constitute a representation and warranty by the
Pledgor under this Pledge Agreement that, with respect to such Collateral and
each item thereof: (1) Pledgor is the owner of the Collateral; and (2) the
matters heretofore warranted in clauses (a) through (i) of this section are true
and correct.
5. Covenants. Pledgor further covenants and agrees: (a) from time
to time promptly to execute, assign, endorse and deliver to Secured Party all
chattel paper, documents, instruments or other evidences of payment or writing
constituting or relating to any of the Collateral, and all such other
assignments, certificates, supplemental writings, and financing statements and
do all other acts or things as Secured Party may reasonably request in order
more fully to evidence and perfect the Security Interest; (b) promptly to
furnish Secured Party with any information or writings which Secured Party may
reasonably request concerning the Collateral; (c) to allow Secured Party to
inspect all records of Pledgor relating to the Collateral or to the Note, and to
make and take away copies of such records during normal business hours; (d)
promptly to notify Secured Party of any change in any fact or circumstance
warranted or represented by Pledgor in this Pledge Agreement or in any other
writing furnished by Pledgor to Secured Party in connection with the Collateral
or the Note; (e) promptly to notify Secured Party of any claim, action or
proceeding affecting title to the Collateral, or any part thereof, or the
Security Interest, and at the request of Secured Party, appear in and defend, at
Pledgor's expense, any such
3
4
action or proceeding; (f) promptly to pay to Secured Party the amount of all
court costs and reasonable attorneys' fees incurred by Secured Party hereunder;
(g) except to the extent prohibited by applicable law, pay all reasonable
expenses incurred in the custody, preservation, use or operation of the
Collateral; and (h) promptly to deliver to Secured Party, in the exact form
received, all securities and other property described in Section 2(b), Section
2(c) and Section 2(d) hereof which comes into the possession, custody or control
of the Pledgor. Pledgor further covenants and agrees that, without the prior
written consent of Secured Party, Pledgor shall not (x) sell, assign or transfer
Pledgor's rights in the Collateral, or (y) create any other lien or security
interest in, or otherwise encumber any of the Collateral, or permit any of the
Collateral ever to be or become subject to any lien, attachment, execution,
sequestration, other legal or equitable process, or any lien or encumbrance of
any kind. Pledgor further agrees that it will (1) cause the issuers of the
Collateral not to issue any stock or other securities in addition to or in
substitution for the Collateral issued by the issuer, except to the Pledgor, and
(2) pledge hereunder, immediately upon its acquisition (directly or indirectly)
thereof, any and all additional shares of stock or other securities of the
Collateral. All assignments and endorsements by the Pledgor shall be in such
form and substance as may be satisfactory to the Secured Party. Should any
covenant, duty or agreement of the Pledgor fail to be performed in accordance
with its terms hereunder, the Secured Party may, but shall never be obligated
to, perform or attempt to perform such covenant, duty or agreement on behalf of
the Pledgor, and any amount expended by the Secured Party in such performance or
attempted performance shall become part of the Note, except to the extent
prohibited by applicable law.
6. Adjustments and Distributions Concerning Collateral. Should
the Collateral, or any part thereof, ever be converted in any manner by its
issuer into another type of property or any money or other proceeds ever be paid
or delivered to Pledgor as a result of Pledgor's rights in the Collateral, then
in any such event (except as provided in Section 7 hereof), all such property,
money and other proceeds shall immediately be and become part of the Collateral,
and Pledgor covenants to pay forthwith and deliver all such property, money or
other proceeds so received to Secured Party; and, if Secured Party deems it
necessary and so requests, to endorse properly or assign any and all such other
proceeds to Secured Party and to deliver to Secured Party any and all such other
proceeds which require perfection by possession under the Uniform Commercial
Code in effect in the State of Texas or other appropriate jurisdiction (the
"UCC"). With respect to any of such property of a kind requiring an additional
security agreement, financing statement or other writing to perfect a security
interest therein in favor of Secured Party, Pledgor will forthwith execute and
deliver to Secured Party whatever Secured Party shall deem necessary or proper
for such purpose.
4
5
7. Intentionally Ommitted.
8. Registration of Collateral in Name of Secured Party. After an
Event of Default, the Secured Party, at its option, may have any or all of the
Collateral registered in its name or that of its nominee including any "clearing
corporation" or "custodian bank" as defined in the UCC and any nominee of any of
the foregoing, and the Pledgor hereby covenants that, upon the Secured Party's
request, the Pledgor will cause the issuer of the Collateral to effect such
registration. Immediately after an Event of Default and with or without notice,
whether or not the Collateral shall have been registered in the name of the
Secured Party or its nominee, the Secured Party or its nominee shall have, with
respect to the Collateral, the right to exercise all voting rights and all other
corporate rights and all conversion, exchange, subscription or other rights,
privileges or options pertaining thereto as if it were the absolute owner
thereof, including, without limitation, the right to exchange any or all of the
Collateral upon the merger, consolidation, reorganization, recapitalization or
other readjustment of the issuer thereof, or upon the exercise by such issuer of
any right, privilege, or option pertaining to any of the Collateral, and, in
connection therewith, to deliver any of the Collateral to any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it; but the Secured Party shall have no duty to
exercise any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so, delay in doing so, or depreciation in the
value of the Collateral by reason of doing so.
9. Default. Upon the occurrence of an Event of Default, in
addition to any and all other rights and remedies which Secured Party may then
have hereunder, under the UCC or otherwise, Secured Party may at its discretion
and without notice to the Pledgor do any one or more of the following, without
liability except to account for property actually received by it, and Pledgor
agrees that it is commercially reasonable for Secured Party to do any of the
following: (a) declare the entire unpaid balance of principal of and all
accrued, unpaid interest on the Note immediately due and payable without notice,
including without limitation, notice of acceleration and notice of intent to
accelerate, demand, or presentment, which are hereby waived; (b) transfer to or
register in its name or the name of its nominee (if the same has not already
been done) any of the Collateral with or without indication of the security
interest herein created, and whether or not so transferred or registered,
receive the income, dividends and other distributions thereon and hold them or
apply them to the Note in any order of payment; (c) exercise or cause to be
exercised all voting and corporate powers with respect to any of the Collateral
so registered or transferred, including all rights to conversion, exchange,
subscription or any other rights, privileges or options pertaining to such
Collateral,
5
6
as if the absolute owner thereof; (d) insure any of the Collateral; (e) exchange
any of the Collateral for other property upon a reorganization, recapitalization
or other readjustment and, in connection therewith, deposit any of the
Collateral with any committee or depository upon such terms as the Secured Party
may determine; (f) in its name or in the name of the Pledgor demand, xxx for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for any of the Collateral and, in connection
therewith, endorse notes, checks, drafts, money orders, documents of title or
other evidences of payment, shipment or storage in the name of the Pledgor; (g)
make any compromise or settlement deemed advisable with respect to any of the
Collateral; (h) renew, extend, or otherwise change the terms and conditions of
any of the Collateral or the Note; (i) take or release any other collateral as
security for any of the Collateral or the Note; (j) add or release any
guarantor, indorser, surety or other party to any of the Collateral or the Note;
(k) reduce its claim to judgment or foreclose or otherwise enforce the Security
Interest, in whole or in part, by any available judicial procedure; (1) without
demand of performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or private sale)
to or upon the Pledgor or any other person (all of which are, to the extent
permitted by law, hereby expressly waived), forthwith realize upon the
Collateral or any part thereof, and may forthwith sell or otherwise dispose of
or deliver the Collateral or any part thereof or interest therein, in one or
more parcels at public or private sale or sales (it being understood and agreed
that a sale of all the Collateral at once may adversely affect the price paid
for the Collateral), on any national or regional exchange or recognized market
(including without limitation on the New York Stock Exchange or in the
over-the-counter market by a registered broker dealer at the current market
price), broker's board or at the Secured Party's office or elsewhere, at such
prices and on such terms including, but without limitation, a requirement that
any purchaser of all or any part of the Collateral purchase the shares
constituting the Collateral for investment without any intention to make any
distribution thereof) as it may deem best (it being agreed that the sale of any
part of the Collateral shall not exhaust Secured Party's power of sale, but
sales may be made from time to time until all of the Collateral has been sold or
until the Note has been paid in full without any intention to make any
distribution thereof), for cash or on credit, or for future delivery without
assumption of any credit risk, with the right of the Secured Party or any
purchaser to purchase upon any such sale the whole or any part of the Collateral
free from any right or equity of redemption in the Pledgor, which right or
equity is hereby expressly waived and released, and at any such sale it shall
not be necessary to exhibit the Collateral; (m) apply by appropriate judicial
proceedings for appointment of a receiver for the Collateral, or any part
thereof, and Pledgor hereby consents to any such appointment; (n) at its
discretion, retain the Collateral in satisfaction of the Note whenever the
circumstances are such that Secured Party is entitled
6
7
to do so under the UCC or otherwise; (o) exercise any and all other rights it
may have hereunder or under the UCC or otherwise; (p) buy the Collateral at any
public sale; and (q) buy the Collateral at any private sale if the Collateral is
of a type customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations. Pledgor hereby grants
to Secured Party an irrevocable proxy coupled with an interest to exercise as to
such Collateral, upon the occurrence of an Event of Default, all rights, powers
and remedies of an owner and all of the rights, powers and remedies hereinabove
set forth, the proxy herein granted to exist until the Note has been paid and
performed in full. The proceeds of any disposition of the Collateral or other
action by the Secured Party shall be applied as follows:
(1) First, to the cost and expenses incurred in connection
therewith or incidental thereto or to the care or safekeeping
of any of the Collateral or in any way relating to the rights
of the Secured Party hereunder, including reasonable
attorneys' fees and legal expenses;
(2) Then, to the satisfaction of the Note in such order as the
Secured Party may elect;
(3) Then, to the payment of any other amounts required by
applicable law; and
(4) Then, to the Pledgor to the extent of any surplus proceeds.
In addition to the rights and remedies granted to the Secured Party in
this Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Note, the Secured Party shall have all rights and
remedies of a secured party under the UCC. The Pledgor further agrees to waive
and agrees not to assert any rights or privileges which it may acquire under the
UCC with respect to collateral not owed by the debtor, and the Collateral shall
be subject to any deficiency if the proceeds of any sale or other disposition of
the Collateral are insufficient to pay all amounts to which the Secured Party is
entitled and the fees and expenses of any attorneys employed by the Secured
Party to collect such deficiency. The Secured Party will be under no duty to
exercise or to withhold the exercise of any of the rights, powers, privileges
and options expressly or implicitly granted to the Secured Party in this Pledge
Agreement, and shall not be responsible for any failure to do so or delay in so
doing.
10. Laws and Agreements. Pledgor agrees that there may be legal
and/or practical restrictions or limitations affecting Secured Party in
attempting to dispose of certain portions of the Collateral and enforce its
rights hereunder, because of the Securities Act of 1933, as amended, or any
other laws or regulations, or for other reasons, including an order to obtain
any required approval of the
7
8
purchase or purchaser by any governmental regulatory agency or officers. For
these reasons, Secured Party is hereby authorized by Pledgor, but not obligated,
in the event of the occurrence of an Event of Default, to sell all or any part
of the Collateral at private sale, subject to investment letter or in any other
manner which will not require the Collateral, or any part thereof, to be
registered in accordance with any laws or regulations, including but not limited
to the Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder, or make it necessary to obtain any required approval of
purchaser or the purchase by any governmental regulatory agency or officer, at
the best price reasonably obtainable by Secured Party at such private sale or
other disposition in the manner mentioned above. Secured Party is also hereby
authorized by Pledgor, but not obligated, to take such actions, give such
notices, obtain such consents and do such other things as Secured Party may deem
necessary or appropriate in the event of sale or disposition of any of the
Collateral. Pledgor understands that Secured Party may in its discretion
approach a restricted number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Collateral, or any part or parts
thereof, than would otherwise be obtainable if same were either offered to a
large number of potential purchasers, or registered and sold in the open market.
The Pledgor agrees (i) that at such private sale or sales, the Secured Party
shall have the right to rely upon the advice and opinion of any member firm of a
national securities exchange as to the best price reasonably obtainable upon
such private sale thereof, and that such reliance shall be conclusive evidence
that the Secured Party handled such matter in a commercially reasonable manner
under applicable law, and (ii) that the Secured Party has no obligation to delay
sale of any Collateral to permit the issuer thereof to register it for public
sale under any applicable federal or state securities laws, and (iii) that the
Secured Party shall not be liable or accountable to Pledgor, nor shall the Note
be subject to any reduction by reason of the fact that the proceeds of sale
subject to any such limitation or restriction are less than otherwise might have
been obtained.
11. Notification of Sale. Reasonable notification of the time and
place of any public sale of the Collateral, or reasonable notification of the
time after which any private sale or other intended disposition of the
Collateral is to be made, shall be sent to Pledgor and to any other person
entitled under the UCC to notice; provided that if any of the Collateral
threatens to decline speedily in value or is of the type customarily sold on a
recognized market, Secured Party may sell or otherwise dispose of the Collateral
without notification, advertisement, or other notice of any kind. It is agreed
that notice sent or given not less than five (5) calendar days prior to the
taking of the action to which the notice relates is reasonable notification and
notice for the purposes of this paragraph.
12. Satisfaction of Obligations. Upon the repayment in full
8
9
of the Note and the satisfaction of all additional costs and expenses of the
Secured Party as provided herein, this Pledge Agreement shall terminate, and the
Secured Party shall deliver to the Pledgor, at the Pledgor's expense, such of
the Collateral as shall not have been sold or otherwise applied pursuant to this
Pledge Agreement.
13. Duties of Secured Party. The Secured Party's duty with respect
to any Collateral now or hereafter in the possession of the Secured Party is
solely to use reasonable care in the custody and preservation of the Collateral.
The Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation in the Collateral if the Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property, it being understood that the Secured Party shall not have any
responsibility for ascertaining or taking action with respect to fixing or
preserving rights against prior parties to the Collateral, calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral or
for informing Pledgor of such matters whether or not the Secured Party has or is
deemed to have any knowledge of such matters. The Secured Party shall not be
required to take any steps necessary to preserve any rights in the Collateral
against prior parties or to protect, perfect, preserve or maintain any security
interest given to secure the Collateral. Secured Party shall never be liable for
its failure to use due diligence in the collection of the Note, or any part
thereof, or for its failure to give notice to the Pledgor of default in the
payment of the Note, or any part thereof, or in the payment of or upon any
security, whether pledged hereunder or otherwise. The Secured Party shall not be
liable for a decline in the market value of the Collateral.
14. Indemnification. The Collateral is subject to an indemnity to
hold Secured Party harmless from and against any loss, claim, demand or expense
(including attorneys' fees), with Secured Party looking solely to the Collateral
for payment, by reason, or in any manner related to, the Collateral, including
any such claim as may arise by reason of any alleged breach of warranty
concerning the Collateral, by reason of the failure of the Pledgor to comply
with any state or federal statute, rule, regulation, order or decree, or by
reason of the Secured Party's efforts to enforce payment of the Note, including
expenses incurred in satisfying any applicable securities and banking laws.
15. Expenses. The Collateral is, subject to demand by the Secured
Party, subject the amount of any and all reasonable expenses of Secured Party,
with Secured Party looking solely to the Collateral for payment, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
the Secured Party may incur in connection with (i) the administration of this
Pledge Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights
9
10
of the Secured Party hereunder, or (iv) the failure by the Pledgor to perform or
observe any of the provisions hereof.
16. Security Interest Absolute. All rights of the Secured Party
and the pledge and Security Interest hereunder, and all obligations of the
Pledgor hereunder, shall be absolute and unconditional in all respects and shall
not be released, diminished, impaired, or affected for any reason, including
without limitation the occurrence of any one or more of the following events:
(a) The taking or accepting of any other security or assurance
for the Note;
(b) Any change in the time, manner or place of payment of, or in
any other term of the Note;
(c) Any exchange, release, subordination, surrender, loss or
non-perfection of any other collateral at any time existing in connection with
the Note, or any release or amendment or waiver of or consent to departure from
any guaranty, or other security for the Note;
(d) Any neglect, delay, omission, failure, or refusal of the
Secured Party to take or prosecute any action in connection with this Pledge
Agreement or the Note;
(e) The insolvency, or bankruptcy of the Pledgor; or
(f) Any other circumstance which might otherwise constitute a
defense available to a discharge of the Pledgor in respect of the obligations of
the Pledgor in respect of this Pledge Agreement.
17. Waivers. Except as otherwise required by the terms hereof or
by applicable law, the Pledgor hereby waives all notices, including but not
limited to demand, presentment for payment, notice of nonpayment, protest,
notice of protest, notice of intent to accelerate, notice of acceleration and
all other notices, and without further notice hereby consents to any and all
renewals, extensions, amendments, modifications, indulgences, releases,
subordinations, waivers or changes in the terms of the Note or this Pledge
Agreement.
18. Benefit. This Pledge Agreement shall be binding upon and inure
to the benefit of Pledgor and Secured Party, and their respective heirs, legal
representatives, successors and assigns; provided, that Pledgor may not, without
the prior written consent of Secured Party, assign any rights, powers, duties or
obligations hereunder.
19. Remedies Cumulative. The rights and remedies provided herein
and in the Note are cumulative and are in addition to and not exclusive of any
rights or remedies provided by law, including, but without limitation, the
rights and remedies of a secured party under the XXX.
00
00
00. Amendment. This agreement may be amended only by written
instrument signed by both parties.
21. Course of Dealing. No course of dealing between the Pledgor
and the Secured Party, nor any failure to exercise, nor any delay in exercising
any right, power or privilege of, the Secured Party hereunder or under the Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
22. Invalidity of Any Provision. The invalidity of any one or more
phrases, sentences, clauses, paragraphs or sections hereof shall not affect the
remaining portions of this Pledge Agreement, all of which are being inserted
conditionally on their being held legally valid. In the event that any one or
more of the phrases, sentences, clauses, paragraphs or sections contained herein
should be invalid, or should operate to render this Pledge Agreement invalid,
then this Pledge Agreement shall be construed as if such invalid phrase or
phrases, sentence or sentences, clause or clauses, paragraph or paragraphs, or
section or sections had not been inserted.
23. Application of Payments. If at any time JRG's liabilities to
the Secured Party are in excess of JRG's indebtedness to Secured Party under the
Note, the Secured Party may, at its option, first apply all payments collected
with respect to the Collateral, toward payment of JRG's liabilities in excess of
that evidenced by the Note.
24. Stock Powers. Secured Party shall hold the Collateral in the
form in which it is delivered to it unless and until it is entitled under the
terms hereof to register, to sell or to dispose of the same as hereinabove
provided, in which event Pledgor hereby authorizes and irrevocably appoints the
Secured Party as the Pledgor's Attorney-in-Fact to transfer such Collateral on
the books of the issuer thereof, in whole or in part, to the name of the Secured
Party or such other person or persons as the Secured Party may designate. The
powers of attorney granted by, attached to, or pursuant to this Pledge Agreement
and all authority hereby conferred, are made, granted and conferred subject to
and in consideration of the interest of the Secured Party for the purpose of
assuring payment of the Note. Accordingly, such powers of attorney shall be
deemed coupled with an interest and irrevocable prior to the payment in full of
the Note and shall not be terminated prior thereto or affected by any act of
Pledgor, or any other person or by operation of law, including but not limited
to, the dissolution, death, disability or incompetency of any person,
determination of any trust, or the occurrence of any other event. If the
Pledgor, the issuer of the Collateral or any other person should be dissolved or
die or become disabled or incompetent, or an other event should occur before the
payment in full of the Note, such Attorney-in-Fact is nevertheless authorized to
act under such powers of attorney as if such dissolution, death, disability or
incompetency or other event had not occurred and regardless of notice thereof.
11
12
25. Governing Law. This Pledge Agreement is being executed and
delivered, and is intended to be performed, in the State of Texas, and the
substantive laws of such State shall govern the validity, construction,
enforcement and interpretation of this Agreement, unless the laws of another
state require the application of the laws of such state. This Pledge Agreement
is performable in Dallas, Texas.
26. Severability of Security. Pledgor hereby agrees that this
Agreement may, upon request by the Secured Party, be substituted by five (5) new
Pledge Agreements each securing one-fifth (1/5) of the Collateral secured
hereby. Upon substitution of this Agreement with five (5) new Pledge Agreements,
this Agreement will be marked to read "Substituted with Five (5) Pledge
Agreements" and returned to Pledgor. At such time, Pledgor shall cause JRG to
issue five new stock certificates in equal amounts of shares to replace the
Collateral.
27. Notice. Any notice, request, demand, instruction or other
communication to be given to either party hereunder, except those required to be
delivered at Closing, shall be in writing, and shall be deemed to be given upon
receipt, if hand delivered or delivered by express delivery service, or three
(3) days after deposit of such notice in registered or certified mail, return
receipt requested (provided that any notice of termination shall be effective
immediately upon deposit in registered or certified mail, return receipt
requested), addressed as follows:
IF TO PLEDGOR:
Xx. Xxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
IF TO SECURED PARTY:
M.S. HOLDING CO. CORP.
Attn.: Mr. F. Xxxxx Xxxxxxx
00000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
COPY TO:
Xxxx X. Xxxxxxx, Esq.
00000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
The addresses and addressees for the purpose of this article may be
changed by either party by giving notice of such change to the other party in
the manner provided herein for giving notice. For the purpose of changing such
addresses or addressees only, unless and until such written notice is received,
the last address and addressee stated herein shall be deemed to continue in
effect for all purposes.
12
13
28. NOTWITHSTANDING ANY OTHER PROVISION TO THE CONTRARY, NEITHER
PLEDGOR NOR HIS ESTATE IS OBLIGATED HEREIN OR UNDER THE NOTE EXCEPT FOR THE
PLEDGE OF THE COLLATERAL, AND THE NOTE SHALL BE NON-RECOURSE AS TO PLEDGOR.
IN WITNESS WHEREOF, the parties have executed this Pledge Agreement as
of the day and year first above written.
PLEDGOR:
/s/ Xxxxx X. Xxxxxx
----------------------------------
XXXXX X. XXXXXX
SECURED PARTY:
M.S. HOLDING CO. CORP., a
Nevada corporation
By: /s/ F. Xxxxx Xxxxxxx
-------------------------------
F. Xxxxx Xxxxxxx,
Vice President
13
