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EXHIBIT 2
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
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exchange for, or on account of, any such shares, as represented 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
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free of any pledge, mortgage, hypothecation, lien, charge, encumbrance or
security interest or purchase right or option on the 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
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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 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
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favor of Secured Party, Pledgor will forthwith execute and deliver to Secured
Party whatever Secured Party shall deem necessary or proper for such purpose.
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
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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, 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
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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 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.
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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 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
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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 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.
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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 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.
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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 UCC.
20. 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
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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.
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
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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.
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
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