EXHIBIT 10.4
Stock Pledge Agreement (Burg)
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement"), which is to be
effective on the 1st day of December, 2001, is by and between JBO, INC., a
Nevada corporation (hereafter the "Pledgor"), and XXXXXXX X. XXXX (hereafter,
the "Pledgee").
RECITALS
Pursuant to that certain Promissory Note more particularly described on
Exhibit "A" attached hereto (the "Note"), Pledgor has acquired from Pledgee
2,250,000 shares of Pledgor's outstanding common stock, which constitutes
forty-five percent (45%) of the total outstanding common stock of Pledgor
immediately prior to Pledgee's merger with XxXxxxx Petroleum, Incorporated, an
Arizona corporation (the "Securities"), for the sum of Seventy Thousand and
No/100 Dollars ($70,000.00), which Pledgee has agreed to pay, and Pledgor has
agreed to accept in accordance with the payment schedule set forth in the Note
(the "Loan").
Pledgee was willing to make the Loan to Pledgor based on its understanding
that Pledgor intends to pledge the Securities to Pledgee in accordance with the
terms and conditions of this Pledge Agreement.
1. Definitions. The following terms shall have the following meanings in
this Pledge Agreement:
Collateral shall mean the Securities and all dividends, distributions
and amounts or additional securities to which Pledgor (with or without
additional consideration) is or becomes entitled by virtue of its ownership
of any of the Securities or as the result of any corporate reorganization,
merger, consolidation, stock split, stock dividend, conversion, preemptive
right or otherwise.
Obligations shall mean (a) payment in cash of all principal, interest,
and any other fees, late charges, and attorneys' fees related to the Note.
and all addenda, modifications, and amendments thereto, if any; and (b)
payment, performance and observance by Pledgor of each covenant, condition,
provision, and agreement contained herein and of all monies expended or
advanced by Pledgee pursuant to the terms hereof, or to preserve any right
of Pledgee thereunder, or to protect or preserve the Collateral or any part
thereof; and (c) any and all other obligations of Pledgor to Pledgee
arising in any manner in connection with the issuance and performance by
Pledgor under the Note.
2. Collateral. To secure payment and performance of the Obligations and to
secure any Dilutive Event, Pledgor hereby pledges the Securities and hereby
grants to Pledgee a valid and perfected first lien on and security interest in
the Securities and all other items of the Collateral.
3. Representations, Covenants, and Warranties. Pledgor hereby represents
and warrants to Pledgee that (i) Pledgor is, and at all times prior to the
payment and performance of the Obligations will be, the legal and beneficial
owner of such Collateral; (ii) that the Securities represent a total of
forty-five percent (45%) of the total Common Stock of JBO, Inc. owned by
Pledgor; (iii) the pledge of such Collateral pursuant to the terms of this
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Pledge Agreement, together with delivery thereof, creates a valid and perfected
first lien on and security interest in such Collateral in favor of Pledgee;
(iii) none of such Collateral is subject to any claim, lien, charge, security
interest or other encumbrance of any kind whatsoever, except for the perfected
first security interest therein granted to Pledgee hereby and, so long as this
Pledge Agreement remains in effect, Pledgor will not create or permit to exist
any claim, lien, charge, security interest or encumbrance upon or with respect
to such Collateral, except for the first security interest therein granted to
Pledgee by this Pledge Agreement and except as otherwise permitted pursuant to
the terms of this Pledge Agreement; (iv) so long as this Pledge Agreement
remains in effect, Pledgor will not sell, transfer, convey, assign, or otherwise
divest its interests in such Collateral, or any part thereof, to any other
person; (v) no authorization, approval or other action by, or notice to or
filing with, any governmental body is required for the pledge by Pledgor of such
Collateral pursuant to the terms of this Pledge Agreement; and (vi) all of the
Collateral has been duly authorized, validly issued and is fully paid and
non-assessable and is registered in the name of Pledgor.
4. Stock Splits, Stock Dividends, Anti-Dilutive Actions, Etc. Pledgor
agrees that in the event Pledgor, by virtue of its ownership of the Collateral,
now is, or hereafter becomes, entitled (with or without additional
consideration) to other or additional securities as the result of any corporate
reorganization, merger, consolidation, stock split, stock dividend,
anti-dilution provisions, conversion or preemptive right or otherwise ("Dilutive
Event"), Pledgor agrees that such additional securities shall constitute a
portion of the Collateral and be subject to this Pledge Agreement in the same
manner and to the same extent as the securities pledged hereby to Pledgee on the
date hereof.
5. Voting Power; Dividends. Unless and until an Event of Default pursuant
to the terms of the Note and/or this Pledge Agreement shall have occurred,
Pledgor shall be entitled to exercise all voting powers in all corporate matters
pertaining to the Collateral for any purpose not inconsistent with, or in
violation of, the provisions of the Note and/or this Pledge Agreement. Any cash
dividends and cash distributions of any kind made with respect to the Collateral
shall be made in compliance with the Note and/or this Pledge Agreement and shall
be applied to reduce the Obligations. Pledgor shall have no right to vote the
Collateral in favor of an increase in the capitalization of JBO, Inc. without
the prior written consent of Pledgee. Following an Event of Default (as defined
below), Pledgee shall have all voting and dividend rights in the Collateral, and
for this purpose this Pledge Agreement shall constitute an irrevocable and
non-expiring proxy coupled with an interest in the Securities.
6. Default and Remedies.
6.1 The occurrence of any of the following events shall constitute an
"Event of Default":
6.1.1 The occurrence of a Default under the Note, which shall
include, but not be limited to, the failure to pay principal when due.
6.1.2 Any levy or execution upon, or judicial seizure of, any
portion of the Collateral that is not cured within thirty (30) days.
6.1.3 Any attachment or garnishment of, or the existence or
filing of any lien or encumbrance against, any portion of the
Collateral which is not released within thirty (30) days.
6.1.4 The institution of any legal action or proceedings to
enforce any lien or encumbrance upon any portion of the Collateral
that is not dismissed within thirty (30) days after its institution.
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6.1.5 Any failure or neglect to perform or observe any of the
terms, provisions, or covenants of this Pledge Agreement which is not
cured within fifteen (15) days after notice is received by Pledgor.
6.2 If an Event of Default shall have occurred and be continuing,
Pledgee, at its option, may:
6.2.1 Declare all or any part of the Obligations to be
immediately due and payable, and the same, with all costs and charges,
shall be collectible thereupon by action at law;
6.2.2 Cause the Collateral to be registered in its name or in the
name of its nominee;
6.2.3 Exercise all voting powers pertaining to the Collateral and
otherwise act with respect thereto as though Pledgee were the owners
thereof;
6.2.4 Receive all dividends and all other distributions of any
kind whatsoever on all or any part of such Collateral;
6.2.5 Realize on the Collateral by public or private sale; and
6.2.6 Pursue any legal or equitable remedy available to collect
the Obligations, to enforce Pledgee's title in and right to possession
of the Collateral and to enforce any and all other rights or remedies
available to it.
With respect to the actions described in this Section 6.2, Pledgor hereby
irrevocably constitutes and appoints Pledgee his proxies and
attorneys-in-fact with full power of substitution and acknowledges that the
constitution and appointment of such proxies and attorneys-in-fact are
coupled with an interest and are irrevocable.
6.3 Pledgee shall give not less than ten (10) Business Days prior
written notice to Pledgor of any sale pursuant to this Section 6. "Business
Day" means each day other than a Saturday, a Sunday or any other day on
which commercial banks in Chicago, Illinois are authorized or required by
law or executive order to close. Pledgor hereby agrees that such notice is
commercially reasonable.
6.4 Pledgee shall apply the proceeds of any sale of the whole or any
part of the Collateral (the "Proceeds") and any other monies at the time
held by Pledgee under the provisions of this Pledge Agreement in the manner
provided pursuant to the terms of the Notes. Pledgor shall be fully
responsible for any deficiency remaining after the sale of the Collateral.
6.5 Any sale of all or any portion of the Collateral pursuant to
Section 6.2 above shall operate to divest all right, title and interest of
Pledgor to the Collateral that is the subject of any such sale.
7. Pledgee's Obligations, Custodial Agreement, Performance Rights. Pledgee
shall not have any duty to protect, preserve or enforce rights against the
Collateral other than a duty of reasonable custodial care of any such Collateral
in its possession, it being understood that Pledgee shall have no responsibility
for (i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to the Collateral,
whether or not Pledgee have or are deemed to have knowledge of such matters, or
(ii) taking any necessary steps to preserve rights against any parties with
respect to the Collateral.
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8. Termination of Pledge Agreement. Upon the Obligation Termination Date,
the pledge of the Securities hereunder shall immediately terminate without
further act by any party, and the requirements, covenants and conditions
contained within this Pledge Agreement relating to the Obligation shall
automatically terminate. The "Obligation Termination Date" shall mean the date
upon which the payment and performance in full of all of the Obligations shall
have been made.
9. Miscellaneous.
9.1 This Pledge Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against Pledgor
for liquidation or reorganization, should Pledgor become insolvent or make
an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of Pledgor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Obligations or any part thereof is,
pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the obligations,
whether as a "voidable preference," "fraudulent conveyance," or otherwise,
all as though such payment, or performance had not been made. In the event
that any payment, or any part hereof, is rescinded, reduced, restored or
returned, the obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
9.2 Each and every right, remedy and power granted to Pledgee
hereunder shall be cumulative and in addition to any other right, remedy or
power specifically granted herein or now or hereafter existing in equity,
at law, by virtue of statute or otherwise and may be exercised by Pledgee,
from time to time, concurrently or independently and as often and in such
order as Pledgee may deem expedient. Any failure or delay on the part of
Pledgee in exercising any such right, remedy or power, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver
thereof or affect Pledgee's right thereafter to exercise the same, and any
single or partial exercise of any such right, remedy or power shall not
preclude any other right, remedy or power, and no such failure, delay,
abandonment or single or partial exercise of Pledgee's rights hereunder
shall be deemed to establish a custom or course of dealing or performance
among the parties hereto.
9.3 Any modification or waiver of any provision of this Pledge
Agreement, or any consent to any departure by Pledgor therefrom, shall not
be effective in any event unless the same is in writing and signed by both
Pledgee, and then such modification, waiver or consent shall be effective
only in the specific instance and for the specific purpose given. Any
notice to or demand on Pledgor in any event not specifically required of
Pledgee hereunder shall not entitle Pledgor to any other or further notice
or demand in the same, similar or other circumstances unless specifically
required hereunder.
9.4 Pledgor agrees that at any time, and from time to time, after the
execution and delivery of this Pledge Agreement, Pledgor, upon the request
of either Pledgee and at the expense of Pledgor, promptly will execute and
deliver such further documents and do such further acts and things as
Pledgee may reasonably request in order to effect fully the purposes of
this Pledge Agreement and to subject to the security interest created
hereby any property or rights intended by the provisions hereof to be
covered hereby.
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9.5 Pledgor agrees that it will warrant, preserve, maintain and
defend, at its sole expense, the right, title and interest of Pledgee in
and to the Collateral and all right, title and interest represented thereby
against all claims, charges and demands of all persons whomsoever.
9.6 All notices required or permitted to be given hereunder shall be
in writing and may be given in person or by United States mail, by delivery
service or by electronic transmission. Any notice directed to a party to
this Pledge Agreement shall become effective upon the earliest of the
following: (i) actual receipt by that party; (ii) delivery to the
designated address of that party, addressed to that party; or (iii) if
given by certified or registered United States mail, three days after
deposit with the United States Postal Service, postage prepaid, addressed
to that party at its designated address. The designated addresses of the
parties shall be as follows:
If to Pledgor:
---------------
JBO, Inc.
0000 X. Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
If to Pledgee:
---------------
Xxxxxxx X. Xxxx
3257 Winged Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
provided, however, that any party may change its respective address for
purposes of receipt of any such communication by giving ten (10) days prior
written notice of such change to the other parties hereto in the manner
provided above. All notices sent pursuant to the terms of this Section 9.6
shall be deemed received (i) if sent by overnight, express carrier, on the
next Business Day immediately following the day sent or (ii) if sent by
registered or certified mail, on the third Business Day following the day
sent.
9.7 This Pledge Agreement shall be construed in accordance with and
governed by the laws of the State of Arizona (without reference to the
conflicts of laws principles of such state). For purposes of this
Section 9.7, this Pledge Agreement shall be deemed to be performed and made
in the State of arizona.
9.8 In the event that any provision of this Pledge Agreement is deemed
to be invalid by reason of the operation of any law, or by reason of the
interpretation placed thereon by any court or other governmental body, this
Pledge Agreement shall be construed as not containing such provision and
the invalidity of such provision shall not affect the validity of any other
provision hereof, and any and all other provisions hereof which otherwise
are lawful and valid shall remain in full force and effect.
9.9 This Pledge Agreement shall inure to the benefit of the successors
and assigns of Pledgee and shall be binding upon the successors and assigns
of Pledgor.
9.10 This Pledge Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which taken together shall be one and the same instrument.
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9.11 If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement the prevailing party shall be
entitled to reasonable attorneys fees, reasonable costs and necessary
disbursements in addition to any other relief such party may be entitled.
IN WITNESS WHEREOF, Pledgor and Pledgee have caused this Pledge Agreement to be
executed as of the date first written above.
PLEDGOR:
JBO, INC., a Nevada corporation
By: /s/ Xxxxxx X. XxXxxxx
--------------------------
Xxxxxx X. XxXxxxx
Its: President
PLEDGEE:
/s/ Xxxxxxx X. Xxxx
--------------------------
Xxxxxxx X. Xxxx
EXHIBIT "A"
Promissory Note
See Exhibit 10.3 above
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