Document:

stratum8kex105_682011.htm

 

Exhibit 10.5

AMERICAN  NOTE

	
U.S. $531,875.00

	
Houston, TX

	
June 3, 2011

FOR VALUE RECEIVED, the undersigned, SB Group Holdings, Inc., a Delaware corporation (“Maker”), hereby unconditionally promises to pay to the order of Stratum Holdings, Inc., a corporation organized and existing under the laws of Nevada, (“Payee”), the principal sum of U.S. $531,875.00, plus interest (calculated on the basis of a 360 day year) at the rate of eight percent (8%) per annum on the unpaid principal balance from the date hereof until maturity  (or acceleration of maturity).

1.           Definitions.   When used in this Note, the following terms shall have the respective meanings specified herein or in the Section referred to:

“Business Day” means a day upon which business is transacted by national banks in Houston, Texas.

“Default” has the meaning ascribed to it in Section 6 hereof.

“Maximum Rate”  means, with  respect to the holder hereof, the maximum non-usurious rate of interest which, under all applicable legal requirements, such holder is permitted to contract for, charge, take, reserve, or receive on this Note.  If the laws of the State of Texas are applicable for purposes of determining the “Maximum Rate”, then such terms means the “weekly ceiling” from time to time in effect under Texas Finance code 303.001, as amended, as limited by Texas Finance Code 303.009.  

“Note” means this American Note.

“Pledge” means that certain Pledge and Security Agreement, dated of even date herewith, by and among Maker and Payee.

“Stock Purchase Agreement” means that certain Stock Purchase Agreement, dated June 3, 2011, pursuant to which Maker purchased all of the issued and outstanding capital stock of Decca Consulting, Inc., a corporation organized and existing under the laws of Nevada.

2.           Payment.  The principal and interest on this Note shall be due and payable in forty-eight (48) installments of principal and accrued interest in the amount of $12,984.65, being due and payable on the first day of October, 2011, and thereafter on the 1st day of each successive calendar month until all outstanding principal and interest due under this Note has been paid in full.

All payments of principal and interest of this Note shall be made by Maker to Payee in immediately available funds.  Payments made to Payee by Maker hereunder shall be applied first to accrued interest and then to principal.

Should the principal of, or any installment of the principal of or interest upon, this Note become due and payable on any day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day, and interest shall be payable with respect to such extension.

3.           Security.  The payment of this Note is secured by the Pledge.

  

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4.           Waivers.  Maker and each surety, endorser, guarantor, and other party ever liable for  payment of any sums of money  payable upon this Note, jointly and severally waive presentment, demand, protest, notice of protest and non-payment or other notice of default, notice of acceleration, and intention to accelerate, or other notice of any kind, and agree that their liability under this Note shall not be affected by any renewal or extension in the time of payment hereof, or in any indulgences, and hereby consent to any and all renewals, extensions, indulgences, releases, or changes, regardless of the number of such renewals, extensions, indulgences, releases, or changes.

No waiver by Payee of any of its rights or remedies hereunder or under any other document evidencing or securing this  Note or otherwise, shall be considered a waiver of any other subsequent right or remedy of Payee; no delay or omission in the exercise or enforcement by Payee of any rights or remedies shall ever be construed as a waiver of any right or remedy of Payee; and no exercise or enforcement of any such rights or remedies shall ever be held to exhaust any right or remedy of Payee.

5.           Representations and Warranties.  Maker hereby represents and warrants to Payee as follows:

	
  

	
(a)

	
Maker is a corporation, duly organized, validly existing and in good standing under the laws of Delaware and has the power and authority to own its property and to carry on its business in each jurisdiction in which it does business.

	
  

	
(b)

	
Maker has full power and authority to execute and deliver this Note and to incur and perform the obligations provided for herein, all of which have been duly authorized by all proper and necessary action of the appropriate governing body of Maker.  No consent or approval of any public authority or other third party is required as a condition to the validity of this Note.

	
  

	
(c)

	
There is no event that is, or with notice of passage of time, or both, would be, a Default under this Note and the Pledge.

	
  

	
(d)

	
This Note constitutes the valid and legally binding obligation of Maker, enforceable against Maker in accordance with its terms.

	
  

	
(e)

	
There is no charter, bylaw, stock provision or other document pertaining to the organization, power or authority of Maker and no provision of any existing agreement, mortgage, indenture or contract binding on Maker or affecting Maker’s property, which would conflict with or in any way prevent the execution, delivery or carrying out of the terms of this Note and the Pledge.

All representations and warranties made under this Note shall be deemed to be made at and as of the date hereof.

  

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6.           Default and Remedies.

A “Default” shall exist hereunder if any one or more of the following events shall occur and be continuing:  (i) Maker shall fail to pay when due any principal on this Note and after receipt of written notice from Payee, Maker fails to make such payment within 15 days of receipt of  such notice (the “Cure Period”); (ii) this Promissory Note shall cease to be a legal, valid, binding agreeable enforceable against Maker in accordance with its terms or shall in any way be terminated or become or be declared ineffective or inoperative; (iii) maker shall (A) apply for or consent to the appointment of a receiver, trustee, intervenor, custodian or liquidator of itself or of all of substantially all of its assets, (B)  be adjudicated a bankrupt or insolvent or file a voluntary petition for bankruptcy or admit in writing that it is unable to pay its debts as they become due, (C) make a general assignment for the benefit of creditors, (D) file a petition or answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy or insolvency laws, (E) file an answer admitting the material allegations of, or consent to, or default in answering, a petition filed against it in any bankruptcy, reorganization or insolvency proceeding, or take corporate action for the purpose of effecting any of the foregoing; (iv) an order, judgment or decree shall be entered by any court of competent jurisdiction or other competent authority approving a petition seeking reorganization of Maker or appointing a receiver, trustee, intervenor or liquidator of any such person, or of all or substantially all of its or their assets, and such order, judgment or decree shall continue unstayed and in effect for a period of sixty (60) days.

If Maker fails or refuses to pay any part of the principal upon this Note after receipt of written notice from Payee and expiration of the applicable Cure Period, then Payee may, at its option (i) declare the entire unpaid balance of principal of the Note to be immediately due and payable without present or further notice of any kind which Maker waives pursuant to Section 4 herein (ii) reduce any claim to judgment, and/or (iii) pursue and enforce any of Payee’s rights and remedies under the Pledge or available pursuant to any applicable law or agreement.

7.           Voluntary Prepayment.  Maker reserves the right to prepay the  outstanding principal balance of, and all accrued but unpaid interest on, this Note, in whole or in part, at any time and from time to time, without premium or penalty.

8.           Usury Laws.  Regardless of any provisions contained in this Note, the Payee shall never be deemed to have contracted for or be entitled to receive, collect, or apply as interest on the Note, any amount in excess of the Maximum Rate permitted by applicable law, and, in the event Payee ever receives, collects, or applies any such excess, such amount which would be excessive interest shall be applied to the reduction of the unpaid principal balance of this Note, and, if the principal balance of this Note is paid in full, then any remaining excess shall  forthwith be paid to Maker.  In determining whether or not the interest paid or payable under any specific contingency exceeds the highest lawful rate, Maker and Payee shall, to the maximum extent permitted under applicable law, (a) characterize any non-principal payment (other than payments which are expressly designated as interest payments hereunder) thereof, and (c) spread the total amount of interest throughout the entire contemplated term of this Note so that the interest rate is uniform throughout such term.

9.           Costs.  If this Note is placed in the hands of an attorney for collection, or if it is collected through any legal proceeding at law or in equity, or in bankruptcy, receivership or other court proceedings, Maker agrees to pay all costs of collection, including, but not limited to, court costs and reasonable attorney’s fees, including all costs of appeal.

  

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10.           Notices.  Any notice that may be given by either Maker or Payee shall be in writing and shall be deemed given upon the earlier of the time of receipt thereof by the person entitled to receive such notice, or if mailed by registered or certified mail or with a recognized overnight mail courier upon two (2) days after deposit with the Post Office of the United States or Canada or one (1) day after deposit with such overnight mail courier, if postage is prepaid and mailing is addressed to Maker or Payee, as the case may be, at the following addresses, or to a different address previously given in a written notice to the other party:

	
                To Maker:

	
SB Group Holdings, Inc.

	  	
3820 State Street

	  	
Santa Barbara, CA  93105

	  	
Attn:  Grant Haws

	  	
Telephone:  (805) 882-2200

	  	
Facsimile:  (805) 898-7114

	  	  
	
                To Payee:

	
Stratum Holdings, Inc.

	  	
Three Riverway, Suite 1590

	  	
Houston, Texas 77056

	  	
Attn.: Chief Executive Officer

	  	
Telephone: (713) 479-7075

	  	
Facsimile: (713) 479-7080

	  	
With a copy to:

	  	
Haynes and Boone, LLP

	  	
One Houston Center

	  	
1221 McKinney Street, Suite 2100

	  	
Houston, Texas 77010

	  	
Attn:  Bryce D. Linsenmayer, Esq.

	  	
Telephone: (713) 547-2007

	  	
Facsimile: (713) 236-5540

11.           GOVERNING LAW.  THIS INSTRUMENT AND ALL ISSUES AND CLAIMS ARISING IN CONNECTION WITH OR RELATING TO THE INDEBTEDNESS EVIDENCED HEREBY SHALL BE GOVERNED AND CONSTRUED INACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

12.           ENTIRETY.  THE PROVISIONS OF THIS NOTE MAY BE AMENDED OR REVISED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY MAKER AND PAYEE.  THIS NOTE, THE PLEDGE AND THE STOCK PURCHASE AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF MAKER AND PAYEE AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUIBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF MAKER AND PAYEE.  THERE ARE NO ORAL AGREEMENTS BETWEEN MAKER AND PAYEE.

  

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13.           WAIVER OF JURY TRIAL.  MAKER, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY KNOWINGLY, INTENTIONALLY, IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARYILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FOREGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING OT THIS NOTE OR THE PLEDGE.

14.           Assignment.  Neither this Note nor any rights or obligations under it are assignable without the express written consent of Maker and Payee.

15.           Parties in Interest.  This Note shall be binding upon and insure to the benefit of each party hereto and their respective successors and assigns, and nothing in this Note, express or implied, is intended to confer upon any other person  any rights or remedies of any nature whatsoever under or by reason of this Note.   Nothing in this Note is intended to relieve or discharge the obligation of any third person to any party to this Note.

  

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and year first written above and effective as of the date first written above.

	  	
MAKER:

	  	  
	  	
SB GROUP HOLDINGS, INC.

	  	  
	  	  
	  	
By:       /s/  Robert Olson                                

	  	
Name:  Robert Olson

	  	
Title:    Secretary

	  	  
	  	  
	  	
PAYEE:

	  	  
	  	
STRATUM HOLDINGS, INC.

	  	  
	  	  
	  	
By:       /s/  D. Hughes Watler, Jr.                                           

	  	
Name:  D. Hughes Watler, Jr.

	  	
Title:    Chief Financial Officer

 

 

 

6stratum8kex106_682011.htm

 

Exhibit 10.6

 

CANADIAN PLEDGE AND SECURITY AGREEMENT

 

This PLEDGE AND SECURITY AGREEMENT (this “Agreement”) is entered into effective as of this 3rd day of June, 2011, by and between SB Group Holdings, Inc., a Delaware corporation (the “Pledgor”), and Stratum Holdings, Inc., a Nevada corporation (“Pledgee”).   Pledgor and Pledgee are each a “party” and together are “parties” to this Agreement.

RECITALS

A.           Pledgor, Pledgee and 1607920 Alberta Ltd., a corporation organized and existing under the laws of Alberta, Canada (the “Canadian Purchaser”), are parties to that certain Stock Purchase Agreement, dated June 3, 2011 (the “Stock Purchase Agreement”), pursuant to which the Canadian Purchaser purchased all of the issued and outstanding capital stock of Decca Consulting Ltd., a corporation organized and existing under the laws of Alberta, Canada (the “Company”);

B.           Immediately following the consummation of such transaction, the Canadian Purchaser will amalgamate with and into the Company, and as a result of such amalgamation the obligations of the Canadian Purchaser under the Stock Purchase Agreement for the payment of all amounts due under the Notes (as defined below) will be transferred to the Company by operation of law, and the Company will become a wholly owned subsidiary of Pledgor;

C.           As part of the purchase price for the Stock, the Canadian Purchaser has delivered the following promissory notes, dated of even date herewith (the “Notes”), to the Pledgee:

	
  

	
1.

	
The Canadian Note payable to Pledgee in the original principal amount of U.S. $1,318,125.00.

	
  

	
2.

	
The Canadian Receivables Note payable to Pledgee in the original principal amount of U.S. $1,710,000.00, as may be adjusted in accordance with the terms of the Stock Purchase Agreement.

Promptly following the consummation of such transaction, the Canadian Purchaser will amalgamate with and into the Company, and as a result of such amalgamation the obligations of the Canadian Purchaser under Canadian Note and the Canadian Receivables Notes will be transferred to the Company by operation of law.  The Company will promptly issue new notes to the Payee in replacement of the Canadian Purchaser's Notes.

D.           As part of the consideration of Pledgee accepting the Notes (as opposed to cash or other consideration) under the Stock Purchase Agreement, Pledgor desires to pledge and deliver to Pledgee the Stock as security for the Notes and other obligations hereafter identified.

AGREEMENT

NOW, THEREFORE, to induce Pledgee to accept the Notes, and as security for Pledgor’s obligations under the Notes and any other obligations or liabilities of Pledgor under this Agreement (this Agreement and the Notes, the “Loan Documents” and the obligations and liabilities of Pledgor under the Loan Documents are collectively referred to herein as the “Secured Indebtedness”), and for other good and valuable consideration, the parties agree as follows:

  

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1.         Pledge of Common Stock.  Pledgor hereby grants to Pledgee a security interest in, and pledges to Pledgee, 100% of the stock of the Canadian Purchaser and, after the amalgamation described above, the Company (collectively, the “Stock”) and hereby assigns, transfers and sets over to Pledgee all of Pledgor’s right, title and interest in and to the Stock, to be held by Pledgee as security for the Secured Indebtedness and further upon the terms and conditions set forth in this Agreement.

2.         Pledge of Additional Common Stock.  If Pledgor shall, at any time after the date hereof, acquire, by purchase, dividend or otherwise, any additional shares of capital stock of whatever class or description of either of the Canadian Purchaser or the Company, or any other securities or other instruments convertible or exchangeable for any such additional shares or any rights in participations of profits, options or warrants or any other contractual rights relating to any participation in the Canadian Purchaser or the Company (collectively, the “Additional Stock”), Pledgor shall be deemed to have pledged to Pledgee the Additional Stock pursuant to this Agreement.  Pledgor hereby grants a security interest in and assigns, transfers and sets over to Pledgee all of Pledgors' right, title and interest in and to the Additional Stock and such certificates, instruments, documents and contracts evidencing the same as security for the Secured Indebtedness.  The Stock, the Additional Stock and any shares of capital stock or other securities of the Canadian Purchaser or the Company issued in exchange therefore or replacement thereof are hereafter called the “Pledged Securities”.  Pledgor hereby further assigns transfers, sets over and grants to Pledgee a security interest in and to all proceeds of the Pledged Securities.

3.         Representations, Warranties and Covenants.   Pledgor represents, warrants and covenants that:

(a)           So long as the Secured Indebtedness or any part thereof remains unpaid, Pledgor covenants and agrees that Pledgor shall furnish to Pledgee such stock powers, consents, security agreements and other instruments as may be required by Pledgee to evidence its interest in the Pledged Securities and to assure the transferability of the Pledged Securities;

(b)           If the validity or the priority of this Agreement or of any right, title, security or other interest created or evidenced hereby or of any right, title, security interest or other interest of Pledgor in and to the Pledged Securities shall be attached, endangered or questioned or if any legal proceedings are instituted against Pledgor with respect thereto, Pledgor will give prompt notice thereof to Pledgee.

4.          Restrictions on Disposition of the Pledged Securities of Pledgor.  Pledgor will not, directly or indirectly, sell, assign, transfer, mortgage, pledge, hypothecate or otherwise dispose of the Pledged Securities or any interest therein, or create, assume or permit any lien or encumbrance of any kind whatsoever to exist with respect thereto, without the express written consent of Pledgee.

5.            Voting. Unless and until an Event of Default shall have occurred and be continuing, Pledgor shall have the right to vote the Pledged Securities and to otherwise act with respect thereto.  All right to vote shall, without further action by any party, cease if an Event of Default shall occur.

 

6.                   Dividends and other Distributions.  Pledgor agrees that it shall not cause or allow the Company to declare a dividend or make a distribution of its Stock, subdivide its outstanding Stock, combine its outstanding Stock into a smaller number of shares, or issue by reclassification of its Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing entity) any securities of its capital ownership that would in any way reduce the percentage ownership interest of the Pledged Securities in the Company or otherwise dilute such ownership interest.

  

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7.                   Remedies.  If Pledgor defaults on any of the Notes or any of the Secured Indebtedness,  or defaults upon any obligations hereunder and such breach or default is not cured after thirty (30) days following the delivery of written notice of such default to Pledgor (each an “Event of Default”), then upon written notice to Pledgor that Pledgee intends to exercise rights and/or remedies under this Agreement and/or any other Loan Document, Pledgee shall be entitled to exercise all of the rights, powers and remedies conveyed by this Agreement or the Notes and all rights, powers and remedies now or hereafter existing at law or in equity or by statute or otherwise for the protection and enforcement of its rights with respect to the Pledged Securities, and Pledgee shall be entitled, without limitation:

(a)           to transfer all or any part of the Pledged Securities into Pledgee’s name or the names of its nominees and to cause new certificates or instruments to be issued in the names of such transferees;

(b)            to vote all or any part of the Pledged Securities, whether or not transferred into the name of Pledgee or nominees, and to give all consents, waivers and ratifications with respect to the Pledged Securities and otherwise act with respect thereto as though it were the outright owner thereof, Pledgor hereby irrevocably constituting and appointing Pledgee the proxy and attorney-in-fact of Pledgor, with full power of substitution to do so, and

(c)                  at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Pledged Securities, or any interest therein, at any public or private sale, without demand or performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof or otherwise, other than written notice to Pledgor of same, for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, for such reasonable price or prices and on such terms as Pledgee in its absolute discretion may determine.  Pledgor hereby waives demand, advertisement and notice, other than to Pledgor of Pledgee’s intention to sell and the time and place of the sale;

(d)                  To have and exercise all the rights of a secured party after default under the Uniform Commercial Code of Texas and in conjunction with, in addition to or in substitution for those rights and remedies and the rights and remedies provided for herein:

(i)           Written notice mailed to Pledgor as provided herein five (5) days prior to the date of public sale of the Pledged Securities or prior to the date after which private sale of the Pledged Securities will be made shall constitute reasonable  notice; and

(ii)                      It shall not be necessary that the Pledged Securities or any part thereof be present at the location of such sale; and

(iii)           Prior to the application of proceeds of the disposition of the Pledged Securities to the Secured Indebtedness, such proceeds shall be applied to the reasonable expenses of retaking, holding, preparing for sale, selling, and the attorney’s fees and legal expenses incurred by Pledgee; and

  

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(iv)           The sale by Pledgee of less than the whole  of the Pledged Securities shall not exhaust the rights of Pledgee hereunder and Pledgee is specifically empowered to make successive sales hereunder until the whole of the Pledged Securities shall be sold,  and if the proceeds of such sale of less than the whole of the Pledged Securities shall be less than the aggregate of the Secured Indebtedness, this Agreement and the security interest created hereby shall remain in full force and effect as to the unsold portion of the Pledged Securities as though no sale had been made; and

(v)                      The holder of the Secured Indebtedness or any part thereof on which payment or performance is delinquent shall have the option to proceed with  foreclosure in satisfaction of such delinquent payment or performance either through judicial proceedings or by proceeding as if under a full foreclosure, conducting the sale as herein provided without declaring the entire Secured Indebtedness due, and if sale is made because of a default upon an installment or other performance due under the Secured Indebtedness, such sale may be made subject to the unmatured part of the Secured Indebtedness, but as to such unmatured part this Agreement shall remain in full force and effect as though no sale had been under the provisions of this subparagraph.  Several sales may be made hereunder without exhausting the right of sale for any unmatured part of the Secured Indebtedness; and

(vi)           In the event any sale hereunder is not completed or is defective in the opinion of Pledgee, such sale shall not exhaust the rights of Pledgee hereunder and Pledgee shall have the right to cause a subsequent sale or sales to be made hereunder; and

(vii)           any and all statements of fact or other recitals made in any bill of sale or assignment or other instrument evidencing any foreclosure sale hereunder as to nonpayment of the Secured Indebtedness or as to the occurrence of any default, or as to Pledgee having declared all of such indebtedness to be due and payable, or as to notice of time, place and terms of sale and the properties to be sold having been duly given, or as to any other act or thing having been duly done by Pledgee, shall be taken as prima facie evidence of the truth of the facts so stated and recited; and

(viii)           Pledgee may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by Pledgee including the sending of notices and the conduct of sale.

(e)             To resort to any security given by this Agreement or to any other security now existing or hereafter given to secure the payment of the Secured Indebtedness in whole or in part and in such portions and in such order as may seem best to Pledgee in its sole discretion, and any such action shall not be considered as a waiver of any of the rights, benefits or security interests evidenced by this Agreement.

  

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To the full extent Pledgor may do so, Pledgor agrees that Pledgor will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for any appraisement, valuation, stay, extension or redemption with respect to the Pledged Securities and Pledgor for Pledgor’s heirs, devisees, personal representatives, receivers, trustees, successors and assigns and for any and all person ever claiming any interest in the Pledged Securities, to the extent permitted by law, hereby waives and releases all rights of redemption, valuation, appraisement, stay of execution, notice of intention to mature or declare due the whole of the Secured Indebtedness, notice of election to mature or declare due the whole of the Secured Indebtedness and all rights to a marshalling of the assets of Pledgor, including the Pledged Securities or proceeds thereof, or to a sale in inverse order of alienation in the event of foreclosure of the security interest hereby created.

8.             Application of Proceeds by Pledgee.  All proceeds collected upon any sale of the Pledged Securities or part thereof hereunder, together with all other cash received by Pledgee hereunder, shall be applied as follows:

	
  

	
(a)

	
First:  to the payment of all reasonable costs and expenses of retaking, holding, preparing for sale, selling and to reasonable attorney’s fees and legal expenses incurred by Pledgee;

	
  

	
(b)

	
Second: to the satisfaction of any indebtedness under the Canadian Receivables Note secured by this Agreement, including without limitation, the Secured Indebtedness, Pledgor to remain liable for any deficiency;

	
  

	
(c)

	
Third: to the satisfaction of any indebtedness under the Canadian Note secured by this Agreement, including without limitation, the Secured Indebtedness, Pledgor to remain liable for any deficiency;

	
  

	
(d)

	
Fourth:

	
the balance, if any, to Pledgor.

9.       Pledgor’s Obligations Absolute. The obligations of Pledgor under this Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever, including, without limitation:  (a) any renewal, extension, amendment or modification of or addition or supplement to or deletion from the application provisions of any of the Notes, any other Loan Documents or with respect to any of the Secured Indebtedness, or any assignment or transfer of any interest thereon; (b) any waiver, consent, extension, or other action or inaction under or with respect to any Secured Indebtedness to Pledgee or any exercise or non-exercise of any right, remedy, power or privilege under or with respect thereto or with respect to this Agreement or any other Loan Document; (c) any furnishing of additional security to Pledgee or any release of security or guaranty by Pledgee; (d) any bankruptcy, insolvency, reorganization, dissolution, liquidation or other like proceeding relating to Pledgor, or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding; (e) release of any party liable either directly or indirectly for the Secured Indebtedness or any part thereof or for any covenant herein or in any other Loan  Document; or (f) any other circumstances that might otherwise constitute a defense available to, or a discharge of, Pledgor with respect to the performance of its obligations under this Agreement.  Without notice to or consent of Pledgor, and without impairment of the lien and security interest and other rights created by this Agreement, Pledgee may accept from Pledgor, or from any other person or persons, additional security for the Secured Indebtedness to Pledgee.

  

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10.             Non-Public Sale.  If at any time when Pledgee shall elect to exercise its right to sell all or any of the Pledged Securities pursuant to Section 7 of this Agreement, the Pledged Securities, or the part thereof to be sold, Pledgee may, in its sole and absolute discretion, sell the Pledged Securities or part thereof by private sale in such manner and under such circumstances as Pledgee may deem necessary or advisable in order that such sale may be effected legally without applicable registration.  Without limiting the generality  of the foregoing, Pledgee, in its sole and absolute discretion (a) may proceed to make the private sale notwithstanding that a registration statement for the purpose of registering the Pledged Securities shall have been filed under the Securities Acts, (b) may approach and negotiate with as few as one possible purchaser to effect the sale and (c) may restrict the sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of the Pledged Securities and who will satisfy other conditions that at the time are or may be required for a lawful non-public sale or are reasonably requested by Pledgee.  Any sale complying with the foregoing shall be deemed to have been conducted in a commercially reasonable manner, but the foregoing shall not be considered minimum requirements for a commercially reasonable sale.  In the event of any non-public sale, Pledgee shall incur no responsibility or liability for selling all or any part of the Pledged securities at a price that Pledgee may in good faith deem reasonable under the circumstances, notwithstanding that a substantially higher price might be realized if the sale were deferred until after registration as aforesaid.

11.                 Costs and Expenses.  Pledgor will  upon demand pay to Pledgee the amount of any and all reasonable expenses incurred by Pledgee in administering this Agreement, including, without limitation, the reasonable expenses of Pledgee’s counsel that Pledgee may incur in connection with (a) the realization upon the Pledged Securities (b) the failure by Pledgor to perform or observe any of the provisions hereof or (c) the successful defense of any counterclaim, cross-claim or other cause of action asserted by Pledgor in connection with this Agreement.

12.                 Remedies Cumulative.  Each right, power and remedy of Pledgee provided for in this Agreement, any Note, and any of the other Loan Documents, now or hereafter existing at law, in equity and by statute or otherwise, shall be cumulative and concurrent and shall be in addition to every other such right, power and remedy.  The exercise by Pledgee of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise of all such other rights, powers or remedies.  No failure or delay on the part of Pledgee to exercise any right, power or remedy shall operate as a waiver thereof.

13.                 Reasonable Care.  Pledgee shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Securities in their possession if the Pledged Securities are accorded treatment substantially equal to that which Pledgee accords their own property, it being understood that Pledgee shall not have responsibility for taking any necessary steps to preserve rights against any parties with respect to the Pledged Securities.  Pledgee shall not be responsible in any way for any depreciation in the value of the Pledged Securities.

14.                 Further Assurances.  Pledgor, at its sole cost and expense, will duly execute, acknowledge and deliver all instruments and take all action as Pledgee from time to time may request in order to further effectuate the intent and purpose of this Agreement.

  

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15.                 Termination.  Upon receipt by Pledgee of payment in full of all Secured Indebtedness, this Agreement shall terminate, and Pledgee, at the request and expense of Pledgor, will execute and deliver to Pledgor a proper instrument acknowledging the satisfaction and termination of this Agreement, and will duly assign, transfer and deliver to Pledgor the Pledged Securities or portion thereof then in their possession that have not been theretofore sold or otherwise applied or released pursuant to this Agreement.

16.                 Notices.  All notices and other communications under this Agreement shall be in writing and either (a) delivered against a receipt therefore; (b) mailed by registered or certified mail, return receipt requested, or (c) sent by telecopy, in each case addressed as follows:

	  	
(a)

	
  If to Pledgor, to:

	
SB Group Holdings, Inc.

	  	  	  	
3820 State Street

	  	  	  	
Santa Barbara, CA  93105

	  	  	  	
Attn:  Grant Haws

	  	  	  	
Telephone:  (805) 882-2200

	  	  	  	
Facsimile:  (805) 898-7114

	  	  	  	  
	  	
(b)

	
 If to Pledgee, to:

	
Stratum Holdings, Inc.

	  	  	  	
Three Riverway, Suite 1590

	  	  	  	
Houston, Texas 77056

	  	  	  	
Attn.: Chief Executive Officer

	  	  	  	
Telephone: (713) 479-7075

	  	  	  	
Facsimile: (713) 479-7080

	  	  	  	  
	  	  	
With a copy to:

	  
	  	  	  	  
	  	  	  	
Haynes and Boone, LLP

	  	  	  	
One Houston Center

	  	  	  	
1221 McKinney Street, Suite 2100

	  	  	  	
Houston, Texas 77010

	  	  	  	
Attn: Bryce D. Linsenmayer, Esq.

	  	  	  	
Telephone: (713) 547-2007

	  	  	  	
Facsimile: (713) 236-5540

 

 

  

7

  

17.                 Provisions Subject to Applicable Law.  All rights, powers and remedies provided herein may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Agreement invalid or unenforceable.  If any term of this Agreement shall be held to be invalid, illegal or unenforceable, the remainder of this Agreement and the validity of the other terms of this Agreement shall be in no way be affected thereby.  THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, AND IS PERFORMABLE IN HARRIS COUNTY, TEXAS.

18.                 Miscellaneous.  This Agreement shall be binding upon Pledgor and its successors and assigns and shall inure to the benefit of and be enforceable by Pledgee and its successors and assigns.  Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought.  The headings in this Agreement are for purposes of reference only and shall not limit or define the meaning hereof.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.  A carbon, photographic or other reproduction of this Agreement or of any financing statement relating to this Agreement shall be sufficient as a financing statement.  If any part of the Secured Indebtedness cannot be lawfully secured by this Agreement, or if any part of the Pledged Securities cannot be lawfully subject to the security interest hereof to the full extent of such Secured Indebtedness, then all payments made shall be applied on the Secured Indebtedness first in discharge of that portion thereof which is not secured by this Agreement.   For the purposes of the Texas Uniform Commercial Code and other applicable law, Pledgor shall be the “Debtor” and Pledgee shall be the “Secured Party”.

19.                  Benefits.  Pledgor does hereby acknowledge that it has investigated fully the benefits and advantages that it will receive from the execution of this Agreement and Pledgor does hereby acknowledge, warrant and represent that its officers have found that a direct or indirect benefit will accrue to Pledgor by reason of its execution of this Agreement in favor of Pledgee.  Pledgor further acknowledges that but for Pledgor’s agreement to execute this Agreement and the Notes executed by the Pledgor, Pledgee would not have accepted the Notes as payment for the Stock.

20.                 Representation of Parties.  Each of the parties signing below represents and warrants to the other that such party has the power and authority to execute this Agreement.

(SIGNATURE PAGE FOLLOWS)

 

  

8

  

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and year first written above and effective as of the date first written above.

	  	
PLEDGOR:

	  	  
	  	
SB GROUP HOLDINGS, INC.

	  	  
	  	  
	  	
By:      /s/  Robert Olson                                

	  	
Name:  Robert Olson

	  	
Title:    Secretary

	  	  
	  	  
	  	
PLEDGEE:

	  	  
	  	
STRATUM HOLDINGS, INC.

	  	  
	  	  
	  	
By:      /s/  D. Hughes Watler, Jr.

	  	
Name:  D. Hughes Watler, Jr.

	  	
Title:    Chief Financial Officer

9

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